<PAGE> 1
[NATIONS FUNDS LOGO]
International Stock Funds
Annual Report For The Year Ended March 31, 1999
[GRAPHIC DEPICTING GLOBE]
[PHOTO DEPICTING TREE]
Investments For A Lifetime(SM)
Nations International Value Fund
Nations International Equity Fund
Nations International Growth Fund
Nations Emerging Markets Fund
<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.
[graphic depicting arrow]
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
INTERNATIONAL MARKET OVERVIEW 4
PORTFOLIO COMMENTARY
Nations International Value Fund 7
Nations International Equity Fund 13
Nations International Growth Fund 19
Nations Emerging Markets Fund 25
FINANCIAL STATEMENTS
Statements of Net Assets 30
Statements of Operations 44
Statements of Changes in Net Assets 46
Schedules of Capital Stock Activity 48
Financial Highlights 52
Notes to Financial Statements 60
</TABLE>
<TABLE>
<S> <C>
---------------------------------------------------------------------------------
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>
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<TABLE>
<CAPTION>
THE
NATIONS FUNDS
FAMILY AT A GLANCE
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)
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
International
Market Overview
The global investment environment grew more
challenging during the 12-month period ended March
31, 1999. We have entered a period of generally
slower economic growth across the major international
markets, with lower interest rates and modest
inflation. As might be expected, the dominant trends
varied by region. Economic growth in Europe was
strong early in the fiscal period, but tailed off as
the year progressed. During the period, we also saw
the successful introduction of the euro, a common
currency for most European nations. In Asia, the
recession in Japan and the Pacific region has shown
some signs that we may have seen the worst.
Looking ahead over the next 12 months, we believe
corporate profits may recover in the United Kingdom
and Continental Europe, with modest growth in the
Pacific region outside Japan. However, we remain
skeptical of a recovery in Japan.
The Asian crisis had its effects across the
international markets. The clearest signs of the
widening impact were seen in other emerging markets,
most notably in Russia, where the currency -- the
ruble -- collapsed and the Russian government
defaulted on part of its external debt. The effects
also were seen in Brazil, where the government
decided in January to de-couple the Brazilian
currency -- the real -- from the U.S. dollar,
effectively allowing its devaluation. Europe,
however, did not escape the problems that began in
Asia. On the Continent, we saw declining economic
growth rates and disappointing corporate earnings.
Reflecting these broad trends, interest rates have
come down, particularly in the United Kingdom, where
they ended the fiscal period at 5.5%, compared with
7.5% at the start of the period.
Volatility and uncertainty in the international
financial markets also was heightened by the collapse
(and subsequent bailout) of Long-Term Capital
Management, a hedge fund, as well as by the Malaysian
government's decision to impose capital controls. The
hedge fund debacle led to a sharp, abrupt decline in
market prices for all risky assets. Credit
spreads -- the differences in yields between high
quality bonds and bonds with credit risk -- widened
in an international "flight to quality" in which the
highest quality securities were the best performers.
The Malaysian government's announcement that it would
control the movement of capital from Malaysia
prompted fears among investors that other governments
with vulnerable currencies might adopt similar
policies. These fears proved unwarranted, however. In
the end, the Malaysian government decided to replace
the controls with a sliding capital gains tax
following a general rebound of currencies throughout
the Pacific region. Outside Malaysia, with the
notable exception of Japan, the Pacific region showed
some general
Source for all statistical data -- Gartmore Global
Partners
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
<PAGE> 9
International
Market Overview continued...
improvement, with the economies of Korea and Thailand
evidently reaching the bottom of their slumps in late
1998. We expect that Hong Kong and Singapore should
reach their lows during the first half of 1999.
Australia enjoyed signs of strong economic growth,
although part of its success was due to a
depreciation of the Australian dollar.
International equity markets performed consistently
with these economic trends. However, movements in the
relative values of currencies had a distorting effect
on the returns on investments in U.S. dollar terms.
The most notable example was in Japan, where the yen
rose against the dollar beginning in September 1998.
Overall foreign equity returns, as measured by the
Morgan Stanley Capital International Europe,
Australasia and Far East (MSCI EAFE) Index, rose by
4.86% in U.S. dollar terms for the 12-month period.*
While European equity markets were the strongest
performers in local currency terms, yen strength
against the U.S. dollar pushed Japan to the top of
the performance table in U.S. dollar terms. This
performance came despite the fact that the Japanese
stock market was basically flat in yen terms. Japan,
in fact, was the only major market to outperform the
MSCI EAFE Index. Yen strength also pushed other
currencies of the Pacific region upward against the
U.S. dollar. This general regional currency strength,
however, did not overcome declines in local equity
markets. As a result, the region's markets, as a
whole, produced negative returns. Currency movements
had different effects on the returns realized by U.S.
investors in the United Kingdom and in Continental
Europe. In general, currencies on the Continent
strengthened against the U.S. dollar, boosting the
region's returns in U.S. dollar terms. However, the
British pound sterling declined against the U.S.
dollar so that returns from U.K. equity investments
were lower in U.S. dollars, though still positive.
Elsewhere, Latin American markets suffered sharp
declines, while the markets of emerging Europe fared
somewhat better.
Looking forward, we anticipate economic growth in
Continental Europe in 1999 to be about 2.0%, down
from the 2.5% growth rate during 1998. We expect that
growth in the United Kingdom will be negligible.
Corporate earnings growth in Continental Europe
should be about 5% this year and flat-to-negative in
the U.K. However, we believe that earnings
expectations will begin to recover across the region
towards the end of 1999. Our initial estimate for
2000 is that corporate earnings in Continental Europe
and the U.K. will be 10% or more.
In Japan, we expect very weak, if any, economic
growth, and no significant rebound in corporate
profits. We believe progress on structural and
banking sector reform in Japan is likely to be slow.
If economic conditions continue to deteriorate in
Japan, there is a risk of
*The Morgan Stanley Capital International Europe,
Australasia, Far East (MSCI EAFE) Index is an
unmanaged, capitalization-weighted index that tracks
stocks traded in twenty countries in Europe,
Australia and the Far East. It is unavailable for
investment.
5
<PAGE> 10
International
Market Overview continued...
monetization, in which the Japanese would effectively
print money to stimulate growth. In the Pacific
region outside Japan, we expect to see further
evidence in 1999 that the region-wide slump has
bottomed. We believe the prospects are reasonably
strong that economic growth will be renewed in 2000.
We believe emerging market economies will struggle
for growth in the current environment, and the impact
of tight monetary and fiscal policies in Latin
America will act as a further brake on economic
expansion.
While European markets disappointed investors over
the past 12 months, several factors encourage more
optimism about Europe for the coming 12-month period.
These factors include: a reasonable expectation for a
profits recovery, reflecting a growth rebound;
neutral to favorable bond/equity valuations; and the
probability of further interest rate reductions.
Pacific Rim markets also should offer interesting
investing opportunities, with the potential for
better-than-expected corporate earnings and
opportunities created by the growing trend of
corporate restructuring throughout the region. In
Japan, a recovery requires fast economic growth and
an end to deflation. While we are marginally
encouraged by consideration of more aggressive
measures to stimulate the Japanese economy, we have
not seen sufficient evidence to justify overweighting
Japanese investments relative to international
benchmarks.
Emerging markets are likely to remain volatile, but
we continue to believe that some emerging markets in
Asia and Eastern Europe are well positioned to offer
the potential for reasonable returns. In Latin
America, we believe that Brazil will end the year
higher.
In summary, we continue to believe that the
international markets should offer long-term
investors the potential for both growth and
diversification in the coming year.
Stephen Watson
Chief Investment Officer
Gartmore Global Partners
March 31, 1999
6
<PAGE> 11
Nations
International Value
Fund Investment Committee Commentary*
<TABLE>
<S> <C>
In the following interview, the Committee shares its views
on Nations International 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 Large Nations International Value Fund uses a Graham-Dodd value
Cap Investment Committee of discipline to select international equities. Benjamin
Brandes Investment Partners, L.P., Graham, sometimes called the father of financial analysis,
investment sub-adviser to the and David Dodd, first spelled out the principles of
Fund. value-based investing in their 1934 book, Security Analysis.
INVESTMENT OBJECTIVE Following these principles, the Fund searches the world for
The Fund seeks long-term capital companies whose stocks are believed to be undervalued. Upon
appreciation by investing the purchase of such stocks, the Fund plans to hold them for
primarily in equity securities of 3-5 years to allow them to seek to achieve their long-term
foreign issuers, including or "intrinsic" value. The Fund conducts a rigorous bottom-up
emerging markets countries. search. This means that it is the companies that lead us to
PERFORMANCE REVIEW the countries in which the Fund invests, not the other way
For the 12-month period ended around. As value investors, we see opportunity in periods of
March 31, 1999, Nations volatility such as occurred in the last 12 months. These
International Value Fund Investor periods can provide us with access to solid companies
A Shares provided shareholders selling at discounts from their intrinsic value. Over time,
with a total return of 1.75%.** we believe that the market will recognize this intrinsic
value and the prices of these stocks will rise. We believe
that by purchasing stocks at discounts from their long-term
value, a "margin of safety" against price declines is
created -- thus reducing risk -- while at the same time
providing the opportunity for capital appreciation.
PLEASE COMMENT ON FUND PERFORMANCE FOR THE PERIOD.
Nations International Value Fund (Investor A Shares)
provided shareholders with a total return of 1.75%,
substantially outperforming its peer group, the Lipper
International Funds Universe*** which returned 0.02%.
</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 performance shown includes the effect of
fee waivers by the investment adviser, which have the
effect of increasing total return.
***Lipper Inc. is an independent mutual fund
performance monitor. Funds included in the
Lipper International Funds Universe invest their
assets in securities with primary trading
markets outside of the United States.
INVESTMENTS IN INTERNATIONAL INVESTMENTS MAY INVOLVE
SPECIAL RISKS, INCLUDING FOREIGN TAXATION, CURRENCY
RISKS, RISKS ASSOCIATED WITH POSSIBLE DIFFERENCES IN
FINANCIAL STANDARDS AND OTHER MONETARY AND POLITICAL
RISKS ASSOCIATED WITH FUTURE POLITICAL AND ECONOMIC
DEVELOPMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
7
<PAGE> 12
Nations
International Value
Fund Investment Committee Commentary continued...
<TABLE>
<S> <C>
WHAT WERE INTERNATIONAL ECONOMIC AND MARKET CONDITIONS LIKE
DURING THE REPORTING PERIOD?
Over the past year, world markets experienced some of the
more dramatic movement in recent memory. Following the
widespread currency devaluation in Asia the prior fall,
aftershocks were felt even in the developed countries in
Europe and North America during mid-1998. Several factors
were largely responsible for the turmoil in global equity
markets over the past year. First, deteriorating economic
fundamentals in Japan threatened to intensify and prolong
the broader economic slump in Asia. Secondly, continued
political unrest in Indonesia, and the imposition of
currency restrictions in Malaysia, contributed to investor
unease in Asia. Third, political and economic turmoil in
Russia contributed to widespread sell-offs. Concern about
the exposure of European banks to defaulted loans in Russia
in late summer of 1998 also contributed to that region's
correction mid-fiscal-year. Lastly, the devaluation of the
Russian ruble put pressure on the currencies of Latin
American nations, as investors worried that these countries
would not be able to maintain their managed currency
systems. The "other shoe" eventually dropped with the
devaluation of the Brazilian real in January of 1999, and
the subsequent plunge in value of Brazilian and Venezuelan
stocks. Since that time, however, there has been some
recovery in Latin American markets, and further strength in
Europe.
...the Fund's security selection WHAT COUNTRY OR REGIONAL DECISIONS CONTRIBUTED THE MOST TO
process is based on a bottom-up THE FUND'S PERFORMANCE?
analysis of stocks chosen For the year ended March 1999, holdings in the following
according to their fundamental countries turned in the strongest performances: Germany,
intrinsic values. Therefore, Switzerland, Italy, Mexico, South Korea and Japan. Holdings
weightings in countries, sectors, in the following countries detracted most significantly from
industries, and currencies are a the Fund's performance: Brazil, Venezuela, South Africa and
by-product of the stock selection the United Kingdom.
process itself. It is important to remember that the Fund's security
selection process is based on a bottom-up analysis of stocks
chosen according to their fundamental intrinsic values.
Therefore, weightings in countries, sectors, industries, and
currencies are a by-product of the stock selection process
itself. They are not a result of top-down allocations driven
by a market outlook. The general trend in the Fund over the
past year has been to sell European stocks which we believe,
have become fully valued, and to invest more heavily in
Asian and Latin American companies, whose values have come
down to, in our view, very attractive levels. In the short
run, re-deployment into troubled areas of the world can have
a negative impact on Fund performance. However, we believe
that in the long run, investing in bargain-priced companies
will provide the potential for strong returns while reducing
risk.
</TABLE>
8
<PAGE> 13
Nations
International Value
Fund Investment Committee Commentary continued...
<TABLE>
<S> <C>
WHAT ARE SOME EXAMPLES OF STOCKS HELD BY THE FUND THAT
PERFORMED PARTICULARLY WELL?+
Stocks showing the strongest performance during the last
year included: Deutche Telekom AG, Reuters Group PLC,
Swisscom AG, Korea Electric Power Corporation, Telecom
Italia SPA, and Daimler-Benz (later Daimler Chrysler, which
the Fund has sold.)
...a bottom-up, fundamental WHAT IMPACT DID CURRENCY HAVE ON THE FUND'S PERFORMANCE?
investment process, which does not The effects of Latin American currencies were generally
forecast market levels, economic negative on the performance of the Fund during the fiscal
growth, or currency movements. year. However, it is useful to keep in mind the reasons the
Fund does not hedge currencies. First, we do not believe
that currency risk presents a major risk to a long-term
investor in a diversified portfolio. Currency fluctuations
tend to even out over time, and hedging is costly. Secondly,
one of the main reasons to invest internationally is to gain
the benefits of diversification, part of which is provided
by the currency component. Currency hedging would
essentially remove the diversification benefit and low
correlation with other asset classes, which is desirable in
an international portion of an investor's portfolio. Lastly,
currency hedging is inconsistent with a bottom-up,
fundamental investment process, which does not forecast
market levels, economic growth, or currency movements.
WHAT IS YOUR INTERNATIONAL ECONOMIC AND MARKET OUTLOOK FOR
THE YEAR AHEAD?
As a bottom-up manager, we do not make any top-down
projections for countries, regions, economies, or interest
rates. We choose companies first, based on a "rear view
mirror" -- what the company has been able to achieve
historically, how sustainable we think its performance is,
and how it is currently priced. We see great opportunity
when markets are unsettled as they have been, particularly
in Asian and Latin American markets. There are bright spots
on the horizon: expectations of lower interest rates in the
U.S., legislative progress on banking reform in Japan, and
encouraging words by Brazil's president on his continued
commitment to free markets. In recent months, Latin American
countries such as Mexico and Argentina have shown some very
positive moves.
Although we recognize that there are important risks to
consider, in our opinion, prices in some parts of the world
are at bargain levels.
By acquiring stocks at these bargain levels, we believe we
can create for the Fund a "margin of safety" against price
declines over time, and an opportunity for long-term profit.
+Portfolio holdings are subject to change and may not be
representative of current holdings.
</TABLE>
9
<PAGE> 14
Nations
International Value
Fund Investment Committee Commentary continued...
<TABLE>
<S> <C>
Lastly, while the equity and currency volatility in many
markets can be unsettling in the short-term, we believe the
policy changes it is forcing in many countries will
ultimately result in greater sustainable long-term growth
for their economies.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THIS
ENVIRONMENT? HOW ARE YOU POSITIONING THE FUND TO TAKE
ADVANTAGE OF THESE OPPORTUNITIES?
While volatility persists in Asia and Latin America, the
Fund will continue to invest in strong companies in these
areas as long as our analysis tells us they are
value-priced. Over the past year, the Fund sold many of its
fully priced European holdings and invested more in Asian
and Latin American companies. We believe this will position
the Fund to take advantage of the value opportunities
presenting themselves in the coming months.
</TABLE>
10
<PAGE> 15
Nations
International Value
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
-------------------------------------------
1 Hitachi Ltd., ADR 5.2%
-------------------------------------------
2 Hutchison Whampoa Ltd., ADR 4.8%
18.6% Other -------------------------------------------
3.4% South Africa 3 Telecom Italia Spa 4.5%
4.2% Netherlands -------------------------------------------
5.7% Germany 4 Deutsche Telekom AG 4.4%
6.1% Italy -------------------------------------------
6.8% Brazil 5 HSBC Holdings plc, ADR 4.3%
7.5% France -------------------------------------------
9.0% Hong Kong 6 Diageo plc, ADR 4.1%
19.2% United Kingdom -------------------------------------------
19.5% Japan 7 Mitsubishi Heavy Industries Ltd. 3.6%
-------------------------------------------
8 Telefonos de Mexico, ADR 3.1%
-------------------------------------------
9 Tokio Marine & Fire Insurance
Company Ltd., ADR 3.0%
-------------------------------------------
10 Swire Pacific Ltd. 'A', ADR 2.9%
-------------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
11
<PAGE> 16
Nations
International Value
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
<TABLE>
<CAPTION>
MSCI
INTERNATIONAL|VALUE|$15,623 EAFE|INDEX|$13,255 LIPPER|INTERNATIONAL|FUNDS|UNIVERSE|$13,539
--------------------------- ------------------ -------------------------------------------
<S> <C> <C> <C>
Dec. 27|1995 9425 10000 10000
'1995' 9374 10000 10000
9591 10297 10448
10184 10468 10829
10043 10463 10783
'1996' 10809 10637 11223
11436 10478 11353
12936 11846 12620
13496 11770 12794
'1997' 13012 10856 11814
15353 12461 13547
14518 12602 13647
12112 10819 11449
'1998' 14550 13064 13333
Mar. 31|1999 15623 13255 13539
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
<TABLE>
<CAPTION>
MSCI
INTERNATIONAL|VALUE|$16,576 EAFE|INDEX|$13,255 LIPPER|INTERNATIONAL|FUNDS|UNIVERSE|$13,539
--------------------------- ------------------ -------------------------------------------
<S> <C> <C> <C>
Dec. 27|1995 10000 10000 10000
'1995' 9946 10000 10000
10176 10297 10448
10806 10468 10829
10655 10463 10783
'1996' 11468 10637 11223
12134 10478 11353
13726 11846 12620
14320 11770 12794
'1997' 13806 10856 11814
16289 12461 13547
15403 12602 13647
12851 10819 11449
'1998' 15438 13064 13333
Mar. 31|1999 16576 13255 13539
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
Since
Inception NAV** MOP*
(12/27/95 through
3/31/99) 16.77% 14.66%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations
International Value Fund
from the inception of the
shareclass. The Morgan
Stanley Capital
International Europe,
Australasia and Far East
(MSCI EAFE) Index is an
unmanaged,
capitalization-weighted
index that tracks stocks
traded on 20 exchanges in
Europe, Australia and the
Far East. Funds included in
the Lipper International
Funds Universe invest their
assets in securities with
primary trading markets of
the U.S. 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 12/27/95 12/27/95 12/27/95 5/28/98 5/28/98 6/15/98 6/15/98
- ---------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 1.48% 1.75% -4.10% 1.25% -3.33% 3.98% 2.99%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 17.79% 17.66% 15.36% 17.47% 16.74% -- --
SINCE INCEPTION 16.92% 16.77% 14.66% 3.85% -1.07% 3.98% 2.99%
</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.
