<PAGE> 1
NATIONS BALANCED TARGET
MATURITY FUND, INC.
ANNUAL
REPORT
For the Year Ended March 31, 1998
--------------
Nations
--------------
--------------
Balanced
--------------
--------------
Target
--------------
--------------
Maturity Fund
--------------
<PAGE> 2
- -------------------------------------------------------------------------------
NOT MAY LOSE VALUE
FDIC-
INSURED NO BANK GUARANTEE
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SHARES OF THE COMPANY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY NATIONSBANK, N.A. ("NATIONSBANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN THE COMPANY INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
NATIONSBANK OR ITS AFFILIATES PROVIDE INVESTMENT ADVISORY AND OTHER SERVICES TO
THE COMPANY, FOR WHICH THEY ARE COMPENSATED.
<PAGE> 3
Nations Balanced Target Maturity Fund, Inc.
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 32.4%
AEROSPACE AND DEFENSE -- 0.9%
2,950 Litton Industries, Inc.+.................................... $ 170,178
1,450 Lockheed Martin Corporation................................. 163,125
3,025 Raytheon Company, Class B................................... 176,584
-----------
509,887
-----------
APPAREL AND TEXTILES -- 0.7%
3,200 Claiborne (Liz) Inc. ....................................... 159,600
6,800 Reebok International Ltd.+.................................. 207,400
-----------
367,000
-----------
AUTOMOBILE PARTS MANUFACTURERS -- 0.5%
12,075 Cooper Tire & Rubber Company................................ 286,781
-----------
BANKS -- 0.7%
5,750 One Valley Bancorp Inc. .................................... 217,422
4,500 Southtrust Corporation...................................... 188,438
-----------
405,860
-----------
BEVERAGES -- 0.5%
3,400 Anheuser-Busch Companies Inc. .............................. 157,463
2,075 PepsiCo Inc. ............................................... 88,577
-----------
246,040
-----------
BUILDING PRODUCTS -- AIR AND HEATING -- 0.8%
2,825 Armstrong World Industries Inc. ............................ 244,539
5,500 Owens Corning............................................... 197,656
-----------
442,195
-----------
CHEMICALS -- BASIC -- 1.3%
2,625 Dow Chemical Company........................................ 255,281
5,925 Lubrizol Corporation........................................ 228,113
2,550 PPG Industries, Inc. ....................................... 173,241
1,650 Union Carbide Corporation................................... 82,706
-----------
739,341
-----------
CHEMICALS -- SPECIALTY -- 1.5%
3,900 BetzDearborn, Inc. ......................................... 220,106
4,850 Dexter Corporation.......................................... 200,669
6,600 Ferro Corporation........................................... 193,875
4,500 Olin Corporation............................................ 211,219
-----------
825,869
-----------
COMPUTERS -- 1.8%
10,550 Compaq Computer Corporation................................. 272,981
7,655 Flowserve Corporation....................................... 249,744
3,900 Hewlett-Packard Company..................................... 247,163
1,900 International Business Machines Corporation................. 197,363
-----------
967,251
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 4
Nations Balanced Target Maturity Fund, Inc.
