<PAGE> 1
[NATIONS FUNDS LOGO] [GRAPHIC DEPICTING TREE]
DOMESTIC STOCK FUNDS Investments for a Life Time
Nations Balanced Assets Fund
Nations Value Fund
Nations Equity Fund
Nations Index Fund
Nations Marsico Growth
& Income
Nations Strategic Equity
Fund
Nations Capital Growth Fund
Nations Marsico Focused
Equity Fund
Nations Emerging Growth Fund
Nations Small Company Growth
Fund
ANNUAL REPORT FOR THE YEAR ENDED MARCH 31, 1999
[GRAPHIC DEPICTING BANNER]
<PAGE> 2
[GRAPHIC DEPICTING BASKETS]
This report is submitted for
the general information of
shareholders of Nations Funds.
This material must be preceded or
accompanied by a current Nations
Funds prospectus.
Nations Funds Distributor:
Stephens Inc., Stephens Inc., which
is not affiliated with Bank of
America National Trust and
Savings Association or
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.
NOT FDIC-
INSURED
May Lose Value
No Bank Guarantee
<PAGE> 3
Presidents'
Message
Dear Shareholder:
We'd like to thank you for being a part of the
Nations Funds family. Your continued trust and
confidence are greatly appreciated. Many noteworthy
events have taken place during the past year. Let's
take a look.
A ROLLER-COASTER-RIDE OF A YEAR
We know the past 12 months have proved to be quite an
unsettling time for investors. You've seen major
market indexes reach all-time highs, even after the
significant market volatility of late summer-early
fall 1998. Much of the volatility was attributed to
financial crises in Brazil and Russia, the continuing
malaise in Asia, as well as a slowdown in U.S.
corporate earnings growth. However, the Federal
Reserve Board came to the rescue in late September
with the first of three successive cuts in interest
rates. By year-end, investors were feeling confident
once again and many stocks had soared, moving the Dow
Jones Industrial Average closer to the 10,000
milestone.*
While some stock indexes had another impressive year
of double-digit performance -- the Standard & Poor's
500 Composite Stock Price Index (S&P 500)** of
large-company stocks was up 18.46% for the 12 months
ending March 31, 1999 -- focusing on these particular
indexes doesn't give you the complete picture. For
example, during the same 12-month period, the
Standard & Poor's MidCap 400 Index*** posted a gain
of only 0.43% and the Russell 2000 Index(+) of
small-company stocks actually posted negative
performance of -16.20%. There was even divergence
among the stocks in the S&P 500, with the performance
of the 25 largest stocks accounting for approximately
70% of the Index's return.
THE VALUE OF ADVICE
Diversification, along with a long-term perspective,
are among the best tools for investors to weather
changing markets and create a balanced investment
portfolio. That's where the value of professional
financial advice comes in. The role of a good
financial adviser, especially during volatile times,
is to help you make smart investment decisions that
help you pursue your long-term goals. During last
year's downturn in
* The Dow Jones Industrial Average is a
price-weighted index of 30 of the largest, most
widely held
stocks traded on the New York Stock Exchange. It is
unmanaged and unavailable for investment.
** The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely
held common stocks. It is unavailable for investment.
*** The Standard & Poor's MidCap 400 Index is a
market-value weighted index that measures
the market value of 400 domestic stocks chosen for
market size, liquidity and industry
representation. It is unmanaged and unavailable for
investment.
+ The Russell 2000 Index is a capitalization-weighted
index that includes 2,000 of the smallest
stocks representing approximately 11% of the U.S.
equity market. It is unmanaged and unavailable for
investment.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE> 4
Presidents'
Message continued...
the markets, many mutual fund shareholders who
invested through a financial adviser remained calm
and ignored short-term corrections.
Today, these same investors are probably glad they
did, as the markets continue their generally upward
trend. Of course, history tells us that these trends
do not continue indefinitely, and our belief is that
the best way to weather changing market conditions is
by working with a professional financial adviser.
YOUR MANAGERS OF DISTINCTION(SM)
Financial advisers are there to guide and assist you,
but it also helps to invest with a company that has
experienced fund managers who have weathered various
market cycles over time. At Nations Funds, we call
them our Managers of Distinction(SM).
In bringing you the wide range of funds we offer,
we've carefully selected a roster of specialized
investment management firms. Nations Funds Managers
of Distinction(SM) are all seasoned and
well-respected investment firms. We are pleased to
bring this talent together in one place to offer you
a variety of distinct money management styles.
And, our fund family should get even better with the
completion of our merger with Pacific Horizon
Funds -- the largest merger in mutual fund
history -- anticipated for May. Together, the new
Nations Funds family will be able to offer you an
even broader selection of mutual funds.
Of course, customer service continues to be of
tremendous importance to us and, for the second year
in a row, Nations Funds received the Key Honors award
for superior customer support from DALBAR, Inc. -- an
independent evaluator of customer service in the
mutual fund industry. Our commitment is to provide
you with the best products and services, and we will
seek to continue to do so in the coming year.
We are excited about the past year and the
opportunities ahead of us. If you have any questions
or comments on your annual report, please contact us
at 1.800.321.7854 or e-mail your comments to us via
our Web site at www.nationsbank.com/nationsfunds.
Once again, thank you for being a part of the Nations
Funds family.
Sincerely,
<TABLE>
<S> <C>
/s/ A. Max Walker /s/ Robert H. Gordon
A. Max Walker Robert H. Gordon
President and Chairman President
of the Board NationsBanc Advisors, Inc.
</TABLE>
March 31, 1999
P.S. On May 21, 1999, the Nations Funds/Pacific
Horizon Funds merger was successfully completed.
<PAGE> 5
Table
Of
Contents
<TABLE>
<S> <C>
NATIONS FUNDS SPECTRUM 2
ECONOMIC OVERVIEWS 4
PORTFOLIO COMMENTARY
Nations Balanced Assets Fund 9
Nations Value Fund 14
Nations Equity Income Fund 19
Nations Equity Index Fund 24
Nations Marsico Growth & Income Fund 28
Nations Strategic Equity Fund 33
Nations Capital Growth Fund 37
Nations Disciplined Equity Fund 42
Nations Marsico Focused Equities Fund 47
Nations Emerging Growth Fund 53
Nations Small Company Growth Fund 58
FINANCIAL STATEMENTS
Statement of Net Assets 64
Statements of Operations 100
Statements of Changes in Net Assets 102
Schedules of Capital Stock Activity 106
Financial Highlights 118
Notes to Financial Statements 140
</TABLE>
<TABLE>
<S> <C>
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Nations Funds [Dalbar Logo]
Recognized For
Outstanding DALBAR, Inc., is a well-respected research firm
Customer Service that measures customer service levels and
establishes benchmarks in the financial services
In recognition of our industry.
commitment to retail
shareholders through
consistently providing
superior customer service,
Nations Funds was awarded
DALBAR Key Honors in 1997
and 1998.
---------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
THE
NATIONS FUNDS
FAMILY AT A GLANCE
POTENTIAL RETURN
GROWTH & INCOME
------------------
CURRENT INCOME
- ------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY
- ----------------------------------------------
MONEY SHORTER INTERMEDIATE LONGER TERM LARGE
MARKET MATURITY MATURITY DOMESTIC CAPITALIZATION
FUNDS BOND FUNDS BOND FUNDS BOND FUNDS VALUE FUNDS
- ----- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
*Nations *Nations Short- *Nations *Nations *Nations
Prime Fund Intermediate Strategic Fixed Diversified Value Fund
Government Income Fund Income Fund
*Nations Government Fund *Nations
Money Market *Nations *Nations Managed
Fund *Nations Government U.S. Government Value Index
Short-Term Securities Fund Bond Fund Fund
*Nations Income Fund
Treasury Fund *Nations *Nations *Nations
*Nations Short- Intermediate Municipal Balanced Assets
*Nations Tax Term Municipal Municipal Income Fund Fund
Exempt Fund Income Fund Bond Fund
*Nations
*Nations State-Specific
State-Specific Long-Term
Intermediate Municipal Bond
Municipal Bond Funds
Funds
</TABLE>
RISK (VARIABILITY)
2
<PAGE> 7
<TABLE>
<CAPTION>
[NATIONS FUNDS LOGO]
INVESTMENTS FOR A LIFETIME(SM)
POTENTIAL RETURN
AGGRESSIVE GROWTH
-----------------------------------------------------------------------------
GROWTH
- -------------------------------------------------------------------
GROWTH & INCOME
- -------------------------------------------
LARGE
CAPITALI- LARGE MID SMALL REGION-SPECIFIC
ZATION CAPITALIZATION INTERNATIONAL CAPITALIZATION CAPITALIZATION INTERNATIONAL
FUNDS GROWTH FUNDS EQUITY FUNDS FUNDS FUNDS FUNDS
- ----- ------------ ------------ ----- ----- -----
<S> <C> <C> <C> <C> <C>
*Nations *Nations *Nations *Nations *Nations *Nations
Marsico Growth Marsico Focused International Emerging Small Company Emerging
& Income Fund Equities Fund Value Fund Growth Fund Growth Fund Markets Fund
*Nations *Nations *Nations *Nations
Equity Disciplined International Managed
Index Fund Equity Fund Growth Fund SmallCap
Index Fund
*Nations *Nations *Nations
Managed Capital Growth International *Nations
Index Fund Fund Equity Fund Managed
SmallCap
*Nations *Nations Value Index
Equity Strategic Equity Fund
Income Fund Fund
RISK (VARIABILITY)
</TABLE>
LIFEGOAL PORTFOLIOS
*LifeGoal Income And Growth Portfolio
*LifeGoal Balanced Growth Portfolio
*LifeGoal Growth Portfolio
3
<PAGE> 8
Economic
Overview
The U.S. economy expanded strongly and the stock
market surged for the 12 months ending March 31,
1999.
Declining interest rates, confident consumers,
healthy corporate capital spending and an expanding
housing industry all helped propel the economy and
fuel a persistent rally in stocks, particularly of
large-capitalization companies. It was an
event-filled period, punctuated by abrupt changes in
investor sentiment and even some signs of a slowing
of growth in the middle of the year. Through it all,
the nation's Gross Domestic Product (the market value
of the goods and services produced) grew. In 1998,
the growth rate was an estimated 3.6%, only slightly
less than the healthy 3.9% growth rate of 1997.
Upon closer examination, the story of the 12-month
period actually was a tale of two economies -- a
strong consumer economy and a weak industrial sector.
Solid employment growth and increased real disposable
personal income translated to a high level of
consumer confidence. Industries linked closely to
consumer behavior -- including autos, housing and
retail -- were quite strong. At the same time, a
number of factors contributed to weakness on the
industrial side of the economy. The economic problems
of some of our key trading partners, combined with
the strength of the U.S. dollar, led to sluggishness
in exports. While the evidence remains mixed, the
worst of these problems for industrial industries may
be ending. The most recent view of the National
Association of Purchasing Managers, for example, is
that manufacturing conditions in the U.S. may have
bottomed.
Inflation, as measured by the Consumer Price Index,
averaged 1.5% in 1998, following a 2.3% rise in 1997.
Lower food and energy prices, combined with cheaper
import prices, contributed significantly to the tame
inflation picture. The low inflation rate came
despite a low unemployment rate of 5% or less for
most of the year. In the past, low unemployment
accompanied by growth in money supply has tended to
fuel inflation. However, that did not happen last
year, as concerns about a worldwide credit crunch,
global recession and deflation acted as a brake on
inflation. The U.S. Federal Reserve Board moved away
from its tight monetary policy stance of early 1998
and cut short-term interest rates three successive
times in the fall, easing the availability of credit
and liquidity. As we entered the second calendar
quarter of 1999, economists were debating what the
next move of the Federal Reserve Board might be.
If the economic story during the period was split
into two sections -- consumer and industrial -- the
year in the stock market
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
<PAGE> 9
Economic
Overview continued...
was divided into three periods. For the first seven
months, the market steadily progressed, peaking in
July. Then, the market abruptly reversed course,
diving in August through early October as
international concerns -- starting with the
devaluation of the Russian ruble -- overwhelmed
relatively benign reports about the U.S. economy.
However, the Federal Reserve Board's actions helped
restore confidence, and the market went on to new
highs in late 1998 and early 1999.
The fiscal year also encompassed several different
periods for bond market investors. Earlier in the
year, investor uneasiness about the possibility of a
revival of inflation worried the bond market, and
interest rates tended to rise and bond prices slumped
going into the summer of 1998. That situation changed
dramatically with the Russian economic crisis of
April. Fears about a global economic slowdown drove
investor dollars toward only the highest quality
securities -- principally U.S. Treasuries, and
interest rates fell sharply. This period of investor
anxiety ended in early October, however, as the
Federal Reserve Board's intervention calmed the
markets. For the remainder of the fiscal year,
corporate and mortgage-backed securities -- with
yield spread advantages over U.S.
Treasuries -- tended to return to favor.
International economic forces continue to send mixed
signals. In early 1999, we could see scattered signs
of an economic turnaround in Southeast Asia. Japan
was beginning to reform its banking system, and
investors were waiting to see the impact of an
injection of 40 trillion yen into the banking system.
Japan suffered through its worst economic performance
in 50 years during 1998. The key to its economic
rebound will be how quickly the business community,
consumers and investors regain confidence. Worth
watching will be whether Japan's export industry can
grow. Elsewhere, the international scene provided
additional signs of progress. The International
Monetary Fund (IMF) finally received funding from the
U.S. Congress, easing investor concerns. The
devaluation of the real -- the Brazilian
currency -- seemed to be postponed, but Brazil's
government remained under pressure to carry out
needed economic reforms.
But if U.S. investors found reasons for guarded
optimism in some international developments, they
also found sources for concern. China appeared unable
to meet its ambitious growth targets and Hong Kong's
economy remained under pressure. The world continued
to watch to see whether China would feel pressure to
devalue its currency. Meanwhile, the ability of
Russia to pay its bills remained in doubt and the
Russian domestic political situation raised questions
as Foreign Minister Primakov took over day-to-day
decision-making from an ailing Boris Yeltsin.
5
<PAGE> 10
Economic
Overview continued...
Our outlook for 1999 calls for a possible slowing,
but not reversal, of the domestic economic expansion.
In light of reports of a slowdown in employment
growth, a reduction in capital spending and continued
sluggishness in international trade, we think
economic expansion may have peaked. However, we still
see room for continued growth in 1999 at lower levels
than in 1998, perhaps at a rate of between 3% and
3.5%.
Viewing the domestic stock market in early 1999, the
big question is whether the third quarter of 1998
represented a bottom for earnings and for stock
prices. Given expectations of a slowing of U.S.
economic growth and continued sluggishness in the
global economy, investors are concerned about
corporate earnings expectations for 1999. However, we
do not think the most recent stock market levels
reflected these investor concerns.
In the bond market, we see the potential of a more
stable interest rate climate over the next several
months, with the possibility of less dramatic changes
in investor sentiment than we saw over the past 12
months.
We believe the direction of the markets will depend
greatly on the economy's ability to continue to move
forward at a controlled pace.
C. Thomas Clapp
Chief Equity Investment Officer
TradeStreet Investment Associates, Inc.
March 31, 1999
6
<PAGE> 11
Economic
Overview
The U.S. equity market again demonstrated its
resiliency in the 12-month period ended March 31,
1999. The fiscal year also reaffirmed the importance
for investors of maintaining a long-term perspective
in managing their portfolios. Large-capitalization,
U.S. stocks continued to post strong gains despite a
succession of problems, including the collapse of
Russia's economy, the emergency bailout of a
prominent hedge fund, President Clinton's impeachment
hearings, continued economic malaise in Japan, and
persistent concerns about third world economies.
Through it all, the Standard & Poor's 500 Composite
Stock Price Index returned 18.5% for the 12 months
ended March 31, 1999.*
The stock market's persistence reminds us of Mark
Twain's observation that it is necessary to take the
"long view to see the true shape of the river." Over
the last two decades we have seen many instances in
which investors have been warned to reduce their
equity exposure because of short-term events.
Examples that come to mind include the savings and
loan crisis, "Black Monday" 1987, the collapse in
commercial real estate, the Gulf War, and -- more
recently -- fears of a possible global credit crunch
in late-summer 1998. However, when we look back upon
these events, we find a consistently vibrant U.S.
economy, which created a positive backdrop for equity
returns. Despite a number of negative events, which
in our view were healthy reminders of the risks
inherent in equity investing, the U.S. economy
continues to grow at a healthy rate and to create new
levels of prosperity.
At Marsico Capital Management, our investment process
is anchored by a macroeconomic view incorporating
both shorter-term, cyclical and longer-term, secular
factors. We continue to see a healthy economy in
which inflation is restrained, consumer confidence is
strong, and productivity continues to increase. For
the first time in years, the government has a budget
surplus. The Federal Reserve Board, in our opinion,
has been very conscientious in targeting inflation as
its primary concern. Inflation is one of the most
important "macro" issues we examine when developing
our market outlook because it is one of the greatest
threats to financial assets.
Looking ahead, we believe inflation will remain low.
U.S. companies have demonstrated a consistent ability
to improve quality through productivity gains while
keeping costs low. Additionally, a strong U.S. dollar
reduces the ability of U.S. producers to raise
prices. Investors continue to have high confidence in
Federal Reserve Board Chairman Alan Greenspan and the
ability of the United States to
*The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500
widely held common stocks. It is unavailable for
investment.
Source for all statistical data -- Marsico Capital
Management, LLC
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
7
<PAGE> 12
Economic
Overview continued...
remain a "safe haven" in an uncertain world, which,
incidentally, has created a shortage of low risk U.S.
government debt issues. With this as a backdrop, we
believe it is unlikely that interest rates will
increase.
In summary, we believe the U.S. investing environment
remains attractive -- a strong U.S. economy should
lead to continued earnings growth, while low
inflation, low interest rates, and a strong consumer
create a backdrop for a healthy stock market.
Thomas F. Marsico
Chief Executive Officer
Marsico Capital Management, LLC
March 31, 1999
8
<PAGE> 13
Nations
Balanced Assets
Fund Value Management
Team Commentary*
<TABLE>
<S> <C>
In the following interview, the team shares its views on
Nations Balanced Assets Fund's performance for the 12-month
period ended March 31, 1999, and its outlook for the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT STYLE AND PHILOSOPHY.
The Fund is managed by the Value
Management Team of TradeStreet The Fund seeks to provide shareholders with the potential
Investment Associates, Inc., for solid returns with reduced overall portfolio risk. It
investment sub-adviser to the allocates its assets among a diversified portfolio of
Fund. stocks, fixed-income securities and money market
instruments -- all of which have different return/risk
INVESTMENT OBJECTIVE characteristics. The Fund invests primarily in stocks of
The Fund seeks total return by high-quality companies with favorable long-term fundamentals
investing in equity and fixed and attractive valuations. Its fixed-income holdings consist
income securities. of investment-grade securities.
WHAT ECONOMIC FACTORS OR MARKET OCCURRENCES INFLUENCED THE
PERFORMANCE REVIEW FUND'S PERFORMANCE?
For the 12-month period ended
March 31, 1999, Nations Balanced The stock market, as reflected by the Standard & Poor's 500
Assets Fund Investor A Shares Composite Stock Price Index (S&P 500 Index)***, performed
provided a total return of very well, driven by a favorable environment of low
- -1.36%.** inflation, stable economic growth, the continued global
benefits from the fall of communism, and increased global
trade and competition. Large-capitalization stocks with
stable earnings growth, particularly in the technology,
communications services and health-care industries, were the
performance leaders. However, the spreading impact of a
global economic slowdown, which began in Asia and spread
through emerging markets, undermined the performance of
value stocks. These stocks, which have lower
price-to-earnings (p/e) ratios(+), often tend to be found in
cyclical industries whose fortunes are linked to movements
in the business cycle. Nations Balanced Assets Fund held
many of these value-oriented, cyclical stocks, and this
emphasis held back performance during much of the year. We
believe, however, that the disparity between the performance
of growth
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75% which may apply to
purchases of Investor A Shares. For standardized
performance, please refer to the "Fund Performance"
table.
***The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held common
stocks. It is unavailable for investment.
+The p/e ratio gives investors an idea of how much
they are paying for a company's earnings power.
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
9
<PAGE> 14
Nations
Balanced Assets
Fund Value Management
Team Commentary continued...
<TABLE>
<S> <C>
stocks and of value stocks may have run its course and may
not be repeated. It is worth noting that this performance
disparity was greater in 1998 than it had been in the
previous 50 years.
HOW DID YOU MANAGE THE STOCK PORTION OF THE FUND?(++)
Halfway through the year, we
diversified equity investments to At the beginning of the reporting period, the Fund
reduce the Fund's exposure to emphasized stocks with low p/e ratios in cyclical industries
value stocks in cyclical such as paper, metals, chemicals, energy and consumer
industries, which had suffered cyclicals. Unfortunately, as we noted, these stocks tended
because of fears of a global to be out of favor during 1998.
economic slowdown.
Approximately halfway through the fiscal year, we
diversified the stock portion of the Fund's portfolio to
gain a broader cross-section of the market, including
less-cyclical stocks. This approach helped to recover some
ground as portfolio holdings like Sun Microsystems, Inc.,
International Business Machines Corporation, and Anheuser-
Busch Companies provided strong performance for the Fund.
HOW DID YOU MANAGE THE BOND PORTION OF THE FUND?
We maintained a relatively heavy emphasis on U.S. Treasury
and U.S. agency bonds, which helped performance
considerably. In a period of international uncertainty and
volatility, especially in the fall of 1998, U.S. Treasuries
were the best-performing fixed income asset class across
different maturities. The Fund also benefited from the
relatively high credit quality of its corporate bonds.
Higher-rated corporate bonds outperformed lower-rated
corporate bonds over the reporting period.
WHAT INVESTMENT DECISIONS HINDERED OVERALL PORTFOLIO
PERFORMANCE DURING THE PERIOD?
The global economic slowdown that began in Asia weakened
demand for U.S. exports, particularly in cyclical
industries. The Fund's position early in the fiscal year in
companies such as Olin Corporation, a chemical company, and
AGCO Corporation, an agricultural machinery firm, left it
overly exposed to these international economic problems,
particularly at a time in which there was increased
manufacturing capacity in those industries. The slowdown
also depressed demand for oil and other basic commodities.
++Portfolio holdings and characteristics are subject to
change and may not be representative of current holdings and
characteristics.
</TABLE>
10
<PAGE> 15
Nations
Balanced Assets
Fund Value Management
Team Commentary continued...
<TABLE>
<S> <C>
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THE
COMING YEAR AND HOW ARE YOU POSITIONING THE FUND
ACCORDINGLY?
On the stock side, we have taken several steps.
First, we have underweighted technology stocks relative to
their position in the S&P 500 Index. We believe technology
sector stocks are fully priced and their exceptional
performance in 1998 should fall off during the coming year.
As we approached the end of the fiscal year in March 1999,
technology stocks were selling at an unusually-high 33 times
1999 estimated earnings, with a 15% expected sustainable
growth rate on average. The Fund's remaining technology
holdings are concentrated in dominant companies that we
believe can continue to do well -- companies like Sun
Microsystems, IBM and Intel Corporation.
Second, we have overweighted the financial sector, leaning
more towards the life and annuity insurance companies than
the banks. We believe the insurance industry is at the
beginning of a mergers and consolidation phase, much like
the banking industry was 10 years ago. Insurance companies
also are moving to become strong competitors in the
promising asset-gathering business.
Third, we have increased the Fund's weighting in the energy
sector to an over-weighted position. We believe the Fund
will benefit from an expected increase in oil prices over
the coming months. In addition, we continue to overweight
the utilities area, believing that industry consolidation,
attractive valuations and strong dividend yields will help
performance.
Finally, we are adding to the most out-of-favor
sector -- basic materials -- with the addition of several
steel companies that would benefit from higher steel prices.
We believe that the eventual recovery in the emerging
economies also should be a positive influence.
On the bond side of the portfolio, we are optimistic that
the Fund's corporate and asset-backed holdings will perform
well in the coming months because of the continued strength
of the U.S. economy. However, we continue to watch the
economy and the equity markets closely, as any large
downturn in stocks could lead to renewed weakness in
corporate bonds and asset-backed fixed-income securities. As
we learned in late 1998, the international markets can
always provide unwelcome surprises. However, with the
outlook for continued U.S. economic strength, we retain a
positive outlook for fixed income performance for the
remainder of 1999.
</TABLE>
11
<PAGE> 16
Nations
Balanced Assets
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
2.6% Electric Power
2.7% Federal National Mortgage
Association (FNMA)
Certificates
3.4% Drugs
4.7% Insurance
5.0% Oil - International
5.3% Utilities - Telephone
7.0% Computer Related
7.9% Banking and Finance
15.1% U.S. Treasury Obligations
46.3% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<C> <S> <C>
- --------------------------------------------
1 Sun Microsystems, Inc. 2.0%
- --------------------------------------------
2 Lincoln National Corporation Ltd. 1.9%
- --------------------------------------------
3 Mellon Bank Corporation 1.6%
- --------------------------------------------
4 BP Amoco plc, ADR 1.5%
- --------------------------------------------
5 United Technologies Corporation 1.5%
- --------------------------------------------
6 AT&T Corporation 1.5%
- --------------------------------------------
7 Bristol-Myers Squibb Company 1.5%
- --------------------------------------------
8 CIGNA Corporation 1.5%
- --------------------------------------------
9 Wellpoint Health Networks, Inc. 1.4%
- --------------------------------------------
10 Schering-Plough Corporation 1.4%
- --------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
12
<PAGE> 17
Nations
Balanced Assets
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S
BALANCED ASSETS $19,444 500 INDEX $35,682 LIPPER BALANCED FUNDS UNIVERSE $22,044
----------------------- ----------------- --------------------------------------
<S> <C> <C> <C>
Oct. 2 1992 9425.00 10000.00 10000.00
1992 9776.00 10504.00 10396.00
10179.00 10963.00 10830.00
10431.00 11017.00 11003.00
10659.00 11301.00 11387.00
1993 10726.00 11563.00 11548.00
10381.00 11125.00 11178.00
10050.00 11172.00 11058.00
10441.00 11718.00 11387.00
1994 10369.00 11716.00 11269.00
10955.00 12857.00 11984.00
11862.00 14085.00 12862.00
12491.00 15204.00 13575.00
1995 13070.00 16120.00 14146.00
13504.00 16985.00 14523.00
13864.00 17748.00 14875.00
14178.00 18296.00 15279.00
1996 14946.00 19820.00 16114.00
15148.00 20351.00 16118.00
16679.00 23907.00 17786.00
17997.00 25695.00 18992.00
1997 18137.00 26432.00 19233.00
19713.00 30120.00 20706.00
19408.00 31114.00 20932.00
17657.00 28018.00 19590.00
1998 19637.00 33986.00 21817.00
Mar. 31 1999 19444.00 35682.00 22044.00
<CAPTION>
LEHMAN AGGREGATE BOND
INDEX $15,554
---------------------
<S> <C>
Oct. 2 1992 10000.00
1992 10027.00
10441.00
10718.00
10998.00
1993 11004.00
10688.00
10578.00
10643.00
1994 10683.00
11222.00
11905.00
12138.00
1995 12655.00
12431.00
12502.00
12734.00
1996 13116.00
13042.00
13521.00
13970.00
1997 14380.00
14605.00
14947.00
15579.00
1998 15632.00
Mar. 31 1999 15554.00
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
Investor A Shares at NAV** (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S
BALANCED ASSETS $20,630 500 INDEX $35,682 LIPPER BALANCED FUNDS UNIVERSE $22,044
----------------------- ----------------- --------------------------------------
<S> <C> <C> <C>
Oct. 2 1992 10000 10000 10000
1992 10372 10504 10396
10800 10963 10830
11067 11017 11003
11310 11301 11387
1993 11361 11563 11548
11014 11125 11178
10668 11172 11058
11078 11718 11387
1994 11001 11716 11269
11623 12857 11984
12585 14085 12862
13254 15204 13575
1995 13867 16120 14146
14328 16985 14523
14710 17748 14875
15043 18296 15279
1996 15858 19820 16114
15072 20351 16118
17697 23907 17786
19095 25695 18992
1997 19244 26432 19233
20916 30120 20706
20592 31114 20932
15734 28018 19590
1998 20835 33986 21817
Mar. 31 1999 20630 35682 22044
<CAPTION>
LEHMAN AGGREGATE BOND
INDEX $15,554
---------------------
<S> <C>
Oct. 2 1992 10000
1992 10027
10441
10718
10998
1993 11004
10688
10578
10643
1994 10683
11222
11905
12138
1995 12655
12431
12502
12734
1996 13116
13042
13521
13970
1997 14380
14605
14947
15579
1998 15632
Mar. 31 1999 15554
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
SINCE INCEPTION NAV** MOP*
(10/2/92 through
3/31/99) 11.80% 10.78%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Balanced
Assets Fund from the
inception of the share
class. Figures for the
Standard & Poor's 500
Composite Stock Price Index
(Standard & Poor's 500
Index), an unmanaged index
of 500 widely held common
stocks, include reinvestment
of dividends. Figures for
the Lehman Aggregate Bond
Index, which is an unmanaged
index comprised of the
Government Corporate Bond
Index, the Asset-Backed
Securities Index and the
Mortgage-Backed Securities
Index and includes U.S.
Treasury issues, agency
issues, corporate bond
issues and mortgage-backed
issues include reinvestment
of dividends. Funds included
in the Lipper Balanced Funds
Universe have a primary
objective of conserving
principal by maintaining at
all times a balanced
portfolio of both stocks and
bonds. Typically, the
stock/bond ratio ranges
around 60%/40%. It is not
possible to invest in the
Indexes or Lipper Universe.
The performance of Primary
A, Investor B and Investor C
Shares may vary based on the
differences in sales loads
and fees paid by the
shareholders investing in
each class.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date 9/30/92 10/2/92 10/2/92 6/7/93 6/7/93 10/2/92 10/2/92
- ----------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE -1.20% -1.36% -7.04% -2.13% -6.65% -2.17% -3.07%
- ----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 13.16% 12.92% 10.72% 12.21% 11.50% 12.30% 12.30%
5 YEARS 13.62% 13.38% 12.04% 12.71% 12.47% 12.68% 12.68%
SINCE INCEPTION 12.03% 11.80% 10.78% 11.22% 11.11% 11.08% 11.08%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
13
<PAGE> 18
Nations
Value
Fund Value Management
Team Commentary*
<TABLE>
<S> <C>
In the following interview, the team shares its views on
Nations Value Fund's performance for the 12-month period
ended March 31, 1999, and its outlook for the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
The Fund is managed by the Value
Management Team of TradeStreet The investment philosophy and style of Nations Value Fund is
Investment Associates, Inc., based on the premise that a well diversified portfolio of
investment sub-adviser to the undervalued companies with low prices relative to their
Fund. expected earnings should, over time, outperform the overall
market. We also believe this strategy should incur
INVESTMENT OBJECTIVE lower-than-average market risk and provide a cushion during
The Fund seeks growth of capital market declines.
by investing in companies that are
believed to be undervalued. WHAT ECONOMIC FACTORS OR MARKET OCCURRENCES INFLUENCED THE
FUND'S PERFORMANCE?
PERFORMANCE REVIEW
For the 12-month period ended The stock market, as reflected in the Standard & Poor's 500
March 31, 1999, Nations Value Fund Composite Stock Price Index (S&P 500 Index)***, surged ahead
Investor A Shares provided during the 12-month period, driven by continued low
shareholders with a total return inflation, stable economic growth and increased global trade
of 3.96%.** and competition. Growth stocks, particularly in technology,
communications services and health-care led the market's
performance. In this environment, investors were less
attracted to value-oriented companies that tend to be
emphasized by the Fund. The performance of these companies,
which typically have lower price-to-earnings (p/e) ratios(+)
and often are in more cyclical industries, was held back by
fears of the impact of the global financial crisis that
began in Asia. In fact, the disparity between the
performance of growth stocks and of value stocks during 1998
was as large as has been seen in 50 years. We believe,
however, that this recent extreme divergence in performance
between growth stocks and value stocks may have run its
course and is not likely to continue.
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75%, which may apply to
purchases of Investor A Shares. For standardized
performance, please refer to the "Fund Performance"
table.
***The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held common
stocks. It is unavailable for investment.
+The p/e ratio gives investors an idea of how much
they are paying for a company's earnings power.
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
14
<PAGE> 19
Nations
Value
Fund Value Management
Team Commentary continued...
<TABLE>
<S> <C>
WHAT PARTICULAR SECTORS OR STOCKS WERE FAVORABLE FOR THE
While the stock market, in FUND?(++)
general, favored growth stocks
over value stocks during the The Fund's performance, relative to other value funds, was
reporting period, we believe this helped by our discipline requiring a diversified portfolio
tendency may have run its course, across all economic sectors. We believe this
with opportunities presenting diversification, in addition to supporting performance,
themselves for value investing. reduced relative market risk.
The Fund ended the year by modestly underweighting
technology stocks, while overweighting stocks in the
financial services, utilities and energy industries.
In technology, we believe that while many technology stock
valuations were relatively high, strong fundamentals
justified the prices of a few large-capitalization companies
owned by the Fund, including Sun Microsystems, Inc.,
International Business Machines Corporation and Intel
Corporation. All three companies provided strong performance
during the past year.
The financial sector represented the largest portion of the
Fund at the end of the fiscal year, at 18.9% of total
assets. Our strategy was to diversify among large and
regional banks and to emphasize insurance companies,
including life, annuity and HMO businesses, with more
attractive valuations than many banks. This strategy helped
performance, as the Fund's holdings in finance outperformed
the S&P 500 Index's finance sector for the 12-month period.
We have started the new fiscal year with high expectations
for holdings such as CIGNA Corporation, Lincoln National
Corporation Ltd., Hartford Financial Services Group, Inc.,
Chase Manhattan Corporation and Paine Webber Group, Inc.
In addition to technology and finance, communication
services holdings provided strong performance for the year.
Stocks supporting performance included BellSouth Corporation
and SBC Communications.
Relative performance also was helped by our decision to de-
emphasize basic materials stocks -- in industries such as
steel and chemicals. This was the worst-performing sector in
the S&P 500 Index during 1998 -- the only sector with a
decline.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
In general, traditional growth-oriented sectors such as
technology, health-care and consumer staples posed the most
difficulty for the Fund, principally because their high
stock valuations tended to be
++Portfolio holdings and characteristics are subject to
change and may not be representative of current holdings and
characteristics.
</TABLE>
15
<PAGE> 20
Nations
Value
Fund Value Management
Team Commentary continued...
<TABLE>
<S> <C>
incompatible with our investment strategy. The market's
best-performing stocks during the year tended to be in those
sectors -- large companies with high p/e ratios. These were
companies like Dell Computer Corporation and pharmaceutical
giant Pfizer Inc. The Fund normally avoids or de-emphasizes
these companies because its value discipline emphasizes
stocks with low p/e ratios.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THE
COMING YEAR AND HOW ARE YOU POSITIONING THE FUND
ACCORDINGLY?
First, we have underweighted technology stocks,
concentrating on those stocks that we believe should
continue to perform well because of their strong, dominant
positions. These include companies such as Sun Microsystems,
IBM and Intel Corporation. However, we believe technology
stocks, in general, are fully valued and not likely to
repeat their impressive performance of the past year. At the
end of the fiscal year, this sector was selling at an
astounding 33 times 1999 estimated earnings, with a 15%
expected sustainable growth rate on average.
Second, we have overweighted the financial sector, leaning
more towards the life and annuity insurance companies than
the banks. We believe the insurance industry is only at the
beginning of a consolidation phase, much like the banking
industry was 10 years ago. Insurance companies also are
moving to become strong competitors in the promising
asset-gathering business.
Third, we have overweighted the energy sector, believing the
Fund can benefit from expected increases in oil prices. In
addition, we continue to overweight utilities, believing
that industry consolidation, attractive valuations and
strong dividend yields should help performance.
Finally, we are adding to the most out-of-favor sector,
basic materials, with the addition of several steel
companies that could benefit from the possibility of higher
steel prices. We believe the eventual recovery in the Asia
and other emerging economies also should support
performance.
</TABLE>
16
<PAGE> 21
Nations
Value
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
3.1% Medical Services
3.3% Financial Services
3.6% Retail - General
3.9% Electric Power
5.1% Drugs
7.1% Insurance
7.7% Oil - International
8.3% Utilities - Telephone
8.5% Banking
10.4% Computer Related
39.0% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<C> <S> <C>
- --------------------------------------------
1 Lincoln National Corporation Ltd. 3.0%
- --------------------------------------------
2 Sun Microsystems, Inc. 2.9%
- --------------------------------------------
3 Mobil Corporation 2.5%
- --------------------------------------------
4 BP Amoco plc, ADR 2.5%
- --------------------------------------------
5 Bristol-Myers Squibb Company 2.3%
- --------------------------------------------
6 CIGNA Corporation 2.3%
- --------------------------------------------
7 Schering-Plough Corporation 2.2%
- --------------------------------------------
8 United Technologies Corporation 2.2%
- --------------------------------------------
9 Mellon Bank Corporation 2.1%
- --------------------------------------------
10 AT&T Corporation 2.1%
- --------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
<PAGE> 22
Nations
Value
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 LIPPER GROWTH
VALUE $36,267 INDEX $47,067 & INCOME FUNDS UNIVERSE $36,042
------------- ---------------------- -------------------------------
<S> <C> <C> <C>
Dec. 6 1989 9425 10000 10000
1989 9455 10185 10097
9526 9878 9843
10022 10500 10355
8810 9057 8988
1990 9789 9869 9654
11103 11303 11034
11101 11277 11009
11589 11880 11626
1991 12322 12875 12456
12393 12550 12474
12459 12788 12514
12595 13191 12824
1992 13199 13856 13604
13829 14461 14254
14147 14532 14391
14769 14907 14902
1993 15319 15253 15258
14920 14675 14786
14800 14736 14742
15051 15457 15369
1994 14845 15454 15138
16224 16959 16366
17846 18579 17680
19272 20056 18978
1995 20157 21263 19900
21159 22405 21064
21984 23411 21789
22520 24134 22442
1996 24360 26145 24148
24926 26845 24428
28071 31535 27946
31285 33894 30450
1997 30766 34867 30693
34449 39731 34291
34428 41042 34366
30186 36958 30074
1998 36040 44830 35415
Mar. 31 1999 36267 47067 36042
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
Investor A Shares at NAV** (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 LIPPER GROWTH
VALUE $37,997 INDEX $47,067 & INCOME FUNDS UNIVERSE $36,042
------------- --------------------- -------------------------------
<S> <C> <C> <C>
Dec. 6 1989 10000 10000 10000
1989 10032 10185 10097
10107 9878 9843
10634 10500 10355
9347 9057 8988
1990 10387 9869 9654
11780 11303 11034
11778 11277 11009
12296 11880 11626
1991 13073 12875 12456
13149 12550 12474
13219 12788 12514
13363 13191 12824
1992 14004 13856 13604
14672 14461 14254
15010 14532 14391
15670 14907 14902
1993 16253 15253 15258
15831 14675 14786
15702 14736 14742
15969 15457 15369
1994 15751 15454 15138
17214 16959 16366
18935 18579 17680
20448 20056 18978
1995 21387 21263 19900
22450 22405 21064
23325 23411 21789
23894 24134 22442
1996 25847 26145 24148
26446 26845 24428
29784 31535 27946
33194 33894 30450
1997 32643 34867 30693
36550 39731 34291
36528 41042 34366
32028 36958 30074
1998 38238 44830 35415
Mar. 31 1999 37997 47067 36042
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
SINCE INCEPTION NAV** MOP*
(12/6/89 through
3/31/99) 15.41% 14.68%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Value Fund
from the inception of the
share class. Figures for the
Standard & Poor's 500
Composite Stock Price Index
(Standard & Poor's 500
Index), an unmanaged index
of 500 widely held common
stocks, include reinvestment
of dividends. Funds included
in the Lipper Growth and
Income Funds Universe
combine a growth of earnings
orientation and an income
requirement for level and/or
rising dividends. It is not
possible to invest in the
Index or Lipper Universe.
The performance of Primary
A, Investor B and Investor C
Shares may vary based on the
differences in sales loads
and fees paid by the
shareholders investing in
each class.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date 9/19/89 12/6/89 12/6/89 6/7/93 6/7/93 6/17/92 6/17/92
- ---------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 4.15% 3.96% -2.04% 3.11% -1.44% 3.39% 2.48%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 19.43% 19.17% 16.85% 18.39% 17.67% 18.67% 18.67%
5 YEARS 19.39% 19.14% 17.73% 18.44% 18.23% 18.50% 18.50%
SINCE INCEPTION -- 15.41% 14.68% 16.95% 16.87% 16.58% 16.58%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
18
<PAGE> 23
Nations
Equity Income
Fund Structured Products Management
Team Commentary*
<TABLE>
<S> <C>
In the following interview, the team shares its views on
Nations Equity Income Fund's performance for the 12-month
period ended March 31, 1999, and its outlook for the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT STYLE AND PHILOSOPHY.
The Fund is managed by the
Structured Products Management The Fund seeks to provide returns comparable to the Standard
Team of TradeStreet Investment & Poor's 500 Composite Stock Price Index (S&P 500 Index)***
Associates, Inc., investment over time, but to accomplish this with less risk than in the
sub-adviser to the Fund. overall market. We seek to emphasize investments in
INVESTMENT OBJECTIVE high-quality companies with above-average dividends. With
The Fund seeks current income and this strategy, we hope to capture most of the returns in
growth of capital by investing rising markets, while avoiding the full impact of falling
primarily in companies with above- markets.
average dividend yields.
PERFORMANCE REVIEW During the fiscal year, we changed the Fund's investment
For the 12-month period ended approach to make Fund performance more consistent with that
March 31, 1999, Nations Equity of the benchmark S&P 500 Index. Prior to January of 1999,
Income Fund Investor A Shares the Fund took a deep-value approach to stock selection,
provided a total return of primarily buying stocks trading at significantly lower
- -9.87%.** prices, as reflected in measures such as price-to-earnings
ratios(+), than the market as a whole. We have modified that
approach to remove the emphasis on deep-value stocks, while
retaining a focus on stocks with above-average dividends and
low potential price volatility. We believe this revised
approach will give the Fund flexibility to participate more
fully in the investment opportunities of the stock market.
WHAT WERE THE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
REPORTING PERIOD?
During the 12-month period ended March 31, 1999, the
domestic economy provided a favorable backdrop for many
investment strategies, particularly those emphasizing
large-capitalization growth companies. The U.S. economy grew
at a controlled rate, corporate profits slowed, but remained
positive, and inflation remained benign.
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75%, which may apply to
purchases of Investor A Shares. For standardized
performance, please refer to the "Fund Performance"
table.
***The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held common
stocks. It is unavailable for investment.
+The price-to-earnings ratio gives investors an idea
of how much they are paying for a company's earnings
power.
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
19
<PAGE> 24
Nations
Equity Income
Fund Structured Products Management
Team Commentary continued...
<TABLE>
<S> <C>
Most stock indices posted solid gains. Large-capitalization
stocks with stable earnings growth, particularly in the
technology, communications services and health-care
industries, were the performance leaders. However, the
spreading impact of a global economic slowdown, which began
in Asia and spread through emerging markets, undermined the
performance of value stocks, with lower price-to-earnings
ratios, and cyclical stocks, whose fortunes are linked to
changes in the business cycle.
HOW DID THESE ECONOMIC CONDITIONS AFFECT FUND PERFORMANCE?
While it was a favorable environment for growth stocks,
especially for the "mega blue chip" companies with market
capitalizations of more than $25 billion, it did not favor
the deep-value stocks we emphasized until late in the fiscal
year. We believed many of the companies that became the
performance leaders of 1998 had stock price valuations that
were too high and posed too much risk if the market were to
slump. As a consequence, the Fund did not participate in
their performance until late in the fiscal year, when we
adjusted our approach to allow more investments in large
company growth stocks.
WHAT INVESTMENT DECISIONS CONTRIBUTED TO THE FUND'S
The Fund's investments in several PERFORMANCE?(++)
stocks of transportation and
services companies were the The Fund's exposure to the technology sector, while limited,
biggest positive contributors to supported performance during the year, while the
performance. Several successful communications, health-care, and consumer cyclical sectors
investments offered both also contributed positively. Communications companies owned
attractive valuations and by the Funds included ALLTEL Corp., AT&T Corporation and
competitive dividend yields. Frontier Corp. Among the Fund's holdings in the consumer
cyclicals sector, United Technologies (owner of Carrier
Heating) was the best performing company.
Our decision to underweight stocks of the basic materials
companies also helped performance, as this more-cyclical
sector lagged the overall market in performance.
DID THE FUND INVEST IN BONDS? IF SO, HOW DID THEY IMPACT
PERFORMANCE?
The Fund invested approximately 5% of its assets in U.S.
Treasury securities. This decision was successful as
declining interest rates and a preference for high-quality
bonds by many investors resulted in a rally in U.S. Treasury
bonds.
++Portfolio holdings are subject to change and may not be
representative of current holdings.
</TABLE>
20
<PAGE> 25
Nations
Equity Income
Fund Structured Products Management
Team Commentary continued...
<TABLE>
<S> <C>
WHAT INVESTMENT DECISIONS HINDERED OVERALL PORTFOLIO
PERFORMANCE DURING THE PERIOD?
The Fund's emphasis on deep-value stocks during most of the
reporting period was the primary factor holding back
performance. It was a year in which growth stocks were
favored, including many trading at extremely high
valuations. The Fund's de-emphasis of technology stocks,
which were the performance leaders for the year, also
hindered performance. We avoided many technology companies
because of both their high valuations and their low or
non-existent dividend yields.
WHAT IS YOUR INVESTMENT OUTLOOK FOR THE REMAINDER OF 1999?
Looking ahead, we expect the stock market to perform well,
but not to repeat the gains of the last 12 months. We
believe an economy with low inflation, high company
productivity and overall efficiency has created a favorable
environment for investing in stocks. We also anticipate that
investors will begin to focus more closely on valuations in
a period of moderate growth and slowing corporate profit
growth. Although we may not see as good a year as we did
this past year for the market as a whole, we still
anticipate positive returns from stocks relative to other
types of investments. With this outlook, we expect to see
investment opportunities for the Fund's modified
stock-selection process.