12
<PAGE> 17
Nations
International Equity
Fund Portfolio Manager Commentary*
<TABLE>
<S> <C>
In the following interview, Mr. Watson shares his views on
Nations International Equity Fund's performance for the
12-month period ended March 31, 1999, and his outlook for
the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Stephen Watson is a co-manager of The Fund's primary objective is to identify opportunities
the Fund and Head of the for above-average future earnings growth. This is achieved
International and Global Portfolio by screening regions, countries, sectors and individual
Team for Gartmore Global Partners, stocks to determine where emphasis should be placed to
investment sub-adviser to the pursue earnings growth that is consistently higher than
Fund. consensus forecasts. By combining active regional and
INVESTMENT OBJECTIVE country allocation with theme-based sector and stock
The Fund seeks long-term capital selection, we aim to maintain a portfolio that strategically
growth by investing primarily in emphasizes growing markets while tactically avoiding those
equity securities of non-United with less favorable prospects. The process is driven by
States companies in Europe, fundamental research that combines analysis from the
Australia, the Far East and other macroeconomic to the individual company level, carried out
regions, including developing by dedicated regional investment teams and sector/company
countries. analysts.
PERFORMANCE REVIEW
For the 12-month period ended PLEASE COMMENT ON FUND PERFORMANCE FOR THE PERIOD.***
March 31, 1999, Nations
International Equity Fund Investor Nations International Equity Fund (Investor A Shares)
A Shares provided a total return provided shareholders with a total return of 3.59%,
of 3.59%.** substantially outperforming its peer group, the Lipper
International Funds Universe which returned 0.02%.
WHAT WERE INTERNATIONAL ECONOMIC AND MARKET CONDITIONS LIKE
DURING THE REPORTING PERIOD?
The 12 months ended March 31, 1999 were another turbulent
period for international equity markets. Returns dipped to
their lowest point in early October following the Russian
ruble crisis in August and the Long-Term Capital Management
debacle in September; but
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**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
International Funds Universe invest their assets in
securities with primary trading markets outside
of the United States.
Source for all statistical data -- Gartmore Global
Partners.
INVESTMENTS IN INTERNATIONAL INVESTMENTS MAY INVOLVE
SPECIAL RISKS, INCLUDING FOREIGN TAXATION, CURRENCY
RISKS, RISKS ASSOCIATED WITH POSSIBLE DIFFERENCES IN
FINANCIAL STANDARDS AND OTHER MONETARY AND POLITICAL
RISKS ASSOCIATED WITH FUTURE POLITICAL AND ECONOMIC
DEVELOPMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
13
<PAGE> 18
Nations
International Equity
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
markets quickly rebounded, reaching a new peak in early
January, helped by U.S.-led cuts in short-term interest
rates, optimism over the launch of the Euro and improving
sentiment in the Pacific Rim.
The period began with Continental European equity markets in
the driver's seat as investors focused on upbeat merger and
acquisition activity and evidence of stronger growth. In
contrast, the U.K. was held back by evidence of slower
growth coupled with a surprise hike in interest rates, which
was blamed on accelerating wages. This trend reversed later
in the year as the U.K. began a series of interest rate
cuts -- between October and February, there were five
reductions resulting in the rate coming down from 7.5% to
5.5%. As sentiment grew more positive in the U.K., it became
less so on the Continent where earnings results continued to
disappoint and the political background grew less certain.
This resulted in a lackluster performance for Continental
European equities later in the period, while the U.K. market
was more buoyant.
In Japan and the rest of the Pacific region, investors
stayed on the sidelines early in the period as evidence of
recession mounted. As the year progressed, there were some
signs of improvement in Japan. Banking reform made some
headway, corporate restructuring activity was more evident
and officials talked about more radical measures to
stimulate the economy. However, growth remained stubbornly
flat and the stock market maintained a generally southward
trend for the whole of the period in local currency terms.
In contrast, investor sentiment toward the rest of the
Pacific region improved during the period as light appeared
at the end of the economic tunnel in some of the 'crisis'
economies -- in particular, Korea and Thailand. Growth in
Hong Kong and Singapore continued to decline, but their
troughs are expected to be reached sometime in the first
half of this year.
Latin America, while generally stronger than its Asian
counterparts at the outset of the period, failed to keep
pace as the year progressed. The region took a major tumble
in the wake of the Brazilian devaluation but bounced back
from oversold positions during February. Elsewhere, emerging
European economies, notably Greece, enjoyed strong
performances, helped by their proximity to Continental
Europe.
The Fund benefited WHAT ARE SOME EXAMPLES OF STOCKS HELD BY THE FUND THAT
from the strong PERFORMED PARTICULARLY WELL?+
performance of the The extraordinary growth in mobile phone usage over the past
telecommunications sector. 12 months put the telecommunications sector well ahead of
all
+Portfolio holdings are subject to change and may not be
representative of current holdings.
</TABLE>
14
<PAGE> 19
Nations
International Equity
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
others, and this clearly benefited Fund performance. The
Fund was overweighted in the sector with holdings such as
Telecom Italia Spa, Tele Danmark, Vodafone Group plc ord.
and Nokia AB "A", all of which rose strongly. Mannesmann AG,
an engineering company that has diversified into
telecommunications, rose by more than 70% in U.S. dollar
terms. The performance of financials was mixed, but the Fund
realized gains from its exposure to insurance companies such
as Allianz AG NPV, AXA and Aegon NV. The Fund also saw
strong performances from growth stocks such as Fosters
Brewing Group ord. and News Corporation Ltd.
WHAT IMPACT DID CURRENCY HAVE ON THE FUND'S PERFORMANCE?
The biggest currency related impact to Fund performance was
a strong yen, which helped the Fund. However, the dramatic
weakening of the euro over the past few months has offset
much of the benefit the Fund derived from yen strength.
WHAT IS YOUR INTERNATIONAL ECONOMIC AND MARKET OUTLOOK FOR
THE YEAR AHEAD?
Looking forward, earnings growth in Continental Europe
should be about 5% this year and flat to negative in the
U.K. However, towards the end of the year we believe that
earnings expectations in the U.K. will begin to recover and
our initial earnings estimate for next year is 10%. In
Japan, we expect very weak economic growth and no
significant rebound in corporate profits. We have increased
the Fund's exposure to Japan but it remains underweight
versus the Morgan Stanley Capital International Europe,
Australasia and Far East Index++. This was based on the view
that its previous underweight stance was too extreme, given
the aggressive easing of monetary policy which took
short-term interest rates to 0% plus, and continued
corporate restructuring activity. In the Pacific ex-Japan
region, we expect further evidence of a bottoming out during
1999 but believe the prospects for renewed growth in 2000
are reasonably strong.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THIS
MARKET?
While European markets disappointed compared with the U.S.
over the past 12 months, we believe they are likely to be
supported over the coming 12-month period by several factors
that will not necessarily pertain to the U.S. These include
a reasonable prospect for a profits recovery, reflecting a
growth rebound, neutral to favorable bond to equity
valuations and the probability of further interest rate
cuts. Pacific Rim markets may also offer interesting
investment opportunities with the potential for positive
earnings
++The Morgan Stanley Capital International Europe,
Australasia, Far East (MSCI EAFE) Index is an unmanaged,
capitalization-weighted index that tracks stocks traded in
twenty countries in Europe, Australia and the Far East. It
is unavailable for investment.
</TABLE>
15
<PAGE> 20
Nations
International Equity
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
surprises. In Japan, a recovery requires fast economic
growth and an end to deflation; while we feel marginally
encouraged by talk of more radical measures to stimulate the
economy, this is not yet sufficient to justify a more
aggressive stance. Emerging markets are likely to
remain volatile, but we continue to believe that some
emerging markets in Eastern Europe are well placed to offer
reasonable return potential, given the continuing likelihood
of convergence with Western Europe; in Latin America, we
expect Brazil to end the year higher.
We are continuing to maintain an HOW ARE YOU POSITIONING THE FUND TO TAKE ADVANTAGE OF THESE
overweight stance in Europe within ANTICIPATED DEVELOPMENTS?
the Fund, with emphasis on the We are continuing to maintain an overweight stance in Europe
U.K. within the Fund, with emphasis on the U.K. At a sector
level, we are focusing on growth areas such as
telecommunications and information services. The Fund will
maintain an underweight stance in Japan, but we are
monitoring the situation closely. We favor the Pacific Rim
over Latin America and expect to concentrate Fund exposure
on large-capitalization stocks that we believe are likely to
benefit from resurgent economic growth.
</TABLE>
16
<PAGE> 21
Nations
International Equity
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
-----------------------------------
1 Glaxo Wellcome plc 2.0%
-----------------------------------
2.7% Australia 2 Telecom Italia Spa 1.9%
2.8% Hong Kong -----------------------------------
3.9% Italy 3 Nokia AB "A" 1.8%
4.9% Netherlands -----------------------------------
5.7% Germany 4 Novartis AG 1.7%
6.5% Switzerland -----------------------------------
9.6% France 5 Societe Generale 1.6%
14.3% Japan -----------------------------------
22.5% United Kingdom 6 Unilever plc ord. 1.6%
27.1% Other -----------------------------------
7 Vodafone Group plc ord. 1.5%
-----------------------------------
8 BP Amoco plc 1.5%
-----------------------------------
9 Lloyds TSB Group plc 1.5%
-----------------------------------
10 British
Telecommunications 1.4%
-----------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED
TO ILLUSTRATE EXAMPLES OF THE
INDUSTRIES AND SECURITIES IN WHICH
THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
17
<PAGE> 22
Nations
International Equity
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
<TABLE>
<CAPTION>
INTERNATIONAL|EQUITY|$15,409 LIPPER|INTERNATIONAL|FUNDS|UNIVERSE|$18,387
---------------------------- -------------------------------------------
<S> <C> <C>
Jun. 3|1992 9425 10000
9187 9725
8961 9279
'1992' 8590 9157
9067 9946
9362 10446
10201 11361
'1993' 10902 12434
10800 12342
11053 12474
11460 12870
'1994' 11142 12365
10643 12179
10878 12689
11660 13307
'1995' 12057 13581
12713 14189
12920 14707
12872 14644
'1996' 13038 15242
12850 15418
14336 17139
14008 17376
'1997' 13173 16045
14876 18398
15124 18535
13025 15549
'1998' 15332 18108
Mar. 31|1999 15409 18387
<CAPTION>
MSCI
EAFE|INDEX|$19,792
------------------
<S> <C>
Jun. 3|1992 10000
9529
9682
'1992' 9317
10443
11502
12272
'1993' 12387
12828
13492
13514
'1994' 13385
13645
13755
14340
'1995' 14932
15376
15631
15623
'1996' 15884
15646
17689
17576
'1997' 16210
18608
18818
16155
'1998' 19508
Mar. 31|1999 19792
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
<TABLE>
<CAPTION>
INTERNATIONAL|EQUITY|$16,349 LIPPER|INTERNATIONAL|FUNDS|UNIVERSE|$18,387
---------------------------- -------------------------------------------
<S> <C> <C>
Jun. 3|1992 10000.00 10000.00
9748.00 9725.00
9508.00 9279.00
'1992' 9115.00 9157.00
9620.00 9946.00
9933.00 10446.00
10823.00 11361.00
'1993' 11567.00 12434.00
11459.00 12342.00
11727.00 12474.00
12159.00 12870.00
'1994' 11822.00 12365.00
11292.00 12179.00
11542.00 12689.00
12372.00 13307.00
'1995' 12792.00 13581.00
13488.00 14189.00
13708.00 14707.00
13657.00 14644.00
'1996' 13834.00 15242.00
13634.00 15418.00
15211.00 17139.00
14862.00 17376.00
'1997' 13976.00 16045.00
15784.00 18398.00
16047.00 18535.00
13820.00 15549.00
'1998' 16267.00 18108.00
Mar. 31|1999 16349.00 18387.00
<CAPTION>
MSCI
EAFE|INDEX|$19,792
------------------
<S> <C>
Jun. 3|1992 10000.00
9529.00
9682.00
'1992' 9317.00
10443.00
11502.00
12272.00
'1993' 12387.00
12828.00
13492.00
13514.00
'1994' 13385.00
13645.00
13755.00
14340.00
'1995' 14932.00
15376.00
15631.00
15623.00
'1996' 15884.00
15646.00
17689.00
17576.00
'1997' 16210.00
18608.00
18818.00
16155.00
'1998' 19508.00
Mar. 31|1999 19792.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
Since
Inception NAV** MOP*
(6/3/92 through
3/31/99) 7.47% 6.55%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations
International Equity Fund
from the inception of the
shareclass. The Morgan
Stanley Capital
International Europe,
Australasia and Far East
(MSCI EAFE) Index is an
unmanaged,
capitalization-weighted
index that tracks stocks
traded on 20 exchanges in
Europe, Australia and the
Far East. Funds included in
the Lipper International
Funds Universe invest their
assets in securities with
primary trading markets
outside of the U.S. 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 12/2/91 6/3/92 6/3/92 6/7/93 6/7/93 6/17/92 6/17/92
- --------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 3.68% 3.59% -2.34% 2.65% -2.07% 2.63% 1.69%
- --------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 6.83% 6.63% 4.53% 5.76% 4.86% 5.96% 5.96%
5 YEARS 7.60% 7.37% 6.11% 6.60% 6.29% 6.64% 6.64%
SINCE INCEPTION 7.80% 7.47% 6.55% 7.69% 7.57% 7.19% 7.19%
</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
International Growth
Fund Portfolio Manager Commentary*
<TABLE>
<S> <C>
In the following interview, Mr. O'Neil shares his views on
Nations International Growth Fund's performance for the
12-month period ended March 31, 1999, and his outlook for
the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Brian O'Neil is Portfolio Manager The Fund's investment philosophy is based on the view that a
of Nations International Growth diversified portfolio of equity securities of established
Fund and is the Principal Senior non-United States issuers can provide long-term growth of
Investment Manager of the Global capital and income. The Fund will generally hold 50-80
Portfolio Team for Gartmore Global securities invested in approximately 10 sectors within 15-20
Partners, investment sub-adviser markets. The manager uses a "bottom-up" approach to
to the Fund. selecting securities, looking for companies with high
INVESTMENT OBJECTIVE quality and sustainable earnings, high growth potential over
The Fund seeks long-term capital a two-year investment horizon, quality management teams, the
growth by investing primarily in ability to finance growth internally and strong financial
equity securities of companies results. Throughout the investment process, the manager
domiciled in countries outside the balances the portfolio's emphasis on growth companies with a
United States and listed on major sensitivity to securities prices.
stock exchanges primarily in PLEASE COMMENT ON FUND PERFORMANCE FOR THE PERIOD.***
Europe and the Pacific Basin. Nations International Growth Fund (Investor A Shares)
PERFORMANCE REVIEW provided shareholders with a total return of 5.89%,
For the 12-month period ended substantially outperforming its peer group, the Lipper
March 31, 1999, Nations International Funds Universe, which returned 0.02%. For the
International Growth Fund Investor period, the Fund outperformed over 80% of its competitors
A Shares provided shareholders (558 funds in the Universe).
with a total return of 5.89%.** *The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**The performance shown includes the effect of fee waivers
by the investment adviser, which have the effect of
increasing total return and 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 International Funds
Universe invest their assets in securities with primary
trading markets outside of the United States.
Source for all statistical data -- Gartmore Global Partners.
INVESTMENTS IN INTERNATIONAL INVESTMENTS MAY INVOLVE SPECIAL
RISKS, INCLUDING FOREIGN TAXATION, CURRENCY RISKS, RISKS
ASSOCIATED WITH POSSIBLE DIFFERENCES IN FINANCIAL STANDARDS
AND OTHER MONETARY AND POLITICAL RISKS ASSOCIATED WITH
FUTURE POLITICAL AND ECONOMIC DEVELOPMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
19
<PAGE> 24
Nations
International Growth
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
WHAT WERE INTERNATIONAL ECONOMIC AND MARKET CONDITIONS LIKE
DURING THE REPORTING PERIOD?
The 12-month period ended March 31, 1999 was another
turbulent period for international equity markets. Returns
dipped to their lowest point in early October following the
Russian ruble crisis in August and the Long-Term Capital
Management debacle in September; but markets quickly
rebounded, reaching a new peak in early January, helped by
U.S.-led cuts in short-term interest rates, optimism over
the launch of the euro and improving sentiment in the
Pacific Rim.
The period began with Continental European equity markets in
the driver's seat as investors focused on upbeat merger and
acquisition activity and evidence of stronger growth. In
contrast, the U.K. was held back by evidence of slower
growth coupled with a surprise hike in interest rates, which
was blamed on accelerating wages. This trend reversed later
in the year as the U.K. began a series of interest rate
cuts -- between October and February, there were five
reductions resulting in the rate coming down from 7.5% to
5.5%. As sentiment grew more positive in the U.K., it became
less so on the Continent where earnings results continued to
disappoint and the political background grew less certain.
This resulted in a lackluster performance for Continental
European equities later in the period, while the U.K. market
was more buoyant.
In Japan and the rest of the Pacific region, investors
stayed on the sidelines early in the period as evidence of
recession mounted. As the year progressed, there was some
evidence of improvement in Japan. Banking reform made some
headway, corporate restructuring activity was more evident
and officials talked about more radical measures to
stimulate the economy. However, growth remained stubbornly
flat and the stock market maintained a generally southward
trend for the whole of the period in local currency terms.
In contrast, investor sentiment toward the rest of the
Pacific region improved during the period as light appeared
at the end of the economic tunnel in some of the 'crisis'
economies -- in particular, Korea and Thailand. Growth in
Hong Kong and Singapore continued to decline but their
troughs are expected to be reached sometime in the first
half of this year.
WHAT ARE SOME EXAMPLES OF STOCKS HELD BY THE FUND THAT
PERFORMED PARTICULARLY WELL?+
The Fund's bottom-up investment strategy emphasizes growth
stocks; some that performed strongly were telecommunications
firms
+Portfolio holdings are subject to change and may not be
representative of current holdings.
</TABLE>
20
<PAGE> 25
Nations
International Growth
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
such as Telstra Corporation Ltd., Securicor plc and the
engineering company, Mannesmann AG, which has diversified
into telecommunications. Results in the financial sector
were mixed, but Fund holdings such as Colonial Ltd., Bank of
Scotland and Bank of Ireland ord. turned in notable
outperformances. Select growth stocks such as WPP Group plc
(advertising), L'Oreal (cosmetics) and Wolters Kluwer CVA
(publishing) also advanced strongly.
WHAT IMPACT DID CURRENCY HAVE ON THE FUND'S PERFORMANCE?
The biggest currency related impact to Fund performance was
a strong yen which helped the Fund. However, the dramatic
weakening of the euro over the past few months has offset
much of the benefit the Fund derived from yen strength.