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
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<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
COSMETICS AND TOILETRY -- 0.4%
7,800 Alberto Culver Company...................................... $ 237,413
-----------
DIVERSIFIED -- 1.0%
4,000 Raychem Corporation......................................... 166,250
4,500 Varian Associates Inc. ..................................... 249,188
1,900 Coastal Corporation......................................... 123,737
-----------
539,175
-----------
DURABLE GOODS -- WHOLESALE -- 0.5%
4,350 Avnet, Inc. ................................................ 250,397
-----------
ELECTRIC POWER -- 0.7%
6,100 Dominion Resources Inc. .................................... 256,200
5,000 Entergy Corporation......................................... 148,750
-----------
404,950
-----------
ELECTRIC SERVICES -- 0.4%
8,475 PP&L Resources Inc. ........................................ 200,222
-----------
ELECTRONICS -- 1.3%
5,850 AMP Inc. ................................................... 256,303
5,200 Arrow Electronics, Inc.+ ................................... 140,725
5,300 Motorola, Inc. ............................................. 321,313
-----------
718,341
-----------
FINANCIAL SERVICES -- 2.5%
2,350 AllState Corporation........................................ 216,053
2,875 BankAmerica Corporation..................................... 237,547
2,350 Bankers Trust New York Corporation.......................... 282,734
2,550 Chase Manhattan Corporation................................. 343,931
2,425 The Hartford Financial Services Group Inc. ................. 263,113
-----------
1,343,378
-----------
FOOD -- 0.7%
4,250 Nabisco Holdings Corporation, Class A....................... 199,750
3,000 Quaker Oats Company......................................... 171,750
-----------
371,500
-----------
FURNITURE AND APPLIANCES -- 0.3%
6,250 Rubbermaid, Inc. ........................................... 178,125
-----------
INSURANCE -- 0.4%
3,675 SAFECO Corporation.......................................... 200,862
-----------
MACHINERY AND EQUIPMENT -- 2.1%
7,600 AGCO Corporation............................................ 225,625
5,400 Briggs & Stratton........................................... 247,387
3,575 General Signal Corporation.................................. 167,131
7,625 Harnischfeger Industries Inc. .............................. 260,680
5,450 Nordson Corporation......................................... 271,819
-----------
1,172,642
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 5
Nations Balanced Target Maturity Fund, Inc.
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SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL PRODUCTS AND SUPPLIES -- 1.4%
1,400 Abbott Laboratories......................................... $ 105,437
6,050 Bard (C.R.) Inc. ........................................... 222,338
3,475 Johnson & Johnson Corporation............................... 254,761
5,050 United States Surgical Corporation.......................... 166,650
-----------
749,186
-----------
MEDICAL SERVICES -- 0.3%
7,450 Humana Inc.+................................................ 184,853
-----------
OIL -- DOMESTIC -- 4.5%
1,200 Amoco Corporation........................................... 103,650
4,850 Apache Corporation.......................................... 178,237
3,200 Atlantic Richfield Company.................................. 251,600
3,325 Mobil Corporation........................................... 254,778
4,900 Murphy Oil Corporation...................................... 245,612
9,650 Occidental Petroleum Corporation............................ 282,866
4,750 Phillips Petroleum Company.................................. 237,203
5,775 Ultramar Diamond Shamrock Corporation....................... 203,569
9,375 Union Pacific Resources Group Inc. ......................... 223,828
12,300 Union Texas Petroleum Holdings, Inc. ....................... 272,137
6,000 Unocal Corporation.......................................... 232,125
-----------
2,485,605
-----------
OIL -- INTERNATIONAL -- 0.7%
3,300 Repsol SA, ADR.............................................. 167,888
7,000 Y.P.F. SA, Sponsored ADR.................................... 238,000
-----------
405,888
-----------
OIL -- SERVICES -- 0.4%
6,350 Valero Energy Corporation................................... 211,931
-----------
PAPER AND FOREST PRODUCTS -- 0.7%
1,600 Kimberly-Clark Corporation.................................. 80,200
5,350 Louisiana-Pacific Corporation............................... 124,387
6,600 Westvaco Corporation........................................ 202,950
-----------
407,537
-----------
RESTAURANTS AND LODGING -- 0.4%
10,225 Wendy's International....................................... 228,145
-----------
RETAIL -- 1.0%
8,325 Dillards Inc., Class A...................................... 307,505
3,500 Nordstrom Inc. ............................................. 223,344
-----------
530,849
-----------
STEEL -- 0.3%
3,175 Nucor Corporation........................................... 172,839
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 6
Nations Balanced Target Maturity Fund, Inc.
