NATIONS ANNUITY TRUST, 497, 1999-10-12

NATIONS ANNUITY TRUST
497, 1999-10-12

Previous: CAPITAL AUTOMOTIVE REIT, 8-K/A, 1999-10-12

Next: GLOBAL IMAGING SYSTEMS INC, 11-K, 1999-10-12

[GRAPHIC]
NATIONS ANNUITY TRUST
PROSPECTUS

MAY 1, 1999
AS SUPPLEMENTED ON
OCTOBER 1, 1999
---------

EQUITY PORTFOLIOS
NATIONS VALUE PORTFOLIO
NATIONS INTERNATIONAL GROWTH PORTFOLIO
NATIONS DISCIPLINED EQUITY PORTFOLIO
NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO
NATIONS MARSICO GROWTH & INCOME PORTFOLIO

MANAGED INDEX PORTFOLIOS
NATIONS MANAGED INDEX PORTFOLIO
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO

BALANCED PORTFOLIO
NATIONS BALANCED ASSETS PORTFOLIO

THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[GRAPHIC]
NOT FDIC INSURED
- ------------------
May Lose Vaule
- ------------------
No Bank Guarantee
- ------------------

[GRAPHIC]
NATIONS FUNDS
<PAGE>
AN OVERVIEW OF THE PORTFOLIOS
- --------------------------------------------------------------------------------
[GRAPHIC]
TERMS USED IN THIS PROSPECTUS

IN THIS PROSPECTUS, WE, US AND OUR REFER TO THE NATIONS FUNDS
FAMILY (NATIONS FUNDS). SOME OTHER IMPORTANT TERMS WE'VE USED MAY
BE NEW TO YOU. THESE ARE PRINTED IN ITALICS WHERE THEY FIRST APPEAR
IN A SECTION AND ARE DESCRIBED IN TERMS USED IN THIS PROSPECTUS.

[GRAPHIC]
YOU'LL FIND TERMS USED
IN THIS PROSPECTUS ON
PAGE 33.

YOUR INVESTMENT IN THESE PORTFOLIOS IS NOT A BANK DEPOSIT AND IS
NOT INSURED OR GUARANTEED BY BANK OF AMERICA, N. A. (BANK OF
AMERICA), THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY
OTHER GOVERNMENT AGENCY. YOUR INVESTMENT MAY LOSE MONEY.

AFFILIATES OF BANK OF AMERICA ARE PAID FOR THE SERVICES THEY
PROVIDE TO THE PORTFOLIOS.

This booklet, which is called a prospectus, tells you about eight Nations
Annuity Trust portfolios. The portfolios are the underlying investment vehicles
for certain variable annuity and variable life insurance separate accounts
issued by participating life insurance companies, including Hartford Life
Insurance Company. Please read it carefully, because it contains information
that's designed to help you make informed investment decisions.

ABOUT THE PORTFOLIOS
Each group of portfolios has a different investment focus:

o Equity portfolios invest primarily in EQUITY SECURITIES of U.S. companies

o International portfolios invest primarily in equity securities of companies
outside the United States

o Managed Index portfolios are intended to match the industry and risk
characteristics of a specific stock market index, like the S&P 500, by
investing primarily in equity securities that are included in the index

o Balanced portfolios invest in a mix of equity and FIXED INCOME SECURITIES,
as well as MONEY MARKET INSTRUMENTS

The portfolios also have different risk/return characteristics because they
invest in different kinds of securities.

Equity securities have the potential to provide you with higher returns than
many other kinds of investments, but they also tend to have the highest risk.
FOREIGN SECURITIES also involve special risks not associated with investing in
the U.S. stock market, which you need to be aware of before you invest.

Fixed income securities have the potential to increase in value because when
interest rates fall, the value of these securities tends to rise. When interest
rates rise, however, the value of these securities tends to fall. Other things
can also affect the value of fixed income securities.

In every case, there's a risk that you'll lose money or you may not earn as
much as you expect.

2
<PAGE>
CHOOSING THE RIGHT PORTFOLIOS FOR YOU
Not every portfolio is right for every investor. When you're choosing a
portfolio to invest in, you should consider things like your investment goals,
how much risk you can accept and how long you're planning to hold your
investment.

The Equity, International and Managed Index portfolios all focus on long-term
growth. They may be suitable for you if:

o you have longer-term investment goals

o they're part of a balanced portfolio

o you want to try to protect your portfolio against a loss of buying power
that inflation can cause over time

They may not be suitable for you if:

o you're not prepared to accept or are unable to bear the risks associated
with equity securities, including foreign securities

o you have short-term investment goals

o you're looking for a regular stream of income

The Balanced portfolio invests in a mix of equity and fixed income securities,
as well as money market instruments. It may be suitable for you if:

o you're looking for both long-term growth and income

o you want a diversified portfolio in a single mutual fund

It may not be suitable for you if:

o you're not prepared to accept or are unable to bear the risks associated
with equity and fixed income securities

o you have short-term investment goals

o you're looking for a regular stream of income

You'll find a discussion of each portfolio's principal investments, strategies
and risks in the portfolio descriptions that start on page 5.

FOR MORE INFORMATION
If you have any questions about the portfolios, please call us at
1.800.321.7854 or contact your investment professional.

You'll find more information about the portfolios in the Statement of
Additional Information (SAI). The SAI includes more detailed information about
each portfolio's investments, policies, performance and management, among other
things. Please turn to the back cover to find out how you can get a copy.

3
<PAGE>
WHAT'S INSIDE
- --------------------------------------------------------------------------------
[GRAPHIC]
BANC OF AMERICA ADVISORS, INC.

BANC OF AMERICA ADVISORS, INC. (BAAI) IS THE INVESTMENT ADVISER TO
EACH OF THE PORTFOLIOS. BAAI IS RESPONSIBLE FOR THE OVERALL
MANAGEMENT AND SUPERVISION OF THE INVESTMENT MANAGEMENT OF EACH
PORTFOLIO. BAAI AND NATIONS ANNUITY TRUST HAVE ENGAGED INVESTMENT
SUB-ADVISERS, WHICH ARE RESPONSIBLE FOR THE DAY-TO-DAY INVESTMENT
DECISIONS FOR EACH OF THE PORTFOLIOS.

[GRAPHIC]
YOU'LL FIND MORE ABOUT
BAAI AND THE SUB-ADVISERS
STARTING ON PAGE 23.

[GRAPHIC]
ABOUT THE PORTFOLIOS
<TABLE>
<CAPTION>
<S> <C>
EQUITY PORTFOLIOS
NATIONS VALUE PORTFOLIO 5
Sub-adviser: TradeStreet Investment Associates, Inc.
- -------------------------------------------------------------------
NATIONS INTERNATIONAL GROWTH PORTFOLIO 7
Sub-adviser: Gartmore Global Partners
- -------------------------------------------------------------------
NATIONS DISCIPLINED EQUITY PORTFOLIO 9
Sub-adviser: TradeStreet Investment Associates, Inc.
- -------------------------------------------------------------------
NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO 11
Sub-adviser: Marsico Capital Management, LLC
- -------------------------------------------------------------------
NATIONS MARSICO GROWTH & INCOME PORTFOLIO 13
Sub-adviser: Marsico Capital Management, LLC

MANAGED INDEX PORTFOLIOS
NATIONS MANAGED INDEX PORTFOLIO 15
Sub-adviser: TradeStreet Investment Associates, Inc.
- -------------------------------------------------------------------
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO 17
Sub-adviser: TradeStreet Investment Associates, Inc.

BALANCED PORTFOLIO
NATIONS BALANCED ASSETS PORTFOLIO 19
Sub-adviser: TradeStreet Investment Associates, Inc.
- -------------------------------------------------------------------
OTHER IMPORTANT INFORMATION 21
- -------------------------------------------------------------------
HOW THE PORTFOLIOS ARE MANAGED 23

[GRAPHIC]
ABOUT YOUR INVESTMENT
INFORMATION FOR INVESTORS
Buying, selling and transfering shares 28
How selling and servicing agents are paid 29
Distributions and taxes 30
- -------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 31
- -------------------------------------------------------------------
TERMS USED IN THIS PROSPECTUS 33
- -------------------------------------------------------------------
WHERE TO FIND MORE INFORMATION BACK COVER
</TABLE>
4
<PAGE>
ABOUT THE EQUITY PORTFOLIOS
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

TRADESTREET INVESTMENT ASSOCIATES, INC. (TRADESTREET) IS THIS
PORTFOLIO'S SUB-ADVISER. TRADESTREET'S VALUE MANAGEMENT TEAM MAKES
THE DAY-TO-DAY INVESTMENT DECISIONS FOR THE PORTFOLIO.

[GRAPHIC]
YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 24.

[GRAPHIC]
WHAT IS VALUE INVESTING?

VALUE INVESTING MEANS LOOKING FOR "UNDERVALUED" COMPANIES - QUALITY
COMPANIES THAT MAY BE CURRENTLY OUT OF FAVOR AND SELLING AT A
REDUCED PRICE, BUT THAT HAVE GOOD POTENTIAL TO INCREASE IN VALUE.

THE MANAGEMENT TEAM USES FUNDAMENTAL ANALYSIS TO HELP DECIDE
WHETHER THE CURRENT STOCK PRICE OF A COMPANY MAY BE LOWER THAN THE
COMPANY'S TRUE VALUE, AND THEN LOOKS FOR THINGS THAT COULD TRIGGER
A RISE IN PRICE, LIKE A NEW PRODUCT LINE, NEW PRICING OR A CHANGE
IN MANAGEMENT. THIS TRIGGER IS OFTEN CALLED A "CATALYST."

NATIONS VALUE PORTFOLIO

[GRAPHIC]
INVESTMENT OBJECTIVE
This portfolio seeks growth of capital by investing in companies
that are believed to be undervalued.

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
The portfolio normally invests at least 65% of its assets in COMMON
STOCKS of U.S. companies. It generally invests in companies in a broad
range of industries with market capitalizations of at least $1 billion
and daily trading volumes of at least $3 million.