</TABLE>
21
<PAGE> 26
Nations
Equity Income
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
3.1% Retail - General
3.4% Medical Products and Supplies
3.4% Insurance
3.6% Oil - International
3.7% Computer Software
5.5% Computer Related
6.1% Electric Power
6.6% Banking
8.2% Utilities - Telephone
56.4% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<S> <C> <C>
- ----------------------------------------------
1 General Electric Company 2.7%
- ----------------------------------------------
2 Microsoft Corporation 2.7%
- ----------------------------------------------
3 Johnson & Johnson 2.6%
- ----------------------------------------------
4 International Business Machines
Corporation 2.5%
- ----------------------------------------------
5 AT&T Corporation 2.5%
- ----------------------------------------------
6 Hewlett-Packard Company 2.4%
- ----------------------------------------------
7 May Department Stores Company 2.0%
- ----------------------------------------------
8 ALLTEL Corporation 1.8%
- ----------------------------------------------
9 Intel Corporation 1.8%
- ----------------------------------------------
10 Banc One Corporation 1.6%
- ----------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
22
<PAGE> 27
Nations
Equity Income
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
EQUITY INCOME $25,065 INDEX $40,174 LIPPER EQUITY INCOME FUNDS UNIVERSE $29,662
--------------------- --------------------- -------------------------------------------
<S> <C> <C> <C>
Apr. 16 1991 9425.00 10000.00 10000.00
9321.00 9625.00 9783.00
10007.00 10140.00 10403.00
1991 10740.00 10990.00 10991.00
10650.00 10712.00 11012.00
10927.00 10915.00 11268.00
11376.00 11259.00 11575.00
1992 11790.00 11826.00 12111.00
12398.00 12343.00 12885.00
12486.00 12404.00 13046.00
12946.00 12724.00 13629.00
1993 13259.00 13019.00 13825.00
12729.00 12526.00 13321.00
12960.00 12578.00 13373.00
13451.00 13193.00 13903.00
1994 13087.00 13191.00 13568.00
14197.00 14475.00 14628.00
15051.00 15858.00 15602.00
15962.00 17118.00 16721.00
1995 16667.00 18149.00 17706.00
17614.00 19124.00 18543.00
18250.00 19982.00 19074.00
18746.00 20600.00 19612.00
1996 19939.00 22316.00 21106.00
20311.00 22914.00 21389.00
22735.00 26917.00 24122.00
24985.00 28930.00 26170.00
1997 25068.00 29760.00 26798.00
27810.00 33912.00 29513.00
26584.00 35031.00 29203.00
22663.00 31545.00 26248.00
1998 25883.00 38265.00 29778.00
Mar. 31 1999 25065.00 40174.00 29662.00
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
Investor A Shares at NAV** (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
EQUITY INCOME $26,594 INDEX $40,174 LIPPER EQUITY INCOME FUNDS UNIVERSE $29,662
--------------------- --------------------- -------------------------------------------
<S> <C> <C> <C>
Apr. 16 1991 10000.00 10000.00 10000.00
9890.00 9625.00 9783.00
10618.00 10140.00 10403.00
1991 11309.00 10990.00 10991.00
11299.00 10712.00 11012.00
11593.00 10915.00 11268.00
12070.00 11259.00 11575.00
1992 12509.00 11826.00 12111.00
15154.00 12343.00 12885.00
13248.00 12404.00 13046.00
13735.00 12724.00 13629.00
1993 14068.00 13019.00 13825.00
13505.00 12526.00 13321.00
13751.00 12578.00 13373.00
14272.00 13193.00 13903.00
1994 18885.00 13191.00 13568.00
15063.00 14475.00 14628.00
15970.00 15858.00 15602.00
16936.00 17118.00 16721.00
1995 17684.00 18149.00 17706.00
18689.00 19124.00 18543.00
19363.00 19982.00 19074.00
19890.00 20600.00 19612.00
1996 21155.00 22316.00 21106.00
21551.00 22914.00 21389.00
24122.00 26917.00 24122.00
26510.00 28930.00 26170.00
1997 26597.00 29760.00 26798.00
29507.00 33912.00 29513.00
28206.00 35031.00 29203.00
24045.00 31545.00 26248.00
1998 27462.00 38265.00 29778.00
Mar. 31 1999 26594.00 40174.00 29662.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
SINCE INCEPTION NAV** MOP*
(4/16/91 through
3/31/99) 13.08% 12.24%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Equity
Income Fund from the
inception of the share
class. Figures for the
Standard & Poor's 500
Composite Stock Price Index
(Standard & Poor's 500
Index), an unmanaged index
of 500 widely held common
stocks, include reinvestment
of dividends. Funds included
in the Lipper Equity Income
Universe seek relatively
high current income and
growth of income through
investing 60% or more of
their portfolios in
equities. It is not possible
to invest in the Index or
Lipper Universe. The
performance of Primary A,
Investor B and Investor C
Shares may vary based on the
differences in sales loads
and fees paid by the
shareholders investing in
each class.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date 4/11/91 4/16/91 4/16/91 6/7/93 6/7/93 6/17/92 6/17/92
- -------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE -9.40% -9.87% -15.07% -10.49% -14.57% -10.28% -11.10%
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 12.85% 12.48% 10.28% 11.80% 11.10% 12.04% 12.04%
5 YEARS 14.85% 14.51% 13.16% 13.85% 13.61% 13.91% 13.91%
SINCE INCEPTION 13.45% 13.08% 12.24% 12.25% 12.16% 12.64% 12.64%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
23
<PAGE> 28
Nations
Equity Index
FundStructured Products Management
Team Commentary*
<TABLE>
<S> <C>
In the following interview, the team shares its views on
Nations Equity Index Fund's performance for the 12-month
period ended March 31, 1999, and its outlook for the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT STYLE AND PHILOSOPHY.
The Fund is managed by the
Structured Products Management The Fund invests in the stocks that comprise the S&P 500
Team of TradeStreet Investment Index, an unmanaged market-capitalization-weighted index
Associates, Inc., investment consisting of 500 common stocks chosen for market size,
sub-adviser to the Fund. liquidity and industry group representation.
HOW DID THE FUND PERFORM UNDER THE MARKET CONDITIONS THAT
INVESTMENT OBJECTIVE PREVAILED OVER THE PAST 12 MONTHS?
The Fund seeks investment results
that correspond, before fees and Nations Equity Index Fund (Investor A Shares) tracked the
expenses, to the total return of S&P 500 Index for the 12 months ending March 31, 1999,
the Standard & Poor's 500 returning 18.00%, while the Index returned 18.46%. The stock
Composite Stock Price Index (S&P market performed very well during the 12-month period,
500 Index).** driven by a favorable environment of low inflation, low and
declining interest rates and stable economic growth.
PERFORMANCE REVIEW Large-capitalization stocks with stable earnings growth,
For the 12-month period ended particularly in the technology, communications services and
March 31, 1999, Nations Equity health-care industries, were the performance leaders.
Index Fund Investor A Shares However, the spreading impact of a global economic slowdown,
provided a total return of which began in Asia and spread through emerging markets,
18.00%.*** undermined the performance of value stocks, with lower
price-to-earnings ratios(+), and cyclical stocks, whose
fortunes are linked to changes in the business cycle.
WHICH SECTORS PROVED FAVORABLE FOR THE FUND AND WHICH PROVED
UNFAVORABLE?(++)
The technology sector provided significant strength during
the year, while the communications, health-care, and
consumer cyclical sectors also contributed positively.
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held common
stocks. It is unavailable for investment.
***The performance shown includes the effect of fee
waivers by the investment adviser, which have the
effect of increasing total return.
+The price-to-earnings ratio gives investors an idea
of how much they are paying for a company's earnings
power.
++Portfolio characteristics are subject to change and
may not be representative of current characteristics.
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
24
<PAGE> 29
Nations
Equity Index
Fund Structured Products Management
Team Commentary continued...
<TABLE>
<S> <C>
Companies in basic materials, transportation and services
tended to underperform the S&P 500 Index during the year.
However, these sectors did not have major weightings in the
Fund, so the underperformance was reduced.
WHAT DO YOU ANTICIPATE FOR THE COMING YEAR?
We believe we are in a favorable We believe we are in a favorable market environment,
market environment, supported by supported by the combination of low inflation, high company
the combination of low inflation, productivity and a generally efficient economy. Although we
high company productivity and a may not see as strong performance in the coming 12-month
generally efficient economy. period as we did this past year, we still anticipate
positive returns from investing in the domestic stock
market.
</TABLE>
25
<PAGE> 30
Nations
Equity Index
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
3.3% Medical Products and Supplies
3.5% Telecommunications
3.8% Electrical Equipment
4.3% Oil - International
4.7% Financial Services
5.4% Computer Related
5.5% Computer Software
8.3% Banking
8.3% Utilities - Telephone
8.6% Drugs
44.3% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<S> <C> <C>
- ----------------------------------------------
1 Microsoft Corporation 4.3%
- ----------------------------------------------
2 General Electric Company 3.5%
- ----------------------------------------------
3 Wal-Mart Stores, Inc. 2.0%
- ----------------------------------------------
4 Intel Corporation 1.9%
- ----------------------------------------------
5 Merck & Company, Inc. 1.8%
- ----------------------------------------------
6 Pfizer Inc. 1.7%
- ----------------------------------------------
7 Cisco Systems, Inc. 1.7%
- ----------------------------------------------
8 Exxon Corporation 1.7%
- ----------------------------------------------
9 AT&T Corporation 1.6%
- ----------------------------------------------
10 International Business Machines
Corporation 1.6%
- ----------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
26
<PAGE> 31
Nations
Equity Index
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES RETURN CHART]
Investor A Shares (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 LIPPER S&P
EQUITY INDEX $23,501 INDEX $23,201 500 INDEX OBJECTIVE FUNDS UNIVERSE $23,077
-------------------- --------------------- ------------------------------------------
<S> <C> <C> <C>
Oct. 10 1995 10000 10000 10000
1995 10710 10617 10603
11267 11187 11160
11755 11689 11646
12092 12051 11991
1996 13091 13054 12974
13414 13404 13301
15735 15746 15597
16893 16924 16740
1997 17285 17410 17196
19662 19838 19563
20291 20493 20185
18276 18454 18169
1998 22136 22384 22023
Mar. 31 1999 23501 23201 23077
</TABLE>
[PRIMARY A SHARES RETURN CHART]
Primary A Shares (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500 LIPPER S&P
EQUITY INDEX $30,548 INDEX $31,093 500 INDEX OBJECTIVE FUNDS UNIVERSE $30,247
-------------------- --------------------- ------------------------------------------
<S> <C> <C> <C>
Dec. 15 1993 10000.00 10000.00 10000.00
1993 10072.00 10076.00 10072.00
9681.00 9694.00 9678.00
9710.00 9735.00 9710.00
10182.00 10211.00 10169.00
1994 10172.00 10209.00 10157.00
11152.00 11203.00 11130.00
12209.00 12273.00 12174.00
13167.00 13249.00 13123.00
1995 13939.00 14046.00 13897.00
14677.00 14801.00 14626.00
15329.00 15465.00 15264.00
15787.00 15943.00 15716.00
1996 17093.00 17271.00 17005.00
17526.00 17734.00 17433.00
20577.00 20832.00 20442.00
22114.00 22390.00 21941.00
1997 22684.00 23033.00 22537.00
25831.00 26246.00 25641.00
26668.00 27112.00 26456.00
24043.00 24415.00 23813.00
1998 29124.00 29615.00 28864.00
Mar. 31 1999 30548.00 31093.00 30247.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
SINCE INCEPTION
(10/10/95 through
3/31/99) 27.41%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares and Primary A Shares
of Nations Equity Index Fund
from the inception of each
share class. Figures for the
Standard & Poor's 500
Composite Stock Price Index
(Standard & Poor's 500
Index), an unmanaged index
of 500 widely held common
stocks, include reinvestment
of dividends. Funds included
in the Lipper S&P 500 Index
Objective Funds Universe are
passively managed,
limited-expense (adviser fee
no higher than .50%) funds
designed to replicate the
performance of the Standard
& Poor's 500 on a reinvested
basis. It is not possible to
invest in the Index or
Lipper Universe.
[CHART LEGEND]
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
SINCE INCEPTION
(12/15/93 through
3/31/99) 23.50%
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Primary A Investor A
<S> <C> <C> <C>
Inception Date 12/15/93 10/10/95
- -----------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 18.26% 18.00%
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 27.68% 27.22%
5 YEARS 25.84% --
10 YEARS
SINCE INCEPTION 23.50% 27.41%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
The performance shown includes the effect of fee waivers by the investment
adviser, which have the effect of increasing total return.
27
<PAGE> 32
Nations
Marsico Growth & Income
Fund Portfolio Manager Commentary*
<TABLE>
<S> <C>
In the following interview, Mr. Marsico shares his views on
Nations Marsico Growth & Income Fund's performance for the
12-month period ended March 31, 1999, and his outlook for
the future.
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Thomas F. Marsico is Portfolio
Manager of Nations Marsico Growth The Fund seeks long-term growth of capital with a limited
& Income Fund and Chief Executive emphasis on income. The Fund invests primarily in
Officer of Marsico Capital large-capitalization equity securities that are selected for
Management, LLC, investment their growth potential. The Fund typically will own 35 to 50
sub-adviser to the Fund. securities, allocated across a variety of economic sectors
and industries. We seek investments in companies with strong
INVESTMENT OBJECTIVE brand franchises, improving financial returns and global
The Fund seeks long-term growth of presences.
capital with a limited emphasis on WHAT WERE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
income. REPORTING PERIOD?
PERFORMANCE REVIEW One of the dominant themes of the 12-month period was the
For the 12-month period ended continuing concern of investors about the effects of the
March 31, 1999, Nations Marsico emerging markets financial crisis, and whether this crisis
Growth & Income Fund Investor A would harm the economies of more developed nations,
Shares provided a total return of including the United States. These concerns peaked in the
24.38%.** wake of Russia's economic collapse in August, when the
Russian government defaulted on part of its external debt.
However, prompt leadership by U.S. Federal Reserve Board
Chairman Alan Greenspan and Secretary of the Treasury Robert
Rubin led to a wave of interest-rate easings in developed
nations, restoring liquidity and confidence to markets
around the world.
In the aftermath of this crisis, the markets once again
focused on the strong economic fundamentals of the U. S.
economy. High productivity, low inflation and low interest
rates coupled with a steady earnings outlook helped propel
the Dow Jones Industrial Average*** to new highs.
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75%, which may apply to
purchasers of Investor A Shares. For standardized
performance, please refer to the "Fund Performance"
table.
***The Dow Jones Industrial Average is a
price-weighted index of 30 of the largest, most
widely held stocks traded on the New York Stock
Exchange. It is unmanaged and unavailable for
investment.
Source for all statistical data -- Marsico Capital
Management, LLC
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
28
<PAGE> 33
Nations
Marsico Growth & Income
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
WHAT IS YOUR INVESTMENT PROCESS?
We believe strongly that there is
no substitute for direct, We believe strongly that there is no substitute for direct,
comprehensive and disciplined comprehensive and disciplined research. Our investment team
research. Our investment team does does not rely on computer-based screening techniques,
not rely on computer-based ratio-driven analysis or Wall Street in order to generate
screening techniques, ratio-driven investment ideas. Rather, we foster creative, innovative
analysis or Wall Street in order thinking, which in turn leads to promising areas that
to generate investment ideas. frequently are not well followed or well understood by other
investors.
In research, our investment team looks for information from
a variety of sources. One source of information is
direct -- we speak regularly with company management to get
its perspective. But we also go outside the company,
surveying customers, competitors, suppliers and distributors
for independent sources of information. In this process, our
central purpose is to uncover information and relationships
that are not obvious under conventional analytical
techniques. Our goal is to be able to act early by using
this independent information when it can provide the maximum
benefit to the Fund's investors.
PLEASE COMMENT ON THE FUND'S PERFORMANCE.(+)
For the 12-month period ending March 31, 1999, the Fund
gained 24.38%. This return compares favorably to the
Standard & Poor's 500 Composite Stock Price Index,(++) the
Fund's primary benchmark, which was up 18.5%. The Fund's
strong performance is even more dramatically shown when
compared to its peer group, the Lipper Growth & Income Funds
Universe,(+++) which returned 5.47% for the period. Nations
Marsico Growth & Income Fund outperformed over 95% of its
peer group (808 funds).
During the period, being in the right sector or industry was
critical to investment success. Technology stocks, for
example, had exceptionally strong performance.
Pharmaceuticals, retail companies, consumer durables and
telephone stocks also did well. In contrast, stocks in
energy, raw materials and precious metals companies lagged
the market.
+Portfolio holdings are subject to change and may not be
representative of current holdings.
++The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged index of 500 widely held common stocks. It is
unavailable for investment.
+++Lipper Inc. is an independent mutual fund performance
monitor. Funds included in the Lipper Growth & Income Funds
Universe combine a growth of earnings orientation and an
income requirement for level and/or rising dividends.
</TABLE>
29
<PAGE> 34
Nations
Marsico Growth & Income
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
Many of the Fund's most successful investments during the
year were in the technology sector. We focused on what we
like to call the 'arms suppliers' to the Internet. These
stocks included EMC Corporation, Lucent Technologies, Inc.,
Cisco Systems, Inc., International Business Machines
Corporation, Dell Computer Corporation and Microsoft
Corporation. These companies all experienced significant
earnings growth from the expansion of Internet. At the same
time, their stock prices did not reach the uncomfortably
high valuations of the "pure-play" Internet stocks.
In August, seeing signs of global financial uncertainty, we
substantially reduced the Fund's exposure to financial
services companies. This allowed the Fund selectively to
rebuild positions in financial companies during the latter
half of the year. We have built up the Fund's positions in
Citigroup Inc., Chase Manhattan Corporation and Fannie Mae.
These companies all have excellent franchises, are well
managed, and -- in our view -- are poised to deliver
attractive earnings growth.
As the economy continued to show signs of strength during
the winter, we increased the Fund's exposure to consumer
stocks, including automobiles and airlines, which we
believed, offered good investment potential in a period of
high consumer confidence. We believe the Fund is well
positioned in these industries with stocks like Ford Motor
Co., General Motors Corporation, UAL Corporation and Delta
Air Lines, Inc. We also continue to favor consumer non-
durable such as McDonald's Corporation and Anheuser-Busch
Companies, Inc.
TELL US ABOUT STOCKS YOU FIND TO BE PARTICULARLY PROMISING.
I'd like to mention two names. First is a company undergoing
a life-cycle change -- General Motors. GM has refocused its
energies on its core automotive business. It plans to spin
off the rest of the Delphi auto parts business, following
the Delphi stock's successful initial public offering. The
company also is merging marketing and operating divisions,
cutting its model offerings, and replacing older plants with
modern factories that need fewer workers.
The second example is an aggressive growth company, Qwest
Communications International Inc. This is a new generation
phone company or -- more accurately -- communications
company. Qwest has spun an international fiber optic cable
network that may address the voice and data transmission and
Internet needs of the 21st century.
</TABLE>
30
<PAGE> 35
Nations
Marsico Growth & Income
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
WHAT ECONOMIC DEVELOPMENTS DO YOU ANTICIPATE DURING THE REST
OF 1999?
Looking ahead, we expect continued low inflation and
declining interest rates to lead to higher price-to-earnings
ratios(#) and higher stock prices. We also expect business
in Asia to show improvement in the next year. Korea and
Thailand are showing signs of stabilization and Japan is
beginning to restructure its financial sector. This more
stable global economy should improve the earnings outlook
for the large capitalization, multinational stocks in which
the Fund invests.
#The price-to-earnings ratio gives investors an idea of how
much they are paying for a company's earnings power.
</TABLE>
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
3.5% Drugs
5.1% Computer Related
5.3% Restaurants and Lodging
6.0% Automobiles and Trucks
6.7% Telecommunications
7.3% Beverages
7.4% Media
7.8% Financial Services
8.4% Transportation
8.7% Banking
33.8% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<S> <C> <C>
- ------------------------------------------------
1 EMC Corporation 4.2%
- ------------------------------------------------
2 Anheuser-Busch Companies, Inc. 3.9%
- ------------------------------------------------
3 Time Warner Inc. 3.8%
- ------------------------------------------------
4 Chase Manhattan Corporation 3.7%
- ------------------------------------------------
5 Citigroup Inc. 3.7%
- ------------------------------------------------
6 Microsoft Corporation 3.5%
- ------------------------------------------------
7 General Motors Corporation 3.2%
- ------------------------------------------------
8 Delta Air Lines, Inc. 3.0%
- ------------------------------------------------
9 Gillette Company 3.0%
- ------------------------------------------------
10 Qwest Communications
International Inc. 2.9%
- ------------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
<PAGE> 36
Nations
Marsico Growth & Income
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
GROWTH STANDARD & POOR'S 500 LIPPER GROWTH
& INCOME $14,103 INDEX $13,499 & INCOME FUNDS UNIVERSE $11,743
---------------- --------------------- -------------------------------
<S> <C> <C> <C>
Dec. 31 1997 9425.00 10000.00 10000.00
11338.00 11395.00 11172.00
12329.00 11771.00 11197.00
10820.00 10600.00 9798.00
1998 13065.00 12858.00 11538.00
Mar. 31 1999 14103.00 13499.00 11743.00
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
Investor A Shares at NAV** (as of 3/31/99)
<TABLE>
<CAPTION>
GROWTH STANDARD & POOR'S 500 LIPPER GROWTH
& INCOME $14,963 INDEX $13,499 & INCOME FUNDS UNIVERSE $11,743
---------------- --------------------- -------------------------------
<S> <C> <C> <C>
Dec. 31 1997 10000.00 10000.00 10000.00
12030.00 11395.00 11172.00
13081.00 11771.00 11197.00
11480.00 10600.00 9798.00
1998 13862.00 12858.00 11538.00
Mar. 31 1999 14963.00 13499.00 11743.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
SINCE INCEPTION NAV** MOP*
(12/31/97 through
3/31/99) 38.17% 31.76%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Marsico
Growth & Income Fund from
the inception of the share
class. Figures for the
Standard & Poor's 500
Composite Stock Price Index
(Standard & Poor's 500
Index), an unmanaged index
of 500 widely held common
stocks, include reinvestment
of dividends. Funds included
in the Lipper Growth &
Income Funds Universe
combine a growth of earnings
orientation and an income
requirement for level and/or
rising dividends. It is not
possible to invest in the
Index or Lipper Universe.
The performance of Primary
A, Investor B and Investor C
Shares may vary based on the
differences in sales loads
and fees paid by the
shareholders investing in
each class.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
Inception Date 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 24.05% 24.38% 17.27% 23.55% 18.55% 23.63% 22.63%
- ------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
SINCE INCEPTION 37.87% 38.17% 31.76% 37.43% 34.45% 37.50% 37.50%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
32
<PAGE> 37
Nations
Strategic Equity
Fund Portfolio Manager Commentary*
<TABLE>
<S> <C>
In the following interview, Mr. Kenneally shares his views
on Nations Strategic Equity Fund's performance since its
inception and his outlook for the future.
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Michael E. Kenneally, CFA, is
Portfolio Manager of Nations Nations Strategic Equity Fund follows a large-capitalization
Strategic Equity Fund and growth-oriented strategy with an added focus on managing
President and Chief Investment risk and minimizing taxes. We seek to identify opportunities
Officer of Bank of America for the Fund by blending fundamental and quantitative
Investment Management. research perspectives, and we concentrate on finding those
NationsBank, N.A., through its select companies believed likely to increase in value due to
division, Bank of America strategic business advantages that create the potential to
Investment Management, is the grow more quickly or over a longer time period than is
investment sub-adviser to the generally expected. This potential may come from a strong
Fund. competitive position or from favorable "macro" prospects
relating to certain long-term strategic themes such as an
INVESTMENT OBJECTIVE aging U.S. population, globalization or innovation.
The Fund seeks long-term, Portfolio decisions are made with long-term consequences in
after-tax returns by investing in mind, so portfolio turnover is normally low and intelligent
a diversified portfolio of common tax-management strategies are used consistent with the
stocks. Fund's objective and policies.
PLEASE COMMENT ON THE FUND'S PERFORMANCE.
PERFORMANCE REVIEW
Since its inception on October 2, From its inception on October 2, 1998 to March 31, 1999,
1998 through March 31, 1999, Nations Strategic Equity Fund (Primary A Shares) provided
Nations Strategic Equity Fund shareholders with a return of 38.65%, substantially
Primary A Shares provided a total outperforming its benchmark, the Standard & Poor's 500
return of 38.65%. Composite Stock Price Index** and its peer group, the Lipper
Growth Funds Universe,*** which returned 29.16% and 28.23%,
respectively.
WHAT PARTICULAR SECTORS OR STOCKS PROVED FAVORABLE FOR THE
FUND?(+)
With few exceptions, all of the Fund's investments performed
as expected. However, the Fund's overweighting of market
leaders in retailing, technology and health-care was also a
major contributor to the Fund's strong relative performance.
In addition, two of the Fund's investments -- Airtouch
Communications, Inc. and Ascend
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held common
stocks. It is unavailable for investment.
***Lipper Inc. is an independent mutual fund
performance monitor. Funds included in the
Lipper Growth Funds Universe normally invest in
companies whose long-term earnings are
expected to grow significantly faster than the
earnings of the stocks represented in the major
unmanaged stock indices.
+Portfolio holdings are subject to change and may not
be representative of current holdings.
Source for all statistical data -- Bank of America
Investment Management.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
33
<PAGE> 38
Nations
Strategic Equity
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
Communications, Inc. -- were acquisition targets and also
helped results. Finally, some other standout performers
included Guidant Corporation, Dell Computer Corporation and
EMC Corporation.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
...most of the Fund's holdings As mentioned, most of the Fund's holdings performed as
performed as expected and our expected and our emphasis on growth sectors -- such as
emphasis on growth sectors -- such technology, health- care and communications -- served
as technology, health-care and shareholders well. The Fund maintained only modest exposure
communications -- served to energy and utility issues, which added value to
shareholders well. investment results since these sectors significantly
underperformed the broader market average. Regarding
specific stocks, the Fund sold shares of two smaller
companies -- Watson Pharmaceuticals and BMC Software,
Inc. -- to soften its capital gains burden.
WHAT ECONOMIC FACTORS MOST INFLUENCED THE FUND'S
PERFORMANCE?
Generally, the U.S. economic climate remained exceptional
and resulted in very strong market and Fund performance
since inception. A general lack of product pricing
flexibility due to global competition and low inflation has
created the best relative growth prospects for innovative
and dominant companies -- the types of companies sought by
and owned in Nations Strategic Equity Fund.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THE
COMING YEAR AND HOW ARE YOU POSITIONING THE FUND
ACCORDINGLY?
We are confidant that the U.S. economy will continue to be
healthy and that select opportunities will remain for
investors. We continue to favor large-company stocks and
particularly like innovative leaders in the technology and
health-care industries. In addition, the Fund is maintaining
exposure to a number of strong multinational franchises, as
well as to companies we believe likely to be beneficiaries
of demographic changes taking place in the world.
</TABLE>
34
<PAGE> 39
Nations
Strategic Equity
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
3.3% Networking Equipment and Products
3.3% Banking
3.5% Telecommunications
4.1% Computer Software
5.4% Retail - Specialty
5.5% Medical Products and Supplies
6.9% Computer Related
8.0% Financial Services
9.0% Utilities - Telephone
10.2% Drugs
40.8% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<S> <C> <C>
- --------------------------------------------
1 Microsoft Corporation 4.1%
- --------------------------------------------
2 General Electric Company 3.3%
- --------------------------------------------
3 Wal-Mart Stores, Inc. 3.1%
- --------------------------------------------
4 Merck & Company, Inc. 2.5%
- --------------------------------------------
5 Pfizer Inc. 2.4%
- --------------------------------------------
6 Intel Corporation 2.4%
- --------------------------------------------
7 MCI Worldcom, Inc. 2.4%
- --------------------------------------------
8 Cisco Systems, Inc. 2.3%
- --------------------------------------------
9 Lucent Technologies, Inc. 2.2%
- --------------------------------------------
10 International Business Machines
Corporation 2.1%
- --------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
35
<PAGE> 40
Nations
Strategic Equity
Fund Performance
GROWTH OF $10,000 INVESTMENT
[PRIMARY A SHARES RETURN CHART]
Primary A Shares (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
STRATEGIC EQUITY $13,865 INDEX $12,916 LIPPER GROWTH FUNDS UNIVERSE $12,808
------------------------ ---------------------- ------------------------------------
<S> <C> <C> <C>
Oct. 2 1998 10000.00 10000.00 10000.00
1998 12882.00 12303.00 12273.00
Mar. 31 1999 13865.00 12916.00 12808.00
</TABLE>
CUMULATIVE TOTAL RETURN
Primary A Shares
SINCE INCEPTION
(10/2/98 through
3/31/99) 38.65%
The chart to the left shows
the growth in value of a
hypothetical $10,000
investment in Primary A
Shares of Nations Strategic
Equity Fund from the
inception of the share
class. Figures for the
Standard & Poor's 500
Composite Stock Price Index
(Standard & Poor's 500
Index), an unmanaged index
of 500 widely held common
stocks, include reinvestment
of dividends. Funds included
in the Lipper Growth Funds
Universe normally invest in
companies whose long-term
earnings are expected to
grow significantly faster
than the earnings of stocks
represented in the major
unmanaged stock indices. It
is not possible to invest in
the Index or Lipper
Universe.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
PRIMARY A
Inception Date 10/2/98
- ----------------------------------------------------------------------------
<S> <C> <C>
TOTAL RETURN SINCE INCEPTION 38.65%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Cumulative total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
36
<PAGE> 41
Nations
Capital Growth
Fund Core Growth Management
Team Commentary*
<TABLE>
<S> <C>
In the following interview, the team shares its views on
Nations Capital Growth Fund's performance for the 12-month
period ended March 31, 1999, and its outlook for the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
The Fund is managed by the Core
Growth Management Team of We believe a stock portfolio of large-capitalization
TradeStreet Investment Associates, companies with superior long-term prospects, purchased at
Inc., investment sub-adviser to reasonable prices, will provide the potential for superior
the Fund. returns over a market cycle. We look for companies that are
well positioned to generate sustainable earnings growth at
INVESTMENT OBJECTIVE rates well above the overall market's growth rate. The Fund
The Fund seeks growth of capital typically invests in companies that are recognized as
by investing in companies that are industry leaders, have strong track records and possess key
believed to have superior earnings competitive advantages. We believe these characteristics can
growth potential. help them sustain superior growth rates and exceed consensus
earnings expectations of market analysts. We particularly
PERFORMANCE REVIEW look for growth companies that can benefit by taking
For the 12-month period ended advantage of trends in the economy such as changing
March 31, 1999, Nations Capital population characteristics, emerging technologies,
Growth Fund Investor A Shares industries undergoing deregulation and changing consumer
provided a total return of behavior.
14.70%.** While the majority of the Fund's holdings are in
large-capitalization stocks, the Fund has the flexibility to
invest selectively in some smaller companies that possess
superior growth potential.
PLEASE COMMENT ON THE FUND'S PERFORMANCE.***
Nations Capital Growth Fund (Investor A Shares) provided
shareholders with a return of 14.70%, outperforming its peer
group, the Lipper Growth Funds Universe, which returned
13.56% for the 12-month period.
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75%,
which may apply to purchases of Investor A Shares.
For standardized performance, please
refer to the "Fund Performance" table.
***Lipper Inc. is an independent mutual fund
performance monitor. Funds included in the
Lipper Growth Funds Universe normally invest in
companies whose long-term earnings are
expected to grow significantly faster than the
earnings of the stocks represented in the major
unmanaged stock indices.
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
37
<PAGE> 42
Nations
Capital Growth
Fund Core Growth Management
Team Commentary continued...
<TABLE>
<S> <C>
WHAT PARTICULAR SECTORS OR STOCKS PROVED FAVORABLE FOR THE
Nations Capital Growth Fund's FUND?(+)
performance benefited from taking
advantage of several trends, The Fund's investments in four areas performed particularly
including: the aging babyboomer well during the 12 months: health-care; technology-market
generation which created increased leaders; telecommunications-related companies; and
demand for health-care products retailers.
and services; growing corporate
spending in information technology The Fund generally overweighted health-care industry
and telecommunications; and robust companies, which were the beneficiaries of several favorable
consumer spending. trends. First, the aging baby boom generation has created
unprecedented demand for quality health care products and
services. Second, in recognition of this demographic factor,
the U.S. Food and Drug Administration (FDA) has expedited
the approval cycle for new therapies and medications, making
it easier to introduce new products and services. Third, the
growth of managed-care programs, with their co-payment
features, has increased the accessibility and affordability
of prescribed medicines. Large drug companies particularly
benefited, including portfolio holdings such as
Schering-Plough Corporation, Pfizer, Inc. and Merck &
Company. The same forces also contributed to strong
performance by another Fund investment, Guidant Corporation,
a medical devices company.
The Fund benefited by owning several dominant technology
companies, including Microsoft Corporation, Cisco Systems,
Inc., Lucent Technologies, Inc. and EMC Corporation. All
achieved superior earnings growth by taking advantage of
their premier competitive positions to expand market share
as corporate information technology spending increased.
The growth of the Internet and wireless communications
helped both service providers and equipment suppliers in the
telecommunications industry. In telecommunications, MCI
Worldcom, AirTouch Communications and Nokia Corporation all
were significant contributors to Fund performance.
Robust consumer spending helped propel performance in the
retail industry. Industry consolidation and a trend toward
tighter financial discipline also helped several retailers
improve their profitability. Best Buy Company, Inc., Lowe's
Companies Inc., Home Depot Inc., Dayton Hudson Corporation
(parent of Target stores) and Office Depot were Fund
holdings that benefited from these trends and produced
superior returns over the period.
+Portfolio holdings are subject to change and may not be
representative of current holdings.
</TABLE>
38
<PAGE> 43
Nations
Capital Growth
Fund Core Growth Management
Team Commentary continued...
<TABLE>
<S> <C>
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
Earnings disappointments and deteriorating prospects for
short-term growth held back the performance of several
holdings, including: HEALTHSOUTH Corporation; Service
Corporation International; Raychem Corporation; Praxair
Incorporated; and Computer Associates International. In
addition, global economic problems and weakness in cyclical
industries hurt the performance of holdings such as
Honeywell Incorporated, Sunstrand Corporation, Dover
Corporation and Federal-Mogul.
In general, the steady decline in oil prices led to
underperformance in energy stocks. The Fund had only modest
exposure to the energy sector, owning Halliburton Company,
Schlumberger Ltd. and Mobil Oil Corporation. However, we
believe these three companies possess above-average
long-term growth prospects relative to their peers.
The Fund benefited from a very WHAT ECONOMIC FACTORS MOST INFLUENCED THE FUND'S
favorable economic environment for PERFORMANCE?
growth funds.
The Fund benefited from a very favorable economic
environment for growth stocks. Specifically, declining
interest rates, low inflation and solid corporate profits
enabled the Fund to experience its strong return.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THE
COMING YEAR AND HOW ARE YOU POSITIONING THE FUND FOR THESE
OPPORTUNITIES?
In the year ahead, we expect the technology sector to
continue to be even more volatile than usual. Continued
uncertainty about the effects of foreign economic problems
may contribute to this volatility. Technology stocks also
may be affected by the "Y2K" problem, which is caused by the
potential inability of some computer systems to accommodate
calendar dates after December 31, 1999. This problem could
slow down some corporate technology spending. We are
constantly exploring a broad list of technology stocks,
taking advantage of stock price fluctuations to identify
investment opportunities where growth results from the
pressure on companies to enhance their productivity through
technology investments.
</TABLE>
39
<PAGE> 44
Nations
Capital Growth
Fund Core Growth Management
Team Commentary continued...
<TABLE>
<S> <C>
We also see continued opportunities in the health-care
sector because of favorable demographic trends, a more
accommodating regulatory environment that encourages the
introduction of new drugs and procedures and the consistent
earnings growth potential of health-care companies.
Finally, many signs point to the continued health and
confidence of the U.S. consumer. Employment is strong, both
income and personal wealth are growing, and interest rates
remain low. We believe these factors should sustain healthy
consumer spending.
</TABLE>
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
4.3% Electrical Equipment
4.3% Media
4.6% Telecommunications
5.3% Networking Equipment and Products
5.4% Medial Products and Supplies
5.6% Financial Services
7.9% Computer Software
9.1% Retail - Specialty
9.5% Drugs
10.0% Computer Related
34.0% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<S> <C> <C>
- ----------------------------------------------
1 General Electric Company 3.5%
- ----------------------------------------------
2 Microsoft Corporation 3.5%
- ----------------------------------------------
3 Cisco Systems, Inc. 3.3%
- ----------------------------------------------
4 Intel Corporation 2.5%
- ----------------------------------------------
5 Sun Microsystems, Inc. 2.5%
- ----------------------------------------------
6 EMC Corporation 2.2%
- ----------------------------------------------
7 Tyco International Ltd. 2.0%
- ----------------------------------------------
8 Ascend Communications, Inc. 2.0%
- ----------------------------------------------
9 TJX Companies Inc. 2.0%
- ----------------------------------------------
10 CBS Corporation 2.0%
- ----------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
40
<PAGE> 45
Nations
Capital Growth
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
CAPITAL GROWTH $28,412 INDEX $35,682 LIPPER GROWTH FUNDS UNIVERSE $30,127
---------------------- --------------------- ------------------------------------
<S> <C> <C> <C>
Oct. 2 1992 9425 10000 10000
1992 10157 10504 10901
10333 10963 11194
10229 11017 11297
10571 11301 11846
1993 10921 11563 12133
10590 11125 11760
10269 11172 11474
10899 11718 12103
1994 10752 11716 11942
11430 12857 12841
12660 14085 14096
13772 15204 15316
1995 13823 16120 15700
14431 16985 16562
15012 17748 17312
15556 18296 17840
1996 16351 19820 18827
16102 20351 18625
18893 23907 21578
20612 25695 23817
1997 21315 26432 23567
24770 30120 26624
25352 31114 27130
21567 28018 23521
1998 27651 33986 28868
Mar. 31 1999 28412 35682 30127
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
Investor A Shares at NAV** (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
CAPITAL GROWTH $30,145 INDEX $35,682 LIPPER GROWTH FUNDS UNIVERSE $30,127
---------------------- --------------------- ------------------------------------
<S> <C> <C> <C>
Oct. 2 1992 10000 10000 10000
1992 10777 10504 10901
10963 10963 11194
10853 11017 11297
11216 11301 11846
1993 11588 11563 12133
11238 11125 11760
10896 11172 11474
11564 11718 12103
1994 11408 11716 11942
12128 12857 12841
13433 14085 14096
14612 15204 15316
1995 14666 16120 15700
15311 16985 16562
15928 17748 17312
16505 18296 17840
1996 17348 19820 18827
17085 20351 18625
20045 23907 21578
21870 25695 23817
1997 22615 26432 23567
26281 30120 26624
26899 31114 27130
22883 28018 23521
1998 29338 33986 28868
Mar. 31 1999 30145 35682 30127
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
SINCE INCEPTION NAV** MOP*
(10/2/92
through 3/31/99) 18.52% 17.45%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Capital
Growth Fund from the
inception of the share
class. Figures for the
Standard & Poor's 500
Composite Stock Price Index
(Standard & Poor's 500
Index), an unmanaged index
of 500 widely held common
stocks, include reinvestment
of dividends. Funds included
in the Lipper Growth Funds
Universe normally invest in
companies whose long-term
earnings are expected to
grow significantly faster
than the earnings of stocks
represented in the major
unmanaged stock indices. It
is not possible to invest in
the Index or Lipper
Universe. The performance of
Primary A, Investor B and
Investor C Shares may vary
based on the differences in
sales loads and fees paid by
the shareholders investing
in each class.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
Inception Date 9/30/92 10/2/92 10/2/92 6/7/93 6/7/93 10/2/92 10/2/92
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 14.99% 14.70% 8.09% 13.86% 9.42% 13.76% 12.87%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 25.57% 25.33% 22.88% 24.34% 23.78% 24.70% 24.70%
5 YEARS 22.08% 21.82% 20.38% 20.89% 20.71% 21.09% 21.09%
SINCE INCEPTION 18.77% 18.52% 17.45% 18.79% 18.72% 17.77% 17.77%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
41
<PAGE> 46
Nations
Disciplined Equity
Fund Structured Products Management
Team Commentary*
<TABLE>
<S> <C>
In the following interview, the team shares its views on
Nations Disciplined Equity Fund's performance for the
12-month period ended March 31, 1999, and its outlook for
the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
The Fund is managed by the
Structured Products Management The premise that earnings drive stock prices underlies
Team of TradeStreet Investment Nations Disciplined Equity Fund's investment philosophy and
Associates, Inc., investment style. We use quantitative techniques to build an equally
sub-adviser to the Fund. weighted portfolio of companies we believe are undervalued
and are most likely to report earnings that exceed
INVESTMENT OBJECTIVE expectations. To follow company earnings trends and
The Fund seeks growth of capital expectations, the team uses a proprietary tracking system
by investing in companies that are that follows a set of established rules for buying, selling
expected to produce significant and valuing stocks.
increases in earnings per share. PLEASE ELABORATE ON THE PROCESS YOU USE TO CHOOSE
INVESTMENTS FOR NATIONS DISCIPLINED EQUITY FUND.
PERFORMANCE REVIEW
For the 12-month period ended As noted, the investment process for the Fund is
March 31, 1999, Nations quantitative and focuses primarily on earnings expectations
Disciplined Equity Fund Investor A and valuations. We use computer models and optimization
Shares provided shareholders with tools to rank various securities based on these and other
a total return of 15.49%.** criteria. We then narrow possible investments to a select
group of securities that meet the earnings expectations and
valuation and other criteria established for the Fund. We
also review companies for financial stability and quality of
earnings.
Nations Disciplined Equity Fund is equally disciplined in
selling securities. Using the same methodologies, we
evaluate those stocks already in the portfolio and sell them
when earnings expectations decline or when a stock appears
to be significantly overvalued.
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75%, which may apply to
purchases of Investor A Shares. For standardized
performance, please refer to the "Fund Performance"
table.
Source for all statistical data: TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
42
<PAGE> 47
Nations
Disciplined Equity
Fund Structured Products Management
Team Commentary continued...
<TABLE>
<S> <C>
PLEASE COMMENT ON THE FUND'S PERFORMANCE.***
Nations Disciplined Equity Fund (Investor A Shares)
substantially outperformed its peer group, the Lipper Growth
Funds Universe. For the 12-month period ended March 31,
1999, the Fund returned 15.49% compared with a return of
13.56% for the Lipper Growth Funds Universe. This strong
competitive performance can be attributed to the
quantitative process and discipline that enables selection
of quality stocks for the portfolio.
WHAT PARTICULAR SECTORS OR STOCKS PROVED FAVORABLE FOR THE
Nations Disciplined Equity Fund FUND?(+)
places primary emphasis on
earnings expectations and stock In absolute terms, the best performing sectors were
valuations in evaluating the technology, health-care and consumer cyclical stocks. On
stocks to buy and to sell. average, the Fund's weightings in those sectors were
approximately equal to the weightings in the Standard &
Poor's 500 Composite Stock Price Index (S&P 500 Index)(++)
sectors in the overall market for the fiscal year.
In the health-care industry, the Fund's holdings appreciated
approximately 20 percentage points above the increase for
the S&P 500 Index health-care sector. One of the best
performers was Allergan, Inc., returning more than 100% for
the 12-month period. Guidant Corporation and Biogen, Inc.
also did well, appreciating more than 70% each.
The Fund's technology holdings likewise did very well, led
by Dell Computer Corporation and Cisco Systems Inc., both of
which had returns of more than 100% for the period.
Strong consumer spending in the U.S. helped drive
performance of the Fund's consumer cyclical stocks. Best Buy
Company, Inc. soared 200% while Lowe's Companies Inc.,
Dayton Hudson Corporation and Staples Inc. each posted
returns of about 50%.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
Even though the Fund had competitive returns overall, some
stock holdings had disappointing earnings and did not meet
expectations. Specifically, USX-U.S. Steel Group Inc. and
Fort James
***Lipper Analytical Services, Inc. is an independent mutual
fund performance monitor. Funds included in the Lipper
Growth Funds Universe normally invest in companies whose
long-term earnings are expected to grow substantially faster
than the earnings of the stocks represented in the major
unmanaged stock indices.
+Portfolio holdings are subject to change and may not be
representative of current holdings.
++The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged index of 500 widely held common stocks. It is
unavailable for investment.
</TABLE>
43
<PAGE> 48
Nations
Disciplined Equity
Fund Structured Products Management
Team Commentary continued...
<TABLE>
<S> <C>
Corporation suffered in the basic materials sector while
energy stocks plunged, pulling down the Fund's holdings in
BJ Services Company. These stocks were sold and replaced
with securities that the model identified as more promising.
WHAT ECONOMIC FACTORS MOST INFLUENCED THE FUND'S
PERFORMANCE?
Throughout the fiscal year, we witnessed a slowing in
corporate earnings growth related to global economic
problems that began with the Asian financial crisis.
However, we still found pockets of strength, particularly in
sectors benefiting from U.S. consumer spending. The Fund was
able to de-emphasize companies hurt by weakness in commodity
prices, while capturing strong performance in the consumer
cyclical, health-care and technology sectors.
DO YOU EXPECT THAT MARKET ENVIRONMENT TO CHANGE?
While the fiscal year saw global financial turmoil and
slowing corporate profits, the remainder of 1999 may witness
a change as Asian-Pacific economies begin to recover and
Latin American economies move beyond the worst of their
crises. The concerted efforts of the seven largest
industrial nations to ease their fiscal policies should help
any potential recovery in emerging economies. A modest
improvement in global demand coupled with reductions in
industrial capacity could lead to better relative
performance in those industries that have been the laggards:
basic materials, energy and capital goods.
HOW ARE YOU POSITIONING THE FUND TO TAKE ADVANTAGE OF THE
MARKET YOU JUST DESCRIBED?
Over the past few months, the quantitative model has begun
to provide clues that attractive acquisition candidates may
be developing in the basic materials, energy and capital
goods sectors. At the end of the fiscal period, however,
companies in the consumer cyclical, financial and technology
sectors continued to be the more attractive candidates for
purchase, based on earnings expectations and valuations. We
will continue to invest the Fund's assets by following the
lead of the quantitative model and analytical process.