WHAT IS YOUR INTERNATIONAL ECONOMIC AND MARKET OUTLOOK FOR
THE YEAR AHEAD?
Earnings growth in Continental Europe should be about 5%
this year and flat to negative in the U.K. However, towards
the end of the year, we believe that earnings expectations
in the U.K. will begin to recover and our initial earnings
estimate for next year is 10%. In Japan, we expect very weak
economic growth and no significant rebound in corporate
profits. In the rest of the Pacific region, we expect
further evidence of a bottoming out during 1999, but believe
the prospects for renewed growth in 2000 are reasonably
strong.
We continue to believe that WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THIS
significant investment MARKET?
opportunities will be found in We continue to believe that significant investment
Continental Europe and the U.K. opportunities will be found in Continental Europe and the
over the coming 12 months. U.K. over the coming 12 months. While European markets
disappointed relative to the U.S. over the past year, they
are likely to be supported over the coming 12-month period
by several factors that will not necessarily pertain to the
U.S. These include reasonable prospects for a profits
recovery reflecting a growth rebound, neutral to favorable
valuations for bonds and stocks and the probability of more
interest rate cuts. Furthermore, merger and acquisition
activity and restructuring across many sectors such as
telecommunications, banking and insurance should support
prices as well as offer interesting investment
opportunities. In Japan, a recovery would require fast
economic growth and an end to deflation.
</TABLE>
21
<PAGE> 26
Nations
International Growth
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
HOW ARE YOU POSITIONING THE FUND TO TAKE ADVANTAGE OF THESE
ANTICIPATED DEVELOPMENTS?
We will continue to emphasize growth stocks, particularly in
Europe where we believe the background is most supportive of
equities. At a sector level, we are focusing on growth areas
such as telecommunications and technology. We will also
maintain the Fund's exposure to financials with strong
balance sheets and well-focused business development
strategies. Elsewhere, we may expand the Fund's list of
Japanese holdings where opportunities arise.
</TABLE>
22
<PAGE> 27
Nations
International Growth
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
-------------------------------------------
1 Telecom Italia Spa 3.6%
-------------------------------------------
2 Gas Natural SDG SA 3.4%
3.8% Sweden -------------------------------------------
6.4% Ireland 3 Bank of Scotland 3.2%
6.4% Australia -------------------------------------------
6.8% Netherlands 4 L'Oreal 3.1%
7.3% Spain -------------------------------------------
7.5% Germany 5 Matsushita Electric Industrial
10.9% France Company 2.8%
11.8% Japan -------------------------------------------
22.1% United Kingdom 6 Smithkline Beecham Ord. 2.8%
17.0% Other -------------------------------------------
7 Bank of Ireland Ord. 2.7%
-------------------------------------------
8 WPP Group plc 2.5%
-------------------------------------------
9 CRH plc 2.5%
-------------------------------------------
10 Mannesmann AG 2.5%
-------------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
23
<PAGE> 28
Nations
International Growth
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP* RETURN CHART]
<TABLE>
<CAPTION>
MSCI LIPPER|INTERNATIONAL|FUNDS
INTERNATIONAL|GROWTH|$21,039 EAFE|INDEX|$17,865 UNIVERSE|$22,857
---------------------------- ------------------ --------------------------
<S> <C> <C> <C>
Mar. 31|1989 9425 10000 10000
9766 10000 10000
9714 9389 9984
11186 10558 11307
'1989' 11592 11043 11795
10833 8865 11198
11964 9720 12111
9364 7666 9995
'1990' 9880 8481 10495
11192 9118 11269
10863 8628 10904
11325 9375 11703
'1991' 11047 9540 11908
11030 8415 11574
11533 8601 12089
10706 8740 11534
'1992' 10669 8410 11383
11444 9426 12364
11732 10382 12985
12624 11078 14123
'1993' 13710 11181 15457
13847 11579 15343
13829 12178 15507
14411 12198 15999
'1994' 13672 12082 15371
13513 12316 15139
14354 12416 15774
15248 12944 16542
'1995' 15548 13478 16883
16336 13879 17639
17145 14109 18283
17008 14102 18204
'1996' 17243 14338 18947
17313 14123 19167
19268 15967 21306
19025 15865 21600
'1997' 17566 14632 19945
19869 16796 22871
20395 16986 23040
17405 14582 19328
'1998' 21054 17608 22510
Mar. 31|1999 21039 17865 22857
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
<TABLE>
<CAPTION>
MSCI LIPPER|INTERNATIONAL|FUNDS
INTERNATIONAL|GROWTH|$22,322 EAFE|INDEX|$17,865 UNIVERSE|$22,857
---------------------------- ------------------ --------------------------
<S> <C> <C> <C>
Mar. 31|1989 10000 10000 10000
10362 10000 10000
10307 9389 9984
11869 10558 11307
'1989' 12299 11043 11795
11494 8865 11198
12694 9720 12111
9935 7666 9995
'1990' 10483 8481 10495
11875 9118 11269
11526 8628 10904
12016 9375 11703
'1991' 11721 9540 11908
11703 8415 11574
12236 8601 12089
11359 8740 11534
'1992' 11320 8410 11383
12142 9426 12364
12448 10382 12985
13394 11078 14123
'1993' 14546 11181 15457
14691 11579 15343
14672 12178 15507
15290 12198 15999
'1994' 14506 12082 15371
14337 12316 15139
15229 12416 15774
16178 12944 16542
'1995' 16497 13478 16883
17333 13879 17639
18191 14109 18283
18046 14102 18204
'1996' 18295 14338 18947
18370 14123 19167
20444 15967 21306
20186 15865 21600
'1997' 18638 14632 19945
21081 16796 22871
21640 16986 23040
18467 14582 19328
'1998' 22338 17608 22510
Mar. 31|1999 22322 17865 22857
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
10-Year NAV** MOP*
(3/31/89 through
3/31/99) 7.97% 7.33%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations
International Growth Fund
over the last 10 years. The
Morgan Stanley Capital
International Europe,
Australasia and Far East
(MSCI EAFE) Index is an
unmanaged,
capitalization-weighted
index that tracks stocks
traded on 20 exchanges in
Europe, Australia and the
Far East. Funds included in
the Lipper International
Funds Universe invest their
assets in securities with
primary trading markets
outside of the U.S. 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 7/26/93 1/2/68 1/2/68 7/1/96 7/1/96 9/19/97 9/19/97
- -------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 6.16% 5.89% -0.18% 5.11% 1.18% 5.56% 4.76%
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 9.04% 8.79% 6.67% -- -- -- --
5 YEARS 8.99% 8.72% 7.44% -- -- -- --
10 YEARS -- 7.97% 7.33% -- -- -- --
SINCE INCEPTION 10.85% 11.58% 11.37% 6.85% 6.01% 8.43% 8.43%
</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.
The performance shown includes the effect of fee waivers by the investment
adviser, which have the effect of increasing total return.
24
<PAGE> 29
Nations
Emerging Markets
Fund Portfolio Manager Commentary*
<TABLE>
<S> <C>
In the following interview, Mr. Ehrmann shares his views on
Nations Emerging Markets Fund's performance for the 12-month
period ended March 31, 1999, and his outlook for the future.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Philip Ehrmann is Principal
Portfolio Manager of Nations The Fund invests in growth opportunities in emerging market
Emerging Markets Fund and is the equities. We believe this is best accomplished by
Head of the Emerging Markets Team identifying companies whose rates of earnings growth will
for Gartmore Global Partners, exceed market expectations. Sources of unexpected growth may
investment sub-adviser to the include strong national or regional franchises, strategies,
Fund. management or the ability to finance business objectives.
The markets in which the Fund invests are generally those
INVESTMENT OBJECTIVE where economic and political conditions provide an
The Fund seeks long-term capital acceptable level of risk, and at a macro-economic level,
growth by investing primarily in will attract rising expectations of growth.
equity securities of companies in
emerging market countries, such as PLEASE COMMENT ON FUND PERFORMANCE FOR THE PERIOD.***
those in Latin America, Eastern
Europe, the Pacific Basin, the Far Nations Emerging Markets Fund Investor A Shares returned
East, Africa and India. -22.90%, outperforming its peer group, the Lipper Emerging
Markets Funds Universe which returned -23.45%.
PERFORMANCE REVIEW
For the 12-month period ended WHAT WERE ECONOMIC AND MARKET CONDITIONS IN EMERGING MARKETS
March 31, 1999, Nations Emerging LIKE DURING THE REPORTING PERIOD?
Markets Fund Investor A Shares
returned -22.90%.** Emerging markets had another difficult year over the 12
months ended March 31, 1999, but proved remarkably resilient
nevertheless. The period was highlighted by the Russian
ruble crisis in August which sent shock waves through equity
markets across the globe.
</TABLE>
*The outlook for this Fund may differ from that
presented for other Nations Funds mutual funds.
**The performance shown includes the effect of fee
waivers by the investment adviser, which
have the effect of increasing total return. The
performance shown does not reflect the maximum
front-end sales charge of 5.75% which may be charged
on 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
Emerging Markets Funds Universe seek long-term
capital appreciation by investing at least 65% of
their total assets in emerging market (defined by a
country's GNP per capita) equity securities.
Source for all statistical data -- Gartmore Global
Partners.
INVESTMENTS IN INTERNATIONAL INVESTMENTS MAY INVOLVE
SPECIAL RISKS, INCLUDING FOREIGN TAXATION, CURRENCY
RISKS, RISKS ASSOCIATED WITH POSSIBLE DIFFERENCES IN
FINANCIAL STANDARDS AND OTHER MONETARY AND POLITICAL
RISKS ASSOCIATED WITH FUTURE POLITICAL AND ECONOMIC
DEVELOPMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
25
<PAGE> 30
Nations
Emerging Markets
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
The markets of Latin America and emerging Europe were
particularly hard hit because of the attention drawn by the
Russian experience to the problem of risk elsewhere.
However, Asian markets withstood the worst effects of the
downdraft in one of the first signs that the region was
finally beginning to stabilize. Moreover, the effects of the
Russian debacle were not lasting, as Latin America and
emerging European markets registered gains from their low
points in the September-October period.
The many bright spots in emerging markets over the past year
demonstrated that a fiasco in one need not have a lasting
effect on the others. Thus, Mexico's equity market was
buoyant on the back of Gross Domestic Product (the market
value of the goods and services produced) growth and trade
with a strong U.S. economy. Brazil suffered in the build-up
to the devaluation of their currency, the real, in January,
but quickly bounced back as concerns about the currency and
slowing growth gave way to optimism over more promising
developments. These included progress on fiscal reform, a
new International Monetary Fund program, and a declaration
by the speculator George Soros that the Brazilian currency
was now grossly undervalued.
Elsewhere, Greece proved exceptionally strong, helped both
by the continuing theme of euro-convergence, booming
domestic corporate activity and global strength in
telecommunications, a sector well represented within the
Greek stock market. Within Asia, Hong Kong successfully
fought off currency speculators while Taiwan benefited from
a strong technology sector and Korean equities showed signs
of an early recovery. More generally encouraging in the
Asian emerging markets, particularly in Korea, were signs of
corporate restructuring and an improving macroeconomic
climate.
WHAT ARE SOME EXAMPLES OF STOCKS HELD BY THE FUND THAT
PERFORMED PARTICULARLY WELL?+
Among the Fund's best performing individual stocks were
National Bank of Greece SA, Alpha Credit Bank (Greece) and
OTE (Greek telecommunications). Also rising strongly were
Samsung Electronics Ltd. (Korea), SK Telecom Company Ltd.
(Korea) and Grupo Carso Global Telecom SA (Mexico).
+Portfolio holdings are subject to change and may not be
representative of current holdings.
</TABLE>
26
<PAGE> 31
Nations
Emerging Markets
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
We have become more optimistic on WHAT IS YOUR ECONOMIC AND MARKET OUTLOOK FOR THE EMERGING
prospects for the developing MARKETS IN THE YEAR AHEAD?
markets in the Pacific Rim, We have become more optimistic on prospects for the
particularly in Korea and Taiwan. developing markets in the Pacific Rim, particularly in Korea
and Taiwan. At a macroeconomic level, interest rates are
declining, inflation is starting to come down and currencies
appear to have stabilized. Furthermore, restructuring
activity, the resurgence of the technology sector and
renewed signs of foreign investment in low cost
manufacturing in the region are also promising signs. In
Latin America, the impact of tight monetary and fiscal
policies will tend to dampen growth in the region, but we
believe the worst is past. Brazil, the region's economic
engine, should move into a recovery stage later in the year.
The Mexican economy should continue to prosper on the back
of U.S. economic strength and improvements in oil prices.
Elsewhere, some emerging markets in Eastern Europe are well
placed to offer reasonable returns, given the continuing
likelihood of convergence with Western Europe. Greece will
continue to be a direct beneficiary of European Monetary
Union-related convergence. In South Africa, we will be
watching for signs of sustained improvement in the
macroeconomic environment and further restructuring
activity.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THIS
MARKET?
We believe that restructuring stories and sector plays such
as telecommunications and technology will offer interesting
investment opportunities in regions where growth prospects
appear to be recovering and sustainable.
HOW ARE YOU POSITIONING THE FUND TO TAKE ADVANTAGE OF THESE
ANTICIPATED DEVELOPMENTS?
We are placing greater emphasis on Asian markets than a year
ago, with particular emphasis on Korea and Taiwan. Within
these markets we will focus on technology stocks, using our
global sector analysts to identify sector trends and
companies most likely to benefit. Within Latin America,
initial emphasis will be placed on Mexico, although we will
be watching commodity prices closely to determine their
effect on other markets (such as oil rich Venezuela) and
make investment decisions accordingly. In addition, the
situation in Brazil will be closely monitored and further
emphasis placed on that market as conditions warrant. Within
emerging Europe, emphasis will continue to be placed on
Greece, Hungary and Poland.
</TABLE>
27
<PAGE> 32
Nations
Emerging Markets
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/99)
[PIE CHART]
<TABLE>
<C> <S> <C>
16.8% Other_______________________ TOP TEN HOLDINGS
3.6% Hungary________________________ -------------------------------------------
5.9% South Africa_____________________ 1 Grupo Carso Global Telecom SA,
7.9% South Korea________________________ ADR 4.4%
7.9% Taiwan_______________________________ -------------------------------------------
9.3% Greece_________________________________ 2 Samsung Electronics Ltd. 3.2%
9.8% Brazil___________________________ -------------------------------------------
10.1% Hong Kong_______________________ 3 HSBC Holdings plc 2.9%
13.5% Mexico______________ -------------------------------------------
15.2% United States________________ 4 Hutchison Whampoa Ltd. 2.7%
-------------------------------------------
5 Alpha Credit Bank 2.6%
-------------------------------------------
6 Taiwan Semiconductor SP, ADS 2.4%
-------------------------------------------
7 Siliconware Precision Company,
GDR 2.4%
-------------------------------------------
8 SK Telecom Company Ltd., ADR 2.3%
-------------------------------------------
9 Hellenic Telecommunication
Organization SA 2.2%
-------------------------------------------
10 LG Electronics, Inc. 2.0%
-------------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1999, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
28
<PAGE> 33
Nations
Emerging Markets
Fund Performance
GROWTH OF $10,000 INVESTMENT
[INVESTOR A SHARES AT MOP RETURN CHART]
<TABLE>
<CAPTION>
EMERGING|MARKETS|$7,828 IFC|INVESTABLES|INDEX|$7,949
----------------------- ----------------------------
<S> <C> <C>
June 30|1995 9425 10000
9302 9966
'1995' 9209 9874
9727 10620
10120 11074
9780 10825
'1996' 9992 10797
10870 11826
11901 12539
11545 11408
'1997' 9672 9201
10153 9855
8176 7764
6193 6079
'1998' 7180 7176
Mar. 31|1999 7828 7949
<CAPTION>
LIPPER|EMERGING|MARKETS|FUNDS|UNIVERSE|$8,665
---------------------------------------------
<S> <C>
June 30|1995 10000
10123
'1995' 9824
10617
11246
10936
'1996' 11099
12175
13468
13131
'1997' 10950
11540
9267
7089
'1998' 8035
Mar. 31|1999 8665
</TABLE>
[INVESTOR A SHARES AT NAV RETURN CHART]
<TABLE>
<CAPTION>
NATIONS|EMERGING|MARKETS|$8,306 IFC|INVESTABLES|INDEX|$7,949
------------------------------- ----------------------------
<S> <C> <C>
June 30|1995 10000 10000
9870 9966
'1995' 9770 9874
10320 10620
10737 11074
10377 10825
'1996' 10602 10797
11534 11826
12627 12539
12249 11408
'1997' 10263 9201
10773 9855
8675 7764
6571 6079
'1998' 7618 7176
Mar. 31|1999 8306 7949
<CAPTION>
LIPPER|EMERGING|MARKETS|FUNDS|UNIVERSE|$8,665
---------------------------------------------
<S> <C>
June 30|1995 10000
10123
'1995' 9824
10617
11246
10936
'1996' 11099
12175
13468
13131
'1997' 10950
11540
9267
7089
'1998' 8035
Mar. 31|1999 8665
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
Since
Inception NAV** MOP*
(6/30/95 through
3/3/99) -4.83% -6.32%
The charts to the left show
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Emerging
Markets Fund from the
inception of the shareclass.
The IFC Investables Index is
an unmanaged, capitalization
weighted index that tracks
more than 1,400 stocks in 25
emerging markets in Asia,
Latin America, Eastern
Europe, Africa and the
Middle East. Funds included
in the Lipper Emerging
Markets Funds Universe seek
long-term capital
appreciation by investing at
least 65% of their total
assets in emerging markets
(defined by a country's GNP
per capita) equity
securities. 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 6/30/95 6/30/95 6/30/95 6/30/95 6/30/95 6/30/95 6/30/95
- ---------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE -22.60% -22.90% -27.31% -23.42% -27.23% -23.37% -24.13%
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS -6.73% -6.99% -8.81% -7.65% -8.58% -7.48% -7.48%
SINCE INCEPTION -4.57% -4.83% -6.32% -5.52% -6.28% -5.35% -5.35%
</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.
