NATIONS FUND TRUST, 497, 1996-10-15

NATIONS FUND TRUST
497, 1996-10-15

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<PAGE>
Prospectus

PRIMARY A SHARES
OCTOBER 15, 1996

This Prospectus describes NATIONS MANAGED INDEX FUND
and NATIONS MANAGED SMALLCAP INDEX FUND (the
"Funds") of Nations Fund Trust, an open-end
management investment company in the Nations Fund
Family ("Nations Fund" or "Nations Fund Family").
This Prospectus describes one class of shares of the
Funds -- Primary A Shares.

This Prospectus sets forth concisely the information
about the Funds that a prospective purchaser of
Primary A Shares should consider before investing.
Investors should read this Prospectus and retain it
for future reference. Additional information about
Nations Fund Trust is contained in a separate
Statement of Additional Information (the "SAI") that
has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request
without charge by writing or calling Nations Fund at
its address or telephone number shown below. The
SAI, dated October 15, 1996, is incorporated by
reference in its entirety into this Prospectus.
NationsBanc Advisors, Inc. ("NBAI") is the
investment adviser to the Funds. TradeStreet
Investment Associates, Inc. ("TradeStreet") is
investment sub-adviser to the Funds. As used herein
the "Adviser" shall mean NBAI and/or TradeStreet as
the context may require.

SHARES OF NATIONS FUND 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 FUNDS
INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.

NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE
CERTAIN OTHER SERVICES TO NATIONS FUND, FOR WHICH
THEY ARE COMPENSATED. STEPHENS INC., WHICH IS NOT
AFFILIATED WITH NATIONSBANK, IS THE SPONSOR AND
ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR FOR
NATIONS FUND.

THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

Nations
Managed
Index Fund
Nations
Managed
SmallCap
Index Fund

For Fund information call:
1-800-626-2275
Nations Fund
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
NATIONS FUND

TR-96699-1096

<PAGE>
Table Of Contents

About The Funds

Prospectus Summary 3

Expenses Summary 4

Objectives 5

How The Objectives Are Pursued 5

How Performance Is Shown 7

How The Funds Are Managed 8

Organization And History 10

About Your
Investment

How To Buy Shares 11

How To Redeem Shares 12

How To Exchange Shares 12

How The Funds Value Their Shares 13

How Dividends And Distributions Are Made;
Tax Information 13

Appendix A -- Portfolio Securities 14

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
NATIONS FUND OR ITS DISTRIBUTOR. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING BY NATIONS FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.

<PAGE>
About The Funds

Prospectus Summary

(Bullet) TYPE OF COMPANY: Open-end management investment company.

(Bullet) INVESTMENT OBJECTIVES AND POLICIES:

(BULLET) Nations Managed Index Fund's investment objective is to seek, over
the long-term, to provide a total return which (gross of fees and
expenses) exceeds the total return of the Standard & Poor's 500
Composite Stock Price Index.

(Bullet) Nations Managed SmallCap Index Fund's investment objective is to
seek, over the long-term, to provide a total return which (gross
of fees and expenses) exceeds the total return of the Standard &
Poor's SmallCap 600 Index.

(Bullet) When consistent with the Funds' objectives, the Funds will employ
various techniques to manage capital gain distributions.

(Bullet) INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as the investment
adviser to the Funds. NBAI provides investment advice to more than 43
investment company portfolios in the Nations Fund Family. TradeStreet
Investment Associates, Inc. provides sub-advisory services to the
Funds. See "How The Funds Are Managed."

(Bullet) DIVIDENDS AND DISTRIBUTIONS: Nations Managed Index Fund and Nations
Managed SmallCap Index Fund declare and pay dividends from net
investment income each calendar quarter. Each Fund's net realized
capital gains, including net short-term capital gains, are distributed
at least annually.

(Bullet) RISK FACTORS: Although the Adviser seeks to achieve the investment
objective of the Funds, there is no assurance that it will be able to
do so. Investments in the Funds are not insured against loss of
principal. Investments by the Funds in common stocks and other equity
securities are subject to stock market risk, which is the risk that the
value of the stocks the Funds hold may decline over short or even
extended periods. Certain of the Funds' permissible investments may
constitute derivative securities. Certain types of derivative
securities can, under certain circumstances, significantly increase an
investor's exposure to market or other risks. For a discussion of these
and other factors, see "How Objectives Are Pursued -- Risk
Considerations" and "Appendix A -- Portfolio Securities."

(Bullet) MINIMUM PURCHASE: The minimum initial investment per record holder is
$500,000 for Nations Managed Index Fund and $500,000 for Nations
Managed SmallCap Index Fund. See "How To Buy Shares."

<PAGE>
Expenses Summary

Expenses are one of several factors to consider when investing in the Funds. The
following tables summarize shareholder transaction and operating expenses for
Primary A Shares of the Funds. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in Primary A Shares of the
indicated Fund over specified periods.

PRIMARY A SHARES

SHAREHOLDER TRANSACTION EXPENSES

Nations
Managed
Index Fund
<S> <C>
Sales Load Imposed on Purchases None
Deferred Sales Load None

Nations
Managed
SmallCap
Index Fund
Sales Load Imposed on Purchases None
Deferred Sales Load None

</TABLE>

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Nations
Managed
Index Fund
<S> <C>

Management Fees (After Fee Waivers) .30%
All Other Expenses .20%
Total Operating Expenses (After Fee Waivers) .50%

Nations
Managed
SmallCap
Index Fund

Management Fees (After Fee Waivers) .30%
All Other Expenses .20%
Total Operating Expenses (After Fee Waivers) .50%

</TABLE>

EXAMPLES:

You would pay the following expenses on a $1,000 investment in Primary A Shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.

Nations
Managed
Index Fund
<S> <C>
1 Year $5
3 Years $16

Nations
Managed
SmallCap
Index Fund
1 Year $5
3 Years $16
</TABLE>

The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Primary A Shares will bear either directly or indirectly. The figures in the
above tables are based on estimates for the fiscal year and have been restated
as necessary to reflect anticipated fee waivers. There is no assurance that any
fee waivers and reimbursements will continue beyond the current fiscal year. If
fee waivers and/or reimbursements are discontinued, the amounts contained in the
"Examples" above may increase. For a more complete description of the Funds'
operating expenses, see "How The Funds Are Managed."

Absent fee waivers, "Management Fees" and "Total Operating Expenses" would be
.50% and .70%, respectively, for both Nations Managed Index Fund and Nations
Managed SmallCap Index Fund.

THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST OR
FUTURE PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE GREATER OR LESS
THAN THOSE SHOWN.

<PAGE>

Objectives

NATIONS MANAGED INDEX FUND: Nations Managed Index Fund's investment objective is
to seek, over the long-term, to provide a total return which (gross of fees and
expenses) exceeds the total return of the Standard & Poor's 500 Composite Stock
Price Index.

NATIONS MANAGED SMALLCAP INDEX FUND: Nations Managed SmallCap Index Fund's
investment objective is to seek, over the long-term, to provide a total return
which (gross of fees and expenses) exceeds the total return of the Standard &
Poor's SmallCap 600 Index.

How The Objectives Are Pursued

NATIONS MANAGED INDEX FUND: In seeking to achieve its investment objective, the
Fund will invest in selected equity securities that are included in the Standard
& Poor's 500 Composite Stock Price Index (the "S&P 500 Index")1. The S&P 500
Index is a value weighted index consisting of 500 common stocks chosen for
market size, liquidity and industry group representation.

Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 500 Index while minimizing
the downside risk of underperforming the Index over time.

The initial stock universe considered by the Adviser is the S&P 500 Index. The
Adviser ranks the attractiveness of each security according to a multi-factor
valuation model. Both value and momentum factors are considered in the ranking
process. Value factors such as book value, earnings yield and cash flow measure
a stock's intrinsic worth versus its market price, while momentum
characteristics such as price momentum, earnings growth and earnings
acceleration measure a stock relative to others in the same industry. Each stock
is assigned a ranking from 1 to 10 (best to worst). The Adviser then screens out
the lower rated stocks resulting in a portfolio of 350 to 400 holdings that
capture the investment characteristics of the Index.

In addition, when consistent with the Fund's investment objective, the Fund will
employ various techniques to manage capital gain distributions. These techniques
include utilizing a share identification methodology whereby the Fund will
specifically identify each lot of shares of portfolio securities that it holds,
which will allow the Fund to sell first those specific shares with the highest
tax basis in order to reduce the amount of recognized capital gains as compared
with a sale of identical portfolio securities, if any, with a lower tax basis.
The Fund will sell first those shares with the highest tax basis only when it is
in the best interest of the Fund to do so, and reserves the right to sell other
shares when appropriate. In addition, the Fund may, at times, sell portfolio
securities in order to realize capital losses. Such capital losses would be used
to offset realized capital gains thereby reducing capital gain distributions.
Additionally, the Adviser will, consistent with the multi-factor valuation model
discussed above, employ a low portfolio turnover strategy designed to defer the
realization of capital gains.

Under normal conditions, the Adviser will attempt to invest as much of the
Fund's assets as is practical and, in any event the Fund will invest at least
65% of its total assets, in common stocks which are included in the S&P 500
Index. The Fund is expected, however, to maintain a position in high-quality
short-term debt securities and money market instruments to meet redemption
requests. If the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest without limitation in high-quality
short-term debt securities and money market instruments. These securities and
money market instruments may include domestic and foreign commercial paper,
certificates of deposit, bankers' acceptances and time deposits, U.S. Government
obligations ("U.S. Government Obligations") and repurchase agreements.

The Fund also may invest in certain specified derivative securities including:
exchange-traded options; over-the-counter options executed with primary dealers,
including long calls and puts and covered calls to enhance return; and U.S.
exchange-traded financial futures approved by the Commodity Futures Trading
Commission ("CFTC") and options thereon for market exposure risk management. The
Fund may lend its portfolio securities to qualified institutional investors. The
Fund also may invest in restricted, private placement and other illiquid
securities. In addition, the Fund may invest in securities issued by other
investment companies, consistent with the Fund's investment objective and
policies.

NATIONS MANAGED SMALLCAP INDEX FUND: In seeking to achieve its investment
objective, the Fund will invest in selected equity securities that are included
in the Standard & Poor's SmallCap 600 Index (the "S&P 600 Index")2. The S&P 600
Index is a capitalization weighted index consisting of 600 domestic stocks which
capture the economic and industry characteristics of small stock performance.
Most of these stocks are listed on either the New York, American or NASDAQ stock
exchanges.

(1) "Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation ("S&P").

(2) "Standard & Poor's 600" is a registered service mark of S&P.

<PAGE>

Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 600 Index while minimizing
the downside risk of underperforming the Index over time.

From the initial S&P 600 Index stock universe the Adviser ranks the
attractiveness of each security according to a multi-factor valuation model.
Both value and momentum factors are considered in the ranking process. Value
factors such as book value, earnings yield and cash flow measure a stock's
intrinsic worth versus its market price, while momentum characteristics such as
price momentum, earnings growth and earnings acceleration measure a stock
relative to others in the same industry. Each stock is assigned a ranking from 1
to 10 (best to worst). The Adviser then screens out the lower rated stocks
resulting in a portfolio of approximately 450-500 holdings that capture the
investment characteristics of the Index.

Under normal conditions, substantially all of the Fund's assets, and, in any
event at least 65% of its total assets, will be invested in common stocks which
are included in the S&P 600 Index. The Fund is expected, however, to maintain a
position in high-quality short-term debt securities and money market instruments
to meet redemption requests. If the Adviser believes that market conditions
warrant a temporary defensive posture, the Fund may invest without limitation in
high-quality short-term debt securities and money market instruments. These
securities and money market instruments may include domestic and foreign
commercial paper, certificates of deposit, bankers' acceptances and time
deposits, U.S. Government Obligations and repurchase agreements.

The Fund also may invest in certain specified derivative securities including:
exchange-traded options; over-the-counter options executed with primary dealers,
including long calls and puts and covered calls to enhance return; and U.S.
exchange-traded financial futures approved by the CFTC and options thereon for
market exposure risk management. The Fund may lend its portfolio securities to
qualified institutional investors. The Fund also may invest in restricted,
private placement and other illiquid securities. In addition, the Fund may
invest in securities issued by other investment companies, consistent with the
Fund's investment objective and policies.

ABOUT THE INDEXES: The S&P 500 Index is composed of 500 common stocks, which are
chosen by S&P on a statistical basis to be included in the Index. The S&P
SmallCap 600 Index is composed of 600 domestic stocks, which are chosen by S&P
based on, among other things, market size, liquidity and industry group
representation. The S&P SmallCap 600 Index is designed to be a benchmark of
small capitalization stock performance.

The inclusion of a stock in the S&P 500 Index or the SmallCap 600 Index in no
way implies that S&P believes the stock to be an attractive investment. The
Indexes are determined, composed and calculated by S&P without regard to the
Funds. S&P is neither a sponsor of, nor in any way affiliated with, the Funds,
and S&P makes no representation or warranty, expressed or implied, on the
advisability of investing in the Funds or as to the ability of the Indexes to
track general stock market performance. S&P disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the
Indexes or any data included therein.

PORTFOLIO TURNOVER: Generally, the Funds will purchase portfolio securities for
capital appreciation or investment income, or both, and not for short-term
trading profits. While it is not possible to predict exactly annual portfolio
turnover rates, it is expected that under normal market conditions, the annual
portfolio turnover rate for each Fund will not exceed 25%.

RISK CONSIDERATIONS: Although the Adviser will seek to achieve the investment
objective of each Fund, there is no assurance that it will be able to do so. No
single fund should be considered, by itself, to provide a complete investment
program for any investor. Investments in a Fund are not insured against loss of
principal.

Investments by a Fund in common stocks and other equity securities are subject
to stock market risk. The value of the stocks that the Funds hold, like the
broader stock market, may decline over short or even extended periods.

<PAGE>

cantly increase a purchaser's exposure to market or other risks. The Adviser,
however, only purchases derivative securities in circumstances where it believes
such purchases are consistent with a Fund's investment objective and do not
unduly increase the Fund's exposure to market or other risks. For additional
risk information regarding the Funds' investments in particular instruments, see
"Appendix A -- Portfolio Securities."