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SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
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<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS -- 1.7%
5,600 Alltel Corporation.......................................... $ 244,650
14,100 DSC Communications+......................................... 256,444
13,225 Scientific-Atlantic Inc. ................................... 258,714
8,500 Telefonica De Peru, ADR..................................... 183,281
-----------
943,089
-----------
TRANSPORTATION -- RAILROADS -- 0.5%
2,350 Burlington Northern Santa Fe Inc. .......................... 244,400
-----------
UTILITIES -- NATURAL GAS -- 0.6%
3,025 Equitable Resources Inc. ................................... 100,581
5,950 Peoples Energy Corporation.................................. 216,431
-----------
317,012
-----------
UTILITIES -- TELEPHONE -- 0.9%
6,125 Baker Hughes, Inc. ......................................... 246,531
4,050 GTE Corporation............................................. 242,494
-----------
489,025
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TOTAL COMMON STOCKS (Cost $16,386,583)...................... 17,777,588
-----------
INVESTMENT COMPANY -- 2.6% (Cost $1,444,589)
1,444,589 Nations Cash Reserves(b).................................... 1,444,589
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 65.1%
$15,256,800 TIGR, Interest Receipt, 7.460% 08/15/04**................... 10,566,707
20,000,000 TIGR, Principal Receipt, 7.440% 08/15/04**.................. 13,851,800
16,120,000 U.S. Treasury Strip, 7.440% 08/15/04**...................... 11,237,413
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS (Cost $32,218,843)........ 35,655,920
-----------
TOTAL INVESTMENTS (Cost $50,050,015(a))..................... 100.1% 54,878,097
OTHER ASSETS AND LIABILITIES (NET).......................... (0.1) (82,017)
----- -----------
NET ASSETS.................................................. 100.0% $54,796,080
===== ===========
</TABLE>
- ---------------
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $4,923,597 and gross
depreciation of $120,522 for federal income tax purposes. At March 31, 1998,
the aggregate cost of securities for federal income tax purposes was
$50,075,022.
(b) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
** The rate shown is the effective yield at date of purchase.
+ Non-income producing security.
ABBREVIATIONS:
ADR -- American Depository Receipt
TIGR -- Treasury Investor Growth Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 7
Nations Balanced Target Maturity Fund, Inc.
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STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $50,050,015) (Note 1)
See accompanying schedule............................ $54,878,097
Cash................................................... 464
Receivable for investment securities sold.............. 362,617
Dividends and interest receivable...................... 35,476
Unamortized organization costs (Note 1)................ 13,819
-----------
Total Assets...................................... 55,290,473
LIABILITIES:
Payable for investment securities purchased............ $354,779
Accrued legal and audit fees payable................... 61,201
Investment advisory fee payable (Note 2)............... 21,171
Transfer agent fees payable (Note 2)................... 15,773
Administration fee payable (Note 2).................... 11,599
Custodian fees payable (Note 2)........................ 9,472
Accrued Directors' fees and expenses (Note 2).......... 1,125
Accrued expenses and other payables.................... 19,273
--------
Total Liabilities................................. 494,393
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NET ASSETS.................................................. $54,796,080
===========
NET ASSETS consist of:
Undistributed net investment income.................... $ 1,717
Accumulated net realized gain on investments sold...... 1,168,638
Net unrealized appreciation of investments............. 4,828,082
Common Stock at par value (Note 4)..................... 5,231
Paid-in capital in excess of par value................. 48,792,412
-----------
Total Net Assets.................................. $54,796,080
===========
NET ASSET VALUE PER SHARE:
($54,796,080 / 5,231,163 shares of common stock
outstanding).............................................. $10.47
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
Nations Balanced Target Maturity Fund, Inc.
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STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................... $ 2,363,001
Dividends.............................................. 479,521
-----------
Total Investment Income........................... 2,842,522
EXPENSES:
Investment advisory fee (Note 2)....................... $271,738
Administration fee (Note 2)............................ 141,589
Legal and audit fees................................... 85,095
Transfer agent fees (Note 2)........................... 78,652
Custodian fees (Note 2)................................ 28,638
Amortization of organization costs (Note 1)............ 11,056
Directors' fees and expenses (Note 2).................. 9,002
Income tax expense..................................... 4,411
Other.................................................. 67,525
--------
Total Expenses.................................... 697,706
-----------
NET INVESTMENT INCOME....................................... 2,144,816
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
(NOTES 1 AND 3):
Net realized gain on investments during the period..... 5,397,031
Net unrealized appreciation of investments during the
period................................................ 4,083,611
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............. 9,480,642
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $11,625,458
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
Nations Balanced Target Maturity Fund, Inc.