29
<PAGE> 34
NATIONS FUNDS
Nations International Value Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 98.8%
ARGENTINA -- 2.7%
129,250 YPF SA, ADR................................ $ 4,080
--------
AUSTRIA -- 0.4%
24,860 EVN AG, ADR................................ 647
--------
BRAZIL -- 6.8%
165,000 Banco Bradesco SA, ADR..................... 890
271,050 Centrais Eletricas Brasileiras SA, ADR
(Electrobas)............................... 2,639
20,575 Centrais Geradoras do Sul do Brasil SA++... 83
179,400 Compania Cervejaria Brahma, ADR............ 1,671
8,800 Embratel Participacoes SA, ADR++........... 147
212,000 Petroleo Brasileiro SA..................... 2,953
880 Tele Celular Sul Participacoes SA, ADR..... 17
2,933 Tele Centro Oeste Celular Participacoes SA,
ADR........................................ 11
1,760 Tele Centro Sul Participacoes SA, ADR++.... 81
176 Tele Leste Celular Participacoes SA, ADR... 6
440 Tele Nordeste Celular Participacoes SA,
ADR........................................ 10
176 Tele Norte Celular Participacoes SA, ADR... 5
8,800 Tele Norte Leste Participacoes SA, ADR++... 135
18,000 Telebras, ADR Pfd. Block................... 1,451
440 Telemig Celular Participacoes SA, ADR++.... 12
3,520 Telesp Celular Participacoes SA, ADR....... 74
8,800 Telesp Participacoes SA, ADR............... 182
--------
10,367
--------
DENMARK -- 2.2%
31,410 Den Danske Bank, ADR....................... 3,300
--------
FRANCE -- 7.5%
153,000 Alcatel SA, ADR............................ 3,490
53,600 Elf Aquitaine, ADR......................... 3,608
36,000 Michelin "B"............................... 1,615
75,900 PSA Peugeot Citroen, ADR................... 2,729
--------
11,442
--------
GERMANY -- 5.7%
57,000 BASF AG.................................... 2,086
163,600 Deutsche Telekom AG........................ 6,666
--------
8,752
--------
HONG KONG -- 9.0%
999,000 Citic Pacific Ltd. ........................ 2,101
186,000 Hutchison Whampoa Ltd., ADR................ 7,320
950,500 Swire Pacific Ltd. "A", ADR................ 4,416
--------
13,837
--------
ITALY -- 6.1%
39,400 ENI Spa.................................... 2,487
65,610 Telecom Italia Spa......................... 6,847
--------
9,334
--------
JAPAN -- 19.5%
63,100 Canon, Inc. ............................... 1,507
109,000 Hitachi Ltd., ADR.......................... 7,930
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
JAPAN -- (CONTINUED)
304,000 Komatsu Ltd. .............................. $ 1,563
79,100 Kyocera Corporation, ADR................... 4,163
17,900 Matsushita Electric Industrial Company
Ltd., ADR................................. 3,461
1,213,000 Mitsubishi Heavy Industries Ltd. .......... 5,480
282,000 Nippon Oil Company Ltd. ................... 1,102
81,200 Tokio Marine & Fire Insurance Company Ltd.,
ADR........................................ 4,558
--------
29,764
--------
MEXICO -- 3.1%
73,525 Telefonos de Mexico, ADR................... 4,816
--------
NETHERLANDS -- 4.2%
75,280 ING Groep NV, ADR.......................... 4,136
55,790 Royal KPN NV, ADR.......................... 2,214
--------
6,350
--------
SINGAPORE -- 3.3%
136,430 Development Bank of Singapore Ltd.,
ADR....................................... 4,136
283,900 Jardine Matheson Holdings Ltd., ADR........ 857
--------
4,993
--------
SOUTH AFRICA -- 3.4%
212,000 De Beers Consolidated Mines Ltd., ADR...... 4,015
131,700 Iscor Ltd., ADR............................ 328
100,600 South African Breweries plc................ 872
--------
5,215
--------
SOUTH KOREA -- 1.6%
144,000 Korea Electric Power Corporation, ADR...... 1,827
36,900 Pohang Iron and Steel Company Ltd.,
ADR....................................... 660
--------
2,487
--------
SPAIN -- 0.7%
23,400 Corporacion Bancaria de Espana SA, ADR
(Argentina)................................ 1,129
--------
SWITZERLAND -- 2.1%
61,000 Allied Zurich plc++........................ 1,645
4,200 Swisscom AG++.............................. 1,640
--------
3,285
--------
UNITED KINGDOM -- 19.2%
91,000 BOC Group plc.............................. 1,269
75,200 British American Tobacco plc, ADR.......... 1,344
132,500 British Steel plc, ADR..................... 2,675
437,360 BTR Siebe ADR.............................. 3,894
166,140 Coats Viyella plc, ADR..................... 354
135,451 Diageo plc, ADR............................ 6,197
21,100 HSBC Holdings plc, ADR..................... 6,615
45,200 Imperial Chemical Industries plc, ADR...... 1,619
79,700 Marks & Spencer plc, ADR................... 3,123
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE> 35
NATIONS FUNDS
Nations International Value Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
184,000 Royal & Sun Alliance Insurance Group
plc....................................... $ 1,736
20,000 Tate & Lyle plc, ADR...................... 535
--------
29,361
--------
VENEZUELA -- 1.3%
113,200 Cia Anonima Nacional Telefonos de
Venezuela, ADR (CANTV)................... 2,059
--------
TOTAL COMMON STOCKS
(Cost $146,465).......................... 151,218
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
- ---------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 23.9%
(Cost $36,495)
36,495 Nations Cash Reserves#...................... 36,495
--------
TOTAL INVESTMENTS
(Cost $182,960*)..................... 122.7% 187,713
--------
OTHER ASSETS AND LIABILITIES (NET)... (22.7)%
Cash........................................ $ 1
Receivable for Fund shares sold............. 262
Dividends receivable........................ 733
Interest receivable......................... 28
Prepaid expenses and other assets........... 161
Collateral on securities loaned............. (34,212)
Payable for Fund shares redeemed............ (1,496)
Investment advisory fee payable............. (143)
Administration fee payable.................. (23)
Shareholder servicing and distribution fees
payable.................................... (16)
Accrued Directors' fees and expenses........ (8)
Accrued expenses and other liabilities...... (16)
--------
TOTAL OTHER ASSETS AND LIABILITIES (NET).... (34,729)
--------
NET ASSETS........................... 100.0% $152,984
========
NET ASSETS CONSIST OF:
Undistributed net investment income......... $ 286
Accumulated net realized gain on investments
sold, foreign currencies and net other
assets..................................... 2,327
Net unrealized appreciation of investments,
foreign currencies and net other assets.... 4,753
Paid-in capital............................. 145,618
--------
NET ASSETS.................................. $152,984
========
</TABLE>
<TABLE>
<CAPTION>
VALUE
(000)
- --------------------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($142,546,371/9,864,761
shares outstanding)........................
$14.45
========
INVESTOR A SHARES:
Net asset value and redemption price per
share ($5,959,871/412,905 shares
outstanding)...............................
$14.43
========
Maximum sales charge........................ 5.75%
Maximum offering price per share............ $15.31
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($4,295,572/298,391 shares
outstanding)...............................
$14.40
========
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($181,813/12,614 shares
outstanding)...............................
$14.41
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $17,169 and gross
depreciation of $12,416 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$182,960.
++ 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.
Represents cash collateral received from securities lending activity (Note
8).
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE> 36
NATIONS FUNDS
Nations International Value Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
At March 31, 1999, sector diversification was as follows (unaudited):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (000)
- ----------------------------------------------------------------------------------
<S> <C> <C>
Telecommunications.......................................... 18.0% $27,502
Banking..................................................... 10.5 16,070
Oil and Gas................................................. 8.6 13,128
Electronics................................................. 6.7 10,263
Beverages................................................... 5.7 8,740
Insurance................................................... 5.2 7,939
Electrical Equipment........................................ 5.2 7,930
Investment Companies/Trusts................................. 4.8 7,320
Miscellaneous............................................... 4.3 6,517
Aerospace and Defense....................................... 3.6 5,480
Financial Services.......................................... 2.7 4,136
Mining...................................................... 2.6 4,015
Manufacturing............................................... 2.5 3,894
Retail -- Department Stores................................. 2.0 3,123
Steel....................................................... 2.0 3,003
Chemicals -- Basic.......................................... 1.9 2,888
Automobiles................................................. 1.8 2,729
Commercial Services......................................... 1.4 2,214
Chemicals -- Diversified.................................... 1.4 2,086
Utilities -- Electric....................................... 1.2 1,910
Other....................................................... 6.7 10,331
----- --------
TOTAL COMMON STOCKS......................................... 98.8 151,218
INVESTMENT COMPANIES........................................ 23.9 36,495
----- --------
TOTAL INVESTMENTS........................................... 122.7% 187,713
OTHER ASSETS AND LIABILITIES (NET).......................... (22.7) (34,729)
----- --------
NET ASSETS.................................................. 100.0% $152,984
===== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE> 37
NATIONS FUNDS
Nations International Equity Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 95.4%
ARGENTINA -- 0.4%
357,000 Perez Companc, ADR...................... $ 3,347
--------
AUSTRALIA -- 2.7%
67,791 AMP Ltd. ............................... 739
188,000 Broken Hill Proprietary Company
Ltd.++................................. 1,597
960,000 Cable and Wireless Optus Ltd.++......... 2,225
123,000 Commonwealth Bank of Australia.......... 2,011
670,000 Foster's Brewing Group ord.++........... 1,964
200,000 National Australia Bank Ltd. ord........ 3,618
499,887 News Corporation Ltd. .................. 3,684
138,000 Telstra Corporation Ltd. ............... 719
46,700 Telstra Corporation Ltd. Rep 20 Ord.
NPV.................................... 4,927
--------
21,484
--------
BELGIUM -- 1.0%
140,000 Global Telesystems Group Inc.++......... 7,831
--------
BRAZIL -- 1.9%
158,400 Cemig CIA Energ, ADR.................... 3,524
162,000 Companhia Vale do Rio Doce, ADR......... 2,349
132,000 Embratel Participacoes SA, ADR++........ 2,203
46,000 Tele Centro Sul Participacoes SA,
ADR++.................................. 2,125
167,000 Tele Norte Leste Participacoes SA,
ADR++.................................. 2,568
95,000 Telesp Participacoes SA, ADR............ 1,959
--------
14,728
--------
CANADA -- 0.9%
47,200 Magna International Inc., Class A, Sub
Voting Com NPV......................... 2,714
72,000 Northern Telecom Ltd. Com NPV........... 4,474
--------
7,188
--------
CHILE -- 0.4%
50,000 Cia Telecomunicaciones de Chile SA,
ADR.................................... 1,178
85,000 Enersis SA, ADR......................... 2,279
--------
3,457
--------
DENMARK -- 0.5%
36,000 Tele Danmark A/S........................ 3,566
--------
FINLAND -- 1.8%
88,000 Nokia AB "A"............................ 14,164
--------
FRANCE -- 9.6%
35,000 AXA..................................... 4,640
20,000 Bouygues (Bouy.Pa)...................... 5,549
25,000 Cap Gemini SA........................... 4,186
41,000 Castorama Dubois Investisse............. 8,587
36,000 Compagnie De Saint-Gobain............... 5,713
35,000 Elf Aquitaine "A"....................... 4,753
90,000 Rhone Poulenc SA........................ 4,071
26,000 Sanofi SA............................... 4,379
65,000 Societe Generale........................ 12,491
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
<C> <S> <C>
VALUE
SHARES (000)
FRANCE -- (CONTINUED)
60,000 Suez Lyonnaise des Eaux-Dumez........... $ 11,102
39,000 Vivendi................................. 9,595
--------
75,066
--------
GERMANY -- 5.7%
30,000 Allianz AG NPV.......................... 9,133
6,000 Bayer Motoren Werk AG................... 3,932
60,000 Bayerische Hypo Vereinsbank AG NPV...... 3,588
69,685 Daimler Chrysler AG..................... 6,063
130,000 Deutsche Telekom AG..................... 5,298
110,000 Fresenius Medical Care.................. 6,650
80,000 Mannesmann AG........................... 10,217
--------
44,881
--------
GREECE -- 0.7%
220,005 Hellenic Telecommunication Organization
SA..................................... 5,335
--------
HONG KONG -- 2.8%
373,000 Cheung Kong Holdings Ltd. .............. 2,839
640,000 China Telecom++......................... 1,065
410,000 CLP Holdings Ltd. ...................... 1,968
149,000 Hang Seng Bank Ltd. .................... 1,370
1,218,000 Hong Kong Telecommunications............ 2,405
131,000 HSBC Holdings plc....................... 4,108
638,000 Hutchison Whampoa Ltd. ................. 5,022
344,000 Sun Hung Kai Properties................. 2,575
209,000 Swire Pacific, Class A.................. 971
--------
22,323
--------
HUNGARY -- 0.1%
28,600 Magyar Olaj-es Gazidari-SP GDS Ord.
"A".................................... 611
--------
IRELAND -- 2.2%
450,001 Bank of Ireland Ord..................... 9,425
110,000 Elan Corporation plc ADR++.............. 7,673
--------
17,098
--------
ITALY -- 3.9%
400,000 ENI Spa................................. 2,548
800,000 Telecom Italia Mobile................... 5,381
1,400,000 Telecom Italia Spa...................... 14,873
1,400,000 Unicredito Italiano..................... 7,557
--------
30,359
--------
JAPAN -- 14.3%
931,000 Asahi Chemical Industry Co. Ltd. ....... 5,447
202,000 Bridgestone Corporation................. 5,151
422,000 Dai-Ichi Kangyo Bank, Ltd. ............. 2,815
815,000 Daiwa Securities........................ 4,370
193,000 Fujitsi Ltd. ........................... 3,100
102,000 Honda Motor Company..................... 4,608
68,000 Ito-Yokado Company Ltd. ................ 4,375
96 Japan Telecom Company Ltd. ............. 1,378
1,223,000 Mitsui O.S.K. Lines, Ltd. .............. 2,520
88,000 Namco Ltd. ............................. 2,318
35,400 Nichiei Company Ltd, (Kyoto)............ 3,171
18,300 Nidec Corporation....................... 2,256
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE> 38
NATIONS FUNDS
Nations International Equity Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
888 Nippon Telegraph & Telephone............ $ 8,698
50,000 Rohm Company............................ 5,974
76,000 Secom Company Ltd. ..................... 7,200
187,000 Sharp Corporation....................... 1,974
40,700 Sony Corporation........................ 3,763
76,300 Sony Music Entertainment Inc. .......... 5,766
188,000 Taiyo Yuden Company, Ltd. .............. 2,437
841,000 The Asahi Bank Ltd. .................... 4,438
460,000 The Bank of Tokyo - Mitsubishi.......... 6,339
415,000 Tokyo Broadcasting System Inc. ......... 5,274
122,100 Tokyo Electric Power.................... 2,629
156,000 Toyota Motor Corporation................ 4,518
16,000 Trend Micro Inc.++...................... 1,837
1,276,000 Ube Industries, Ltd. ................... 2,457
62,500 World Company, Ltd. .................... 3,351
136,000 Yamanouchi Pharmaceutical............... 4,306
--------
112,470
--------
MEXICO -- 2.3%
187,999 Cifra SA, ADR++......................... 2,937
551,000 Grupo Carso Global Telecom SA, ADR...... 5,717
496,000 Grupo Carso SA de C.V., ADR............. 4,092
85,000 Grupo Televisa SA GDR++................. 2,667
172,500 Panamerican Beverages, Inc. ............ 3,030
--------
18,443
--------
NETHERLANDS -- 4.9%
60,000 Aegon NV................................ 5,477
280,000 Ahold NV................................ 10,731
75,000 Benckiser NV............................ 4,206
120,000 Heineken NV............................. 6,049
125,000 Internationale Nederlanden Groep NV..... 6,889
120,000 Koninklijke Kpn......................... 4,774
--------
38,126
--------
NEW ZEALAND -- 0.2%
448,000 Lion Nathan Ltd. ....................... 1,123
160,000 Telecom Corporation of New Zealand
Ltd. .................................. 778
--------
1,901
--------
PHILIPPINES -- 0.1%
550,300 Ayala Corporation, Class B.............. 167
36,000 Philippine Long Distance Telephone
Company................................ 948
--------
1,115
--------
PORTUGAL -- 2.2%
290,000 Banco Commercial Portugues++............ 8,766
420,000 Electricidade De Portugal, SA........... 8,289
--------
17,055
--------
SINGAPORE -- 1.0%
289,000 Keppel Corporation Ltd. ................ 779
468,000 Overseas Union Bank..................... 1,652
600,000 Sembcorp Industries Ltd.++.............. 656
147,000 Singapore Press Holdings Ltd. .......... 1,624
1,080,000 Singapore Technologies Engineering
Ltd. .................................. 975
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
<C> <S> <C>
VALUE
SHARES (000)
SINGAPORE -- (CONTINUED)
588,000 Singapore Telecommunications............ $ 837
180,000 United Overseas Bank-Foreign............ 1,125
--------
7,648
--------
SOUTH AFRICA -- 0.1%
482,000 Sanlam Ltd.++........................... 416
--------
SOUTH KOREA -- 1.0%
78,000 Housing and Commercial Bank Korea....... 1,557
60,000 Korea Telecom Corporation++............. 2,034
21,000 Samsung Electronics Ltd. ............... 1,626
98,000 Shinhan Bank............................ 795
167,000 SK Telecom Company Ltd., ADR............ 2,035
--------
8,047
--------
SPAIN -- 2.7%
290,000 Banco Bilbao Vizacayo................... 4,320
140,000 Endessa SA.............................. 3,534
144,600 Telefonica SA........................... 6,133
490,000 Union Electrica Fenosa SA............... 7,316
--------
21,303
--------
SWEDEN -- 2.5%
170,000 Astra AB "A"............................ 3,897
250,000 Atlas Copco AB, Series "B".............. 6,628
160,000 Ericsson (L.M.) Telephone Company, Class
B...................................... 3,892
210,000 Foreningssparbank "A"................... 4,942
--------
19,359
--------
SWITZERLAND -- 6.5%
50,000 Credit Suisse Group..................... 9,324
8,100 Novartis AG............................. 13,140
900 Roche Holding AG........................ 10,976
35,000 UBS AG.................................. 10,996
10,000 Zurich Allied AG........................ 6,398
--------
50,834
--------
TAIWAN -- 0.3%
67,000 Advanced Semiconductor Engineering,
GDR++.................................. 913
544,000 Siliconware Precision Industries
Company++.............................. 1,108
--------
2,021
--------
THAILAND -- 0.2%
138,000 Advanced Info Service++................. 999
3,199,000 National Finance Public Company
Ltd.++................................. 937
--------
1,936
--------
UNITED KINGDOM -- 22.5%
240,000 Abbey National plc...................... 4,986
220,000 Barclays plc............................ 6,396
705,700 BP Amoco plc............................ 12,029
670,000 British Aerospace plc................... 4,477
500,000 British Energy plc...................... 4,786
685,000 British Telecommunications.............. 11,179
260,000 Colt Telecom Group plc++................ 4,583
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE> 39
NATIONS FUNDS
Nations International Equity Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
530,000 Compass Group........................... $ 6,134
260,000 EMAP plc................................ 5,108
670,000 GKN plc................................. 10,188
460,000 Glaxo Wellcome plc...................... 15,392
400,000 Granada Group plc....................... 8,103
800,000 J Sainsbury plc......................... 4,939
720,000 Kingfisher plc.......................... 9,077
400,000 Legal & General Group plc............... 4,710
760,000 Lloyds TSB Group plc.................... 11,495
420,000 Orange Ord.++........................... 5,905
700,000 Shell Transport and Trading Company
Ord.................................... 4,709
720,000 Smithkline Beecham Ord. ................ 10,385
950,000 Telewest Communications plc++........... 4,140
1,600,000 Tesco plc............................... 4,281
1,330,000 Unilever plc ord. ...................... 12,355
653,165 Vodafone Group plc ord. ................ 12,136
--------
177,493
--------
TOTAL COMMON STOCKS
(Cost $653,019)........................ 749,605
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
- -----------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 17.3%
135,717 Nations Cash Reserves #................... 135,717
--------
TOTAL INVESTMENT COMPANIES
(Cost $135,717).......................... 135,717
--------
TOTAL INVESTMENTS
(Cost $788,736*).................. 112.7% 885,322
--------
OTHER ASSETS AND LIABILITIES
(NET)............................. (12.7)%
Cash...................................... $ 33,253
Receivable for investment securities
sold..................................... 41,686
Receivable for Fund shares sold........... 458
Dividends receivable...................... 2,050
Interest receivable....................... 13
Prepaid expenses and other assets......... 268
Collateral on securities loaned........... (135,717)
Payable for investment securities
purchased................................ (35,561)
Payable for Fund shares redeemed.......... (5,004)
Investment advisory fee payable........... (595)
Administration fee payable................ (122)
Shareholder servicing and distribution
fees payable............................. (51)
Accrued Directors' fees and expenses...... (55)
Accrued expenses and other liabilities.... (209)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)........................ (99,586)
--------
NET ASSETS......................... 100.0% $785,736
========
</TABLE>
<TABLE>
<CAPTION>
VALUE
(000)
- --------------------------------------------------------------------
<C> <S> <C> <C>
NET ASSETS CONSIST OF:
Distributions in excess of net investment
income................................... $ (847)
Accumulated net realized gain on
investments sold, forward foreign
currency contracts, foreign currencies
and net other assets..................... 45,360
Net unrealized appreciation of
investments, forward foreign currency
contracts, foreign currencies and net
other assets............................. 96,491
Paid-in capital........................... 644,732
--------
NET ASSETS................................ $785,736
========
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($743,860,566/52,688,781
shares outstanding)......................