The techniques employed by the Adviser to seek to manage capital gain
distributions will generally only have the effect of deferring the realization
of capital gains. For example, to the extent that the capital gains recognized
on a sale of portfolio securities arise from the sale of specifically-identified
securities with higher tax bases, subsequent sales of the same portfolio
securities will be calculated by reference to the lower tax basis securities
that remain in the portfolio. Under this scenario, an investor who purchases
shares of a Fund after the first sale could receive capital gain distributions
that are higher than the distributions that would have been received if this
methodology had not been used. Therefore, certain investors actually could be
disadvantaged by the techniques employed by the Fund to seek to manage capital
gain distributions, depending on the timing of their purchase of Fund shares.
Even if there are no subsequent sales, upon a redemption or exchange of Fund
shares an investor will have to recognize gain to the extent that the net asset
value of Fund shares at such time exceeds such investor's tax basis in his or
her Fund shares.

The various techniques employed by the Funds to manage capital gain
distributions may result in the accumulation of substantial unrealized gains in
the Funds' portfolios. Moreover, the realization of capital gains is not
entirely within a Fund's control because it is at least partly dependent on
shareholder purchase and redemption activity. Capital gain distributions may
vary considerably from year-to-year.

INVESTMENT LIMITATIONS: Each Fund is subject to a number of investment
limitations. The following investment limitations are matters of fundamental
policy and may not be changed without the affirmative vote of the holders of a
majority of each Fund's outstanding shares. Other investment limitations that
cannot be changed without such a vote of shareholders are described in the SAI.

Each Fund may not:

1. Purchase any securities which would cause 25% or more of the value of the
Fund's total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal activities in the
same industry (for purposes of this limitation, U.S. Government securities are
not considered members of any industry.)

2. Make loans, except that a Fund may purchase and hold debt instruments
(whether such instruments are part of a public offering or privately placed),
may enter into repurchase agreements and may lend portfolio securities in
accordance with its investment policies.

3. Purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities) if,
immediately after such purchase, more than 5% of the value of such Fund's total
assets would be invested in the securities of such issuer, except that up to 25%
of the value of the Fund's total assets may be invested without regard to these
limitations and with respect to 75% of such Fund's assets, the Fund will not
hold more than 10% of the voting securities of any issuer.

The investment objective and policies of each Fund, unless otherwise specified,
may be changed without a vote of the Fund's shareholders. If the investment
objective or policies of a Fund change, shareholders should consider whether the
Fund remains an appropriate investment in light of their current position and
needs.

How Performance Is Shown

From time to time the Funds may advertise the total return and yield on a class
of shares. TOTAL RETURN AND YIELD FIGURES ARE BASED ON HISTORICAL DATA AND ARE
NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" of a class of
shares of a Fund may be calculated on an average annual total return basis or an
aggregate total return basis. Average annual total return refers to the average
annual compounded rates of return over one-, five-, and ten-year periods or the
life of a Fund (as stated in the advertisement) that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment, assuming the reinvestment of all dividend and capital
gain distributions. Aggregate total return reflects the total percentage change
in the value of the investment over the measuring period again assuming the
reinvestment of all dividends and capital gain distributions. Total return may
also be presented for other periods.

"Yield" is calculated by dividing the annualized net investment income per share
during a recent 30-day (or one month) period of a class of shares of a Fund by
the maximum public offering price per share on the last day of that period.

Set forth below is certain performance data for the Enhanced Equity Index Common
Trust Fund and Enhanced Small Cap Equity Index Common Trust Fund (the "CTFs"),
each of which is currently managed on

<PAGE>

behalf of NationsBank by TradeStreet. (Prior to the formation of TradeStreet in
1995, the CTFs were managed solely by NationsBank.) The performance data for the
CTFs is deemed relevant because the Enhanced Equity Index and Enhanced Small Cap
Equity Index Common Trust Funds have investment objectives and policies that are
substantially similar to those of Nations Managed Index Fund and Nations Managed
SmallCap Index Fund, respectively. Moreover, the portfolio manager of
TradeStreet (who currently manages the CTFs and the Funds) employs the same
quantitative investment process for the Funds that has, and continues to be,
utilized for the CTFs. THIS PERFORMANCE DATA REPRESENTS PAST PERFORMANCE OF THE
CTFS AND IS NOT NECESSARILY INDICATIVE OF THE FUTURE PERFORMANCE OF THE CTFS OR
THE FUNDS.

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
INDICATED THROUGH SEPTEMBER 30, 1996*

Since
Inception
One Year Three Year Five Year (12/31/88)**
<S> <C> <C> <C> <C>
Enhanced Equity
Index Common
Trust Fund 19.78% 16.91% 14.90% 16.03%
S&P 500 Index 20.33% 17.40% 15.21% 15.79%
Lipper Equity
Index Funds
Average+ 19.77% 16.90% 14.70% 15.18%
</TABLE>

ANNUAL TOTAL RETURNS*

Enhanced Lipper Equity
Equity Index Index
Common Trust S&P Funds
Year Fund 500 Index Average+
<S> <C> <C> <C>
1989 34.12% 31.55% 30.58%
1990 -1.52% -3.15% -3.57%
1991 31.72% 30.56% 29.65%
1992 5.52% 7.64% 7.12%
1993 10.47% 9.99% 9.52%
1994 0.69% 1.31% 0.90%
1995 37.66% 37.45% 36.82%
</TABLE>

TOTAL RETURNS FOR THE PERIODS INDICATED
THROUGH SEPTEMBER 30, 1996*

Since
Year-To- Inception
Three Month Date (10/1/95)
<S> <C> <C> <C>
Enhanced Small Cap Equity
Index Common Trust Fund 4.35% 16.33% 17.25%
S&P 600 Index 3.21% 14.79% 15.31%
</TABLE>

* The total returns above reflect the deduction of 0.50% of fees and expenses
per annum. The CTFs are not subject to certain investment limitations,
diversification requirements, and other restrictions imposed by the 1940 Act
and the Internal Revenue Code, which if applicable, may have adversely
affected the performance results of the CTFs.

** Prior to 12/31/88 the Enhanced Equity Index Common Trust Fund was managed
with a different objective and policies and therefore performance prior
thereto is not included in the prior performance calculations.

+ The Lipper Equity Index Funds Average represents the average performance of
mutual funds with similar objectives monitored by Lipper Analytical Services,
Inc. during the periods shown.

Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a Fund's portfolio and the Fund's
operating expenses. Investment performance also often reflects the risks
associated with such Fund's investment objective and policies. These factors
should be considered when comparing a Fund's investment results to those of
other mutual funds and other investment vehicles. Since yields fluctuate, yield
data cannot necessarily be used to compare an investment in a Fund with bank
deposits, savings accounts, and similar investment alternatives which often
provide an agreed-upon or guaranteed fixed yield for a stated period of time.

In addition to Primary A Shares, the Funds offer Primary B, Investor A and
Investor C Shares. Each class of shares may bear different sales charges,
shareholder servicing fees and other expenses, which may cause the performance
of a class to differ from the performance of the other classes. Performance
quotations will be computed separately for each class of a Fund's shares. Any
fees charged by an institution directly to its customers' accounts in connection
with investments in the Funds will not be included in calculations of total
return or yield. Each Fund's annual report contains additional performance
information and is available upon request without charge from the Funds'
distributor or your Institution, as defined below.

How The Funds Are Managed

The business and affairs of Nations Fund Trust are managed under the direction
of its Board of Trustees. Nations Fund Trust's SAI contains the names of and
general background information concerning each Trustee of Nations Fund Trust.

Nations Fund and the Adviser have adopted codes of ethics which contain policies
on personal securities transactions by "access persons," including portfolio
managers and investment analysts. These policies substantially comply in all
material respects with the recommendations set forth in the May 9, 1994 Report
of the Advisory

<PAGE>
Group on Personal Investing of the Investment Company Institute.

INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as investment adviser to
the Funds. NBAI is a wholly owned subsidiary of NationsBank, which in turn is a
wholly owned banking subsidiary of NationsBank Corporation, a bank holding
company organized as a North Carolina corporation. NBAI has its principal
offices at One NationsBank Plaza, Charlotte, North Carolina 28255.

TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the Funds. TradeStreet is a wholly owned subsidiary of
NationsBank. TradeStreet provides investment management services to individuals,
corporations and institutions.

Subject to the general supervision of Nations Fund Trust's Board of Trustees,
and in accordance with each Fund's investment policies, the Adviser formulates
guidelines and lists of approved investments for each Fund, makes decisions with
respect to and places orders for each Fund's purchases and sales of portfolio
securities and maintains records relating to such purchases and sales. The
Adviser is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of agency
transactions, financial institutions which are affiliated with the Adviser or
which have sold shares in such Funds, if the Adviser believes that the quality
of the transaction and the commission are comparable to what they would be with
other qualified brokerage firms. From time to time, to the extent consistent
with its investment objective, policies and restrictions, each Fund may invest
in securities of companies with which NationsBank has a lending relationship.
For the services provided and expenses assumed pursuant to an Investment
Advisory Agreement, NBAI is entitled to receive advisory fees, computed daily
and paid monthly, at the annual rate of 0.50% of the average daily net assets of
each Fund.

From time to time, NBAI (and/or TradeStreet) may waive or reimburse (either
voluntarily or pursuant to applicable state limitations) advisory fees and/or
expenses payable by a Fund.

For the services provided and the expenses assumed pursuant to a Sub-Advisory
Agreement, NBAI will pay TradeStreet sub-advisory fees, computed daily and paid
monthly, at the annual rate of 0.10% of the average daily net assets of each
Fund.

Greg W. Golden is a Structured Products Manager, Equity Management for
TradeStreet and is Portfolio Manager for Nations Equity Index Fund, Nations
Managed Index Fund and Nations Managed SmallCap Index Fund. He has been
Portfolio Manager for Nations Managed SmallCap Index Fund since its inception.
Prior to assuming his position with TradeStreet in 1996, he was Vice President
and Structured Products Manager for the Investment Management Group at
NationsBank. He has worked in the investment community since 1990. His past
experience includes portfolio management, derivatives management and
quantitative analysis for the Investment Management Group at NationsBank and
Sovran Bank of Tennessee. Mr. Golden received a B.B.A. in Finance from Belmont
University. He is a Chartered Financial Analyst candidate and a member of the
Association for Investment Management and Research as well as the North Carolina
Society of Financial Analysts, Inc.

Morrison & Foerster LLP, counsel to Nations Fund and special counsel to
NationsBank, has advised Nations Fund and NationsBank that NationsBank and its
affiliates may perform the services contemplated by the Investment Advisory
Agreement and this Prospectus without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in such federal or state statutes, regulations and
judicial or administrative decisions or interpretations, could prevent such
entities from continuing to perform, in whole or in part, such services. If any
such entity were prohibited from performing any of such services, it is expected
that new agreements would be proposed or entered into with another entity or
entities qualified to perform such services.

OTHER SERVICE PROVIDERS: Stephens Inc. ("Stephens"), with principal offices at
111 Center Street, Little Rock, Arkansas 72201, serves as the administrator of
Nations Fund pursuant to an Administration Agreement. Pursuant to the terms of
the Administration Agreement, Stephens provides various administrative and
corporate secretarial services to the Funds, including providing general
oversight of other service providers, office space, utilities and various legal
and administrative services in connection with the satisfaction of various
regulatory requirements applicable to the Funds.

First Data Investor Services Group, Inc. ("First Data"), formerly The
Shareholder Services Group, Inc., a wholly owned subsidiary of First Data
Corporation, with principal offices at One Exchange Place, Boston, Massachusetts
02109, serves as the co-administrator of Nations Fund pursuant to a
Co-Administration Agreement. Under the Co-Administration Agreement, First Data
provides various administrative and accounting services to the Funds including
performing the calculations necessary to determine net asset value per share and
dividends of each class of shares of the Funds, preparing tax

<PAGE>

returns and financial statements and maintaining the portfolio records and
certain of the general accounting records for the Funds.

For the services rendered pursuant to the Administration and Co-Administration
Agreements, Stephens and First Data are entitled to receive a combined fee at an
annual rate of up to 0.10% of each Fund's average daily net assets.

NationsBank serves as sub-administrator for Nations Fund pursuant to a
Sub-Administration Agreement. Pursuant to the terms of the Sub-Administration
Agreement, NationsBank assists Stephens in supervising, coordinating and
monitoring various aspects of the Funds' administrative operations. For
providing such services, NationsBank shall be entitled to receive a monthly fee
from Stephens based on an annual rate of 0.01% of the Funds' average daily net
assets.

Shares of the Funds are sold on a continuous basis by Stephens, as the Funds'
sponsor and distributor. Stephens is a registered broker/dealer with principal
offices at 111 Center Street, Little Rock, Arkansas 72201. Nations Fund has
entered into distribution agreements with Stephens which provide that Stephens
has the exclusive right to distribute shares of the Funds. Stephens may pay
service fees or commissions to Institutions which assist customers in purchasing
Primary A Shares of the Funds.

First Data serves as the Transfer Agent for the Funds' Primary A Shares.
NationsBank of Texas, N.A. ("NationsBank of Texas" or the "Custodian") serves as
custodian for the assets of the Funds. NationsBank of Texas, which also serves
as the sub-transfer agent for the Funds' Primary A Shares, is located at 1401
Elm Street, Dallas, Texas 75202, and is a wholly owned subsidiary of NationsBank
Corporation. In return for providing custodial services, NationsBank of Texas is
entitled to receive, in addition to out-of-pocket expenses, fees payable monthly
(i) at the rate of 1.25% of 1% of the average daily net assets of each Fund,
(ii) $10.00 per repurchase collateral transaction by such Fund, and (iii) $15.00
per purchase, sale and maturity transaction involving such Fund. In return for
providing sub-transfer agency services for the Primary A Shares of Nations Fund,
NationsBank of Texas is entitled to receive an annual fee from First Data of
$251,000.

Price Waterhouse LLP serves as independent accountant to Nations Fund. Its
address is 160 Federal Street, Boston, Massachusetts 02110.

EXPENSES: The accrued expenses of each Fund are deducted from the Fund's total
accrued income before dividends are declared. These expenses include, but are
not limited to: fees paid to the Adviser, NationsBank, Stephens and First Data;
taxes; interest; Trustees' fees; federal and state securities registration and
qualification fees; brokerage fees and commissions; costs of preparing and
printing prospectuses for regulatory purposes and for distribution to existing
shareholders; charges of the Custodian and Transfer Agent; certain insurance
premiums; outside auditing and legal expenses; costs of shareholder reports and
shareholder meetings; other expenses which are not expressly assumed by the
Adviser, NationsBank, Stephens or First Data under their respective agreements
with Nations Fund; and any extraordinary expenses. Any general expenses of
Nations Fund Trust that are not readily identifiable as belonging to a
particular investment portfolio are allocated among all portfolios in the
proportion that the assets of a portfolio bears to the assets of Nations Fund
Trust or in such other manner as the Board of Trustees determines is fair and
equitable.