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STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
03/31/98 03/31/97
----------- -----------
<S> <C> <C>
Net investment income....................................... $ 2,144,816 $ 2,247,549
Net realized gain on investments............................ 5,397,031 6,344,318
Net unrealized appreciation/(depreciation) on investments... 4,083,611 (3,817,472)
----------- -----------
Net increase in net assets resulting from operations........ 11,625,458 4,774,395
Distributions to shareholders from net investment income.... (2,144,777) (2,281,662)
Distributions to shareholders from net realized gain on
investments............................................... (7,548,568) (6,009,731)
----------- -----------
Net increase/(decrease) in net assets....................... 1,932,113 (3,516,998)
NET ASSETS:
Beginning of year........................................... 52,863,967 56,380,965
----------- -----------
End of year (including undistributed net investment income
and distributions in excess of net investment income of
$1,717 and $(439), respectively).......................... $54,796,080 $52,863,967
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
Nations Balanced Target Maturity Fund, Inc.
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FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
03/31/98 03/31/97 03/31/96 03/31/95*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of year.......................... $ 10.11 $ 10.78 $ 9.67 $ 9.35#
------- ------- ------- -------
Net investment income....................................... 0.41 0.43 0.40 0.29**
Net realized and unrealized gain on investments............. 1.80 0.49 1.61 0.40
------- ------- ------- -------
Net increase in net assets resulting from investment
operations................................................ 2.21 0.92 2.01 0.69
Offering expenses charged to paid-in-capital................ -- -- -- (0.03)
Distributions:
Distributions from net investment income.................... (0.41) (0.44) (0.40) (0.29)
Distributions in excess of net investment income............ -- -- -- (0.00)##
Distributions from net realized capital gains............... (1.44) (1.15) (0.50) (0.05)
------- ------- ------- -------
Total distributions......................................... (1.85) (1.59) (0.90) (0.34)
------- ------- ------- -------
Net asset value, end of year................................ $ 10.47 $ 10.11 $ 10.78 $ 9.67
======= ======= ======= =======
Market value, end of year................................... $ 10.00 $ 9.00 $ 9.25 $ 8.50
------- ------- ------- -------
Total return++.............................................. 32.73% 13.93% 19.25% (5.54)%
------- ------- ------- -------
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's).......................... $54,796 $52,864 $56,381 $50,238
Ratio of operating expenses to average net assets........... 1.23% 1.18% 1.24% 1.10%+
Ratio of net investment income to average net assets........ 3.78% 4.01% 3.75% 4.12%+
Portfolio turnover rate..................................... 106% 99% 46% 25%
Average commission rate (per share of security)+++.......... $0.0589 $0.0592 $0.0623 N/A
</TABLE>
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<TABLE>
<C> <S>
* Nations Balanced Target Maturity Fund, Inc. commenced
operations on June 30, 1994.
** Per share amounts have been calculated using the monthly
average shares method.
+ Annualized.
++ Total return represents aggregate total return for the
period based on market value at period end.
+++ Average commission rate paid per share of securities
purchased and sold by the Company.
# Initial offering price net of sales commissions of $0.65 per
share.
## Value represents less than $0.01 per share.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
Nations Balanced Target Maturity Fund, Inc.
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NOTES TO FINANCIAL STATEMENTS
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Nations Balanced Target Maturity Fund, Inc. (the "Company") is registered with
the Securities and Exchange Commission ("SEC") as a diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act").
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 may differ from those estimates. The following is a summary of
significant accounting policies followed by the Company in the preparation of
its financial statements.
Securities Valuation: Securities which are traded on a recognized securities
exchange or on the NASDAQ system are valued at the last sales price on the
securities exchange or market on which such securities are primarily traded or
at the last sale price on a national securities market. Securities traded only
on over-the-counter markets (other than on the NASDAQ National Market System)
are valued on the basis of the closing over-the-counter bid prices or, if no
sale occurred on such day, at the mean of the current bid and asked prices.