$14.12
========
INVESTOR A SHARES:
Net asset value and redemption price per
share ($12,785,145/915,428 shares
outstanding).............................
$13.97
========
Maximum sales charge...................... 5.75%
Maximum offering price per share.......... $14.82
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($28,265,832/2,056,120 shares
outstanding).............................
$13.75
========
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($824,128/60,940 shares
outstanding).............................
$13.52
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $121,040 and gross
depreciation of $27,466 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$791,748.
++ 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.
Represents cash collateral received from securities lending activity (Note
8).
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE> 40
NATIONS FUNDS
Nations International Equity Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
At March 31, 1999, sector diversification was as follows (unaudited):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (000)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
Telecommunications.......................................... 16.1% $126,353
Banking..................................................... 14.1 110,826
Drugs....................................................... 8.9 70,148
Utilities -- Electric....................................... 4.4 34,325
Financial Services.......................................... 3.7 29,071
Oil and Gas................................................. 3.6 27,997
Manufacturing............................................... 3.0 23,822
Insurance................................................... 2.8 21,964
Automobiles and Trucks...................................... 2.4 19,121
Electronics................................................. 2.2 17,585
Machinery & Engineering..................................... 2.1 16,845
Media....................................................... 2.1 16,733
Food Processing............................................. 1.9 15,012
Utilities -- Telephone...................................... 1.8 14,053
Automobile Parts Manufacturers.............................. 1.6 12,902
Food Producers.............................................. 1.6 12,355
Environmental............................................... 1.4 11,102
Beverages................................................... 1.4 11,043
Utilities -- Water.......................................... 1.2 9,595
Other....................................................... 19.1 148,753
----- --------
TOTAL COMMON STOCKS......................................... 95.4 749,605
INVESTMENT COMPANIES........................................ 17.3 135,717
----- --------
TOTAL INVESTMENTS........................................... 112.7 885,322
OTHER ASSETS AND LIABILITIES (NET).......................... (12.7) (99,586)
----- --------
NET ASSETS.................................................. 100.0% $785,736
===== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE> 41
NATIONS FUNDS
Nations International Growth Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 94.4%
AUSTRALIA -- 6.4%
150,000 AMP Ltd.................................. $ 1,636
250,000 Australia and New Zealand Banking Group
Ltd..................................... 1,808
500,000 Cable and Wireless Optus Ltd.++.......... 1,159
600,000 Colonial Ltd............................. 2,376
400,000 News Corporation Ltd..................... 2,948
350,000 Southern Pacific Petroleum NV++.......... 686
25,000 Telstra Corporation Ltd. Rep 20 Ord.
NPV..................................... 2,638
--------
13,251
--------
BRAZIL -- 1.2%
161,000 Tele Norte Leste Participacoes SA,
ADR++................................... 2,475
--------
FRANCE -- 10.7%
20,000 Accor SA................................. 4,966
20,000 Equant NV++.............................. 1,520
10,000 L'Oreal.................................. 6,326
8,000 Promodes................................. 4,888
20,000 Synthelabo............................... 4,351
--------
22,051
--------
GERMANY -- 7.5%
5,000 Bayer Motoren Werk AG.................... 3,276
40,000 Deutsch Pfandbrief-Und Hypothekenbank AG,
'Depfa'................................. 3,539
50,000 Henkel Kgaa-Vorzug Hen................... 3,671
40,000 Mannesmann AG............................ 5,109
--------
15,595
--------
IRELAND -- 6.4%
267,610 Bank of Ireland Ord...................... 5,605
300,000 CRH plc.................................. 5,179
33,500 Elan Corporation plc ADR++............... 2,337
--------
13,121
--------
ITALY -- 3.6%
700,000 Telecom Italia Spa....................... 7,436
--------
JAPAN -- 11.8%
50,000 Fujitsu Support and Service, Inc......... 4,898
50,000 Ito-Yokado Company Ltd................... 3,217
200,000 Kao Corporation.......................... 4,416
300,000 Matsushita Electric Industrial Company... 5,852
250,000 Sharp Corporation........................ 2,639
250,000 Toppan Printing Company.................. 3,274
--------
24,296
--------
MEXICO -- 1.4%
100,000 Cifra SA, ADR++.......................... 1,563
75,000 Panamerican Beverages, Inc............... 1,317
--------
2,880
--------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
NETHERLANDS -- 6.8%
60,000 Getronics NV............................. $ 2,215
80,000 Internationale Nederlanden Groep NV...... 4,409
100,000 Koninklijke Numic NV..................... 3,832
20,000 Wolters Kluwer CVA....................... 3,627
--------
14,083
--------
PORTUGAL -- 1.5%
70,000 Portugal Telecom......................... 3,135
--------
SOUTH AFRICA -- 0.7%
1,784,000 Sanlam Ltd.++............................ 1,540
--------
SPAIN -- 7.3%
150,000 Endessa SA............................... 3,786
75,000 Gas Natural SDG SA....................... 6,923
85,000 Repsol Petroleo SA....................... 4,377
--------
15,086
--------
SWEDEN -- 3.8%
160,000 Atlas Copco AB, Series "A"............... 4,339
42,000 Atlas Copco AB, Series "B"............... 1,113
100,000 Ericsson (L.M.) Telephone Company, Class
B....................................... 2,432
--------
7,884
--------
SWITZERLAND -- 3.2%
1,000 Nestle SA................................ 1,817
3,000 Novartis AG.............................. 4,867
--------
6,684
--------
UNITED KINGDOM -- 22.1%
500,000 Amvescap plc............................. 5,056
1,500,000 Azlan Group plc++........................ 1,743
500,000 Bank of Scotland......................... 6,641
35,000 EIDOS Plc................................ 1,150
200,000 Granada Group plc........................ 4,052
200,000 Hyder plc................................ 2,525
500,000 Securicor plc............................ 4,403
700,000 Shell Transport and Trading Company
Ord..................................... 4,709
400,000 Smithkline Beecham Ord................... 5,768
300,000 Standard Chartered Bank plc.............. 4,240
600,000 WPP Group plc............................ 5,201
--------
45,488
--------
TOTAL COMMON STOCKS
(Cost $127,526)......................... 195,005
--------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
---------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 0.2%
(Cost $349)
FRANCE -- 0.2%
$ 366 Promodes
3.500% 07/24/03......................... 393
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE> 42
NATIONS FUNDS
Nations International Growth Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
(000) (000)
- -------------------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 17.8%
(Cost $36,852)
36,852 Nations Cash Reserves#..................... $ 36,852
--------
TOTAL INVESTMENTS
(Cost $164,727*)................... 112.4% 232,250
--------
OTHER ASSETS AND
LIABILITIES (NET).................. (12.4)%
Cash....................................... $ 9,735
Receivable for investment securities
sold...................................... 1,145
Receivable for Fund shares sold............ 13
Dividends receivable....................... 782
Interest receivable........................ 10
Prepaid expenses and other assets.......... 234
Collateral on securities loaned............ (36,852)
Payable for Fund shares redeemed........... (396)
Investment advisory fee payable............ (231)
Administration fee payable................. (32)
Shareholder servicing and distribution fees
payable................................... (8)
Accrued Directors' fees and expenses....... (8)
Accrued expenses and other liabilities..... (36)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)......................... (25,644)
--------
NET ASSETS.......................... 100.0% $206,606
========
NET ASSETS CONSIST OF:
Distributions in excess of net investment
income.................................... $ (1,515)
Accumulated net realized gain on
investments sold, forward foreign exchange
contracts, foreign currencies and net
other assets.............................. 24,426
Net unrealized appreciation of investments,
forward foreign exchange contracts,
foreign currencies and net other assets... 67,509
Paid-in capital............................ 116,186
--------
NET ASSETS................................. $206,606
========
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
VALUE
(000)
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and redemption
price per share ($182,315,773/11,737,144
shares outstanding)....................... $15.53
========
INVESTOR A SHARES:
Net asset value and redemption price per
share ($22,873,778/1,498,972 shares
outstanding).............................. $15.26
========
5.75%
Maximum sales charge.......................
$16.19
Maximum offering price per share...........
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($957,073/63,745 shares
outstanding).............................. $15.01
========
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($459,093/29,744 shares
outstanding).............................. $15.43
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $72,484 and gross
depreciation of $4,961 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was
$164,727.
++ 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.
Represents cash collateral received from securities lending activity (Note
8).
SEE NOTES TO FINANCIAL STATEMENTS.
38
<PAGE> 43
NATIONS FUNDS
Nations International Growth Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
At March 31, 1999, sector diversification was as follows (unaudited):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (000)
- ----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
Banking..................................................... 11.8% $ 24,434
Telecommunications.......................................... 8.9 18,363
Drugs....................................................... 8.4 17,323
Financial Services.......................................... 5.2 10,780
Cosmetics and Toiletries.................................... 5.2 10,742
Machinery & Engineering..................................... 5.1 10,561
Oil and Gas................................................. 4.7 9,772
Computer Services........................................... 3.4 7,113
Energy...................................................... 3.4 6,923
Printing and Publishing..................................... 3.3 6,901
Electrical Equipment........................................ 2.8 5,852
Advertising and Marketing Services.......................... 2.5 5,201
Building Materials.......................................... 2.5 5,179
Lodging..................................................... 2.4 4,966
Retail -- Specialty......................................... 2.4 4,888
Distribution and Wholesale.................................. 2.1 4,403
Leisure and Recreation Products............................. 2.0 4,052
Food Producers.............................................. 1.9 3,832
Utilities -- Electric....................................... 1.8 3,786
Chemicals -- Basic.......................................... 1.8 3,671
Other....................................................... 12.8 26,263
----- --------
TOTAL COMMON STOCKS......................................... 94.4 195,005
INVESTMENT COMPANIES........................................ 17.8 36,852
CORPORATE BONDS AND NOTES................................... 0.2 393
----- --------
TOTAL INVESTMENTS........................................... 112.4 232,250
OTHER ASSETS AND LIABILITIES (NET).......................... (12.4) (25,644)
----- --------
NET ASSETS.................................................. 100.0% $206,606
===== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE> 44
NATIONS FUNDS
Nations Emerging Markets Fund
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 87.1%
ARGENTINA -- 3.4%
17,990 Banco de Galicia, ADR.................... $ 289
44,000 Perez Companc, ADR....................... 413
4,000 Telefonica de Argentina S.A.............. 121
--------
823
--------
BRAZIL -- 9.8%
30,000,000 Banco Bradesco Preferred................. 162
14,000 Cemig CIA Energ, ADR..................... 312
540,000 Cia Cervejaria Brahma Pref NPV........... 253
12,700 Companhia Brasileira de Distribuicao
Grupo Pao de Acucar, ADR................ 186
7,000 Compania Cervejaria Brahma, ADR.......... 65
19,500 Embratel Participacoes SA, ADR++......... 325
1,150,000 Petrol Brasileiros SA Preferred NPV...... 160
9,000 Petroleo Brasileiro SA................... 125
5,000 Tele Centro Sul Participacoes SA,
ADR++................................... 231
21,200 Tele Norte Leste Participacoes SA,
ADR++................................... 326
11,000 Telesp Participacoes SA, ADR............. 227
--------
2,372
--------
CHILE -- 2.8%
11,000 Cia Telecomunicaciones de Chile SA,
ADR..................................... 259
15,500 Enersis SA, ADR.......................... 415
--------
674
--------
EGYPT -- 0.9%
13,600 Suez Cement Company, GDR................. 218
--------
GREECE -- 9.3%
9,500 Alpha Credit Bank........................ 630
7,700 Antenna TV S.A.++........................ 100
1,900 Commercial Bank of Greece................ 296
610 EFG Eurobank............................. 17
5,000 Hellenic Bottling Company SA............. 148
22,220 Hellenic Telecommunication Organization
SA...................................... 538
25,500 National Bank of Greece SA, GDR++........ 344
6,500 Stet Hellas Telecommunication SA,
ADR++................................... 193
--------
2,266
--------
HONG KONG -- 10.1%
90,000 China Telecom++.......................... 150
130,800 Hong Kong Telecommunications............. 258
22,200 HSBC Holdings plc........................ 695
85,000 Hutchison Whampoa Ltd.................... 668
61,000 Sun Hung Kai Properties.................. 456
80,000 VTech Holdings Ltd....................... 231
--------
2,458
--------
HUNGARY -- 3.6%
6,000 Demasz Rt., GDR.......................... 93
10,000 Demasz, GDS.............................. 141
10,000 Magyar Olaj-es Gazidari-SP GDS Ord.
"A"..................................... 214
11,500 Matav, ADR............................... 308
6,000 Mol Magyar Olaj-Es Gz-Spnsd GDS.......... 123
--------
879
--------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
VALUE
SHARES (000)
<C> <S> <C>
INDIA -- 2.6%
50,000 Reliance Industries Ltd., GDS............ $ 316
33,000 Videsh Sanchar Nigam Ltd., GDR........... 328
--------
644
--------
ISRAEL -- 1.4%
140,000 Bank Hapoalim Ltd........................ 329
--------
MALAYSIA -- 3.2%
185,000 Berjaya Sports Toto Berhad............... 232
200,000 Malaysian International Shipping (Fgn)
Berhad.................................. 255
150,000 Telekom Malaysia Berhad.................. 302
--------
789
--------
MEXICO -- 13.5%
23,000 Cifra SA, ADR++.......................... 359
9,000 Consorcio Ara SA, ADR++***............... 269
103,000 Grupo Carso Global Telecom SA, ADR....... 1,069
58,000 Grupo Carso SA de C.V., ADR.............. 479
13,500 Grupo Imsa SA de C.V., ADR............... 213
75,720 Grupo Industrial Bimbo SA de CV.......... 169
100,000 Grupo Modelo SA de C.V................... 254
5,500 Grupo Televisa SA GDR++.................. 173
17,500 Panamerican Beverages, Inc............... 308
--------
3,293
--------
PHILIPPINES -- 1.3%
170,000 Ayala Corporation, Class B............... 52
354,000 Ayala Land Inc., Class B................. 103
2,800 Philippine Long Distance Telephone
Company................................. 74
480,000 SM Prime Holding Inc..................... 99
--------
328
--------
POLAND -- 1.7%
18,000 Bank Handlowy W. Warszawie Ord. ......... 212
40,000 Telekomunikacja Polska S.A. ............. 211
--------
423
--------
PORTUGAL -- 1.1%
9,500 Companhia De Seguros Mundial
Confianca, SA++......................... 271
--------
SOUTH AFRICA -- 5.9%
65,000 Amalgamated Banks of South Africa........ 310
44,000 Amalgamated Beverage Industries Ltd. .... 277
21,000 Liberty Life Association of Africa
Ltd. ................................... 259
9,000 Nedcor Ltd. GDR++........................ 198
37,500 Rembrandt Group Ltd...................... 269
150,000 Sanlam Ltd.++............................ 130
--------
1,443
--------
SOUTH KOREA -- 7.9%
37,291 LG Electronics Inc....................... 495
4,700 Pohang Iron and Steel Company Ltd.,
ADR..................................... 84
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE> 45
NATIONS FUNDS
Nations Emerging Markets Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SOUTH KOREA -- (CONTINUED)
10,020 Samsung Electronics Ltd. ................ $ 776
46,000 SK Telecom Company Ltd., ADR............. 560
--------
1,915
--------
TAIWAN -- 5.9%
26,000 Asustek Computer Inc., GDR++............. 238
44,840 Siliconware Precision Company, GDR++..... 590
25,150 Taiwan Semiconductor SP, ADS++........... 594
--------
1,422
--------
THAILAND -- 2.2%
27,000 Advanced Info Service++.................. 196
1,117,000 National Finance Public Company Ltd.++... 327
--------
523
--------
TURKEY -- 0.5%
5,000,000 Haci Omer Sabanci Holding................ 121
--------
TOTAL COMMON STOCKS
(Cost $22,624).......................... 21,191
--------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
---------
<C> <S> <C>
CONVERTIBLE BONDS AND NOTES -- 1.0%
(Cost $283)
POLAND -- 1.0%
$ 205 Elektrim SA
2.000% 05/30/04++....................... 243
--------
U.S. TREASURY OBLIGATIONS -- 5.4%
(Cost $1,305)
UNITED STATES -- 5.4%
1,320 U.S. Treasury Bills
4.380%** 06/17/99....................... 1,308
--------
SHARES
---------
WARRANTS -- 0.3%
BRAZIL -- 0.0%+
59,969 Brahma Cia Cervejaria
Expire 04/30/03++....................... 2
4,990 Brahma Cia Cervejaria
Expire 04/30/03++....................... 0!!