</TABLE>
44
<PAGE> 49
Nations
Disciplined Equity
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
3.4% Machinery and Equipment
3.5% Electric Power
4.2% Retail - General
5.5% Oil - Domestic
6.3% Insurance
6.3% Computer Software
7.7% Financial Services
7.8% Retail - Specialty
8.3% Medical Products and Supplies
8.7% Utilities - Telephone
38.3% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<S> <C> <C>
- ----------------------------------------------
1 Microsoft Corporation 3.1%
- ----------------------------------------------
2 Best Buy Company, Inc. 2.8%
- ----------------------------------------------
3 Biogen, Inc. 2.8%
- ----------------------------------------------
4 Allergan, Inc. 2.7%
- ----------------------------------------------
5 Dayton Hudson Corporation 2.7%
- ----------------------------------------------
6 Guidant Corporation 2.7%
- ----------------------------------------------
7 Lexmark International Group,
Inc., Class A 2.6%
- ----------------------------------------------
8 Century Telephone Enterprise,
Inc. 2.6%
- ----------------------------------------------
9 Lowe's Companies Inc. 2.5%
- ----------------------------------------------
10 Capital One Financial
Corporation 2.5%
- ----------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
45
<PAGE> 50
Nations
Disciplined Equity
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
DISCIPLINED EQUITY $26,949 INDEX $32,370 LIPPER GROWTH FUNDS UNIVERSE $26,698
-------------------------- --------------------- ------------------------------------
<S> <C> <C> <C>
Jul. 26 1993 9425 10000 10000
11310 10252 10498
1993 10844 10490 10752
10287 10092 10422
9602 10135 10168
10379 10630 10726
1994 10148 10628 10583
10309 11663 11379
11605 12777 12492
12751 13793 13573
1995 12918 14623 13913
13478 15409 14677
14007 16100 15342
14489 16598 15810
1996 15767 17980 16684
15734 18462 16506
18356 21688 19122
20918 23310 21107
1997 20406 23979 20885
23334 27324 23594
24296 28226 24042
20576 25417 20844
1998 25537 30831 25582
Mar. 31 1999 26949 32370 26698
</TABLE>
[PRIMARY A SHARES RETURN CHART]
Primary A Shares (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
DISCIPLINED EQUITY $43,339 INDEX $35,682 LIPPER GROWTH FUNDS UNIVERSE $30,127
-------------------------- --------------------- ------------------------------------
<S> <C> <C> <C>
Oct. 1 1992 10000 10000 10000
1992 13311 10504 10901
14104 10963 11194
15099 11017 11297
17922 11301 11846
1993 17279 11563 12133
16408 11125 11760
15304 11172 11474
16542 11718 12103
1994 16181 11716 11942
16442 12857 12841
18521 14085 14096
20413 15204 15316
1995 20635 16120 15700
21529 16985 16562
22387 17748 17312
23137 18296 17840
1996 25190 19820 18827
25185 20351 18625
29403 23907 21578
33528 25695 23817
1997 32727 26432 23567
37440 30120 26624
39012 31114 27130
33051 28018 23521
1998 41185 33986 28868
Mar. 31 1999 43339 35682 30127
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
SINCE INCEPTION NAV** MOP*
(7/26/93 through 3/31/99) 20.32% 19.07%
The charts to the left show the growth in
value of a hypothetical $10,000 investment in
Investor A Shares and Primary A Shares of
Nations Disciplined Equity Fund from the
inception of each share class. Figures for
the Standard & Poor's 500 Composite Stock
Price Index (Standard & Poor's 500 Index), an
unmanaged index of 500 widely held common
stocks, include reinvestment of dividends.
Funds included in the Lipper Growth Funds
Universe normally invest in companies whose
long-term earnings are expected to grow
significantly faster than the earnings of
stocks represented in the major unmanaged
stock indices. It is not possible to invest
in the Index or Lipper Universe. The
performance of Investor B and Investor C
Shares may vary based on the differences in
sales loads and fees paid by the shareholders
investing in each class.
</TABLE>
[CHART LEGEND]
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
(10/1/92 through
3/31/99) 25.33%
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
Inception Date 10/1/92 7/26/93 7/26/93 5/20/94 5/20/94 5/10/95 5/10/95
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 15.74% 15.49% 8.84% 14.69% 9.69% 14.64% 13.64%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 26.26% 25.98% 23.51% 25.04% 24.40% 25.31% 25.31%
5 YEARS 21.44% 21.22% 19.79% -- -- -- --
SINCE INCEPTION 25.33% 20.32% 19.07% 22.15% 21.96% 25.59% 25.59%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
46
<PAGE> 51
Nations
Marsico Focused Equities
Fund Portfolio Manager Commentary*
<TABLE>
<S> <C>
In the following interview, Mr. Marsico shares his views on
Nations Marsico Focused Equities Fund's performance for the
12-month period ended March 31, 1999, and his outlook for
the future.
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Thomas F. Marsico is Portfolio
Manager of Nations Marsico Focused The Fund seeks long-term growth of capital through a
Equities Fund and Chief Executive relatively concentrated portfolio. Generally, the Fund holds
Officer of Marsico Capital 20 to 30 large-capitalization equities that we believe offer
Management, LLC, investment attractive growth potential. Because the Fund is
sub-adviser to the Fund. concentrated, it may take large positions in individual
companies and typically will have substantial allocations to
INVESTMENT OBJECTIVE a limited number of economic sectors and industries. We seek
The Fund seeks long-term growth of investments in companies with strong brand franchises,
capital. improving financial returns and global presences.
WHAT WERE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
PERFORMANCE REVIEW REPORTING PERIOD?
For the 12-month period ended One of the dominant themes of the 12-month period was the
March 31, 1999, Nations Marsico continuing concern of investors about the effects of the
Focused Equities Fund Investor A emerging markets financial crisis, and whether this crisis
Shares provided a total return of would harm the economies of more developed nations,
37.94%.** including the United States. These concerns peaked in the
wake of Russia's economic collapse in August, when the
Russian government defaulted on part of its external debt.
However, prompt leadership by U.S. Federal Reserve Board
Chairman Alan Greenspan and Secretary of the Treasury Robert
Rubin led to a wave of interest-rate easings in developed
nations, restoring liquidity and confidence to markets
around the world.
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75%, which
may apply to purchases of Investor A Shares. For
standardized performance, please refer to the
"Fund's Performance" table.
Source for all statistical data -- Marsico Capital
Management, LLC
THE FUND NORMALLY INVESTS IN A CORE PORTFOLIO OF
20-30 COMMON STOCKS. BY MAINTAINING A RELATIVELY
CONCENTRATED PORTFOLIO, THE FUND MAY BE SUBJECT TO
GREATER RISK THAN A FUND THAT IS MORE FULLY
DIVERSIFIED.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
47
<PAGE> 52
Nations
Marsico Focused Equities
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
In the aftermath of this crisis, the markets once again
focused on the strong economic fundamentals of the U. S.
economy. High productivity, low inflation and low interest
rates coupled with a steady earnings outlook helped propel
the Dow Jones Industrial Average*** to new highs.
WHAT IS YOUR INVESTMENT PROCESS?
We believe strongly that there is
no substitute for direct, We believe strongly that there is no substitute for direct,
comprehensive and disciplined comprehensive and disciplined research. Our investment team
research. Our investment team does does not rely on computer-based screening techniques,
not rely on computer-based ratio-driven analysis or Wall Street in order to generate
screening techniques, ratio-driven investment ideas. Rather, we foster creative, innovative
analysis or Wall Street in order thinking, which in turn leads to promising areas that
to generate investment ideas. frequently are not well followed or well understood by other
investors.
In research, our investment team looks for information from
a variety of sources. One source of information is
direct -- we speak regularly with company management to get
its perspective. But we also go outside the company,
surveying customers, competitors, suppliers and distributors
for independent sources of information. In this process, our
central purpose is to uncover information and relationships
that are not obvious under conventional analytical
techniques. Our goal is to be able to act early by using
this independent information when it can provide the maximum
benefit to the Fund's investors.
PLEASE COMMENT ON THE FUND'S PERFORMANCE FOR THE PERIOD.(+)
For the 12-month period ending March 31, 1999, the Fund
gained 37.94%. This return compares very favorably to the
Standard & Poor's 500 Composite Stock Price Index,(++) the
Fund's primary benchmark, which was up 18.5%. The Fund's
strong performance is even more dramatically shown when
compared to its peer group, the Lipper Growth Funds
Universe,(+++) which returned 13.56%. Nations Marsico
Focused Equities Fund outperformed over 90% of its peers
(1022 Funds) in the universe.
***The Dow Jones Industrial Average is a price-weighted
index of 30 of the largest, most widely held stocks traded
on the New York Stock Exchange. It is unmanaged and
unavailable for investment.
+Portfolio holdings are subject to change and may not be
representative of current holdings.
++The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged index of 500 widely held common stocks. It is
unavailable for investment.
+++Lipper Inc. is an independent mutual fund performance
monitor. Funds included in the Lipper Growth Funds Universe
normally invest in companies whose long-term earnings are
expected to grow significantly faster than the earnings of
the stocks represented in the major unmanaged stock indices.
</TABLE>
48
<PAGE> 53
Nations
Marsico Focused Equities
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
During the period, being in the right sector or industry was
critical to investment success. Technology stocks, for
example, had exceptionally strong performance.
Pharmaceuticals, retail companies, consumer durables and
telephone stocks also did well. In contrast, stocks in
energy, raw materials and precious metals companies lagged
the market.
Many of the Fund's most successful investments during the
year were in the technology sector. We focused on what we
like to call the "arms suppliers" to the Internet. These
stocks included EMC Corporation, Lucent Technologies, Inc.,
Cisco Systems, Inc., International Business Machines
Corporation, Dell Computer Corporation and Microsoft
Corporation. These companies all experienced significant
earnings growth from the expansion of Internet. At the same
time, their stock prices did not reach the uncomfortably
high valuations of the pure-play Internet stocks.
In August, seeing signs of global financial uncertainty, we
substantially reduced the Fund's exposure to financial
services companies. This allowed the Fund selectively to
rebuild positions in financial companies during the latter
half of the year. We have built up the Fund's positions in
Citigroup Inc., Chase Manhattan Corporation and Fannie Mae.
These companies all have excellent franchises, are well
managed, and -- in our view -- are poised to deliver
attractive earnings growth.
As the economy continued to show signs of strength during
the winter, we increased the Fund's exposure to consumer
stocks, including automobiles and airlines, which we
believed offered good investment potential in a period of
high consumer confidence. We believe the Fund is well
positioned in these industries with stocks like Ford Motor
Co., General Motors Corporation, UAL Corporation and Delta
Air Lines, Inc. We also continue to favor consumer non-
durables such as McDonald's Corporation and Anheuser-Busch
Companies, Inc.
TELL US ABOUT STOCKS YOU FIND TO BE PARTICULARLY PROMISING.
I'd like to mention two names. First is a company undergoing
a life-cycle change -- General Motors. GM has refocused its
energies on its core automotive business. It plans to spin
off the rest of the Delphi auto parts business, following
the Delphi stock's successful initial public offering. The
company also is merging marketing and operating divisions,
cutting its model offerings, and replacing older plants with
modern factories that need fewer workers.
</TABLE>
49
<PAGE> 54
Nations
Marsico Focused Equities
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
The second example is an aggressive growth company, Qwest
Communications International Inc. This is a new generation
phone company or -- more accurately -- communications
company. Qwest has spun an international fiber optic cable
network that may address the voice and data transmission and
Internet needs of the 21st century.
WHAT ECONOMIC DEVELOPMENTS DO YOU ANTICIPATE DURING THE REST
OF 1999?
Looking ahead, we expect continued low inflation and
declining interest rates to lead to higher price-to-earnings
ratios(#) and higher stock prices. We also expect business
in Asia to show improvement in the next year. Korea and
Thailand are showing signs of stabilization and Japan is
beginning to restructure its financial sector. This more
stable global economy should improve the earnings outlook
for the large capitalization, multinational stocks in which
the Fund invests.
#The price-to-earnings ratio gives investors an idea of how
much they are paying for a company's earnings power.
</TABLE>
50
<PAGE> 55
Nations
Marsico Focused Equities
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<C> <S>
3.9% Computer Software
4.1% Drugs
4.3% Financial Services
7.3% Beverages
7.5% Media
7.9% Automobiles and Trucks
8.1% Banking
8.1% Transportation
9.1% Telecommunications
9.5% Computer Related
30.2% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<C> <S> <C>
- --------------------------------------------
1 General Motors Corporation 6.1%
- --------------------------------------------
2 EMC Corporation 5.9%
- --------------------------------------------
3 Citigroup Inc. 5.0%
- --------------------------------------------
4 Anheuser-Busch Companies, Inc. 4.1%
- --------------------------------------------
5 Microsoft Corporation 3.9%
- --------------------------------------------
6 Qwest Communications
International Inc. 3.8%
- --------------------------------------------
7 Lucent Technologies, Inc. 3.7%
- --------------------------------------------
8 Gillette Company 3.4%
- --------------------------------------------
9 General Electric Company 3.4%
- --------------------------------------------
10 Chase Manhattan Corporation 3.1%
- --------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
51
<PAGE> 56
Nations
Marsico Focused Equities
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
FOCUSED EQUITIES $15,783 INDEX $13,499 LIPPER GROWTH FUNDS UNIVERSE $12,783
------------------------ ---------------------- ------------------------------------
<S> <C> <C> <C>
Dec. 31 1997 9425.00 10000.00 10000.00
11442.00 11395.00 11297.00
12697.00 11771.00 11512.00
11556.00 10600.00 9981.00
1998 14151.00 12858.00 12249.00
Mar. 31 1999 15783.00 13499.00 12783.00
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
Investor A Shares at NAV** (as of 3/31/99)
<TABLE>
<CAPTION>
STANDARD & POOR'S 500
FOCUSED EQUITIES $16,746 INDEX $13,499 LIPPER GROWTH FUNDS UNIVERSE $12,783
------------------------ --------------------- ------------------------------------
<S> <C> <C> <C>
Dec. 31 1997 10000.00 10000.00 10000.00
12140.00 11395.00 11297.00
13472.00 11771.00 11512.00
12261.00 10600.00 9981.00
1998 15014.00 12858.00 12249.00
Mar. 31 1999 16746.00 13499.00 12783.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
Since Inception NAV** MOP*
(12/31/97 through
3/31/99) 51.23% 44.21%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Marsico
Focused Equities Fund from
the inception of the share
class. Figures for the
Standard & Poor's 500
Composite Stock Price Index
(Standard & Poor's 500
Index), an unmanaged index
of 500 widely held common
stocks, include reinvestment
of dividends. Funds included
in the Lipper Growth Funds
Universe normally invest in
companies whose long-term
earnings are expected to
grow significantly faster
than the earnings of stocks
represented in the major
unmanaged stock indices. It
is not possible to invest in
the Index or Lipper
Universe. The performance of
Primary A, Investor B and
Investor C Shares may vary
based on the differences in
sales loads and fees paid by
the shareholders investing
in each class.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
Inception Date 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 37.73% 37.94% 30.02% 37.15% 32.15% 37.56% 36.56%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
SINCE INCEPTION 50.94% 51.23% 44.21% 50.43% 47.52% 50.79% 50.79%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
52
<PAGE> 57
Nations
Emerging Growth
Fund Strategic Growth Management
Team Commentary*
<TABLE>
<S> <C>
In the following interview, the team shares its views on
Nations Emerging Growth Fund's performance for the 12-month
period ended March 31, 1999, and its outlook for the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
The Fund is managed by the The investment philosophy of Nations Emerging Growth Fund is
Strategic Growth Management Team based on the premise that earnings growth drives stock
of TradeStreet Investment prices. We believe that superior stock market returns occur
Associates, Inc., investment when a company experiences rapid and accelerating earnings
sub-adviser to the Fund. growth due to improving fundamentals. Our approach
INVESTMENT OBJECTIVE emphasizes a rigorous, disciplined and fundamental-based
The Fund seeks capital process that seeks to identify successful mid-sized
appreciation by investing in companies that are between $1 billion and $10 billion in
emerging growth companies that are market capitalization and that, in our view, are poised to
believed to have superior become tomorrow's successful larger companies. We attempt to
long-term earnings growth identify these companies before their potential is
prospects. recognized by investors in general.
PERFORMANCE REVIEW HOW DID THE FUND PERFORM UNDER THE MARKET CONDITIONS THAT
For the 12-month period ended PREVAILED OVER THE LAST TWELVE MONTHS?
March 31, 1999, Nations Emerging Nations Emerging Growth Fund, like the overall market,
Growth Fund Investor A Shares experienced considerable volatility during the last 12
provided a total return of months. The market rewarded stocks with large market
- -7.41%.** capitalizations and consistent earnings growth. Many
companies with ".com" at the end of their names had strong
stock market performance as the business possibilities
associated with the Internet captured investors'
imaginations and dollars. Not surprisingly, Internet stocks
drove the performance of mid-capitalization stock benchmarks
such as the Standard & Poor's MidCap 400 Index (S&P MidCap
400)*** during the 12-month period.
As a consequence of these market preferences, strategies
that lagged the market benchmarks' performance tended to be
those that
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75%, which
may apply to purchases of Investor A Shares. For
standardized performance, please refer to the
"Fund Performance" table.
***Standard & Poor's MidCap 400 Index is a
market-value weighted index that measures the
market value of 400 domestic stocks chosen for market
size, liquidity and industry representation. It
is unmanaged and unavailable for investment.
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
53
<PAGE> 58
Nations
Emerging Growth
Fund Strategic Growth Management
Team Commentary continued...
<TABLE>
<S> <C>
emphasized smaller-capitalization stocks or that relied on a
disciplined analysis of stock valuations. Nations Emerging
Growth Fund struggled in this environment because of its
emphasis on medium-capitalization growth stocks with
reasonable valuations. For the 12-month period ending March
31, 1999, the Fund recorded two quarters of below average
performance, one quarter of excellent performance and one
quarter of average performance. Overall, these returns
produced disappointing annual results.
WHAT PARTICULAR SECTORS OR STOCKS WERE FAVORABLE FOR THE
Stocks in the technology, FUND?(+)
transportation and communications Technology holdings performed well because of strong
services industries helped the consumer demand for products such as personal computers and
performance of Nations Emerging cellular telephones. While many of the companies producing
Growth Fund. these products were too large for the Fund, we did find
opportunities among their suppliers. Holdings such as
Vitesse Semiconductor Corporation and Comverse Technology
Inc., both of which supply products in the communications
industry, were strong performers.
In the transportation sector, low energy prices provided for
profit margin expansion, while a strong economic environment
boosted revenues. The regional airline Comair Holdings, Inc.
benefited from its relationship with Delta Airlines, Inc.,
achieving record passenger levels in 1998.
The strong economy also helped stock performance in the
communication services sector, specifically as the growth in
cable services has produced a strong demand for programming
content. As a result, one of the new additions to the
portfolio during the year, Univision Communications, Inc.,
which is involved in Hispanic television programming,
performed well as more cable service packages offered
Spanish-language networks.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
Stocks in which the Fund did not invest turned out to be a
major factor in the Fund's performance. Not owning America
Online was a detriment. That stock, a large component of the
S&P MidCap 400 Index, gained more than 300% during the
12-month period.
The health-care sector, in general, performed poorly because
of investor concerns over Medicare reimbursement issues and
the possibility of increased government regulation. Both
HEALTHSOUTH Corporation, which operates outpatient
facilities, and Quorum Health Group Inc., which operates
hospitals, were down over 50% for the year ending March 31,
1999.
+Portfolio holdings are subject to change and may not be
representative of current holdings.
</TABLE>
54
<PAGE> 59
Nations
Emerging Growth
Fund Strategic Growth Management
Team Commentary continued...
<TABLE>
<S> <C>
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THE
COMING YEAR AND HOW ARE YOU POSITIONING THE FUND
ACCORDINGLY?
With valuations at all time lows at the close of the March
1999 fiscal period, we believe small- and
medium-capitalization stocks are very attractive
investments. Many small- and mid-capitalization companies
have earnings growth projections of 20% or more per year,
and yet their stocks are trading at substantial discounts to
large-capitalization stocks.
Our primary focus will be on companies with excellent
business plans and rapidly growing and predictable earnings
streams. We expect to continue to position the Fund in
traditional high growth sectors such as technology and
consumer cyclicals.
The economic environment can have a significant effect on
the fortunes of medium-sized companies and deserves careful
attention. Changing economic conditions affect the
large-capitalization companies that are the customers of
many of the Fund's holdings. In spite of this reality, we
believe the portfolio has some degree of protection because
we have chosen stocks with good earnings growth potential
and reasonable valuations.
We intend to identify and invest in those companies that
have very visible, rapid and sustainable earnings growth
potential. We continue to believe the market's preference
for growth stocks and our disciplined valuation process
should reward Fund shareholders in the long run.
</TABLE>
55
<PAGE> 60
Nations
Emerging Growth
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<C> <S>
4.3% Banking
4.5% Electric Components
4.5% Insurance
5.6% Computer Software
5.6% Retail - Specialty
5.8% Financial Services
6.2% Semiconductors
7.5% Telecommunications
7.9% Apparel and Textiles
48.1% Other
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
</TABLE>
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<C> <S> <C>
- --------------------------------------------
1 Uniphase Corporation 3.9%
- --------------------------------------------
2 Tommy Hilfiger Corporation 3.4%
- --------------------------------------------
3 ADC Telecommunications Inc. 2.7%
- --------------------------------------------
4 ECI Telecom Limited 2.6%
- --------------------------------------------
5 Staples Inc. 2.6%
- --------------------------------------------
6 Xilinx Inc. 2.4%
- --------------------------------------------
7 Bed Bath & Beyond Inc. 2.3%
- --------------------------------------------
8 Vitesse Semiconductor Corporation 2.3%
- --------------------------------------------
9 Aflac Inc. 2.3%
- --------------------------------------------
10 Waddell & Reed Financial, Inc. 2.2%
- --------------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
56
<PAGE> 61
Nations
Emerging Growth
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
EMERGING GROWTH $20,996 STANDARD & POOR'S LIPPER MIDCAP FUNDS UNIVERSE $24,071
----------------------- MIDCAP 400 ------------------------------------
INDEX $25,999
------------------
<S> <C> <C> <C>
Dec. 10 1992 9425 10000 10000
1992 9875 10280 10247
9487 10617 10447
9764 10865 10691
10604 11411 11487
1993 11025 11715 11753
10435 11269 11377
9749 10858 10815
11064 11593 11684
1994 11068 11294 11566
11630 12208 12376
12645 13285 13477
13961 14581 14918
1995 14357 14790 15613
15627 15701 16093
16772 16153 16941
17044 16623 17463
1996 16986 17630 17944
15654 17367 16861
18356 19921 19491
21563 23124 22280
1997 20465 23316 21603
22678 25883 24223
21705 25329 23896
15957 21664 19569
1998 21142 27771 24153
Mar. 31 1999 20996 25999 24071
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
Investor A Shares at NAV** (as of 3/31/99)
<TABLE>
<CAPTION>
EMERGING GROWTH $22,277 STANDARD & POOR'S LIPPER MIDCAP FUNDS UNIVERSE $24,071
----------------------- MIDCAP 400 ------------------------------------
INDEX $25,999
-----------------
<S> <C> <C> <C>
Dec. 10 1992 10000.00 10000.00 10000.00
1992 10477.00 10280.00 10247.00
10065.00 10617.00 10447.00
10359.00 10865.00 10691.00
11251.00 11411.00 11487.00
1993 11698.00 11715.00 11753.00
11072.00 11269.00 11377.00
10345.00 10858.00 10815.00
11739.00 11593.00 11684.00
1994 11743.00 11294.00 11566.00
12340.00 12208.00 12376.00
13416.00 13285.00 13477.00
14813.00 14581.00 14918.00
1995 15233.00 14790.00 15613.00
16580.00 15701.00 16093.00
17795.00 16153.00 16941.00
18084.00 16623.00 17463.00
1996 18022.00 17630.00 17944.00
16609.00 17367.00 16861.00
19476.00 19921.00 19491.00
22878.00 23124.00 22280.00
1997 21714.00 23316.00 21603.00
24061.00 25883.00 24223.00
23029.00 25329.00 23896.00
16931.00 21664.00 19569.00
1998 22432.00 27771.00 24153.00
Mar. 31 1999 22277.00 25999.00 24071.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
Since Inception NAV** MOP*
(12/10/92 through
3/31/99) 13.55% 12.49%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Emerging
Growth Fund from the
inception of the share
class. Figures for the
Standard & Poor's MidCap 400
Index, an unmanaged,
capitalization-weighted
index of 400 domestic stocks
chosen for market size,
liquidity and industry
representation, include
reinvestment of dividends.
Funds included in the Lipper
MidCap Funds Universe invest
primarily in companies with
market capitalizations less
than $5 billion at time of
purchase. It is not possible
to invest in the Index or
Lipper Universe. The
performance of Primary A,
Investor B and Investor C
Shares may vary based on the
differences in sales loads
and fees paid by the
shareholders investing in
each class.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
Inception Date 12/4/92 12/10/92 12/10/92 6/7/93 6/7/93 12/18/92 12/18/92
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE -7.21% -7.41% -12.72% -8.10% -12.04% -8.08% -8.87%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 10.56% 10.35% 8.19% 9.49% 8.73% 9.73% 9.73%
5 YEARS 15.25% 15.01% 13.65% 14.14% 13.90% 14.30% 14.30%
SINCE INCEPTION 13.54% 13.55% 12.49% 13.90% 13.81% 12.85% 12.85%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
57
<PAGE> 62
Nations
Small Company Growth
Fund Strategic Growth Management
Team Commentary*
<TABLE>
<S> <C>
In the following interview, the team shares its views on
Nations Small Company Growth Fund's performance for the
12-month period ended March 31, 1999, and its outlook for
the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
The Fund is managed by the The investment philosophy of Nations Small Company Growth
Strategic Growth Management Team Fund is based on the premise that earnings growth drives
of TradeStreet Investment stock prices. We believe that superior stock market returns
Associates, Inc., investment occur when a company experiences rapid and accelerating
sub-adviser to the Fund. earnings growth from improving fundamentals. Our approach
INVESTMENT OBJECTIVE emphasizes a rigorous, disciplined and fundamental-based
The Fund seeks long-term capital process that seeks to identify successful small companies
growth by investing primarily in under $1 billion in market capitalization at the early
equity securities. stages of their business lifecycles. We attempt to identify
PERFORMANCE REVIEW these companies before their potential is recognized by
For the 12-month period ended investors in general.
March 31, 1999, Nations Small HOW DID THE FUND PERFORM UNDER THE MARKET CONDITIONS THAT
Company Growth Fund Investor A PREVAILED OVER THE LAST 12 MONTHS?
Shares provided a total return of Nations Small Company Growth Fund, like the overall market,
- -21.32%.** experienced considerable volatility during the year. Small-
capitalization stocks peaked in early April 1998 before
falling off in performance. However, unlike
large-capitalization stocks that have gone on to new highs,
small-capitalization stocks have yet to return to those
April 1998 levels. At the close of the fiscal period in
March 1999, small-capitalization stock prices remained
almost 20% off the highs of the previous April. It was a
year in which Internet stocks drove the performance of the
small-capitalization stock indices, such as the Russell 2000
Index***. Many companies with
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75%, which may apply to
purchases of Investor A Shares. The performance
shown includes the effect of fee waivers by the
investment adviser, which have the effect of
increasing total return. For standardized
performance, please refer to the "Fund Performance"
table.
***The Russell 2000 Index is a capitalization-
weighted index that includes 2,000 of the smallest
stocks representing approximately 11% of the U.S.
equity market. It is unmanaged and unavailable for
investment.
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
BECAUSE SMALL COMPANIES OFTEN HAVE NARROWER MARKETS
AND LIMITED FINANCIAL RESOURCES, AND THEIR STOCKS ARE
NOT AS ACTIVELY TRADED AS LARGE COMPANY STOCKS, THEIR
SHARE PRICES WILL BE MORE VOLATILE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
58
<PAGE> 63
Nations
Small Company Growth
Fund Strategic Growth Management
Team Commentary continued...
<TABLE>
<S> <C>
".com" at the end of their names had strong stock market
performance as the business possibilities associated with
the Internet captured investors' imaginations and dollars.
A healthy domestic economy and relatively low vulnerability
to the Asian financial crisis benefited the consumer
cyclical sector. Among the better performers for the Fund in
this domestically oriented sector were Quiksilver, Inc., and
Fossil Inc., a watchmaker.
The 12-month period proved to be difficult for the Fund. Our
focus on high growth stocks helped performance, as growth
was a popular theme. However, the rigorous valuation process
that we use in determining how much to pay for a company's
future growth did not help performance during the 12 months.
The market was willing to pay any price for growth, as
evidenced by the extremely strong performance of some
Internet stocks. However, our investment discipline led us
away from many Internet-related stocks because we believed
them to be too expensive.
The Fund's performance was in line with that of
non-Internet, growth-oriented sectors, which tended to have
returns of between -15% and -25% during the 12-month period.
However, performance trailed the small-capitalization
indices that were more influenced by the performance of
Internet stocks, and it trailed returns of the
large-capitalization indices in a period in which investors
preferred large-company stocks. For the 12-month period
ending March 1999, the Fund recorded two quarters of
below-average performance, one quarter of excellent
performance and one quarter of average performance. Overall,
these returns produced disappointing annual results.
WHAT PARTICULAR SECTORS OR STOCKS WERE FAVORABLE FOR THE
The technology and consumer FUND?(+)
cyclical sectors were the better Small-capitalization technology stocks did well both because
performing sectors for Nations of the growth of the Internet and because of the expanding
Small Company Growth Fund. demand for wide-band fiber optic networks in the
telecommunications industry. Several telecommunications
equipment company stocks involved in fiber optics performed
extremely well, including SDL, Inc., Antec Corporation,
Harmonic Lightwaves, Inc. and E-Tek Dynamics Inc. The Fund
also had a number of successful investments in
telecommunications-related companies involved in wireless
networks, including RF Micro Devices, Inc., Proxim Inc.,
Gilat Satellite Networks Ltd. and Sawtek Inc.
+Portfolio holdings are subject to change and may not be
representative of current holdings.
</TABLE>
59
<PAGE> 64
Nations
Small Company Growth
Fund Strategic Growth Management
Team Commentary continued...
<TABLE>
<S> <C>
A healthy domestic economy and relatively low vulnerability
to the Asian financial crisis benefited the consumer
cyclical sector. Among the better performers for the Fund in
this domestically oriented sector were Quiksilver, Inc., and
Fossil Inc., a watchmaker.
In general, the Fund's strategy of identifying
small-capitalization stocks early, before their potential is
recognized by the rest of the investing public, leads us to
build a portfolio of smaller companies than those held by
many other small company funds. This strategy inevitably
results in the Fund owning less liquid stocks -- stocks
which do not have large trading volumes -- and this brings
additional risk. While we have confidence in this strategy,
the 12-month period was a time when smaller companies tended
to underperform larger companies, and the market tended to
favor a relatively narrow group of stocks. Neither of these
trends helped the performance of the Fund.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
Energy stocks showed poor returns, as energy companies were
hurt as falling oil prices led to reduced drilling and lower
cash-flows for the sector in general. The capital goods and
business services areas also proved disappointing.
We believe many of the disappointing performers during the
12-month period had difficulty successfully executing their
business plans.
In our review process, we have moved to identify the sources
of weak performance in every stock and to use this analysis
to evaluate whether to continue to maintain the Fund's
positions in specific stocks. In some cases, companies have
executed their business plans well, but the stock market has
not recognized their success. However, others have not been
able to follow through on their plans successfully. Our
decision on whether to retain a disappointing investment
basically comes down to whether we consider the
underperformance to be a short-term disruption to the
company or whether we consider it to be related to lasting
fundamental problems. Among the companies that did not meet
expectations were SmarTalk Teleservices Inc, IMC Mortgage
Company and 3DLabs Inc., Ltd.
</TABLE>
60
<PAGE> 65
Nations
Small Company Growth
Fund Strategic Growth Management
Team Commentary continued...
<TABLE>
<S> <C>
WHAT ECONOMIC FACTORS INFLUENCED THE FUND'S PERFORMANCE AND
WHAT DO YOU ANTICIPATE IN THE COMING YEAR?
We consider small-capitalization stocks to be very
attractive investment opportunities. At the close of the
fiscal period, small-capitalization stock valuations were at
all time lows in relation to large company valuations. Many
small-capitalization stocks had earnings growth of 20% or
higher per year, and yet were trading at substantial
discounts to large-capitalization stocks.
Our primary focus will be on companies with what we believe
to be excellent business plans and rapidly growing and
predictable earnings streams. We expect to continue to
position the Fund in traditional high growth sectors such as
technology, health-care, capital goods and business
services.
The economic environment can have a significant effect on
the fortunes of small companies and deserves careful
attention. Changing economic conditions affect the
large-capitalization companies that are the customers of
many of the Fund's small-capitalization holdings. In spite
of this reality, we believe the portfolio has some degree of
protection because we have chosen stocks with good earnings
growth potential and reasonable valuations.
We intend to identify and invest in those companies that
have very visible, rapid and sustainable earnings growth
potential. We believe the market's preference for growth
stocks and our disciplined valuation process should reward
Fund shareholders in the long run.
</TABLE>
61
<PAGE> 66
Nations
Small Company Growth
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<S> <C>
3.0% Retail - Specialty
3.0% Commercial Services
3.6% Aerospace and Defense
4.4% Apparel and Textiles
4.9% Computer Software
8.2% Medical Services
9.5% Professional Services
11.3% Electronics
19.5% Telecommunications
32.6% Other
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
<C> <S> <C>
- --------------------------------------------
1 Antec Corporation 3.0%
- --------------------------------------------
2 Gilat Satellite Networks Ltd. 3.0%
- --------------------------------------------
3 Quiksilver, Inc. 2.9%
- --------------------------------------------
4 Proxim Inc. 2.6%
- --------------------------------------------
5 Career Education Corporation 2.5%
- --------------------------------------------
6 Sawtek Inc. 2.3%
- --------------------------------------------
7 Harmonic Lightwaves, Inc. 2.2%
- --------------------------------------------
8 REMEC, Inc. 2.1%
- --------------------------------------------
9 Kinder Morgan Energy Partners,
L.P. 2.1%
- --------------------------------------------
10 Affiliated Managers Group, Inc. 2.1%
- --------------------------------------------
</TABLE>
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
62
<PAGE> 67
Nations
Small Company Growth
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
Investor A Shares at MOP* (as of 3/31/99)
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH $12,378 RUSSELL 2000 INDEX $13,484 LIPPER SMALLCAP FUNDS UNIVERSE $13,888
---------------------------- -------------------------- --------------------------------------
<S> <C> <C> <C>
Dec. 12 1995 9425.00 10000.00 10000.00
1995 9313.00 10264.00 10176.00
9843.00 10787.00 10846.00
10474.00 11327.00 11683.00
10584.00 11365.00 11910.00
1996 11167.00 11956.00 12217.00
10547.00 11338.00 11419.00
12643.00 13176.00 13373.00
14577.00 15137.00 15590.00
1997 13341.00 14630.00 14814.00
15732.00 16101.00 16446.00
14764.00 15351.00 15769.00
10955.00 12258.00 12392.00
1998 13505.00 14257.00 14768.00
Mar. 31 1999 12378.00 13484.00 13888.00
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
Investor A Shares at NAV** (as of 3/31/99)
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH $13,133 RUSSELL 2000 INDEX $13,484 LIPPER SMALLCAP FUNDS UNIVERSE $13,888
---------------------------- -------------------------- --------------------------------------
<S> <C> <C> <C>
Dec. 12 1995 10000.00 10000.00 10000.00
1995 9881.00 10264.00 10176.00
10443.00 10787.00 10846.00
11113.00 11327.00 11683.00
11229.00 11365.00 11910.00
1996 11848.00 11956.00 12217.00
11190.00 11338.00 11419.00
13414.00 13176.00 13373.00
15466.00 15137.00 15590.00
1997 14155.00 14630.00 14814.00
16691.00 16101.00 16446.00
15665.00 15351.00 15769.00
11623.00 12258.00 12392.00
1998 14329.00 14257.00 14768.00
Mar. 31 1999 13133.00 13484.00 13888.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
SINCE INCEPTION NAV** MOP*
(12/12/95 through
3/31/99) 8.61% 6.68%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Small
Company Growth Fund from the
inception of the share
class. Figures for the
Russell 2000 Index, an
unmanaged, capitalization-
weighted index that includes
2,000 of the smallest
stocks, representing
approximately 11% of the
U.S. equity market, include
reinvestment of dividends.
Funds included in the Lipper
SmallCap Funds Universe
invest primarily in
companies with market
capitalizations less than $1
billion at time of purchase.
It is not possible to invest
in the Index or Lipper
Universe. The performance of
Primary A, Investor B and
Investor C Shares may vary
based on the differences in
sales loads and fees paid by
the shareholders investing
in each class.
[CHART LEGEND]
TOTAL RETURN (AS OF 3/31/99)
<TABLE>
<CAPTION>
Investor A Investor B Investor C
Primary A NAV MOP NAV CDSC*** NAV CDSC
Inception Date 12/12/95 12/12/95 12/12/95 12/12/95 12/12/95 9/22/97 9/22/97
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE -21.05% -21.32% -25.85% -21.86% -25.46% -21.66% -22.38%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 8.27% 7.94% 5.81% 7.20% 6.32% --
SINCE INCEPTION 9.00% 8.61% 6.68% 7.92% 7.15% -9.95% -9.95%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
The performance shown includes the effect of fee waivers by the investment
adviser, which have the effect of increasing total return.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
63
<PAGE> 68
NATIONS FUNDS
Nations Balanced Assets Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) (000)
- ------------------------------------------------------------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 3.6%
ASSET BACKED -- AUTO LOANS -- 1.0%
$ 1,250 Premier Auto Trust, Series 1997-2,
Class B,
6.530% 12/06/03.......................... $ 1,264
250 Premier Auto Trust, Series 1998-1,
Class B,
5.920% 10/06/04.......................... 250
--------
1,514
--------
ASSET BACKED -- CREDIT CARD RECEIVABLES -- 0.9%
990 Chase Manhattan Credit Card Master Trust,
Series 1996-4, Class A,
6.730% 02/15/03.......................... 992
325 Standard Credit Card Master Trust, Series
1995-9, Class B,
6.650% 10/07/07.......................... 328
--------
1,320
--------
ASSET BACKED -- HOME EQUITY LOANS -- 1.7%
1,550 CS First Boston Mortgage Securities
Corporation, Series 1996-2, Class A4,
6.620% 02/25/18.......................... 1,559
276 EQCC Home Equity Loan Trust, Series
1996-2, Class A2,
6.700% 09/15/08.......................... 278
500 IMC Home Equity Loan Trust,
Series 1997-7, Class A3,
6.540% 11/20/12.......................... 503
--------
2,340
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $5,141)............................ 5,174
--------
<CAPTION>
SHARES
- --------
<C> <S> <C>
COMMON STOCKS -- 66.0%
AEROSPACE AND DEFENSE -- 1.6%
13,050 Lockheed Martin Corporation............... 492
30,175 Raytheon Company, Class B................. 1,769
--------
2,261
--------
APPAREL AND TEXTILES -- 0.6%
17,500 V.F. Corporation.......................... 826
--------
AUTOMOBILE PARTS MANUFACTURERS -- 1.4%
13,800 Dana Corporation.......................... 524
30,200 Genuine Parts Company..................... 871
13,100 Lear Corporation.......................... 559
--------
1,954
--------
AUTOMOBILES AND TRUCKS -- 1.5%
13,100 Daimler Chrysler AG....................... 1,124
17,200 Ford Motor Company........................ 976
--------
2,100
--------
BANKING -- 5.8%
30,800 Banc One Corporation...................... 1,696
26,600 Bank of New York Inc. .................... 956
17,000 BankBoston Corporation.................... 736
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
BANKING -- (CONTINUED)
20,750 Chase Manhattan Corporation.............. $ 1,687
17,950 Citigroup Inc. .......................... 1,147
31,900 Mellon Bank Corporation.................. 2,246
--------
8,468
--------
BEVERAGES -- 1.9%
19,950 Anheuser-Busch Companies, Inc. .......... 1,520
30,350 PepsiCo, Inc. ........................... 1,189
--------
2,709
--------
CHEMICALS -- BASIC -- 1.4%
6,200 Dow Chemical Company..................... 578
24,100 E.I. duPont de Nemours and Company....... 1,399
--------
1,977
--------
COMPUTER RELATED -- 7.0%
15,100 3Com Corporation++....................... 352
24,100 Apple Computer Inc.++.................... 866
38,900 Ceridian Corporation++................... 1,422
23,400 Compaq Computer Corporation.............. 741
4,000 Comverse Technology Inc.++............... 340
22,900 Gateway 2000 Inc.++...................... 1,571
6,600 Honeywell Inc. .......................... 500
8,600 International Business Machines
Corporation............................. 1,524
23,250 Sun Microsystems, Inc.++................. 2,906
--------
10,222
--------
CONGLOMERATE -- 1.9%
7,200 Unilever NV, ADR......................... 478
16,375 United Technologies Corporation.......... 2,218
--------
2,696
--------
CONSTRUCTION -- 1.3%
27,100 Centex Corporation....................... 904
34,100 Masco Corporation........................ 964
--------
1,868
--------
DIVERSIFIED -- 0.0%@
500 Fortune Brands Inc. ..................... 19
--------
DRUGS -- 3.4%
9,300 American Home Products Corporation....... 607
9,100 Bergen Brunswig Corporation, Class A..... 182
33,900 Bristol-Myers Squibb Company............. 2,180
35,500 Schering-Plough Corporation.............. 1,964
--------
4,933
--------
ELECTRIC POWER -- 2.6%
36,400 Energy East Corporation.................. 1,913
19,700 Texas Utilities Company.................. 821
29,400 Unicom Corporation....................... 1,075
--------
3,809
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
64
<PAGE> 69
NATIONS FUNDS
Nations Balanced Assets Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
FINANCIAL SERVICES -- 2.1%
37,900 Paine Webber Group, Inc. ................ $ 1,511
38,444 Washington Mutual, Inc. ................. 1,572
--------
3,083
--------
FOOD PRODUCERS -- 2.2%
5,600 General Mills Inc. ...................... 423
11,400 Interstate Bakeries Corporation.......... 246
21,900 Nabisco Holdings Corporation, Class A.... 910
16,700 Quaker Oats Company...................... 1,045
15,200 Suiza Foods Corporation.................. 512
--------
3,136
--------
INSURANCE -- 4.7%
25,900 CIGNA Corporation........................ 2,171
33,850 Hartford Financial Services Group,
Inc. ................................... 1,923
27,100 Lincoln National Corporation Ltd. ....... 2,679
--------
6,773
--------
MEDICAL SERVICES -- 2.3%
65,300 Tenet Healthcare Corporation++........... 1,237
27,100 Wellpoint Health Networks, Inc. ......... 2,054
--------
3,291
--------
OFFICE EQUIPMENT -- 1.5%
10,100 Lexmark International Group, Inc.,
Class A................................. 1,128
18,300 Xerox Corporation........................ 977
--------
2,105
--------
OIL -- DOMESTIC -- 1.3%
17,000 Coastal Corporation...................... 561
26,500 Columbia Energy Group.................... 1,385
--------
1,946
--------
OIL -- INTERNATIONAL -- 5.0%
22,200 BP Amoco plc, ADR........................ 2,242
12,100 Chevron Corporation...................... 1,070
14,300 Exxon Corporation........................ 1,009
21,900 Mobil Corporation........................ 1,927
20,700 Royal Dutch Petroleum Company............ 1,076
--------
7,324
--------
OIL FIELD SERVICES & EQUIPMENT -- 0.5%
18,500 Halliburton Company...................... 712
--------
PRINTING AND PUBLISHING -- 0.6%
23,800 Dun & Bradstreet Corporation............. 848
--------
RECREATION -- 1.1%
54,050 Hasbro, Inc. ............................ 1,564
--------
RETAIL -- FOOD -- 1.0%
23,350 Kroger Company++......................... 1,398
--------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
RETAIL -- GENERAL -- 2.6%
12,100 Dillards, Inc., Class A.................. $ 307
33,050 Federated Department Stores, Inc. ....... 1,326
35,700 May Department Stores Company............ 1,397
25,400 Saks Inc.++.............................. 660
--------
3,690
--------
RETAIL -- SPECIALTY -- 1.4%
19,100 Rite Aid Corporation..................... 478
47,500 TJX Companies Inc. ...................... 1,615
--------
2,093
--------
SEMICONDUCTORS -- 1.2%
14,700 Intel Corporation........................ 1,747
--------
STEEL -- 0.9%
22,000 Nucor Corporation........................ 969
17,100 USX - U.S. Steel Group Inc. ............. 402
--------
1,371
--------
TOBACCO -- 0.5%
22,200 Philip Morris Companies Inc. ............ 781
--------
TRANSPORTATION -- 0.4%
7,300 Delta Air Lines, Inc. ................... 507
--------
UTILITIES -- NATURAL GAS -- 0.4%
15,000 Williams Companies, Inc. ................ 593
--------
UTILITIES -- TELEPHONE -- 5.3%
8,725 ALLTEL Corporation....................... 544
27,600 AT&T Corporation......................... 2,203
34,300 BellSouth Corporation.................... 1,374
23,625 GTE Corporation.......................... 1,429
12,000 MCI Worldcom, Inc.++..................... 1,063
26,950 SBC Communications Inc. ................. 1,270
--------
7,883
--------
WASTE MANAGEMENT -- 0.6%
20,750 Waste Management Inc. ................... 921
--------
TOTAL COMMON STOCKS
(Cost $86,794).......................... 95,608
--------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
- --------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 9.8%
AEROSPACE AND DEFENSE -- 0.2%
$ 250 Raytheon Company,
6.750% 08/15/07......................... 256
--------
BANKING AND FINANCE -- 5.6%
350 American Express Credit, Deb.,
8.500% 06/15/99......................... 352
250 ERAC USA Finance Company,
6.950% 03/01/04......................... 250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
65
<PAGE> 70
NATIONS FUNDS
Nations Balanced Assets Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
BANKING AND FINANCE -- (CONTINUED)
$ 500 ERAC USA Finance Company,
6.625% 02/15/05......................... $ 488
500 FCB/NC Capital Trust I, Gtd. Notes,
8.050% 03/01/28......................... 493
250 First Union Institutional Capital I,
8.040% 12/01/26......................... 263
500 Ford Motor Credit Company, MTN,
6.800% 04/23/01......................... 511
500 GMAC, Deb.,
8.750% 07/15/05......................... 566
250 GMAC, Deb.,
8.875% 06/01/10......................... 298
500 Goldman Sachs Group, LP,
6.625% 12/01/04......................... 505
500 Lehman Brothers Inc., Sr. Sub. Notes,
7.250% 04/15/03......................... 512
1,000 Merrill Lynch and Company, Notes,
6.700% 08/01/00......................... 1,016
875 NYNEX Capital Funding,
7.630% 10/15/09......................... 998
750 Popular Inc., MTN,
6.375% 09/15/03......................... 749
750 Salomon Smith Barney Holdings, MTN,
6.625% 11/30/00......................... 762
250 Union Planters Capital Trust,
8.200% 12/15/26......................... 258
250 Wells Fargo Capital I, Gtd. Notes,
7.960% 12/15/26......................... 260
--------
8,281
--------
HEALTHCARE -- 0.2%
250 HEALTHSOUTH Corporation, Sr. Notes,
6.875% 06/15/05......................... 236
--------
INDUSTRIAL -- 0.9%
500 Ford Motor Company, Deb.,
7.400% 11/01/46......................... 522
250 USA Waste Services Inc.,
7.125% 10/01/07......................... 258
500 Xerox Capital Trust I, Gtd. Notes,
8.000% 02/01/27......................... 507
--------
1,287
--------
INSURANCE -- 0.9%
250 American Re Corporation, Sr. Notes,
7.450% 12/15/26......................... 266
1,000 AON Corporation,
7.400% 10/01/02......................... 1,047
--------
1,313
--------
TELECOMMUNICATIONS -- 0.2%
250 GTE Corporation,
6.600% 09/22/05......................... 255
--------
TRANSPORTATION -- 0.2%
250 Norfolk Southern Corporation,
7.350% 05/15/07......................... 267
--------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
(000) (000)
<C> <S> <C>
TRUCKING AND SHIPPING -- 0.4%
$650 Ryder Systems Inc.,
6.600% 11/15/05......................... $ 637
--------
UTILITIES -- TELEPHONE -- 1.2%
400 AT&T Corporation, Deb.,
8.125% 01/15/22......................... 422
500 Chesapeake Potomac Telephone Maryland,
Deb.,
8.000% 10/15/29......................... 581
650 GTE Southwest,
6.540% 12/01/05......................... 668
--------
1,671
--------
TOTAL CORPORATE BONDS AND NOTES (Cost
$14,025)................................ 14,203
--------
FOREIGN BONDS AND NOTES -- 0.4%
(Cost $520)
500 AB Spintab (Sweden),
7.500% 08/14/49......................... 512
--------
MORTGAGE-BACKED SECURITIES -- 6.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
CERTIFICATES -- 1.9%
660 6.200% 09/08/08......................... 644
139 8.000% 07/01/10......................... 143
579 7.000% 06/01/11......................... 592
24 8.500% 02/15/21......................... 24
1,255 8.000% 09/01/25......................... 1,307
--------
2,710
--------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) CERTFICATES -- 2.7%
109 8.000% 06/01/99......................... 110
163 8.500% 02/01/00......................... 164
500 6.350% 06/10/05......................... 514
1,548 6.500% 08/01/10......................... 1,565
787 8.500% 08/01/11......................... 828
471 7.000% 01/25/21......................... 481
199 7.500% 02/01/25......................... 205
--------
3,867
--------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)
CERTIFICATES -- 1.7%
7 10.000% 02/15/18........................ 8
617 7.500% 12/15/23......................... 637
1,803 7.500% 10/15/27......................... 1,858
--------
2,503
--------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $8,849)........................... 9,080
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
66
<PAGE> 71
NATIONS FUNDS
Nations Balanced Assets Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) (000)
- -----------------------------------------------------------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 15.1%
U.S. TREASURY BONDS -- 3.5%
$ 500 12.000% 08/15/13........................ $ 728
710 7.250% 05/15/16......................... 814
2,200 6.250% 08/15/23......................... 2,299
1,075 6.750% 08/15/26......................... 1,200
--------
5,041
--------
U.S. TREASURY NOTES -- 11.6%
1,625 7.500% 10/31/99......................... 1,650
425 5.750% 11/15/00......................... 430
1,980 5.375% 02/15/01......................... 1,992
2,550 7.875% 08/15/01......................... 2,709
2,400 7.500% 05/15/02......................... 2,560
250 5.750% 11/30/02......................... 255
3,200 6.125% 08/15/07......................... 3,349
3,200 5.500% 02/15/08......................... 3,236
500 9.250% 02/15/16......................... 679
--------
16,860
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $21,557).......................... 21,901
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
- ---------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 7.3%
(Cost $10,579)
10,579 Nations Cash Reserves#..................... 10,579
--------
TOTAL INVESTMENTS
(Cost $147,465*)................... 108.5% 157,057
--------
OTHER ASSETS AND
LIABILITIES (NET).................. (8.5)%
Cash....................................... $ 1
Receivable for investment securities
sold...................................... 6,226
Receivable for Fund shares sold............ 254
Dividends receivable....................... 174
Interest receivable........................ 666
Prepaid expenses........................... 2
Collateral on securities loaned............ (10,567)
Payable for Fund shares redeemed........... (4,022)
Investment advisory fee payable............ (97)
Administration fee payable................. (25)
Shareholder servicing and distribution fees
payable................................... (174)
Distributions payable...................... (2)
Payable for investment securities
purchased................................. (4,711)
Accrued Trustees'/Directors' fees and
expenses.................................. (20)
Accrued expenses and other liabilities..... (61)
--------
TOTAL OTHER ASSETS
AND LIABILITIES (NET)..................... (12,356)
--------
NET ASSETS.......................... 100.0% $144,701
========
</TABLE>
<TABLE>
<CAPTION>
VALUE
(000)
- -------------------------------------------------------------------
<C> <S> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment income........ $ 258
Accumulated net realized loss on
investments sold.......................... (2,953)
Net unrealized appreciation of
investments............................... 9,592
Paid-in capital............................ 137,804
--------
NET ASSETS................................. $144,701
========
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($48,372,920/4,655,242
shares outstanding)....................... $10.39
========
INVESTOR A SHARES:
Net asset value and redemption price per
share ($20,979,326/2,021,574 shares
outstanding).............................. $10.38
========
Maximum sales charge....................... 5.75%
Maximum offering price per share........... $11.01
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($73,735,066/7,118,061 shares
outstanding).............................. $10.36
========
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($1,613,235/156,280 shares
outstanding).............................. $10.32
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $12,467 and gross
depreciation of $2,988 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$147,578.