The portfolio may also invest in securities that aren't part of its principal
investment strategies, but it won't hold more than 10% of its assets in any one
type of these securities. These securities are described in the SAI.

The management team uses FUNDAMENTAL ANALYSIS to identify stocks of companies
that it believes are undervalued, looking at, among other things:

o the quality of the company

o the company's projected earnings and dividends

o the stock's PRICE-TO-EARNINGS RATIO relative to other stocks in the same
industry or economic sector. The team believes that companies with lower
price-to-earnings ratios are generally more likely to provide better
opportunities for capital appreciation

o the stock's potential to provide total return

o the value of the stock relative to the overall stock market

The team also looks for a "catalyst" for improved earnings. This could be, for
example, a new product, new management or a new sales channel.

The management team may use various strategies, consistent with the portfolio's
investment objective, to try to reduce the amount of CAPITAL GAINS distributed
to shareholders. For example, the team:

o may limit the number of buy and sell transactions it makes

o will try to sell shares that have the lowest tax burden on shareholders

o may offset capital gains by selling securities to realize a CAPITAL LOSS

While the portfolio tries to manage its capital gain distributions, it will not
be able to completely avoid making taxable distributions. These strategies also
may be affected by changes in tax laws and regulations, or by court decisions.

The team may sell a security when its price reaches the target set by the team,
there is a deterioration in the company's financial situation, when the team
believes other investments are more attractive, or for other reasons.

5
<PAGE>
[GRAPHIC]
YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS PORTFOLIO
ON PAGE 21 AND IN THE SAI.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER

Nations Value Portfolio has the following risks:

o INVESTMENT STRATEGY RISK - The management team chooses stocks that it
believes are undervalued, with the expectation that they will rise in
value. There is a risk that the value of these investments will not
rise as high as the team expects, or will fall.

o STOCK MARKET RISK - The value of the stocks the portfolio holds can be
affected by changes in U.S. or foreign economies and financial
markets, and the companies that issue the stocks, among other things.
Stock prices can rise or fall over short as well as long periods. In
general, stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. As of the date of this
prospectus, the stock markets, as measured by the S&P 500 and other
commonly used indices, were trading at or close to record levels.
There can be no guarantee that these levels will continue.

6
<PAGE>
ABOUT THE EQUITY PORTFOLIOS
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

GARTMORE GLOBAL PARTNERS (GARTMORE) IS THIS PORTFOLIO'S
SUB-ADVISER. BRIAN O'NEILL, THE PRINCIPAL SENIOR INVESTMENT MANAGER
OF THE GARTMORE GLOBAL PORTFOLIO TEAM, MAKES THE DAY-TO-DAY
INVESTMENT DECISIONS FOR THE PORTFOLIO.

[GRAPHIC]
YOU'LL FIND MORE ABOUT
GARTMORE ON PAGE 24.

[GRAPHIC]
WHAT IS AN INTERNATIONAL
GROWTH PORTFOLIO?

INTERNATIONAL GROWTH PORTFOLIOS INVEST IN COMPANIES AROUND THE
WORLD THAT HAVE THE POTENTIAL FOR SIGNIFICANT INCREASES IN REVENUE
OR EARNINGS. THESE ARE TYPICALLY COMPANIES THAT ARE DEVELOPING OR
APPLYING NEW TECHNOLOGIES, PRODUCTS OR SERVICES IN STRONG INDUSTRY
SECTORS.

THE PORTFOLIO MANAGER FOR THIS PORTFOLIO LOOKS FOR COMPANIES WITH
EARNINGS GROWTH THAT IS EXPECTED TO BE HIGHER THAN OTHER INVESTORS
BELIEVE, AND THEN SELLS THESE INVESTMENTS WHEN GROWTH MAY BE LOWER
THAN OTHERS EXPECT.

NATIONS INTERNATIONAL GROWTH PORTFOLIO

[GRAPHIC]
INVESTMENT OBJECTIVE
This portfolio seeks long-term capital growth by investing primarily in
EQUITY SECURITIES of companies domiciled in countries outside the United
States and listed on major stock exchanges primarily in Europe and the
Pacific Basin.

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
The portfolio normally invests at least 65% of its assets in foreign
companies listed on major exchanges in Europe and the Pacific Basin.
These companies can be of any size.

The portfolio invests in COMMON STOCKS, PREFERRED STOCKS and CONVERTIBLE
SECURITIES, such as WARRANTS, RIGHTS and CONVERTIBLE DEBT.

The portfolio may invest up to 35% of its assets in securities of issuers
located in developing countries in the Asia and Pacific regions, Africa, Latin
America and Eastern Europe.

The portfolio will generally hold 50 to 80 securities invested in approximately
10 industry sectors within 15 to 20 stock markets.

The portfolio manager uses a "bottom-up" approach to selecting securities,
looking for companies with:

o high quality and sustainable earnings

o high growth potential over a two-year investment horizon

o quality management teams

o the ability to finance growth internally

o strong financial results

Throughout the investment process, the portfolio manager balances the
portfolio's emphasis on growth companies with a sensitivity to securities
prices.

The portfolio manager may sell a security when its price reaches the target set
by the portfolio manager, when there is a deterioration in the growth prospects
of the company or its industry, when the portfolio manager believes other
investments are more attractive, or for other reasons.

7
<PAGE>
[GRAPHIC]
YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS PORTFOLIO
ON PAGE 21 AND IN THE SAI.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations International Growth Portfolio has the following risks:

o INVESTMENT STRATEGY RISK - The portfolio manager chooses stocks
believed to have the potential for high growth. There is a risk that
the value of these investments will not rise as high as the portfolio
manager expects, or will fall.

o FOREIGN INVESTMENT RISK - Foreign investments may be riskier than U.S.
investments because of political and economic conditions, changes in
currency exchange rates, the implementation of the Euro, foreign
controls on investment, difficulties selling some securities and lack
of or limited financial information. Withholding taxes may also apply
to some foreign investments.

8
<PAGE>
ABOUT THE EQUITY PORTFOLIOS
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

TRADESTREET IS THIS PORTFOLIO'S SUB-ADVISER. TRADESTREET'S
STRUCTURED PRODUCTS MANAGEMENT TEAM MAKES THE DAY-TO-DAY
INVESTMENT DECISIONS FOR THE PORTFOLIO.

[GRAPHIC]
YOU'LL FIND MORE ABOUT
TRADESTREET ON PAGE 24.

[GRAPHIC]
WHY USE A COMPUTER
MODELING SYSTEM?

THE MANAGEMENT TEAM USES A COMPUTER MODELING SYSTEM AS A KEY
COMPONENT IN MANAGING THIS PORTFOLIO. THE SYSTEM RANKS STOCKS BASED
ON THE RELATIVE SIZE AND RATE OF GROWTH OF A COMPANY'S EARNINGS
(EARNINGS MOMENTUM), AND ON THE VALUE OF ITS STOCK COMPARED WITH
OTHERS IN THE SAME INDUSTRY. THIS HELPS THE TEAM CHOOSE STOCKS THAT
HAVE THE POTENTIAL TO GENERATE ATTRACTIVE RETURNS.

NATIONS DISCIPLINED EQUITY PORTFOLIO

[GRAPHIC]
INVESTMENT OBJECTIVE
This portfolio seeks growth of capital by investing in companies that
are expected to produce significant increases in earnings per share.

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
The portfolio normally invests at least 65% of its assets in COMMON
STOCKS of large and medium-sized U.S. companies. These companies
typically have a market capitalization of $1 billion or more.

The management team uses a computer modeling system to help construct a
portfolio of 40 to 60 securities diversified across industry sectors. Each
security selected for investment by the portfolio is in the top third of the
securities ranked by the team's quantitative model for earnings momentum and in
the top third of securities ranked by the model on a valuation basis.

When selecting investments, the team looks for securities it believes are
attractively priced with increasing earnings. It uses QUANTITATIVE ANALYSIS,
which is an analysis of a company's financial information, to:

o identify companies with improving profit potential and increasing earnings

o identify companies with favorable PRICE-TO-EARNINGS RATIOS

o identify companies with positive earnings trends. In general, these
companies also tend to experience favorable trends in their stock prices

o rank the attractiveness of EQUITY SECURITIES based on a "multi-factor"
valuation model, a computer modeling system that takes into account value
measures like book value, earnings yield and cash flow to measure a stock's
intrinsic worth compared with its market price. The model also considers
growth measures like price momentum and the size and rate of earnings
growth to compare a stock with others in the same industry

The management team may use various strategies, consistent with the portfolio's
investment objective, to try to reduce the amount of CAPITAL GAINS it
distributes to shareholders. For example, the team:

o may limit the number of buy and sell transactions it makes

o will try to sell shares that have the lowest tax burden on shareholders

o may offset capital gains by selling securities to realize a CAPITAL LOSS

The team may sell a security when its earnings momentum begins to deteriorate,
when there is a development in the company that causes earnings estimates to
fall, or for other reasons.

9
<PAGE>
[GRAPHIC]
YOU'LL FIND MORE ABOUT
OTHER RISKS OF INVESTING IN
THIS PORTFOLIO ON PAGE 21
AND THE SAI.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations Disciplined Equity Portfolio has the following risks:

o INVESTMENT STRATEGY RISK - The team uses a quantitative approach to
select investments it believes are attractively valued and whose
earnings per share are likely to increase. There is a risk that the
value of these investments will not rise as high as the team expects,
or will fall.

10
<PAGE>
ABOUT THE EQUITY PORTFOLIOS
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

MARSICO CAPITAL MANAGEMENT, LLC (MARSICO CAPITAL) IS THIS
PORTFOLIO'S SUB-ADVISER. THOMAS F. MARSICO IS THE PORTFOLIO
MANAGER AND MAKES THE DAY-TO-DAY INVESTMENT DECISIONS FOR THE
PORTFOLIO.

[GRAPHIC]
YOU'LL FIND MORE ABOUT
MARSICO CAPITAL AND
MR. MARSICO ON PAGE 25.