--------
2
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<C> <S> <C>
PHILIPPINES -- 0.3%
118,000 Queenbee Res-Cwo3 Jollibee Foods
Expire 03/25/03++....................... $ 59
--------
TOTAL WARRANTS (Cost $63)................ 61
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
(000) (000)
- --------------------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANIES -- 11.8%
UNITED STATES -- 9.8%
2,371 Nations Cash Reserves#.................... $ 2,371
--------
TAIWAN -- 2.0%
49 Taiwan Index Fund***...................... 490
--------
TOTAL INVESTMENT COMPANIES
(Cost $2,821)............................ 2,861
--------
TOTAL INVESTMENTS
(Cost $27,096*)................... 105.6% 25,664
--------
OTHER ASSETS AND LIABILITIES
(NET)............................. (5.6)%
Receivable for investment securities
sold..................................... $ 9,058
Receivable for Fund shares sold........... 1
Dividends receivable...................... 52
Interest receivable....................... 1
Unamortized organization costs............ 36
Prepaid expenses and other assets......... 7
Collateral on securities loaned........... (2,371)
Payable for Fund shares redeemed.......... (87)
Accrued Malaysian repatriation tax........ (246)
Investment advisory fee payable........... (29)
Administration fee payable................ (2)
Shareholder servicing and distribution
fees payable............................. (1)
Due to custodian.......................... (2,866)
Payable for investment securities
purchased................................ (4,838)
Accrued Directors' fees and expenses...... (11)
Accrued expenses and other liabilities.... (64)
--------
TOTAL OTHER ASSETS AND LIABILITIES
(NET).................................... (1,360)
--------
NET ASSETS......................... 100.0% $ 24,304
========
NET ASSETS CONSIST OF:
Distributions in excess of net investment
income................................... $ (57)
Accumulated net realized loss on
investments sold, forward foreign
exchange contracts, foreign currencies
and net other assets..................... (21,632)
Net unrealized depreciation of
investments, forward foreign exchange
contracts, foreign currencies and net
other assets............................. (1,436)
Paid-in capital........................... 47,429
--------
NET ASSETS................................ $ 24,304
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE> 46
NATIONS FUNDS
Nations Emerging Markets 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 ($21,688,751/2,664,232
shares outstanding)...................... $8.14
========
INVESTOR A SHARES:
Net asset value and redemption price per
share ($950,933/117,501 shares
outstanding)............................. $8.09
========
Maximum sales charge...................... 5.75%
Maximum offering price per share.......... $8.58
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($1,578,780/197,630 shares
outstanding)............................. $7.99
========
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($85,890/10,761 shares
outstanding)............................. $7.98
========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized depreciation of investment
securities was comprised of gross appreciation of $1,286 and gross
depreciation of $3,292 for Federal income tax purposes. At March 31, 1999,
the aggregate cost of securities for Federal income tax purposes was $27,684.
** Rate represents annualized yield at date of purchase.
*** 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%.
!! 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.
Represents cash collateral received from securities lending activity (Note
8).
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE> 47
NATIONS FUNDS
Nations Emerging Markets Fund
STATEMENT OF NET ASSETS (CONTINUED) MARCH 31, 1999
At March 31, 1999, sector diversification was as follows (unaudited):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (000)
- ---------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
Telecommunications.......................................... 17.6% $ 4,282
Banking..................................................... 14.3 3,482
Holdings Companies -- Diversified........................... 6.3 1,537
Electrical Equipment........................................ 6.2 1,502
Electric Components......................................... 5.9 1,422
Utilities -- Telephone...................................... 5.7 1,394
Beverages................................................... 5.4 1,305
Financial Services.......................................... 5.0 1,219
Oil and Gas................................................. 4.3 1,036
Other....................................................... 16.4 4,012
----- -------
TOTAL COMMON STOCKS......................................... 87.1 21,191
INVESTMENT COMPANIES........................................ 11.8 2,861
U.S. TREASURY OBLIGATIONS................................... 5.4 1,308
CONVERTIBLE BONDS AND NOTES................................. 1.0 243
WARRANTS.................................................... 0.3 61
----- -------
TOTAL INVESTMENTS........................................... 105.6 25,664
OTHER ASSETS AND LIABILITIES (NET).......................... (5.6) (1,360)
----- -------
NET ASSETS.................................................. 100.0% $24,304
===== =======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
43
<PAGE> 48
NATIONS FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL VALUE
--------------------------------------
FOR THE PERIOD FOR THE PERIOD
MAY 16, 1998 DECEMBER 1, 1997 INTERNATIONAL INTERNATIONAL EMERGING
TO MARCH 31, 1999 TO MAY 15, 1998(a) EQUITY GROWTH MARKETS
---------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding
taxes of $370, $93, $2,143, $398 and
$57, respectively)...................... $ 2,533 $ 993 $ 12,858 $ 2,589 $ 1,040
Interest.................................. 308 97 2,229 1,050 59
Securities lending income................. 259 -- 866 137 68
------- ------- --------- -------- --------
Total investment income............... 3,100 1,090 15,953 3,776 1,167
------- ------- --------- -------- --------
EXPENSES:
Investment advisory fee................... 1,165 330 7,491 2,488 375
Administration fee........................ 123 26 875 290 36
Transfer agent fees....................... 43 25 367 150 8
Custodian fees............................ 23 2 428 178 77
Legal and audit fees...................... 66 8 82 81 49
Registration and filing fees.............. 95 17 40 25 47
Directors' fees and expenses.............. 15 -- 15 15 15
Amortization of organization costs........ -- -- -- -- 29
Interest expense.......................... -- -- -- 88 4
Other..................................... 104 11 81 -- 33
------- ------- --------- -------- --------
Subtotal.............................. 1,634 419 9,379 3,315 673
Shareholder servicing and distribution
fees:
Primary B Shares........................ -- -- --* -- --*
Investor A Shares....................... 12 11 31 59 1
Investor B Shares....................... 20 -- 305 7 8
Investor C Shares....................... 1 -- 9 4 2
------- ------- --------- -------- --------
Total expenses........................ 1,667 430 9,724 3,385 684
Fees waived by investment advisor and/or
distributor............................. (117) (4) -- (205) (67)
Fees reduced by credits allowed by the
custodian............................... -- -- -- -- (2)
------- ------- --------- -------- --------
Net expenses.......................... 1,550 426 9,724 3,180 615
------- ------- --------- -------- --------
NET INVESTMENT INCOME..................... 1,550 664 6,229 596 552
------- ------- --------- -------- --------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain/(loss) from:
Security transactions................... 8,438 5,461 123,694 80,050 (13,136)
Forward foreign exchange contracts,
foreign currencies and other net
assets................................ 8 (12) (1,354) 1,239 (86)
------- ------- --------- -------- --------
Net realized gain/(loss) on investments... 8,446 5,449 122,340 81,289 (13,222)
------- ------- --------- -------- --------
Change in unrealized appreciation/
(depreciation) of:
Securities.............................. (4,376) 5,638 (103,664) (65,606) (7,106)
Forward foreign exchange contracts,
foreign currencies and other net
assets................................ 1 -- 40 201 (4)
------- ------- --------- -------- --------
Net change in unrealized appreciation/
(depreciation) of investments........... (4,375) 5,638 (103,624) (65,405) (7,110)
------- ------- --------- -------- --------
Net realized and unrealized gain/(loss) on
investments............................. 4,071 11,087 18,716 15,884 (20,332)
------- ------- --------- -------- --------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... $ 5,621 $11,751 $ 24,945 $ 16,480 $(19,780)
======= ======= ========= ======== ========
</TABLE>
- ---------------
* Amount represents less than $500.
(a) Represents financial information for the Emerald International Equity Fund,
which was reorganized into International Value on May 22, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
44
<PAGE> 49
[THIS PAGE INTENTIONALLY LEFT BLANK.]
45
<PAGE> 50
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERNATIONAL VALUE
-------------------------------------------
PERIOD ENDED PERIOD ENDED YEAR ENDED
3/31/99 5/15/98(b) 11/30/97(b)
-------------------------------------------
<S> <C> <C> <C>
(IN THOUSANDS)
Net investment income....................................... $ 1,550 $ 664 $ 343
Net realized gain/(loss) on investments..................... 8,446 5,449 1,530
Net change in unrealized appreciation/(depreciation) of
investments............................................... (4,375) 5,638 2,556
-------- -------- -------
Net increase/(decrease) in net assets resulting from
operations................................................ 5,621 11,751 4,429
Distributions to shareholders from net investment income:
Primary A Shares.......................................... (1,714) -- (335)
Primary B Shares.......................................... --* -- --
Investor A Shares......................................... (78) -- (5)
Investor B Shares......................................... (30) -- --
Investor C Shares......................................... (1) -- --
Distributions to shareholders in excess of net investment
income:
Primary A Shares.......................................... -- -- (57)
Primary B Shares.......................................... -- -- --
Investor A Shares......................................... -- -- (15)
Investor B Shares......................................... -- -- --
Investor C Shares......................................... -- -- --
Distributions to shareholders from net realized gain on
investments:
Primary A Shares.......................................... (11,258) (1,210) (43)
Primary B Shares.......................................... --* -- --
Investor A Shares......................................... (526) (96) --
Investor B Shares......................................... (127) -- --
Investor C Shares......................................... (8) -- --
Net increase/(decrease) in net assets from Fund share
transactions.............................................. 36,565 55,558 36,920
-------- -------- -------
Net increase/(decrease) in net assets....................... 28,444 66,003 40,894
NET ASSETS:
Beginning of year........................................... 124,540 58,537 17,643
-------- -------- -------
End of year................................................. $152,984 $124,540 $58,537
======== ======== =======
Undistributed net investment income/(Distributions in excess
of net investment income) at end of period................ $ 286 $ 565 $ (85)
======== ======== =======
</TABLE>
- ---------------
* Amount represents less than $500.
(a) Represents financial information from September 1, 1996 for the Pilot
International Equity Fund, which was reorganized into International Growth
on May 23, 1997.
(b) Represents financial information for the Emerald International Equity Fund,
which was reorganized into International Value on May 22, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
46
<PAGE> 51
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INTERNATIONAL GROWTH EMERGING MARKETS
----------------------- ---------------------------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
3/31/99 3/31/98 3/31/99 3/31/98 5/16/97(a) 3/31/99 3/31/98
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 6,229 $ 7,358 $ 596 $ 1,013 $ 2,204 $ 552 $ 303
122,340 28,467 81,289 10,453 13,208 (13,222) (8,221)
(103,624) 104,356 (65,405) 8,102 58,689 (7,110) (2,211)
--------- --------- --------- --------- -------- -------- --------
24,945 140,181 16,480 19,568 74,101 (19,780) (10,129)
(6,815) (12,161) -- -- (6,575) (438) (728)
--* (21) -- -- -- --* (1)
(97) (135) -- -- (225) (3) (7)
(196) -- -- -- (3) (5) --*
(6) (7) -- -- -- (1) (1)
-- (3,213) -- -- -- -- --
-- (6) -- -- -- -- --
-- (36) -- -- -- -- --
-- -- -- -- -- -- --
-- (2) -- -- -- -- --
(57,696) (11,817) (65,781) (10,545) (12,568) -- --
--* (31) --* -- -- -- --
(968) (166) (6,209) (474) (530) -- --
(2,238) (423) (181) (6) (9) -- --
(69) (14) (118) (10) -- -- --
(105,006) (207,777) (164,008) (310,432) 68,197 (31,495) 7,489
--------- --------- --------- --------- -------- -------- --------
(148,146) (95,628) (219,817) (301,899) 122,388 (51,722) (3,377)
933,882 1,029,510 426,423 728,322 605,934 76,026 79,403
--------- --------- --------- --------- -------- -------- --------
$ 785,736 $ 933,882 $ 206,606 $ 426,423 $728,322 $ 24,304 $ 76,026
========= ========= ========= ========= ======== ======== ========
$ (847) $ (5,384) $ (1,515) $ (6,766) $ 2,416 $ (57) $ (948)
========= ========= ========= ========= ======== ======== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
47
<PAGE> 52
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
INTERNATIONAL VALUE
YEAR ENDED PERIOD ENDED YEAR ENDED
MARCH 31, 1999(b) MAY 15, 1998(a) NOVEMBER 30, 1997(a)
----------------------- ---------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold................................ 4,332 $ 80,384 4,183 $64,837 3,256 $41,548
Issued as reinvestment of
dividends......................... 292 4,000 34 451 2 24
Redeemed............................ (2,449) (52,728) (650) (9,773) (688) (8,726)
------ -------- ----- ------- ------ -------
Net increase/(decrease)............. 2,175 $ 31,656 3,567 $55,515 2,570 $32,846
====== ======== ===== ======= ====== =======
INVESTOR A SHARES:
Sold................................ 260 $ 5,477 110 $ 1,552 370 $ 4,813
Issued as reinvestment of
dividends......................... 23 313 7 98 --* 1
Redeemed............................ (202) (5,154) (110) (1,607) (55) (740)
------ -------- ----- ------- ------ -------
Net increase/(decrease)............. 81 $ 636 7 $ 43 315 $ 4,074
====== ======== ===== ======= ====== =======
INVESTOR B SHARES:
Sold................................ 306 $ 4,222 -- $ -- -- $ --
Issued as reinvestment of
dividends......................... 11 147 -- -- -- --
Redeemed............................ (19) (263) -- -- -- --
------ -------- ----- ------- ------ -------
Net increase/(decrease)............. 298 $ 4,106 -- $ -- -- $ --
====== ======== ===== ======= ====== =======
INVESTOR C SHARES:
Sold................................ 16 $ 200 -- $ -- -- $ --
Issued as reinvestment of
dividends......................... --* 9 -- -- -- --
Redeemed............................ (3) (42) -- -- -- --
------ -------- ----- ------- ------ -------
Net increase/(decrease)............. 13 $ 167 -- $ -- -- $ --
====== ======== ===== ======= ====== =======
Total net increase/(decrease)......... 2,567 $ 36,565 3,574 $55,558 2,885 $36,920
====== ======== ===== ======= ====== =======
</TABLE>
- ---------------
* Amount represents less than 500 shares.
(a) Represents financial information for the Emerald International Equity Fund,
which reorganized into International Value on May 22, 1998.
(b) International Value's Investor B and Investor C Shares commenced operations
on May 28, 1998 and June 15, 1998, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
48
<PAGE> 53
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL 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...................................................... 9,397 $ 138,073 16,262 $ 225,113
Issued as reinvestment of dividends....................... 2,060 28,238 652 8,725
Redeemed.................................................. (18,544) (266,676) (31,547) (431,169)
------- --------- ------- ---------
Net increase/(decrease)................................... (7,087) $(100,365) (14,633) $(197,331)
======= ========= ======= =========
PRIMARY B SHARES:+
Sold...................................................... --* $ --* 42 $ 589
Issued as reinvestment of dividends....................... -- -- 3 39
Redeemed.................................................. (2) (25) (465) (6,273)
------- --------- ------- ---------
Net increase/(decrease)................................... (2) $ (25) (420) $ (5,645)
======= ========= ======= =========
INVESTOR A SHARES:
Sold...................................................... 7,314 $ 99,691 2,454 $ 33,606
Issued as reinvestment of dividends....................... 70 948 23 295
Redeemed.................................................. (7,387) (101,232) (2,284) (31,594)
------- --------- ------- ---------
Net increase/(decrease)................................... (3) $ (593) 193 $ 2,307
======= ========= ======= =========
INVESTOR B SHARES:
Sold...................................................... 93 $ 1,339 108 $ 1,475
Issued as reinvestment of dividends....................... 176 2,358 32 414
Redeemed.................................................. (556) (7,666) (657) (8,842)
------- --------- ------- ---------
Net increase/(decrease)................................... (287) $ (3,969) (517) $ (6,953)
======= ========= ======= =========
INVESTOR C SHARES:
Sold...................................................... 33 $ 460 57 $ 755
Issued as reinvestment of dividends....................... 6 75 2 22
Redeemed.................................................. (43) (589) (71) (932)
------- --------- ------- ---------
Net increase/(decrease)................................... (4) $ (54) (12) $ (155)
======= ========= ======= =========
Total net increase/(decrease)............................... (7,383) $(105,006) (15,389) $(207,777)
======= ========= ======= =========
</TABLE>
- ---------------
* Amount represents less than 500 shares and $500.
+ There were no longer any public shareholders of the Primary B Share class as
of April 22, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
49
<PAGE> 54
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH
YEAR ENDED PERIOD ENDED PERIOD ENDED
MARCH 31, 1999 MARCH 31, 1998(b) MAY 16, 1997(a)
-------------------- -------------------- -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold................................................... 1,721 $ 29,566 3,038 $ 53,329 8,260 $142,214
Issued as reinvestment of dividends.................... 2,297 35,769 407 7,111 755 13,088
Redeemed............................................... (12,933) (233,351) (20,833) (367,654) (4,945) (85,373)
------- --------- ------- --------- ------- --------
Net increase/(decrease)................................ (8,915) $(168,016) (17,388) $(307,214) 4,070 $ 69,929
======= ========= ======= ========= ======= ========
INVESTOR A SHARES:
Sold................................................... 2,106 $ 34,591 361 $ 6,487 32 $ 546
Issued as reinvestment of dividends.................... 276 4,107 17 288 27 471
Redeemed............................................... (2,150) (35,380) (574) (10,349) (177) (3,088)
------- --------- ------- --------- ------- --------
Net increase/(decrease)................................ 232 $ 3,318 (196) $ (3,574) (118) $ (2,071)
======= ========= ======= ========= ======= ========
INVESTOR B SHARES:
Sold................................................... 38 $ 635 27 $ 485 24 $ 405
Issued as reinvestment of dividends.................... 12 178 -- 6 --* 11
Redeemed............................................... (13) (207) (31) (582) (4) (77)
------- --------- ------- --------- ------- --------
Net increase/(decrease)................................ 37 $ 606 (4) $ (91) 20 $ 339
======= ========= ======= ========= ======= ========
INVESTOR C SHARES:
Sold................................................... 3 $ 36 30 $ 550 -- $ --
Issued as reinvestment of dividends.................... 7 109 -- 8 -- --
Redeemed............................................... (4) (61) (6) (111) -- --
------- --------- ------- --------- ------- --------
Net increase/(decrease)................................ 6 $ 84 24 $ 447 -- $ --
======= ========= ======= ========= ======= ========
Total net increase/(decrease)............................ (8,640) $(164,008) (17,564) $(310,432) 3,972 $ 68,197
======= ========= ======= ========= ======= ========
</TABLE>
- ---------------
(a) Represents financial information from September 1, 1996 for the Pilot
International Equity Fund which was reorganized into International Growth
Fund on May 23, 1997.
(b) International Growth Investor C Shares commenced operations on September 19,
1997.
SEE NOTES TO FINANCIAL STATEMENTS.
50
<PAGE> 55
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EMERGING MARKETS
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...................................................... 363 $ 3,133 3,664 $ 43,349
Issued in exchange for Primary A Shares of Nations Pacific
Growth Fund (Note 10)................................... 1,016 8,277 -- --
Issued as reinvestment of dividends....................... 18 155 18 217
Redeemed.................................................. (5,693) (44,018) (3,424) (35,666)
------ -------- ------ --------
Net increase/(decrease)................................... (4,296) $(32,453) 258 $ 7,900
====== ======== ====== ========
PRIMARY B SHARES:+
Sold...................................................... --* $ --* 18 $ 213
Issued as reinvestment of dividends....................... --* --* --* 1
Redeemed.................................................. (4) (23) (41) (447)
------ -------- ------ --------
Net increase/(decrease)................................... (4) $ (23) (23) $ (233)
====== ======== ====== ========
INVESTOR A SHARES:
Sold...................................................... 20 $ 165 172 $ 1,807
Issued in exchange for Investor A Shares of Nations
Pacific Growth Fund (Note 10)........................... 78 632 -- --
Issued as reinvestment of dividends....................... --* 3 1 7
Redeemed.................................................. (42) (346) (189) (1,949)
------ -------- ------ --------
Net increase/(decrease)................................... 56 $ 454 (16) $ (135)
====== ======== ====== ========
INVESTOR B SHARES:
Sold...................................................... 15 $ 142 22 $ 245
Issued in exchange for Investor B Shares of Nations
Pacific Growth Fund (Note 10)........................... 113 906 -- --
Issued as reinvestment of dividends....................... --* 5 -- --
Redeemed.................................................. (49) (411) (36) (370)
------ -------- ------ --------
Net increase/(decrease)................................... 79 $ 642 (14) $ (125)
====== ======== ====== ========
INVESTOR C SHARES:
Sold...................................................... 8 $ 72 10 $ 106
Issued in exchange for Investor C Shares of Nations
Pacific Growth Fund (Note 10)........................... 2 14 -- --
Issued as reinvestment of dividends....................... --* 1 --* 1
Redeemed.................................................. (27) (202) (2) (25)
------ -------- ------ --------
Net increase/(decrease)................................... (17) $ (115) 8 $ 82
====== ======== ====== ========
Total net increase/(decrease)............................... (4,182) $(31,495) 213 $ 7,489
====== ======== ====== ========
</TABLE>
- ---------------
* Amount represents less than 500 shares and $500.