++ Non-income producing security.
+ The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
@ Amount represents less than 0.1%.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc. A
portion of this amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents cash collateral is
$10,567.
ABBREVIATIONS:
ADR -- American Depository Receipt
MTN -- Medium Term Note
SEE NOTES TO FINANCIAL STATEMENTS.
67
<PAGE> 72
NATIONS FUNDS
Nations Value Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.2%
AEROSPACE AND DEFENSE -- 2.3%
284,050 Lockheed Martin Corporation............. $ 10,705
686,634 Raytheon Company, Class B............... 40,254
----------
50,959
----------
APPAREL AND TEXTILES -- 1.1%
524,300 V.F. Corporation........................ 24,740
----------
AUTOMOBILE PARTS MANUFACTURERS -- 1.4%
297,862 Dana Corporation........................ 11,319
542,700 Genuine Parts Company................... 15,637
129,225 Lear Corporation........................ 5,516
----------
32,472
----------
AUTOMOBILES AND TRUCKS -- 2.0%
283,487 Daimler Chrysler AG..................... 24,327
378,500 Ford Motor Company...................... 21,480
----------
45,807
----------
BANKING -- 8.5%
732,705 Banc One Corporation.................... 40,345
650,400 Bank of New York Inc. .................. 23,374
370,100 BankBoston Corporation.................. 16,030
444,629 Chase Manhattan Corporation............. 36,154
432,987 Citigroup Inc. ......................... 27,657
672,950 Mellon Bank Corporation................. 47,359
----------
190,919
----------
BEVERAGES -- 3.1%
489,200 Anheuser-Busch Companies, Inc. ......... 37,271
816,225 PepsiCo, Inc. .......................... 31,986
----------
69,257
----------
CHEMICALS -- BASIC -- 1.9%
131,675 Dow Chemical Company.................... 12,270
514,075 E.I. duPont de Nemours and Company...... 29,849
----------
42,119
----------
COMPUTER RELATED -- 10.4%
328,300 3Com Corporation++...................... 7,653
553,100 Apple Computer Inc.++................... 19,877
1,053,100 Ceridian Corporation++.................. 38,504
1,243,275 Compaq Computer Corporation............. 39,396
41,000 Comverse Technology Inc.++.............. 3,485
295,400 Gateway 2000 Inc.++..................... 20,253
49,900 Honeywell Inc. ......................... 3,783
194,875 International Business Machines
Corporation............................ 34,542
522,250 Sun Microsystems, Inc.++................ 65,250
----------
232,743
----------
CONGLOMERATE -- 2.8%
216,350 Unilever NV, ADR........................ 14,374
357,550 United Technologies Corporation......... 48,425
----------
62,799
----------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
CONSTRUCTION -- 2.1%
733,600 Centex Corporation...................... $ 24,483
811,700 Masco Corporation....................... 22,931
----------
47,414
----------
DIVERSIFIED -- 0.0%@
11,600 Fortune Brands Inc. .................... 449
----------
DRUGS -- 5.1%
150,700 American Home Products Corporation...... 9,833
160,700 Bergen Brunswig Corporation, Class A.... 3,214
811,300 Bristol-Myers Squibb Company............ 52,177
882,900 Schering-Plough Corporation............. 48,835
----------
114,059
----------
ELECTRIC POWER -- 3.9%
215,250 Consolidated Edison, Inc. .............. 9,754
606,800 Energy East Corporation................. 31,895
104,250 Florida Progress Corporation............ 3,935
456,200 Texas Utilities Company................. 19,018
613,800 Unicom Corporation...................... 22,442
----------
87,044
----------
FINANCIAL SERVICES -- 3.3%
28 Berkshire Hathaway Inc., Class B........ 66
1,007,500 Paine Webber Group, Inc. ............... 40,174
825,632 Washington Mutual, Inc. ................ 33,748
----------
73,988
----------
FOOD PRODUCERS -- 2.4%
83,100 General Mills Inc. ..................... 6,279
261,225 Interstate Bakeries Corporation......... 5,633
531,275 Quaker Oats Company..................... 33,237
238,950 Suiza Foods Corporation................. 8,050
----------
53,199
----------
INSURANCE -- 7.1%
612,020 CIGNA Corporation....................... 51,295
730,250 Hartford Financial Services Group,
Inc. .................................. 41,487
681,250 Lincoln National Corporation Ltd. ...... 67,359
----------
160,141
----------
MEDICAL SERVICES -- 3.1%
1,314,250 Tenet Healthcare Corporation++.......... 24,889
596,675 Wellpoint Health Networks, Inc. ........ 45,235
----------
70,124
----------
OFFICE EQUIPMENT -- 2.5%
290,100 Lexmark International Group, Inc.,
Class A................................ 32,418
426,000 Xerox Corporation....................... 22,738
----------
55,156
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
68
<PAGE> 73
NATIONS FUNDS
Nations Value Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
OIL -- DOMESTIC -- 2.0%
374,750 Coastal Corporation..................... $ 12,367
622,800 Columbia Energy Group................... 32,541
----------
44,908
----------
OIL -- INTERNATIONAL -- 7.7%
544,800 BP Amoco plc, ADR....................... 54,991
270,983 Chevron Corporation..................... 23,965
342,500 Exxon Corporation....................... 24,168
627,800 Mobil Corporation....................... 55,246
258,700 Royal Dutch Petroleum Company........... 13,452
----------
171,822
----------
OIL FIELD SERVICES & EQUIPMENT -- 0.6%
348,300 Halliburton Company..................... 13,410
----------
PRINTING AND PUBLISHING -- 0.6%
381,850 Dun & Bradstreet Corporation............ 13,603
----------
RECREATION -- 1.8%
1,370,150 Hasbro, Inc. ........................... 39,649
----------
RETAIL -- FOOD -- 1.5%
574,650 Kroger Company++........................ 34,407
----------
RETAIL -- GENERAL -- 3.6%
245,700 Dillards, Inc., Class A................. 6,235
763,050 Federated Department Stores, Inc. ...... 30,616
780,060 May Department Stores Company........... 30,520
553,100 Saks Inc.++............................. 14,381
----------
81,752
----------
RETAIL -- SPECIALTY -- 1.8%
215,800 Rite Aid Corporation.................... 5,395
1,041,875 TJX Companies Inc. ..................... 35,424
----------
40,819
----------
SEMICONDUCTORS -- 1.9%
357,140 Intel Corporation....................... 42,455
----------
STEEL -- 1.4%
516,400 Nucor Corporation....................... 22,754
372,800 USX - U.S. Steel Group Inc. ............ 8,761
----------
31,515
----------
TOBACCO -- 1.0%
641,987 Philip Morris Companies Inc. ........... 22,590
----------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
TRANSPORTATION -- 0.9%
2 Berkshire Hathaway Inc., Class A........ $ 143
302,800 Delta Air Lines, Inc. .................. 21,044
----------
21,187
----------
UTILITIES -- NATURAL GAS -- 0.7%
380,900 Williams Companies, Inc. ............... 15,046
----------
UTILITIES -- TELEPHONE -- 8.3%
144,400 ALLTEL Corporation...................... 9,007
582,275 AT&T Corporation........................ 46,473
741,000 BellSouth Corporation................... 29,686
672,995 GTE Corporation......................... 40,716
316,842 MCI Worldcom, Inc.++.................... 28,060
661,300 SBC Communications Inc. ................ 31,164
----------
185,106
----------
WASTE MANAGEMENT -- 0.4%
223,400 Waste Management Inc. .................. 9,913
----------
TOTAL COMMON STOCKS
(Cost $1,466,420)...................... 2,181,571
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
- -------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 3.9%
(Cost $86,417)
86,417 Nations Cash Reserves#............... 86,417
----------
TOTAL INVESTMENTS
(Cost $1,552,837*).................. 101.1% 2,267,988
----------
OTHER ASSETS AND
LIABILITIES (NET)................... (1.1)%
Receivable for investment securities sold... $ 50,092
Receivable for Fund shares sold............. 1,759
Dividends receivable........................ 3,682
Interest receivable......................... 95
Prepaid expenses............................ 103
Collateral on securities loaned............. (40,146)
Payable for Fund shares redeemed............ (5,829)
Investment advisory fee payable............. (1,489)
Administration fee payable.................. (327)
Shareholder servicing and distribution fees
payable.................................... (398)
Payable for investment securities
purchased.................................. (32,246)
Accrued Trustees'/Directors' fees and
expenses................................... (76)
Accrued expenses and other liabilities...... (682)
----------
TOTAL OTHER ASSETS AND
LIABILITIES (NET).......................... (25,462)
----------
NET ASSETS........................... 100.0% $2,242,526
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
69
<PAGE> 74
NATIONS FUNDS
Nations Value Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
(000)
- --------------------------------------------------------------------
<C> <S> <C> <C>
NET ASSETS CONSIST OF:
Accumulated net realized gain on
investments sold and futures contracts..... $ 93,173
Net unrealized appreciation of investments.. 715,151
Paid-in capital............................. 1,434,202
----------
NET ASSETS.................................. $2,242,526
==========
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($1,939,704,059/106,831,038
shares outstanding)........................ $18.16
==========
INVESTOR A SHARES:
Net asset value and redemption price per
share ($136,691,098/7,525,011 shares
outstanding)............................... $18.16
==========
Maximum sales charge................. 5.75%
Maximum offering price per share..... $19.27
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($154,024,598/8,558,817 shares
outstanding)............................... $18.00
==========
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($12,106,327/673,312 shares
outstanding)............................... $17.98
==========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $751,737 and gross
depreciation of $36,654 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$1,552,905.
++ Non-income producing security
+ The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
@ Amount represents less than 0.1%.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc. A
portion of this amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents cash collateral is
$40,146.
ABBREVIATIONS:
ADR -- American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
70
<PAGE> 75
NATIONS FUNDS
Nations Equity Income Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 93.9%
AEROSPACE AND DEFENSE -- 2.5%
41,200 EG&G, Inc. ............................... $ 1,087
38,000 General Dynamics Corporation.............. 2,442
91,800 Lockheed Martin Corporation............... 3,460
89,800 Raytheon Company, Class B................. 5,264
130,700 TRW Inc. ................................. 5,946
--------
18,199
--------
APPAREL AND TEXTILES -- 0.5%
47,800 Springs Industries Inc. .................. 1,294
43,800 V.F. Corporation.......................... 2,066
--------
3,360
--------
AUTOMOBILE PARTS MANUFACTURERS -- 1.9%
78,175 Eaton Corporation......................... 5,590
296,050 Genuine Parts Company..................... 8,529
--------
4,119
--------
AUTOMOBILES AND TRUCKS -- 1.9%
162,900 Ford Motor Company~....................... 9,244
35,000 General Motors Corporation................ 3,041
52,300 ITT Industries, Inc. ..................... 1,850
--------
14,135
--------
BANKING -- 6.6%
218,300 Banc One Corporation...................... 12,021
141,600 Chase Manhattan Corporation............... 11,515
93,700 Citigroup Inc. ........................... 5,985
46,700 First Union Corporation................... 2,496
161,200 Fleet Financial Group, Inc. .............. 6,065
24,200 National City Corporation................. 1,606
36,100 Regions Financial Corporation............. 1,250
118,784 SunTrust Banks, Inc. ..................... 7,394
18,000 Wachovia Corporation...................... 1,461
--------
49,793
--------
BEVERAGES -- 2.8%
37,100 Adolph Coors Company, Class B............. 2,003
54,800 Anheuser-Busch Companies, Inc. ........... 4,175
17,700 Brown-Forman Corporation, Class B......... 1,020
45,400 Coca-Cola Company......................... 2,786
266,650 PepsiCo, Inc. ............................ 10,450
--------
20,434
--------
CHEMICALS -- BASIC -- 0.2%
18,300 Dow Chemical Company...................... 1,705
--------
COMMERCIAL SERVICES -- 0.5%
166,600 Ogden Corporation......................... 4,009
--------
COMPUTER RELATED -- 5.5%
30,900 Compaq Computer Corporation............... 979
48,800 Dell Computer Corporation@................ 1,995
15,200 EMC Corporation@.......................... 1,942
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMPUTER RELATED -- (CONTINUED)
262,950 Hewlett-Packard Company................... $ 17,831
103,300 International Business Machines
Corporation~............................. 18,310
--------
41,057
--------
COMPUTER SOFTWARE -- 3.7%
209,350 Computer Associates International
Inc.~.................................... 7,445
224,400 Microsoft Corporation@~................... 20,112
--------
27,557
--------
CONGLOMERATE -- 1.6%
9,500 Unilever NV, ADR.......................... 631
81,500 United Technologies Corporation~.......... 11,038
--------
11,669
--------
CONTAINERS -- 0.3%
45,000 Ball Corporation.......................... 2,112
--------
COSMETICS AND TOILETRIES -- 1.9%
201,500 Kimberly-Clark Corporation................ 9,659
43,700 Procter & Gamble Company.................. 4,280
--------
13,939
--------
DIVERSIFIED -- 2.4%
79,900 AlliedSignal Inc. ........................ 3,930
83,500 Eastern Enterprises....................... 3,037
209,300 Frontier Corporation...................... 10,858
--------
17,825
--------
DRUGS -- 2.5%
22,600 American Home Products Corporation........ 1,475
37,200 Bristol-Myers Squibb Company.............. 2,392
33,000 Eli Lilly and Company..................... 2,801
48,400 Merck & Company, Inc. .................... 3,881
25,600 Pfizer Inc. .............................. 3,552
31,700 Pharmacia & Upjohn, Inc. ................. 1,977
26,300 Schering-Plough Corporation............... 1,455
13,000 Warner-Lambert Company.................... 860
--------
18,393
--------
ELECTRIC POWER -- 6.1%
76,200 Ameren Corporation........................ 2,757
116,400 Central & South West Corporation.......... 2,728
209,000 CINergy Corporation....................... 5,748
59,700 Consolidated Edison, Inc. ................ 2,705
77,900 Dominion Resources, Inc. ................. 2,877
187,445 Duke Energy Corporation................... 10,240
97,300 FirstEnergy Corporation................... 2,718
28,500 New Century Energies, Inc. ............... 971
128,500 Northern States Power Corporation......... 2,980
230,760 PacifiCorp................................ 3,981
78,500 Public Service Enterprise Group........... 2,998
120,700 SCANA Corporation......................... 2,618
62,900 Texas Utilities Company................... 2,622
--------
45,943
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
71
<PAGE> 76
NATIONS FUNDS
Nations Equity Income Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRICAL EQUIPMENT -- 2.7%
182,800 General Electric Company~................. $ 20,222
--------
ELECTRONICS -- 1.8%
88,407 AMP Inc. ................................. 4,746
216,125 Harris Corporation........................ 6,187
28,500 Motorola, Inc. ........................... 2,088
--------
13,021
--------
ENVIRONMENTAL -- 0.5%
33,100 Browning-Ferris Industries Inc. .......... 1,276
33,000 Johnson Controls Inc. .................... 2,059
--------
3,335
--------
FINANCIAL SERVICES -- 0.5%
22,600 American General Corporation.............. 1,593
25,200 Marsh & McLennan Companies Inc. .......... 1,870
--------
3,463
--------
FOOD PRODUCERS -- 2.9%
66,400 Bestfoods................................. 3,121
153,900 General Mills Inc. ....................... 11,628
29,400 H.J. Heinz Company........................ 1,393
203,420 Sara Lee Corporation...................... 5,035
--------
21,177
--------
FOREST AND PAPER PRODUCTS -- 1.8%
165,300 Potlatch Corporation...................... 5,610
163,700 Westvaco Corporation...................... 3,438
72,000 Weyerhaeuser Company...................... 3,996
--------
13,044
--------
HOUSEHOLD PRODUCTS -- 0.9%
133,157 Newell Rubbermaid Inc. ................... 6,325
--------
INSURANCE -- 3.4%
84,450 Aetna Life and Casualty Company........... 7,009
135,300 Allstate Corporation...................... 5,015
26,300 AON Corporation........................... 1,663
41,600 Jefferson-Pilot Corporation............... 2,818
84,500 Lincoln National Corporation Ltd. ........ 8,356
--------
24,861
--------
MACHINERY AND EQUIPMENT -- 1.6%
37,100 Briggs & Stratton Corporation............. 1,829
128,179 Cooper Industries Inc. ................... 5,464
293,500 Pall Corporation.......................... 4,861
--------
12,154
--------
MEDIA -- 0.2%
22,900 Time Warner Inc. ......................... 1,627
--------
MEDICAL PRODUCTS AND SUPPLIES -- 3.4%
26,100 Abbott Laboratories....................... 1,222
23,400 Baxter International Inc. ................ 1,544
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
MEDICAL PRODUCTS AND SUPPLIES -- (CONTINUED)
24,700 C.R. Bard Inc. ........................... $ 1,246
207,400 Johnson & Johnson......................... 19,431
26,300 Medtronic, Inc. .......................... 1,887
--------
25,330
--------
METALS AND MINING -- 0.9%
71,200 Alcoa Inc. ............................... 2,932
123,400 Cyprus Amax Minerals Company.............. 1,496
47,000 Reynolds Metals Company................... 2,271
--------
6,699
--------
NETWORKING EQUIPMENT AND PRODUCTS -- 0.5%
32,100 Cisco Systems, Inc.@...................... 3,517
--------
OFFICE EQUIPMENT -- 0.3%
24,600 Pitney Bowes, Inc. ....................... 1,568
9,200 Xerox Corporation......................... 491
--------
2,059
--------
OIL -- DOMESTIC -- 2.5%
120,318 Atlantic Richfield Company................ 8,783
35,600 Phillips Petroleum Company................ 1,682
221,669 Sunoco, Inc. ............................. 7,994
--------
18,459
--------
OIL -- INTERNATIONAL -- 3.6%
71,613 Chevron Corporation....................... 6,333
51,500 Exxon Corporation......................... 3,634
115,100 Mobil Corporation......................... 10,129
79,600 Royal Dutch Petroleum Company............. 4,139
37,900 Texaco Inc. .............................. 2,151
--------
26,386
--------
OIL FIELD SERVICES & EQUIPMENT -- 1.1%
31,000 Baker Hughes Inc. ........................ 754
162,200 Halliburton Company....................... 6,244
53,000 Sempra Energy............................. 1,017
--------
8,015
--------
PHOTO AND OPTICAL -- 0.2%
25,300 Eastman Kodak Company..................... 1,616
--------
PRINTING AND PUBLISHING -- 1.0%
34,700 Deluxe Corporation........................ 1,011
50,000 Jostens Inc. ............................. 1,063
26,000 McGraw-Hill Companies, Inc. .............. 1,417
131,800 R.R. Donnelley & Sons Company............. 4,241
--------
7,732
--------
RECREATION -- 1.7%
542,950 Brunswick Corporation..................... 10,350
69,600 Walt Disney Company....................... 2,166
--------
12,516
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
72
<PAGE> 77
NATIONS FUNDS
Nations Equity Income Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RESTAURANTS AND LODGING -- 1.8%
302,975 Hilton Hotels Corporation................. $ 4,261
200,000 McDonald's Corporation.................... 9,062
--------
13,323
--------
RETAIL -- FOOD -- 1.3%
24,200 Albertson's Inc. ......................... 1,314
37,500 American Stores Company................... 1,238
31,600 Safeway, Inc.@............................ 1,621
258,800 Supervalu Inc. ........................... 5,338
--------
9,511
--------
RETAIL -- GENERAL -- 3.1%
80,050 J.C. Penny Company, Inc. ................. 3,242
371,475 May Department Stores Company............. 14,534
52,900 Wal-Mart Stores, Inc. .................... 4,877
--------
22,653
--------
RETAIL -- SPECIALTY -- 0.5%
30,700 CVS Corporation........................... 1,458
37,600 Home Depot Inc. .......................... 2,341
--------
3,799
--------
SEMICONDUCTORS -- 1.8%
111,800 Intel Corporation~........................ 13,290
--------
STEEL -- 0.1%
88,000 Worthington Industries.................... 1,034
--------
TELECOMMUNICATIONS -- 0.4%
28,800 Lucent Technologies, Inc. ................ 3,103
--------
TOBACCO -- 0.1%
13,600 Philip Morris Companies Inc. ............. 479
--------
TRANSPORTATION -- 1.1%
238,795 Burlington Northern Santa Fe Inc. ........ 7,850
--------
TRUCKING AND SHIPPING -- 0.3%
71,740 Ryder System Inc. ........................ 1,982
--------
UTILITIES -- NATURAL GAS -- 2.8%
106,900 Baltimore Gas and Electric................ 2,713
170,700 Consolidated Natural Gas Company~......... 8,310
159,800 Keyspan Energy Corporation................ 4,015
119,000 NICOR Inc. ............................... 4,277
48,000 Sonat Inc. ............................... 1,440
--------
20,755
--------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
UTILITIES -- TELEPHONE -- 8.2%
215,025 ALLTEL Corporation........................ $ 13,413
227,200 AT&T Corporation~......................... 18,134
45,300 Bell Atlantic Corporation................. 2,341
254,000 BellSouth Corporation~.................... 10,176
186,294 GTE Corporation........................... 11,271
54,800 SBC Communications Inc. .................. 2,582
58,800 U.S. West Inc. ........................... 3,238
--------
61,155
--------
TOTAL COMMON STOCKS
(Cost $608,805)........................... 694,741
--------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 0.5%
U.S. TREASURY BILLS -- 0.5% (Cost $3,366)
$ 3,400 4.110%** 06/24/99~........................ 3,366
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
- ---------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 6.7%
(Cost $49,821)
49,821 Nations Cash Reserves#..................... 49,821
--------
TOTAL INVESTMENTS
(Cost $661,992*).................... 101.1% 747,928
--------
OTHER ASSETS AND LIABILITIES
(NET).............................. (1.1)%
Receivable for Fund shares sold............ $ 517
Dividends receivable....................... 1,213
Interest receivable........................ 217
Prepaid expenses........................... 10
Collateral on securities loaned............ (5,193)
Variation margin........................... (846)
Payable for Fund shares redeemed........... (2,943)
Investment advisory fee payable............ (413)
Administration fee payable................. (123)
Shareholder servicing and distribution fees
payable................................... (250)
Accrued Trustees'/Directors' fees and
expenses.................................. (8)
Accrued expenses and other liabilities..... (207)
--------
TOTAL OTHER ASSETS AND LIABILITIES (NET)...
(8,026)
--------
NET ASSETS.......................... 100.0% $739,902
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
73
<PAGE> 78
NATIONS FUNDS
Nations Equity Income Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
(000)
- -------------------------------------------------------------------
<C> <S> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment income........ $ 389
Accumulated net realized loss on
investments sold and futures contracts.... (205)
Net unrealized appreciation of investments
and futures contracts..................... 85,205
Paid-in capital............................ 654,513
--------
NET ASSETS................................. $739,902
========
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($575,075,904/50,624,803
shares outstanding)....................... $11.36
========
INVESTOR A SHARES:
Net asset value and redemption price per
share ($51,278,213/4,533,163 shares
outstanding).............................. $11.31
========
Maximum sales charge....................... 5.75%
Maximum offering price per share........... $12.00
INVESTOR B SHARES:
Net asset value and offering price per
share(b) ($107,746,917/9,524,828 shares
outstanding).............................. $11.31
========
INVESTOR C SHARES:
Net asset value and offering price per
share(b) ($5,800,499/506,770 shares
outstanding).............................. $11.45
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $109,783 and gross
depreciation of $23,955 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$662,100.
** Rate represents annualized yield at date of purchase.
@ Non-income producing security.
(b) The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
~ Security segregated as collateral for futures contracts.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc. A
portion of this amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents cash collateral is
$5,193.
ABBREVIATIONS:
ADR -- American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
74
<PAGE> 79
NATIONS FUNDS
Nations Equity Index Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 100.6%
AEROSPACE AND DEFENSE -- 0.8%
86,100 Boeing Company........................... $ 2,938
3,900 EG&G, Inc. .............................. 103
11,500 General Dynamics Corporation............. 739
35,300 Lockheed Martin Corporation.............. 1,330
6,300 Northrop Grumman Corporation............. 377
30,700 Raytheon Company, Class B................ 1,800
11,100 TRW Inc. ................................ 505
--------
7,792
--------
APPAREL AND TEXTILES -- 0.3%
6,800 Fruit of the Loom, Inc., Class A......... 71
6,000 Liz Claiborne Inc. ...................... 196
3,600 National Service Industries, Inc. ....... 123
26,100 Nike, Inc., Class B...................... 1,505
5,000 Reebok International, Ltd.@.............. 79
2,900 Russell Corporation...................... 58
1,500 Springs Industries Inc. ................. 41
11,000 V.F. Corporation......................... 519
--------
2,592
--------
AUTOMOBILE PARTS MANUFACTURERS -- 0.3%
13,800 AutoZone Inc.@........................... 419
7,400 Cooper Tire & Rubber Company............. 136
14,800 Dana Corporation......................... 562
6,700 Eaton Corporation........................ 479
16,000 Genuine Parts Company.................... 461
14,200 Goodyear Tire & Rubber Company........... 708
5,300 Snap-On Inc. ............................ 154
--------
2,919
--------
AUTOMOBILES AND TRUCKS -- 1.3%
109,700 Ford Motor Company....................... 6,225
60,500 General Motors Corporation............... 5,256
10,600 ITT Industries, Inc. .................... 375
6,300 Navistar International Corporation@...... 253
7,300 PACCAR, Inc. ............................ 301
--------
12,410
--------
BANKING -- 8.3%
9,900 Amsouth Bancorporation................... 450
105,560 Banc One Corporation..................... 5,812
68,200 Bank of New York Inc. ................... 2,451
157,700 BankAmerica Corporation.................. 11,138
26,600 BankBoston Corporation................... 1,152
9,000 Bankers Trust N.Y. Corporation........... 794
25,600 BB&T Corporation......................... 926
77,300 Chase Manhattan Corporation.............. 6,285
205,101 Citigroup Inc. .......................... 13,101
14,100 Comerica Inc. ........................... 880
23,800 Fifth Third Bancorp...................... 1,569
87,800 First Union Corporation.................. 4,692
21,000 Firstar Corporation...................... 1,880
51,100 Fleet Financial Group, Inc. ............. 1,923
5,100 Golden West Financial Corporation........ 487
19,200 Huntington Bancshares Inc. .............. 594
16,000 J.P. Morgan & Company Inc. .............. 1,974
40,000 KeyCorp.................................. 1,213
23,500 Mellon Bank Corporation.................. 1,654
13,700 Mercantile Bancorporation................ 651
29,700 National City Corporation................ 1,971
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
BANKING -- (CONTINUED)
10,100 Northern Trust Corporation............... $ 897
27,300 PNC Bank Corporation..................... 1,517
20,100 Regions Financial Corporation............ 696
9,700 Republic New York Corporation............ 447
14,600 SouthTrust Corporation................... 545
14,600 State Street Corporation................. 1,200
15,900 Summit Bancorp........................... 620
28,100 SunTrust Banks, Inc. .................... 1,749
67,100 U.S. Bancorp............................. 2,286
11,600 Union Planters Corporation............... 510
18,700 Wachovia Corporation..................... 1,518
146,900 Wells Fargo Company...................... 5,151
--------
78,733
--------
BEVERAGES -- 2.7%
2,900 Adolph Coors Company, Class B............ 157
43,900 Anheuser-Busch Companies, Inc. .......... 3,345
6,400 Brown-Forman Corporation, Class B........ 369
222,800 Coca-Cola Company++...................... 13,673
37,000 Coca-Cola Enterprises Inc. .............. 1,119
134,600 PepsiCo, Inc. ........................... 5,275
35,600 Seagram Company Ltd. .................... 1,780
--------
25,718
--------
BUSINESS SERVICES -- 0.1%
388 Momentum Business Applications Inc. ..... 3
14,900 Paychex, Inc. ........................... 707
--------
710
--------
CHEMICALS -- BASIC -- 1.3%
21,200 Air Products & Chemicals Inc. ........... 726
6,800 B.F. Goodrich Company.................... 233
20,500 Dow Chemical Company..................... 1,911
102,200 E.I. duPont de Nemours and Company....... 5,935
7,400 Eastman Chemical Company................. 311
11,700 Ecolab, Inc. ............................ 415
2,800 FMC Corporation@......................... 138
8,700 Hercules, Inc. .......................... 220
7,000 Mallinckrodt Group Inc. ................. 186
6,100 Nalco Chemical Company................... 162
15,900 PPG Industries, Inc. .................... 815
14,200 Praxair Inc. ............................ 512
16,400 Rohm & Haas Company...................... 550
12,300 Union Carbide Corporation................ 556
--------
12,670
--------
CHEMICALS -- DIVERSIFIED -- 0.3%
54,200 Monsanto Company......................... 2,490
--------
CHEMICALS -- SPECIALTY -- 0.1%
13,000 Engelhard Corporation.................... 220
5,300 Great Lakes Chemical Corporation......... 195
11,800 Morton International Inc. ............... 434
9,200 Sigma-Aldrich Corporation................ 269
7,200 W.R. Grace & Company..................... 87
--------
1,205
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
75
<PAGE> 80
NATIONS FUNDS
Nations Equity Index Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
COMPUTER RELATED -- 5.4%
32,200 3Com Corporation@........................ $ 751
12,100 Apple Computer Inc.@..................... 435
13,500 Ceridian Corporation@.................... 494
154,100 Compaq Computer Corporation.............. 4,883
4,300 Data General Corporation................. 44
228,400 Dell Computer Corporation@............... 9,336
45,200 EMC Corporation@......................... 5,774
14,000 Gateway 2000 Inc.@....................... 960
93,900 Hewlett-Packard Company.................. 6,368
11,500 Honeywell Inc. .......................... 872
29,400 IMS Health Inc. ......................... 974
83,500 International Business Machines
Corporation............................. 14,799
22,100 Seagate Technology Inc.@................. 653
16,900 Silicon Graphics, Inc.@.................. 282
34,400 Sun Microsystems, Inc.@.................. 4,298
22,800 Unisys Corporation@...................... 631
--------
51,554
--------
COMPUTER SERVICES -- 0.6%
54,700 Automatic Data Processing Inc. .......... 2,263
14,200 Computer Sciences Corporation@........... 784
44,200 Electronic Data Systems.................. 2,152
13,300 Equifax Inc. ............................ 457
--------
5,656
--------
COMPUTER SOFTWARE -- 5.5%
6,200 Adobe Systems Inc. ...................... 352
4,000 Autodesk, Inc. .......................... 162
18,700 BMC Software, Inc.@...................... 693
14,300 Cabletron Systems Inc.@.................. 117
49,400 Computer Associates International
Inc. ................................... 1,757
32,900 Compuware Corporation@................... 785
40,300 First Data Corporation................... 1,723
458,200 Microsoft Corporation@................... 41,065
31,800 Novell Inc.@............................. 801
132,050 Oracle Systems Corporation@.............. 3,483
24,500 Parametric Technology Corporation@....... 484
20,000 Peoplesoft, Inc.@........................ 293
2,100 Shared Medical Systems Corporation....... 117
--------
51,832
--------
CONGLOMERATE -- 1.1%
58,215 Tyco International Ltd. ................. 4,177
57,900 Unilever NV, ADR......................... 3,847
20,800 United Technologies Corporation.......... 2,817
--------
10,841
--------
CONSTRUCTION -- 0.3%
3,300 Armstrong World Industries, Inc. ........ 149
7,100 Case Corporation......................... 180
5,300 Centex Corporation....................... 177
6,250 Crane Company............................ 151
7,600 Fluor Corporation........................ 205
3,200 Kaufman & Broad Home Corporation......... 72
30,800 Masco Corporation........................ 870
4,800 Owens-Corning Fiberglass Corporation..... 153
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
CONSTRUCTION -- (CONTINUED)
3,600 Pulte Corporation........................ $ 75
15,600 Sherwin-Williams Company................. 439
--------
2,471
--------
CONTAINERS -- 0.2%
10,700 Avery-Dennison Corporation............... 614
2,400 Ball Corporation......................... 113
4,600 Bemis Company, Inc. ..................... 143
11,300 Crown Cork & Seal Company, Inc. ......... 323
13,900 Owens-Illinois, Inc. .................... 348
7,800 Sealed Air Corporation................... 384
5,600 Tupperware Corporation................... 101
--------
2,026
--------
COSMETICS AND TOILETRIES -- 2.6%
5,000 Alberto-Culver Company, Class B.......... 117
23,800 Avon Products, Inc. ..................... 1,120
26,800 Colgate-Palmolive Company................ 2,466
101,800 Gillette Company......................... 6,051
9,700 International Flavors & Fragrances,
Inc. ................................... 364
50,400 Kimberly-Clark Corporation............... 2,416
121,700 Procter & Gamble Company................. 11,919
--------
24,453
--------
DIVERSIFIED -- 1.0%
2,300 Aeroquip-Vickers Inc. ................... 132
51,000 AlliedSignal Inc. ....................... 2,509
21,000 Corning, Inc. ........................... 1,260
1,700 Eastern Enterprises...................... 62
15,600 Fortune Brands Inc. ..................... 604
15,300 Frontier Corporation..................... 794
36,600 Minnesota Mining & Manufacturing
Company................................. 2,588
15,200 Tenneco Inc. ............................ 425
14,700 Textron Inc. ............................ 1,137
--------
9,511
--------
DRUGS -- 8.6%
8,100 ALZA Corporation@........................ 310
118,700 American Home Products Corporation....... 7,745
46,100 Amgen Inc.@.............................. 3,452
180,300 Bristol-Myers Squibb Company............. 11,596
100,100 Eli Lilly and Company.................... 8,496
216,400 Merck & Company, Inc.++.................. 17,352
118,000 Pfizer Inc. ............................. 16,373
46,000 Pharmacia & Upjohn, Inc. ................ 2,869
132,700 Schering-Plough Corporation.............. 7,340
74,100 Warner-Lambert Company................... 4,904
--------
80,437
--------
ELECTRIC POWER -- 1.9%
15,800 AES Corporation@......................... 589
12,400 Ameren Corporation....................... 449
17,200 American Electric Power Inc. ............ 683
13,600 Carolina Power & Light Company........... 514
19,200 Central & South West Corporation......... 450
14,300 CINergy Corporation...................... 393
21,300 Consolidated Edison, Inc. ............... 965
17,700 Dominion Resources, Inc. ................ 654
13,000 DTE Energy Company....................... 500
32,600 Duke Energy Corporation.................. 1,780
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
76
<PAGE> 81
NATIONS FUNDS
Nations Equity Index Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRIC POWER -- (CONTINUED)
32,600 Edison International..................... $ 725
22,300 Entergy Corporation...................... 613
20,900 FirstEnergy Corporation.................. 584
16,300 FPL Group Inc. .......................... 868
11,600 GPU, Inc. ............................... 433
10,400 New Century Energies, Inc. .............. 354
13,700 Northern States Power Corporation........ 318
34,600 P G & E Corporation...................... 1,075
26,900 PacifiCorp............................... 464
20,300 PECO Energy Company...................... 939
14,900 PP&L Resources Inc. ..................... 369
21,000 Public Service Enterprise Group.......... 802
26,800 Reliant Energy Inc. ..................... 698
63,100 Southern Company......................... 1,471
25,300 Texas Utilities Company.................. 1,055
19,700 Unicom Corporation....................... 720
--------
18,465
--------
ELECTRICAL EQUIPMENT -- 3.8%
40,000 Emerson Electric Company................. 2,118
296,916 General Electric Company++............... 32,845
7,800 Raychem Corporation...................... 176
7,400 Scientific-Atlanta Inc. ................. 202
4,900 Thomas & Betts Corporation............... 184
9,000 W.W. Grainger Inc. ...................... 388
--------
35,913
--------
ELECTRONICS -- 1.1%
20,000 AMP Inc. ................................ 1,074
33,200 Applied Materials Inc.@.................. 2,048
7,500 Harris Corporation....................... 215
8,100 KLA-Tencor Corporation@.................. 393
12,700 LSI Logic Corporation@................... 396
54,100 Motorola, Inc. .......................... 3,963
14,800 National Semiconductor Corporation@...... 138
4,300 Perkin-Elmer Corporation................. 417
17,600 Rockwell International Corporation....... 747
21,600 Solectron Corporation@................... 1,049
4,400 Tektronix, Inc. ......................... 111
--------
10,551
--------
ENVIRONMENTAL -- 0.1%
16,500 Browning-Ferris Industries Inc. ......... 636
7,900 Johnson Controls Inc. ................... 493
29,700 Laidlaw Inc. ............................ 173
3,700 Millipore Corporation.................... 89
--------
1,391
--------
EXPLORATION AND DRILLING -- 0.1%
15,900 Burlington Resources Inc. ............... 635
4,400 Helmerich & Payne, Inc. ................. 100
5,500 McDermott International Inc. ............ 139
--------
874
--------
FINANCIAL SERVICES -- 4.7%
41,600 American Express Company................. 4,888
23,000 American General Corporation............. 1,622
62,900 Associates First Capital Corporation..... 2,831
10,800 Bear Stearns Companies Inc. ............. 483
6,100 Capital One Financial Corporation........ 921
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES -- (CONTINUED)
36,150 Charles Schwab Corporation............... $ 3,475
9,900 Countrywide Credit Industries, Inc. ..... 371
93,900 Fannie Mae............................... 6,502
61,500 Freddie Mac.............................. 3,513
44,300 Household International Inc. ............ 2,021
10,800 Lehman Brothers Holdings Inc. ........... 645
23,200 Marsh & McLennan Companies Inc. ......... 1,721
68,000 MBNA Corporation......................... 1,624
31,300 Merrill Lynch & Company Inc. ............ 2,768
52,840 Morgan Stanley Dean Witter & Company..... 5,280
12,900 Providian Financial Corporation.......... 1,419
15,200 SLM Holding Corporation.................. 635
23,900 Synovus Financial Corporation............ 488
11,500 Transamerica Corporation................. 817
52,252 Washington Mutual, Inc. ................. 2,136
--------
44,160
--------
FOOD PRODUCERS -- 1.6%
54,250 Archer-Daniels-Midland Company........... 797
26,200 Bestfoods................................ 1,231
41,100 Campbell Soup Company.................... 1,672
43,400 ConAgra Inc. ............................ 1,109
14,200 General Mills Inc. ...................... 1,073
33,000 H.J. Heinz Company....................... 1,563
12,900 Hershey Foods Corporation................ 722
36,900 Kellogg Company.......................... 1,248
22,100 Pioneer Hi-Bred Internationl............. 832
12,500 Quaker Oats Company...................... 782
28,700 Ralston Purina Group..................... 766
84,400 Sara Lee Corporation..................... 2,089
10,600 Wm. Wrigley Jr. Company.................. 959
--------
14,843
--------
FOREST AND PAPER PRODUCTS -- 0.6%
5,000 Boise Cascade Corporation................ 161
8,800 Champion International Corporation....... 361
20,000 Fort James Corporation................... 634
8,500 Georgia-Pacific Corporation.............. 631
27,801 International Paper Company.............. 1,174
10,000 Louisiana Pacific Corporation............ 186
9,400 Mead Corporation......................... 289
2,300 Potlatch Corporation..................... 78
4,900 Temple-Inland Inc. ...................... 307
6,500 Union Camp Corporation................... 436
9,200 Westvaco Corporation..................... 193
18,000 Weyerhaeuser Company..................... 1,000
10,100 Willamette Industries Inc. .............. 381
--------
5,831
--------
FURNITURE AND APPLIANCES -- 0.2%
8,700 Black & Decker Corporation............... 482
8,700 Maytag Corporation....................... 525
8,300 Stanley Works............................ 213
7,100 Whirlpool Corporation.................... 386
--------
1,606
--------
HOUSEHOLD PRODUCTS -- 0.3%
10,600 Clorox Company........................... 1,243
25,042 Newell Rubbermaid Inc. .................. 1,189
--------
2,432
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
77
<PAGE> 82
NATIONS FUNDS
Nations Equity Index Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
INSURANCE -- 3.2%
13,000 Aetna Life and Casualty Company.......... $ 1,079
75,800 Allstate Corporation..................... 2,809
110,335 American International Group, Inc. ...... 13,309
15,100 AON Corporation.......................... 955
15,100 Chubb Corporation........................ 884
19,400 CIGNA Corporation........................ 1,626
15,000 Cincinnati Financial Corporation......... 547
28,000 Conseco Inc. ............................ 865
21,300 Hartford Financial Services Group,
Inc. ................................... 1,210
9,600 Jefferson-Pilot Corporation.............. 650
9,200 Lincoln National Corporation Ltd. ....... 910
10,400 Loews Corporation........................ 776
8,900 MBIA Inc. ............................... 516
10,300 MGIC Investment Corporation.............. 361
6,800 Progressive Corporation.................. 976
11,500 Provident Companies Inc. ................ 397
12,700 SAFECO Corporation....................... 514
21,200 St. Paul Companies Inc. ................. 659
12,600 Torchmark Corporation.................... 398
12,500 Unum Corporation......................... 595
--------
30,036
--------
MACHINERY AND EQUIPMENT -- 0.7%
2,000 Briggs & Stratton Corporation............ 99
33,000 Caterpillar Inc. ........................ 1,517
10,700 Cooper Industries Inc. .................. 456
3,200 Cummins Engine Company, Inc. ............ 114
22,500 Deere & Company.......................... 869
20,300 Dover Corporation........................ 667
3,400 Foster Wheeler Corporation............... 41
4,100 Harnischfeger Industries Inc. ........... 23
22,600 Illinois Tool Works, Inc. ............... 1,399
14,900 Ingersoll-Rand Company................... 739
3,300 Milacron Inc. ........................... 52
600 NACCO Industries Inc., Class A........... 44
11,300 Pall Corporation......................... 187
10,000 Parker Hannifin Corporation.............. 343
14,400 Thermo Electron Corporation++............ 195
5,600 Timken Company........................... 91
--------
6,836
--------
MANUFACTURING -- 0.1%
13,300 Danaher Corporation...................... 695
--------
MEDIA -- 2.0%
64,800 CBS Corporation@......................... 2,653
22,400 Clear Channel Communications, Inc.@...... 1,502
33,500 Comcast Corporation, Class A............. 2,108
55,100 MediaOne Group, Inc. .................... 3,499
15,300 Omnicom Group............................ 1,223
112,200 Time Warner Inc. ........................ 7,973
--------
18,958
--------
MEDICAL PRODUCTS AND SUPPLIES -- 3.3%
139,500 Abbott Laboratories...................... 6,530
6,100 Allergan, Inc. .......................... 536
4,900 Bausch & Lomb Inc. ...................... 319
25,500 Baxter International Inc. ............... 1,683
22,300 Becton Dickinson & Company............... 854
10,200 Biomet, Inc. ............................ 428
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
MEDICAL PRODUCTS AND SUPPLIES -- (CONTINUED)
35,000 Boston Scientific Corporation@........... $ 1,420
5,000 C.R. Bard Inc. .......................... 252
24,600 Cardinal Health, Inc. ................... 1,624
27,300 Guidant Corporation...................... 1,652
122,300 Johnson & Johnson........................ 11,457
53,700 Medtronic, Inc. ......................... 3,853
7,900 St. Jude Medical Inc.@................... 193
--------
30,801
--------
MEDICAL SERVICES -- 0.5%
58,200 Columbia/HCA Healthcare Corporation...... 1,102
24,900 HBO & Company, Inc. ..................... 1,643
6,300 HCR Manor Care, Inc.@.................... 144
36,600 HEALTHSOUTH Corporation@................. 380