Organization And History

The Funds are members of the Nations Fund Family, which consists of Nations Fund
Trust, Nations Fund, Inc., Nations Fund Portfolios, Inc. and Nations
Institutional Reserves. The Nations Fund Family currently consists of more than
43 distinct investment portfolios and total assets in excess of $18 billion.

NATIONS FUND TRUST: Nations Fund Trust was organized as a Massachusetts business
trust on May 6, 1985. Nations Fund Trust's fiscal year end is March 31; prior to
1996, Nations Fund Trust's fiscal year end was November 30. The Funds currently
offer four classes of shares -- Primary A Shares, Primary B Shares, Investor A
Shares and Investor C Shares. This Prospectus relates only to the Primary A
Shares of Nations Managed Index Fund and Nations Managed SmallCap Index Fund of
Nations Fund Trust. To obtain additional information regarding the Funds' other
classes of shares which may be available to you, contact your Institution (as
defined below) or Nations Fund at 1-800-626-2275.

Each share of Nations Fund Trust is without par value, represents an equal
proportionate interest in the related fund with other shares of the same class,
and is entitled to such dividends and distributions out of the income earned on
the assets belonging to such fund as are declared in the discretion of Nations
Fund Trust's Board of Trustees. Nations Fund Trust's Declaration of Trust
authorizes the Board of Trustees to classify or reclassify any class of shares
into one or more series of shares.

Shareholders are entitled to one vote for each full share held and a
proportionate fractional vote for each fractional share held. Shareholders of
each fund of Nations

<PAGE>
Fund Trust will vote in the aggregate and not by fund, and shareholders of each
fund will vote in the aggregate and not by class except as otherwise expressly
required by law or when the Board of Trustees determines that the matter to be
voted on affects only the interests of shareholders of a particular fund or
class. See the related SAI for examples of when the Investment Company Act of
1940 (the "1940 Act") requires voting by fund.

As of October 15, 1996, NationsBank and its affiliates possessed or shared power
to dispose or vote with respect to more than 25% of the outstanding shares of
certain classes of shares of Nations Fund Trust and therefore could be
considered to be a controlling person of these classes and series of Nations
Fund Trust for purposes of the 1940 Act. For more detailed information
concerning the percentage of each class or series of shares over which
NationsBank and its affiliates possessed or shared power to dispose or vote as
of a certain date, see Nations Fund Trust's SAI.

Nations Fund Trust does not presently intend to hold annual meetings except as
required by the 1940 Act. Shareholders will have the right to remove Trustees.
Nations Fund Trust's Code of Regulations provides that special meetings of
shareholders shall be called at the written request of the shareholders entitled
to vote at least 10% of the outstanding shares of Nations Fund Trust entitled to
be voted at such meeting.

About Your Investment

How To Buy Shares

There is a minimum initial investment for each record holder of $500,000 for
Nations Managed Index Fund and $500,000 for Nations Managed SmallCap Index Fund;
there are no minimum subsequent investments.

Primary A Shares may be sold to NationsBank and its affiliates acting on behalf
of bona fide trust customers. Primary A Shares also may be sold to employee
benefit plans, charitable foundations, endowments and to other funds in the
Nations Fund Family.

Primary A Shares are sold at net asset value without the imposition of a sales
charge. Financial institutions ("Institutions") acting on behalf of their
customers ("Customers") may establish certain procedures for processing
Customers' purchase orders and may charge their Customers for services provided
to them in connection with their investments.

Purchases may be effected on days on which the New York Stock Exchange (the
"Exchange") is open for business (a "NYSE Business Day"). Unless otherwise
specified, the term "Business Day" in this Prospectus refers to a NYSE Business
Day.

Nations Fund reserves the right to reject any purchase order. The issuance of
Primary A Shares is recorded on the books of the Funds, and share certificates
are not issued. It is the responsibility of Institutions, when applicable, to
record beneficial ownership of Primary A Shares and to reflect such ownership in
the account statements provided to their Customers.

EFFECTIVE TIME OF PURCHASES: Purchase orders for Primary A Shares of the Funds
which are received by Stephens or by the Transfer Agent before the close of
regular trading hours on the Exchange (currently 4:00 p.m., Eastern time) on any
Business Day are priced according to the net asset value determined on that day
but are not executed until 4:00 p.m., Eastern time, on the Business Day on which
immediately available funds in payment of the purchase price are received by the
Funds' Custodian. Such payment must be received no later than 4:00 p.m., Eastern
time, by the third Business Day following receipt of the order. If funds are not
received by such date, the order will not be accepted and notice thereof will be
given to the Institution or investor placing the order. Payment for orders which
are not received or accepted will be returned after prompt inquiry to the
sending Institution or investor. Primary A Shares are purchased at the net asset
value per share next determined after receipt of the order by Stephens or by the
Transfer Agent.

Institutions are responsible for transmitting orders for purchases of Primary A
Shares by their Customers, and for delivering required funds, on a timely basis.
It is Stephens' responsibility to transmit orders it receives to Nations Fund.

<PAGE>
How To Redeem Shares

Nations Fund may redeem a shareholder's Primary A Shares if the balance in such
shareholder's account with a Fund drops below $500 as a result of redemptions,
and the shareholder does not increase the balance to at least
$500 on 60 days' written notice. If a Customer has agreed with a particular
Institution to maintain a minimum balance in his or her account at the
Institution, and the balance in such Institution account falls below that
minimum, the Customer may be obliged to redeem all or a part of his or her
Primary A Shares in such Fund to the extent necessary to maintain the required
minimum balance in such Institution account. Nations Fund also may redeem shares
involuntarily or make payment for redemption in readily marketable securities or
other property under certain circumstances in accordance with the 1940 Act.

Institutions are responsible for transmitting redemption orders to Stephens or
to the Transfer Agent and for crediting their Customers' accounts with the
redemption proceeds on a timely basis. It is the responsibility of Stephens to
transmit orders it receives to Nations Fund. No charge for wiring redemption
payments is imposed by Nations Fund, although Institutions may charge their
Customer accounts for these or other services provided in connection with the
redemption of Primary A Shares and may establish additional procedures.
Information concerning any charges or procedures is available from the
Institutions. Redemption orders are effected at the net asset value per share
next determined after acceptance of the order by Stephens or by the Transfer
Agent. Redemption proceeds are normally remitted in federal funds wired to the
redeeming Institution or investor within three Business Days following receipt
of the order.

How To Exchange Shares

The exchange feature enables a shareholder of Primary A Shares of a Fund to
acquire Primary A Shares of another fund when that shareholder believes that a
shift between funds is an appropriate investment decision. An exchange of
Primary A Shares for Primary A Shares of another fund is made on the basis of
the next calculated net asset value per share of each fund after the exchange
order is received.

The Funds and each of the other funds of Nations Fund may limit the number of
times this exchange feature may be exercised by a shareholder within a specified
period of time. Also, the exchange feature may be terminated or revised at any
time by Nations Fund upon such notice as may be required by applicable
regulatory agencies (presently 60 days for termination or material revision),
provided that the exchange feature may be terminated or materially revised
without notice under certain unusual circumstances.

The current prospectus for each fund of Nations Fund describes its investment
objective and policies, and shareholders should obtain a copy and examine it
carefully before investing. Exchanges are subject to the minimum investment
requirement and any other conditions imposed by each fund. In the case of any
shareholder holding a share certificate or certificates, no exchanges may be
made until all applicable share certificates have been received by the Transfer
Agent and deposited in the shareholder's account. An exchange will be treated
for Federal income tax purposes the same as a redemption of shares, on which the
shareholder may realize a capital gain or loss. However, the ability to deduct
capital losses on an exchange may be limited in situations where there is an
exchange of shares within 90 days after the shares are purchased.

Nations Fund reserves the right to reject any exchange request. Only shares that
may legally be sold in the state of the investor's residence may be acquired in
an exchange. Only shares of a class that is accepting investments generally may
be acquired in an exchange.

If you have telephone exchange privileges, during periods of significant
economic or market change, telephone exchanges may be difficult to complete. In
such event, shares may be exchanged by mailing your request directly to the
entity through which the original shares were purchased. Investors should
consult their Institution or Stephens for further information regarding
exchanges.

Primary A Shares may be exchanged by directing a request directly to the
Institution, if any, through which the original Primary A Shares were purchased
or in other cases Stephens or the Transfer Agent. Investors should consult their
Institution, Stephens or the Transfer Agent for further information regarding
exchanges. Your exchange feature may be governed by your account agreement with
your Institution.

<PAGE>

How The Funds Value Their Shares

The net asset value of a share of each class is calculated by dividing the total
value of its assets, less liabilities, by the number of shares in the class
outstanding. Shares of the Funds are valued as of the close of regular trading
on the Exchange (currently 4:00 p.m., Eastern time) on each NYSE Business Day.
Currently, the days on which the Exchange is closed (other than weekends) are:
New Year's Day, Presidents' Day, Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Portfolio securities for which market quotations are readily available are
valued at market value. Short-term investments that will mature in 60 days or
less are valued at amortized cost, which approximates market value. All other
securities are valued at their fair value following procedures approved by the
Trustees.

How Dividends And Distributions Are Made;
Tax Information

DIVIDENDS AND DISTRIBUTIONS: Even though the Funds seek to manage taxable
distributions, the Funds may be expected to earn and distribute taxable income
and may also be expected to realize and distribute capital gains from time to
time. Dividends from net investment income are declared and paid each calendar
quarter by the Funds. The Funds' net realized capital gains (including net
short-term capital gains) are distributed at least annually.

Primary A Shares of the Funds are eligible to receive dividends when declared,
provided, however, that the purchase order for such shares is received at least
one day prior to the dividend declaration and such shares continue to be
eligible for dividends through and including the day before the redemption order
is executed.

The net asset value of Primary A Shares will be reduced by the amount of any
dividend or distribution. Dividends and distributions are paid in cash within
five Business Days of the end of the quarter to which the dividend relates.
Certain purchasing Institutions may provide for the reinvestment of dividends in
additional Primary A Shares of the same Fund. Dividends and distributions
payable to a shareholder are paid in cash within five Business Days after a
shareholder's complete redemption of his or her Primary A Shares in a Fund.

TAX INFORMATION: Each Fund intends to qualify as a separate "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). Such qualification relieves a Fund of liability for Federal income tax
to the extent its earnings are distributed in accordance with the Code.

Each Fund intends to distribute substantially all of its investment company
taxable income and net tax-exempt income each taxable year. Such distributions
by a Fund of its net investment income (including net foreign currency gains)
and the excess, if any, of its net short-term capital gain over its net
long-term capital loss will be taxable as ordinary income to shareholders who
are not currently exempt from Federal income tax, whether such income is
received in cash or reinvested in additional shares.

Corporate shareholders may be entitled to the dividends-received deduction for
distributions from a Fund's investment in the stock of domestic corporations to
the extent of the total qualifying dividends received by the Fund.

Substantially all of the net realized long-term capital gains of the Funds, if
any, will be distributed at least annually to the Funds' shareholders. The Funds
will generally have no tax liability with respect to such gains, and the
distributions will be taxable to such shareholders who are not currently exempt
from Federal income tax as long-term capital gains, regardless of how long the
shareholders have held such Funds' shares and whether such gains are received in
cash or reinvested in additional shares.

Each year, shareholders will be notified as to the amount and Federal tax status
of all dividends and capital gains paid during the prior year. Such dividends
and capital gains may also be subject to state and local taxes.

Dividends declared in October, November or December of any year payable to
shareholders of record on a specified date in such months will be deemed to have
been received by shareholders and paid by a Fund on December 31 of such year in
the event such dividends are actually paid during January of the following year.

<PAGE>

withholding, a Fund is required by the Internal Revenue Service to withhold 31%
of any dividend (other than exempt-interest dividends) and/or redemption
(including exchange redemptions). Amounts withheld are applied to the
shareholder's Federal tax liability, and a refund may be obtained from the
Internal Revenue Service if withholding results in overpayment of taxes. Federal
law also requires each Fund to withhold 30% or the applicable tax treaty rate
from dividends paid to certain nonresident alien, non-U.S. partnership and
non-U.S. corporation shareholder accounts.

The foregoing discussion is based on tax laws and regulations which were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the Funds and their
shareholders. It is not intended as a substitute for careful tax planning.
Accordingly, potential investors should consult their tax advisors with specific
reference to their own tax situations. Further tax information is contained in
the SAI.

Appendix A -- Portfolio Securities

The following are summary descriptions of certain types of instruments in which
a Fund may invest. The "How Objectives Are Pursued" section of the Prospectus
identifies each Fund's permissible investments, and the SAI contains more
information concerning such investments.

BANK INSTRUMENTS: Bank instruments consist mainly of certificates of deposit,
time deposits and bankers' acceptances. The Funds will limit their investments
in bank obligations so they do not exceed 25% of each Fund's total assets at the
time of purchase.

BORROWINGS: When a Fund borrows money, the net asset value of a share may be
subject to greater fluctuation until the borrowing is paid off. The Funds may
borrow money from banks for temporary purposes in amounts of up to one-third of
their respective total assets, provided that borrowings in excess of 5% of the
value of the Fund's total assets must be repaid prior to the purchase of
portfolio securities. Under the requirements of the 1940 Act, the Funds are
required to maintain an asset coverage (including the proceeds of the
borrowings) of at least 300% of all borrowings.

COMMERCIAL INSTRUMENTS: Commercial instruments consist of short-term U.S.
dollar-denominated obligations issued by domestic corporations or foreign
corporations and foreign commercial banks. Investments by a Fund in commercial
paper will consist of issues rated in a manner consistent with such Fund's
investment policies and objective. In addition, a Fund may acquire unrated
commercial paper and corporate bonds that are determined by the Adviser at the
time of purchase to be of comparable quality to rated instruments that may be
acquired by a Fund. Commercial instruments include variable-rate master demand
notes, which are unsecured instruments that permit the indebtedness thereunder
to vary and provide for periodic adjustments in the interest rate, and variable-
and floating-rate instruments.