+ There were no longer any public shareholders of the Primary B Share class as
of January 24, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
51
<PAGE> 56
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 IN EXCESS OF
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT NET INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL VALUE
PRIMARY A SHARES*
Period ended 3/31/1999#................. $15.53 $0.16 $0.28 $0.44 $(0.18) $ --
Period ended 5/15/1998.................. 13.17 0.09 2.56 2.65 -- --
Year ended 11/30/1997................... 11.29 0.09 1.91 2.00 (0.09) (0.01)
Period ended 11/30/1996**............... 10.00 0.06 1.29 1.35 (0.06) --
INVESTOR A SHARES*
Period ended 3/31/1999#................. $15.44 $0.14 $0.36 $0.50 $(0.17) $ --
Period ended 5/15/1998.................. 13.13 0.08 2.52 2.60 -- --
Year ended 11/30/1997................... 11.29 0.01 1.91 1.92 (0.01) (0.05)
Period ended 11/30/1996**............... 10.00 0.04 1.31 1.35 (0.04) --
INVESTOR B SHARES
Year ended 3/31/1999***#................ $14.33 $0.06 $0.76 $0.82 $(0.13) $ --
INVESTOR C SHARES
Year ended 3/31/1999***#................ $13.33 $0.06 $1.77 $1.83 $(0.13) $ --
</TABLE>
- ---------------
* The financial information for the fiscal periods through May 22, 1998 reflect
the financial information for the Emerald International Equity Fund's
Institutional Shares and Retail Shares, which were reorganized into the
Primary A Shares and Investor A Shares, respectively, as of May 22, 1998.
** International Value Primary A and Investor A Shares commenced operations on
December 27, 1995.
*** International Value Investor B and Investor C Shares commenced operations on
May 28, 1998 and June 15, 1998, 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
shares method.
SEE NOTES TO FINANCIAL STATEMENTS.
52
<PAGE> 57
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
DISTRIBUTIONS TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
FROM NET DIVIDENDS VALUE END OF EXPENSES TO INCOME/(LOSS) EXPENSES TO PORTFOLIO
REALIZED AND END OF TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE TURNOVER
CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS NET ASSETS RATE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$(1.34) $(1.52) $14.45 1.48% $142,546 1.30%+ 1.36%+ 1.39%+ 44%
(0.29) (0.29) 15.53 20.54 119,412 1.25+ 2.06+ 1.26+ 88
(0.02) (0.12) 13.17 17.75 54,277 1.21 0.89 1.21 29
-- (0.06) 11.29 13.47 17,528 0.00+ 0.00+ 3.46+ 50
$(1.34) $(1.51) $14.43 1.75% $ 5,960 1.55%+ 1.11%+ 1.64%+ 44%
(0.29) (0.29) 15.44 20.22 5,128 1.81+ 1.21+ 1.82+ 88
(0.02) (0.08) 13.13 17.11 4,259 1.73 0.26 1.93 29
(0.02) (0.06) 11.29 13.54 115 0.00+ 1.83+ 57.40+ 50
$(0.62) $(0.75) $14.40 1.25% $ 4,296 2.30%+ 0.36%+ 2.39%+ 44%
$(0.62) $(0.75) $14.41 3.98% $ 182 2.30%+ 0.36%+ 2.39%+ 44%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
53
<PAGE> 58
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET INCREASE/ DISTRIBUTIONS
NET ASSET REALIZED AND (DECREASE) IN DIVIDENDS IN EXCESS
VALUE NET UNREALIZED NET ASSET FROM NET OF NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT INVESTMENT
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY
PRIMARY A SHARES
Year ended 3/31/1999#.......... $14.81 $ 0.11 $ 0.39 $ 0.50 $(0.12) $ --
Year ended 3/31/1998#.......... 13.13 0.11 1.95 2.06 (0.17) (0.05)
Year ended 3/31/1997#.......... 13.50 0.08 0.11 0.19 (0.11) (0.00)***
Period ended 3/31/1996(a)#..... 11.75 0.07 1.80 1.87 (0.06) (0.04)
Year ended 5/31/1995#.......... 12.06 0.14 (0.20) (0.06) (0.03) --
Year ended 5/31/1994#.......... 10.60 0.09 1.44 1.53 (0.05) --
PRIMARY B SHARES+++
Year ended 3/31/1999#.......... $14.80 $ 0.01 $ 0.43 $ 0.44 $(0.10) $ --
Year ended 3/31/1998#.......... 13.11 0.04 1.91 1.95 (0.08) (0.02)
Period ended 3/31/1997*#....... 13.65 0.01 (0.09)(b) (0.08) (0.01) (0.00)***
INVESTOR A SHARES
Year ended 3/31/1999#.......... $14.67 $ 0.08 $ 0.40 $ 0.48 $(0.11) $ --
Year ended 3/31/1998#.......... 13.01 0.07 1.94 2.01 (0.15) (0.04)
Year ended 3/31/1997#.......... 13.39 0.05 0.11 0.16 (0.09) (0.00)***
Period ended 3/31/1996(a)#..... 11.67 0.04 1.78 1.82 (0.04) (0.04)
Year ended 5/31/1995#.......... 12.00 0.11 (0.20) (0.09) (0.02) --
Year ended 5/31/1994#.......... 10.56 0.06 1.44 1.50 (0.04) --
INVESTOR B SHARES
Year ended 3/31/1999#.......... $14.56 $(0.03) $ 0.38 $ 0.35 $(0.09) $ --
Year ended 3/31/1998#.......... 12.83 (0.03) 1.92 1.89 -- --
Year ended 3/31/1997#.......... 13.27 (0.05) 0.10 0.05 (0.04) (0.00)***
Period ended 3/31/1996(a)#..... 11.56 (0.02) 1.78 1.76 -- (0.03)
Year ended 5/31/1995#.......... 11.96 0.05 (0.22) (0.17) (0.01) --
Period ended 5/31/1994*#....... 10.51 (0.00)*** 1.51 1.51 (0.04) --
INVESTOR C SHARES
Year ended 3/31/1999#.......... $14.34 $(0.03) $ 0.37 $ 0.34 $(0.09) $ --
Year ended 3/31/1998#.......... 12.74 (0.01) 1.89 1.88 (0.10) (0.02)
Year ended 3/31/1997#.......... 13.13 0.02 0.10 0.12 (0.06) (0.00)***
Period ended 3/31/1996(a)#..... 11.45 (0.03) 1.75 1.72 -- (0.02)
Year ended 5/31/1995#.......... 11.86 0.02 (0.21) (0.19) -- --
Year ended 5/31/1994#.......... 10.49 (0.03) 1.43 1.40 (0.01) --
</TABLE>
- ---------------
* International Equity Primary B and Investor B Shares commenced operations on
June 28, 1996 and June 7, 1993, respectively.
** Amount represents less than $500
*** Amount represents less than $0.01 per share.
+ 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 April 22, 1998.
The amounts reflected are for the period April 1, 1998 to April 22, 1998.
# Per share net investment income/(loss) has been calculated using the monthly
average shares method.
## Amount represents less than 0.01%.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
May 31.
(b) The amount shown at this caption for each share outstanding throughout the
period may not accord with the net realized and unrealized gain/(loss) for
the period because of the timing of purchases and withdrawals of shares in
relation to the fluctuating market values of the portfolio.
SEE NOTES TO FINANCIAL STATEMENTS.
54
<PAGE> 59
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
DISTRIBUTION RATIO OF RATIO OF NET
DISTRIBUTIONS IN EXCESS OF TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT
FROM NET NET REALIZED DIVIDENDS VALUE END OF EXPENSES INCOME/(LOSS)
REALIZED CAPITAL AND END OF TOTAL PERIOD TO AVERAGE TO AVERAGE
CAPITAL GAINS GAINS DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(1.07) $ -- $(1.19) $14.12 3.68% $743,861 1.13% 0.79%
(0.16) -- (0.38) 14.81 16.06 885,329 1.14 0.76
(0.42) (0.03) (0.56) 13.13 1.32 976,855 1.16 0.62
(0.02) -- (0.12) 13.50 16.01 849,731 1.17+ 0.65+
(0.12) (0.10) (0.25) 11.75 (0.46) 572,940 1.03 1.17
(0.02) -- (0.07) 12.06 14.37 401,559 1.17 0.75
$(0.03) $ -- $(0.13) $15.11 2.31% $ --** 1.63%+ 0.29%+
(0.16) -- (0.26) 14.80 15.09 25 1.64 0.26
(0.42) (0.03) (0.46) 13.11 (0.66) 5,526 1.66+ 0.12+
$(1.07) $ -- $(1.18) $13.97 3.59% $ 12,785 1.38% 0.54%
(0.16) -- (0.35) 14.67 15.77 13,477 1.39 0.51
(0.42) (0.03) (0.54) 13.01 1.08 9,443 1.41 0.37
(0.02) -- (0.10) 13.39 15.66 7,643 1.42+ 0.40+
(0.12) (0.10) (0.24) 11.67 (0.69) 4,877 1.28 0.92
(0.02) -- (0.06) 12.00 14.00 3,219 1.42 0.50
$(1.07) $ -- $(1.16) $13.75 2.65% $ 28,266 2.13% (0.21)%
(0.16) -- (0.16) 14.56 14.93 34,119 2.14 (0.24)
(0.42) (0.03) (0.49) 12.83 0.28 36,698 2.16 (0.38)
(0.02) -- (0.05) 13.27 15.25 40,426 1.99+ (0.17)+
(0.12) (0.10) (0.23) 11.56 (1.30) 31,372 1.78 0.42
(0.02) -- (0.06) 11.96 14.32 17,349 1.92+ (0.00)+##
$(1.07) $ -- $(1.16) $13.52 2.63% $ 824 2.13% (0.21)%
(0.16) -- (0.28) 14.34 15.05 933 1.97 (0.07)
(0.42) (0.03) (0.51) 12.74 0.77 988 1.66 0.12
(0.02) -- (0.04) 13.13 15.09 652 2.09+ (0.27)+
(0.12) (0.10) (0.22) 11.45 (1.56) 495 2.03 0.17
(0.02) -- (0.03) 11.86 13.21 339 2.17 (0.25)
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF
OPERATING
EXPENSES PORTFOLIO
TO AVERAGE TURNOVER
NET ASSETS RATE
- --- ---------------------------
<S> <C> <C>
1.13% 146%
1.14 64
1.16 36
1.18+ 26
1.04 92
1.18 39
1.73%+ 146%
1.64 64
1.66+ 36
1.38% 146%
1.39 64
1.41 36
1.43+ 26
1.29 92
1.43 39
2.13% 146%
2.14 64
2.16 36
2.00+ 26
1.79 92
1.93+ 39
2.13% 146%
1.97 64
1.66 36
2.10+ 26
2.04 92
2.18 39
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
55
<PAGE> 60
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>
INTERNATIONAL GROWTH
PRIMARY A SHARES*
Year ended 3/31/1999#.......... $19.42 $ 0.05 $ 0.87 $ 0.92 $ -- $(4.81)
Period ended 3/31/1998#........ 18.43 0.03 1.30 1.33 -- (0.34)
Period ended 5/16/1997......... 17.05 0.05 1.84 1.89 (0.17) (0.34)
Year ended 8/31/1996........... 16.24 0.18 1.48 1.66 (0.46) (0.39)
Year ended 8/31/1995#.......... 16.34 0.13 0.17 0.30 (0.11) (0.29)
Year ended 8/31/1994#.......... 14.14 0.11 2.24 2.35 -- (0.15)
INVESTOR A SHARES*
Year ended 3/31/1999#.......... $19.21 $ 0.01 $ 0.85 $ 0.86 $ -- $(4.81)
Period ended 3/31/1998#........ 18.27 (0.01) 1.29 1.28 -- (0.34)
Period ended 5/16/1997......... 16.90 (0.05) 1.90 1.85 (0.14) (0.34)
Year ended 8/31/1996........... 16.14 0.04 1.57 1.61 (0.46) (0.39)
Year ended 8/31/1995#.......... 16.29 0.08 0.17 0.25 (0.11) (0.29)
Year ended 8/31/1994#.......... 14.13 0.07 2.24 2.31 -- (0.15)
INVESTOR B SHARES*
Year ended 3/31/1999#.......... $19.11 $(0.12) $ 0.83 $ 0.71 $ -- $(4.81)
Period ended 3/31/1998#........ 18.32 (0.11) 1.24 1.13 -- (0.34)
Period ended 5/16/1997......... 17.04 (0.05) 1.79 1.74 (0.12) (0.34)
Period ended 8/31/1996(a)...... 17.54 -- (0.50) (0.50) -- --
INVESTOR C SHARES
Year ended 3/31/1999#.......... $19.42 $(0.12) $ 0.94 $ 0.82 $ -- $(4.81)
Period ended 3/31/1998**#...... 18.49 (0.09) 1.36 1.27 -- (0.34)
</TABLE>
- ---------------
* The financial information for the fiscal periods through May 23, 1997 reflect
the financial information for the Pilot International 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 May 23, 1997.
** International Growth Investor C Shares commenced operations on September 19,
1997, 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/(loss) has been calculated using the monthly
average shares method.
(a) Shares were initially issued on July 1, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
56
<PAGE> 61
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 TO INCLUDING INCOME/(LOSS) EXPENSES TO PORTFOLIO
AND END OF TOTAL PERIOD AVERAGE INTEREST TO AVERAGE AVERAGE TURNOVER
DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS EXPENSE NET ASSETS NET ASSETS RATE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$(4.81) $15.53 6.16% $182,316 1.12% 1.14% 0.24% 1.21% 21%
(0.34) 19.42 7.39 401,105 1.15+ -- 0.21+ 1.17+ 11
(0.51) 18.43 11.28 701,033 1.18+ -- 0.47+ 1.18+ 34
(0.85) 17.05 10.64 579,019 1.08 -- 0.69 1.08 22
(0.40) 16.24 2.08 363,212 1.18 -- 0.82 1.18 36
(0.15) 16.34 16.75 307,561 1.12 -- 0.75 1.12 35
$(4.81) $15.26 5.89% $ 22,874 1.37% 1.39% (0.01)% 1.46% 21%
(0.34) 19.21 7.18 24,353 1.40+ -- (0.04)+ 1.42+ 11
(0.48) 18.27 11.14 26,730 1.42+ -- 0.29+ 1.42+ 34
(0.85) 16.90 10.40 26,730 1.32 -- 0.48 1.32 22
(0.40) 16.14 1.77 27,625 1.42 -- 0.50 1.42 36
(0.15) 16.29 16.48 44,990 1.37 -- 0.48 1.37 35
$(4.81) $15.01 5.11% $ 957 2.12% 2.14% (0.76)% 2.21% 21%
(0.34) 19.11 6.34 500 2.15+ -- (0.79)+ 2.17+ 11
(0.46) 18.32 10.37 560 2.18+ -- (0.61)+ 2.18+ 34
-- 17.04 (2.85) 184 2.06+ -- (0.32)+ 2.06+ 22
$(4.81) $15.43 5.56% $ 459 2.12% 2.14% (0.76)% 2.21% 21%
(0.34) 19.42 7.04 465 2.15+ -- (0.79)+ 2.17+ 11
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
57
<PAGE> 62
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET INCREASE/ DISTRIBUTIONS
NET ASSET NET REALIZED (DECREASE) IN DIVIDENDS IN EXCESS
VALUE NET AND UNREALIZED NET ASSET FROM NET OF NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT INVESTMENT
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EMERGING MARKETS
PRIMARY A SHARES
Year ended 3/31/1999#.......... $10.60 $ 0.14 $(2.53) $(2.39) $(0.07) $ --
Year ended 3/31/1998#.......... 11.41 0.04 (0.76) (0.72) (0.09) --
Year ended 3/31/1997#.......... 10.34 0.01 1.21 1.22 (0.02) (0.07)
Period ended 3/31/1996*#....... 10.00 (0.03) 0.37 0.34 -- 0.00**
PRIMARY B SHARES+++
Year ended 3/31/1999#.......... $10.57 $ 0.08 $(3.39) $(3.31) $(0.06) $ --
Year ended 3/31/1998#.......... 11.40 (0.02) (0.75) (0.77) (0.06) --
Year ended 3/31/1997*#......... 10.71 (0.04) 0.82 0.78 (0.01) (0.02)
INVESTOR A SHARES
Year ended 3/31/1999#.......... $10.57 $ 0.10 $(2.52) $(2.42) $(0.06) $ --
Year ended 3/31/1998#.......... 11.39 0.01 (0.75) (0.74) (0.08) --
Year ended 3/31/1997#.......... 10.32 (0.01) 1.21 1.20 (0.02) (0.05)
Period ended 3/31/1996*#....... 10.00 (0.05) 0.37 0.32 -- --
INVESTOR B SHARES
Year ended 3/31/1999#.......... $10.49 $ 0.05 $(2.50) $(2.45) $(0.05) $ --
Year ended 3/31/1998#.......... 11.31 (0.07) (0.75) (0.82) -- --
Year ended 3/31/1997#.......... 10.26 (0.09) 1.20 1.11 -- --
Period ended 3/31/1996*#....... 10.00 (0.11) 0.37 0.26 -- --
INVESTOR C SHARES
Year ended 3/31/1999#.......... $10.47 $ 0.05 $(2.49) $(2.44) $(0.05) $ --
Year ended 3/31/1998#.......... 11.34 (0.05) (0.75) (0.80) (0.07) --
Year ended 3/31/1997#.......... 10.27 (0.04) 1.20 1.16 (0.01) (0.02)
Period ended 3/31/1996*#....... 10.00 (0.10) 0.37 0.27 -- --
</TABLE>
- ---------------
* Emerging Markets Primary A, Investor A, Investor B and Investor C Shares
commenced operations on June 30, 1995. Emerging Markets Primary B Shares
commenced operations on June 28, 1996.
** Amount represents less than $0.01 per share.
+ Annualized.
++ Total return represents aggregate total return for the period indicated,
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 24,
1999. The amounts reflected are for the period April 1, 1998 to January 24,
1999.