15,000 Humana Inc.@............................. 259
27,800 Tenet Healthcare Corporation@............ 526
17,200 United Healthcare Corporation............ 905
--------
4,959
--------
METALS AND MINING -- 0.5%
20,700 Alcan Aluminium Ltd. .................... 534
30,400 Alcoa Inc. .............................. 1,253
3,300 ASARCO Inc. ............................. 45
33,900 Barrick Gold Corporation................. 579
20,900 Battle Mountain Gold Company............. 57
8,600 Cyprus Amax Minerals Company............. 104
16,300 Freeport-McMoran Copper & Gold, Inc. .... 177
19,300 Homestake Mining Company................. 166
14,900 Inco Ltd. ............................... 198
14,200 Newmont Mining Corporation............... 249
16,800 Niagara Mohawk Holdings Inc. ............ 226
5,200 Phelps Dodge Corporation................. 256
22,600 Placer Dome Inc. ........................ 253
6,600 Reynolds Metals Company.................. 319
--------
4,416
--------
NETWORKING EQUIPMENT AND PRODUCTS -- 1.8%
19,900 Ascend Communications, Inc.@............. 1,665
143,300 Cisco Systems, Inc.@..................... 15,701
--------
17,366
--------
OFFICE EQUIPMENT -- 0.5%
12,300 Ikon Office Solutions Inc. .............. 158
8,200 Moore Corporation Ltd. .................. 81
24,700 Pitney Bowes, Inc. ...................... 1,575
59,300 Xerox Corporation........................ 3,164
--------
4,978
--------
OIL -- DOMESTIC -- 0.8%
8,500 Amerada Hess Corporation................. 428
7,200 Ashland Inc. ............................ 295
29,000 Atlantic Richfield Company............... 2,116
19,200 Coastal Corporation...................... 634
7,700 Columbia Energy Group.................... 402
7,704 Kerr-McGee Corporation................... 253
33,100 Occidental Petroleum Corporation......... 596
23,600 Phillips Petroleum Company............... 1,115
8,700 Sunoco, Inc. ............................ 314
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
78
<PAGE> 83
NATIONS FUNDS
Nations Equity Index Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
OIL -- DOMESTIC -- (CONTINUED)
21,900 Unocal Corporation....................... $ 806
26,300 USX-Marathon Group Inc. ................. 723
--------
7,682
--------
OIL -- INTERNATIONAL -- 4.3%
10,900 Anadarko Petroleum Corporation........... 411
9,000 Apache Corporation....................... 235
59,200 Chevron Corporation...................... 5,236
221,928 Exxon Corporation++...................... 15,659
70,600 Mobil Corporation........................ 6,213
194,000 Royal Dutch Petroleum Company++.......... 10,087
49,000 Texaco Inc. ............................. 2,781
22,700 Union Pacific Resources Group Inc. ...... 270
--------
40,892
--------
OIL AND GAS -- 0.2%
29,700 Enron Corporation........................ 1,908
--------
OIL FIELD SERVICES & EQUIPMENT -- 0.6%
28,640 Baker Hughes Inc. ....................... 696
39,600 Halliburton Company...................... 1,525
8,100 Rowan Companies Inc.@.................... 103
49,700 Schlumberger Ltd. ....................... 2,991
21,700 Sempra Energy............................ 416
--------
5,731
--------
PHOTO AND OPTICAL -- 0.2%
29,100 Eastman Kodak Company.................... 1,859
3,700 Polaroid Corporation..................... 74
--------
1,933
--------
PRINTING AND PUBLISHING -- 0.7%
6,700 American Greetings Corporation, Class
A....................................... 170
7,500 Deluxe Corporation....................... 218
8,600 Dow Jones & Company Inc. ................ 406
15,400 Dun & Bradstreet Corporation............. 549
25,800 Gannett Company, Inc. ................... 1,625
6,600 Harcourt General Inc. ................... 292
3,000 Jostens Inc. ............................ 64
7,400 Knight-Ridder Inc. ...................... 370
18,200 McGraw-Hill Companies, Inc. ............. 992
4,600 Meredith Corporation..................... 145
17,100 New York Times Company, Class A.......... 487
12,800 R.R. Donnelley & Sons Company............ 412
8,300 Times Mirror Company, Class A............ 449
11,000 Tribune Company.......................... 720
--------
6,899
--------
PROFESSIONAL SERVICES -- 0.3%
23,000 Franklin Resources, Inc. ................ 647
9,500 H & R Block, Inc. ....................... 450
12,300 Interpublic Group Companies, Inc. ....... 958
23,300 Service Corporation International........ 332
--------
2,387
--------
RECREATION -- 1.4%
9,100 Brunswick Corporation.................... 173
54,700 Carnival Corporation..................... 2,656
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
RECREATION -- (CONTINUED)
2,900 Fleetwood Enterprises Inc. .............. $ 83
9,300 Harrah's Entertainment Inc.@............. 177
18,000 Hasbro, Inc. ............................ 521
7,000 King World Productions Inc.@............. 214
26,600 Mattel, Inc. ............................ 662
16,100 Mirage Resorts, Inc.@.................... 342
32,200 Viacom Inc., Class B..................... 2,703
184,900 Walt Disney Company...................... 5,756
--------
13,287
--------
RESTAURANTS AND LODGING -- 1.0%
77,100 Cendant Corporation@..................... 1,214
12,800 Darden Restaurants Inc. ................. 264
22,500 Hilton Hotels Corporation................ 316
23,000 Marriott International Inc., Class A..... 773
124,300 McDonald's Corporation................... 5,633
13,800 Tricon Global Restaurants Inc. .......... 969
11,800 Wendy's International Inc. .............. 336
--------
9,505
--------
RETAIL -- FOOD -- 0.8%
22,300 Albertson's Inc. ........................ 1,211
24,700 American Stores Company.................. 815
3,200 Great Atlantic & Pacific Tea Company,
Inc. ................................... 96
23,200 Kroger Company@.......................... 1,389
44,900 Safeway, Inc.@........................... 2,303
10,600 Supervalu Inc. .......................... 219
30,500 SYSCO Corporation........................ 803
13,400 Winn-Dixie Stores Inc. .................. 501
--------
7,337
--------
RETAIL -- GENERAL -- 3.2%
9,800 Consolidated Stores Corporation@......... 297
19,600 Costco Companies Inc.@................... 1,795
39,600 Dayton Hudson Corporation................ 2,639
9,700 Dillards, Inc., Class A.................. 246
16,175 Dollar General Corporation............... 550
19,100 Federated Department Stores, Inc. ....... 766
22,800 J.C. Penny Company, Inc. ................ 923
44,100 K Mart Corporation@...................... 741
31,350 May Department Stores Company............ 1,227
35,300 Sears, Roebuck and Company............... 1,595
25,000 Toys R US Inc.@.......................... 470
201,700 Wal-Mart Stores, Inc. ................... 18,595
--------
29,844
--------
RETAIL -- SPECIALTY -- 2.7%
9,000 Circuit City Stores - Circuit City
Group................................... 690
34,800 CVS Corporation.......................... 1,653
13,800 Fred Meyer, Inc.@........................ 812
53,150 Gap Inc. ................................ 3,578
133,300 Home Depot Inc. ......................... 8,297
14,400 Kohls Corporation@....................... 1,021
20,600 Limited Inc. ............................ 816
3,200 Longs Drug Stores Corporation............ 97
31,600 Lowe's Companies Inc. ................... 1,912
13,700 Nordstrom Inc. .......................... 560
5,600 PEP Boys - Manny, Moe & Jack............. 85
23,300 Rite Aid Corporation..................... 583
39,200 Staples Inc.@............................ 1,289
9,200 Tandy Corporation........................ 587
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
79
<PAGE> 84
NATIONS FUNDS
Nations Equity Index Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RETAIL -- SPECIALTY -- (CONTINUED)
28,900 TJX Companies Inc. ...................... $ 983
89,900 Walgreen Company......................... 2,540
--------
25,503
--------
SEMICONDUCTORS -- 2.4%
12,900 Advanced Micro Devices@.................. 200
151,345 Intel Corporation++...................... 17,990
22,500 Micron Technology Inc.@.................. 1,086
35,300 Texas Instruments Inc. .................. 3,504
--------
22,780
--------
STEEL -- 0.1%
17,800 Allegheny Teledyne Inc. ................. 337
11,600 Bethlehem Steel Corporation.............. 96
8,200 Nucor Corporation........................ 361
8,100 USX - U.S. Steel Group Inc. ............. 190
8,900 Worthington Industries................... 105
--------
1,089
--------
TELECOMMUNICATIONS -- 3.5%
93,200 America Online Inc. ..................... 13,606
8,200 Andrew Corporation@...................... 101
13,700 General Instruments Corporation.......... 415
119,700 Lucent Technologies, Inc. ............... 12,898
24,900 Nextel Communications Inc. .............. 912
59,260 Northern Telecommunications Ltd. ........ 3,682
16,600 Tellabs, Inc.@........................... 1,623
--------
33,237
--------
TOBACCO -- 0.9%
220,700 Philip Morris Companies Inc. ............ 7,765
28,300 RJR Nabisco Holdings Corporation......... 708
16,600 UST Inc. ................................ 434
--------
8,907
--------
TRANSPORTATION -- 0.9%
16,400 AMR Corporation@......................... 960
42,700 Burlington Northern Santa Fe Inc. ....... 1,405
19,800 CSX Corporation.......................... 771
13,800 Delta Air Lines, Inc. ................... 959
13,300 FDX Corporation@......................... 1,234
34,400 Norfolk Southern Corporation............. 907
30,300 Southwest Airlines Company............... 917
22,400 Union Pacific Corporation................ 1,197
9,200 US Airways Group Inc. ................... 449
--------
8,799
--------
TRUCKING AND SHIPPING -- 0.0%+
7,000 Ryder System Inc. ....................... 193
--------
UTILITIES -- NATURAL GAS -- 0.3%
13,300 Baltimore Gas and Electric............... 337
8,800 Consolidated Natural Gas Company......... 428
4,100 NICOR Inc. .............................. 147
2,500 Oneok Inc. .............................. 62
2,800 Peoples Energy Corporation............... 90
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
UTILITIES -- NATURAL GAS -- (CONTINUED)
10,000 Sonat Inc. .............................. $ 300
38,500 Williams Companies, Inc. ................ 1,522
--------
2,886
--------
UTILITIES -- TELEPHONE -- 8.3%
51,500 AirTouch Communications, Inc. ........... 4,976
24,800 ALLTEL Corporation....................... 1,547
99,500 Ameritech Corporation.................... 5,759
190,000 AT&T Corporation......................... 15,164
140,500 Bell Atlantic Corporation................ 7,262
179,000 BellSouth Corporation.................... 7,171
87,200 GTE Corporation.......................... 5,276
166,400 MCI Worldcom, Inc.@...................... 14,737
177,800 SBC Communications Inc. ................. 8,379
40,600 Sprint Corporation (FON Group)........... 3,984
41,500 Sprint Corporation (PCS Group)........... 1,839
45,500 U.S. West Inc. .......................... 2,505
--------
78,599
--------
WASTE MANAGEMENT -- 0.2%
51,200 Waste Management Inc. ................... 2,272
--------
TOTAL COMMON STOCKS (Cost $524,919)...... 952,801
--------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
- --------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 0.2%
U.S. TREASURY BILLS -- 0.2%
$ 1,400 3.990%** 06/03/99++...................... 1,390
750 4.110%** 06/24/99++...................... 742
--------
TOTAL U.S. TREASURY OBLIGATIONS (Cost
$2,132)................................. 2,132
--------
SHARES
(000)
- --------
INVESTMENT COMPANIES -- 4.6%
(Cost $43,571)
43,571 Nations Cash Reserves#................... 43,571
--------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $570,622*).................. 105.4% 998,504
--------
OTHER ASSETS AND
LIABILITIES (NET)................ (5.4)%
Receivable for Fund shares sold.......... $ 538
Dividends receivable..................... 996
Interest receivable...................... 72
Prepaid expenses......................... 11
Collateral on securities loaned.......... (27,228)
Variation margin......................... (297)
Payable for Fund shares redeemed......... (25,066)
Investment advisory fee payable.......... (64)
Administration fee payable............... (152)
Shareholder servicing and distribution
fees payable............................ (3)
Accrued Trustees'/Directors' fees and ex-
penses.................................. (34)
Accrued expenses and other liabilities... (137)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)....................... (51,364)
--------
NET ASSETS........................ 100.0% $947,140
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
80
<PAGE> 85
NATIONS FUNDS
Nations Equity Index Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
(000)
- -----------------------------------------------------------------
<C> <S> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment income...... $ 44
Accumulated net realized gain on invest-
ments sold and futures contracts........ 1,774
Net unrealized appreciation of
investments and futures contracts....... 427,610
Paid-in capital.......................... 517,712
--------
NET ASSETS............................... $947,140
========
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($933,312,659/37,243,990
shares outstanding)..................... $25.06
========
INVESTOR A SHARES:
Net asset value, offering and redemption
price per share ($13,827,354/554,428
shares
outstanding)............................ $24.94
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $435,745 and gross
depreciation of $12,635 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$575,394.
** Rate represents annualized yield at date of purchase.
@ Non-income producing security.
++ Security segregated as collateral for futures contracts.
+ Amount represents less than 0.1%.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc. A
portion of this amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents cash collateral is
$27,228.
ABBREVIATIONS:
ADR -- American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
81
<PAGE> 86
NATIONS FUNDS
Nations Marsico Growth & Income Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 92.9%
ADVERTISING AND MARKETING SERVICES -- 0.5%
23,511 Young & Rubicam Inc. .................... $ 958
--------
AUTOMOBILE PARTS MANUFACTURERS -- 0.5%
51,282 Delphi Automotive Systems Corporation.... 910
--------
AUTOMOBILES AND TRUCKS -- 6.0%
24,439 Daimler Chrysler AG...................... 2,097
62,921 Ford Motor Company....................... 3,571
72,249 General Motors Corporation............... 6,277
--------
11,945
--------
BANKING -- 8.7%
90,880 Chase Manhattan Corporation.............. 7,389
115,256 Citigroup Inc. .......................... 7,361
21,118 Northern Trust Corporation............... 1,876
11,325 U.S. Bancorp............................. 386
--------
17,012
--------
BEVERAGES -- 7.3%
101,450 Anheuser-Busch Companies, Inc. .......... 7,728
55,000 Beringer Wine Estates Holdings, Inc. .... 2,001
78,908 Coca-Cola Enterprises Inc. .............. 2,387
112,392 Pepsi Bottling Group, Inc. .............. 2,438
--------
14,554
--------
CHEMICALS -- DIVERSIFIED -- 2.5%
109,397 Monsanto Company......................... 5,025
--------
COMPUTER RELATED -- 5.1%
65,029 EMC Corporation++........................ 8,308
51,628 IMS Health Inc. ......................... 1,710
--------
10,018
--------
COMPUTER SOFTWARE -- 3.5%
76,604 Microsoft Corporation++.................. 6,866
--------
CONSTRUCTION -- 0.5%
67,191 M.D.C. Holdings, Inc. ................... 966
--------
COSMETICS AND TOILETRIES -- 3.0%
98,939 Gillette Company......................... 5,881
--------
DRUGS -- 3.5%
36,936 Pfizer Inc. ............................. 5,125
34,228 Schering-Plough Corporation.............. 1,893
--------
7,018
--------
ELECTRICAL EQUIPMENT -- 2.2%
39,991 General Electric Company................. 4,424
--------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
FINANCIAL SERVICES -- 7.8%
126,982 Associates First Capital Corporation..... $ 5,713
72,053 Fannie Mae............................... 4,990
81,222 Freddie Mac.............................. 4,640
--------
15,343
--------
MEDIA -- 7.4%
24,979 Comcast Corporation, Class A............. 1,572
89,466 MediaOne Group, Inc. .................... 5,681
105,393 Time Warner Inc. ........................ 7,490
--------
14,743
--------
NETWORKING EQUIPMENT AND PRODUCTS -- 1.9%
35,144 Cisco Systems, Inc.++.................... 3,850
--------
OFFICE EQUIPMENT -- 1.2%
45,056 Xerox Corporation........................ 2,405
--------
OIL -- INTERNATIONAL -- 1.9%
70,915 Royal Dutch Petroleum Company............ 3,688
--------
PRINTING AND PUBLISHING -- 1.0%
41,441 Houghton Mifflin Company................. 1,943
--------
RENTAL AUTO AND EQUIPMENT -- 1.9%
72,149 Hertz Corporation, Class A............... 3,860
--------
RESTAURANTS AND LODGING -- 5.3%
88,818 Four Seasons Hotels Inc. ................ 3,708
92,888 McDonald's Corporation................... 4,209
92,030 Starbucks Corporation++.................. 2,583
--------
10,500
--------
RETAIL -- GENERAL -- 0.8%
25,096 Dayton Hudson Corporation................ 1,672
--------
RETAIL -- SPECIALTY -- 1.9%
21,064 CVS Corporation.......................... 1,001
42,583 Home Depot Inc. ......................... 2,650
2,565 Tiffany & Company........................ 192
--------
3,843
--------
TECHNOLOGY -- 0.8%
13,833 Uniphase Corporation++................... 1,593
--------
TELECOMMUNICATIONS -- 6.7%
37,007 Lucent Technologies, Inc. ............... 3,988
28,965 QUALCOMM Inc. ........................... 3,603
79,737 Qwest Communications International
Inc.++.................................. 5,748
--------
13,339
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
82
<PAGE> 87
NATIONS FUNDS
Nations Marsico Growth & Income Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
TRANSPORTATION -- 8.4%
86,007 Delta Air Lines, Inc. ................... $ 5,976
170,282 Southwest Airlines Company............... 5,151
69,104 UAL Corporation.++....................... 5,373
--------
16,500
--------
UTILITIES -- TELEPHONE -- 2.6%
32,287 AT&T Corporation......................... 2,577
56,210 Sprint Corporation (PCS Group)........... 2,491
--------
5,068
--------
TOTAL COMMON STOCKS
(Cost $158,637)......................... 183,924
--------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
- --------
<C> <S> <C>
CONVERTIBLE BONDS AND NOTES -- 1.0%
(Cost $1,237)
$ 1,237 Exodus Communications Inc.
5.000% 03/15/06**....................... 1,981
--------
CORPORATE BONDS AND NOTES -- 0.5%
CONSTRUCTION -- 0.2%
550 M.D.C. Holdings, Inc.
8.375% 02/01/08......................... 543
--------
ENTERTAINMENT -- 0.3%
500 Premier Parks
12.000% 08/15/03........................ 539
--------
TOTAL CORPORATE BONDS AND NOTES (Cost
$1,078)................................. 1,082
--------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 12.9%
(Cost $25,500)
FEDERAL HOME LOAN BANK (FHLB) -- 12.9%
25,500 Discount note 04/01/99................... 25,497
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
(000) (000)
- -------------------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 0.0%+
(Cost $18)
18 Nations Cash Reserves#..................... $ 18
--------
TOTAL INVESTMENTS
(Cost $186,467*)................... 107.3% 212,502
--------
OTHER ASSETS AND
LIABILITIES (NET).................. (7.3)%
Receivable for Fund shares sold............ $ 3,455
Dividends receivable....................... 51
Interest receivable........................ 20
Other assets............................... 34
Payable for Fund shares redeemed........... (623)
Investment advisory fee payable............ (143)
Administration fee payable................. (28)
Shareholder servicing and distribution fees
payable................................... (309)
Payable for investment securities
purchased................................. (16,824)
Accrued Trustees'/Directors' fees and ex-
penses.................................... (8)
Accrued expenses and other liabilities..... (16)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)......................... (14,391)
--------
NET ASSETS.......................... 100.0% $198,111
========
NET ASSETS CONSIST OF:
Accumulated net realized loss on invest-
ments sold and written options............ $ (343)
Net unrealized appreciation of
investments............................... 26,035
Paid-in capital............................ 172,419
--------
NET ASSETS................................. $198,111
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
83
<PAGE> 88
NATIONS FUNDS
Nations Marsico Growth & Income Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
(000)
- -------------------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($52,229,362/3,502,961
shares outstanding)....................... $14.91
========
INVESTOR A SHARES:
Net asset value and redemption price per
share ($43,392,293/2,902,818 shares out-
standing)................................. $14.95
========
Maximum sales charge....................... 5.75%
Maximum offering price per share........... $15.86
INVESTOR B SHARES:
Net asset value and offering price per
share@ ($99,256,493/6,685,351 shares
outstanding).............................. $14.85
========
INVESTOR C SHARES:
Net asset value and offering price per
share@ ($3,232,937/217,486 shares
outstanding).............................. $14.86
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $27,614 and gross
depreciation of $2,626 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$187,514.
** 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.
++ Non-income producing security.
@ The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
+ Amount represents less than 0.1%.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
84
<PAGE> 89
NATIONS FUNDS
Nations Strategic Equity Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.8%
BANKING -- 3.3%
66,000 Citigroup Inc. ........................... $ 4,216
20,000 Northern Trust Corporation................ 1,776
83,000 Wells Fargo Company....................... 2,910
--------
8,902
--------
BEVERAGES -- 1.4%
60,000 Coca-Cola Company......................... 3,683
--------
CHEMICALS -- BASIC -- 1.5%
69,000 Air Products & Chemicals Inc. ............ 2,363
27,000 E.I. duPont de Nemours and Company........ 1,568
--------
3,931
--------
COMPUTER RELATED -- 6.9%
116,000 Dell Computer Corporation++............... 4,742
32,000 EMC Corporation++......................... 4,088
32,000 International Business Machines
Corporation.............................. 5,672
32,000 Sun Microsystems, Inc.++.................. 3,998
--------
18,500
--------
COMPUTER SOFTWARE -- 4.1%
122,000 Microsoft Corporation++................... 10,934
--------
CONGLOMERATE -- 1.8%
41,000 Tyco International Ltd. .................. 2,942
30,000 Unilever NV, ADR.......................... 1,993
--------
4,935
--------
CONSTRUCTION -- 0.9%
89,000 Masco Corporation......................... 2,514
--------
CONTAINERS -- 0.9%
43,000 Avery-Dennison Corporation................ 2,473
--------
COSMETICS AND TOILETRIES -- 2.5%
60,000 Gillette Company.......................... 3,566
32,000 Procter & Gamble Company.................. 3,134
--------
6,700
--------
DIVERSIFIED -- 0.9%
51,000 AlliedSignal Inc. ........................ 2,509
--------
DRUGS -- 10.2%
40,000 Bristol-Myers Squibb Company.............. 2,573
49,000 Eli Lilly and Company..................... 4,159
82,000 Merck & Company, Inc. .................... 6,574
47,000 Pfizer Inc. .............................. 6,521
68,000 Schering-Plough Corporation............... 3,761
49,000 Warner-Lambert Company.................... 3,243
--------
26,831
--------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
ELECTRIC POWER -- 0.9%
68,000 AES Corporation++......................... $ 2,533
--------
ELECTRICAL EQUIPMENT -- 3.3%
79,000 General Electric Company.................. 8,739
--------
FINANCIAL SERVICES -- 8.0%
23,000 Capital One Financial Corporation......... 3,473
31,000 Charles Schwab Corporation................ 2,980
55,000 Fannie Mae................................ 3,809
34,000 Merrill Lynch & Company Inc. ............. 3,007
37,000 Morgan Stanley Dean Witter & Company...... 3,698
38,836 Providian Financial Corporation........... 4,271
--------
21,238
--------
INSURANCE -- 2.9%
43,500 American International Group, Inc. ....... 5,248
46,000 Hartford Financial Services Group,
Inc. .................................... 2,613
--------
7,861
--------
MACHINERY AND EQUIPMENT -- 1.8%
32,000 Illinois Tool Works, Inc. ................ 1,980
56,000 Ingersoll-Rand Company.................... 2,779
--------
4,759
--------
MEDIA -- 1.3%
48,000 Time Warner Inc. ......................... 3,411
--------
MEDICAL PRODUCTS AND SUPPLIES -- 5.5%
86,000 Abbott Laboratories....................... 4,026
76,000 Guidant Corporation....................... 4,598
33,000 Johnson & Johnson......................... 3,092
40,000 Medtronic, Inc. .......................... 2,870
--------
14,586
--------
NETWORKING EQUIPMENT AND PRODUCTS -- 3.3%
34,000 Ascend Communications, Inc.++............. 2,845
55,000 Cisco Systems, Inc.++..................... 6,026
--------
8,871
--------
OIL -- DOMESTIC -- 0.9%
70,000 Coastal Corporation....................... 2,310
--------
OIL -- INTERNATIONAL -- 2.6%
28,000 BP Amoco plc, ADR......................... 2,826
59,000 Exxon Corporation......................... 4,163
--------
6,989
--------
PRINTING AND PUBLISHING -- 1.1%
54,000 McGraw-Hill Companies, Inc. .............. 2,943
--------
PROFESSIONAL SERVICES -- 0.9%
31,000 Interpublic Group Companies, Inc. ........ 2,414
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
85
<PAGE> 90
NATIONS FUNDS
Nations Strategic Equity Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RECREATION -- 1.5%
50,000 Carnival Corporation...................... $ 2,429
51,000 Walt Disney Company....................... 1,587
--------
4,016
--------
RESTAURANTS AND LODGING -- 0.6%
50,000 Marriott International Inc., Class A...... 1,681
--------
RETAIL -- FOOD -- 1.6%
82,000 Safeway, Inc.++........................... 4,208
--------
RETAIL -- GENERAL -- 3.1%
91,000 Wal-Mart Stores, Inc. .................... 8,389
--------
RETAIL -- SPECIALTY -- 5.4%
61,000 Gap Inc. ................................. 4,105
65,000 Home Depot Inc. .......................... 4,046
41,000 Lowe's Companies Inc. .................... 2,481
45,000 Office Depot, Inc.++...................... 1,657
65,000 Staples Inc.++............................ 2,137
--------
14,426
--------
SEMICONDUCTORS -- 3.1%
54,000 Intel Corporation......................... 6,420
37,000 Linear Technology Corporation............. 1,896
--------
8,316
--------
TELECOMMUNICATIONS -- 3.5%
23,000 America Online Inc. ...................... 3,358
55,000 Lucent Technologies, Inc. ................ 5,926
--------
9,284
--------
TOBACCO -- 1.3%
98,000 Philip Morris Companies Inc. ............. 3,448
--------
TRANSPORTATION -- 1.0%
28,000 FDX Corporation++......................... 2,599
--------
UTILITIES -- NATURAL GAS -- 0.8%
51,000 Williams Companies, Inc. ................. 2,015
--------
UTILITIES -- TELEPHONE -- 9.0%
40,000 AirTouch Communications, Inc. ............ 3,865
64,000 AT&T Corporation.......................... 5,108
86,000 BellSouth Corporation..................... 3,445
71,000 MCI Worldcom, Inc.++...................... 6,289
40,000 SBC Communications Inc. .................. $ 1,885
35,000 Sprint Corporation (FON Group)............ 3,434
--------
24,026
--------
TOTAL COMMON STOCKS
(Cost $188,803).......................... 260,974
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
(000) (000)
- --------------------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 1.6%
(Cost $4,377)
4,377 Nations Cash Reserves#............... $ 4,377
--------
TOTAL INVESTMENTS
(Cost $193,180*)..................... 99.4% 265,351
--------
OTHER ASSETS AND LIABILITIES (NET)... 0.6%
Cash........................................ $ 1
Receivable for Fund shares sold............. 1,552
Dividends receivable........................ 199
Interest receivable......................... 39
Prepaid expenses............................ 2
Payable for Fund shares redeemed............ (7)
Investment advisory fee payable............. (162)
Administration fee payable.................. (39)
Accrued Trustees'/Directors' fees and
expenses................................... (8)
Accrued expenses and other liabilities...... (105)
--------
TOTAL OTHER ASSETS AND LIABILITIES (NET).... 1,472
--------
NET ASSETS........................... 100.0% $266,823
========
NET ASSETS CONSIST OF:
Accumulated net realized gain on investments
sold....................................... $ 4,269
Net unrealized appreciation of
investments................................ 72,171
Paid-in capital............................. 190,383
--------
NET ASSETS.................................. $266,823
========
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($266,823,318/19,255,163
shares outstanding)........................
$13.86
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $74,484 and gross
depreciation of $2,313 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$193,180.
++ Non-income producing security.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc.
ABBREVIATIONS:
ADR -- American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
86
<PAGE> 91
NATIONS FUNDS
Nations Capital Growth Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 98.0%
AUTOMOBILE PARTS MANUFACTURERS -- 0.8%
167,040 Federal-Mogul Corporation................... $ 7,183
--------
BANKING -- 4.0%
267,525 Banc One Corporation........................ 14,730
155,050 Chase Manhattan Corporation................. 12,608
102,080 Mellon Bank Corporation..................... 7,184
--------
34,522
--------
BEVERAGES -- 1.4%
313,310 PepsiCo, Inc. .............................. 12,278
--------
COMPUTER RELATED -- 10.0%
348,990 Compaq Computer Corporation................. 11,059
228,600 Dell Computer Corporation++................. 9,344
150,875 EMC Corporation++........................... 19,274
133,150 Hewlett-Packard Company..................... 9,029
93,300 International Business Machines
Corporation................................ 16,537
169,255 Sun Microsystems, Inc.++.................... 21,146
--------
86,389
--------
COMPUTER SERVICES -- 0.8%
204,255 Equifax Inc. ............................... 7,021
--------
COMPUTER SOFTWARE -- 7.9%
250,210 BMC Software, Inc.++........................ 9,273
150,170 Computer Associates International Inc. ..... 5,340
565,610 Compuware Corporation++..................... 13,504
335,230 Microsoft Corporation++..................... 30,046
323,945 Sterling Commerce, Inc.++................... 9,961
--------
68,124
--------
CONGLOMERATE -- 3.8%
243,790 Tyco International Ltd. .................... 17,492
109,600 United Technologies Corporation............. 14,844
--------
32,336
--------
DRUGS -- 9.5%
165,800 American Home Products Corporation.......... 10,818
241,710 Bristol-Myers Squibb Company................ 15,545
198,850 Merck & Company, Inc. ...................... 15,945
102,175 Pfizer Inc. ................................ 14,177
273,180 Schering-Plough Corporation................. 15,110
149,470 Warner-Lambert Company...................... 9,893
--------
81,488
--------
ELECTRICAL EQUIPMENT -- 4.3%
120,485 Emerson Electric Company.................... 6,378
273,380 General Electric Company.................... 30,243
--------
36,621
--------
FINANCIAL SERVICES -- 5.6%
177,380 Fannie Mae.................................. 12,284
237,290 Household International Inc. ............... 10,826
449,930 MBNA Corporation............................ 10,742
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
FINANCIAL SERVICES -- (CONTINUED)
92,560 Morgan Stanley Dean Witter & Company........ $ 9,250
135,192 Washington Mutual, Inc. .................... 5,526
--------
48,628
--------
FOOD PRODUCERS -- 1.0%
147,665 Campbell Soup Company....................... 6,008
53,460 Hershey Foods Corporation................... 2,994
--------
9,002
--------
HOUSEHOLD PRODUCTS -- 0.7%
52,340 Clorox Company.............................. 6,134
--------
INSURANCE -- 3.5%
119,722 American International Group, Inc. ......... 14,441
324,290 Unum Corporation............................ 15,425
--------
29,866
--------
MEDIA -- 4.3%
415,285 CBS Corporation++........................... 17,000
232,290 Fox Entertainment Group Inc. ............... 6,301
190,730 Time Warner Inc. ........................... 13,554
--------
36,855
--------
MEDICAL PRODUCTS AND SUPPLIES -- 5.4%
142,925 Abbott Laboratories......................... 6,691
156,525 Baxter International Inc. .................. 10,331
243,650 Guidant Corporation......................... 14,740
201,000 Medtronic, Inc. ............................ 14,422
--------
46,184
--------
MEDICAL SERVICES -- 0.7%
310,195 Tenet Healthcare Corporation++.............. 5,874
--------
NETWORKING EQUIPMENT AND PRODUCTS -- 5.3%
208,865 Ascend Communications, Inc.++............... 17,479
255,790 Cisco Systems, Inc.++....................... 28,025
--------
45,504
--------
OFFICE EQUIPMENT -- 0.9%
150,220 Xerox Corporation........................... 8,018
--------
OIL -- INTERNATIONAL -- 0.6%
60,280 Mobil Corporation........................... 5,305
--------
OIL FIELD SERVICES & EQUIPMENT -- 1.6%
213,120 Halliburton Company......................... 8,205
96,630 Schlumberger Ltd. .......................... 5,816
--------
14,021
--------
PRINTING AND PUBLISHING -- 0.9%
121,645 Gannett Company, Inc. ...................... 7,664
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
87
<PAGE> 92
NATIONS FUNDS
Nations Capital Growth Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RECREATION -- 1.2%
208,640 Carnival Corporation........................ $ 10,132
--------
RETAIL -- FOOD -- 1.5%
187,810 Safeway, Inc.++............................. 9,637
121,635 SYSCO Corporation........................... 3,201
--------
12,838
--------
RETAIL -- GENERAL -- 3.1%
250,270 Dayton Hudson Corporation................... 16,674
253,100 Federated Department Stores, Inc. .......... 10,156
--------
26,830
--------
RETAIL -- SPECIALTY -- 9.1%
265,510 Best Buy Company, Inc.++.................... 13,807
222,040 CVS Corporation............................. 10,547
134,650 Home Depot Inc. ............................ 8,382
246,240 Lowe's Companies Inc. ...................... 14,898
360,060 Office Depot, Inc.++........................ 13,255
511,510 TJX Companies Inc. ......................... 17,390
--------
78,279
--------
SEMICONDUCTORS -- 2.5%
179,985 Intel Corporation........................... 21,396
--------
TELECOMMUNICATIONS -- 4.6%
58,740 Lucent Technologies, Inc. .................. 6,329
74,500 Nokia Corporation, Class A, ADR............. 11,603
151,395 Northern Telecommunications Ltd. ........... 9,405
125,350 Tellabs, Inc.++............................. 12,254
--------
39,591
--------
UTILITIES -- TELEPHONE -- 3.0%
92,825 AirTouch Communications, Inc. .............. 8,969
186,400 MCI Worldcom, Inc.++........................ 16,508
--------
25,477
--------
TOTAL COMMON STOCKS
(Cost $478,955)............................. 843,560
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 7.0%
(Cost $60,618)
60,618 Nations Cash Reserves#........................ 60,618
--------
TOTAL INVESTMENTS
(Cost $539,573*)...................... 105.0% 904,178
--------
</TABLE>
<TABLE>
<CAPTION>
VALUE
(000)
- --------------------------------------------------------------------
<C> <S> <C> <C>
OTHER ASSETS AND LIABILITIES (NET)..... (5.0)%
Receivable for Fund shares sold............... $ 1,761
Dividends receivable.......................... 612
Interest receivable........................... 39
Prepaid expenses.............................. 10
Collateral on securities loaned............... (42,390)
Payable for Fund shares redeemed.............. (2,267)
Investment advisory fee payable............... (543)
Administration fee payable.................... (136)
Shareholder servicing and distribution fees
payable...................................... (167)
Distributions payable......................... (119)
Accrued Trustees'/Directors' fees and
expenses..................................... (44)
Accrued expenses and other liabilities........ (127)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)............................ (43,371)
--------
NET ASSETS............................. 100.0% $860,807
========
NET ASSETS CONSIST OF:
Accumulated net realized gain on investments
sold......................................... $ 7,731
Net unrealized appreciation of investments.... 364,605
Paid-in capital............................... 488,471
--------
NET ASSETS............................. $860,807
========
PRIMARY A SHARES:
Net asset value, offering and redemption price
per share ($737,619,362/61,211,973 shares
outstanding)................................. $12.05
========
INVESTOR A SHARES:
Net asset value and redemption price per share
($52,987,290/4,427,985 shares outstanding)... $11.97
========
Maximum sales charge.......................... 5.75%
Maximum offering price per share.............. $12.70
INVESTOR B SHARES:
Net asset value and offering price per share+
($66,338,066/5,823,660 shares outstanding)... $11.39
========
INVESTOR C SHARES:
Net asset value and offering price per share+
($3,861,815/336,282 shares outstanding)...... $11.48
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $373,063 and gross
depreciation of $9,652 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$540,767.
++ Non-income producing security.
+ The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc. A
portion of this amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents cash collateral is
$42,390.
ABBREVIATIONS:
ADR -- American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
88
<PAGE> 93
NATIONS FUNDS
Nations Disciplined Equity Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 100.4%
AEROSPACE AND DEFENSE -- 2.2%
184,400 General Dynamics Corporation............... $ 11,848
--------
APPAREL AND TEXTILES -- 3.2%
447,000 Shaw Industries Inc.++..................... 8,270
186,900 V.F. Corporation........................... 8,819
--------
17,089
--------
AUTOMOBILES AND TRUCKS -- 1.9%
182,400 Ford Motor Company......................... 10,351
--------
BANKING -- 2.1%
137,500 Chase Manhattan Corporation................ 11,180
--------
COMPUTER RELATED -- 2.4%
313,800 Dell Computer Corporation++................ 12,827
--------
COMPUTER SERVICES -- 1.6%
152,700 Computer Sciences Corporation++............ 8,427
--------
COMPUTER SOFTWARE -- 6.3%
293,700 Compuware Corporation++.................... 7,012
184,600 Microsoft Corporation++.................... 16,545
375,100 Oracle Systems Corporation++............... 9,893
--------
33,450
--------
CONGLOMERATE -- 2.1%
81,800 United Technologies Corporation............ 11,079
--------
CONSTRUCTION -- 3.3%
345,300 Sherwin-Williams Company................... 9,712
155,700 USG Corporation............................ 7,999
--------
17,711
--------
DRUGS -- 3.4%
329,000 Mylan Laboratories Inc..................... 9,027
135,000 Warner-Lambert Company..................... 8,935
--------
17,962
--------
ELECTRIC POWER -- 3.5%
198,650 DTE Energy Company......................... 7,636
237,900 PECO Energy Company........................ 11,002
--------
18,638
--------
ELECTRICAL EQUIPMENT -- 1.8%
86,600 General Electric Company................... 9,580
--------
FINANCIAL SERVICES -- 7.7%
89,200 Capital One Financial Corporation.......... 13,470
186,700 Greenpoint Financial Corporation........... 6,488
125,000 Morgan Stanley Dean Witter & Company....... 12,492
212,125 Paine Webber Group, Inc.................... 8,458
--------
40,908
--------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
FURNITURE AND APPLIANCES -- 2.0%
172,800 Maytag Corporation......................... $ 10,433
--------
HOUSEHOLD CARE PRODUCERS -- 1.5%
235,900 Premark International, Inc................. 7,770
--------
INSURANCE -- 6.3%
179,300 Allstate Corporation....................... 6,645
99,040 American International Group, Inc.......... 11,947
135,700 Equitable Companies, Inc................... 9,499
150,100 MGIC Investment Corporation................ 5,263
--------
33,354
--------
MACHINERY AND EQUIPMENT -- 3.4%
182,800 Ingersoll-Rand Company..................... 9,071
129,950 Sundstrand Corporation..................... 9,032
--------
18,103
--------
MEDICAL PRODUCTS AND SUPPLIES -- 8.3%
166,000 Allergan, Inc.............................. 14,587
132,300 Biogen, Inc.++............................. 15,123
236,800 Guidant Corporation........................ 14,326
--------
44,036
--------
NETWORKING EQUIPMENT AND PRODUCTS -- 0.7%
34,400 Cisco Systems, Inc.++...................... 3,769
--------
OFFICE EQUIPMENT -- 2.6%
126,000 Lexmark International Group, Inc., Class
A......................................... 14,081
--------
OIL -- DOMESTIC -- 5.5%
143,400 Ashland Inc................................ 5,870
280,800 Coastal Corporation........................ 9,266
128,950 Columbia Energy Group...................... 6,738
209,550 Sunoco, Inc................................ 7,557
--------
29,431
--------
PRINTING AND PUBLISHING -- 1.7%
180,100 Knight-Ridder Inc.......................... 9,005
--------
RETAIL -- FOOD -- 1.4%
362,200 Supervalu Inc.............................. 7,470
--------
RETAIL -- GENERAL -- 4.2%
217,800 Dayton Hudson Corporation.................. 14,511
189,500 Federated Department Stores, Inc. ......... 7,604
--------
22,115
--------
RETAIL -- SPECIALTY -- 7.8%
290,900 Best Buy Company, Inc.++................... 15,127
223,200 Lowe's Companies Inc....................... 13,504
384,300 TJX Companies Inc. ........................ 13,066
--------
41,697
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
89
<PAGE> 94
NATIONS FUNDS
Nations Disciplined Equity Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SEMICONDUCTORS -- 2.4%
160,900 Altera Corporation++....................... $ 9,574
27,500 Intel Corporation.......................... 3,269
--------
12,843
--------
TELECOMMUNICATIONS -- 2.4%
118,800 Lucent Technologies, Inc................... 12,801
--------
UTILITIES -- TELEPHONE -- 8.7%
150,000 AT&T Corporation........................... 11,972
251,400 BellSouth Corporation...................... 10,072
197,600 Century Telephone Enterprise, Inc.......... 13,880
181,700 U.S. West Inc.............................. 10,005
--------
45,929
--------
TOTAL COMMON STOCKS
(Cost $390,296)............................ 533,887
--------
SHARES
(000)
- ------
INVESTMENT COMPANIES -- 3.5%
(Cost $18,798)
18,798 Nations Cash Reserves#..................... 18,798
--------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $409,094*)...................... 103.9% 552,685
--------
OTHER ASSETS AND
LIABILITIES (NET).................... (3.9)%
Cash......................................... $ 1
Receivable for Fund shares sold.............. 107
Dividends receivable......................... 289
Interest receivable.......................... 7
Prepaid expenses............................. 6
Collateral on securities loaned.............. (16,884)
Payable for Fund shares redeemed............. (3,448)
Investment advisory fee payable.............. (344)
Administration fee payable................... (86)
Shareholder servicing and distribution fees
payable..................................... (142)
Distributions payable........................ (26)
Accrued Trustees'/Directors' fees and ex-
penses...................................... (15)
Accrued expenses and other liabilities....... (192)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)........................... (20,727)
--------
NET ASSETS............................ 100.0% $531,958
========
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
VALUE
(000)
<C> <S> <C> <C>
NET ASSETS CONSIST OF:
Accumulated net realized gain on investments
sold........................................ $ 28,393
Net unrealized appreciation of investments... 143,591
Paid-in capital.............................. 359,974
--------
NET ASSETS................................... $531,958
========
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($412,176,257/17,643,529
shares outstanding)......................... $23.36
======
INVESTOR A SHARES:
Net asset value and redemption price per
share ($67,356,219/2,899,324 shares
outstanding)................................ $23.23
======
Maximum sales charge......................... 5.75%
Maximum offering price per share............. $24.65
INVESTOR B SHARES:
Net asset value and offering price per share+
($50,797,180/2,260,793 shares outstanding).. $22.47
======
INVESTOR C SHARES:
Net asset value and offering price per share+
($1,628,478/71,229 shares outstanding)...... $22.86
======
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $160,332 and gross
depreciation of $16,742 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$409,095.
++ Non-income producing security.
+ The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc. A
portion of this amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents cash collateral is
$16,884.
SEE NOTES TO FINANCIAL STATEMENTS.