[GRAPHIC]
WHAT IS A FOCUSED PORTFOLIO?

A FOCUSED PORTFOLIO INVESTS IN A SMALL NUMBER OF COMPANIES WITH
EARNINGS THAT ARE BELIEVED TO HAVE THE POTENTIAL TO GROW
SIGNIFICANTLY. THIS PORTFOLIO FOCUSES ON LARGE, ESTABLISHED AND
WELL-KNOWN U.S. COMPANIES.

BECAUSE A FOCUSED PORTFOLIO HOLDS FEWER INVESTMENTS THAN OTHER
KINDS OF PORTFOLIOS, IT CAN HAVE GREATER PRICE SWINGS THAN MORE
DIVERSIFIED PORTFOLIOS. IT MAY EARN RELATIVELY HIGHER RETURNS WHEN
ONE OF ITS INVESTMENTS PERFORMS WELL, OR RELATIVELY LOWER RETURNS
WHEN AN INVESTMENT PERFORMS POORLY.

NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO

[GRAPHIC]
INVESTMENT OBJECTIVE
This portfolio seeks long-term growth of capital.

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
The portfolio normally invests at least 65% of its assets in COMMON
STOCKS of large companies. The portfolio, which is NON-DIVERSIFIED,
generally holds a core position of 20 to 30 common stocks. It may invest
up to 25% of its assets in FOREIGN SECURITIES.

Marsico Capital looks for companies with earnings growth potential that may not
be recognized by other investors, focusing on companies that have some of the
following characteristics:

o products, markets or technologies in flux that can result in extraordinary
growth

o strong brand franchises that can take advantage of a changing global
environment

o global reach that allows the company to generate sales and earnings both in
the United States and abroad. This can give the company added growth
potential and also means the company may be less affected by changes in
local markets

o movement with, not against, the major social, economic and cultural shifts
taking place in the world

Once an investment opportunity is identified, Marsico Capital uses a
disciplined analytical process to assess its potential as an investment. This
process includes a "top-down" analysis that takes into account economic factors
like interest rates, inflation, the regulatory environment, the industry and
global competition.

The process also includes a "bottom-up" analysis of a company's financial
situation, as well as individual company characteristics like commitment to
research, market franchise and quality of management.

Marsico Capital may sell a security when it believes there is a deterioration
in the company's financial situation, the security is overvalued, when there is
a negative development in the company's competitive, regulatory or economic
environment, or for other reasons.

11
<PAGE>
[GRAPHIC]
YOU'LL FIND MORE ABOUT
OTHER RISKS OF INVESTING IN
THIS PORTFOLIO ON PAGE 21
AND THE SAI.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations Marsico Focused Equities Portfolio has the following risks:

o INVESTMENT STRATEGY RISK - There is a risk that the value of the
portfolio's investments will not rise as high as Marsico Capital
expects, or will fall.

o HOLDING FEWER INVESTMENTS - This portfolio is considered to be
non-diversified because it may hold fewer investments than other kinds
of equity funds. This increases the risk that its value could go down
significantly if even only one of its investments performs poorly. The
value of this portfolio will tend to have greater price swings than
the value of more diversified equity funds. The portfolio may become a
diversified portfolio by limiting the investments in which more than
5% of its total assets are invested.

o FOREIGN INVESTMENT RISK - Because the portfolio may invest up to 25%
of its assets in foreign securities, it can be affected by the risks
of foreign investing. Foreign investments may be riskier than U.S.
investments because of political and economic conditions, changes in
currency exchange rates, the implementation of the Euro, foreign
controls on investment, difficulties selling some securities and lack
of or limited financial information. Withholding taxes also may apply
to some foreign investments.

12
<PAGE>
ABOUT THE EQUITY PORTFOLIOS
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

MARSICO CAPITAL IS THIS PORTFOLIO'S SUB-ADVISER. THOMAS F. MARSICO
IS THE PORTFOLIO MANAGER AND MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE PORTFOLIO.

[GRAPHIC]
YOU'LL FIND MORE ABOUT
MARSICO CAPITAL AND
MR. MARSICO ON PAGE 25.

[GRAPHIC]
WHY INVEST IN A GROWTH
AND INCOME PORTFOLIO?

GROWTH AND INCOME PORTFOLIOS CAN INVEST IN A MIX OF EQUITY AND
FIXED INCOME SECURITIES. THIS CAN HELP REDUCE VOLATILITY AND
PROVIDE THE PORTFOLIO WITH THE FLEXIBILITY TO SHIFT AMONG
SECURITIES THAT OFFER THE POTENTIAL FOR HIGHER RETURNS.

WHILE THIS PORTFOLIO INVESTS IN A WIDE RANGE OF COMPANIES AND
INDUSTRIES, IT HOLDS FEWER INVESTMENTS THAN OTHER KINDS OF
PORTFOLIOS. THIS MEANS IT CAN HAVE GREATER PRICE SWINGS THAN MORE
DIVERSIFIED PORTFOLIOS. IT ALSO MEANS IT MAY HAVE RELATIVELY HIGHER
RETURNS WHEN ONE OF ITS INVESTMENTS PERFORMS WELL, OR RELATIVELY
LOWER RETURNS WHEN AN INVESTMENT PERFORMS POORLY.

NATIONS MARSICO GROWTH & INCOME PORTFOLIO

[GRAPHIC]
INVESTMENT OBJECTIVE
This portfolio seeks long-term growth of capital with a limited emphasis
on income.

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
The portfolio invests primarily in EQUITY SECURITIES of large
capitalization companies that are selected for their growth potential.
It invests at least 25% of its assets in securities that are believed to
have income potential, and generally holds 35 to 50 securities. It may
hold up to 25% of its assets in FOREIGN SECURITIES.

Marsico Capital may shift assets between growth and income securities based on
its assessment of market, financial and economic conditions. The portfolio,
however, is not designed to produce a consistent level of income.

Marsico Capital looks for companies with earnings growth potential that may not
be recognized by other investors, focusing on companies that have some of the
following characteristics:

o products, markets or technologies in flux that can result in extraordinary
growth

o strong brand franchises that can take advantage of a changing global
environment

o movement with, not against, the major social, economic and cultural shifts
taking place in the world

13
<PAGE>
[GRAPHIC]
YOU'LL FIND MORE ABOUT
OTHER RISKS OF INVESTING IN
THIS PORTFOLIO ON PAGE 21
AND THE SAI.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations Marsico Growth & Income Portfolio has the following risks:

o INVESTMENT STRATEGY RISK - Marsico Capital uses an investment strategy
that tries to identify equities with growth or income potential. There
is a risk that the value of these investments will not rise as high as
Marsico Capital expects, or will fall.

o INTEREST RATE RISK - The prices of the portfolio's FIXED INCOME
SECURITIES will tend to fall when interest rates rise and to rise when
interest rates fall. In general, fixed income securities with longer
terms tend to fall more in value when interest rates rise than fixed
income securities with shorter terms.

o CREDIT RISK - The portfolio could lose money if the issuer of a fixed
income security is unable to pay interest or repay principal when it's
due. Credit risk usually applies to most fixed income securities, but
is generally not a factor for U.S. GOVERNMENT OBLIGATIONS.

14
<PAGE>
ABOUT THE MANAGED INDEX PORTFOLIOS
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

TRADESTREET IS THIS PORTFOLIO'S SUB-ADVISER. TRADESTREET'S
STRUCTURED PRODUCTS MANAGEMENT TEAM MAKES THE DAY-TO-DAY
INVESTMENT DECISIONS FOR THE PORTFOLIO.

[GRAPHIC]
YOU'LL FIND MORE ABOUT
TRADESTREET ON PAGE 24.

[GRAPHIC]
WHAT IS A MANAGED INDEX
PORTFOLIO?

A MANAGED INDEX PORTFOLIO COMBINES THE BENEFITS OF TRADITIONAL
INDEX FUNDS -- RELATIVELY LOW COSTS AND LOW PORTFOLIO
TURNOVER -- WITH ACTIVE MANAGEMENT.

WITH A MANAGED INDEX PORTFOLIO, THE PORTFOLIO MANAGER STARTS WITH
THE STOCKS OF A SPECIFIC MARKET INDEX -- IN THIS CASE, THE S&P 500
-- AND THEN TRIES TO ACHIEVE HIGHER RETURNS THAN THE INDEX BY
EMPHASIZING STOCKS IN THE INDEX THAT ARE EXPECTED TO GENERATE THE
HIGHEST RETURNS.

THERE IS NO ASSURANCE THAT ACTIVE MANAGEMENT WILL RESULT IN A
HIGHER RETURN THAN THE INDEX.

NATIONS MANAGED INDEX PORTFOLIO

[GRAPHIC]
INVESTMENT OBJECTIVE
This portfolio seeks, over the long term, to provide a total return that
(before fees and expenses) exceeds the total return of the Standard &
Poor's 500 Composite Stock Price Index (S&P 500).

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
The portfolio normally invests at least 80% of its assets in COMMON
STOCKS that are included in the S&P 500. The S&P 500 is an unmanaged
index of 500 widely held common stocks, and is not available for
investment.

The management team tries to maintain a portfolio that matches the industry and
risk characteristics of the S&P 500. The team will, from time to time, vary the
number and percentages of the portfolio's holdings to try to provide higher
returns than the S&P 500 and to reduce the risk of underperforming the index
over time. The portfolio usually holds 300 to 400 of the stocks included in the
index. The portfolio may invest in financial futures traded on U.S. exchanges.

When selecting investments for the portfolio, the management team starts with
the stocks included in the S&P 500. It uses QUANTITATIVE ANALYSIS, which is an
analysis of a company's financial information, to:

o rank the attractiveness of each stock based on a "multi-factor" valuation
model, which takes into account value measures like book value, earnings
yield and cash flow to measure a stock's intrinsic worth versus its market
price. The model also considers growth measures like price momentum and the
size and rate of earnings growth when comparing a stock with others in the
same industry

o measure the rate of earnings growth of each stock. Each stock is assigned a
ranking from 1 to 10 (best to worst). The team will hold a slightly higher
percentage of an attractively ranked stock than the index and hold a lower
percentage -- or none -- of a less attractively ranked stock

The management team tries to control costs when it buys and sells securities
for the portfolio by using computerized systems called CROSSING NETWORKS that
allow it to try to make trades at better prices and reduced commission rates.