CONVERTIBLE SECURITIES, PREFERRED STOCK, AND WARRANTS: The Funds may invest in
debt securities convertible into or exchangeable for equity securities,
preferred stocks or warrants. Preferred stocks are securities that represent an
ownership interest in a corporation providing the owner with claims on a
company's earnings and assets before common stock owners, but after bond or
other debt security owners. Warrants are options to buy a stated number of
shares of common stock at a specified price any time during the life of the
warrants.

FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS: The Funds may attempt to
reduce the overall level of investment risk of particular securities and attempt
to protect a Fund against adverse market movements by investing in futures,
options and other derivative instruments. These include the purchase and writing
of options on securities (including index options), and investing in futures
contracts for the purchase or sale of instruments based on financial indices,
including interest rate indices or indices of U.S. Government, equity or fixed
income securities ("futures contracts"), options on futures contracts, forward
contracts and swaps and swap-related products such as interest rate swaps,
currency swaps, caps, collars and floors.

The use of futures, options, forward contracts and swaps exposes a Fund to
additional investment risks and transaction costs. If the Adviser incorrectly
analyzes market conditions or does not employ the appropriate strategy with
respect to these instruments, a Fund could be left in a less favorable position.
Additional risks inherent in the use of futures, options, forward contracts and
swaps include: imperfect correlation between the price of futures, options and
forward contracts and movements in the prices of the securities or currencies
being hedged; the possible absence of a liquid secondary market for any
particular instrument at any time; and the possible need to defer closing out
certain hedged positions to avoid adverse tax consequences. A Fund may not
purchase put and call options which are traded on a national stock exchange in
an amount exceeding 5% of its net assets. Further information on the use of
futures, options and other derivative instruments, and the associated risks, is
contained in the SAI.

<PAGE>

shares. Repurchase agreements, time deposits and guaranteed investment contracts
that do not provide for payment to a Fund within seven days after notice, and
illiquid restricted securities are subject to the limitation on illiquid
securities.

If otherwise consistent with its investment objective and policies, certain
Funds may purchase securities that are not registered under the Securities Act
of 1933, as amended (the "1933 Act") but which can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the 1933 Act, or which
were issued under Section 4(2) of the 1933 Act. Any such security will not be
considered illiquid so long as it is determined by a Fund's Board of Trustees or
the Adviser, acting under guidelines approved and monitored by such Fund's
Board, after considering trading activity, availability of reliable price
information and other relevant information, that an adequate trading market
exists for that security. To the extent that, for a period of time, qualified
institutional or other buyers cease purchasing such restricted securities
pursuant to Rule 144A or otherwise, the level of illiquidity of a Fund holding
such securities may increase during such period.

MONEY MARKET INSTRUMENTS: The term "money market instruments" refers to
instruments with remaining maturities of one year or less. Money market
instruments may include, among other instruments, certain U.S. Treasury
obligations, U.S. Government obligations, bank instruments, commercial
instruments, repurchase agreements and municipal securities. Such instruments
are described in this Appendix A.

OTHER INVESTMENT COMPANIES: Each Fund may invest in securities issued by other
investment companies to the extent that such investments are consistent with the
Fund's investment objective and policies and permissible under the 1940 Act. As
a shareholder of another investment company, a Fund would bear, along with other
shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the advisory and
other expenses that a Fund bears directly in connection with its own operations.

REPURCHASE AGREEMENTS: A repurchase agreement involves the purchase of a
security by a Fund and a simultaneous agreement (generally with a bank or
broker/dealer) to repurchase that security from the Fund at a specified price
and date or upon demand. This technique offers a method of earning income on
idle cash. A risk associated with repurchase agreements is the failure of the
seller to repurchase the securities as agreed, which may cause a Fund to suffer
a loss if the market value of such securities declines before they can be
liquidated on the open market. Repurchase agreements with a duration of more
than seven days are considered illiquid securities and are subject to the limit
stated above. A Fund may enter into repurchase agreements jointly with other
investment portfolios of Nations Fund.

SECURITIES LENDING: To increase return on portfolio securities, the Funds may
lend their portfolio securities to broker/dealers and other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by collateral equal at all times in value to at least the market value
of the securities loaned. There is a risk of delay in receiving collateral or in
recovering the securities loaned or even a loss of rights in the collateral
should the borrower of the securities fail financially. However, loans are made
only to borrowers deemed by the Adviser to be credit worthy and when, in its
judgment, the income to be earned from the loan justifies the attendant risks.
The aggregate of all outstanding loans of a Fund may not exceed 30% of the value
of its total assets.

U.S. GOVERNMENT OBLIGATIONS: U.S. Government obligations consist of marketable
securities and instruments issued or guaranteed by the U.S. Government or any of
its agencies, authorities or instrumentalities. Direct obligations are issued by
the U.S. Treasury and include all U.S. Treasury instruments. U.S. Treasury
obligations differ only in their interest rates, maturities and time of
issuance. Obligations of U.S. Government agencies, authorities and
instrumentalities are issued by government-sponsored agencies and enterprises
acting under authority of Congress. Although obligations of federal agencies,
authorities and instrumentalities are not debts of the U.S. Treasury, some are
backed by the full faith and credit of the U.S. Treasury, such as direct
pass-through certificates of the Government National Mortgage Association; some
are supported by the right of the issuer to borrow from the U.S. Government,
such as obligations of Federal Home Loan Banks, and some are backed only by the
credit of the issuer itself, such as obligations of the Federal National
Mortgage Association. No assurance can be given that the U.S. Government would
provide financial support to government-sponsored instrumentalities if it is not
obligated to do so by law. The market value of U.S. Government obligations may
fluctuate due to fluctuations in market interest rates. As a general matter, the
value of debt instruments, including U.S. Government obligations, declines when
market interest rates increase and rises when market interest rates decrease.
Certain types of U.S. Government obligations are subject to fluctuations in
yield or value due to their structure or contract terms.

WHEN-ISSUED, DELAYED DELIVERY AND FORWARD COMMITMENT SECURITIES: The purchase of
new issues of securities on a "when-issued," "delayed delivery" or "forward
commitment" basis occurs when the payment for and delivery of securities takes
place at a future date. Because actual payment for and delivery of such
securities generally take place 15 to 45 days after the purchase date,
purchasers of such securities bear the risk that interest rates on debt
securities at the time of delivery may be higher or lower than those contracted
for on the security purchased.

<PAGE>
Prospectus

PRIMARY B SHARES
OCTOBER 15, 1996

This Prospectus sets forth concisely the information
about the Funds that a prospective purchaser of
Primary B Shares should consider before investing.
Investors should read this Prospectus and retain it
for future reference. Additional information about
Nations Fund Trust is contained in a separate
Statement of Additional Information (the "SAI") that
has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request
without charge by writing or calling Nations Fund at
its address or telephone number shown below. The
SAI, dated October 15, 1996, is incorporated by
reference in its entirety into this Prospectus.
NationsBanc Advisors, Inc. ("NBAI") is the
investment adviser to the Funds. TradeStreet
Investment Associates, Inc. ("TradeStreet") is
investment sub-adviser to the Funds. As used herein
the "Adviser" shall mean NBAI and/or TradeStreet as
the context may require.

Nations
Managed
Index Fund
Nations
Managed
SmallCap
Index Fund

For Fund information call:
1-800-626-2275
Nations Fund
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
(Nations Fund logo
appears here)

TR-96697-1096

<PAGE>
Table Of Contents

About The Funds

Prospectus Summary 3

Expenses Summary 4

Objectives 5

How The Objectives Are Pursued 5

How Performance Is Shown 7

How The Funds Are Managed 8

Organization And History 10

About Your
Investment

How To Buy Shares 11

How To Redeem Shares 11

How To Exchange Shares 12

Shareholder Administration Arrangements 12

How the Funds Value Their Shares 13

How Dividends And Distributions Are Made; Tax
Information 13

Appendix A -- Portfolio Securities 14

<PAGE>
About The Funds

Prospectus Summary

(Bullet) TYPE OF COMPANY: Open-end management investment company.

(Bullet) INVESTMENT OBJECTIVES AND POLICIES:

(Bullet) Nations Managed Index Fund's investment objective is to seek,
over the long-term, to provide a total return which (gross of
fees and expenses) exceeds the total return of the Standard &
Poor's 500 Composite Stock Price Index.

(Bullet) Nations Managed SmallCap Index Fund's investment
objective is to seek, over the long-term, to provide
a total return which (gross of fees and expenses)
exceeds the total return of the Standard & Poor's
SmallCap 600 Index.

(Bullet) When consistent with the Funds' objectives,
the Funds will employ various techniques to
manage capital gain distributions.

(Bullet) MINIMUM PURCHASE: The minimum initial investment per record holder is
$1,000 for Nations Managed Index Fund and $1,000 for Nations Managed
SmallCap Index Fund. See "How To Buy Shares."

<PAGE>
Expenses Summary

Expenses are one of several factors to consider when investing in the Funds. The
following tables summarize shareholder transaction and operating expenses for
Primary B Shares of the Funds. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in Primary B Shares of the
indicated Fund over specified periods.

PRIMARY B SHARES

SHAREHOLDER TRANSACTION EXPENSES

Nations
Managed
Index
Fund
<S> <C>
Sales Load Imposed on Purchases None
Deferred Sales Load None

Nations
Managed
SmallCap
Index
Fund
Sales Load Imposed on Purchases None
Deferred Sales Load None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Nations
Managed
Index
Fund

<S> <C>
Management Fees (After Fee Waivers) 0.30%
Other Expenses 0.70%
Total Operating Expenses (After Fee Waivers) 1.00%

Nations
Managed
SmallCap
Index
Fund

Management Fees (After Fee Waivers) 0.30%
Other Expenses 0.70%
Total Operating Expenses (After Fee Waivers) 1.00%
</TABLE>

EXAMPLES:

You would pay the following expenses on a $1,000 investment in Primary B Shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.

Nations
Managed
Index
Fund

<S> <C>
1 Year $10
3 Years $32

Nations
Managed
SmallCap
Index
Fund
1 Year $10
3 Years $32
</TABLE>

The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Primary B Shares will bear either directly or indirectly. The "Other Expenses"
figures in the above tables are based on estimates for the fiscal year and have
been restated as necessary to reflect anticipated fee waivers. There is no
assurance that any fee waivers and reimbursements will continue beyond the
current fiscal year. If fee waivers and/or reimbursements are discontinued, the
amounts contained in the "Examples" above may increase. For a more complete
description of the Funds' operating expenses, see "How The Funds Are Managed."
For a more complete description of the Shareholder Servicing Fees payable by the
Funds, see "Shareholder Administration Arrangements."

Absent fee waivers, "Management Fees" and "Total Operating Expenses" would be
.50% and 1.20%, respectively, for both Nations Managed Index Fund and Nations
Managed SmallCap Index Fund.

THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST OR
FUTURE PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE GREATER OR LESS
THAN THOSE SHOWN.

<PAGE>

Objectives

How The Objectives Are Pursued

(1) "Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation ("S&P").

(2) "Standard & Poor's 600" is a registered service mark of S&P.

<PAGE>

Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 600 Index while minimizing
the downside risk of underperforming the Index over time.

The Fund also may invest in certain specified derivative securities including:
exchange-traded options; over-the-counter options executed with primary dealers,
including long calls and puts and covered calls to enhance return; and U.S.
exchange-traded financial futures approved by the CFTC and options thereon for
market exposure risk management. The Fund may lend its portfolio securities to
qualified institutional investors. The Fund also may invest in restricted,
private placement and other illiquid securities. In addition, the Fund may
invest in securities issued by other investment companies, consistent with the
Fund's investment objective and policies.

The inclusion of a stock in the S&P 500 Index or the S&P SmallCap 600 Index in
no way implies that S&P believes the stock to be an attractive investment. The
Indexes are determined, composed and calculated by S&P without regard to the
Funds. S&P is neither a sponsor of, nor in any way affiliated with, the Funds,
and S&P makes no representation or warranty, expressed or implied, on the
advisability of investing in the Funds or as to the ability of the Indexes to
track general stock market performance. S&P disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the
Indexes or any data included therein.

<PAGE>

types of derivative securities that can, under certain circumstances,
significantly increase a purchaser's exposure to market or other risks. The
Adviser, however, only purchases derivative securities in circumstances where it
believes such purchases are consistent with a Fund's investment objective and do
not unduly increase the Fund's exposure to market or other risks. For additional
risk information regarding the Funds' investments in particular instruments, see
"Appendix A -- Portfolio Securities."

Each Fund may not:

How Performance Is Shown

<PAGE>

Set forth below is certain performance data for the Enhanced Equity Index Common
Trust Fund and Enhanced Small Cap Equity Index Common Trust Fund (the "CTFs"),
each of which is currently managed on behalf of NationsBank by TradeStreet.
(Prior to the formation of TradeStreet in 1995, the CTFs were managed solely by
NationsBank.) The performance data for the CTFs is deemed relevant because the
Enhanced Equity Index and Enhanced Small Cap Equity Index Common Trust Funds
have investment objectives and policies that are substantially similar to those
of Nations Managed Index Fund and Nations Managed SmallCap Index Fund,
respectively. Moreover, the portfolio manager of TradeStreet (who currently
manages the CTFs and the Funds) employs the same quantitative investment process
for the Funds that has, and continues to be, utilized for the CTFs. THIS
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE OF THE CTFS AND IS NOT NECESSARILY
INDICATIVE OF THE FUTURE PERFORMANCE OF THE CTFS OR THE FUNDS.

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
INDICATED THROUGH SEPTEMBER 30, 1996*

Since
One Three Five Inception
Year Year Year (12/31/88)**
<S> <C> <C> <C> <C>
Enhanced Equity Index
Common Trust Fund 19.78% 16.91% 14.90% 16.03%
S&P 500 Index 20.33% 17.40% 15.21% 15.79%
Lipper Equity Index+
Funds Average 19.77% 16.90% 14.70% 15.18%
</TABLE>

ANNUAL TOTAL RETURNS*

TOTAL RETURNS FOR THE PERIODS INDICATED
THROUGH SEPTEMBER 30, 1996*

Since
Year-To- Inception
Three Month Date (10/1/95)
<S> <C> <C> <C>
Enhanced Small Cap Equity
Index Common Trust Fund 4.35% 16.33% 17.25%
S&P 600 Index 3.21% 14.79% 15.31%
</TABLE>

+ The Lipper Equity Index Funds Average represents the average performance of
mutual funds with similar objectives monitored by Lipper Analytical Services,
Inc. during the periods shown.