Certain securities are valued using broker quotations or on the basis of prices
provided by a pricing service. Restricted securities, securities for which
market quotations are not readily available and certain other assets are valued
by the investment adviser under the supervision of the Board of Directors.
Short-term investments that mature in 60 days or less are valued at amortized
cost.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Realized gains or losses are computed based
on the specific identification of the securities sold. Interest income, adjusted
for accretion of discounts and amortization of premiums, is earned from the
settlement date and is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date.
Dividends and Distributions to Shareholders: It is the policy of the Company to
declare and pay distributions from net investment income quarterly to
shareholders. The Company expects that all or a portion of net capital gains, if
any, will be distributed to shareholders annually. The Company may elect to
retain net long-term gains and pay corporate income tax thereon, which will
result in Federal tax consequences to shareholders. Income and capital gain
distributions are determined in accordance with Federal income tax regulations
which may differ from generally accepted accounting principles. Certain
reclassifications are made to the Company's capital accounts to reflect income
and gains available for distribution (or available for capital loss
carryforwards) under Federal income tax regulations. For the year ended March
31, 1998, reclassifications have been made to increase undistributed net
investment income by $2,117 and decrease paid-in capital by $2,117.
Federal Income Tax: The Company intends to continue to qualify as a regulated
investment company, if such qualification is in the best interest of its
shareholders, by complying with the requirements of the Internal Revenue Code of
1986, as amended, applicable to regulated investment companies and by
distributing substantially all of its earnings to its shareholders. Therefore,
no Federal income or excise tax provision is applicable.
Organization Costs: The Company bears all costs in connection with its
organization. All such costs are being amortized on the straight-line method
over a period of five years from the commencement of operations for the Company.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND OTHER
RELATED PARTY TRANSACTIONS.
The Company has entered into an investment advisory agreement with NationsBanc
Advisors, Inc. ("NBAI"), pursuant to which it pays NBAI a monthly fee equal to
an annual rate of 0.30% of the Company's average weekly net investment in Zero
Coupon (Stripped) U.S. Treasuries plus 0.75% of the Company's average weekly net
assets in investments other than Zero Coupon (Stripped) U.S. Treasuries.
The Company and NBAI have entered into a sub-advisory agreement with TradeStreet
Investment Associates, Inc., ("TradeStreet"), a wholly-owned subsidiary of
NationsBank, pursuant to which TradeStreet is entitled to receive a sub-
advisory fee from NBAI at an annual rate of 0.15% of the Company's average
weekly net investment in Zero Coupon (Stripped) U.S. Treasuries plus 0.25% of
the Company's average weekly net assets in investments other than Zero Coupon
(Stripped) U.S. Treasuries.
11
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Nations Balanced Target Maturity Fund, Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Effective January 1, 1998, NBAI became the Company's Administrator. Prior to
that date, NationsBank served as the Administrator. In its role as
Administrator, NBAI (and prior to January 1998, NationsBank) supervises the
overall day-to-day operations and provides certain administrative services. NBAI
also maintains certain of the Company's books and records and furnishes, at its
own expense, such clerical assistance, bookkeeping and other administrative
services as the Company may reasonably require in the conduct of its business.
As compensation for both the administrative services and the expenses assumed by
NBAI, the Company pays NBAI a monthly fee equal to an annual rate of 0.25% of
the Company's average weekly net assets.
NBAI has entered into a sub-administration agreement dated January 1, 1998, with
First Data Investor Services Group, Inc. ("First Data"), a wholly-owned
subsidiary of First Data Corporation. First Data provides certain administrative
services in support of the operations of the Company. The fees of First Data are
paid out of the fees paid to NBAI by the Company for administrative services.
(Prior to January 1, 1998, the fees of First Data were part of the fees paid to
NationsBank for administrative services.) First Data also serves as the transfer
agent and dividend disbursing agent for the Company.
NationsBank of Texas, N.A. ("NationsBank of Texas") served as the custodian of
the Company's assets and, for the year ended March 31, 1998, earned $28,638 for
providing such services. The Bank of New York ("BONY") has entered into an
agreement with the Company and NationsBank of Texas whereby BONY serves as
sub-custodian for the Company.