The management team uses various strategies, consistent with the portfolio's
investment objective, to try to reduce the amount of CAPITAL GAINS distributed
to shareholders. For example, the team:

o may try to sell shares of a security with the highest cost for tax purposes
first, before selling other shares of the same security. The management

15
<PAGE>
[GRAPHIC]
YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS PORTFOLIO
ON PAGE 21 AND IN THE SAI.

team will only use this strategy when it is in the best interest of the
portfolio to do so and may sell other shares when appropriate

o may offset capital gains by selling securities to realize a CAPITAL LOSS.
This may reduce capital gains distributions

o will try to keep portfolio turnover low, which helps to defer the
realization of capital gains

While the portfolio tries to manage its capital gain distributions, it will not
be able to completely avoid making taxable distributions. These strategies may
also be affected by changes in tax laws and regulations, or by court decisions.

The team may sell a stock when it believes other stocks in the index are more
attractive investments, when the stock is removed from the index, or for other
reasons.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations Managed Index Portfolio has the following risks:

o INVESTMENT STRATEGY RISK - The team chooses stocks that it believes
have the potential for higher growth than the S&P 500. There is a risk
that the value of these investments will not rise as high as the team
expects, or will fall.

o FUTURES RISK - This portfolio may use FUTURES CONTRACTS periodically
to manage LIQUIDITY. There is a risk that this could result in losses,
reduce returns, increase transaction costs or increase the portfolio's
volatility.

16
<PAGE>
ABOUT THE MANAGED INDEX PORTFOLIOS
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

TRADESTREET IS THIS PORTFOLIO'S SUB-ADVISER. TRADESTREET'S
STRUCTURED PRODUCTS MANAGEMENT TEAM MAKES THE DAY-TO-DAY
INVESTMENT DECISIONS FOR THE PORTFOLIO.

[GRAPHIC]
YOU'LL FIND MORE ABOUT
TRADESTREET ON PAGE 24.

[GRAPHIC]
WHAT IS THE S&P SMALLCAP 600?

THE S&P SMALLCAP 600 IS DESIGNED TO BE A BENCHMARK OF THE
PERFORMANCE OF SMALL CAPITALIZATION STOCKS. IT IS AN UNMANAGED
INDEX OF 600 COMMON STOCKS, WEIGHTED BY MARKET CAPITALIZATION, AND
IS NOT AVAILABLE FOR INVESTMENT.

NATIONS MANAGED SMALLCAP INDEX PORTFOLIO

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
The portfolio normally invests at least 80% of its assets in COMMON
STOCKS that are included in the S&P SmallCap 600.

The management team tries to maintain a portfolio that matches the industry and
risk characteristics of the S&P SmallCap 600. The team will, from time to time,
vary the number and percentages of the portfolio's holdings to try to provide
higher returns than the S&P SmallCap 600 while reducing the risk of
underperforming the index over time. The portfolio usually holds 400 to 500 of
the stocks included in the index. The portfolio may invest in financial futures
traded on U.S. exchanges.

When selecting investments for the portfolio, the management team starts with
the stocks included in the S&P SmallCap 600. It uses QUANTITATIVE ANALYSIS,
which is an analysis of a company's financial information, to:

o rank the attractiveness of each stock based on a "multi-factor" valuation
model, which takes into account value measures like book value, earnings
yield and cash flow to measure a stock's intrinsic worth versus its market
price. The model also considers momentum measures like price momentum and
the size and rate of earnings growth to compare a stock with others in the
same industry

The management team uses various strategies, consistent with the portfolio's
investment objective, to try to reduce the amount of CAPITAL GAINS distributed
to shareholders. For example, the team:

o may try to sell shares of a security with the highest cost for tax purposes
first, before selling other shares of the same security. The management
team will only use this strategy when it is in the best interest of the
portfolio to do so and may sell other shares when appropriate

17
<PAGE>
[GRAPHIC]
YOU'LL FIND MORE ABOUT
OTHER RISKS OF INVESTING IN
THIS PORTFOLIO ON PAGE 21
AND THE SAI.

o may offset capital gains by selling securities to realize a CAPITAL LOSS.
This may reduce capital gains distributions

o will try to keep portfolio turnover low, which helps to defer the
realization of capital gains

The team may sell a stock when it believes other stocks in the index are more
attractive investments, when the stock is removed from the index, or for other
reasons.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations Managed SmallCap Index Portfolio has the following risks:

o INVESTMENT STRATEGY RISK - The team chooses stocks from the S&P
SmallCap 600 that it believes have the potential for higher growth.
There is a risk that the value of these investments will not rise as
high as the team expects, or will fall. Smaller companies also tend to
have greater price swings than stocks of larger companies for many
reasons, for example, because they trade less frequently and in lower
volumes.

o FUTURES RISK - This portfolio may use FUTURES CONTRACTS to manage
LIQUIDITY. There is a risk that this could result in losses, reduce
returns, increase transaction costs or increase the portfolio's
volatility.

18
<PAGE>
ABOUT THE BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

TRADESTREET IS THIS PORTFOLIO'S SUB-ADVISER. TRADESTREET'S VALUE
MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT DECISIONS FOR THE
EQUITY PORTION OF THE PORTFOLIO. ITS FIXED INCOME MANAGEMENT TEAM
MAKES THE DAY-TO-DAY INVESTMENT DECISIONS FOR THE FIXED INCOME AND
MONEY MARKET PORTIONS OF THE PORTFOLIO.

[GRAPHIC]
YOU'LL FIND MORE ABOUT
TRADESTREET ON PAGE 24.

[GRAPHIC]
WHAT IS A BALANCED PORTFOLIO?

A BALANCED PORTFOLIO INVESTS IN A MIX OF EQUITY AND FIXED INCOME
SECURITIES, AND MONEY MARKET INSTRUMENTS.

EACH OF THESE "ASSET CLASSES" HAS DIFFERENT RISK/RETURN
CHARACTERISTICS. COMBINING THEM IN ONE PORTFOLIO CAN HELP REDUCE
RISK AND INCREASE RETURNS BECAUSE AT LEAST ONE ASSET CLASS SHOULD
HAVE THE POTENTIAL TO BE A STRONGER PERFORMER REGARDLESS OF MARKET
CONDITIONS.

BALANCED PORTFOLIOS LIKE THIS ONE CAN PROVIDE A DIVERSIFIED ASSET
MIX FOR YOU IN A SINGLE INVESTMENT.

NATIONS BALANCED ASSETS PORTFOLIO

[GRAPHIC]
INVESTMENT OBJECTIVE
This portfolio seeks total return by investing in EQUITY and FIXED
INCOME SECURITIES.

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
This portfolio invests in a mix of equity and fixed income securities,
as well as MONEY MARKET INSTRUMENTS.

Equity securities the portfolio invests in are primarily COMMON STOCK of
established companies believed to be financially strong.

Fixed income securities normally make up at least 25% of the portfolio's
assets. Fixed income securities the portfolio invests in are primarily bonds,
notes and MORTGAGE-BACKED and ASSET-BACKED SECURITIES issued by U.S. companies
and government entities.

Money market instruments the portfolio invests in are primarily CASH
EQUIVALENTS, including U.S. GOVERNMENT OBLIGATIONS, COMMERCIAL PAPER and other
short-term, interest-bearing instruments.

The management team uses asset allocation as its primary investment approach.
The team allocates assets among the three asset classes based on its assessment
of the expected risks and returns of each class. The team evaluates:

o current economic and financial market conditions, including trends in
interest rates, in the United States and abroad

o earnings and dividend prospects for common stocks

o the overall stability of financial markets

The team may change the portfolio's asset allocation to try to increase returns
and reduce risk.

The team identifies individual investments using the following process:

o For the equity portion of the portfolio, the team evaluates the overall
economy, industry conditions, and the financial condition and management of
each company, using a process called FUNDAMENTAL ANALYSIS.

o For the fixed income portion of the portfolio, the team looks for
securities rated INVESTMENT GRADE at the time of investment. The team may
choose unrated securities if it believes they are of comparable quality to
investment grade securities at the time of investment.

o For the money market portion of the portfolio, the team chooses
high-quality securities primarily to provide LIQUIDITY.

19
<PAGE>
[GRAPHIC]
YOU'LL FIND MORE ABOUT
OTHER RISKS OF INVESTING IN
THIS PORTFOLIO ON PAGE 21
AND THE SAI.

The management team may use various tax strategies, consistent with the
portfolio's investment objective, to try to reduce the amount of CAPITAL GAINS
distributed to shareholders. For example, the team:

o may limit the number of buy and sell transactions it makes

o will try to sell shares that have the lowest tax burden on shareholders

o may offset capital gains by selling securities to realize a CAPITAL LOSS

The team may sell a security when the portfolio's asset allocation changes,
there is a deterioration in the issuer's financial situation, when the team
believes other investments are more attractive, or for other reasons.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations Balanced Assets Portfolio has the following risks:

o INVESTMENT STRATEGY RISK - The team uses an asset allocation strategy
to try to achieve the highest total return. There is a risk that the
mix of investments will not produce the returns the team expects, or
will fall in value.

o INTEREST RATE RISK - The prices of the portfolio's fixed income
securities will tend to fall when interest rates rise. In general,
fixed income securities with longer terms tend to fall more in value
when interest rates rise than fixed income securities with shorter
terms.

o PREPAYMENT AND EXTENSION RISK - The value of the portfolio's
mortgage-backed securities can fall if the owners of the underlying
mortgages pay off their mortgages sooner than expected, which could
happen when interest rates fall, or later than expected, which could
happen when interest rates rise. If the underlying mortgages are paid
off sooner than expected, the portfolio may have to reinvest this
money in mortgage-backed securities that have lower yields.