In addition to Primary B Shares, the Funds offer Primary A, Investor A and
Investor C Shares. Each class of shares may bear different sales charges,
shareholder servicing fees and other expenses, which may cause the performance
of a class to differ from the performance of the other classes. Performance
quotations will be computed separately for each class of a Fund's shares. Any
fees charged by an institution and/or servicing agent directly to its customers'
accounts in connection with investments in the Funds will not be included in
calculations of total return or yield. Each Fund's annual report contains
additional performance information and is available upon request without charge
from the Funds' distributor or your Institution, as defined below.

How The Funds Are Managed

<PAGE>

Subject to the general supervision of Nations Fund Trust's Board of Trustees and
in accordance with each Fund's investment policies, the Adviser formulates
guidelines and lists of approved investments for each Fund, makes decisions with
respect to and places orders for each Fund's purchases and sales of portfolio
securities and maintains records relating to such purchases and sales. The
Adviser is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of agency
transactions, financial institutions which are affiliated with the Adviser or
which have sold shares in such Funds, if the Adviser believes that the quality
of the transaction and the commission are comparable to what they would be with
other qualified brokerage firms. From time to time, to the extent consistent
with its investment objective, policies and restrictions, each Fund may invest
in securities of companies with which NationsBank has a lending relationship.
For the services provided and expenses assumed pursuant to an Investment
Advisory Agreement, NBAI is entitled to receive advisory fees, computed daily
and paid monthly, at the annual rate of 0.50% of the average daily net assets of
each Fund.

From time to time, NBAI and/or TradeStreet may waive or reimburse (either
voluntarily or pursuant to applicable state limitations) advisory fees and/or
expenses payable by a Fund.

Morrison & Foerster LLP, counsel to Nations Fund and special counsel to
NationsBank, has advised NationsBank and Nations Fund that NationsBank and its
affiliates may perform the services contemplated by the Investment Advisory
Agreement and this Prospectus, without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in federal or state statutes, including the
Glass-Steagall Act, and regulations and judicial or administrative decisions or
interpretations thereof, could prevent such entities from continuing to perform,
in whole or in part, such services. If any such entity were prohibited from
performing any of such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.

First Data Investor Services Group, Inc. ("First Data"), formerly The
Shareholder Services Group, Inc., a wholly owned subsidiary of First Data
Corporation, with principal offices at One Exchange Place, Boston, Massachusetts
02109, serves as the co-administrator of Nations Fund pursuant to a
Co-Administration Agreement. Under the Co-Administration Agreement, First Data
provides various administrative and accounting services to the Funds including
performing the calculations necessary to determine the net asset value per share
and dividends of each class of shares of the Funds, preparing tax returns and
financial statements and maintaining the portfolio records and certain of the
general accounting records for the Funds.

<PAGE>

First Data serves as the Transfer Agent for the Funds' Primary B Shares.
NationsBank of Texas, N.A. ("NationsBank of Texas" or the "Custodian") serves as
custodian for the assets of the Funds. NationsBank of Texas, which also serves
as the sub-transfer agent for the Funds' Primary B Shares, is located at 1401
Elm Street, Dallas, Texas 75202, and is a wholly owned subsidiary of NationsBank
Corporation. In return for providing custodial services, the Custodian is
entitled to receive, in addition to out-of-pocket expenses, fees payable monthly
(i) at the rate of 1.25% of 1% of the average daily net assets of each Fund,
(ii) $10.00 per repurchase collateral transaction by such Fund, and (iii) $15.00
per purchase, sale and maturity transaction involving such Fund. In return for
providing sub-transfer agency services for the Primary B Shares of Nations Fund,
NationsBank of Texas is entitled to receive an annual fee from First Data of
$251,000.

Price Waterhouse LLP serves as independent accountant to Nations Fund. Its
address is 160 Federal Street, Boston, Massachusetts 02110.

EXPENSES: The accrued expenses of each Fund, as well as certain expenses
attributable to Primary B Shares, are deducted from the Fund's total accrued
income before dividends are declared. These expenses include, but are not
limited to: fees paid to the Adviser, NationsBank, Stephens and First Data;
taxes; interest; Trustees' fees; federal and state securities registration and
qualification fees; brokerage fees and commissions; costs of preparing and
printing prospectuses for regulatory purposes and for distribution to existing
shareholders; charges of the Custodian and Transfer Agent; certain insurance
premiums; outside auditing and legal expenses; costs of shareholder reports and
shareholder meetings; other expenses which are not expressly assumed by the
Adviser, NationsBank, Stephens or First Data under their respective agreements
with Nations Fund; and any extraordinary expenses. Primary B Shares also bear
certain shareholder servicing costs. Any general expenses of Nations Fund Trust
that are not readily identifiable as belonging to a particular investment
portfolio are allocated among all portfolios in the proportion that the assets
of a portfolio bears to the assets of Nations Fund Trust or in such other manner
as the Board of Trustees determines is fair and equitable.

Organization And History

NATIONS FUND TRUST: Nations Fund Trust was organized as a Massachusetts business
trust on May 6, 1985. Nations Fund Trust's fiscal year end is March 31; prior to
1996, Nations Fund Trust's fiscal year end was November 30. The Funds currently
offer four classes of shares -- Primary A Shares, Primary B Shares, Investor C
Shares and Investor A Shares. This Prospectus relates only to the Primary B
Shares of Nations Managed Index Fund and Nations Managed SmallCap Index Fund of
Nations Fund Trust. To obtain additional information regarding the Funds' other
classes of shares which may be available to you, contact your Institution (as
defined below) or Nations Fund at 1-800-626-2275.

Shareholders are entitled to one vote for each full share held and a
proportionate fractional vote for each fractional share held. Shareholders of
each fund of Nations Fund Trust will vote in the aggregate and not by fund, and
shareholders of each fund will vote in the aggregate and not by class except as
otherwise expressly required by law or when the Board of Trustees determines
that the matter to be voted on affects only the interests of shareholders of a
particular fund or class. See Nations Fund Trust's SAI for examples of when the
Investment Company Act of 1940 (the "1940 Act") requires voting by fund.

<PAGE>
the 1940 Act. For more detailed information concerning the percentage of each
class or series of shares over which NationsBank and its affiliates possessed or
shared power to dispose or vote as of a certain date, see Nations Fund Trust's
SAI.

About Your Investment

How To Buy Shares

Primary B Shares may be purchased through banks, broker/dealers or other
financial institutions (including certain affiliates of NationsBank)
("Institutions") that have entered into a shareholder administration agreement
(an "Administration Agreement") with Nations Fund and/or a selling agreement
with Stephens.

Primary B Shares are purchased at net asset value per share without the
imposition of a sales charge according to procedures established by the
Institution. Institutions, however, may charge the accounts of their customers
("Customers") for services provided in connection with the purchase of shares.
Purchases of shares may be effected on days on which the New York Stock Exchange
(the "Exchange") is open for business ("NYSE Business Day"). Unless otherwise
specified, the term "Business Day" in this Prospectus refers to a NYSE Business
Day.

There is a minimum initial investment of $1,000 for each record holder; there is
no minimum subsequent investment.

Pursuant to the Administration Agreements, Institutions will provide various
shareholder services for their Customers that own Primary B Shares. From time to
time, Nations Fund may voluntarily reduce the maximum fees payable for
shareholder services.

Nations Fund reserves the right to reject any purchase order. The issuance of
Primary B Shares is recorded on the books of the Funds, and share certificates
are not issued. It is the responsibility of Institutions to record beneficial
ownership of Primary B Shares and to reflect such ownership in the account
statements provided to their Customers.

EFFECTIVE TIME OF PURCHASES: Purchase orders for Primary B Shares which are
received by Stephens or by the Transfer Agent before the close of regular
trading hours on the Exchange (currently 4:00 p.m., Eastern time) on any
Business Day are priced according to the net asset value determined on that day
but are not executed until 4:00 p.m., Eastern time, on the Business Day on which
immediately available funds in payment of the purchase price are received by the
Funds' Custodian. Such payment must be received no later than 4:00 p.m., Eastern
time, by the third Business Day following receipt of the order. If funds are not
received by such date, the order will not be accepted and notice thereof will be
given to the Institution placing the order. Payment for orders which are not
received or accepted will be returned after prompt inquiry to the sending
Institution.

Institutions are responsible for transmitting orders for purchases of Primary B
Shares by their Customers, and for delivering required funds, on a timely basis.
It is the responsibility of Stephens to transmit orders it receives to Nations
Fund.

How To Redeem Shares

Customers may redeem all or part of their Primary B Shares in accordance with
instructions and limitations pertaining to their accounts at an Institution. It
is the responsibility of the Institutions to transmit redemption orders to
Stephens or to the Transfer Agent and to credit their Customers' accounts with
the redemption proceeds on a timely basis. It is the responsibility of Stephens
to transmit orders it receives to Nations Fund. No charge for wiring redemption
payments is imposed by Nations Fund, although the Institutions may charge their
Customer accounts for these or other services provided in connection with the
redemption of Primary B Shares. Information concerning these services and any
charges are available from the Institutions. Redemption orders are effected at
the net asset value per share next determined after acceptance of the order by
Stephens or by the Transfer Agent. Redemption proceeds are normally remitted in
federal funds wired to the redeeming Institution within three Business Days
following receipt of the order.

<PAGE>

Nations Fund may redeem a shareholder's Primary B Shares if the balance in such
shareholder's account drops below $500 as a result of redemptions, and the
shareholder does not increase his or her balance to at least $500 on 60 days'
written notice. If a shareholder has agreed with a particular Institution to
maintain a minimum balance in his or her account at the Institution, and the
balance in such Institution account falls below that minimum, the shareholder
may be obliged to redeem all or a part of his or her Primary B Shares in the
Funds to the extent necessary to maintain the required minimum balance in such
Institution account. Nations Fund also may redeem shares involuntarily or make
payment for redemption in readily marketable securities or other property under
certain circumstances in accordance with the 1940 Act.

How To Exchange Shares

The exchange feature enables a shareholder of Primary B Shares of a Fund to
acquire Primary B Shares of another fund when that shareholder believes that a
shift between Funds is an appropriate investment decision. An exchange of
Primary B Shares for Primary B Shares of another fund is made on the basis of
the next calculated net asset value per share of each fund after the exchange
order is received.

Provided your Institution allows telephone exchanges, during periods of
significant economic or market change, telephone exchanges may be difficult to
complete. In such event, shares may be exchanged by mailing your request
directly to the Institution through which the original shares were purchased.
Investors should consult their Institution or Stephens for further information
regarding exchanges.

Primary B Shares may be exchanged by directing a request directly to the
Institution through which the original Primary B Shares were purchased or in
some cases Stephens or the Transfer Agent. Investors should consult their
Institution or Stephens for further information regarding exchanges. Your
exchange feature may be governed by your account agreement with your
Institution.

Shareholder Administration Arrangements

The Fund has adopted a Shareholder Administration Plan (the "Administration
Plan") pursuant to which Institutions provide shareholder administrative
services to their Customers who from time to time beneficially own Primary B
Shares. Payments under the Administration Plan are calculated daily and paid
monthly at a rate or rates set from time to time by the Funds, provided that the
annual rate may not exceed 0.60% of the average daily net asset value of the
Primary B Shares beneficially owned by Customers with whom the Institutions have
a servicing relationship. Additionally, in no event may the portion of the
shareholder administration fee that constitutes a "service fee," as that term is
defined in Article III, Section 26(b)(9) of the Rules of Fair Practice of the
NASD, exceed 0.25% of the average daily net asset value of the Primary B Shares
of a Fund. Holders of Primary B Shares will bear all fees paid to Institutions
under the Administration Plan.

Such shareholder administration services supplement the services provided by
Stephens, First Data and the Transfer Agent to shareholders of record. The
shareholder administration services provided by Institutions may include: (i)
aggregating and processing purchase and redemption requests for Primary B Shares
from Customers and transmitting promptly net purchase and

<PAGE>

redemption orders to Stephens or the Transfer Agent; (ii) providing Customers
with a service that invests the assets of their accounts in Primary B Shares
pursuant to specific or pre-authorized instructions; (iii) processing dividend
and distribution payments from the Funds on behalf of Customers; (iv) providing
information periodically to Customers showing their positions in Primary B
Shares; (v) arranging for bank wires; (vi) responding to Customers' inquiries
concerning their investment in Primary B Shares; (vii) providing sub-accounting
with respect to Primary B Shares beneficially owned by Customers or the
information necessary for sub-accounting; (viii) if required by law, forwarding
shareholder communications (such as proxies, shareholder reports, annual and
semi-annual financial statements and dividend, distribution and tax notices) to
Customers; (ix) forwarding to Customers proxy statements and proxies containing
any proposals regarding the Administration Agreement; (x) employee benefit plan
recordkeeping, administration, custody and trustee services; (xi) general
shareholder liaison services; and (xii) providing such other similar services as
may be reasonably requested.

Nations Fund may suspend or reduce payments under the Administration Plan at any
time, and payments are subject to the continuation of the Administration Plan
described above and the terms of the Administration Agreements between
Institutions and Nations Fund. See the SAI for more details on the
Administration Plan.

The Administration Plan also provides that, to the extent any portion of the
fees payable under the Administration Plan is deemed to be for services
primarily intended to result in the sale of Fund shares, such fees are deemed
approved and may be paid under the Administration Plan. Accordingly, the
Administration Plan has been approved and will be operated pursuant to Rule
12b-1 under the 1940 Act.

Nations Fund understands that Institutions may charge fees to their Customers
who are the owners of Primary B Shares in connection with their Customers'
accounts. These fees would be in addition to any amounts which may be received
by an Institution under its Administration Agreement with Nations Fund. The
Administration Agreement requires an Institution to disclose to its Customers
any compensation payable to the Institution by Nations Fund and any other
compensation payable by the Customers in connection with the investment of their
assets in Primary B Shares. Customers of Institutions should read this
Prospectus in light of the terms governing their accounts with their
Institutions.

Conflict of interest restrictions may apply to the receipt by Institutions of
compensation from Nations Fund in connection with the investment of fiduciary
assets in Primary B Shares. Institutions, including banks regulated by the
Comptroller of the Currency, the Federal Reserve Board, or the Federal Deposit
Insurance Corporation, and investment advisers and other money managers subject
to the jurisdiction of the SEC, the Department of Labor, or state securities
commissions, are urged to consult their legal advisers before investing such
assets in Primary B Shares.