The Company pays the Chairman of the Board of Directors and each unaffiliated
director an annual fee of $1,000, plus an additional $500 for each board meeting
attended, plus reimbursement of expenses incurred in attending such meetings.
The Company 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
period ended March 31, 1998, the Company earned $34,549 in the aggregate from
such investments.
3. PURCHASES AND SALES OF SECURITIES.
The aggregate cost of purchases and proceeds from sales of securities, excluding
U.S. government securities and short-term investments, for the year ended March
31, 1998 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- -------------------------
<S> <C>
$57,405,307 $65,566,233
</TABLE>
There were no purchases or sales of long-term U.S. government securities for the
year ended March 31, 1998.
4. COMMON STOCK.
At March 31, 1998, 1,000,000,000 shares of common stock, $.001 par value, were
authorized.
The Board of Directors has approved a plan that gives the Company the
flexibility to engage in occasional repurchases of its outstanding common stock.
Accordingly, shareholders are notified that, from time to time, the Company may
purchase shares of its common stock in the open market when management of the
Company believes that such purchases are appropriate in light of market
conditions, including the presence of a market discount. There were no share
repurchases for the year ended March 31, 1998.
5. SUBSEQUENT EVENT.
NationsBank of Texas merged into NationsBank on May 6, 1998. NationsBank began
serving as custodian of the Company's assets on that date and is providing the
same services as were previously provided by NationsBank of Texas.
12
<PAGE> 13
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REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND DIRECTORS OF
NATIONS BALANCED TARGET MATURITY FUND, INC.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Nations Balanced Target Maturity
Fund, Inc. (the "Company") at March 31, 1998, and the results of its operations,
the changes in its 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 Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at March
31, 1998 by correspondence with the custodian and the application of alternative
auditing procedures where securities purchased had not been received by the
custodian, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
May 15, 1998
13
<PAGE> 14
Nations Balanced Target Maturity Fund, Inc.
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
For the year ended March 31, 1998, the amount of long term capital gain
distributed to shareholders by the fund was $952,872 of which $875,594 is
taxable as 28% rate gain, and $77,278 is taxable as 20% rate gain. Of the
ordinary income (including short-term capital gain) distributions made by the
Company during the fiscal year ended March 31, 1998, 5.63% qualified for the
dividends received deduction available to corporate shareholders.
14
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Nations Balanced Target Maturity Fund, Inc.
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DIVIDEND REINVESTMENT PLAN
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THE PLAN
The Company's Dividend Reinvestment Plan (the "Plan") offers an automatic way to
reinvest your dividends and capital gains distributions in shares of the
Company.
PARTICIPATION
Shareholders of record will receive their dividends in cash unless they have
otherwise instructed First Data (the "Plan Agent"), acting as agent for each
participant in the Plan, in writing. Such a notice must be received by the Plan
Agent not less than 5 business days prior to the record date for a dividend or
distribution in order to be effective with respect to that dividend or
distribution. A notice which is not received by that time will be effective only
with respect to subsequent dividends and distributions.
Shareholders who do not participate in the Plan will receive all distributions
by check mailed directly to the shareholder by First Data, as dividend paying
agent. For Federal income tax purposes, dividends are treated as income or
capital gains, regardless of whether they are received in cash or reinvested in
additional shares.
Participants may terminate their participation in the Plan by written notice to
the Plan Agent. If the written notice is received at least 5 business days
before the record date of any distribution, it will be effective immediately. If
received after that date, it will be effective as soon as possible after the
reinvestment of the dividend or distribution.