# Per share net investment income/(loss) has been calculated using the monthly
average shares method.
(a) Amount represents less than $500.
(b) The effect of interest expense on the operating expense ratio was less than
0.01%.
(c) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and /or expense
reimbursements, was less than 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
58
<PAGE> 63
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
DISTRIBUTIONS TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
FROM NET DIVIDENDS VALUE END OF EXPENSES TO INCOME/(LOSS) EXPENSES TO PORTFOLIO
REALIZED AND END OF TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE TURNOVER
CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN++ (000) NET ASSETS NET ASSETS NET ASSETS RATE
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $(0.07) $ 8.14 (22.60)% $21,689 1.78%(b)(c) 1.66% 1.98%(c) 71%
-- (0.09) 10.60 (6.39) 73,797 1.57 0.36 1.57 63
(0.06) (0.15) 11.41 11.97 76,483 1.74 0.13 1.74 31
-- 0.00** 10.34 3.42 47,560 2.13+ (0.38)+ 2.13+ 17
$ -- $(0.06) $ 7.20 (31.42)% $ --(a) 2.28%+(b)(c) 1.16%+ 2.58%+(c) 71%
-- (0.06) 10.57 (6.80) 37 2.07 (0.14) 2.07 63
(0.06) (0.09) 11.40 7.34 301 2.24+ (0.37)+ 2.24+ 31
$ -- $(0.06) $ 8.09 (22.90)% $ 951 2.03%(b)(c) 1.41% 2.23%(c) 71%
-- (0.08) 10.57 (6.60) 652 1.82 0.11 1.82 63
(0.06) (0.13) 11.39 11.74 894 1.99 (0.12) 1.99 31
-- -- 10.32 3.20 477 2.38+ (0.63)+ 2.38+ 17
$ -- $(0.05) $ 7.99 (23.42)% $ 1,579 2.78%(b)(c) 0.66% 2.98%(c) 71%
-- -- 10.49 (7.25) 1,247 2.57 (0.64) 2.57 63
(0.06) (0.06) 11.31 10.88 1,499 2.74 (0.87) 2.74 31
-- -- 10.26 2.60 1,209 3.13+ (1.38)+ 3.13+ 17
$ -- $(0.05) $ 7.98 (23.37)% $ 86 2.78%(b)(c) 0.66% 2.98%(c) 71%
-- (0.07) 10.47 (7.17) 293 2.40 (0.47) 2.40 63
(0.06) (0.09) 11.34 11.34 226 2.24 (0.37) 2.24 31
-- -- 10.27 2.70 23 3.02+ (1.27)+ 3.02+ 17
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
59
<PAGE> 64
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS
Nations Fund, Inc. (the "Company") and Nations Fund Portfolios, Inc. ("Nations
Portfolios") 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 Company offered nine separate portfolios and Nations Portfolios offered one
portfolio. These financial statements pertain only to the international stock
portfolios of the Company and Nations Portfolios (each a "Fund" and
collectively, the "Funds"). Financial statements for the other portfolios of the
Company are presented under separate cover. The Funds currently offer five
classes of shares: Primary A Shares, Primary B Shares, Investor A Shares,
Investor B Shares and Investor C Shares. At March 31, 1999, there were no public
shareholders in the Primary B class and Primary B Shares are 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: Equity securities 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 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. Debt obligations are valued by an
independent pricing service approved by the Directors. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices,
and may reflect appropriate factors such as yield, type of issue, coupon rate,
maturity and general market conditions. 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 respective Board
of Directors. Short-term investments that mature in 60 days or less are valued
at amortized cost.
Foreign Currency Translation: The books and records of the Funds are maintained
in U.S. dollars. Foreign currencies, investments and other assets and
liabilities are translated into U.S. dollars at the current exchange rates.
Purchases and sales of investment securities and income and expenses are
translated on the respective dates of such transactions. Net realized foreign
currency gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement date of
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of a Fund
and the amounts actually received. The effects of changes in foreign currency
exchange rates on securities are not separately stated in the Statements of
Operations from the effects of changes in market prices of those securities, but
are included with the net realized and unrealized gain or loss on securities.
Forward Foreign Currency Transactions: Generally, a Fund may enter into forward
currency exchange contracts only under two circumstances: (i) when the Fund
enters into a contract for the purchase or sale of a security denominated in a
foreign currency, to "lock" in the U.S. exchange rate of the transaction, with
such period being a short-dated contract covering the period between transaction
date and settlement date; and (ii) when the investment advisor or sub-advisor
believes that the currency of a particular foreign country may experience a
substantial movement against the U.S. dollar. Forward foreign currency contracts
are valued at the forward rate and are marked-to-market daily. The change in
market value is recorded by the Fund as an unrealized gain or loss. When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed or offset.
Forward foreign currency contracts will be used primarily to protect the Funds
from adverse currency movements and will generally not be entered into for terms
greater than one year. The use of forward foreign currency contracts does not
eliminate fluctuations in the underlying prices of the Fund's
60
<PAGE> 65
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
investment securities; however, it does establish a rate of exchange that can be
achieved in the future. The use of forward contracts involves the risk that
anticipated currency movements will not be accurately predicted. A forward
contract would limit the risk of loss due to a decline in the value of a
particular currency; however, it also would limit any potential gain that might
result should the value of the currency increase instead of decrease. These
contracts may involve market risk in excess of the unrealized gain or loss
reflected in the Statements of Net Assets. In addition, the Funds could be
exposed to risks if counterparties to the contracts are unable to meet the terms
of their contracts. The counterparty risk exposure is, therefore, closely
monitored and contracts are only executed with high credit quality financial
institutions.
Securities Transactions and Investment Income: Securities transactions are
accounted for on trade date. Realized gains and losses are computed based on the
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, except that if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as soon as the Funds are informed
of the ex-dividend date. Each Fund's investment income and realized and
unrealized gains and losses are allocated among its classes based upon the
relative net assets of each class of shares.
Dividends and Distributions to Shareholders: Distributions from net investment
income are declared and paid each calendar quarter. 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
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 foreign currency, organization
costs, investments in passive foreign investment companies 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>
International Value.......... $ 12 $ (19) $ 7
International Equity......... 10,500 5,424 (15,924)
International Growth......... 130 4,655 (4,785)
Emerging Markets............. (693) 786 (93)
</TABLE>
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.
The Funds may be subject to foreign taxes on income, gains on investments or
currency repatriation, a portion of which may be recoverable. The Funds will
accrue such taxes and recoveries as applicable, based upon their current
interpretation of tax rules and regulations that exist in the markets in which
they invest.
Expenses: General expenses of the Company or Nations Portfolios are allocated
to the 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 are being amortized on a straight line basis over a
period of five years from commencement of operations.
On September 1, 1998, the Malaysian government introduced capital controls
effectively eliminating trading of the Malaysian ringgit. Effective February 4,
1999, the Malaysian government modified these restrictions. Funds invested in
Malaysia as of February 15, 1999 and repatriated within one year of September 1,
1998, or one year from the date of the investment if after September 1,
61
<PAGE> 66
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1998, are subject to a graduated repatriation tax on the principal invested with
a maximum of 30%. The Emerging Markets Fund has recorded an accrual in the
amount of $246,000 for potential repatriation tax on principal invested prior to
February 15, 1999. The accrual for Malaysian repatriation taxes is included in
the change in net unrealized appreciation (depreciation) on investments in the
Statements of Operations. Funds invested in Malaysia on or after February 15,
1999 are subject to a repatriation tax on capital gains of 30% for currency
repatriated in less than one year of the initial investment and 10% for currency
repatriated after one year of the initial investment. The Emerging Markets Fund
has not made any additional investments in Malaysia on or after February 15,
1999 and accordingly no tax provision for capital gains has been accrued.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS
Each of the Company and Nations Portfolios 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 these Investment Advisory Agreements, NBAI is entitled to receive
an advisory fee, calculated daily and payable monthly, based on the following
annual rates multiplied by the average daily net assets of each Fund:
<TABLE>
<CAPTION>
ANNUAL
RATE
------
<S> <C>
International Equity and International Growth............ 0.90%
International Value...................................... 1.00%
Emerging Markets......................................... 1.10%
</TABLE>
Each of the Company and Nations Portfolios has entered into a sub-advisory
agreement (the "Sub-Advisory Agreements") with NBAI and Gartmore Global Partners
("Gartmore"). Gartmore is a joint venture structured as a general partnership
between NB Partner Corp., a wholly-owned subsidiary of NationsBank, and Gartmore
U.S. Ltd., an indirect wholly-owned subsidiary of Gartmore Investment Management
PLC ("Gartmore PLC"), which is a United Kingdom ("U.K.") holding company for a
leading U.K. based international fund management group of companies. National
Westminster Bank PLC and its affiliated entities own 100% of the equity of
Gartmore PLC.
Under the Sub-Advisory Agreements, Gartmore is entitled to receive a
sub-advisory fee from NBAI at the following annual rates of each Fund's average
daily net assets:
<TABLE>
<CAPTION>
ANNUAL
RATE
------
<S> <C>
International Equity..................................... 0.70%
International Growth..................................... 0.70%
Emerging Markets......................................... 0.85%
</TABLE>
The Company has, on behalf of International Value Fund, entered into a
sub-advisory agreement with NBAI and Brandes Investment Partners, L.P.
("Brandes"), pursuant to which Brandes is entitled to receive a fee from NBAI at
the annual rate of 0.50% of the Fund's average daily net assets.
Stephens Inc. ("Stephens") serves as the co-administrator of the Company and
Nations Portfolios. On December 28, 1998, 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 0.12% of each Fund's average daily net assets. Prior to December
28, 1998, 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 December 28, 1998, The Bank of New York ("BNY") began serving
as the sub-administrator of the Company and Nations Portfolios, respectively,
pursuant to an agreement with NBAI, and NBAI ceased to serve as sub-
administrator. For the year ended March 31, 1999, Stephens earned $518,561 from
the Funds for its administration services, of which $128,860 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) exceed 1.12% for the International Growth Fund
and 1.90% for the
62
<PAGE> 67
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Emerging Markets Fund of the respective Fund's average daily net assets. For the
year ended March 31, 1999, the investment advisor agreed to voluntarily waive
its advisory fees in the amount of $66,547 for the Emerging Markets Fund. For
the year ended March 31, 1999, the investment advisor has agreed to waive
investment advisory fees of 0.10% of the average daily net assets of the
International Value Fund.
BNY acts as custodian of the Funds' assets. First Data serves as the transfer
agent for the Funds' shares. NationsBank of Texas, N.A. ("NationsBank of Texas")
served as the sub-transfer agent for the Primary Shares of the Funds until it
merged into NationsBank on May 6, 1998. NationsBank began serving as
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 and NationsBank of Texas, N.A.
earned approximately $18,592 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 $104,123 in
front end sales charges for sales of Investor A Shares and $114,529 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 Company and Nations Portfolios pay each unaffiliated Director an annual fee
of $1,000 ($3,000 for the Chairman of the Board), plus $500 per Fund and an
additional $1,000 for each in-person board meeting, and $500 for each telephonic
board meeting attended. The Company and Nations Portfolios also reimburse
expenses incurred by each unaffiliated Director in attending such meetings.
The Company's and Nations Portfolio's eligible Directors may participate in
non-qualified deferred compensation and retirement plans which may be terminated
at any time. All benefits provided under these plans are unfunded and any
payments to plan participants are paid solely out of the Funds' assets. Income
earned on each plan participant's deferral account is tied to the rate of return
of the eligible mutual funds selected by the participants or, if no funds are
selected, to the rate of return of Nations Treasury Fund, a portfolio of the
Company. The expense for the deferred compensation and retirement plans is
included in "Directors' fees and expenses" in the Statements of Operations.
The Funds placed a portion of their portfolio transactions with firms that could
be deemed to be affiliates of Gartmore PLC.
International Value Fund has made daily investments of cash balances in Nations
Cash Reserves, a portfolio of Nations Institutional Reserves, pursuant to an
exemptive order received from the Securities and Exchange Commission. For the
year ended March 31, 1999, International Value Fund earned $294,279 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 Company and Nations Portfolios each have adopted a shareholder
administration plan for Primary B Shares of each Fund and shareholder servicing
plans and distribution plans for the Investor A, Investor B and Investor C
Shares of each Fund. The administration plan permits the Funds to compensate
institutions for shareholder administration services provided to their customers
that own Primary B Shares. The shareholder servicing plans permit the Funds to
compensate or reimburse servicing agents for shareholder services provided by
the servicing agents. The distribution plans, adopted pursuant to Rule 12b-1
under the 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 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.
63
<PAGE> 68
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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................... 0.50% 0.60%
Investor A Shareholder Servicing and
Distribution Plan.............................. 0.25% 0.25%
Investor B and Investor C Shareholder Servicing
Plans.......................................... 0.25% 0.25%
Investor B and Investor C Distribution Plans.... 0.75% 0.75%
</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>
International Value.................... $ 189,685 $ 51,694
International Equity................... 1,159,713 1,320,202
International Growth................... 56,255 293,496
Emerging Markets....................... 24,553 57,124
</TABLE>
There were no purchases or sales of long-term U.S. government securities for the
year ended March 31, 1999.
5. CAPITAL STOCK
As of March 31, 1999, 480,000,000,000 shares of $.001 par value capital stock
were authorized for the Company and 150,000,000,000 shares of $.001 par value
capital stock were authorized for Nations Portfolios. The Company's and Nations
Portfolios' Articles of Incorporation authorize the Boards of Directors to
classify or reclassify any authorized, but unissued shares into one or more
additional classes or series of shares. See Schedule of Capital Stock Activity.
6. FOREIGN SECURITIES
Each Fund may invest in foreign securities. Investing in securities of foreign
companies and foreign governments involves special risks and considerations not
typically associated with investing in U.S. companies and the U.S. government.
These risks include revaluation of currencies, less reliable information about
issuers, different securities transaction clearance and settlement practices,
and future adverse political and economic developments. These risks are
heightened for investments in emerging markets countries. Moreover, securities
of many foreign companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies and the U.S. government.
7. LINE OF CREDIT
The Company and Nations Portfolios 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 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>
International Growth...................... $1,438 5.51%
Emerging Markets.......................... 83 5.70
</TABLE>
The average amount outstanding was calculated based on daily balances in the
period.
8. 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 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.
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NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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>
International Value.............. $ 32,945 $ 34,212
International Equity............. 130,022 135,717
International Growth............. 34,796 36,852
Emerging Markets................. 2,294 2,371
</TABLE>
9. CAPITAL LOSS CARRYFORWARD
At March 31, 1999, the Emerging Markets Fund had available for Federal income
tax purposes unused capital losses of $3,825,000 expiring in 2006 and
$15,069,000 expiring in 2007.
Under current tax law, capital and currency losses realized after October 31 may
be deferred and treated as occurring on the first day of the following fiscal
year. For the fiscal year ended March 31, 1999, the Emerging Markets Fund
elected to defer losses of $2,207,758 occurring between November 1, 1998 and
March 31, 1999 under these rules.
10. REORGANIZATIONS
On May 23, 1997, the International Growth Fund, a newly established portfolio,
acquired the assets and certain liabilities of the Pilot International 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
International Growth Fund in an amount equal to the outstanding shares of the
Pilot International Equity Fund. The financial statements of the International
Growth Fund reflect the historical financial results of the Pilot International
Equity Fund prior to the reorganization. Additionally, the fiscal year end of
the Pilot International Equity Fund for financial reporting purposes was changed
to coincide with that of the Company.
On May 22, 1998, the International Value Fund, a newly established portfolio,
acquired the assets and certain liabilities of the Emerald International Equity
Fund pursuant to a plan of reorganization approved by its shareholders. The
acquisition was accomplished by a tax-free exchange of shares of International
Value Fund in an amount equal to the outstanding shares of the Emerald
International Equity Fund. The financial statements of the International Value
Fund reflect the historical financial results of the Emerald International
Equity Fund prior to the reorganization. Additionally, the fiscal year end of
the Emerald International Equity Fund for financial reporting purposes was
changed to coincide with that of the Company.
On March 30, 1999, the Emerging Markets Fund (the "Acquiring Fund"), acquired
the assets and certain liabilities of the Nations Pacific Growth Fund (the
"Acquired Fund"), in a taxable 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 as of the
reorganization date were as follows:
<TABLE>
<CAPTION>
TOTAL NET ASSETS OF
TOTAL NET ASSETS OF TOTAL NET ASSETS OF ACQUIRING FUND
ACQUIRED FUND ACQUIRING FUND AFTER ACQUISITION
(000) (000) (000)
- ---------------------------------------------------------------
<S> <C> <C>
$9,829 $14,553 $24,382
</TABLE>
11. 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
International Equity Fund of $43,073,185 were acquired in a tax-free
reorganization in exchange for shares of the Nations International Equity Fund
on May 14, 1999.
On December 2, 1998, the Board of Directors of the Company approved INVESCO
Global Asset Management (N.A.) Inc. ("INVESCO") and Putnam Investment
Management, Inc. ("Putnam") to serve with Gartmore as investment sub-advisors
for the International Equity Fund. Pursuant to the new sub-advisory
arrangements, each sub-advisor would manage approximately one-third of the
Fund's assets. On April 28, 1999, the shareholders approved the new sub-advisory
arrangements. This became effective May 3, 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 0.10% of the Funds' average daily net assets, and the combined
co-administration fee payable to NBAI and Stephens increased by the same amount.
65
<PAGE> 70
NATIONS FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND DIRECTORS 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
the Nations International Equity Fund, Nations International Growth Fund,
Nations Emerging Markets Fund, and Nations International Value Fund, (portfolios
of Nations Fund, Inc. or Nations Fund Portfolios, 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 International Value
Fund, formerly Emerald International Equity Fund, for the period ended May 15,
1998 and the year ended November 30, 1997 were audited by other independent
accountants whose report dated July 1, 1998 expressed an unqualified opinion on
those statements.
PricewaterhouseCoopers LLP
Boston, Massachusetts
May 28, 1999
66
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NATIONS FUNDS
TAX INFORMATION (UNAUDITED)
For the tax year ended March 31, 1999, the amount of long-term capital gain
designated by International Value and International Equity Funds was $9,017,582
and $65,761,755, respectively.
For the year ended March 31, 1999, the total amount of income received by
International Equity and Emerging Markets from sources within foreign countries
and possessions of the United States was $0.2558 and $0.3506 per share,
respectively (representing a total of $14,336,218 and $1,048,786, respectively).
The total amount of taxes paid by International Equity and Emerging Markets to
such countries was $0.0001 and $0.0191 per share, respectively (representing a
total of $2,467,320 and $95,521, respectively).
67
<PAGE> 72
NATIONS FUNDS
MEETING OF SHAREHOLDERS
On April 28, 1999, the Company held a Meeting of Shareholders of the Nations
International Equity Fund in Charlotte, North Carolina. The meeting was held to
approve the amended sub-advisory agreement with Gartmore Global Partners and to
approve each new sub-advisory agreement with INVESCO Global Asset Management
(N.A.), Inc. and Putnam Investment Management, Inc. It was approved by the
following votes: 53,088,200 For, 11,056 Against, and 20,345 Abstaining.
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