20
<PAGE>
[GRAPHIC]
OTHER IMPORTANT INFORMATION

You'll find specific information about each portfolio's principal investments,
strategies and risks in the descriptions starting on page 5. The following are
some other risks and information you should consider before you invest:

o CHANGING INVESTMENT OBJECTIVES AND POLICIES - The investment objective
and certain investment policies of any portfolio can be changed
without shareholder approval. Other investment policies may be changed
only with shareholder approval.

o HOLDING OTHER KINDS OF INVESTMENTS - The portfolios may hold
investments that aren't part of their principal investment strategies.
Please refer to the SAI for more information. The portfolio managers
or management team can also choose not to invest in specific
securities described in this prospectus and in the SAI.

o FOREIGN INVESTMENT RISK - Portfolios that invest in FOREIGN SECURITIES
may be affected by changes in currency exchange rates and the costs of
converting currencies; the implementation of the Euro; foreign
government controls on foreign investment, repatriation of capital,
and currency and exchange; foreign taxes; inadequate supervision and
regulation of some foreign markets; difficulty selling some
investments which may increase volatility; different settlement
practices or delayed settlements in some markets; difficulty getting
complete or accurate information about foreign companies; less strict
accounting, auditing and financial reporting standards than those in
the U.S.; political, economic or social instability; and difficulty
enforcing legal rights outside the U.S.

o INVESTING DEFENSIVELY - A portfolio may temporarily hold investments
that are not part of its investment objective or its principal
investment strategies to try to protect it during a market or economic
downturn or because of political or other conditions. A portfolio may
not achieve its investment objective while it is investing
defensively.

o PORTFOLIO TURNOVER - A portfolio that replaces -- or turns over --
more than 100% of its investments in a year is considered to trade
frequently. Frequent trading can result in larger distributions of
short-term CAPITAL GAINS to shareholders. These gains are taxable at
higher rates than long-term capital gains. Frequent trading can also
mean higher brokerage and other transaction costs, which could reduce
the portfolio's returns. The portfolios generally buy securities for
capital appreciation, investment income, or both, and don't engage in
short-term trading. The annual portfolio turnover rate for the Managed
Index Funds is expected to be no more than 25%. You'll find the
portfolio turnover rate for each portfolio in FINANCIAL HIGHLIGHTS.

21
<PAGE>
o PREPARING FOR THE YEAR 2000 - The year 2000 is an issue for
organizations, companies and entities around the world that rely on
computer systems to process date-related information. Computer systems
that cannot read a four-digit year may not be able to calculate and
process information on or after January 1, 2000. All of the
portfolios' primary service providers have confirmed that they have
been working to make the necessary changes to their systems, and that
they expect them to be adapted in time. There is no guarantee,
however, that their computer systems will ready by the year 2000. If
their computer systems are not ready in time, there could be a
negative effect on portfolio operations. A portfolio's performance
could also be affected if securities it holds decrease in value
because of year 2000 issues. Portfolios that invest in foreign
securities may be at greater risk because the computer systems of
foreign issuers, governments or other entities may not be ready for
the year 2000.

22
<PAGE>
[GRAPHIC]
BANC OF AMERICA ADVISORS, INC.

ONE BANK OF AMERICA PLAZA
CHARLOTTE, NORTH CAROLINA 28255

[GRAPHIC]
HOW THE PORTFOLIOS ARE MANAGED

INVESTMENT ADVISER
BAAI is the investment adviser to over 60 mutual fund portfolios in the Nations
Funds family, including the Nations Annuity Trust portfolios. Nations Annuity
Trust is a series of mutual funds that provides underlying investment
alternatives for variable annuity contracts and variable life insurance
policies.

BAAI is a registered investment adviser. It's a wholly-owned subsidiary of Bank
of America, which is owned by Bank of America Corporation. Nations Annuity
Trust pays BAAI an annual fee for its investment advisory services. The fee is
calculated daily based on the average net assets of each portfolio and is paid
monthly. BAAI uses part of this money to pay investment sub-advisers for the
services they provide to each portfolio.

BAAI has agreed to waive fees and/or reimburse expenses for certain portfolios
until July 31, 2000. You'll find a discussion of any waiver and/or
reimbursement in the Fee Table Summary section of the preceding Nations
Variable Annuity prospectus. There is no assurance that BAAI will continue to
waive and/or reimburse any fees and/or expenses after this date.

The following chart shows the maximum advisory fees BAAI can receive.

ANNUAL INVESTMENT ADVISORY FEE, AS A % OF AVERAGE DAILY NET ASSETS
<TABLE>
<CAPTION>
Maximum
advisory
fee
<S> <C>
Nations Value Portfolio .65%
Nations International Growth Portfolio .80%
Nations Disciplined Equity Portfolio .65%
Nations Marsico Focused Equities Portfolio .75%
Nations Marsico Growth & Income Portfolio .75%
Nations Managed Index Portfolio .40%
Nations Managed SmallCap Index Portfolio .40%
Nations Balanced Assets Portfolio .65%
</TABLE>
INVESTMENT SUB-ADVISERS
Nations Annuity Trust and BAAI have engaged investment sub-advisers to provide
day-to-day portfolio management for the portfolios. These sub-advisers function
under the supervision of BAAI and the Board of Trustees of Nations Annuity
Trust.

23
<PAGE>
[GRAPHIC]
TRADESTREET INVESTMENT
ASSOCIATES, INC.

ONE BANK OF AMERICA PLAZA
CHARLOTTE, NORTH CAROLINA 28255

[GRAPHIC]
GARTMORE GLOBAL PARTNERS

ONE BANK OF AMERICA PLAZA
CHARLOTTE, NORTH CAROLINA 28255

TRADESTREET INVESTMENT ASSOCIATES, INC.
TradeStreet is a registered investment adviser and a wholly-owned subsidiary of
Bank of America. Its management expertise covers all major domestic asset
classes, including EQUITY and FIXED INCOME SECURITIES, and MONEY MARKET
INSTRUMENTS.

Currently managing more than $90 billion, TradeStreet has over 200
institutional clients and is sub-adviser to more than 50 mutual funds in the
Nations Funds family. TradeStreet uses a team approach to investment
management. Each team has access to the latest technology and analytical
resources.

TradeStreet is the investment sub-adviser to the portfolios shown in the table
below. The table also tells you which internal TradeStreet asset management
team is responsible for making the day-to-day investment decisions for each
portfolio.
<TABLE>
<CAPTION>
<S> <C>
Portfolio TradeStreet Team
Nations Value Portfolio Value Management Team
Nations Disciplined Equity Portfolio Structured Products Management Team
Nations Managed Index Portfolio Structured Products Management Team
Nations Managed SmallCap Index Portfolio Structured Products Management Team
</TABLE>
GARTMORE GLOBAL PARTNERS
Gartmore is a global asset manager dedicated to serving the needs of U.S. based
investors. Gartmore was formed in 1995 as a registered investment adviser and
manages more than $1 billion in assets.

Gartmore is a joint venture structured as a general partnership between NB
Partner Corp., a wholly-owned subsidiary of Bank of America, and Gartmore U.S.
Limited, an indirect, wholly-owned subsidiary of Gartmore Investment Management
plc, a UK holding company for a leading UK-based international fund management
group of companies.

Gartmore follows a growth philosophy, which is reflected in its active
management of market allocation and stock selection.

Gartmore is the investment sub-adviser to Nations International Growth
Portfolio.

BRIAN O'NEILL, the principal senior investment manager of the Gartmore Global
Portfolio Team at Gartmore Global Partners, manages this portfolio. He has
managed the portfolio since its inception. Before joining Gartmore in 1981, Mr.
O'Neill was a fund manager in global equities at Antony Gibbs & Sons and an
investment analyst at Royal Insurance. He graduated from Glasgow University in
1969 with a MA Honors degree in Political Economy.

24
<PAGE>
[GRAPHIC]
MARSICO CAPITAL
MANAGEMENT, LLC

1200 17TH STREET
SUITE 1300
DENVER, COLORADO 80202

MARSICO CAPITAL MANAGEMENT, LLC
Marsico Capital is a full service investment advisory firm founded by Thomas F.
Marsico in September 1997. It is a registered investment adviser, specializing
in large capitalization stocks, and currently has over $6.5 billion in assets
under management.

Marsico Management Holdings, LLC, a wholly-owned subsidiary of Bank of America
Corporation, indirectly owns 50% of the equity of Marsico Capital.

Marsico Capital is the investment sub-adviser to:

o Nations Marsico Focused Equities Portfolio

o Nations Marsico Growth & Income Portfolio

THOMAS F. MARSICO, Chairman and Chief Executive Officer of Marsico Capital, is
the portfolio manager responsible for making the day-to-day investment
decisions for these portfolios. Mr. Marsico was an executive vice president and
portfolio manager at Janus Capital Corporation from 1988 until he formed
Marsico Capital in September 1997. He has more than 20 years of experience as a
securities analyst and portfolio manager.

25
<PAGE>
PERFORMANCE OF OTHER EQUITY FUNDS MANAGED BY THOMAS MARSICO Nations Marsico
Focused Equities Portfolio and Nations Marsico Growth & Income Portfolio have
been in operation since March 27, 1998, so they have a relatively short
performance history. The tables below are designed to show you how similar
equity funds managed by Thomas Marsico performed in the past.

The Janus Twenty Fund has an investment objective, policies and strategies that
are substantially similar to Nations Marsico Focused Equities Portfolio. Mr.
Marsico managed the Janus Twenty Fund from January 31, 1988 through August 11,
1997. He had full discretionary authority for selecting investments for that
fund, which had approximately $6 billion in net assets on August 11, 1997.

The table below shows the returns for the Janus Twenty Fund compared with the
S&P 500 for the periods ending August 7, 1997. The returns reflect deductions
of fees and expenses, and assume all dividends and distributions have been
reinvested.

AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 7, 1997
<TABLE>
<CAPTION>
Janus Twenty
------------
Fund (%) S&P 500 (%)
-------- -----------
<S> <C> <C>
one year 48.21 46.41
three years 32.07 30.63
five years 20.02 20.98
during the period of Mr. Marsico's management
(January 31, 1988 to August 7, 1997) 23.38 18.20
</TABLE>
This information is designed to show the historical track record of Mr.
Marsico. It does not indicate how the portfolio has performed or will perform
in the future.

Performance will vary based on many factors, including market conditions, the
composition of the portfolio's holdings and the portfolio's expenses.

The Janus Growth and Income Fund has an investment objective, policies and
strategies that are substantially similar to Nations Marsico Growth & Income
Portfolio. Mr. Marsico managed the Janus Growth and Income Fund from its
inception on May 31, 1991 through August 11, 1997. He had full discretionary
authority for selecting investments for that fund, which had approximately $1.7
billion in net assets on August 11, 1997.

26
<PAGE>
[GRAPHIC]
STEPHENS INC.

111 CENTER STREET
LITTLE ROCK, ARKANSAS 72201

[GRAPHIC]
FIRST DATA INVESTOR
SERVICES GROUP, INC.

101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110

The table below shows the returns for the Janus Growth and Income Fund compared
with the S&P 500 for the period ending August 7, 1997. The returns reflect
deductions of fees and expenses, and assume all dividends and distributions
have been reinvested.

AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 7, 1997
<TABLE>
<CAPTION>
Janus
Growth and
Income Fund (%) S&P 500 (%)
<S> <C> <C>
one year 47.77 46.41
three years 31.13 30.63
five years 21.16 20.98
during the period of Mr. Marsico's management
(May 31, 1991 to August 7, 1997) 21.19 18.59

This information is designed to show the historical track record of Mr.
Marsico. It does not indicate how the portfolio has performed or will perform
in the future.

Performance will vary based on many factors, including market conditions, the
composition of the portfolio's holdings and the portfolio's expenses.

OTHER SERVICE PROVIDERS
The portfolios are distributed and co-administered by Stephens Inc., a
registered broker/dealer. Stephens may pay commissions, distribution (12b-1)
and shareholder servicing fees, and/or other compensation to companies for
selling shares and providing services to investors.

BAAI is also co-administrator of the portfolios, and assists in overseeing the
administrative operations of the portfolios. The portfolios pay BAAI and
Stephens a combined fee for their services, plus certain out-of-pocket
expenses. The fee is calculated as an annual percentage of the average daily
net assets of the portfolios and is paid monthly, as follows:
<CAPTION>
<S> <C>
Domestic Equity Portfolios 0.23%
International Portfolio 0.22%
</TABLE>
First Data Investor Services Group, Inc. (First Data) is the transfer agent for
the portfolios' shares. Its responsibilities include processing purchases,
sales and exchanges, calculating and paying distributions, keeping shareholder
records, preparing account statements and providing customer service.

27
<PAGE>
ABOUT YOUR INVESTMENT
- --------------------------------------------------------------------------------
[GRAPHIC]
WE'VE USED THE TERM, INVESTMENT PROFESSIONAL, TO REFER TO THE
PERSON WHO HAS ASSISTED YOU WITH BUYING THE PORTFOLIOS. SELLING
AGENT OR SERVICING AGENT (SOMETIMES REFERRED TO AS A SELLING AGENT)
MEANS THE COMPANY THAT EMPLOYS YOUR INVESTMENT PROFESSIONAL.
SELLING AGENTS INCLUDE BANKS, BROKERAGE FIRMS, MUTUAL FUND DEALERS,
PARTICIPATING LIFE INSURANCE COMPANIES, AND OTHER FINANCIAL
INSTITUTIONS, INCLUDING AFFILIATES OF BANK OF AMERICA.

WHEN YOU SELL SHARES OF A MUTUAL FUND, THE FUND IS EFFECTIVELY
"BUYING" THEM BACK FROM YOU. THIS IS CALLED A REDEMPTION.

[GRAPHIC]
A BUSINESS DAY IS ANY DAY THAT THE NEW YORK STOCK EXCHANGE (NYSE)
IS OPEN. A BUSINESS DAY ENDS AT THE CLOSE OF REGULAR TRADING ON THE
NYSE, USUALLY AT 4:00 P.M. EASTERN TIME. IF THE NYSE CLOSES EARLY,
THE BUSINESS DAY ENDS AS OF THE TIME THE NYSE CLOSES.

THE NYSE IS CLOSED ON WEEKENDS AND ON THE FOLLOWING NATIONAL
HOLIDAYS: NEW YEAR'S DAY, MARTIN LUTHER KING, JR. DAY, PRESIDENTS'
DAY, GOOD FRIDAY, MEMORIAL DAY, INDEPENDENCE DAY, LABOR DAY,
THANKSGIVING DAY AND CHRISTMAS DAY.

[GRAPHIC]
BUYING, SELLING AND TRANSFERING SHARES

Nations Annuity Trust portfolios are available only to owners of variable
annuity contracts or variable life insurance policies. Please refer to the
prospectus that describes your annuity contract or life insurance policy for
information about how to buy, sell and transfer your investment among shares of
the portfolios.

HOW SHARES ARE PRICED
All transactions are based on the price of a portfolio's shares -- or its net
asset value. We calculate net asset value per share for each portfolio at the
end of each business day. First, we calculate the net asset value for each
portfolio by determining the value of the portfolio's assets and then
subtracting its liabilities. Next, we divide this amount by the number of
shares that investors are holding in the portfolio.

VALUING SECURITIES IN A PORTFOLIO
The value of a portfolio's assets is based on the total market value of all of
the securities it holds. The prices reported on stock exchanges and securities
markets around the world are usually used to value securities in a portfolio.
If prices aren't readily available, we'll base the price of a security on its
fair market value. We use the amortized cost method, which approximates market
value, to value short-term investments maturing in 60 days or less.
International markets may be open on days when U.S. markets are closed. The
value of foreign securities owned by a portfolio could change on days when
portfolio shares may not be bought or sold.

28
<PAGE>
[GRAPHIC]
THE FINANCIAL INSTITUTION OR INTERMEDIARY THAT BUYS SHARES FOR YOU
IS ALSO SOMETIMES REFERRED TO AS A SELLING AGENT.

THE DISTRIBUTION FEE IS OFTEN REFERRED TO AS A "12B-1" FEE BECAUSE
IT'S PAID THROUGH A PLAN APPROVED UNDER RULE 12B-1 UNDER THE 1940
ACT.

YOUR SELLING AGENT MAY CHARGE OTHER FEES RELATED TO SERVICES
PROVIDED TO YOUR ACCOUNT.

[GRAPHIC]
HOW SELLING AND SERVICING AGENTS ARE PAID

Selling and servicing agents usually receive compensation based on your
investment in the portfolios. Selling agents typically pay a portion of the
compensation they receive to their investment professionals.

DISTRIBUTION (12B-1) AND SHAREHOLDER SERVICING FEES
Stephens and/or selling and servicing agents are compensated for selling shares
and providing services to investors under a combined distribution and
shareholder servicing plan.

Stephens and/or selling and servicing agents may receive a maximum combined
annual distribution (12b-1) and shareholder servicing fee of 0.25% for selling
shares and providing services to holders of variable annuity contracts or
variable life insurance policies with whom the selling and servicing agents
have a relationship.

Fees are calculated daily and deducted monthly. Because these fees are paid out
of the portfolios' assets on an ongoing basis they will increase the cost of
your investment over time, and may cost you more than any sales charges you may
pay.

The portfolios pay these fees to Stephens and/or to eligible selling and
servicing agents for as long as the plan continues. We may reduce or
discontinue payments at any time.

29
<PAGE>
[GRAPHIC]
THE POWER OF COMPOUNDING

REINVESTING YOUR DISTRIBUTIONS BUYS YOU MORE SHARES OF A
PORTFOLIO -- WHICH LETS YOU TAKE ADVANTAGE OF THE POTENTIAL FOR
COMPOUND GROWTH.

PUTTING THE MONEY YOU EARN BACK INTO YOUR INVESTMENT MEANS IT, IN
TURN, MAY EARN EVEN MORE MONEY. OVER TIME, THE POWER OF COMPOUNDING
HAS THE POTENTIAL TO SIGNIFICANTLY INCREASE THE VALUE OF YOUR
INVESTMENT. THERE IS NO ASSURANCE, HOWEVER, THAT YOU'LL EARN MORE
MONEY IF YOU REINVEST YOUR DISTRIBUTIONS.

[GRAPHIC]
DISTRIBUTIONS AND TAXES

ABOUT DISTRIBUTIONS
A mutual fund can make money two ways:

o It can earn income. Examples are interest paid on bonds and dividends paid
on COMMON STOCKS.

o A portfolio can also have CAPITAL GAIN if the value of its investments
increases. If a portfolio sells an investment at a gain, the gain is
realized. If a portfolio continues to hold the investment, any gain is
unrealized.

A mutual fund is not subject to income tax as long as it distributes its net
investment income and realized capital gain to its shareholders. The portfolios
intend to pay out a sufficient amount of their income and capital gain to their
shareholders so the portfolios won't have to pay any income tax. When a
portfolio makes this kind of a payment, it's split equally among all shares,
and is called a distribution.

The portfolios distribute dividends from net investment income once a year.
They may also distribute any net realized capital gains, including short-term
capital gains, at least once a year.

A distribution is paid based on the number of shares you hold on the record
date, which is usually the day before the distribution is declared. Shares are
eligible to receive distributions from the TRADE DATE of the purchase up to and
including the day before the shares are sold.

Each time a distribution is made, the net asset value per share of the
portfolio is reduced by the amount of the distribution.

We'll automatically reinvest distributions in additional shares of the same
portfolio unless you tell us you want to receive your distributions in cash.
You can do this by writing to us at the address on the back cover, or by
calling us at 1.800.321.7854.