90
<PAGE> 95
NATIONS FUNDS
Nations Marsico Focused Equities Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 91.0%
AUTOMOBILES AND TRUCKS -- 7.9%
215,169 Ford Motor Company........................ $ 12,211
462,508 General Motors Corporation................ 40,180
--------
52,391
--------
BANKING -- 8.1%
250,879 Chase Manhattan Corporation............... 20,400
517,603 Citigroup Inc. ........................... 33,061
--------
53,461
--------
BEVERAGES -- 7.3%
357,074 Anheuser-Busch Companies, Inc. ........... 27,204
435,198 Coca-Cola Enterprises Inc. ............... 13,165
376,694 Pepsi Bottling Group, Inc. ............... 8,170
--------
48,539
--------
CHEMICALS -- DIVERSIFIED -- 2.6%
375,049 Monsanto Company.......................... 17,229
--------
COMPUTER RELATED -- 9.5%
308,267 EMC Corporation++......................... 39,381
144,720 Inktomi Corporation....................... 12,410
91,863 Sun Microsystems, Inc.++.................. 11,477
--------
63,268
--------
COMPUTER SOFTWARE -- 3.9%
285,794 Microsoft Corporation++................... 25,614
--------
COSMETICS AND TOILETRIES -- 3.4%
382,075 Gillette Company.......................... 22,710
--------
DRUGS -- 4.1%
164,439 Merck & Company, Inc. .................... 13,186
99,240 Pfizer Inc. .............................. 13,770
--------
26,956
--------
ELECTRICAL EQUIPMENT -- 3.4%
203,754 General Electric Company.................. 22,540
--------
FINANCIAL SERVICES -- 4.3%
418,174 Associates First Capital Corporation...... 18,818
136,454 Fannie Mae................................ 9,449
--------
28,267
--------
MEDIA -- 7.5%
150,000 Clear Channel Communications, Inc.++...... 10,059
158,050 Infinity Broadcasting Corporation......... 4,070
298,760 MediaOne Group, Inc. ..................... 18,972
238,214 Time Warner Inc. ......................... 16,928
--------
50,029
--------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
NETWORKING EQUIPMENT AND PRODUCTS -- 1.6%
98,155 Cisco Systems, Inc.++..................... $ 10,754
--------
OIL -- INTERNATIONAL -- 1.6%
201,221 Royal Dutch Petroleum Company............. 10,463
--------
RENTAL AUTO AND EQUIPMENT -- 2.7%
333,816 Hertz Corporation, Class A................ 17,859
--------
RESTAURANTS AND LODGING -- 2.4%
347,246 McDonald's Corporation.................... 15,735
--------
RETAIL -- SPECIALTY -- 2.7%
288,932 Home Depot Inc. .......................... 17,986
--------
TELECOMMUNICATIONS -- 9.1%
146,103 Level 3 Communications, Inc. ............. 10,638
227,460 Lucent Technologies, Inc. ................ 24,509
351,100 Qwest Communications International
Inc.++.................................... 25,312
--------
60,459
--------
TRANSPORTATION -- 8.1%
280,767 Delta Air Lines, Inc. .................... 19,513
532,584 Southwest Airlines Company................ 16,111
234,751 UAL Corporation++......................... 18,252
--------
53,876
--------
UTILITIES -- TELEPHONE -- 0.8%
70,108 AT&T Corporation.......................... 5,595
--------
TOTAL COMMON STOCKS
(Cost $509,549).......................... 603,731
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000)
--------
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 9.2%
(Cost $61,000)
FEDERAL HOME LOAN BANK (FHLB) -- 9.2%
$ 61,000 Discount note 04/01/99.................... 60,992
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
-------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 0.0%+
(Cost $105)
105 Nations Cash Reserves#...................... 105
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
91
<PAGE> 96
NATIONS FUNDS
Nations Marsico Focused Equities Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
(000)
- -------------------------------------------------------------------
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $570,654*)..................... 100.2% $664,828
--------
OTHER ASSETS AND
LIABILITIES (NET)................... (0.2)%
Receivable for Fund shares sold............. $ 12,104
Dividends receivable........................ 114
Interest receivable......................... 2
Prepaid expenses and other assets........... 167
Payable for Fund shares redeemed............ (90)
Investment advisory fee payable............. (407)
Administration fee payable.................. (84)
Shareholder servicing and distribution fees
payable.................................... (963)
Payable for investment securities
purchased.................................. (11,984)
Accrued Trustees'/Directors' fees and
expenses................................... (6)
Accrued expenses and other liabilities...... (39)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET).......................... (1,186)
--------
NET ASSETS........................... 100.0% $663,642
========
NET ASSETS CONSIST OF:
Accumulated net realized gain on investments
sold and written options................... $ 2,235
Net unrealized appreciation of
investments................................ 94,174
Paid-in capital............................. 567,233
--------
NET ASSETS.................................. $663,642
========
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($105,457,395/6,318,772
shares outstanding)........................ $16.69
======
INVESTOR A SHARES:
Net asset value and redemption price per
share ($238,137,088/14,235,298 shares
outstanding)............................... $16.73
======
Maximum sales charge........................ 5.75%
Maximum offering price per share............ $17.75
INVESTOR B SHARES:
Net asset value and offering price per
share~ ($306,365,382/18,438,122 shares
outstanding)............................... $16.62
======
INVESTOR C SHARES:
Net asset value and offering price per
share~ ($13,681,995/820,558 shares
outstanding)............................... $16.67
======
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $89,444 and gross
depreciation of $4,182 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$579,566.
++ Non-income producing security.
+ Amount represents less than 0.1%.
~ The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
92
<PAGE> 97
NATIONS FUNDS
Nations Emerging Growth Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.1%
ADVERTISING AND MARKETING SERVICES -- 1.2%
80,000 Lamar Advertising Company@................. $ 2,715
--------
APPAREL AND TEXTILES -- 7.9%
125,000 Jones Apparel Group, Inc.@................. 3,492
126,400 Land's End, Inc.@.......................... 4,376
90,000 The Men's Wearhouse Inc.@.................. 2,599
115,000 Tommy Hilfiger Corporation@................ 7,920
--------
18,387
--------
AUTOMOBILE PARTS MANUFACTURERS -- 1.5%
150,000 Superior Industries International.......... 3,488
--------
BANKING -- 4.3%
110,000 City National Corporation.................. 3,396
40,000 Northern Trust Corporation................. 3,553
80,000 SouthTrust Corporation..................... 2,985
--------
9,934
--------
BROADCASTING -- 2.2%
100,000 Univision Communications Inc.@............. 5,000
--------
COMMERCIAL SERVICES -- 1.2%
300,000 Modis Professional Services, Inc.@......... 2,719
--------
COMPUTER RELATED -- 2.0%
50,000 Comverse Technology Inc.@.................. 4,250
3,200 Village Inc. .............................. 322
--------
4,572
--------
COMPUTER SOFTWARE -- 5.6%
75,000 BMC Software, Inc.@........................ 2,780
100,100 Check Point Software Technologies@......... 4,304
40,000 Compuware Corporation@..................... 955
81,000 Sterling Commerce, Inc.@................... 2,491
60,000 Sungard Data Systems Inc.@................. 2,400
--------
12,930
--------
DRUGS -- 2.4%
125,000 Mylan Laboratories Inc. ................... 3,430
47,600 Watson Pharmaceutical, Inc.@............... 2,100
--------
5,530
--------
EDUCATION -- 0.8%
48,300 ITT Educational Services, Inc.@............ 1,814
--------
ELECTRIC COMPONENTS -- 4.5%
90,000 Maxim Integrated Products@................. 4,871
135,000 Xilinx Inc.@............................... 5,476
--------
10,347
--------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
ELECTRIC POWER -- 3.4%
115,000 AES Corporation@........................... $ 4,283
90,000 CMS Energy Corporation..................... 3,606
--------
7,889
--------
ELECTRONICS -- 1.1%
50,000 Solectron Corporation@..................... 2,428
--------
ENVIRONMENTAL -- 2.0%
150,000 U.S. Filter Corporation@................... 4,594
--------
FINANCIAL SERVICES -- 5.8%
80,000 Finova Group Inc. ......................... 4,150
119,998 Legg Mason Inc. ........................... 4,042
251,500 Waddell & Reed Financial, Inc. ............ 5,156
--------
13,348
--------
FOREST AND PAPER PRODUCTS -- 1.3%
130,000 Caraustar Industries Inc. ................. 2,990
--------
INDUSTRIAL -- 1.3%
185,000 Stewart Enterprises, Inc. ................. 2,972
--------
INSURANCE -- 4.5%
96,000 Aflac Inc. ................................ 5,226
150,000 Reinsurance Group of America, Inc. ........ 5,081
--------
10,307
--------
MACHINERY AND EQUIPMENT -- 2.0%
65,000 Sundstrand Corporation..................... 4,518
--------
MEDIA -- 2.3%
275,000 Metro-Goldwyn-Mayer, Inc.@................. 3,609
3,100 Washington Post Company.................... 1,617
--------
5,226
--------
MEDICAL PRODUCTS AND SUPPLIES -- 2.1%
63,000 Centocor Inc.@............................. 2,327
49,600 Stryker Corporation........................ 2,502
--------
4,829
--------
MEDICAL SERVICES -- 2.6%
65,000 HCR Manor Care, Inc.@...................... 1,483
372,500 Health Management Associates Inc.,
Class++................................... 4,540
--------
6,023
--------
MISCELLANEOUS -- 0.6%
78,200 Convergys Corporation@..................... 1,339
--------
OIL FIELD SERVICES & EQUIPMENT -- 2.2%
130,000 BJ Services Company@....................... 3,047
50,000 Smith International, Inc.@................. 2,000
--------
5,047
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
93
<PAGE> 98
NATIONS FUNDS
Nations Emerging Growth Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
PRINTING AND PUBLISHING -- 0.8%
100,000 A.H. Belo Corporation...................... $ 1,825
--------
PROFESSIONAL SERVICES -- 0.4%
32,900 Franklin Resources, Inc. .................. 925
--------
REAL ESTATE INVESTMENT TRUSTS (REITS) -- 1.0%
131,250 Prison Realty Corporation.................. 2,289
--------
RECREATION -- 1.6%
70,000 International Speedway Corporation......... 3,693
--------
RESTAURANTS AND LODGING -- 1.7%
107,855 Promus Hotel Corporation@.................. 3,923
--------
RETAIL -- SPECIALTY -- 5.6%
148,000 Bed Bath & Beyond Inc.@.................... 5,402
20,000 Priceline.com Inc. ........................ 1,658
180,000 Staples Inc.@.............................. 5,917
--------
12,977
--------
SEMICONDUCTORS -- 6.2%
72,500 Altera Corporation@........................ 4,314
90,000 Linear Technology Corporation.............. 4,612
105,000 Vitesse Semiconductor Corporation@......... 5,315
--------
14,241
--------
TECHNOLOGY -- 3.9%
77,500 Uniphase Corporation@...................... 8,922
--------
TELECOMMUNICATIONS -- 7.5%
129,500 ADC Telecommunications Inc.@............... 6,175
20,000 EchoStar Communications Corporation........ 1,633
170,000 ECI Telecom Limited........................ 5,949
130,000 Reltec Corporation@........................ 3,827
--------
17,584
--------
TRANSPORTATION -- 1.9%
187,500 Comair Holdings, Inc. ..................... 4,430
--------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
UTILITIES -- TELEPHONE -- 1.7%
31,600 Century Telephone Enterprise, Inc. ........ $ 2,220
78,200 Cincinnati Bell Inc. ...................... 1,755
--------
3,975
--------
TOTAL COMMON STOCKS
(Cost $156,887)........................... 223,730
--------
WARRANTS -- 0.0%+ (Cost $0)
4,069 Coram Healthcare Corporation@.............. 0++
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
- -------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 18.3% (Cost $42,284)
42,284 Nations Cash Reserves#....................... 42,284
--------
TOTAL INVESTMENTS
(Cost $199,171*)...................... 115.4% 266,014
--------
OTHER ASSETS AND (15.4)%
LIABILITIES (NET)....................
Receivable for Fund shares sold.............. $ 160
Dividends receivable......................... 70
Interest receivable.......................... 25
Collateral on securities loaned.............. (30,385)
Payable for Fund shares redeemed............. (551)
Investment advisory fee payable.............. (143)
Administration fee payable................... (36)
Shareholder servicing and distribution fees
payable..................................... (75)
Payable for investment securities
purchased................................... (4,437)
Accrued Trustees'/Directors' fees and
expenses.................................... (24)
Accrued expenses and other liabilities....... (87)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)........................... (35,483)
--------
NET ASSETS............................ 100.0% $230,531
========
NET ASSETS CONSIST OF:
Accumulated net realized gain on investments
sold........................................ $ 3,105
Net unrealized appreciation of investments... 66,843
Paid-in capital.............................. 160,583
--------
NET ASSETS................................... $230,531
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
94
<PAGE> 99
NATIONS FUNDS
Nations Emerging Growth Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
(000)
- -------------------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($177,860,600/13,362,811
shares outstanding)......................... $13.31
======
INVESTOR A SHARES:
Net asset value and redemption price per
share ($18,041,913/1,383,750 shares
outstanding)................................ $13.04
======
Maximum sales charge......................... 5.75%
Maximum offering price per share............. $13.84
INVESTOR B SHARES:
Net asset value and offering price per share**
($33,245,214/2,707,417 shares
outstanding)................................ $12.28
======
INVESTOR C SHARES:
Net asset value and offering price per share**
($1,383,292/112,190 shares outstanding)..... $12.33
======
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $73,333 and gross
depreciation of $6,854 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$199,535.
@ Non-income producing security.
** The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
+ Amount represents less than 0.1%.
++ Amount represents less than $500.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
A portion of this amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents cash collateral is
$30,385.
SEE NOTES TO FINANCIAL STATEMENTS.
95
<PAGE> 100
NATIONS FUNDS
Nations Small Company Growth Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.9%
ADVERTISING AND MARKETING SERVICES -- 1.4%
398,623 HA-LO Industries, Inc.++................... $ 4,908
--------
AEROSPACE AND DEFENSE -- 3.6%
116,000 BE Aerospace, Inc. ........................ 1,711
358,300 REMEC, Inc.++.............................. 7,480
387,000 Tristar Aerospace Company.................. 3,531
--------
12,722
--------
APPAREL AND TEXTILES -- 4.4%
130,700 Columbia Sportswear Company................ 2,565
241,500 Quiksilver, Inc.++......................... 10,203
377,500 Tefron Ltd. ............................... 2,666
--------
15,434
--------
BANKING -- 2.9%
210,600 First Republic Bank........................ 5,081
216,200 National Commerce Bancorp.................. 4,932
--------
10,013
--------
BUILDING MATERIALS -- 2.7%
244,467 Advanced Lighting Technologies............. 1,895
438,700 Group Maintenance America Corporation...... 4,990
181,700 Service Experts, Inc. ..................... 2,453
--------
9,338
--------
COMMERCIAL SERVICES -- 3.0%
92,800 Lason Inc. ................................ 5,220
201,415.. Nova Corporation........................... 5,287
--------
10,507
--------
COMPUTER RELATED -- 1.7%
293,900 3DLabs Inc., Ltd. ......................... 918
3,000 autobytel.com inc. ........................ 126
198,975 Cybex Computer Products Corporation++...... 3,569
4,200 MiningCo.com, Inc. ........................ 376
18,300 OneMain.com, Inc. ......................... 663
8,500 Ziff-Davis Inc. - ZDNet.................... 306
--------
5,958
--------
COMPUTER SOFTWARE -- 4.9%
152,400 Avid Technology, Inc. ..................... 2,657
219,600 BARRA Inc.++............................... 5,409
173,065 Hyperion Solutions Corporation............. 2,509
68,100 Peerless Systems Corporation............... 579
343,150 Rogue Wave Software........................ 2,745
351,100 Segue Software, Inc. ...................... 3,379
--------
17,278
--------
CONSTRUCTION -- 0.7%
115,300 Kaufman & Broad Home Corporation........... 2,601
--------
DRUGS -- 0.6%
205,579 Vical, Inc. ............................... 2,107
--------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
EDUCATION -- 1.3%
124,900 ITT Educational Services, Inc.++........... $ 4,692
--------
ELECTRICAL EQUIPMENT -- 1.3%
259,000 C-COR Electronics++........................ 4,468
--------
ELECTRONICS -- 11.3%
384,100 Aeroflex Inc.++............................ 5,473
220,700 Anaren Microwave, Inc. .................... 5,352
143,900 AstroPower, Inc. .......................... 1,691
91,100 Dionex Corporation++....................... 3,439
104,500 E-Tek Dynamics, Inc. ...................... 3,749
145,600 Esterline Technologies Corporation++....... 1,884
333,600 Ortel Corporation.......................... 2,356
238,700 Sawtek Inc. ............................... 8,055
70,400 SDL, Inc.++................................ 6,389
76,000 SIPEX Corporation++........................ 993
--------
39,381
--------
FURNITURE AND APPLIANCES -- 1.2%
105,475 Ethan Allen Interiors, Inc. ............... 4,384
--------
HEALTHCARE -- 1.6%
359,600 Orthodontic Centers of America++........... 5,664
--------
INSURANCE -- 2.0%
169,817 Delphi Financial Group Inc., Class A....... 5,752
99,800 Triad Guaranty, Inc.++..................... 1,354
--------
7,106
--------
MACHINERY AND EQUIPMENT -- 1.0%
129,600 Applied Power, Inc., Class A............... 3,532
--------
MANUFACTURING -- 0.5%
286,547 Martek Biosciences Corporation............. 1,612
--------
MARINE SERVICES -- 1.0%
319,100 Horizon Offshore Inc. ..................... 2,154
208,000 Newpark Resources, Inc.++.................. 1,508
--------
3,662
--------
MEDICAL PRODUCTS AND SUPPLIES -- 2.6%
23,764 Alfacell Corporation....................... 10
273,075 Dura Pharmaceuticals Inc.++................ 3,857
149,700 Human Genome Sciences Inc. ................ 5,193
--------
9,060
--------
MEDICAL SERVICES -- 8.2%
165,400 Acuson Corporation++....................... 2,471
111,700 Centennial HealthCare Corporation.......... 991
161,600 Cerner Corporation++....................... 2,596
180,800 Coherent Inc.++............................ 2,486
124,650 Invacare Corporation....................... 3,031
321,800 OrthAlliance Inc. ......................... 2,494
501,800 Physician Reliance Network++............... 4,265
281,200 Physicians Specialty Corporation........... 1,898
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
96
<PAGE> 101
NATIONS FUNDS
Nations Small Company Growth Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MEDICAL SERVICES -- (CONTINUED)
260,900 Province Healthcare Company................ $ 4,827
168,700 Shire Pharmaceuticals plc.................. 3,848
--------
28,907
--------
OIL AND GAS -- 2.1%
214,100 Kinder Morgan Energy Partners, L.P. ....... 7,413
--------
OIL FIELD SERVICES & EQUIPMENT -- 0.7%
142,800 Core Laboratories NV++..................... 2,508
--------
PROFESSIONAL SERVICES -- 9.5%
278,600 Affiliated Managers Group, Inc. ........... 7,244
155,500 AHL Services Inc. ......................... 3,188
252,900 Career Education Corporation............... 8,757
240,350 Perceptron Inc.++.......................... 879
383,500 Personnel Group of America, Inc.++......... 2,756
198,406 Romac International, Inc.++................ 1,686
521,800 SCB Computer Technology, Inc.++............ 2,381
98,200 Select Appointments Holdings plc........... 2,621
201,700 Trammell Crow Company...................... 3,731
--------
33,243
--------
RESTAURANTS AND LODGING -- 0.6%
147,000 Garden Fresh Restaurant Corporation........ 2,095
--------
RETAIL -- GENERAL -- 0.9%
104,300 ShopKo Stores, Inc.++...................... 3,116
--------
RETAIL -- SPECIALTY -- 3.0%
254,400 Blue Rhino Corporation..................... 3,339
126,850 Fossil Inc.++.............................. 3,782
133,716 Henry Schein, Inc. ........................ 3,376
672 Score Board, Inc.++........................ 0
--------
10,497
--------
SEMICONDUCTORS -- 1.2%
156,700 Plexus Corporation++....................... 4,368
--------
TECHNOLOGY -- 1.3%
601,300 P-Com, Inc.++.............................. 4,585
--------
TELECOMMUNICATIONS -- 19.5%
305,400 Allen Telecom Inc.++....................... 1,851
492,700 Antec Corporation.......................... 10,593
275,000 Cellstar Corporation++..................... 2,853
218,400 Com21 Inc. ................................ 5,733
105,600 Entercom Communications Corporation........ 3,736
178,900 Gilat Communications Ltd. ................. 2,493
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
TELECOMMUNICATIONS -- (CONTINUED)
174,400 Gilat Satellite Networks Ltd. ............. $ 10,464
275,500 Harmonic Lightwaves, Inc. ................. 7,611
321,800 Proxim Inc. ............................... 9,252
47,800 RF Micro Devices Inc. ..................... 4,574
131,000 Spectrian Corporation...................... 1,539
371,300 Stanford Telecommunications, Inc.++........ 5,755
219,000 TTI Team Telecom International Ltd. ....... 1,779
--------
68,233
--------
TRANSPORTATION -- 1.2%
153,150 Air Express International Corporation...... 2,316
176,400 Midway Airlines Corporation................ 2,073
--------
4,389
--------
TOTAL COMMON STOCKS (Cost $357,357)........ 343,781
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
- -------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 10.5%
(Cost $37,027)
37,027 Nations Cash Reserves#...................... 37,027
--------
TOTAL INVESTMENTS
(Cost $394,384*).................... 108.4% 380,808
--------
OTHER ASSETS AND
LIABILITIES (NET)................... (8.4)%
Receivable for investment securities sold... $ 1,300
Receivable for Fund shares sold............. 79
Dividends receivable........................ 33
Interest receivable......................... 67
Prepaid expenses............................ 28
Collateral on securities loaned............. (22,652)
Payable for Fund shares redeemed............ (1,396)
Investment advisory fee payable............. (166)
Administration fee payable.................. (57)
Shareholder servicing and distribution
fees payable............................... (26)
Payable for investment securities
purchased.................................. (6,740)
Accrued Trustees'/Directors' fees and
expenses................................... (8)
Accrued expenses and other liabilities...... (68)
--------
TOTAL OTHER ASSETS AND LIABILITIES (NET).... (29,606)
--------
NET ASSETS........................... 100.0% $351,202
========
NET ASSETS CONSIST OF:
Net investment loss......................... $ (1,069)
Accumulated net realized loss on
investments sold........................... (31,460)
Net unrealized depreciation of
investments................................ (13,576)
Paid-in capital............................. 397,307
--------
NET ASSETS.................................. $351,202
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
97
<PAGE> 102
NATIONS FUNDS
Nations Small Company Growth Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
(000)
- ------------------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share($327,980,904/28,512,656
shares outstanding)........................ $11.50
========
INVESTOR A SHARES:
Net asset value and redemption price per
share($16,143,058/1,412,687 shares out-
standing).................................. $11.43
========
Maximum sales charge........................ 5.75%
Maximum offering price per share............ $12.13
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($5,126,751/456,414 shares
outstanding)............................... $11.23
========
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($1,950,807/171,486 shares
outstanding)............................... $11.38
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized depreciation of investment
securities was comprised of gross appreciation of $57,751 and gross
depreciation of $74,566 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$397,623.
++ Non-income producing security.
+ The redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
# Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and sub-advised by TradeStreet Investment Associates, Inc. A
portion of this amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents cash collateral is
$22,652.
SEE NOTES TO FINANCIAL STATEMENTS.
98
<PAGE> 103
[THIS PAGE INTENTIONALLY LEFT BLANK.]
99
<PAGE> 104
NATIONS FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
BALANCED EQUITY EQUITY
ASSETS VALUE INCOME INDEX
-----------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $2, $62, $12,
$3, $1, $0, $2, $0, $2, $2 and $0, respectively).......... $ 1,980 $ 37,998 $ 23,602 $ 10,686
Interest.................................................... 3,484 1,803 1,508 905
Securities lending.......................................... 66 364 32 25
------- --------- --------- ---------
Total investment income................................. 5,530 40,165 25,142 11,616
------- --------- --------- ---------
EXPENSES:
Investment advisory fee..................................... 1,206 17,722 5,888 3,831
Administration fee.......................................... 171 2,512 986 814
Transfer agent fees......................................... 73 1,095 353 343
Custodian fees.............................................. 34 208 79 143
Legal and audit fees........................................ 51 166 63 78
Registration and filing fees................................ 4 31 -- 72
Trustees'/Directors' fees and expenses...................... 15 15 15 15
Amortization of organization costs.......................... -- -- -- 1
Interest expense............................................ 6 6 21 --
Other....................................................... 57 461 -- 115
------- --------- --------- ---------
Subtotal................................................ 1,617 22,216 7,405 5,412
Shareholder servicing and distribution fees:
Primary B Shares.......................................... 8 -- -- 1
Investor A Shares......................................... 60 353 144 21
Investor B Shares......................................... 764 1,503 1,256 --
Investor C Shares......................................... 17 126 75 --
------- --------- --------- ---------
Total expenses.......................................... 2,466 24,198 8,880 5,434
Fees waived by investment advisor and/or distributor........ (6) (30) (12) (2,737)
Fees reduced by credits allowed by the custodian............ (1) (2) (3) (1)
------- --------- --------- ---------
Net expenses............................................ 2,459 24,166 8,865 2,696
------- --------- --------- ---------
NET INVESTMENT INCOME/(LOSS)................................ 3,071 15,999 16,277 8,920
------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions..................................... (2,434) 191,411 15,476 3,663
Written options........................................... -- -- -- --
Futures contracts......................................... -- 5,727 5,934 3,182
------- --------- --------- ---------
Net realized gain/(loss) on investments..................... (2,434) 197,138 21,410 6,845
------- --------- --------- ---------
Change in unrealized appreciation/(depreciation) of:
Securities (Note 8)....................................... (4,896) (130,060) (151,107) 127,468
Futures contracts......................................... -- -- (731) (260)
------- --------- --------- ---------
Net change in unrealized appreciation/(depreciation) of
investments............................................... (4,896) (130,060) (151,838) 127,208
------- --------- --------- ---------
Net realized and unrealized gain/(loss) on investments...... (7,330) 67,078 (130,428) 134,053
------- --------- --------- ---------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $(4,259) $ 83,077 $(114,151) $ 142,973
======= ========= ========= =========
</TABLE>
- ---------------
* Amount represents less than $500.
(a) Strategic Equity commenced operations on October 2, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
100
<PAGE> 105
NATIONS FUNDS
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH & STRATEGIC CAPITAL DISCIPLINED FOCUSED EMERGING SMALL COMPANY
INCOME EQUITY(a) GROWTH EQUITY EQUITIES GROWTH GROWTH
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 496 $ 799 $ 6,714 $ 5,094 $ 1,394 $ 607 $ 849
556 175 925 56 1,151 1,212 920
2 -- 40 31 --* 79 216
--------- ------- -------- -------- ------- -------- ---------
1,054 974 7,679 5,181 2,545 1,898 1,985
--------- ------- -------- -------- ------- -------- ---------
687 702 6,256 3,580 1,952 2,082 3,767
87 101 887 508 246 296 401
35 43 437 218 60 133 197
15 10 86 35 32 18 52
41 44 94 65 48 53 57
109 72 95 115 75 20 61
15 7 15 15 15 15 15
-- -- -- -- -- -- --
--* -- 26 7 --* 29 5
21 26 86 83 -- 70 49
--------- ------- -------- -------- ------- -------- ---------
1,010 1,005 7,982 4,626 2,428 2,716 4,604
-- -- 1 -- -- -- --
43 -- 112 151 141 48 40
453 -- 603 442 1,262 367 48
11 -- 40 14 26 17 24
--------- ------- -------- -------- ------- -------- ---------
1,517 1,005 8,738 5,233 3,857 3,148 4,716
-- -- --* -- -- --* (1,049)
(1) (1) (1) (2) (4) (4) (3)
--------- ------- -------- -------- ------- -------- ---------
1,516 1,004 8,737 5,231 3,853 3,144 3,664
--------- ------- -------- -------- ------- -------- ---------
(462) (30) (1,058) (50) (1,308) (1,246) (1,679)
--------- ------- -------- -------- ------- -------- ---------
114 4,357 70,219 46,327 3,536 3,479 (18,201)
14 -- -- -- 30 -- --
-- -- -- -- -- --
--------- ------- -------- -------- ------- -------- ---------
128 4,357 70,219 46,327 3,566 3,479 (18,201)
--------- ------- -------- -------- ------- -------- ---------
24,906 72,170 39,437 22,472 90,876 (35,342) (83,458)
-- -- -- -- -- -- --
--------- ------- -------- -------- ------- -------- ---------
24,906 72,170 39,437 22,472 90,876 (35,342) (83,458)
--------- ------- -------- -------- ------- -------- ---------
25,034 76,527 109,656 68,799 94,442 (31,863) (101,659)
--------- ------- -------- -------- ------- -------- ---------
$ 24,572 $76,497 $108,598 $ 68,749 $93,134 $(33,109) $(103,338)
========= ======= ======== ======== ======= ======== =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
101
<PAGE> 106
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED ASSETS VALUE
------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/99 3/31/98 3/31/99 3/31/98
----------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Net investment income/(loss)................................ $ 3,071 $ 4,644 $ 15,999 $ 20,138
Net realized gain/(loss) on investments..................... (2,434) 36,271 197,138 514,208
Net change in unrealized appreciation/(depreciation) of
investments............................................... (4,896) 9,456 (130,060) 170,187
-------- -------- ---------- ----------
Net increase/(decrease) in net assets resulting from
operations................................................ (4,259) 50,371 83,077 704,533
Distributions to shareholders from net investment income:
Primary A Shares.......................................... (1,396) (2,911) (15,869) (18,994)
Primary B Shares.......................................... (25) (139) -- (97)
Investor A Shares......................................... (490) (304) (741) (849)
Investor B Shares......................................... (902) (1,224) -- (231)
Investor C Shares......................................... (19) (41) (7) (23)
Distributions to shareholders from net realized gain on
investments:
Primary A Shares.......................................... (1,225) (26,569) (267,249) (287,309)
Primary B Shares.......................................... (120) (1,423) -- (3,678)
Investor A Shares......................................... (1,032) (2,364) (17,975) (19,885)
Investor B Shares......................................... (5,096) (13,747) (18,826) (22,962)
Investor C Shares......................................... (123) (445) (1,658) (2,516)
Net increase/(decrease) in net assets from Fund share
transactions.............................................. 40,450 (98,063) (79,457) 807,980
-------- -------- ---------- ----------
Net increase/(decrease) in net assets....................... 25,763 (96,859) (318,705) 1,155,969
NET ASSETS:
Beginning of period......................................... 118,938 215,797 2,561,231 1,405,262
-------- -------- ---------- ----------
End of period............................................... $144,701 $118,938 $2,242,526 $2,561,231
======== ======== ========== ==========
Undistributed net investment income/(distributions in excess
of net investment income) at end of period................ $ 258 $ 41 $ -- $ 215
======== ======== ========== ==========
</TABLE>
- ---------------
(a) Growth and Income commenced operations on December 31, 1997.
(b) Strategic Equity commenced operations on October 2, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
102
<PAGE> 107
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EQUITY INCOME EQUITY INDEX GROWTH & INCOME STRATEGIC EQUITY
----------------------- ----------------------- ------------------------- ----------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
3/31/99 3/31/98 3/31/99 3/31/98 3/31/99 3/31/1998(a) 3/31/1999(b)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$16,277... $ 15,036 $ 8,920 $ 9,369 $ (462) $ (2) $ (30)
21,410... 122,323 6,845 48,053 128 8 4,357
(151,838) 109,181 127,208 194,840 24,906 1,128 72,170
---------- ---------- -------- --------- -------- ------- --------
(114,151) 246,540 142,973 252,262 24,572 1,134 76,497
(14,121) (11,909) (8,807) (9,283) -- -- --
-- (84) (2) (32) -- -- --
(986) (1,138) (84) (35) -- -- --
(1,024) (1,603) -- -- -- -- --
(68) (114) -- -- -- -- --
(71,792) (45,271) (29,335) (19,201) (3) -- (87)
-- (847) (5) (118) -- -- --
(5,474) (9,122) (212) (89) (1) -- --
(11,747) (19,538) -- -- (10) -- --
(775) (1,368) -- -- -- -- --
(178,872) 615,156 181,371 (137,381) 161,470 10,949 190,413
---------- ---------- -------- --------- -------- ------- --------
(399,010) 770,702 285,899 86,123 186,028 12,083 266,823
1,138,912... 368,210 661,241 575,118 12,083 -- --
---------- ---------- -------- --------- -------- ------- --------
$739,902.. $1,138,912 $947,140 $ 661,241 $198,111 $12,083 $266,823
========== ========== ======== ========= ======== ======= ========
$388...... $ 335 $ 44 $ 16 $ -- $ 9 $ --
========== ========== ======== ========= ======== ======= ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
103
<PAGE> 108
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
CAPITAL GROWTH DISCIPLINED EQUITY
------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/99 3/31/98 3/31/99 3/31/98
----------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Net investment income/(loss)................................ $ (1,058) $ 348 $ (50) $ 299
Net realized gain/(loss) on investments..................... 70,219 273,745 46,327 35,307
Net change in unrealized appreciation/(depreciation) of
investments............................................... 39,437 78,878 22,472 29,982
--------- --------- -------- --------
Net increase/(decrease) in net assets resulting from
operations................................................ 108,598 352,971 68,749 65,588
Distributions to shareholders from net investment income:
Primary A Shares.......................................... -- (639) -- (246)
Primary B Shares.......................................... -- -- -- --
Investor A Shares......................................... -- -- -- (6)
Investor B Shares......................................... -- -- -- --
Investor C Shares......................................... -- -- -- --
Distributions to shareholders in excess of net investment
income:
Primary A Shares.......................................... -- -- (227) --
Primary B Shares.......................................... -- -- -- --
Investor A Shares......................................... -- -- -- --
Investor B Shares......................................... -- -- -- --
Investor C Shares......................................... -- -- -- --
Distributions to shareholders from net realized gain on
investments:
Primary A Shares.......................................... (181,366) (143,058) (17,824) (22,847)
Primary B Shares.......................................... (61) (2,386) -- (159)
Investor A Shares......................................... (9,887) (7,645) (2,919) (1,985)
Investor B Shares......................................... (13,915) (13,929) (3,828) (5,098)
Investor C Shares......................................... (1,210) (1,825) (118) (160)
Net increase/(decrease) in net assets from Fund share
transactions.............................................. (22,825) 184,298 294,617 29,500
--------- --------- -------- --------
Net increase/(decrease) in net assets....................... (120,666) 367,787 338,450 64,587
NET ASSETS:
Beginning of period......................................... 981,473 613,686 193,508 128,921
--------- --------- -------- --------
End of period............................................... $ 860,807 $ 981,473 $531,958 $193,508
========= ========= ======== ========
Undistributed net investment income/(distributions in excess
of net investment income) at end of period................ $ -- $ -- $ -- $ 47
========= ========= ======== ========
</TABLE>
- ---------------
(a) Focused Equities commenced operations on December 31, 1997.
(b) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
May 16.
(c) Represents financial information for the Pilot Small Capitalization Equity
Fund from September 1, 1996, which was organized into Small Company Growth
on May 23, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
104
<PAGE> 109
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
FOCUSED EQUITIES EMERGING GROWTH SMALL COMPANY GROWTH
------------------------- ----------------------- ----------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
3/31/99 3/31/1998(A) 3/31/99 3/31/98 3/31/99 3/31/98(B) 5/16/97(C)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (1,308) $ (28) $ (1,246) $ (2,067) $ (1,679) $ 23 $ 364
3,566 39 3,479 89,899 (18,201) 20,876 (1,681)
90,876 3,298 (35,342) 47,047 (83,458) 34,467 13,621
-------- ------- --------- -------- -------- -------- --------
93,134 3,309 (33,109) 134,879 (103,338) 55,366 12,304
-- -- -- -- -- (58) (362)
-- -- -- -- -- -- --
-- -- -- -- -- -- (8)
-- -- -- -- -- -- (1)
-- -- -- -- -- -- --
(13) -- (43,365) (34,129) (22,341) (6,839) (357)
-- -- (3) (445) -- -- --
(12) -- (3,190) (1,863) (901) (271) (12)
(36) -- (6,532) (4,817) (327) (52) (10)
(1) -- (320) (260) (217) (153) --
534,792 32,469 (70,866) (22,569) 229,621 84,929 29,256
-------- ------- --------- -------- -------- -------- --------
627,864 35,778 (157,385) 70,796 102,497 132,922 40,810
35,778 -- 387,916 317,120 248,705 115,783 74,973
-------- ------- --------- -------- -------- -------- --------
$663,642 $35,778 $ 230,531 $387,916 $351,202 $248,705 $115,783
======== ======= ========= ======== ======== ======== ========
$ -- $ -- $ -- $ -- $ (1,069) $ (37) $ --
======== ======= ========= ======== ======== ======== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
105
<PAGE> 110
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
BALANCED ASSETS
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
--------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 737 $ 7,600 2,574 $ 29,244
Issued in exchange for Institutional Shares of Emerald
Balanced Fund (Note 11)................................. 6,310 68,185 -- --
Issued as reinvestment of dividends....................... 220 2,295 2,583 27,578
Redeemed.................................................. (4,378) (45,725) (15,564) (169,900)
------ -------- ------- ---------
Net increase/(decrease)................................... 2,889 $ 32,355 (10,407) $(113,078)
====== ======== ======= =========
PRIMARY B SHARES:+
Sold...................................................... -- $ -- 268 $ 3,019
Issued as reinvestment of dividends....................... 11 120 133 1,404
Redeemed.................................................. (174) (1,835) (736) (7,995)
------ -------- ------- ---------
Net increase/(decrease)................................... (163) $ (1,715) (335) $ (3,572)
====== ======== ======= =========
INVESTOR A SHARES:
Sold...................................................... 681 $ 7,093 681 $ 7,699
Issued in exchange for Retail Shares of Emerald Balanced
Fund (Note 11).......................................... 806 8,702 -- --
Issued as reinvestment of dividends....................... 141 1,485 247 2,624
Redeemed.................................................. (1,001) (10,278) (348) (3,890)
------ -------- ------- ---------
Net increase/(decrease)................................... 627 $ 7,002 580 $ 6,433
====== ======== ======= =========
INVESTOR B SHARES:
Sold...................................................... 1,397 $ 14,540 692 $ 7,671
Issued as reinvestment of dividends....................... 551 5,853 1,379 14,629
Redeemed.................................................. (1,713) (17,442) (954) (10,609)
------ -------- ------- ---------
Net increase/(decrease)................................... 235 $ 2,951 1,117 $ 11,691
====== ======== ======= =========
INVESTOR C SHARES:
Sold...................................................... 52 $ 546 124 $ 1,367
Issued as reinvestment of dividends....................... 13 141 46 486
Redeemed.................................................. (80) (830) (125) (1,390)
------ -------- ------- ---------
Net increase/(decrease)................................... (15) $ (143) 45 $ 463
====== ======== ======= =========
Total net increase/(decrease)............................... 3,573 $ 40,450 (9,000) $ (98,063)
====== ======== ======= =========
</TABLE>
- ---------------
+ There were no longer any public shareholders of the Primary B Share class as
of January 5, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
106
<PAGE> 111
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
VALUE
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
----------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 29,523 $ 533,366 16,610 $ 311,812
Issued in exchange for:
Pilot Shares of Pilot Growth and Income Fund (Note
11)................................................... -- -- 17,843 327,257
Assets of NationsBank Common Trust Value Equity Fund
(Note 11)............................................. -- -- 54,449 916,929
Assets of NationsBank Common Trust Long-Term Equity Fund
(Note 11)............................................. 6,395 120,426 -- --
Institutional Shares of Emerald Equity Value Fund
(Note 11)............................................. 1,059 19,791 -- --
Issued as reinvestment of dividends....................... 5,598 103,270 9,342 165,845
Redeemed.................................................. (48,601) (877,373) (52,590) (998,852)
------- --------- ------- ---------
Net increase/(decrease)................................... (6,026) $(100,520) 45,654 $ 722,991
======= ========= ======= =========
PRIMARY B SHARES:+
Sold...................................................... -- $ -- 207 $ 3,909
Issued as reinvestment of dividends....................... -- -- 157 2,798
Redeemed.................................................. -- -- (1,908) (36,315)
------- --------- ------- ---------
Net increase/(decrease)................................... -- $ -- (1,544) $ (29,608)
======= ========= ======= =========
INVESTOR A SHARES:
Sold...................................................... 2,114 $ 37,964 3,310 $ 65,462
Issued in exchange for:
Class A Shares of Pilot Growth and Income Fund (Note
11)................................................... -- -- 436 7,995
Retail Shares of Emerald Equity Value Fund (Note 11).... 354 6,603 -- --
Issued as reinvestment of dividends....................... 946 17,374 1,126 19,824
Redeemed.................................................. (3,378) (59,394) (1,317) (24,923)
------- --------- ------- ---------
Net increase/(decrease)................................... 36 $ 2,547 3,555 $ 68,358
======= ========= ======= =========
INVESTOR B SHARES:
Sold...................................................... 1,531 $ 28,200 1,418 $ 32,294
Issued in exchange for Class B Shares of Pilot Growth and
Income Fund (Note 11)................................... -- -- 310 5,668
Issued as reinvestment of dividends....................... 1,007 18,348 1,288 22,711
Redeemed.................................................. (1,531) (27,558) (1,080) (21,865)
------- --------- ------- ---------
Net increase/(decrease)................................... 1,007 $ 18,990 1,936 $ 38,808
======= ========= ======= =========
INVESTOR C SHARES:
Sold...................................................... 206 $ 3,701 503 $ 10,534
Issued as reinvestment of dividends....................... 91 1,663 145 2,530
Redeemed.................................................. (331) (5,838) (307) (5,633)
------- --------- ------- ---------
Net increase/(decrease)................................... (34) $ (474) 341 $ 7,431
======= ========= ======= =========
Total net increase/(decrease)............................... (5,017) $ (79,457) 49,942 $ 807,980
======= ========= ======= =========
</TABLE>
- ---------------
+ There were no longer any public shareholders of the Primary B Share class as
of March 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
107
<PAGE> 112
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EQUITY INCOME
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
----------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 10,668 $ 124,337 6,312 $ 81,040
Issued in exchange for:
Pilot Shares of Pilot Equity Income Fund (Note 11)...... -- -- 10,972 132,321
Assets of NationsBank Common Trust Equity Income Fund
(Note 11)............................................. -- -- 46,645 563,468
Assets of NationsBank Common Trust Equity Income Fund
(Note 11)............................................. 4,737 62,189 -- --
Issued as reinvestment of dividends....................... 636 8,101 1,566 19,191
Redeemed.................................................. (31,078) (358,488) (16,153) (209,588)
------- --------- ------- ---------
Net increase/(decrease)................................... (15,037) $(163,861) 49,342 $ 586,432
======= ========= ======= =========
PRIMARY B SHARES:+
Sold...................................................... -- $ -- 70 $ 893
Issued as reinvestment of dividends....................... -- -- 63 762
Redeemed.................................................. -- -- (660) (8,640)
------- --------- ------- ---------
Net increase/(decrease)................................... -- $ -- (527) $ (6,985)
======= ========= ======= =========
INVESTOR A SHARES:
Sold...................................................... 1,295 $ 15,303 1,077 $ 13,599
Issued in exchange for Class A Shares of Pilot Equity
Income Fund (Note 11)................................... -- -- 355 4,273
Issued as reinvestment of dividends....................... 475 5,953 788 9,543
Redeemed.................................................. (2,132) (24,670) (1,231) (15,540)
------- --------- ------- ---------
Net increase/(decrease)................................... (362) $ (3,414) 989 $ 11,875
======= ========= ======= =========
INVESTOR B SHARES:
Sold...................................................... 989 $ 12,090 1,293 $ 16,797
Issued in exchange for Class B Shares of Pilot Equity
Income Fund (Note 11)................................... -- -- 409 4,902
Issued as reinvestment of dividends....................... 982 12,328 1,674 20,416
Redeemed.................................................. (2,892) (33,271) (1,751) (22,947)
------- --------- ------- ---------
Net increase/(decrease)................................... (921) $ (8,853) 1,625 $ 19,168
======= ========= ======= =========
INVESTOR C SHARES:
Sold...................................................... 35 $ 434 492 $ 6,685
Issued as reinvestment of dividends....................... 66 839 118 1,451
Redeemed.................................................. (333) (4,017) (277) (3,470)
------- --------- ------- ---------
Net increase/(decrease)................................... (232) $ (2,744) 333 $ 4,666
======= ========= ======= =========
Total net increase/(decrease)............................... (16,552) $(178,872) 51,762 $ 615,156
======= ========= ======= =========
</TABLE>
- ---------------
+ There were no longer any public shareholders of the Primary B Share class as
of March 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
108
<PAGE> 113
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EQUITY INDEX
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
----------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 29,340 $ 653,241 14,925 $ 286,047
Issued as reinvestment of dividends....................... 1,400 30,587 1,114 21,515
Redeemed.................................................. (22,794) (509,984) (22,419) (439,321)
------- --------- ------- ---------
Net increase/(decrease)................................... 7,946 $ 173,844 (6,380) $(131,759)
======= ========= ======= =========
PRIMARY B SHARES:+
Sold...................................................... 13 $ 295 119 $ 2,219
Issued as reinvestment of dividends....................... -- 7 8 142
Redeemed.................................................. (19) (450) (468) (9,016)
------- --------- ------- ---------
Net increase/(decrease)................................... (6) $ (148) (341) $ (6,655)
======= ========= ======= =========
INVESTOR A SHARES:
Sold...................................................... 459 $ 10,251 201 $ 3,881
Issued as reinvestment of dividends....................... 13 279 6 114
Redeemed.................................................. (123) (2,855) (163) (2,962)
------- --------- ------- ---------
Net increase/(decrease)................................... 349 $ 7,675 44 $ 1,033
======= ========= ======= =========
Total net increase/(decrease)............................... 8,289 $ 181,371 (6,677) $(137,381)
======= ========= ======= =========
</TABLE>
- ---------------
+ There were no longer any public shareholders of the Primary B Share class as
of February 15, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
109
<PAGE> 114
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
GROWTH & INCOME
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998(A)
----------------------- ----------------------
SHARES DOLLARS SHARES DOLLARS
----------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 4,035 $ 54,522 210 $ 2,117
Issued as reinvestment of dividends....................... --* 3 -- --
Redeemed.................................................. (741) (9,475) (1) (11)
------ -------- ----- -------
Net increase/(decrease)................................... 3,294 $ 45,050 209 $ 2,106
====== ======== ===== =======
INVESTOR A SHARES:
Sold...................................................... 3,300 $ 41,279 100 $ 1,117
Issued as reinvestment of dividends....................... --* 1 -- --
Redeemed.................................................. (493) (6,453) (5) (55)
------ -------- ----- -------
Net increase/(decrease)................................... 2,807 $ 34,827 95 $ 1,062
====== ======== ===== =======
INVESTOR B SHARES:
Sold...................................................... 6,484 $ 84,968 664 $ 7,350
Issued as reinvestment of dividends....................... --* 9 -- --
Redeemed.................................................. (457) (5,812) (6) (71)
------ -------- ----- -------
Net increase/(decrease)................................... 6,027 $ 79,165 658 $ 7,279
====== ======== ===== =======
INVESTOR C SHARES:
Sold...................................................... 197 $ 2,723 43 $ 502
Issued as reinvestment of dividends....................... --* --* -- --
Redeemed.................................................. (23) (295) -- --
------ -------- ----- -------
Net increase/(decrease)................................... 174 $ 2,428 43 $ 502
====== ======== ===== =======
Total net increase/(decrease)............................... 12,302 $161,470 1,005 $10,949
====== ======== ===== =======
</TABLE>
- ---------------
* Amount represents less than 500 shares and $500.