How The Funds Value Their Shares

The net asset value of a share of each class is calculated by dividing the total
value of its assets, less liabilities, by the number of shares in the class
outstanding. Shares of the Funds are valued as of the close of regular trading
on the Exchange (currently 4:00 p.m., Eastern time) on each NYSE Business Day.
Currently, the days on which the Exchange is closed (other than weekends) are:
New Year's Day, President's Day, Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

How Dividends And Distributions Are Made;
Tax Information

Primary B Shares of the Funds are eligible to receive dividends when declared,
provided however, that the purchase order for such shares is received at least
one day prior to the dividend declaration and such shares continue to be
eligible for dividends through and including the day before the redemption order
is executed.

<PAGE>

The net asset value of Primary B Shares will be reduced by the amount of any
dividend or distribution. Dividends and distributions are paid in cash within
five Business Days of the end of the quarter to which the dividend relates.
Certain purchasing Institutions may provide for the reinvestment of dividends in
the form of additional Primary B Shares of the same Fund. Dividends and
distributions payable to a shareholder are paid in cash within five Business
Days after a shareholder's complete redemption of his or her Primary B Shares in
a Fund. Each Fund's net investment income available for distribution to the
holders of Primary B Shares will be reduced by the amount of shareholder
servicing fees payable to Institutions under the Servicing Agreements.

Corporate shareholders may be entitled to the dividends received deduction for
distributions from a Fund's investment in the stock of domestic corporations to
the extent of the total qualifying dividends received by the Fund.

Federal law requires Nations Fund to withhold 31% from any dividends (other than
exempt-interest dividends) paid by Nations Fund and/or redemptions (including
exchange redemptions) that occur in certain shareholder accounts if the
shareholder has not properly furnished a certified correct Taxpayer
Identification Number and has not certified that withholding does not apply. If
the Internal Revenue Service has notified Nations Fund that the Taxpayer
Identification Number listed on a shareholder account is incorrect according to
its records, or that the shareholder is subject to backup withholding, a Fund is
required by the Internal Revenue Service to withhold 31% of any dividend (other
than exempt-interest dividends) and/or redemption (including exchange
redemptions). Amounts withheld are applied to the shareholder's Federal tax
liability, and a refund may be obtained from the Internal Revenue Service if
withholding results in overpayment of taxes. Federal law also requires each Fund
to withhold 30% or the applicable tax treaty rate from dividends paid to certain
nonresident alien, non-U.S. partnership and non-U.S. corporation shareholder
accounts.

Appendix A -- Portfolio Securities

The following are summary descriptions of certain types of instruments in which
a Fund may invest. The "How Objectives Are Pursued" section of the Prospectus
identifies such Fund's permissible investments, and the SAI contains more
information concerning such investments.

<PAGE>

value of the Fund's total assets must be repaid prior to the purchase of
portfolio securities. Under the requirements of the 1940 Act, the Funds are
required to maintain an asset coverage (including the proceeds of the
borrowings) of at least 300% of all borrowings.

ILLIQUID SECURITIES: Certain securities may be sold only pursuant to certain
legal restrictions, and may be difficult to sell. The Funds will not knowingly
invest more than 15% of the value of their respective net assets in securities
that are illiquid or such lower percentage as may be required by the states in
which the appropriate Fund sells its shares. Repurchase agreements, time
deposits and guaranteed investment contracts that do not provide for payment to
a Fund within seven days after notice, and illiquid restricted securities are
subject to the limitation on illiquid securities.

If otherwise consistent with its investment objective and policies, certain
Funds may purchase securities which are not registered under the Securities Act
of 1933, as amended (the "1933 Act") but which can be sold to "qualified
institutional buyers" in accordance with Rule 144A or otherwise, under the 1933
Act, or which were issued under Section 4(2) of the 1933 Act. Any such security
will not be considered illiquid so long as it is determined by a Fund's Board of
Trustees or the Adviser, acting under guidelines approved and monitored by such
Fund's Board, after considering trading activity, availability of reliable price
information and other relevant information, that an adequate trading market
exists for that security. To the extent that, for a period of time, qualified
institutional or other buyers cease purchasing such restricted securities
pursuant to Rule 144A or otherwise, the level of illiquidity of a Fund holding
such securities may increase during such period.

<PAGE>

<PAGE>
Prospectus

INVESTOR A SHARES
OCTOBER 15, 1996

This Prospectus describes NATIONS MANAGED INDEX
FUND and NATIONS MANAGED SMALLCAP INDEX FUND (the
"Funds") of Nations Fund Trust, an open-end
management investment company in the Nations Fund
Family ("Nations Fund" or "Nations Fund Family").
This Prospectus describes one class of shares of
the Funds -- Investor A Shares.

This Prospectus sets forth concisely the
information about the Funds that a prospective
purchaser of Investor A Shares should consider
before investing. Investors should read this
Prospectus and retain it for future reference.
Additional information about Nations Fund Trust is
contained in a separate Statement of Additional
Information (the "SAI") that has been filed with
the Securities and Exchange Commission (the "SEC")
and is available upon request without charge by
writing or calling Nations Fund at its address or
telephone number shown below. The SAI, dated
October 15, 1996, is incorporated by reference in
its entirety into this Prospectus. NationsBanc
Advisors, Inc. ("NBAI") is the investment adviser
to the Funds. TradeStreet Investment Associates,
Inc. ("TradeStreet") is investment sub-adviser to
the Funds. As used herein the "Adviser" shall mean
NBAI and/or TradeStreet as the context may require.

THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

Nations
Managed
Index Fund

Nations
Managed
SmallCap
Index Fund

For Fund information call:
1-800-321-7854
Nations Fund
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255

(Nations Fund Logo appears here)

NF-96698-1096

<PAGE>
Table Of Contents

About The Funds

Prospectus Summary 3

Expenses Summary 4

Objectives 5

How The Objectives Are Pursued 5

How Performance Is Shown 8

How The Funds Are Managed 10

Organization And History 12

About Your Investment

How To Buy Shares 13

How To Redeem Shares 15

How To Exchange Shares 16

Shareholder Servicing And Distribution Plan 17

How The Funds Value Their Shares 18

How Dividends And Distributions are Made; Tax
Information 18

Appendix A -- Portfolio Securities 20

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION
WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY NATIONS FUND OR ITS DISTRIBUTOR. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING BY NATIONS FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.

<PAGE>
About The Funds

Prospectus Summary

(Bullet) TYPE OF COMPANY: Open-end management investment company.

(Bullet) INVESTMENT OBJECTIVES AND POLICIES:

(Bullet) Nations Managed SmallCap Index Fund's investment objective is
to seek, over the long-term, to provide a total return which
(gross of fees and expenses) exceeds the total return of the
Standard & Poor's SmallCap 600 Index.

(Bullet) When consistent with the Funds' objectives, the Funds will
employ various techniques to manage capital gain
distributions.

(Bullet) MINIMUM PURCHASE: $1,000 minimum initial investment per record holder
except that the minimum initial investment is: $500 for Individual
Retirement Account ("IRA") investors; $250 for non-working spousal
IRAs; and $100 for investors participating on a monthly basis in the
Systematic Investment Plan. There is no minimum investment amount for
investments by certain 401(k) and employee pension plans or salary
reduction -- Individual Retirement Accounts. The minimum subsequent
investment is $100, except for investments pursuant to the Systematic
Investment Plan. See "How To Buy Shares."

<PAGE>
Expenses Summary

Expenses are one of several factors to consider when investing in the Funds. The
following tables summarize shareholder transaction and operating expenses for
Investor A Shares of the Funds. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in Investor A Shares of the
indicated Fund over specified periods.

INVESTOR A SHARES

Nations Nations
Managed Managed
Index SmallCap
SHAREHOLDER TRANSACTION EXPENSES Fund Index Fund
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None None
Maximum Deferred Sales Charge (as a percentage of the lower of the original purchase price
or redemption proceeds) None None

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (After Fee Waivers) .30% 0.30%
Rule 12b-1 Fees (including shareholder servicing fees) .25% 0.25%
Other Expenses .20% 0.20%
Total Operating Expenses (After Fee Waivers) .75% 0.75%
</TABLE>

EXAMPLES:

You would pay the following expenses on a $1,000 investment in Investor A Shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.

Nations Nations
Managed Managed
Index SmallCap
Fund Index Fund
<S> <C> <C>
1 Year $ 8 $ 8
3 Years $ 24 $ 24
</TABLE>

The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Investor A Shares will bear either directly or indirectly. The figures in the
above tables are based on estimates for the fiscal year and have been restated
as necessary to reflect anticipated fee waivers. There is no assurance that any
fee waivers and reimbursements will continue beyond the current fiscal year. If
fee waivers and/or reimbursements are discontinued, the amounts contained in the
"Examples" above may increase. For a more complete description of the Funds'
operating expenses, see "How The Funds Are Managed." For a more complete
description of the Rule 12b-1 and shareholder servicing fees payable by the
Funds, see "Shareholder Servicing And Distribution Plan."

Absent fee waivers, "Management Fees" and "Total Operating Expenses" would be
.50% and .95%, respectively, for both Nations Managed Index Fund and Nations
Managed SmallCap Index Fund.

<PAGE>
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN.

Objectives

How The Objectives Are Pursued

The initial stock universe considered by the Adviser is the S&P 500 Index. The
Adviser ranks the attractiveness of each security according to a multi-factor
valuation model. Both value and momentum factors are considered in the ranking
process. Value factors such as book value, earnings yield and cash flow measure
a stock's intrinsic worth versus its market price, while momentum
characteristics such as price momentum, earnings growth and earnings
acceleration view a stock relative to others in the same industry. Each stock is
assigned a ranking from 1 to 10 (best to worst). The Adviser then screens out
the lower rated stocks resulting in a portfolio of 350 to 400 holdings that
capture the investment characteristics of the Index.

Under normal conditions, the Adviser will attempt to invest as much of the
Fund's assets

(1) "Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation ("S&P").

<PAGE>

as is practical and, in any event at least 65% of its total assets, in common
stocks which are included in the S&P 500 Index. The Fund is expected, however,
to maintain a position in high-quality short-term debt securities and money
market instruments to meet redemption requests. If the Adviser believes that
market conditions warrant a temporary defensive posture, the Fund may invest
without limitation in high-quality short-term debt securities and money market
instruments. These securities and money market instruments may include domestic
and foreign commercial paper, certificates of deposit, bankers' acceptances and
time deposits, U.S. Government obligations ("U.S. Government Obligations") and
repurchase agreements.

Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 600 Index while minimizing
the downside risk of underperforming the Index over time.

Under normal conditions, substantially all of the Fund's assets, and, in any
event at least 65% of its total assets, will be invested in common stocks which
are included in the S&P 600 Index.

(2) "Standard & Poor's 600" is a registered service mark of S&P.

<PAGE>

The Fund is expected, however, to maintain a position in high-quality short-term
debt securities and money market instruments to meet redemption requests. If the
Adviser believes that market conditions warrant a temporary defensive posture,
the Fund may invest without limitation in high-quality short-term debt
securities and money market instruments. These securities and money market
instruments may include domestic and foreign commercial paper, certificates of
deposit, bankers' acceptances and time deposits, U.S. Government Obligations and
repurchase agreements.

The Fund also may invest in certain specified derivative securities including:
exchange-traded options; over-the-counter options executed with primary dealers,
including long calls and puts and covered calls to enhance return; and U.S.
exchange-traded financial futures approved by the CFTC and options thereon for
market exposure risk management. The Fund may lend its portfolio securities to
qualified institutional investors. The Fund also may invest in restricted,
private placement and other illiquid securities. In addition, the Fund may
invest in securities issued by other investment companies, consistent with the
Fund's investment objective and policies.

Certain of the Funds' permissible investments may constitute derivative
securities, which are securities whose value is derived, at least in part, from
an underlying index or reference rate. There are certain types of derivative
securities that can, under certain circumstances, significantly increase a
purchaser's exposure to market or other risks. The Adviser, however, only
purchases derivative securities in circumstances where it believes such
purchases are consistent with a Fund's investment objective and do not unduly
increase the Fund's exposure to market or other risks. For additional risk
information regarding the Funds' investments in particular instruments, see
"Appendix A -- Portfolio Securities."

<PAGE>

basis securities that remain in the portfolio. Under this scenario, an investor
who purchases shares of a Fund after the first sale could receive capital gain
distributions that are higher than the distributions that would have been
received if this methodology had not been used. Therefore, certain investors
actually could be disadvantaged by the techniques employed by the Fund to seek
to manage capital gain distributions, depending on the timing of their purchase
of Fund shares. Even if there are no subsequent sales, upon a redemption or
exchange of Fund shares an investor will have to recognize gain to the extent
that the net asset value of Fund shares at such time exceeds such investor's tax
basis in his or her Fund shares.

Each Fund may not:

1. Purchase any securities which would cause 25% or more of the value of the
Fund's total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal activities in the
same industry. (For purposes of this limitation, U.S. Government securities are
not considered members of any industry.)

How Performance Is Shown

From time to time the Funds may advertise the total return and yield on a class
of shares. BOTH TOTAL RETURN AND YIELD FIGURES ARE BASED ON HISTORICAL DATA AND
ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" of a class
of shares of a Fund may be calculated on an average annual total return basis or
an aggregate total return basis. Average annual total return refers to the
average annual compounded rates of return on a class of shares over one-, five-,
and ten-year periods or the life of a Fund (as stated in the advertisement) that
would equate an initial amount invested at the beginning of a stated period to
the ending redeemable value of the investment, assuming the reinvestment of all
dividend and capital gain distributions. Aggregate total return reflects the
total percentage change in the value of the investment over the

<PAGE>
measuring period, again assuming the reinvestment of all dividends and capital
gain distributions. Total return may also be presented for other periods.

AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS INDICATED THROUGH SEPTEMBER 30, 1996*

Since
One Three Five Inception
Year Year Year (12/31/88)**
<S> <C> <C> <C> <C>
Enhanced Equity
Index Common
Trust Fund 19.78% 16.91% 14.90% 16.03%
S&P 500 Index 20.33% 17.40% 15.21% 15.79%
Lipper Equity+
Index Funds
Average 19.77% 16.90% 14.70% 15.18%
</TABLE>

ANNUAL TOTAL RETURNS*

Enhanced Lipper
Equity Index Equity Index
Common Trust S&P Funds
Year Fund 500 Index Average+
<S> <C> <C> <C>
1989 34.12% 31.55% 30.58%
1990 -1.52% -3.15% -3.57%
1991 31.72% 30.56% 29.65%
1992 5.52% 7.64% 7.12%
1993 10.47% 9.99% 9.52%
1994 0.69% 1.31% 0.90%
1995 37.66% 37.45% 36.82%
</TABLE>

TOTAL RETURNS FOR THE PERIODS INDICATED
THROUGH SEPTEMBER 30, 1996*

Since
Year-To- Inception
Three Month Date (10/1/95)
<S> <C> <C> <C>
Enhanced Small Cap
Equity Index
Common Trust
Fund 4.35% 16.33% 17.25%
S&P 600 Index 3.21% 14.79% 15.31%
</TABLE>

+ The Lipper Equity Index Funds Average represents the average performance of
mutual funds with similar objectives monitored by Lipper Analytical Services,
Inc. during the periods shown.

Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a Fund's portfolio and a Fund's operating
expenses. Investment performance also often reflects the risks associated with
such Fund's investment objective and policies. These factors should be
considered when comparing a Fund's investment results to those of other mutual
funds and other investment vehicles. Since yields fluctuate, yield data cannot
necessarily be used to compare an investment in a Fund with bank deposits,
savings accounts,

<PAGE>
and similar investment alternatives which often provide an agreed-upon or
guaranteed fixed yield for a stated period of time.

In addition to Investor A Shares, the Funds offer Primary A, Primary B and
Investor C Shares. Each class of shares may bear different sales charges,
shareholder servicing fees and other expenses, which may cause the performance
of a class to differ from the performance of the other classes. Total return and
yield quotations will be computed separately for each class of the Funds'
shares. Any fees charged by a selling agent and/or servicing agent directly to
its customers' accounts in connection with investments in the Funds will not be
included in calculations of total return or yield. Each Fund's annual report
contains additional performance information and is available upon request
without charge from the Funds' distributor or your Agent (as defined below).

How The Funds Are Managed

Subject to the general supervision of Nations Fund Trust's Board of Trustees,
and in accordance with each Fund's investment policies, the Adviser formulates
guidelines and lists of approved investments for each Fund, makes decisions with
respect to and places orders for each Fund's purchases and sales of portfolio
securities and maintains records relating to such purchases and sales. The
Adviser is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of agency
transactions, financial institutions which are affiliated with the Adviser or
which have sold shares in such Funds, if the Adviser believes that the quality
of the transaction and the commission are comparable to what they would be with
other qualified brokerage firms. From time to time, to the extent consistent
with its investment objective, policies and restrictions, each Fund may invest
in securities of companies with which NationsBank has a lending relationship.
For the services provided and expenses assumed pursuant to an Investment
Advisory Agreement, NBAI is entitled to receive an advisory fee, computed daily
and paid monthly, at the annual rate of 0.50% of the average daily net assets of
each Fund.

From time to time, NBAI (and/or TradeStreet) may waive or reimburse (either
voluntarily or pursuant to applicable state limitations) advisory fees and/or
expenses payable by a Fund.

For the services provided and the expenses assumed pursuant to a Sub-Advisory
Agreement, NBAI will pay TradeStreet sub-advisory fees, computed daily and paid
monthly, at the annual

<PAGE>

rate of 0.10% of the average daily net assets of each Fund.

Morrison & Foerster LLP, counsel to Nations Fund and special counsel to
NationsBank, has advised Nations Fund and NationsBank that NationsBank and its
affiliates may perform the services contemplated by the Investment Advisory
Agreement and this Prospectus without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in federal or state statutes, including the
Glass-Steagall Act, and regulations and judicial or administrative decisions or
interpretations thereof, could prevent such entities from continuing to perform,
in whole or in part, such services. If any such entity were prohibited from
performing any of such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.

First Data Investor Services Group, Inc. ("First Data"), formerly The
Shareholder Services Group, Inc., a wholly owned subsidiary of First Data
Corporation, with principal offices at One Exchange Place, Boston, Massachusetts
02109, serves as the co-administrator of Nations Fund pursuant to a
Co-Administration Agreement. Under the Co-Administration Agreement, First Data
provides various administrative and accounting services to the Funds including
performing the calculations necessary to determine the net asset value per share
and dividends of each class of shares of the Funds, preparing tax returns and
financial statements and maintaining the portfolio records and certain of the
general accounting records for the Funds.

NationsBank serves as sub-administrator for Nations Fund pursuant to a
Sub-Administration Agreement. Pursuant to the terms of the Sub-Administration
Agreement, NationsBank assists Stephens in supervising, coordinating and
monitoring various aspects of the Funds' administrative operations. For
providing such services NationsBank shall be entitled to receive a monthly fee
from Stephens based on an annual rate of 0.01% of the Funds' average daily net
assets.

Shares of the Funds are sold on a continuous basis by Stephens, as the Funds'
sponsor and distributor. Stephens is a registered bro-

<PAGE>

ker/dealer with principal offices at 111 Center Street, Little Rock, Arkansas
72201. Nations Fund has entered into a distribution agreement with Stephens
which provides that Stephens has the exclusive right to distribute shares of the
Funds. Stephens may pay service fees or commissions to selling agents that
assist customers in purchasing Investor A Shares of the Funds. See "Shareholder
Servicing And Distribution Plan."

NationsBank of Texas, N.A. (the "Custodian") serves as custodian for the Funds.
The Custodian is located at 1401 Elm Street, Dallas, Texas 75202 and is a wholly
owned subsidiary of NationsBank Corporation. In return for providing custodial
services, the Custodian is entitled to receive, in addition to out-of-pocket
expenses, fees payable monthly (i) at the rate of 1.25% of 1% of the average
daily net assets of each Fund, (ii) $10.00 per repurchase collateral transaction
by such Fund, and (iii) $15.00 per purchase, sale and maturity transaction
involving such Fund.

First Data serves as transfer agent (the "Transfer Agent") for the Funds'
Investor A Shares. The Transfer Agent is located at One Exchange Place, Boston,
Massachusetts 02109.

Price Waterhouse LLP serves as independent accountant to Nations Fund. Its
address is 160 Federal Street, Boston, Massachusetts 02110.

EXPENSES: The accrued expenses of each Fund, as well as certain expenses
attributable to Investor A Shares, are deducted from accrued income before
dividends are declared. The Funds' expenses include, but are not limited to:
fees paid to the Adviser, NationsBank, Stephens and First Data; interest;
trustees' fees; federal and state securities registration and qualification
fees; brokerage fees and commissions; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; charges of the Custodian and Transfer Agent; certain insurance
premiums; outside auditing and legal expenses; costs of shareholder reports and
shareholder meetings; other expenses which are not expressly assumed by the
Adviser, NationsBank, Stephens or First Data under their respective agreements
with Nations Fund; and any extraordinary expenses. Investor A Shares bear
certain class specific retail transfer agency expenses and also bear certain
additional shareholder service and/or sales support costs. Any general expenses
of Nations Fund Trust that are not readily identifiable as belonging to a
particular investment portfolio are allocated among all portfolios in the
proportion that the assets of a portfolio bears to the assets of Nations Fund
Trust or in such other manner as the Board of Trustees deems appropriate.

Organization And History

NATIONS FUND TRUST: Nations Fund Trust was organized as a Massachusetts business
trust on May 6, 1985. Nations Fund Trust's fiscal year end is March 31; prior to
1996, Nations Fund Trust's fiscal year end was November 30. The Funds currently
offer four classes of shares -- Primary A Shares, Primary B Shares, Investor A
Shares and Investor C Shares. This Prospectus relates only to the Investor A
Shares of Nations Managed Index Fund and Nations Managed SmallCap Index Fund. To
obtain additional information regarding the Funds' other classes of shares which
may be available to you, contact your Agent (as defined below) or Nations Fund
at 1-800-321-7854.

<PAGE>
cretion of Nations Fund Trust's Board of Trustees. Nations Fund Trust's
Declaration of Trust authorizes the Board of Trustees to classify or reclassify
any class of shares into one or more series of shares.

About Your Investment

How To Buy Shares

The Funds have established various procedures for purchasing Investor A Shares
in order to accommodate different investors. Purchase orders for Investor A
Shares may be placed directly with a Fund or through banks, broker/dealers or
other financial institutions (including certain affiliates of NationsBank) that
have entered into a shareholder servicing agreement ("Servicing Agreement") with
Nations Fund ("Servicing Agents") and/or a sales support agreement ("Sales
Support Agreement") with Stephens ("Selling Agents"). Servicing Agents and
Selling Agents are sometimes referred to hereafter as "Agents."

In addition, Investor A Shares may be purchased through a Nations Fund Personal
Investment Planner account, which is a managed agency/asset allocation account
established with NBAI (an "Account"). Investments through an Account are
governed by the terms and conditions of the Account, which are set forth in the
Client Agreement and Disclosure Statement provided by NBAI to each investor who
establishes an Account. Because of the nature of the Account, certain of the
features described in this Prospectus are not available to investors purchasing
Investor A Shares through an Account. Potential investors through an Account
should refer to the Client Agreement and Disclosure Statement for more
information regarding the Account, including information regarding the fees and
expenses charged in connection with an Account.

There is a minimum initial investment of $1,000 in each Fund, except that the
minimum initial investment is:

(Bullet) $500 for IRA investors;

(Bullet) $250 for non-working spousal IRAs; and

<PAGE>
(Bullet) $100 for investors participating on a monthly basis in the Systematic
Investment Plan described below.

There is no minimum investment amount for investments by 401(k) plans,
simplified employee pension plans ("SEPs"), salary reduction-simplified employee
pension plans ("SAR-SEPs") or salary reduction-Individual Retirement Accounts
("SAR-IRAs"). However, the assets of such plans must reach an asset value of
$1,000 ($500 for SEPs, SAR-SEPs and SAR-IRAs) within one year of the account
open date. If the assets of such plans do not reach the minimum asset size
within one year, Nations Fund reserves the right to redeem the shares held by
such plans on 60 days' written notice. The minimum subsequent investment is
$100, except for investments pursuant to the Systematic Investment Plan
described below.

Investor A Shares are purchased at net asset value per share. Purchases may be
effected on days on which the New York Stock Exchange (the "Exchange") is open
for business (a "Business Day").

Nations Fund and Stephens reserve the right to reject any purchase order. The
issuance of Investor A Shares is recorded on the books of the Funds, and share
certificates are not issued unless expressly requested in writing. Certificates
are not issued for fractional shares.

OPENING AN ACCOUNT DIRECTLY WITH THE FUND: Investors may open a regular
(non-retirement) account directly with a Fund, either by mail or by wire.

BY MAIL: Investors should complete a New Account Application and forward it,
along with a check made payable to the respective Fund, to:

Nations Fund
P.O. Box 34602
Charlotte, NC 28254-4602

BY WIRE: Investors should call Investor Services at 1-800-982-2271 for an
account number and use the following wire instructions:

Nations Fund
c/o Boston Safe Deposit & Trust
ABA #011001234
DDA #154202
Account Name
Account Number
Fund Name

Investors should complete a New Account Application and mail it to the address
above.

RETIREMENT ACCOUNTS: For IRAs and other retirement accounts, investors should
call Investor Services at 1-800-982-2271.

ADDITIONAL PURCHASES: Additional purchases may be made by mail or wire. To
purchase additional shares by mail, send a check made payable to the respective
Fund with a reinvestment slip to the address set forth above. To purchase
additional shares by wire, follow the wiring instructions set forth above.

EFFECTIVE TIME OF PURCHASES: Purchase orders for Investor A Shares in the Funds
which are received by Stephens or by the Transfer Agent before the close of
regular trading hours on the Exchange (currently 4:00 p.m., Eastern time) on any
Business Day are priced according to the net asset value determined on that day
but are not executed until 4:00 p.m., Eastern time, on the Business Day on which
immediately available funds in payment of the purchase price are received by the
Funds' Custodian. Such payment must be received no later than 4:00 p.m., Eastern
time, by the third Business Day following receipt of the order. If funds are not
received by such date, the order will not be accepted and notice thereof will be
given to the Agent placing the order. Payment for orders which are not received
or accepted will be returned after prompt inquiry to the sending Agent.

The Agents are responsible for transmitting orders for purchases of Investor A
Shares by their customers ("Customers"), and delivering required funds, on a
timely basis. Stephens is responsible for transmitting orders it receives to
Nations Fund.

SYSTEMATIC INVESTMENT PLAN: Under the Funds' Systematic Investment Plan ("SIP")
a

<PAGE>
shareholder may automatically purchase Investor A Shares. On a bi-monthly,
monthly or quarterly basis, a shareholder may direct cash to be transferred
automatically from his/her checking or savings account at any bank which is a
member of the Automated Clearing House to his/her Fund account. Transfers will
occur on or about the 15th and/or 30th day of the applicable month. The
systematic investment amount may be in any amount from $25 to $100,000. For more
information concerning the SIP, contact your Agent or Investor Services.

TELEPHONE TRANSACTIONS: Investors may effect purchases, redemptions (up to
$50,000) and exchanges by telephone. See "How To Redeem Shares" and "How To
Exchange Shares" below. Shareholders should be aware that by using the telephone
transaction feature, such shareholders may be giving up a measure of security
that they may have if they were to authorize written requests only. A
shareholder may bear the risk of any resulting losses from a telephone
transaction. Nations Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if Nations Fund and its
service providers fail to employ such measures, they may be liable for any
losses due to unauthorized or fraudulent instructions. Nations Fund requires a
form of personal identification prior to acting upon instructions received by
telephone and provides written confirmation to shareholders of each telephone
share transaction. In addition, Nations Fund reserves the right to record all
telephone conversations.

How To Redeem Shares

For shareholders who open and maintain an account directly with a Fund,
redemption orders should be communicated to such Fund by calling Investor
Services at 1-800-982-2271 or in writing. (Shareholders must have established
telephone features on their account in order to effect telephone transactions.)
Redemption proceeds are normally sent by mail or wired within three Business
Days after receipt of the order by a Fund. For shareholders who purchased their
shares through an Agent, redemption orders should be transmitted by telephone or
in writing through the same Agent. Redemption proceeds are normally wired to the
redeeming Agent within three Business Days after receipt of the order by
Stephens or by the Transfer Agent. Redemption orders are effected at the net
asset value per share next determined after receipt of the order by a Fund,
Stephens, or the Transfer Agent, as the case may be. The Agents are responsible
for transmitting redemption orders to Stephens or to the Transfer Agent and for
crediting their Customer's account with the redemption proceeds on a timely
basis. Redemption proceeds for shares purchased by check may not be remitted
until at least 15 days after the date of purchase to ensure that the check has
cleared; a certified check, however, is deemed to be cleared immediately. No
charge for wiring redemption payments is imposed by Nations Fund. There is no
redemption charge.