We generally pay cash distributions within five business days after the end of
the month or quarter in which the distribution was made. If you sell all of
your shares, we'll pay any distribution that applies to those shares in cash
within five business days after the sale was made.

If you buy shares of a portfolio shortly before it makes a distribution, you
will, in effect, receive part of your purchase back in the distribution, which
is subject to tax. Similarly, if you buy shares of a portfolio that holds
securities with unrealized capital gain, you will, in effect, receive part of
your purchase back if and when the portfolio sells those securities and
distributes the gain. This distribution is also subject to tax. Some portfolios
have built up, or have the potential to build up, high levels of unrealized
capital gain.

30
<PAGE>
[GRAPHIC]
THIS INFORMATION IS A SUMMARY OF HOW FEDERAL INCOME TAXES MAY
AFFECT YOUR INVESTMENT IN THE PORTFOLIOS. IT IS NOT INTENDED AS A
SUBSTITUTE FOR CAREFUL TAX PLANNING. YOU SHOULD CONSULT WITH YOUR
OWN TAX ADVISOR ABOUT YOUR SITUATION, INCLUDING ANY FOREIGN, STATE
AND LOCAL TAXES THAT MAY APPLY.

[GRAPHIC]
FOR MORE INFORMATION ABOUT TAXES, PLEASE SEE THE SAI.

HOW TAXES AFFECT YOUR INVESTMENT
Distributions of net investment income, including net foreign currency gain and
any excess of net short-term capital gain over net long-term capital loss
generally are taxable to you as ordinary income.

Distributions of net capital gain (generally the excess of net long-term
capital gain over net short-term capital loss) generally are taxable to you as
net capital gain.

In general, all distributions are taxable to you when paid, whether they are
paid in cash or automatically reinvested in additional shares of the portfolio.
However, any distributions declared in October, November or December of one
year and distributed in January of the following year will be taxable as if
they had been paid to you on December 31 of the first year.

We'll send you a notice every year that tells you how much you've received in
distributions during the year and their federal tax status. Foreign, state and
local taxes may also apply to these distributions.

By investing in shares of a portfolio through a variable annuity contract or
variable life insurance policy, you may not be subject to immediate taxation on
distributions from a portfolio and may qualify for other favorable tax
treatment. In order to qualify for such treatment, among other things, the
portfolios generally must only be available to owners of variable annuity
contracts and variable life insurance policies and the portfolios must be
"adequately diversified." Each portfolio is only available to owners of
variable annuity contracts and variable life insurance policies and intends to
be "adequately diversified" so that owners of variable annuity contracts and
variable life insurance policies investing in the portfolio may qualify for
favorable tax treatment. See the accompanying prospectus for additional
information regarding the taxation of your variable annuity contract or
variable life insurance policy. Federal income taxation of participating life
insurance companies, variable annuity contracts and variable life insurance
policies is discussed in the accompanying prospectus.

[GRAPHIC]
FINANCIAL HIGHLIGHTS

The financial highlights table is designed to help you understand how the
portfolios have performed since their inception. Certain information reflects
financial results for a single portfolio share. The total investment return
line indicates how much an investment in the portfolio would have earned,
assuming all dividends and distributions had been reinvested.

This financial information has been audited by PricewaterhouseCoopers LLP. The
independent accountant's report and Nations Annuity Trust's financial
statements are incorporated by reference into the SAI. Please see the back
cover to find out how you can get a copy.

31
<PAGE>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
International Focused
Growth Portfolio Equities Portfolio
Period ended Period ended
12/31/98* 12/31/98*
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.06 0.02
Net realized and unrealized gain/(loss) on
investments 0.25 3.00
Net Increase/(Decrease) in Net Asset Value from
operations 0.31 3.02
LESS DISTRIBUTIONS:
Dividends from net investment income (a) ( 0.03) ( 0.02)
Dividends from net realized capital gains ( 0.00) ( 0.00)
Returns of capital ( 0.00) ( 0.00)
Total dividends and distributions ( 0.03) ( 0.02)
Net asset value, end of period $ 10.28 $ 13.00
TOTAL RETURN+ 3.11% 30.16%
===================================================== ======= =======
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $2,310 $24,521
Ratio of operating expenses to average net assets++ 1.25% 1.10%
Ratio of net investment income to average net
assets++ 1.09% 0.33%
Portfolio turnover rate 16% 236%
Ratio of operating expenses to average net assets
without waivers and/or expense reimbursements
(b)++ 4.09% 1.94%
<CAPTION>
Managed SmallCap Disciplined Growth & Income
Index Portfolio Equity Portfolio Portfolio
Period ended Period ended Period ended
12/31/98* 12/31/98* 12/31/98*
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.02 0.02
Net realized and unrealized gain/(loss) on
investments ( 0.97) 0.62 2.16
Net Increase/(Decrease) in Net Asset Value from
operations ( 0.94) 0.64 2.18
LESS DISTRIBUTIONS:
Dividends from net investment income (a) ( 0.03) ( 0.02) ( 0.02)
Dividends from net realized capital gains ( 0.00) ( 0.00) ( 0.00)
Returns of capital ( 0.00) ( 0.00) ( 0.00)
Total dividends and distributions ( 0.03) ( 0.02) ( 0.02)
Net asset value, end of period $ 9.03 $ 10.62 $ 12.16
TOTAL RETURN+ ( 9.35)% 6.44% 21.80%
===================================================== ======= ======= =======
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $6,098 $4,796 $15,576
Ratio of operating expenses to average net assets++ 0.75% 1.00% 1.10%
Ratio of net investment income to average net
assets++ 0.49% 0.44% 0.40%
Portfolio turnover rate 44% 40% 184%
Ratio of operating expenses to average net assets
without waivers and/or expense reimbursements
(b)++ 1.70% 2.41% 1.99%

* Portfolio commenced operations on March 27, 1998. Shares were offered to the public on April 6,
1998.
+ Total return represents aggregate total return for the period indicated.
++ Annualized.
(a) Includes distributions in excess of net investment income or from net realized gains that amounted
to less than $0.01 per share.
(b) The ratio includes custodian fees before reduction for credits.
</TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

Managed Index Portfolio
Period ended 12/31/98*
Net asset value, beginning of period $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.06
Net realized and unrealized gain/(loss) on
investments 1.07
Net Increase/(Decrease) in Net Asset Value from
operations 1.13
LESS DISTRIBUTIONS:
Dividends from net investment income (a) ( 0.07)
Dividends from net realized capital gains ( 0.00)
Returns of capital ( 0.00)
Total dividends and distributions ( 0.07)
Net asset value, end of period $ 11.06
TOTAL RETURN+ 11.39%
===================================================== =======
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $9,931
Ratio of operating expenses to average net assets++ 0.75%
Ratio of net investment income to average net
assets++ 1.04%
Portfolio turnover rate 16%
Ratio of operating expenses to average net assets
without waivers and/or expense reimbursements
(b)++ 1.62%
<TABLE>
<CAPTION>
Value Portfolio Balanced Assets Portfolio
Period ended 12/31/98* Period ended 12/31/98*
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.04 0.09
Net realized and unrealized gain/(loss) on
investments 0.41 ( 0.31)
Net Increase/(Decrease) in Net Asset Value from
operations 0.45 ( 0.22)
LESS DISTRIBUTIONS:
Dividends from net investment income (a) ( 0.04) ( 0.10)
Dividends from net realized capital gains ( 0.00) ( 0.00)
Returns of capital ( 0.00) ( 0.00)
Total dividends and distributions ( 0.04) ( 0.10)
Net asset value, end of period $ 10.41 $ 9.68
TOTAL RETURN+ 4.48% ( 2.23)%
===================================================== ======= =======
RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $5,645 $3,823
Ratio of operating expenses to average net assets++ 1.00% 1.00
Ratio of net investment income to average net
assets++ 0.83% 2.36%
Portfolio turnover rate 27% 94%
Ratio of operating expenses to average net assets
without waivers and/or expense reimbursements
(b)++ 2.32% 2.71%

ASSET-BACKED SECURITY - a debt security that gives you an interest in a pool of
assets that is collateralized or "backed" by one or more kinds of assets,
including real property, receivables or mortgages, generally issued by banks,
credit card companies or other lenders. Some securities may be issued or
guaranteed by the U.S. government or its agencies, authorities or
instrumentalities. Asset-backed securities typically make periodic payments,
which may be interest or a combination of interest and a portion of the
principal of the underlying assets.

CAPITAL GAIN OR LOSS - the difference between the purchase price of a security
and its selling price. You realize a capital gain when you sell a security for
more than you paid for it. You realize a capital loss when you sell a security
for less than you paid for it.

CASH EQUIVALENTS - short-term, interest-bearing instruments, including
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities, bank obligations, asset-backed securities, foreign
government securities and commercial paper issued by U.S. and foreign issuers
which, at the time of investment, is rated at least Prime-2 by Moody's Investor
Services, Inc. (Moody's), A-2 by S&P, or F-1 by Fitch IBCA (Fitch).

COMMERCIAL PAPER - a money market instrument issued by a large company.

COMMON STOCK - a security that represents part equity ownership in a company.
Common stock typically allows you to vote at shareholder meetings and to share
in the company's profits by receiving dividends.

CONVERTIBLE DEBT - a debt security that can be exchanged for common stock (or
another type of security) on a specified basis and date.

CONVERTIBLE SECURITY - a security that can be exchanged for common stock (or
another type of security) at a specified rate. Convertible securities include
convertible debt, rights and warrants.

CROSSING NETWORKS - an electronic system where anonymous parties can match buy
and sell transactions. These transactions don't affect the market, and
transaction costs are extremely low.

DEBT SECURITY - when you invest in a debt security, you are typically lending
your money to a governmental body or company (the issuer) to help fund their
operations or major projects. The issuer pays interest at a specified rate on a
specified date or dates, and repays the principal when the security matures.
Short-term debt securities include money market instruments such as treasury
bills. Long-term debt securities include fixed income securities such as
government and corporate bonds, and mortgage-backed and asset-backed
securities.