PRICING OF DIVIDENDS AND DISTRIBUTIONS
Whenever the Company's Board of Directors declares a dividend or other
distribution payable in cash or, at the option of the Plan Agent, in shares of
capital stock issued by the Company, the Plan Agent will elect on behalf of the
participants to receive the dividend in authorized but unissued shares of
capital stock if the net asset value per share (as determined by the investment
adviser of the Company as of the close of business on the record date for the
dividend or distribution) is equal to or less than 95% of the closing market
price per share of the capital stock of the Company on the New York Stock
Exchange (the "Exchange") on such record date plus estimated brokerage
commissions. The number of such authorized but unissued shares to be credited to
a participant's account will be determined as of the close of business on the
record date for the dividend, by valuing such shares at the greater of the net
asset value per share or 95% of the market price per share. The Plan Agent will
credit each participant's account with the number of shares corresponding in
value, as determined under the foregoing formula, to the amount such participant
would have received in cash had such participant not elected to participate in
this Plan.
If the net asset value per share is equal to or less than the closing market
price per share of the capital stock of the Company on the Exchange on such
record date plus estimated brokerage commissions but exceeds 95% of such closing
market price plus estimated brokerage commissions, the Plan Agent may elect on
behalf of all participants (i) to take the dividend in cash and as soon as
practicable thereafter, consistent with obtaining the best price and execution,
proceed to purchase in one or more transactions the shares of capital stock in
the open market, at the then current price as hereinafter provided, and will
credit each participant's account with the number of shares corresponding in
value, as determined by the price actually paid on the open market for such
shares including brokerage expenses, to the amount such participant would have
received in cash had such participant not elected to participate in this Plan or
(ii) to receive the dividend in authorized but unissued shares of capital stock,
in which case the Plan Agent will credit each participant's account with the
number of shares corresponding in value (determined by valuing such shares at
the greater of the net asset value per share or 95% of the market price per
share, in each case as of the close of business on the record date for the
dividend or distribution) to the amount such participant would have received in
cash had such participant not elected to participate in this Plan.
If the net asset value per share is higher than the closing market price per
share of the capital stock of the Company on the Exchange on such record date
including estimated brokerage commissions, the Plan Agent will elect to take the
dividend in cash and as soon as practicable thereafter, consistent with
obtaining the best price and execution, the Plan Agent will proceed to purchase
in one or more transactions the shares of capital stock in the open market, at
the then current price as hereinafter provided. Each participant's account will
be credited with the number of shares corresponding in value, as determined by
the price actually paid on the open market for such shares including brokerage
expenses, to the amount such participant would have received in cash had such
participant not elected to participate in this Plan. Under such circumstances,
in anticipation of receipt of a dividend in cash, the Plan Agent may purchase
shares in the open
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Nations Balanced Target Maturity Fund, Inc.
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DIVIDEND REINVESTMENT PLAN (CONTINUED)
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market during the period between the record date and the payable date for the
dividend or distribution. The Plan has been amended to specifically authorize
such anticipatory purchases.
If the Plan Agent elects to purchase shares in the open market, and if before
the Plan Agent has completed its purchases the market price exceeds the net
asset value per share, the average per share purchase price paid by the Plan
Agent may exceed the net asset value of the Company's shares, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Company. During certain market conditions, it may be
impracticable or impossible to complete a market purchase program at prices that
are below or not substantially in excess of net asset value, and, in such event,
the Company may in its discretion issue the required shares.
NO SERVICE FEE TO REINVEST
There is no service fee charged to participants for reinvesting dividends or
distributions from net realized capital gains. The Plan Agent's fees for the
handling of the reinvestment of dividends and capital gains distributions will
be paid by the Company. There will be no brokerage commissions with respect to
shares issued directly by the Company as a result of dividends or capital gains
distributions payable either in stock or in cash. However, participants will pay
a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of any
dividends or capital gains distributions payable only in cash.
PLAN AGENT ADDRESS AND TELEPHONE NUMBER
You may obtain more detailed information by requesting a copy of the Plan from
the Plan Agent. All correspondence (including notifications) should be directed
to: Nations Balanced Target Maturity Fund, Inc., Dividend Reinvestment Plan, c/o
First Data Investor Services Group, Inc., P.O. Box 34602, Charlotte, NC 28234,
(800) 982-2271.
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BULK RATE
PO Box 34602 U.S. POSTAGE
Charlotte, NC 28234-4602 PAID
Toll Free 1-800-982-2271 N READING, MA
PERMIT NO.
105
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AR6 IN-96216-398