(a) Growth and Income commenced operations on December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
110
<PAGE> 115
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
STRATEGIC EQUITY
PERIOD ENDED
MARCH 31, 1999(A)
---------------------
SHARES DOLLARS
---------------------
<S> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 20,226 $202,441
Issued as reinvestment of dividends....................... -- --
Redeemed.................................................. (970) (12,028)
------ --------
Net increase/(decrease)................................... 19,256 $190,413
====== ========
Total net increase/(decrease)............................... 19,256 $190,413
====== ========
</TABLE>
- ---------------
(a) Strategic Equity commenced operations on October 2, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
111
<PAGE> 116
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
CAPITAL GROWTH
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
----------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 14,323 $ 183,544 6,334 $ 78,066
Issued in exchange for:
Assets of NationsBank Common Trust Capital Growth Fund
(Note 11)............................................. -- -- 44,251 469,944
Assets of NationsBank Common Trust Equity Funds for
Personal Trust (Note 11).............................. -- -- 5,062 53,754
Issued as reinvestment of dividends....................... 5,911 65,638 9,411 105,982
Redeemed.................................................. (24,584) (296,237) (45,061) (537,766)
------- --------- ------- ---------
Net increase/(decrease)................................... (4,350) $ (47,055) 19,997 $ 169,980
======= ========= ======= =========
PRIMARY B SHARES:+
Sold...................................................... -- $ -- 96 $ 1,136
Issued as reinvestment of dividends....................... 6 61 177 1,992
Redeemed.................................................. (26) (283) (1,311) (16,042)
------- --------- ------- ---------
Net increase/(decrease)................................... (20) $ (222) (1,038) $ (12,914)
======= ========= ======= =========
INVESTOR A SHARES:
Sold...................................................... 2,165 $ 24,731 2,778 $ 33,436
Issued as reinvestment of dividends....................... 811 8,950 620 6,941
Redeemed.................................................. (1,821) (20,456) (1,879) (23,315)
------- --------- ------- ---------
Net increase/(decrease)................................... 1,155 $ 13,225 1,519 $ 17,062
======= ========= ======= =========
INVESTOR B SHARES:
Sold...................................................... 889 $ 10,383 352 $ 4,213
Issued as reinvestment of dividends....................... 1,294 13,706 1,252 13,690
Redeemed.................................................. (994) (11,322) (623) (7,430)
------- --------- ------- ---------
Net increase/(decrease)................................... 1,189 $ 12,767 981 $ 10,473
======= ========= ======= =========
INVESTOR C SHARES:
Sold...................................................... 113 $ 1,473 149 $ 1,808
Issued as reinvestment of dividends....................... 112 1,200 165 1,809
Redeemed.................................................. (367) (4,213) (336) (3,920)
------- --------- ------- ---------
Net increase/(decrease)................................... (142) $ (1,540) (22) $ (303)
======= ========= ======= =========
Total net increase/(decrease)............................... (2,168) $ (22,825) 21,437 $ 184,298
======= ========= ======= =========
</TABLE>
- ---------------
+ There were no longer any public shareholders of the Primary B Share class as
of December 1, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
112
<PAGE> 117
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
DISCIPLINED EQUITY
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
---------------------- ----------------------
SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 5,761 $ 122,198 3,960 $ 81,039
Issued in exchange for:
Pilot Shares of Pilot Growth Fund (Note 11)............. -- -- 2,069 37,389
Assets of NationsBank Common Trust Growth Stock Fund
(Note 11)............................................. 2,279 47,340 -- --
Assets of NationsBank Common Trust Oklahoma Growth Stock
Fund (Note 11)........................................ 205 4,245 -- --
Institutional Shares of Emerald Equity Fund (Note 11)... 11,872 249,848 -- --
Issued as reinvestment of dividends....................... 596 12,584 736 13,934
Redeemed.................................................. (9,046) (192,810) (6,216) (126,868)
------ --------- ------ ---------
Net increase/(decrease)................................... 11,667 $ 243,405 549 $ 5,494
====== ========= ====== =========
PRIMARY B SHARES:+
Sold...................................................... -- $ -- 8 $ 157
Issued as reinvestment of dividends....................... -- -- 1 28
Redeemed.................................................. -- -- (70) (1,439)
------ --------- ------ ---------
Net increase/(decrease)................................... -- $ -- (61) $ (1,254)
====== ========= ====== =========
INVESTOR A SHARES:
Sold...................................................... 3,454 $ 71,438 733 $ 14,589
Issued in exchange for:
Class A Shares of Pilot Growth Fund (Note 11)........... -- -- 12 223
Retail Shares of Emerald Equity Fund (Note 11).......... 2,242 47,004 -- --
Issued as reinvestment of dividends....................... 132 2,780 103 1,934
Redeemed.................................................. (3,913) (80,705) (235) (4,755)
------ --------- ------ ---------
Net increase/(decrease)................................... 1,915 $ 40,517 613 $ 11,991
====== ========= ====== =========
INVESTOR B SHARES:
Sold...................................................... 672 $ 13,830 592 $ 11,777
Issued in exchange for Class B Shares of Pilot Growth Fund
(Note 11)............................................... -- -- 8 139
Issued as reinvestment of dividends....................... 183 3,754 270 5,025
Redeemed.................................................. (359) (7,232) (218) (4,252)
------ --------- ------ ---------
Net increase/(decrease)................................... 496 $ 10,352 652 $ 12,689
====== ========= ====== =========
INVESTOR C SHARES:
Sold...................................................... 35 $ 723 53 $ 1,059
Issued as reinvestment of dividends....................... 6 118 8 154
Redeemed.................................................. (24) (498) (30) (633)
------ --------- ------ ---------
Net increase/(decrease)................................... 17 $ 343 31 $ 580
====== ========= ====== =========
Total net increase/(decrease)............................... 14,095 $ 294,617 1,784 $ 29,500
====== ========= ====== =========
</TABLE>
- ---------------
+ There were no longer any public shareholders of the Primary B Share class as
of March 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
113
<PAGE> 118
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
FOCUSED EQUITIES
YEAR ENDED PERIOD ENDED
MARCH 31, 1999 MARCH 31, 1998(A)
---------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
---------------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 6,465 $ 91,675 726 $ 7,832
Issued as reinvestment of dividends....................... --* 11 -- --
Redeemed.................................................. (873) (11,954) --* (3)
------ -------- ----- -------
Net increase/(decrease)................................... 5,592 $ 79,732 726 $ 7,829
====== ======== ===== =======
INVESTOR A SHARES:
Sold...................................................... 14,569 $219,849 514 $ 5,758
Issued as reinvestment of dividends....................... --* 12 -- --
Redeemed.................................................. (833) (11,959) (15) (168)
------ -------- ----- -------
Net increase/(decrease)................................... 13,736 $207,902 499 $ 5,590
====== ======== ===== =======
INVESTOR B SHARES:
Sold...................................................... 17,825 $250,192 1,701 $18,783
Issued as reinvestment of dividends....................... 3 35 -- --
Redeemed.................................................. (1,076) (15,197) (15) (164)
------ -------- ----- -------
Net increase/(decrease)................................... 16,752 $235,030 1,686 $18,619
====== ======== ===== =======
INVESTOR C SHARES:
Sold...................................................... 809 $ 12,547 39 $ 431
Issued as reinvestment of dividends....................... --* --* -- --
Redeemed.................................................. (27) (419) -- --
------ -------- ----- -------
Net increase/(decrease)................................... 782 $ 12,128 39 $ 431
====== ======== ===== =======
Total net increase/(decrease)............................... 36,862 $534,792 2,950 $32,469
====== ======== ===== =======
</TABLE>
- ---------------
* Amount represents less than 500 shares and $500.
(a) Focused Equities commenced operations on December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
114
<PAGE> 119
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EMERGING GROWTH
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
-------------------- --------------------
SHARES DOLLARS SHARES DOLLARS
--------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 2,838 $ 39,174 3,096 $ 44,791
Issued in exchange for:
Assets of NationsBank Common Trust Emerging Growth Fund
(Note 11)............................................. -- -- 7,086 103,027
Issued as reinvestment of dividends....................... 1,415 20,768 1,624 23,698
Redeemed.................................................. (10,129) (129,391) (13,362) (199,704)
------- --------- ------- ---------
Net increase/(decrease)................................... (5,876) $ (69,449) (1,556) $ (28,188)
======= ========= ======= =========
PRIMARY B SHARES:+
Sold...................................................... -- $ -- 98 $ 1,358
Issued as reinvestment of dividends....................... --* 3 29 425
Redeemed.................................................. (2) (23) (352) (5,177)
------- --------- ------- ---------
Net increase/(decrease)................................... (2) $ (20) (225) $ (3,394)
======= ========= ======= =========
INVESTOR A SHARES:
Sold...................................................... 23,995 $ 284,885 1,655 $ 24,208
Issued as reinvestment of dividends....................... 192 2,766 116 1,645
Redeemed.................................................. (24,128) (287,495) (1,401) (20,185)
------- --------- ------- ---------
Net increase/(decrease)................................... 59 $ 156 370 $ 5,668
======= ========= ======= =========
INVESTOR B SHARES:
Sold...................................................... 295 $ 3,696 368 $ 5,386
Issued as reinvestment of dividends....................... 469 6,405 340 4,707
Redeemed.................................................. (974) (11,323) (502) (7,132)
------- --------- ------- ---------
Net increase/(decrease)................................... (210) $ (1,222) 206 $ 2,961
======= ========= ======= =========
INVESTOR C SHARES:
Sold...................................................... 54 $ 622 97 $ 1,349
Issued as reinvestment of dividends....................... 23 319 18 260
Redeemed.................................................. (110) (1,272) (87) (1,225)
------- --------- ------- ---------
Net increase/(decrease)................................... (33) $ (331) 28 $ 384
======= ========= ======= =========
Total net increase/(decrease)............................... (6,062) $ (70,866) (1,177) $ (22,569)
======= ========= ======= =========
</TABLE>
- ---------------
* Amount represents less than 500 shares.
+ There were no longer any public shareholders of the Primary B Share class as
of June 11, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
115
<PAGE> 120
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH
PERIOD ENDED
YEAR ENDED MARCH 31, PERIOD ENDED
MARCH 31, 1999 1998(A)(B) MAY 15, 1997(C)
-------------------- -------------------- ------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold..................................................... 15,945 $ 214,344 9,153 $125,787 3,463 $ 39,823
Issued in exchange for:
Assets of NationsBank Common Trust Special Equity Fund
(Note 11)............................................ 464 7,075 -- -- -- --
Institutional Shares of Emerald Small Capitalization
Fund (Note 11)....................................... 9,319 139,205 -- -- -- --
Issued as reinvestment of dividends...................... 1,069 14,012 110 1,586 8 97
Redeemed................................................. (13,195) (161,496) (3,417) (47,093) (1,023) (11,850)
------- --------- ------ -------- ------ --------
Net increase/(decrease).................................. 13,602 $ 213,140 5,846 $ 80,280 2,448 $ 28,070
======= ========= ====== ======== ====== ========
INVESTOR A SHARES:
Sold..................................................... 8,141 $ 95,698 234 $ 3,339 88 $ 1,016
Issued in exchange for:
Retail Shares of Emerald Small Capitalization Fund
(Note 11)............................................ 933 13,883 -- -- -- --
Issued as reinvestment of dividends...................... 64 828 18 260 2 20
Redeemed................................................. (8,156) (96,977) (128) (1,747) (29) (332)
------- --------- ------ -------- ------ --------
Net increase/(decrease).................................. 982 $ 13,432 124 $ 1,852 61 $ 704
======= ========= ====== ======== ====== ========
INVESTOR B SHARES:
Sold..................................................... 353 $ 4,713 224 $ 3,173 58 $ 660
Issued as reinvestment of dividends...................... 25 322 4 51 1 10
Redeemed................................................. (139) (1,729) (230) (3,443) (16) (188)
------- --------- ------ -------- ------ --------
Net increase/(decrease).................................. 239 $ 3,306 (2) $ (219) 43 $ 482
======= ========= ====== ======== ====== ========
INVESTOR C SHARES:
Sold..................................................... 13 $ 177 225 $ 3,399 -- $ --
Issued as reinvestment of dividends...................... 15 213 10 149 -- --
Redeemed................................................. (55) (647) (37) (532) -- --
------- --------- ------ -------- ------ --------
Net increase/(decrease).................................. (27) $ (257) 198 $ 3,016 -- $ --
======= ========= ====== ======== ====== ========
Total net increase/(decrease).............................. 14,796 $ 229,621 6,166 $ 84,929 2,552 $ 29,256
======= ========= ====== ======== ====== ========
</TABLE>
- ---------------
(a) Small Company Growth's Investor C Shares commenced operations on September
22, 1997.
(b) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
May 16.
(c) Represents financial information for the Pilot Small Capitalization Equity
Fund from September 1, 1996, which was reorganized into Nations Small
Company Growth Fund on May 23, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
116
<PAGE> 121
[THIS PAGE INTENTIONALLY LEFT BLANK.]
117
<PAGE> 122
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET INCREASE/
NET ASSET REALIZED AND (DECREASE) IN DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCED ASSETS
PRIMARY A
Year ended 3/31/1999#.................... $11.49 $0.26 $(0.39) $(0.13) $(0.23) $(0.74)
Year ended 3/31/1998..................... 11.15 0.29 2.68 2.97 (0.29) (2.34)
Year ended 3/31/1997..................... 11.65 0.39 1.03 1.42 (0.38) (1.54)
Period ended 3/31/1996(a)................ 12.68 0.11 0.45 0.56 (0.18) (1.41)
Year ended 11/30/1995.................... 10.44 0.38 2.21 2.59 (0.33) (0.02)
Year ended 11/30/1994.................... 10.87 0.25 (0.43) (0.18) (0.25) --
PRIMARY B
Year ended 3/31/1999#+++................. $11.50 $0.15 $(0.20) $(0.05) $(0.14) $(0.74)
Year ended 3/31/1998..................... 11.14 0.23 2.70 2.93 (0.23) (2.34)
Period ended 3/31/1997*.................. 11.87 0.21 0.85 1.06 (0.25) (1.54)
INVESTOR A
Year ended 3/31/1999#.................... $11.47 $0.23 $(0.38) $(0.15) $(0.20) $(0.74)
Year ended 3/31/1998..................... 11.13 0.27 2.68 2.95 (0.27) (2.34)
Year ended 3/31/1997..................... 11.64 0.34 1.05 1.39 (0.36) (1.54)
Period ended 3/31/1996(a)................ 12.66 0.11 0.45 0.56 (0.17) (1.41)
Year ended 11/30/1995.................... 10.42 0.34 2.23 2.57 (0.31) (0.02)
Year ended 11/30/1994.................... 10.86 0.22 (0.44) (0.22) (0.22) --
INVESTOR B
Year ended 3/31/1999#.................... $11.45 $0.15 $(0.38) $(0.23) $(0.12) $(0.74)
Year ended 3/31/1998..................... 11.11 0.19 2.68 2.87 (0.19) (2.34)
Year ended 3/31/1997..................... 11.62 0.29 1.04 1.33 (0.30) (1.54)
Period ended 3/31/1996(a)................ 12.63 0.09 0.45 0.54 (0.14) (1.41)
Year ended 11/30/1995.................... 10.40 0.28 2.22 2.50 (0.25) (0.02)
Year ended 11/30/1994.................... 10.85 0.17 (0.44) (0.27) (0.18) --
INVESTOR C
Year ended 3/31/1999#.................... $11.41 $0.15 $(0.38) $(0.23) $(0.12) $(0.74)
Year ended 3/31/1998..................... 11.08 0.20 2.67 2.87 (0.20) (2.34)
Year ended 3/31/1997..................... 11.60 0.33 1.02 1.35 (0.33) (1.54)
Period ended 3/31/1996(a)................ 12.61 0.09 0.45 0.54 (0.14) (1.41)
Year ended 11/30/1995.................... 10.38 0.26 2.21 2.47 (0.22) (0.02)
Year ended 11/30/1994.................... 10.82 0.14 (0.43) (0.29) (0.15) --
</TABLE>
- ---------------
* Balanced Assets Primary B Shares commenced operations on June 28, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
+++ At March 31, 1999, there were no public shareholders in the Primary B Share
class. All publicly held Primary B Shares were redeemed on January 5, 1999.
The amounts reflected are for the period April 1, 1998 to January 5, 1999.
# Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(c) The effect of interest expense on the operating expense ratio was less than
0.01%.
(d) Amount represents less than $500.
SEE NOTES TO FINANCIAL STATEMENTS.
118
<PAGE> 123
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES TO INCOME TO PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD AVERAGE AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.97) $10.39 (1.20)% $ 48,373 1.00%(b)(c) 2.43% 126% 1.00%(b)
(2.63) 11.49 30.35 20,299 1.08(b)(c) 2.70 276 1.08(b)
(1.92) 11.15 12.50 135,731 1.00(b) 3.31 264 1.00(b)
(1.59) 11.65 4.90 164,215 1.00+ 2.91+ 83 1.00+
(0.35) 12.68 25.27 163,198 0.99 3.25 174 0.99
(0.25) 10.44 (1.73) 162,215 0.98 2.31 156 0.99
$(0.88) $10.57 (0.39)% $ --(d) 1.15%+(b)(c) 2.28%+ 126% 1.60%+(b)
(2.57) 11.50 29.90 1,868 1.58(b)(c) 2.20 276 1.58(b)
(1.79) 11.14 9.06 5,537 1.50+(b) 2.81+ 264 1.50+(b)
$(0.94) $10.38 (1.36)% $ 20,979 1.25%(b)(c) 2.18% 126% 1.25%(b)
(2.61) 11.47 30.13 16,009 1.33(b)(c) 2.45 276 1.33(b)
(1.90) 11.13 12.18 9,075 1.25(b) 3.06 264 1.25(b)
(1.58) 11.64 4.86 6,261 1.25+ 2.66+ 83 1.25+
(0.33) 12.66 25.01 5,276 1.24 3.00 174 1.24
(0.22) 10.42 (2.02) 4,881 1.23 2.06 156 1.24
$(0.86) $10.36 (2.13)% $ 73,735 2.00%(b)(c) 1.43% 126% 2.00%(b)
(2.53) 11.45 29.35 78,813 2.00(b)(c) 1.78 276 2.00(b)
(1.84) 11.11 11.62 64,058 1.75(b) 2.56 264 1.75(b)
(1.55) 11.62 4.69 65,764 1.75+ 2.16+ 83 1.75+
(0.27) 12.63 24.35 62,275 1.74 2.50 174 1.74
(0.18) 10.40 (2.51) 52,905 1.73 1.56 156 1.74
$(0.86) $10.32 (2.17)% $ 1,614 2.00%(b)(c) 1.43% 126% 2.00%(b)
(2.54) 11.41 29.43 1,947 1.91(b)(c) 1.87 276 1.91(b)
(1.87) 11.08 11.85 1,396 1.50(b) 2.81 264 1.50(b)
(1.55) 11.60 4.71 1,187 1.62+ 2.29+ 83 1.62+
(0.24) 12.61 24.03 992 1.99 2.25 174 1.99
(0.15) 10.38 (2.72) 951 1.98 1.31 156 1.99
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
119
<PAGE> 124
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET INCREASE/
NET ASSET REALIZED AND (DECREASE) IN DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VALUE
PRIMARY A
Year ended 3/31/1999#............ $19.92 $ 0.13 $ 0.64 $ 0.77 $(0.14) $(2.39)
Year ended 3/31/1998#............ 17.87 0.20 5.98 6.18 (0.19) (3.94)
Year ended 3/31/1997............. 16.60 0.26 2.69 2.95 (0.26) (1.42)
Period ended 3/31/1996(a)........ 16.21 0.07 1.06 1.13 (0.12) (0.62)
Year ended 11/30/1995............ 12.98 0.27 3.91 4.18 (0.28) (0.67)
Year ended 11/30/1994............ 13.74 0.24 (0.23) 0.01 (0.23) (0.54)
INVESTOR A
Year ended 3/31/1999#............ $19.92 $ 0.09 $ 0.63 $ 0.72 $(0.09) $(2.39)
Year ended 3/31/1998#............ 17.87 0.15 5.98 6.13 (0.14) (3.94)
Year ended 3/31/1997............. 16.60 0.21 2.70 2.91 (0.22) (1.42)
Period ended 3/31/1996(a)........ 16.21 0.05 1.06 1.11 (0.10) (0.62)
Year ended 11/30/1995............ 12.98 0.23 3.92 4.15 (0.25) (0.67)
Year ended 11/30/1994............ 13.72 0.20 (0.20) 0.00 (0.20) (0.54)
INVESTOR B
Year ended 3/31/1999#............ $19.81 $(0.05) $ 0.63 $ 0.58 $ -- $(2.39)
Year ended 3/31/1998#............ 17.81 0.02 5.96 5.98 (0.04) (3.94)
Year ended 3/31/1997............. 16.55 0.14 2.68 2.82 (0.14) (1.42)
Period ended 3/31/1996(a)........ 16.15 0.03 1.05 1.08 (0.06) (0.62)
Year ended 11/30/1995............ 12.94 0.17 3.89 4.06 (0.18) (0.67)
Year ended 11/30/1994............ 13.71 0.15 (0.22) (0.07) (0.16) (0.54)
INVESTOR C
Year ended 3/31/1999#............ $19.75 $(0.02) $ 0.65 $ 0.63 $(0.01) $(2.39)
Year ended 3/31/1998#............ 17.75 0.04 5.95 5.99 (0.05) (3.94)
Year ended 3/31/1997............. 16.50 0.17 2.68 2.85 (0.18) (1.42)
Period ended 3/31/1996(a)........ 16.09 0.04 1.05 1.09 (0.06) (0.62)
Year ended 11/30/1995............ 12.90 0.13 3.88 4.01 (0.15) (0.67)
Year ended 11/30/1994............ 13.64 0.12 (0.22) (0.10) (0.10) (0.54)
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Total return represents aggregate total return for the
period indicated, assumes reinvestment of all distributions,
and does not reflect the deduction of any applicable sales
charges.
# Per share net investment income has been calculated using
the monthly average share method.
(a) Fiscal year end changed to March 31. Prior to this, the
fiscal year end was November 30.
(b) The effect of the fees reduced by credits allowed by the
custodian on the operating expense ratio, with and without
waivers and/or expense reimbursements, was less than 0.01%.
(c) The effect of interest expense on the operating expense
ratio was less than 0.01%.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
120
<PAGE> 125
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES TO INCOME/LOSS PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD AVERAGE TO AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(2.53) $18.16 4.15% $1,939,704 0.94%(b)(c) 0.76% 38% 0.94%(b)
(4.13) 19.92 38.53 2,248,460 0.95(b) 1.04 79 0.95(b)
(1.68) 17.87 18.07 1,200,853 0.97(b) 1.51 47 0.97(b)
(0.74) 16.60 7.20 998,957 0.96+ 1.30+ 12 0.96+
(0.95) 16.21 34.53 956,669 0.94 1.90 63 0.94
(0.77) 12.98 (0.08) 799,743 0.93 1.85 75 0.93
$(2.48) $18.16 3.96% $ 136,691 1.19%(b)(c) 0.51% 38% 1.19%(b)
(4.08) 19.92 38.22 149,167 1.20(b) 0.79 79 1.20(b)
(1.64) 17.87 17.80 70,305 1.22(b) 1.26 47 1.22(b)
(0.72) 16.60 7.07 54,341 1.21+ 1.05+ 12 1.21+
(0.92) 16.21 34.22 48,440 1.19 1.65 63 1.19
(0.74) 12.98 (0.17) 35,445 1.18 1.60 75 1.18
$(2.39) $18.00 3.11% $ 154,025 1.94%(b)(c) (0.24)% 38% 1.94%(b)
(3.98) 19.81 37.29 149,635 1.87(b) 0.12 79 1.87(b)
(1.56) 17.81 17.21 99,999 1.72(b) 0.76 47 1.72(b)
(0.68) 16.55 6.90 88,861 1.71+ 0.55+ 12 1.71+
(0.85) 16.15 33.55 83,699 1.69 1.15 63 1.69
(0.70) 12.94 (0.69) 42,530 1.68 1.10 75 1.68
$(2.40) $17.98 3.39% $ 12,106 1.70%(b)(c) 0.00% 38% 1.94%(b)
(3.99) 19.75 37.55 13,969 1.78(b) 0.21 79 1.78(b)
(1.60) 17.75 17.51 6,519 1.47(b) 1.01 47 1.47(b)
(0.68) 16.50 6.99 4,633 1.58+ 0.68+ 12 1.58+
(0.82) 16.09 33.15 4,185 1.94 0.90 63 1.94
(0.64) 12.90 (0.92) 2,983 1.93 0.85 75 1.93
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
121
<PAGE> 126
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET INCREASE/
NET ASSET REALIZED AND (DECREASE) IN DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EQUITY INCOME
PRIMARY A
Year ended 3/31/1999#.............. $13.94 $0.23 $(1.45) $(1.22) $(0.23) $(1.13)
Year ended 3/31/1998#.............. 12.30 0.29 3.79 4.08 (0.28) (2.16)
Year ended 3/31/1997............... 13.14 0.43 1.55 1.98 (0.41) (2.41)
Period ended 3/31/1996(a).......... 11.81 0.30 1.77 2.07 (0.37) (0.37)
Year ended 5/31/1995............... 11.43 0.42 1.11 1.53 (0.42) (0.73)
Year ended 5/31/1994............... 12.06 0.38 0.22 0.60 (0.42) (0.81)
INVESTOR A
Year ended 3/31/1999#.............. $13.89 $0.20 $(1.45) $(1.25) $(0.20) $(1.13)
Year ended 3/31/1998#.............. 12.26 0.26 3.77 4.03 (0.24) (2.16)
Year ended 3/31/1997............... 13.11 0.36 1.58 1.94 (0.38) (2.41)
Period ended 3/31/1996(a).......... 11.78 0.27 1.77 2.04 (0.34) (0.37)
Year ended 5/31/1995............... 11.41 0.40 1.10 1.50 (0.40) (0.73)
Year ended 5/31/1994............... 12.02 0.37 0.21 0.58 (0.38) (0.81)
INVESTOR B
Year ended 3/31/1999#.............. $13.87 $0.11 $(1.45) $(1.34) $(0.09) $(1.13)
Year ended 3/31/1998#.............. 12.25 0.17 3.77 3.94 (0.16) (2.16)
Year ended 3/31/1997............... 13.10 0.31 1.57 1.88 (0.32) (2.41)
Period ended 3/31/1996(a).......... 11.77 0.22 1.76 1.98 (0.28) (0.37)
Year ended 5/31/1995............... 11.40 0.34 1.11 1.45 (0.35) (0.73)
Period ended 5/31/1994*............ 11.98 0.37 0.22 0.59 (0.36) (0.81)
INVESTOR C
Year ended 3/31/1999#.............. $14.01 $0.12 $(1.44) $(1.32) $(0.11) $(1.13)
Year ended 3/31/1998#.............. 12.35 0.18 3.83 4.01 (0.19) (2.16)
Year ended 3/31/1997............... 13.19 0.33 1.59 1.92 (0.35) (2.43)
Period ended 3/31/1996(a).......... 11.83 0.21 1.78 1.99 (0.26) (0.37)
Year ended 5/31/1995............... 11.47 0.32 1.08 1.40 (0.31) (0.73)
Year ended 5/31/1994............... 12.04 0.28 0.21 0.49 (0.25) (0.81)
</TABLE>
- ---------------
* Equity Income Investor B Shares commenced operations on June 7, 1993,
respectively.
+ Annualized
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
# Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year changed to March 31. Prior to this, the fiscal year end was May
31.
(b) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 001%.
(c) The effect of interest expense on the operating expense ratio was less than
0.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
122
<PAGE> 127
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES INCOME TO PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD TO AVERAGE AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(1.36) $11.36 (9.40)% $575,076 0.80%(b)(c) 1.92% 69% 0.80%(b)
(2.44) 13.94 37.21 915,630 0.86(b) 2.22 74 0.86(b)
(2.82) 12.30 15.62 200,772 0.91(b) 3.09 102 0.91(b)
(0.74) 13.14 17.98 283,142 0.90+ 2.84+ 59 0.90+
(1.15) 11.81 14.79 283,082 0.92 3.75 158 0.93
(1.23) 11.43 5.00 225,740 0.94 3.41 116 0.95
$(1.33) $11.31 (9.87)% $ 51,278 1.05%(b)(c) 1.67% 69% 1.05%(b)
(2.40) 13.89 36.92 68,006 1.11(b) 1.97 74 1.11(b)
(2.79) 12.26 15.30 47,891 1.16(b) 2.84 102 1.16(b)
(0.71) 13.11 17.75 42,606 1.15+ 2.59+ 59 1.15+
(1.13) 11.78 14.53 35,538 1.17 3.50 158 1.18
(1.19) 11.41 4.74 33,691 1.19 3.16 116 1.20
$(1.22) $11.31 (10.49)% $107,747 1.80%(b)(c) 0.92% 69% 1.80%(b)
(2.32) 13.87 36.02 144,929 1.78(b) 1.30 74 1.78(b)
(2.73) 12.25 14.76 108,055 1.66(b) 2.34 102 1.66(b)
(0.65) 13.10 17.21 104,026 1.65+ 2.09+ 59 1.65+
(1.08) 11.77 14.03 75,371 1.67 3.00 158 1.68
(1.17) 11.40 4.84 46,043 1.69+ 2.66+ 116 1.70+
$(1.24) $11.45 (10.28)% $ 5,801 1.64%(b)(c) 1.08% 69% 1.80%(b)
(2.35) 14.01 36.28 10,348 1.69(b) 1.39 74 1.69(b)
(2.76) 12.35 15.01 5,007 1.41(b) 2.59 102 1.41(b)
(0.63) 13.19 17.20 4,612 1.75+ 1.99+ 59 1.75+
(1.04) 11.83 13.49 4,278 1.92 2.75 158 1.93
(1.06) 11.47 3.96 4,221 1.94 2.41 116 1.95
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
123
<PAGE> 128
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET INCREASE/
NET ASSET REALIZED AND (DECREASE) IN DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EQUITY INDEX
PRIMARY A
Year ended 3/31/1999............... $22.41 $0.26 $ 3.63 $3.89 $(0.25) $(0.99)
Year ended 3/31/1998#.............. 15.89 0.27 7.11 7.38 (0.27) (0.59)
Year ended 3/31/1997............... 13.58 0.26 2.36 2.62 (0.26) (0.05)
Period ended 3/31/1996(a).......... 12.91 0.08 0.86 0.94 (0.13) (0.14)
Year ended 11/30/1995.............. 9.84 0.28 3.20 3.48 (0.28) (0.13)
Period ended 11/30/1994*........... 10.00 0.24 (0.21) 0.03 (0.19) --
PRIMARY B
Year ended 3/31/1999+++............ $22.46 $0.14 $ 2.54 $2.68 $(0.13) $(0.99)
Year ended 3/31/1998#.............. 15.89 0.18 7.12 7.30 (0.14) (0.59)
Period ended 3/31/1997*............ 14.13 0.16 1.80 1.96 (0.15) (0.05)
INVESTOR A
Year ended 3/31/1999............... $22.31 $0.19 $ 3.63 $3.82 $(0.20) $(0.99)
Year ended 3/31/1998#.............. 15.87 0.21 7.05 7.26 (0.23) (0.59)
Year ended 3/31/1997............... 13.58 0.25 2.32 2.57 (0.23) (0.05)
Period ended 3/31/1996(a).......... 12.91 0.06 0.87 0.93 (0.12) (0.14)
Year ended 11/30/1995*............. 12.29 0.03 0.59 0.62 -- --
</TABLE>
- ---------------
* Equity Index's Primary A, Primary B and Investor A Shares commenced
operations on December 15, 1993, June 28, 1996 and October 10, 1995,
respectively.
+ Annualized
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
+++ At March 31, 1999, there were no public shareholders in the Primary B Share
class. All publicly held Primary B Shares were redeemed on February 15,
1999. The amounts reflected are for the period April 1, 1998 to February 15,
1999.
# Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(c) Amount represents less than $500.
SEE NOTES TO FINANCIAL STATEMENTS.
124
<PAGE> 129
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
RATIO OF NET AND/OR EXPENSE
OPERATING REIMBURSEMENTS
EXPENSES TO ---------------
RATIO OF AVERAGE RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING NET ASSETS INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES INCLUDING INCOME TO PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD TO AVERAGE INTEREST AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS EXPENSES NET ASSETS RATE NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$25.06 18.26% $933,313 0.35%(b) -- 1.17% 4% 0.71%(b)
$(1.24)
22.41 47.38 656,523 0.35(b) 0.36% 1.39 26 0.66(b)
(0.86)
15.89 19.41 567,039 0.35(b) -- 1.91 5 0.70(b)
(0.31)
13.58 7.33 192,388 0.35+ 0.35+ 1.99+ 2 0.73+
(0.27)
12.91 36.35 145,021 0.37 0.38 2.44 18 0.78
(0.41)
9.84 0.29 123,147 0.35+ -- 2.64+ 14 0.79+
(0.19)
$24.02 12.48% $ --(c) 0.85%+(b) -- 0.67+% 4% 1.31%+(b)
$(1.12)
22.46 46.75 123 0.85(b) 0.86% 0.89 26 1.16(b)
(0.73)
15.89 13.93 5,505 0.85+(b) -- 1.41+ 5 1.20+(b)
(0.20)
$24.94 18.00% $ 13,827 0.60%(b) -- 0.92% 4% 0.96%(b)
$(1.19)
22.31 46.58 4,595 0.60(b) 0.61% 1.14 26 0.91(b)
(0.82)
15.87 19.06 2,574 0.60(b) -- 1.66 5 0.95(b)
(0.28)
13.58 7.26 95 0.35+ 0.35+ 1.99+ 2 0.73+
(0.26)
12.91 5.04 11 0.62+ 0.63+ 2.19+ 18 1.03+
--
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
125
<PAGE> 130
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET INCREASE/
NET ASSET REALIZED AND (DECREASE) IN DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GROWTH & INCOME
PRIMARY A
Year ended 3/31/1999#.............. $12.03 $ 0.00 $2.89 $2.89 $0.00 $(0.01)
Period ended 3/31/1998*#........... 10.00 0.01 2.02 2.03 0.00 0.00
INVESTOR A
Year ended 3/31/1999#.............. $12.02 $(0.03) $2.97 $2.94 $0.00 $(0.01)
Period ended 3/31/1998*#........... 10.00 0.00(b) 2.02 2.02 0.00 0.00
INVESTOR B
Year ended 3/31/1999#.............. $12.02 $(0.12) $2.96 $2.84 $0.00 $(0.01)
Period ended 3/31/1998*#........... 10.00 (0.02) 2.04 2.02 0.00 0.00
INVESTOR C
Year ended 3/31/1999#.............. $12.02 $(0.12) $2.97 $2.85 $0.00 $(0.01)
Period ended 3/31/1998*#........... 10.00 (0.02) 2.04 2.02 0.00 0.00
</TABLE>
- ---------------
* Growth & Income Primary A, Investor A, Investor B and Investor C Shares
commenced operations on December 31, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
# Per share net investment income has been calculated using the monthly average
share method.
(a) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and / or expense
reimbursements, was less than 0.01%.
(b) Amount represents less than $0.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS.
126
<PAGE> 131
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES INCOME TO PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD TO AVERAGE AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$14.91 24.05% $52,229 1.25%(a) 0.05% 150% 1.25%(a)
$(0.01)
12.03 20.30 2,517 1.09+(a) 0.38+ 22 1.97+(a)
0.00
$14.95 24.38% $43,392 1.50%(a) (0.20)% 150% 1.50%(a)
$(0.01)
12.02 20.20 1,141 1.34+(a) 0.13+ 22 2.22+(a)
0.00
$14.85 23.55% $99,257 2.25%(a) (0.95)% 150% 2.25%(a)
$(0.01)
12.02 20.20 7,907 2.09+(a) (0.62)+ 22 2.97+(a)
0.00
$14.86 23.63% $ 3,233 2.25%(a) (0.95)% 150% 2.25%(a)
$(0.01)
12.02 20.20 518 2.09+(a) (0.62)+ 22 2.97+(a)
0.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
127
<PAGE> 132
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET
NET ASSET REALIZED AND (DECREASE) IN DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
STRATEGIC EQUITY
PRIMARY A
Period ended 3/31/1999*#........... $10.00 $0.00 $3.87 $3.87 $(0.00)(b) $(0.01)
</TABLE>
- ---------------
* Strategic Equity Primary A Shares commenced operations on October 2, 1998.
+ Annualized.
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
# Per share net investment income has been calculated using the monthly average
share method.
(a) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(b) Amount represents less than $0.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS.
128
<PAGE> 133
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES INCOME/LOSS TO PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD TO AVERAGE AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$13.86 38.65% $266,823 1.07%+(a) (0.03)%+ 34% 1.07%+(a)
$(0.01)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
129
<PAGE> 134
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET
NET ASSET NET REALIZED INCREASE DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED IN NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL GROWTH
PRIMARY A
Year ended 3/31/1999#............... $13.30 $(0.00) $1.59 $1.59 $ -- $(2.84)
Year ended 3/31/1998#............... 11.70 0.02 5.27 5.29 (0.01) (3.68)
Year ended 3/31/1997#............... 13.43 0.05 1.66 1.71 (0.05) (3.39)
Period ended 3/31/1996(a)........... 14.24 0.02 0.38 0.40 (0.02) (1.19)
Year ended 11/30/1995............... 11.23 0.09 3.28 3.37 (0.10) (0.26)
Year ended 11/30/1994............... 11.08 0.09 0.14 0.23 (0.08) (0.00)(b)
PRIMARY B
Year ended 3/31/1999#+++............ $13.20 $(0.04) $0.50 $0.46 $ -- $(2.84)
Year ended 3/31/1998#............... 11.68 (0.05) 5.25 5.20 -- (3.68)
Period ended 3/31/1997#*............ 13.96 (0.01) 1.12 1.11 -- (3.39)
INVESTOR A
Year ended 3/31/1999#............... $13.26 $(0.03) $1.58 $1.55 $ -- $(2.84)
Year ended 3/31/1998#............... 11.67 (0.01) 5.28 5.27 -- (3.68)
Year ended 3/31/1997#............... 13.41 0.02 1.65 1.67 (0.02) (3.39)
Period ended 3/31/1996(a)........... 14.22 0.01 0.38 0.39 (0.01) (1.19)
Year ended 11/30/1995............... 11.21 0.06 3.28 3.34 (0.07) (0.26)
Year ended 11/30/1994............... 11.06 0.07 0.14 0.21 (0.06) (0.00)(b)
INVESTOR B
Year ended 3/31/1999#............... $12.83 $(0.11) $1.51 $1.40 $ -- $(2.84)
Year ended 3/31/1998#............... 11.47 (0.10) 5.14 5.04 -- (3.68)
Year ended 3/31/1997#............... 13.31 (0.08) 1.63 1.55 -- (3.39)
Period ended 3/31/1996(a)........... 14.15 (0.02) 0.37 0.35 -- (1.19)
Year ended 11/30/1995............... 11.17 (0.03) 3.27 3.24 -- (0.26)
Year ended 11/30/1994............... 11.05 (0.01) 0.13 0.12 -- (0.00)(b)
INVESTOR C
Year ended 3/31/1999#............... $12.92 $(0.11) $1.51 $1.40 $ -- $(2.84)
Year ended 3/31/1998#............... 11.50 (0.08) 5.18 5.10 -- (3.68)
Year ended 3/31/1997 #.............. 13.26 (0.01) 1.64 1.63 -- (3.39)
Period ended 3/31/1996(a)........... 14.09 0.00(b) 0.36 0.36 -- (1.19)
Year ended 11/30/1995............... 11.14 (0.03) 3.24 3.21 -- (0.26)
Year ended 11/30/1994............... 11.01 (0.02) 0.15 0.13 -- (0.00)(b)
</TABLE>
- ---------------
* Capital Growth Primary B Shares commenced operations on June 28, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
+++ At March 31, 1999, there were no public shareholders in the Primary B Share
class. All publicly held Primary B Shares were redeemed on December 1, 1998.
The amounts reflected are for the period April 1, 1998 to December 1, 1998.
# Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) Amount represents less than $0.01 per share.
(c) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(d) The effect of interest expense on the operating expense ratio was less than
0.01%.
(e) Amount represents less than $500.
SEE NOTES TO FINANCIAL STATEMENTS.
130
<PAGE> 135
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES INCOME/(LOSS) PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(2.84) $12.05 14.99% $737,620 0.96%(c) (0.04)% 39% 0.96%(c)
(3.69) 13.30 53.89 872,150 0.95(c)(d) 0.13 113 0.95(c)
(3.44) 11.70 11.88 533,168 0.96(d) 0.39 75 0.96
(1.21) 13.43 3.14 839,300 0.96+ 0.38+ 25 0.96+
(0.36) 14.24 30.96 867,361 0.98 0.71 80 0.98
(0.08) 11.23 2.14 717,914 0.90 0.85 56 0.91
$(2.84) $10.82 4.28% $ --(e) 1.46+%(c) (0.54)+% 39% 1.56%+(c)
(3.68) 13.20 52.99 271 1.45(c)(d) (0.37) 113 1.45(c)
(3.39) 11.68 7.07 12,367 1.46+(d) (0.11)+ 75 1.46+
$(2.84) $11.97 14.70% $ 52,987 1.21%(c) (0.29)% 39% 1.21%(c)
(3.68) 13.26 53.83 43,380 1.20(c)(d) (0.12) 113 1.20(c)
(3.41) 11.67 11.58 20,465 1.21(d) 0.14 75 1.21
(1.20) 13.41 3.02 18,311 1.21+ 0.13+ 25 1.21+
(0.33) 14.22 30.70 16,770 1.23 0.46 80 1.23
(0.06) 11.21 1.93 11,038 1.15 0.60 56 1.16
$(2.84) $11.39 13.86% $ 66,338 1.96%(c) (1.04)% 39% 1.96%(c)
(3.68) 12.83 52.52 59,496 1.95(c)(d) (0.87) 113 1.95(c)
(3.39) 11.47 10.68 41,933 1.96(d) (0.61) 75 1.96
(1.19) 13.31 2.77 41,045 1.96+ (0.62)+ 25 1.96+
(0.26) 14.15 29.80 40,868 1.98 (0.29) 80 1.98
(0.00)(b) 11.17 1.12 23,591 1.90 (0.15) 56 1.91
$(2.84) $11.48 13.76% $ 3,862 1.96%(c) (1.04)% 39% 1.96%(c)
(3.68) 12.92 53.02 6,176 1.78(c)(d) (0.70) 113 1.78(c)
(3.39) 11.50 11.39 5,752 1.46(d) (0.11) 75 1.46
(1.19) 13.26 2.86 3,655 1.58+ (0.24)+ 25 1.58+
(0.26) 14.09 29.61 3,322 1.98 (0.29) 80 1.98
(0.00)(b) 11.14 1.22 2,394 1.90 (0.15) 56 1.91
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
131
<PAGE> 136
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED IN NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DISCIPLINED EQUITY
PRIMARY A
Year ended 3/31/1999.................. $22.17 $ 0.02 $ 3.22 $ 3.24 $(0.01)++ $(2.04)
Year ended 3/31/1998##................ 18.47 0.08 7.88 7.96 (0.03) (4.23)
Year ended 3/31/1997.................. 17.19 0.14 2.79 2.93 (0.14) (1.51)
Period ended 3/31/1996(a)............. 17.06 0.05 0.35 0.40 (0.04) (0.23)
Year ended 11/30/1995................. 13.08 0.10 3.96 4.06 (0.08) --
Period ended 11/30/1994*.............. 13.31 0.01 (0.23)# (0.22) (0.01) --
Period ended 4/29/1994*............... 13.65 (0.05) 2.66 2.61 -- (2.95)
INVESTOR A
Year ended 3/31/1999.................. $22.09 $(0.03) $ 3.21 $ 3.18 $ -- $(2.04)
Year ended 3/31/1998##................ 18.44 0.02 7.87 7.89 (0.01) (4.23)
Year ended 3/31/1997.................. 17.16 0.08 2.80 2.88 (0.09) (1.51)
Period ended 3/31/1996(a)............. 17.04 0.04 0.35 0.39 (0.04) (0.23)
Year ended 11/30/1995................. 13.06 0.09 3.96 4.05 (0.07) --
Period ended 11/30/1994**............. 13.30 0.00(b) (0.23)# (0.23) (0.01) --
Period ended 4/29/1994**.............. 14.94 (0.04) 1.35 1.31 -- (2.95)
INVESTOR B
Year ended 3/31/1999.................. $21.57 $(0.17) $ 3.11 $ 2.94 $ -- $(2.04)
Year ended 3/31/1998##................ 18.20 (0.12) 7.72 7.60 -- (4.23)
Year ended 3/31/1997.................. 17.00 (0.05) 2.76 2.71 -- (1.51)
Period ended 3/31/1996(a)............. 16.89 (0.01) 0.35 0.34 -- (0.23)
Year ended 11/30/1995................. 13.02 0.03 3.87 3.90 (0.03) --
Period ended 11/30/1994***............ 12.77 (0.02) 0.28 0.26 (0.01) --
INVESTOR C
Year ended 3/31/1999.................. $21.92 $(0.17) $ 3.15 $ 2.98 $ -- $(2.04)
Year ended 3/31/1998##................ 18.41 (0.09) 7.83 7.74 -- (4.23)
Year ended 3/31/1997.................. 17.10 0.04 2.79 2.83 (0.01) (1.51)
Period ended 3/31/1996(a)............. 16.97 0.01 0.35 0.36 -- (0.23)
Period ended 11/30/1995***............ 14.08 0.00(b) 2.92 2.92 (0.03) --
</TABLE>
- ---------------
* The period for the Disciplined Equity Primary A Shares reflects operations
from April 30, 1994 through November 30, 1994. The financial information for
the fiscal periods through April 29, 1994 is based on the financial
information for The Capitol Mutual Funds' Special Equity Portfolio Class A
Shares, which were reorganized into Primary A Shares of Nations Disciplined
Equity Fund (then named Nations Special Equity Fund) as of the close of
business on April 29, 1994.