33
<PAGE>
DEPOSITARY RECEIPTS - evidence of the deposit of a security with a custodian
bank. American Depositary Receipts (ADRs), for example, are certificates traded
in U.S. markets representing an interest of a foreign company. They were
created to make it possible for foreign issuers to meet U.S. security
registration requirements. Other examples include ADSs, GDRs and EDRs.

DIVIDEND YIELD - rate of return of dividends paid on a common or preferred
stock. It equals the amount of the annual dividend on a stock expressed as a
percentage of the stock's current market value.

EQUITY SECURITY - an investment that gives you an equity ownership right in a
company. Equity securities (or "equities") include common and preferred stock,
rights and warrants.

FIRST BOSTON CONVERTIBLE INDEX - a widely-used unmanaged index that measures
the performance of convertible securities. The index is not available for
investment.

FIXED INCOME SECURITY - an intermediate to long-term debt security that matures
in more than one year.

FOREIGN SECURITY - a debt or equity security issued by a foreign company or
government.

FUNDAMENTAL ANALYSIS - a method of securities analysis that tries to evaluate
the intrinsic, or "true," value of a particular stock. It includes a study of
the overall economy, industry conditions and the financial condition and
management of a company.

FUTURES CONTRACT - a contract to buy or sell an asset or an index of securities
at a specified price on a specified future date. The price is set through a
futures exchange.

IFC INVESTABLES INDEX - an unmanaged index that tracks more than 1,400 stocks
in 25 emerging markets in Asia, Latin America, Eastern Europe, Africa and the
Middle East. The index is weighted by market capitalization.

INVESTMENT GRADE - a debt security that has been given a medium to high credit
rating (Baa or higher by Moody's, BBB or higher by S&P or a comparable rating
by other nationally recognized statistical rating organization NRSROs) based on
the issuer's ability to pay interest and repay principal on time. The portfolio
management team may consider an unrated debt security to be investment grade if
the team believes it is of comparable quality. Please see the SAI for more
information about credit ratings.

LIQUIDITY - a measurement of how easily a security can be bought or sold at a
price that is close to its market value.

34
<PAGE>
MONEY MARKET INSTRUMENT - a short-term debt security that matures in 13 months
or less. Money market instruments include U.S. Treasury obligations, U.S.
government obligations, certificates of deposit, bankers' acceptances,
commercial paper, repurchase agreements and certain municipal securities.

MORTGAGE-BACKED SECURITY OR MORTGAGE-RELATED SECURITY - a debt security that
gives you an interest in, and is backed by, a pool of residential mortgages
issued by the U.S. government or by financial institutions. The underlying
mortgages may be guaranteed by the U.S. government or one of its agencies,
authorities or instrumentalities. Mortgage-backed securities typically make
monthly payments, which are a combination of interest and a portion of the
principal of the underlying mortgages.

MSCI EAFE INDEX - Morgan Stanley Capital International Europe, Australasia and
Far East Index, an index of over 1,100 stocks from 21 developed markets in
Europe, Australia, New Zealand and Asia. The index reflects the relative size
of each market.

MUNICIPAL SECURITY (OBLIGATION) - a debt security issued by state or local
governments or governmental authorities to pay for public projects and
services. "General obligations" are typically backed by the issuer's full
taxing and revenue-raising powers. "Revenue securities" depend on the income
earned by a specific project or authority, like road or bridge tolls, user fees
for water or revenues from a utility. Interest income from these securities is
exempt from federal income taxes and is generally exempt from state taxes if
you live in the state that issued the security. If you live in the municipality
that issued the security, interest income may also be exempt from local taxes.

NON-DIVERSIFIED - a portfolio that holds securities of fewer issuers or kinds
of issuers than other kinds of portfolios. Non-diversified portfolios tend to
have greater price swings than more diversified portfolios because events
affecting one or more of its securities may have a disproportionately large
effect on the portfolio.

OVER-THE-COUNTER MARKET - a market where dealers trade securities through a
telephone or computer network rather than through a public stock exchange.

PREFERRED STOCK - a type of equity security that gives you a limited ownership
right in a company, with certain preferences or priority over common stock.
Preferred stock generally pays a fixed annual dividend. If the company goes
bankrupt, preferred shareholders generally receive their share of the company's
remaining assets before common shareholders and after bondholders and other
creditors.

PRICE-TO-EARNINGS RATIO (P/E RATIO) - the current price of a share divided by
its actual or estimated earnings per share. The P/E ratio is one measure of the
value of a company.

QUANTITATIVE ANALYSIS - an analysis of financial information about a company or
security to identify securities that have the potential for growth or are
otherwise suitable for a portfolio to buy.

35
<PAGE>
REAL ESTATE INVESTMENT TRUST (REIT) - a portfolio of real estate investments
which may include office buildings, apartment complexes, hotels and shopping
malls, and real-estate-related loans or interests.

RIGHT - a temporary privilege allowing investors who already own a common stock
to buy additional shares directly from the company at a specified price or
formula.

RUSSELL 2000 - an unmanaged index of 2,000 of the smallest stocks representing
approximately 11% of the U.S. equity market. The index is weighted by market
capitalization, and is not available for investment.

S&P 500(1) - Standard & Poor's 500 Composite Stock Price Index, an unmanaged
index of 500 widely held common stocks. It is not available for investment.

S&P MIDCAP 400(1) - an unmanaged index of 400 domestic stocks chosen for market
size, liquidity and industry representation. The index is weighted by market
value, and is not available for investment.

S&P SMALLCAP 600(1) - Standard & Poor's SmallCap 600 Index, an unmanaged index
of 600 common stocks, weighted by market capitalization. It is not available
for investment.

S&P/BARRA SMALLCAP VALUE INDEX(1) - an unmanaged index of a group of stocks
from the S&P SmallCap 600 that have low price-to-book ratios relative to the
S&P SmallCap 600 as a whole. It is weighted by market capitalization, and is
not available for investment.

S&P/BARRA VALUE INDEX(1) - an unmanaged index of a group of stocks from the S&P
500 that have low price-to-book ratios relative to the S&P 500 as a whole. It
is weighted by market capitalization, and is not available for investment.

SENIOR SECURITY - a debt security that allows holders to receive their share of
a company's remaining assets in a bankruptcy before other bondholders,
creditors, and common and preferred shareholders.

SETTLEMENT DATE - the date on which an order is settled either by payment or
delivery of securities.

TRADE DATE - the effective date of a purchase, sale or exchange transaction, or
other instructions sent to us. The trade date is determined by the day and time
we receive the order or instructions in a form that's acceptable to us.

U.S. GOVERNMENT OBLIGATIONS - a wide range of debt securities issued or
guaranteed by the U.S. government or its agencies, authorities or
instrumentalities.

WARRANT - a certificate that gives you the right to buy common shares at a
specified price within a specified period of time.

36
<PAGE>
WILSHIRE 5000 EQUITY INDEX - an index that measures the performance of the
equity securities of all companies headquartered in the U.S. that have readily
available price data -- over 7,000 companies. The index is weighted by market
capitalization and is not available for investment.

(1)S&P and BARRA have not reviewed any stock included in the S&P 500, S&P 600,
BARRA Index or BARRA SmallCap Index for its investment merit. S&P and BARRA
determine and calculate their indexes independently of the Funds and are not
a sponsor or affiliate of the Funds. S&P and BARRA give no information and
make no statements about the suitability of investing in the Funds or the
ability of their indexes to track stock market performance. S&P and BARRA
make no guarantees about the indexes, any data included in them and the
suitability of the indexes or their data for any purpose. "Standard and
Poor's," "S&P 500" and "S&P 600" are trademarks of the McGraw-Hill Companies,
Inc.

37
<PAGE>
[GRAPHIC]
NATIONS ANNUITY TRUST

NATIONS ANNUITY TRUST PORTFOLIOS ARE AVAILABLE ONLY TO OWNERS OF
VARIABLE ANNUITY CONTRACTS OR VARIABLE LIFE INSURANCE POLICIES
ISSUED BY PARTICIPATING LIFE INSURANCE COMPANIES, INCLUDING
HARTFORD LIFE INSURANCE COMPANY.

PLEASE REFER TO THE PROSPECTUS THAT DESCRIBES YOUR ANNUITY CONTRACT
OR LIFE INSURANCE POLICY FOR INFORMATION ABOUT HOW TO BUY, SELL AND
TRANSFER YOUR INVESTMENT AMONG SHARES OF THE PORTFOLIOS.

[GRAPHIC]
WHERE TO FIND MORE INFORMATION

You'll find more information about Nations Annuity Trust portfolios in the
following documents:

[GRAPHIC]
ANNUAL AND SEMI-ANNUAL REPORTS
The annual and semi-annual reports contain information about portfolio
investments and performance, the financial statements and the auditor's
reports. The annual report also includes a discussion about the market
conditions and investment strategies that had a significant effect on
each portfolio's performance during the period covered.

[GRAPHIC]
STATEMENT OF ADDITIONAL INFORMATION
The SAI contains additional information about the portfolios and their
policies. The SAI is legally part of this prospectus (it's incorporated
by reference). A copy has been filed with the SEC.

You can obtain a free copy of these documents, request other information
about the portfolios and make shareholder inquiries by contacting
Nations Annuity Trust:

By telephone: 1.800.321.7854

By mail:
NATIONS ANNUITY TRUST
C/O STEPHENS INC.
ONE BANK OF AMERICA PLAZA
33RD FLOOR
CHARLOTTE, NC 28255

On the Internet: WWW.NATIONSBANK.COM/NATIONSFUNDS

If you prefer, you can write or call the SEC's Public Reference Room and
ask them to mail you copies of these documents. They'll charge you a fee
for this service. You can also download them from the SEC's website or
visit the Public Reference Room and copy the documents while you're
there. Please call the SEC for more information.

PUBLIC REFERENCE ROOM OF THE SEC
WASHINGTON, DC 20549-6009
1.800.SEC.0330
WWW.SEC.GOV

[GRAPHIC]
NATIONS FUNDS