** The period for the Disciplined Equity Investor A Shares reflects operations
from April 30, 1994 through November 30, 1994. The financial information for
the fiscal periods through April 29, 1994 is based on the financial
information for The Capitol Mutual Funds' Special Equity Portfolio Class B
Shares, which were reorganized into Investor A Shares of Nations Disciplined
Equity Fund (then named Nations Special Equity Fund) as of the close of
business on April 29, 1994.
*** Disciplined Equity, Investor B and Investor C Shares commenced operations on
May 20, 1994 and May 10, 1995, respectively.
+ Annualized.
++ Amount includes distributions in excess of net investment income of less
than $0.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS.
132
<PAGE> 137
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES TO INCOME/(LOSS) PORTFOLIO EXPENSES TO
RETURN OF AND END OF TOTAL PERIOD AVERAGE TO AVERAGE TURNOVER AVERAGE
CAPITAL DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$(2.05) $23.36 15.74% $412,176 0.97%(c)(d) 0.12% 72% 0.97%(d)
-- (4.26) 22.17 48.65 132,504 0.98(c)(d) 0.37 79 0.98+(d)
-- (1.65) 18.47 17.00 100,260 1.04(c) 0.70 120 1.04
-- (0.27) 17.19 2.44 116,469 1.02+ 0.82+ 47 1.02+
-- (0.08) 17.06 31.13 109,939 1.30 0.85 124 1.30
$(0.00)(b) (0.01) 13.08 (1.62) 9,947 1.13+ 0.12+ 177 1.56+
-- (2.95) 13.31 18.79 8,079 1.20+ (0.60)+ 475 1.53+
$(2.04) $23.23 15.49% $ 67,356 1.22%(c)(d) (0.13)% 72% 1.22%(d)
-- (4.24) 22.09 48.28 21,725 1.23(c)(d) 0.12 79 1.23(d)
-- (1.60) 18.44 16.76 6,837 1.29(c) 0.45 120 1.29
-- (0.27) 17.16 2.35 4,722 1.12+ 0.72+ 47 1.12+
-- (0.07) 17.04 31.05 3,234 1.40 0.75 124 1.40
$(0.00)(b) (0.01) 13.06 (1.71) 252 1.23+ 0.02+ 177 1.66+
-- (2.95) 13.30 8.31 165 1.30+ (0.62)+ 475 1.74+
-- $(2.04) $22.47 14.69% $ 50,797 1.97%(c)(d) (0.88)% 72% 1.97%(d)
-- (4.23) 21.57 47.14 38,079 1.98(c)(d) (0.63) 79 1.98(d)
-- (1.51) 18.20 15.86 20,257 2.04(c) (0.30) 120 2.04
-- (0.23) 17.00 2.08 18,412 2.02+ (0.18)+ 47 2.02+
-- (0.03) 16.89 29.94 16,874 2.30 (0.15) 124 2.30
$(0.00)(b) (0.01) 13.02 2.02 177 2.09+ (0.84)+ 177 2.52+
$(2.04) $22.86 14.64% $ 1,629 1.97%(c)(d) (0.88)% 72% 1.97%(d)
-- (4.23) 21.92 47.38 1,199 1.81(c)(d) (0.46) 79 1.81(d)
-- (1.52) 18.41 16.45 446 1.54(c) 0.20 120 1.54
-- (0.23) 17.10 2.19 283 1.65+ 0.19+ 47 1.65+
-- (0.03) 16.97 20.78 322 2.30+ (0.15)+ 124 2.30+
</TABLE>
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
# The amount shown at this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities for the period because of the timing of purchases
and withdrawals of shares in relation to the fluctuating market value of the
portfolio.
## Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) Amount represents less than $0.01 per share.
(c) The effect of interest expense on the operating expense ratio was less than
$0.01%.
(d) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
133
<PAGE> 138
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED IN NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOCUSED EQUITIES
PRIMARY A
Year ended 3/31/1999#............... $12.13 $(0.01) $4.58 $4.57 $0.00 $(0.01)
Period ended 3/31/1998*#............ 10.00 (0.01) 2.14 2.13 0.00 0.00
INVESTOR A
Year ended 3/31/1999#............... $12.14 $(0.04) $4.64 $4.60 $0.00 $(0.01)
Period ended 3/31/1998*#............ 10.00 (0.01) 2.15 2.14 0.00 0.00
INVESTOR B
Year ended 3/31/1999#............... $12.13 $(0.12) $4.62 $4.50 $0.00 $(0.01)
Period ended 3/31/1998*#............ 10.00 (0.04) 2.17 2.13 0.00 0.00
INVESTOR C
Year ended 3/31/1999#............... $12.13 $(0.14) $4.69 $4.55 $0.00 $(0.01)
Period ended 3/31/1998*#............ 10.00 (0.04) 2.17 2.13 0.00 0.00
</TABLE>
- ---------------
* Focused Equities Primary A, Investor A, Investor B and Investor C Shares
commenced operations on December 31, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
# Per share net investment income has been calculated using the monthly average
share method.
(a) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
134
<PAGE> 139
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES INCOME/(LOSS) PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.01) $16.69 37.73% $105,458 1.06%(a) 0.05% 177% 1.06%(a)
0.00 12.13 21.30 8,808 1.52+(a) (0.30)+ 25 1.52+(a)
$(0.01) $16.73 37.94% $238,137 1.31%(a) (0.20)% 177% 1.31%(a)
0.00 12.14 21.40 6,056 1.77+(a) (0.55)+ 25 1.77+(a)
$(0.01) $16.62 37.15% $306,365 2.06%(a) (0.95)% 177% 2.06%(a)
0.00 12.13 21.30 20,446 2.52+(a) (1.30)+ 25 2.52+(a)
$(0.01) $16.67 37.56% $ 13,682 2.06%(a) (0.95)% 177% 2.06%(a)
0.00 12.13 21.30 469 2.52+(a) (1.30)+ 25 2.52+(a)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
135
<PAGE> 140
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE DISTRIBUTIONS TOTAL
VALUE NET AND UNREALIZED IN NET ASSET FROM NET DIVIDENDS
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM REALIZED AND
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS CAPITAL GAINS DISTRIBUTIONS
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EMERGING GROWTH
PRIMARY A
Year ended 3/31/1999#................. $16.56 $(0.04) $(0.94) $(0.98) $(2.27) $(2.27)
Year ended 3/31/1998#................. 12.86 (0.06) 5.55 5.49 (1.79) (1.79)
Year ended 3/31/1997#................. 14.04 (0.04) 0.20 0.16 (1.34) (1.34)
Period ended 3/31/1996#(a)............ 14.28 0.00(b) 1.26 1.26 (1.50) (1.50)
Year ended 11/30/1995................. 11.41 0.01 3.26 3.27 (0.40) (0.40)
Year ended 11/30/1994#................ 10.87 (0.03) 0.71 0.68 (0.14) (0.14)
PRIMARY B
Year ended 3/31/1999#+++.............. $16.41 $(0.03) $(0.92) $(0.95) $(2.27) $(2.27)
Year ended 3/31/1998#................. 12.81 (0.15) 5.54 5.39 (1.79) (1.79)
Period ended 3/31/1997#*.............. 15.08 (0.08) (0.85) (0.93) (1.34) (1.34)
INVESTOR A
Year ended 3/31/1999#................. $16.30 $(0.07) $(0.92) $(0.99) $(2.27) $(2.27)
Year ended 3/31/1998#................. 12.69 (0.10) 5.50 5.40 (1.79) (1.79)
Year ended 3/31/1997#................. 13.91 (0.07) 0.19 0.12 (1.34) (1.34)
Period ended 3/31/1996#(a)............ 14.17 (0.01) 1.25 1.24 (1.50) (1.50)
Year ended 11/30/1995................. 11.35 (0.01) 3.23 3.22 (0.40) (0.40)
Year ended 11/30/1994#................ 10.85 (0.06) 0.70 0.64 (0.14) (0.14)
INVESTOR B
Year ended 3/31/1999#................. $15.58 $(0.15) $(0.88) $(1.03) $(2.27) $(2.27)
Year ended 3/31/1998#................. 12.29 (0.20) 5.28 5.08 (1.79) (1.79)
Year ended 3/31/1997#................. 13.61 (0.18) 0.20 0.02 (1.34) (1.34)
Period ended 3/31/1996#(a)............ 13.93 (0.05) 1.23 1.18 (1.50) (1.50)
Year ended 11/30/1995................. 11.24 (0.07) 3.16 3.09 (0.40) (0.40)
Year ended 11/30/1994#................ 10.82 (0.14) 0.70 0.56 (0.14) (0.14)
INVESTOR C
Year ended 3/31/1999#................. $15.63 $(0.15) $(0.88) $(1.03) $(2.27) $(2.27)
Year ended 3/31/1998#................. 12.31 (0.18) 5.29 5.11 (1.79) (1.79)
Year ended 3/31/1997#................. 13.56 (0.10) 0.19 0.09 (1.34) (1.34)
Period ended 3/31/1996#(a)............ 13.87 (0.03) 1.22 1.19 (1.50) (1.50)
Year ended 11/30/1995................. 11.20 (0.08) 3.15 3.07 (0.40) (0.40)
Year ended 11/30/1994#................ 10.78 (0.14) 0.70 0.56 (0.14) (0.14)
</TABLE>
- ---------------
* Emerging Growth Primary B Shares commenced operations on June 28, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated,
assumes reinvestment of all distributions, and does not reflect the
deduction of any applicable sales charges.
+++ At March 31, 1999, there were no public shareholders in the Primary B Share
class. All publicly held Primary B Shares were redeemed on June 11, 1998.
The amounts reflected are for the period April 1, 1998 to June 11, 1998.
# Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) Amount represents less than $0.01 per share.
(c) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(d) The effect of interest expense on the operating expense ratio was less than
$0.01%.
(e) Amount represents less than $500.
SEE NOTES TO FINANCIAL STATEMENTS.
136
<PAGE> 141
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
RATIO OF ---------------
RATIO OF OPERATING RATIO OF NET RATIO OF
NET ASSET NET ASSETS OPERATING EXPENSES TO INVESTMENT OPERATING
VALUE END OF EXPENSES AVERAGE NET INCOME/LOSS) PORTFOLIO EXPENSES TO
END OF TOTAL PERIOD TO AVERAGE ASSETS INCLUDING TO AVERAGE TURNOVER AVERAGE
PERIOD RETURN++ (000) NET ASSETS INTEREST EXPENSE NET ASSETS RATE NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$13.31 (7.21)% $177,861 0.98%(c)(d) -- (0.29)% 43% 0.98%(c)
16.56 45.09 318,584 0.98(c) 0.99% (0.42) 76 0.98(c)
12.86 0.48 267,319 0.98(c) -- (0.26) 93 0.98(c)
14.04 9.87 295,764 0.99+ -- (0.06)+ 39 0.99+
14.28 29.95 269,484 0.98 -- 0.08 139 0.98
11.41 6.26 182,459 1.01 -- (0.29) 129 1.01
$13.19 (7.07)% $ --(e) 1.46%+(c)(d) -- (0.77)+% 43% 1.58%+(c)
16.41 44.33 23 1.48(c) 1.49% (0.92) 76 1.48(c)
12.81 (6.80) 2,897 1.48+(c) -- (0.76)+ 93 1.48+(c)
$13.04 (7.41)% $ 18,042 1.23%(c)(d) -- (0.54)% 43% 1.23%(c)
16.30 44.86 21,591 1.23(c) -- (0.67) 76 1.23(c)
12.69 0.18 12,126 1.23(c) -- (0.51) 93 1.23(c)
13.91 9.80 7,802 1.24+ -- (0.31)+ 39 1.24+
14.17 29.65 5,765 1.23 -- (0.17) 139 1.23
11.35 5.90 3,234 1.26 -- (0.54) 129 1.26
$12.28 (8.10)% $ 33,245 1.98%(c)(d) -- (1.29)% 43% 1.98%(c)
15.58 43.64 45,451 1.98(c) 1.99% (1.42) 76 1.98(c)
12.29 (0.57) 33,342 1.98(c) -- (1.26) 93 1.98(c)
13.61 9.52 34,989 1.99+ -- (1.06)+ 39 1.99+
13.93 28.75 32,349 1.98 -- (0.92) 139 1.98
11.24 5.17 15,909 2.01 -- (1.29) 129 2.01
$12.33 (8.08)% $ 1,383 1.98%(c)(d) -- (1.29)% 43% 1.98%(c)
15.63 43.80 2,266 1.81(c) 1.82% (1.25) 76 1.81(c)
12.31 (0.04) 1,437 1.48(c) -- (0.76) 93 1.48(c)
13.56 9.64 936 1.61+ -- (0.68)+ 39 1.61+
13.87 28.67 805 1.98 -- (0.92) 139 1.98
11.20 5.19 542 2.01 -- (1.29) 129 2.01
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
137
<PAGE> 142
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET DECREASE DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED IN NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT LOSS ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SMALL COMPANY GROWTH
PRIMARY A
Year ended 3/31/1999#...................... $15.79 $(0.05) $(3.11) $(3.16) $ -- $(1.13)
Period ended 3/31/1998*.................... 12.07 0.01 4.43 4.44 (0.01) (0.71)
Period ended 5/16/1997*.................... 10.65 0.04 1.47 1.51 (0.04) (0.05)
Period ended 8/31/1996*(a)................. 10.00 0.09 0.64 0.73 (0.08) --
INVESTOR A SHARES
Year ended 3/31/1999#...................... $15.74 $(0.07) $(3.11) $(3.18) $ -- $(1.13)
Period ended 3/31/1998*.................... 12.05 (0.02) 4.42 4.40 -- (0.71)
Period ended 5/16/1997*.................... 10.64 0.03 1.46 1.49 (0.03) (0.05)
Period ended 8/31/96*(a)................... 10.00 0.05 0.64 0.69 (0.05) --
INVESTOR B SHARES
Year ended 3/31/1999#...................... $15.59 $(0.11) $(3.12) $(3.23) $ -- $(1.13)
Period ended 3/31/1998*.................... 12.03 (0.08) 4.35 4.27 -- (0.71)
Period ended 5/16/1997*.................... 10.65 (0.03) 1.46 1.43 -- (0.05)
Period ended 8/31/1996*(a)................. 10.00 0.01 0.65 0.66 (0.01) --
INVESTOR C SHARES
Year ended 3/31/1999#...................... $15.74 $(0.12) $(3.11) $(3.23) $ -- $(1.13)
Period ended 3/31/1998**................... 15.18 (0.08) 1.35 1.27 -- (0.71)
</TABLE>
- ---------------
<TABLE>
<C> <S>
* The financial information for the fiscal periods prior to
May 23, 1997 reflects the financial information for the
Pilot Small Capitalization Equity Fund's Pilot Shares, Class
A Shares and Class B Shares, which were reorganized into the
Primary A Shares, Investor A Shares and Investor B Shares,
respectively, as of the close of business on May 23, 1997.
Prior to May 23, 1997, the investment manager to Small
Company Growth was Boatmen's Trust Company. Effective May
23, 1997, the investment manager to Small Company Growth was
TradeStreet Investment Associates, Inc.
** Small Company Growth's Investor C Shares commenced
operations on September 22, 1997.
+ Annualized.
++ Total return represents aggregate total return for the
period indicated, assumes reinvestment of all distributions,
and does not reflect the deduction of any applicable sales
charges.
# Per share net investment income has been calculated using
the monthly average share method.
(a) Represents the period from December 12, 1995 (commencement
of operations) to August 31, 1996.
(b) The effect of the fees reduced by credits allowed by the
custodian on the operating expense ratio, with and without
waivers and/or expense reimbursements, was less than 0.01%.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
138
<PAGE> 143
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES INCOME/LOSS PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS RATE NET ASSETS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(1.13) $11.50 (21.05)% $327,981 0.95%(b) (0.42)% 87% 1.22%(b)
(0.72) 15.79 37.27 235,427 0.95+(b) 0.05+ 59 1.26+(b)
(0.09) 12.07 14.21 109,450 0.98+ 0.54+ 48 1.41+
(0.08) 10.65 7.37 70,483 1.00+ 1.06+ 31 1.54+
$(1.13) $11.43 (21.32)% $ 16,143 1.20%(b) (0.67)% 87% 1.47%(b)
(0.71) 15.74 37.02 6,772 1.20+(b) (0.20)+ 59 1.51+ (b)
(0.08) 12.05 13.98 3,697 1.23+ 0.30+ 48 1.66+
(0.05) 10.64 6.88 2,611 1.25+ 0.66+ 31 1.65+
$(1.13) $11.23 (21.86)% $ 5,127 1.95%(b) (1.42)% 87% 2.22%(b)
(0.71) 15.59 36.06 3,384 1.87+(b) (0.87)+ 59 2.18+(b)
(0.05) 12.03 13.43 2,635 1.97+ (0.45)+ 48 2.41+
(0.01) 10.65 6.65 1,878 2.01+ (0.07)+ 31 2.44+
$(1.13) $11.38 (21.66)% $ 1,951 1.70%(b) (1.17)% 87% 2.22%(b)
(0.71) 15.74 8.75 3,122 1.95+(b) (0.95)+ 59 2.26+(b)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
139
<PAGE> 144
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS
Nations Fund Trust (the "Trust") and Nations Fund, Inc. (the "Company") are each
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end investment company. At March 31, 1999, the Trust offered
thirty-eight separate portfolios and the Company offered nine separate
portfolios. These financial statements pertain only to certain domestic stock
portfolios of the Trust and the Company (each a "Fund" and collectively, the
"Funds"). Financial statements for the other portfolios of the Trust and the
Company are presented under separate cover. The Funds (except Equity Index and
Strategic Equity Funds) currently offer four classes of shares: Primary A
Shares, Investor A Shares, Investor B Shares and Investor C Shares. Equity Index
Fund currently offers Primary A Shares and Investor A Shares. Strategic Equity
Fund currently offers Primary A Shares. At March 31, 1999, there were no public
shareholders in the Primary B Share class and the class is not currently offered
to the public. 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 differ
from the interests of any other class.
1. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Funds in the preparation of
their financial statements.
Securities Valuation: Securities which are traded on a recognized exchange or
on NASDAQ are valued at the last sales price on the exchange or market on which
such securities are primarily traded. Securities traded only over-the-counter
are valued at the closing bid prices or, if no sale occurred on such day, at the
mean of the current bid and asked prices. Restricted securities, securities for
which market quotations are not readily available, and certain other assets are
valued by the investment advisor under the supervision of the Board of
Trustees/Directors. Short-term investments that mature in 60 days or less are
valued at amortized cost.
Futures Contracts: The Value, Equity Income and Equity Index Funds may invest
in futures contracts. Upon entering into a futures contract, the Fund is
required to deposit with the broker an amount of cash or cash equivalents equal
to a certain percentage of the contract amount. This is known as the "initial
margin". Subsequent payments ("variation margin") are made or received by the
Fund each day, depending on the daily fluctuation of the value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking-to-market" on
a daily basis to reflect the market value of the contract. The Fund recognizes a
realized gain or loss when the contract is closed, equal to the difference
between the proceeds from (or cost of) the closing transaction and the Fund's
basis in the contract.
Risks arise in the possible movement of the securities or indices underlying
those investments. Risks also include the possibility that there may not be a
liquid secondary market for these contracts, that a change in the value of the
contract may not correlate with changes in the value of the underlying
securities or that the counterparty to a contract may default on its obligation
to perform.
Securities Transactions and Investment Income: Securities transactions are
accounted for on trade date. Realized gains and losses are computed based on the
specific identification of securities sold. Interest income, adjusted for
accretion of discounts and amortization of premiums, is earned from settlement
date and recorded on an accrual basis. Dividend income is recorded on
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.
Dividends and Distributions to Shareholders: Distributions from net investment
income are declared and paid each calendar quarter by the Balanced Assets,
Emerging Growth, Equity Index, Focused Equities and Growth & Income Funds; all
other Funds declare and pay distributions monthly. Each Fund will distribute net
realized capital gains (including net short-term capital gains), at least
annually after the fiscal year in which the capital gains were earned, unless
offset by any available capital loss carryforward. Income distributions and
140
<PAGE> 145
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
capital gain distributions on a Fund level are determined in accordance with
Federal income tax regulations which may differ from generally accepted
accounting principles.
Certain reclassifications are made to each Fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryforwards) under Federal income tax regulations. These reclassifications are
due to different book and tax accounting for organization costs, paydowns, net
operating losses, currency gains and losses and the Fund's use of the tax
accounting practice known as equalization.
Reclassifications for the year ended March 31, 1999 were as follows:
<TABLE>
<CAPTION>
INCREASE/
(DECREASE) INCREASE/
INCREASE/ UNDISTRIBUTED (DECREASE)
(DECREASE) NET ACCUMULATED
PAID-IN INVESTMENT NET REALIZED
CAPITAL INCOME GAIN/(LOSS)
(000) (000) (000)
-----------------------------------------
<S> <C> <C> <C>
Balanced Assets.............. $ 69 $ (22) $ (47)
Value........................ -- 404 (404)
Equity Income................ -- (24) 24
Equity Index................. --* --* --*
Growth & Income.............. 12 453 (465)
Strategic Equity............. (29) 29 --
Capital Growth............... (58) 1,058 (1,000)
Disciplined Equity........... 7,500 230 (7,730)
Focused Equities............. -- 1,308 (1,308)
Emerging Growth.............. (1,246) 1,246 --
Small Company Growth......... 908 647 (1,555)
</TABLE>
- ---------------
* Amount represents less than $500.
Federal Income Tax: Each Fund intends to continue to qualify as a regulated
investment company by complying with the applicable requirements of the Internal
Revenue Code of 1986, as amended, and by distributing substantially all of its
earnings to its shareholders. Therefore, no provision is made for Federal income
or excise taxes.
Expenses: General expenses of the Trust or the Company are allocated to the
Funds based upon relative net assets or other expense allocation methodologies
determined by the nature of the expense. Expenses directly attributable to a
Fund or class of shares are charged to such Fund or class. Expenses not directly
attributable to any class of shares are prorated based on the relative net
assets of each class. The Funds bear all costs in connection with their
organization, including the fees and expenses of registering and qualifying
their shares for distribution under Federal and state securities regulations.
All such costs have been amortized on a straight line basis over a period of
five years from commencement of operations.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS
Each of the Trust and the Company has entered into an investment advisory
agreement (the "Investment Advisory Agreements") with NationsBanc Advisors, Inc.
("NBAI"), a wholly-owned subsidiary of NationsBank, N.A. ("NationsBank"), which
in turn is an indirect wholly-owned banking subsidiary of Bank of America
Corporation, a bank holding company organized as a Delaware corporation,
pursuant to which NBAI provides investment advisory services to the Funds. Under
the Investment Advisory Agreements, NBAI is entitled to receive an advisory fee,
calculated daily and payable monthly, based on the following annual rates
multiplied by the average daily net assets of each Fund:
<TABLE>
<CAPTION>
ANNUAL
RATE
------
<S> <C>
Small Company Growth..................................... 1.00%
Growth & Income, Focused Equities........................ 0.85%
Balanced Assets, Value, Strategic Equity, Capital Growth,
Disciplined Equity, Emerging Growth..................... 0.75%
Equity Index............................................. 0.50%
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON FEES ON
NET ASSETS NET ASSETS NET ASSETS
UP TO BETWEEN $100 EXCEEDING
$100 MILLION AND $250 MILLION $250 MILLION
----------------------------------------------
<S> <C> <C> <C>
Equity Income............ 0.75% 0.70% 0.60%
</TABLE>
Each of the Trust and the Company has entered into a sub-advisory agreement with
NBAI and TradeStreet Investment Associates, Inc. ("TradeStreet"), a wholly-owned
subsidiary of NationsBank, pursuant to which TradeStreet is entitled to receive
a fee from NBAI at the following annual rates of each Fund's average daily net
assets:
<TABLE>
<CAPTION>
ANNUAL
RATE
------
<S> <C>
Balanced Assets, Value, Capital Growth, Disciplined
Equity, Emerging Growth, Small Company Growth........... 0.25%
Equity Income............................................ 0.20%
Equity Index............................................. 0.10%
</TABLE>
The Trust has, on behalf of the Focused Equities and Growth & Income Funds,
entered into a sub-advisory agreement with Marsico Capital Management, LLC
("Marsico"), pursuant to which Marsico is entitled to receive a fee from NBAI at
the annual rate of 0.45% of each Fund's average daily net assets.
141
<PAGE> 146
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Marsico Management Holdings, LLC, a wholly-owned subsidiary of NationsBank, owns
50% of the equity of Marisco.
The Trust has, on behalf of the Strategic Equity Fund, entered into a
sub-advisory agreement with NBAI and NationsBank through its division, Bank of
America Private Investments, pursuant to which NationsBank is entitled to
receive a fee from NBAI at the annual rate of 0.25% of the Fund's average daily
net assets.
Stephens Inc. ("Stephens") serves as co-administrator of the Trust and the
Company. On January 4, 1999 for the Growth & Income and Focused Equities Funds
and on January 14, 1999 for the Balanced Assets, Value, Equity Income, Equity
Index, Strategic Equity, Capital Growth, Disciplined Equity, Emerging Growth and
Small Company Growth Funds, NBAI began serving as co-administrator of the Funds
with Stephens. Under the new arrangement, Stephens and NBAI are entitled to
receive a combined fee, computed daily and paid monthly at the annual rate of
0.13% of each Fund's average daily net assets. Prior to those dates, First Data
Investor Services Group, Inc. ("First Data"), a wholly-owned subsidiary of First
Data Corporation, served as co-administrator. Stephens and First Data were
entitled to receive a combined fee, computed daily and paid monthly, at the
annual rate of 0.10% of each Fund's average daily net assets. Effective January
4 and January 14, 1999, The Bank of New York ("BNY") began serving as the sub-
administrator of the Trust and the Company, pursuant to an agreement with NBAI,
and NBAI ceased to serve as sub-administrator. For the year ended March 31,
1999, Stephens earned $4,728,116 from the Funds for its administration services,
of which $658,409 was paid to NBAI for its services.
The investment advisor, sub-advisors and distributor may, from time to time,
voluntarily reduce their fees payable by each Fund. For the year ended March 31,
1999, the investment advisor agreed to voluntarily reimburse expenses and/or
waive its advisory fee to the extent that total expenses (excluding shareholder
servicing and distribution fees), as a percentage of the respective Fund's
average daily net assets, exceeded the following: 0.94% for the Value Fund,
0.35% for the Equity Index Fund and 0.95% for the Small Company Growth Fund.
Effective October 19, 1998, BNY began serving as the custodian of the Trust's
and the Company's assets. Previously, NationsBank of Texas, N.A. ("NationsBank
of Texas") served as custodian until May 6, 1998, when it was merged with
NationsBank. BNY acted as sub-custodian to the Funds until that date. For the
year ended March 31, 1999, NationsBank of Texas and NationsBank earned $35,306
for providing such services. For the year ended March 31, 1999, expenses of the
Funds were reduced by $23,408 under expense offset arrangements with BNY. The
Funds could have invested a portion of the assets utilized in connection with
the expense offset arrangements in an income producing asset if they had not
entered into such arrangements.
First Data serves as the transfer agent for the Funds' shares. NationsBank of
Texas also served as the sub-transfer agent for the Primary Shares of the Funds
until it merged with NationsBank on May 6, 1998. NationsBank began serving as
the sub-transfer agent for the Primary Shares of the Funds on that date and is
providing the same services as were previously provided by NationsBank of Texas.
For the year ended March 31, 1999, NationsBank of Texas and/or NationsBank
earned approximately $51,128 for providing such services.
Stephens serves as distributor of the Funds' shares. For the year ended March
31, 1999, the Funds were informed that the distributor received $26,704,737 in
front end sales charges for sales of Investor A Shares and $1,464,152 in
contingent deferred sales charges from shares which were subject to such
charges. A substantial portion of these fees is paid to affiliates of
NationsBank.
The Trust and the Company pay each unaffiliated Trustee or Director an annual
fee of $1,000 $(3,000 for the Chairman of the Board), plus $500 per Fund and an
additional $1,000 for each in-person board meeting, and $500 for each telephonic
board meeting attended. The Trust and the Company also reimburse expenses
incurred by each unaffiliated Trustee or Director in attending such meetings.
The Trust's and the Company's eligible Trustees or Directors, respectively, may
participate in non-qualified deferred compensation and retirement plans which
may be terminated at any time. All benefits provided under these plans are
unfunded and any payments to plan participants are paid solely out of
142
<PAGE> 147
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the Funds' assets. Income earned on each plan participant's deferral account is
tied to the rate of return of the eligible mutual funds selected by the
participants or, if no funds are selected, to the rate of return of Nations
Treasury Fund, a portfolio of the Company. The expense for the deferred
compensation and retirement plans is included in "Trustees'/Directors' fees and
expenses" in the Statements of Operations.
Certain Funds have made daily investments of cash balances in Nations Cash
Reserves, a portfolio of Nations Institutional Reserves, pursuant to an
exemptive order received from the Securities and Exchange Commission. For the
year ended March 31, 1999, the Funds earned $6,147,236 in aggregate from such
investments, which is included in interest income.
A significant portion of each Fund's Primary A Shares represents investments by
fiduciary accounts over which NationsBank and its affiliates have either sole or
joint investment discretion.
3. SHAREHOLDER SERVICING AND
DISTRIBUTION PLANS
The Trust and the Company each have adopted a shareholder administration plan
for Primary B Shares of each Fund that offered Primary B shares, shareholder
servicing plans and distribution plans for the Investor B and Investor C Shares
of each Fund and a distribution plan for Investor A Shares of each Fund (Equity
Index has no Investor B and Investor C Shares; Strategic Equity only has Primary
A Shares). The administration plan permitted the Funds to compensate
institutions for shareholder administration services provided to their customers
that own Primary B Shares. The shareholder servicing plans permit the Funds to
compensate or reimburse servicing agents for shareholder services provided by
the servicing agents. The distribution plans, adopted pursuant to Rule 12b-1
under the 1940 Act, permit the Funds to compensate or reimburse the distributor
(and for Investor A Shares, the distributor and/or selling agents) for
activities or expenses primarily intended to result in the sale of the classes'
shares. Payments are made at an annual rate, as a percentage of average daily
net assets set from time to time by the Board of Trustees/ Directors, and are
charged as expenses of each Fund directly to the applicable class. A substantial
portion of the expenses incurred pursuant to these plans is paid to affiliates
of NationsBank and NBAI.
At March 31, 1999, the rates in effect and plan limits, as a percentage of
average daily net assets, were as follows:
<TABLE>
<CAPTION>
CURRENT PLAN
RATE LIMIT
--------------------
<S> <C> <C>
Primary B Administration Plan:
Balanced Assets................................. 0.15% 0.60%
Equity Income................................... 0.20% 0.60%
Other Funds..................................... 0.50% 0.60%
Investor A Distribution Plan..................... 0.25% 0.25%
Investor B Distribution Plan..................... 0.75% 0.75%
Investor C Distribution Plan:
Value........................................... 0.51% 0.75%
Equity Income................................... 0.59% 0.75%
Small Company Growth............................ 0.50% 0.75%
Other Funds..................................... 0.75% 0.75%
Investor B and Investor C Shareholder Servicing
Plans........................................... 0.25% 0.25%
</TABLE>
4. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, excluding
long-term U.S. government securities and short-term investments, for the year
ended March 31, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
-----------------------
<S> <C> <C>
Balanced Assets.......................... $214,863 $ 195,449
Value.................................... 873,039 1,341,890
Equity Income............................ 611,987 919,629
Equity Index............................. 31,791 4,600
Growth & Income.......................... 253,739 104,597
Strategic Equity......................... 218,832 31,297
Capital Growth........................... 320,702 561,010
Disciplined Equity....................... 532,738 333,668
Focused Equities......................... 856,556 381,716
Emerging Growth.......................... 123,376 242,250
Small Company Growth..................... 496,568 307,179
</TABLE>
The aggregate cost of purchases and proceeds from sales of long-term U.S.
government securities for the year ended March 31, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
--------------------
<S> <C> <C>
Balanced Assets........................... $ 33,866 $22,264
Equity Index.............................. 157,522 21,809
Growth & Income........................... 6,568 6,324
Focused Equities.......................... 22,517 21,571
</TABLE>
143
<PAGE> 148
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. FUTURES CONTRACTS
At March 31, 1999, the following Funds had futures contracts open:
<TABLE>
<CAPTION>
VALUE OF CONTRACT MARKET VALUE OF UNREALIZED
NUMBER OF WHEN OPENED CONTRACTS (DEPRECIATION)
DESCRIPTION CONTRACTS (000) (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY INCOME:
S&P 500 Futures (long position) expiring June
1999(a).............................................. 151 $49,553 $48,822 $(731)
EQUITY INDEX:
S&P 500 Futures (long position) expiring June
1999(a).............................................. 53 17,408 17,136 (272)
</TABLE>
- ---------------
(a) Securities have been segregated as collateral for the Equity Income and
Equity Index Funds for open futures contracts.
6. WRITTEN OPTIONS
Written options for the Growth & Income and Focused Equities Funds for the year
ended March 31, 1999, aggregated the following:
<TABLE>
<CAPTION>
GROWTH & INCOME FOCUSED EQUITIES
-------------------- --------------------
SUMMARY OF NUMBER OF NUMBER OF
WRITTEN OPTIONS CONTRACTS PREMIUM CONTRACTS PREMIUM
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at March 31,
1998................... 0 $ 0 0 $ 0
Contracts opened....... 1,100 20,294 2,400 44,279
Contracts closed....... (1,100) (20,294) (2,400) (44,279)
------ -------- ------ --------
Outstanding at March 31,
1999................... 0 $ 0 0 $ 0
====== ======== ====== ========
</TABLE>
7. SHARES OF BENEFICIAL
INTEREST/CAPITAL STOCK
As of March 31, 1999, an unlimited number of shares of beneficial interest
without par value were authorized for the Trust and 480,000,000,000 shares of
$.001 par value capital stock were authorized for the Company. The Trust's
Declaration of Trust and the Company's Articles of Incorporation authorize the
Board of Trustees/Directors to classify or reclassify any authorized, but
unissued shares into one or more additional classes or series of shares. See
Schedule of Capital Stock Activity.
8. LINE OF CREDIT
The Trust and the Company participate in an uncommitted line of credit provided
by BNY under a line of credit agreement (the "Agreement"). Advances under the
Agreement are taken primarily for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. Interest on borrowings is payable at the Federal
Funds Rate plus 0.50% on an annualized basis. Each participating Fund maintains
a ratio of no less than 4 to 1 of net
assets (not including funds borrowed pursuant to the Agreement) to the aggregate
amount of indebtedness pursuant to the Agreement.
At March 31, 1999, there were no loans outstanding under this Agreement. For the
year ended March 31, 1999, borrowings by the Funds under the Agreement were as
follows:
<TABLE>
<CAPTION>
AVERAGE
AMOUNT AVERAGE
OUTSTANDING INTEREST
FUND (000) RATE
- --------------------------------------------------------------------
<S> <C> <C>
Balanced Assets............................. $183 5.60%
Value....................................... 66 5.63
Equity Income............................... 370 5.89
Growth & Income............................. 9 5.15
Capital Growth.............................. 438 5.61
Disciplined Equity.......................... 149 5.65
Focused Equities............................ 1 5.15
Emerging Growth............................. 453 5.68
Small Company Growth........................ 48 5.76
</TABLE>
The average amount outstanding was calculated based on daily balances in the
period.
9. SECURITIES LENDING
Under an agreement with BNY, the Funds can lend their portfolio securities to
approved brokers, dealers and other financial institutions. Loans are
collateralized by cash, in an amount at least equal to the market value of the
securities loaned. The cash collateral received is invested in Nations Cash
Reserves, a portfolio of Nations Institutional Reserves. A portion of the income
generated by the investment of the collateral, net of any rebates paid by BNY to
borrowers, is remitted to BNY as lending agent, and the remainder is paid to the
Fund. Generally, in the event of counterparty default, the Fund has the right to
use the collateral to offset losses incurred. There would be a potential loss to
the Fund
144
<PAGE> 149
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
in the event the Fund is delayed or prevented from exercising its right to
dispose of the collateral. The Fund bears the risk of loss with respect to the
investment of collateral.
At March 31, 1999, the following Funds had securities on loan:
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE
LOANED SECURITIES OF COLLATERAL
FUND (000) (000)
- -----------------------------------------------------------------------
<S> <C> <C>
Balanced Assets..................... $10,325 $10,567
Value............................... 38,071 40,146
Equity Income....................... 4,979 5,193
Equity Index........................ 26,086 27,228
Capital Growth...................... 40,685 42,390
Disciplined Equity.................. 16,257 16,884
Emerging Growth..................... 29,839 30,385
Small Company Growth................ 22,052 22,652
</TABLE>
10. CAPITAL LOSS CARRYFORWARD
At March 31, 1999, Balanced Assets Fund had available for Federal income tax
purposes unused capital losses expiring March 31, 2007 of $2,592,560.
11. REORGANIZATIONS
ACQUISITION OF THE PILOT FUNDS
On May 23, 1997, the Small Company Growth Fund, a newly established portfolio,
acquired the assets and certain liabilities of the Pilot Small Capitalization
Equity Fund pursuant to a plan of reorganization approved by its shareholders.
The acquisition was accomplished by a tax-free exchange of shares of the Small
Company Growth Fund in an amount equal to the outstanding shares of the Pilot
Small Capitalization Equity Fund. The financial statements of the Small Company
Growth Fund reflect the historical financial results of the Pilot Small
Capitalization Equity Fund prior to the reorganization. Additionally, the fiscal
year end of the Pilot Small Capitalization Equity Fund for financial reporting
purposes was changed to coincide with that of the Company.
On May 16, 1997, certain Funds, as listed below (each an "Acquiring Fund"),
acquired the assets and certain liabilities of The Pilot Funds, also listed
below (each an "Acquired Fund"), in a tax-free reorganization in exchange for
shares of the Acquiring Fund, pursuant to a plan of reorganization approved by
the Acquired Fund's shareholders. The number and value of shares issued by the
Acquiring Fund are presented in the Schedule of Capital Stock Activity. Net
assets and unrealized appreciation as of the reorganization date were as
follows:
<TABLE>
<CAPTION>
ACQUIRED
TOTAL NET ASSETS OF FUND
TOTAL NET ASSETS OF TOTAL NET ASSETS OF ACQUIRING FUND UNREALIZED
ACQUIRING ACQUIRED ACQUIRED FUND ACQUIRING FUND AFTER ACQUISITION APPRECIATION
FUND FUND (000) (000) (000) (000)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Income Pilot Equity Income Fund $141,496 $ 380,384 $ 521,880 $21,629
Value Pilot Growth and Income
Fund 340,919 1,483,908 1,824,827 70,612
Disciplined Equity Pilot Growth Fund 37,751 134,469 172,220 6,637
</TABLE>
ACQUISITION OF THE EMERALD FUNDS
On May 15, 1998, certain Funds, as listed below (each an "Acquiring Fund"),
acquired the assets and certain liabilities of The Emerald Funds, also listed
below (each an "Acquired Fund"), in a tax-free reorganization in exchange for
shares of the Acquiring Fund, pursuant to a plan of reorganization approved by
the Acquired Fund's shareholders. The number and value of shares issued by the
Acquiring Fund are presented in the Schedule of Capital Stock Activity. Net
assets and unrealized appreciation as of the reorganization date were as
follows:
<TABLE>
<CAPTION>
ACQUIRED
TOTAL NET ASSETS OF FUND
TOTAL NET ASSETS OF TOTAL NET ASSETS OF ACQUIRING FUND UNREALIZED
ACQUIRING ACQUIRED ACQUIRED FUND ACQUIRING FUND AFTER ACQUISITION APPRECIATION
FUND FUND (000) (000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balanced Assets Emerald Balanced Fund $ 76,887 $ 121,047 $ 197,934 $ 8,904
Disciplined Equity Emerald Equity Fund 296,852 258,201 555,053 67,060
Small Company Growth Emerald Small
Capitalization Fund 153,088 313,094 466,182 20,046
Value Emerald Equity Value Fund 26,394 2,570,167 2,596,561 4,855
</TABLE>
145
<PAGE> 150
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
CONVERSION OF COMMON TRUST FUNDS
On November 12, 1997, certain Funds, as listed below (each an "Acquiring Fund"),
acquired the assets of certain common trust funds, managed by NationsBank, also
listed below (each an "Acquired Fund"), in a tax-free exchange for shares of the
Acquiring Fund. The number and value of shares issued by the Acquiring Fund are
presented in the Schedule of Capital Stock Activity. Net assets and unrealized
appreciation as of the conversion date were as follows:
<TABLE>
<CAPTION>
ACQUIRED
TOTAL NET ASSETS OF FUND
TOTAL NET ASSETS OF TOTAL NET ASSETS OF ACQUIRING FUND UNREALIZED
ACQUIRING ACQUIRED ACQUIRED FUND ACQUIRING FUND AFTER CONVERSION APPRECIATION
FUND FUND (000) (000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Growth Common Trust Equity Funds
For Personal Trusts $ 53,754 $ 994,840 $1,048,594 $ 23,336
Capital Growth Common Trust Capital
Growth Fund 469,943 524,897 994,840 131,129
Value Common Trust Value Equity
Fund 916,928 1,630,081 2,547,009 256,045
Equity Income Common Trust Equity
Income Fund 563,468 508,667 1,072,135 75,095
Emerging Growth Common Trust Emerging
Growth Fund 103,027 347,819 450,846 26,813
</TABLE>
On April 17 and April 29, 1998, certain Funds, as listed below (each an
"Acquiring Fund"), acquired the assets of certain common trust funds, managed by
NationsBank, also listed below (each an "Acquired Fund"), in a tax-free exchange
for shares of the Acquiring Fund. The number and value of shares issued by the
Acquiring Fund are presented in the Schedule of Capital Stock Activity. Net
assets and unrealized appreciation as of the conversion date were as follows:
<TABLE>
<CAPTION>
ACQUIRED
TOTAL NET ASSETS OF FUND
TOTAL NET ASSETS OF TOTAL NET ASSETS OF ACQUIRING FUND UNREALIZED
ACQUIRING ACQUIRED ACQUIRED FUND ACQUIRING FUND AFTER CONVERSION APPRECIATION
FUND FUND (000) (000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
APRIL 17, 1998:
Equity Income NationsBank Common Trust
Equity Income Fund $ 62,189 $1,085,070 $1,147,259 $13,366
Small Company NationsBank Common Trust
Growth Special Equity Fund 7,075 238,952 246,027 1,126
Value NationsBank Common Trust
Long-Term Equity Fund 120,426 2,484,751 2,605,177 61,907
APRIL 29, 1998:
Disciplined Equity NationsBank Common Trust
Growth Stock Fund 47,340 201,122 248,462 3,636
Disciplined Equity NationsBank Common Trust
Oklahoma Growth Stock Fund 4,245 248,463 252,708 282
</TABLE>
12. SUBSEQUENT EVENTS
The Company was party to an Agreement and Plan of Reorganization with the
Pacific Horizon Funds, Inc. (a family of mutual funds advised by Bank of America
NT&SA, an indirect wholly-owned subsidiary of Bank of America Corporation),
pursuant to which the assets and liabilities (net) of the Pacific Horizon
Aggressive Growth Fund of $164,166,102 were acquired in a tax-free
reorganization in exchange for shares of the Nations Small Company Growth Fund
on May 14, 1999.
Effective May 14, 1999, the maximum contractual levels of advisory and combined
co-administration fees payable by the Funds changed. At that time, the maximum
contractual advisory fee that NBAI is entitled to receive from the Funds
decreased by .10% of the Funds' average daily net assets, and the combined
co-administration fee payable to NBAI and Stephens increased by the same amount.
146
<PAGE> 151
NATIONS FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS, DIRECTORS AND TRUSTEES OF NATIONS FUNDS
In our opinion, the accompanying statements of net assets, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Nations Balanced Assets Fund, Nations Value Fund, Nations Equity Income Fund,
Nations Equity Index Fund, Nations Marsico Growth & Income Fund, Nations
Strategic Equity Fund, Nations Capital Growth Fund, Nations Disciplined Equity
Fund, Nations Marsico Focused Equities Fund, Nations Emerging Growth Fund and
Small Company Growth Fund, (portfolios of Nations Fund Trust or Nations Fund,
Inc., hereafter referred to as the "Funds") at March 31, 1999, and the results
of each of their operations, the changes in each of their net assets and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 1999 by
correspondence with the custodian provide a reasonable basis for the opinion
expressed above. The financial statements of Nations Small Company Growth Fund,
formerly Pilot Small Capitalization Equity Fund, for the periods ended May 16,
1997 were audited by other independent accountants whose report dated June 20,
1997 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Boston, Massachusetts
May 28, 1999
147
<PAGE> 152
NATIONS FUNDS
TAX INFORMATION (UNAUDITED)
For the fiscal year ended March 31, 1999, the amount of long-term capital gains
designated by the Trust and/or the Company were as follows:
<TABLE>
<CAPTION>
FUND TOTAL
- --------------------------------------------------------------------------
<S> <C>
Balanced Assets............................................. $ 1,949,249
Value....................................................... 305,707,407
Equity Income............................................... 76,560,802
Equity Index................................................ 24,596,060
Strategic Equity............................................ 87,000
Capital Growth.............................................. 187,915,869
Disciplined Equity.......................................... 28,787,055
Emerging Growth............................................. 44,340,102
</TABLE>
Of the ordinary income (including short-term capital gain) distributions made by
the Trust and the Company during the fiscal year ended March 31, 1999, the
following percentages qualify for the dividend received deduction available to
corporate shareholders:
<TABLE>
<S> <C>
Balanced Assets............................................. 37.54%
Value....................................................... 99.26%
Equity Income............................................... 65.42%
Equity Index................................................ 34.12%
Growth & Income............................................. 7.17%
Capital Growth.............................................. 32.82%
Disciplined Equity.......................................... 19.28%
Focused Equities............................................ 0.68%
Emerging Growth............................................. 19.87%
Small Company Growth........................................ 23.52%
</TABLE>
148
<PAGE> 153
[GRAPHIC DEPICTING BASKETS]
<PAGE> 154
BULK RATE
[NATIONS FUNDS LOGO] U.S. POSTAGE
P.O. Box 32602 PAID
Charlotte, NC 28234-4602 N READING, MA
Toll Free 1-800-982-2271 PERMIT NO.
AR1 IN96116 3/99 105