Nations Fund may redeem a shareholder's Investor A Shares upon 60 days' written
notice if the balance in the shareholder's account drops below $500 as a result
of redemptions. Share balances also may be redeemed at the direction of an Agent
pursuant to arrangements between the Agent and its Customers. Nations Fund also
may redeem shares of the Funds involuntarily or make payment for redemption in
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.

Prior to effecting a redemption of Investor A Shares represented by
certificates, the Transfer Agent must have received such certificates at its
principal office. All such certificates must be endorsed by the redeeming
shareholder or accompanied by a signed stock power, in each instance with the
signature guaranteed by a commercial bank or a member of a major stock exchange,
unless other arrangements satisfactory to Nations Fund have previously been
made. Nations Fund may require any additional

<PAGE>
information reasonably necessary to evidence that a redemption has been duly
authorized.

AUTOMATIC WITHDRAWAL PLAN: An Automatic Withdrawal Plan ("AWP") may be
established by a new or existing shareholder of the Funds if the value of the
Investor A Shares in his/her accounts within the Nations Fund Family (valued at
the net asset value at the time of the establishment of the AWP) equals $10,000
or more. Shareholders who elect to establish an AWP may receive a monthly,
quarterly or annual check or automatic transfer to a checking or savings account
in a stated amount of not less than $25 on or about the 10th or 25th day of the
applicable month of withdrawal. Investor A Shares will be redeemed as necessary
to meet withdrawal payments. Withdrawals will reduce principal and may
eventually deplete the shareholder's account. If a shareholder desires to
establish an AWP after opening an account, a signature guarantee will be
required. An AWP may be terminated by a shareholder on 30 days' written notice
to his/her Agent or by Nations Fund at any time.

How To Exchange Shares

GENERAL: The exchange feature enables a shareholder of a fund of Nations Fund to
acquire shares of the same class that are offered by any other fund of Nations
Fund when the shareholder believes that a shift between funds is an appropriate
investment decision. A qualifying exchange is based on the next calculated net
asset value per share of each fund after the exchange order is received.

For shareholders who maintain an account directly with a Fund, exchange requests
should be communicated to such Fund by calling Investor Services at
1-800-982-2271 or in writing. For shareholders who purchased their shares
through an Agent, exchange requests should be communicated to the Agent, who is
responsible for transmitting the request to Stephens or to the Transfer Agent.

The current prospectus for each fund of Nations Fund describes its investment
objective and policies, and shareholders should obtain a copy and examine it
carefully before investing. Exchanges are subject to the minimum investment
requirement and any other conditions imposed by each fund. In the case of any
shareholder holding a share certificate or certificates, no exchanges may be
made until all applicable share certificates have been received by the Transfer
Agent and deposited in the shareholder's account. An exchange will be treated
for Federal income tax purposes the same as a redemption of shares, on which the
shareholder may realize a capital gain or loss. And, the ability to deduct
capital losses on an exchange may be limited in situations where there is an
exchange of shares within 90 days after the shares are purchased.

The Investor A Shares exchanged must have a current value of at least $1,000
(except for exchanges through the Automatic Exchange Feature, which is described
below). Nations Fund reserves the right to reject any exchange request. Only
shares that may legally be sold in the state of the shareholder's residence may
be acquired in an exchange. Only shares of a class that is accepting investments
generally may be acquired in an exchange. During periods of significant economic
or market change, telephone exchanges may be difficult to complete. In such
event, shareholders should consider communicating their exchange requests by
mail.

Investor A Shares of the Funds are offered without any Contingent Deferred Sales
Charge ("CDSC"). However, Investor A Shares of other funds within the Nations
Fund Family may have been sold subject to a CDSC. If a shareholder

<PAGE>
exchanges any such shares (the "Exchanged Shares") for Investor A Shares of the
Fund, the shares of the Fund will be subject to the CDSC. The holding period of
such Investor A Shares (for purposes of determining whether a CDSC is applicable
upon redemption) will be computed from the time of the original purchase of the
Exchanged Shares (or, if the Exchanged Shares were acquired in an exchange, from
the time of the original purchase of Investor A Shares).

AUTOMATIC EXCHANGE FEATURE: Under the Funds' Automatic Exchange Feature ("AEF")
a shareholder may automatically exchange at least $25 on a monthly or quarterly
basis. A shareholder may direct proceeds to be exchanged from one fund of
Nations Fund to another as allowed by the applicable exchange rules within the
Prospectus. Exchanges will occur on or about the 15th or 30th day of the
applicable month. The shareholder must have an existing position in both Funds
in order to establish the AEF. This feature may be established by directing a
request to the Transfer Agent by telephone or in writing. For additional
information, a shareholder should contact his/her Selling Agent or Investor
Services.

Shareholder Servicing And Distribution
Plan

The Funds' Shareholder Servicing and Distribution Plan (the "Investor A Plan"),
adopted pursuant to Rule 12b-1 under the 1940 Act, permits the Funds to
compensate (i) Servicing Agents and Selling Agents for services provided to
their Customers that own Investor A Shares and (ii) Stephens for
distribution-related expenses incurred in connection with Investor A Shares.
Aggregate payments under the Investor A Plan are calculated daily and paid
monthly at a rate or rates set from time to time by the Funds, provided that the
annual rate may not exceed 0.25% of the average daily net asset value of the
Investor A Shares of the Funds.

The fees payable to Servicing Agents under the Investor A Plan are used
primarily to compensate or reimburse Servicing Agents for shareholder services
provided, and related expenses incurred, by such Servicing Agents. The
shareholder services provided by Servicing Agents may include: (i) aggregating
and processing purchase and redemption requests for Investor A Shares from
Customers and transmitting net purchase and redemption orders to Stephens or the
Transfer Agent; (ii) providing Customers with a service that invests the assets
of their accounts in Investor A Shares pursuant to specific or preauthorized
instructions; (iii) processing dividend and distribution payments from the Funds
on behalf of Customers; (iv) providing information periodically to Customers
showing their positions in Investor A Shares; (v) arranging for bank wires; and
(vi) providing general shareholder liaison services. The fees payable to Selling
Agents are used primarily to compensate or reimburse Selling Agents for
providing sales support assistance in connection with the sale of Investor A
Shares to Customers, which may include forwarding sales literature and
advertising provided by Nations Fund to Customers.

The fees under the Investor A Plan also may be used to reimburse Stephens for
distribution-related expenses actually incurred by Stephens, including, but not
limited to, expenses of organizing and conducting sales seminars, printing
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising and sales literature and the costs of administering the Investor
A Plan.

Stephens may, from time to time, at its expense or as an expense for which it
may be reimbursed under the Investor A Plan, pay a bonus or other consideration
or incentive to Agents who sell a minimum dollar amount of shares of the Funds
during a specified period of time. Stephens also may, from time to time, pay
additional consideration to Agents not to exceed 1.00% of the offer-

<PAGE>
ing price per share on all sales of Investor A Shares as an expense of Stephens
or for which Stephens may be reimbursed under the Investor A Plan. Any such
additional consideration or incentive program may be terminated at any time by
Stephens.

In addition, Stephens has established a non-cash compensation program, pursuant
to which broker/dealers or financial institutions that sell shares of the Funds
may earn additional compensation in the form of trips to sales seminars or
vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise. This non-cash compensation program may be
amended or terminated at any time by Stephens.

Nations Fund and Stephens may suspend or reduce payments under the Investor A
Plan at any time, and payments are subject to the continuation of the Investor A
Plan described above and the terms of the Servicing Agreement and Sales Support
Agreement. See the SAI for more details on the Investor A Plan.

Nations Fund understands that Agents may charge fees to their Customers who are
the owners of Investor A Shares for various services provided in connection with
a Customer's account. These fees would be in addition to any amounts received by
a Selling Agent under its Sales Support Agreement with Stephens or by a
Servicing Agent under its Servicing Agreement with Nations Fund. The Sales
Support Agreement and Servicing Agreement require Agents to disclose to their
Customers any compensation payable to the Agent by Stephens or Nations Fund and
any other compensation payable by the Customers for various services provided in
connection with their accounts. Customers should read this Prospectus in light
of the terms governing their accounts with their Agents.

How The Funds Value Their Shares

The Funds calculate the net asset value of a share of each class by dividing the
total value of its assets, less liabilities, by the number of shares in the
class outstanding. Shares are valued as of the close of regular trading on the
Exchange (currently 4:00 p.m., Eastern time) on each Business Day. Currently,
the days on which the Exchange is closed (other than weekends) are: New Year's
Day, Presidents' Day, Good Friday, Memorial Day (observed), Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

Portfolio securities for which market quotations are readily available are
valued at market value. Short-term investments that will mature in 60 days or
less are valued at amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following procedures
approved by the Trustees.

How Dividends And Distributions Are
Made; Tax Information

Investor A Shares of the Funds are eligible to receive dividends when declared,
provided how-

<PAGE>
ever, that the purchase order for such shares is received at least one day prior
to the dividend declaration and such shares continue to be eligible for
dividends through and including the day before the redemption order is executed.

The net asset value of Investor A Shares will be reduced by the amount of any
dividend or distribution. Certain Agents may provide for the reinvestment of
dividends in the form of additional Investor A Shares of the same class in the
same Fund. Dividends and distributions are paid in cash within five Business
Days of the end of the quarter to which the dividend relates. Dividends and
distributions payable to a shareholder are paid in cash within five Business
Days after a shareholder's complete redemption of his/her Investor A Shares.

TAX INFORMATION: Each Fund intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). Such
qualification relieves the Fund of liability for Federal income tax on amounts
distributed in accordance with the Code.

Each Fund intends to distribute substantially all of its investment company
taxable income and net tax-exempt income each taxable year. Distributions by a
Fund of its net investment income and the excess, if any, of its net short-term
capital gain over its net long-term capital loss are taxable as ordinary income
to shareholders who are not currently exempt from Federal income tax, whether
such income is received in cash or reinvested in additional shares.

Corporate investors in a Fund may be entitled to the dividends received
deduction on all or a portion of such Fund's dividends.

Substantially all of the Funds' net realized long-term capital gains will be
distributed at least annually. The Funds will generally have no tax liability
with respect to such gains, and the distributions will be taxable to
shareholders who are not exempt from Federal income tax as long-term capital
gains, regardless of how long the shareholders have held such Funds' shares and
whether such gains are received in cash or reinvested in additional shares.

Dividends declared in October, November, or December of any year payable to
shareholders of record on a specified date in such months will be deemed to have
been received by shareholders and paid by a Fund on December 31 of such year in
the event such dividends are actually paid during January of the following year.

Federal law requires Nations Fund to withhold 31% from any dividends (other than
exempt-interest dividends) paid by Nations Fund and/or redemptions (including
exchange redemptions) that occur in certain shareholder accounts if the
shareholder has not properly furnished a certified correct Taxpayer
Identification Number or has not certified that withholding does not apply, or
if the Internal Revenue Service has notified Nations Fund that the Taxpayer
Identification Number listed on a shareholder account is incorrect according to
its records, or that the shareholder is subject to backup withholding. Amounts
withheld are applied to the shareholder's Federal tax liability, and a refund
may be obtained from the Internal Revenue Service if withholding results in
overpayment of taxes. Federal law also requires the Funds to withhold 30% or the
applicable tax treaty rate from dividends paid to certain nonresident alien,
non-U.S. partnership and non-U.S. corporation shareholder accounts.

The foregoing discussion is based on tax laws and regulations which were in
effect as of the date of this Prospectus and summarizes only some of the
important Federal tax considerations generally affecting the Funds and their
shareholders. It is not intended as a substitute for careful tax planning;
investors should consult their tax advisors with respect to their specific tax
situations as well as with respect to state and local taxes. Further tax
information is contained in the SAI.

<PAGE>
Appendix A -- Portfolio Securities

BORROWINGS: When a Fund borrows money, the net asset value of a share may be
subject to greater fluctuation until the borrowing is paid off. The Funds may
borrow money from banks for temporary purposes in amounts of up to one-third of
their respective total assets, provided that borrowings in excess of 5% of the
value of a Fund's total assets must be repaid prior to the purchase of portfolio
securities. Under the requirements of the 1940 Act, the Funds are required to
maintain an asset coverage (including the proceeds of the borrowings) of at
least 300% of all borrowings.

<PAGE>
which are traded on a national stock exchange in an amount exceeding 5% of its
net assets. Further information on the use of futures, options and other
derivative instruments, and the associated risks, is contained in the SAI.

ILLIQUID SECURITIES: Certain securities may be sold only pursuant to certain
legal restrictions, and may be difficult to sell. The Funds will not hold more
than 15% of the value of their respective net assets in securities that are
illiquid or such lower percentage as may be required by the states in which the
appropriate Fund sells its shares. Repurchase agreements, time deposits and
guaranteed investment contracts that do not provide for payment to a Fund within
seven days after notice, and illiquid restricted securities are subject to the
limitation on illiquid securities.

<PAGE>
U.S. GOVERNMENT OBLIGATIONS: U.S. Government obligations consist of marketable
securities and instruments issued or guaranteed by the U.S. Government or any of
its agencies, authorities or instrumentalities. Direct obligations are issued by
the U.S. Treasury and include all U.S. Treasury instruments. U.S. Treasury
obligations differ only in their interest rates, maturities and time of
issuance. Obligations of U.S. Government agencies, authorities and
instrumentalities are issued by government-sponsored agencies and enterprises
acting under authority of Congress. Although obligations of federal agencies,
authorities and instrumentalities are not debts of the U.S. Treasury, some are
backed by the full faith and credit of the U.S. Treasury, such as direct
pass-through certificates of the Government National Mortgage Association; some
are supported by the right of the issuer to borrow from the U.S. Government,
such as obligations of Federal Home Loan Banks, and some are backed only by the
credit of the issuer itself, such as obligations of the Federal National
Mortgage Association. No assurance can be given that the U.S. Government would
provide financial support to government-sponsored instrumentalities if it is not
obligated to do so by law. The market value of U.S. Government obligations may
fluctuate due to fluctuations in market interest rates. As a general matter, the
value of debt instruments, including U.S. Government obligations, declines when
market interest rates increase and rises when market interest rates decrease.
Certain types of U.S. Government obligations are subject to fluctuations in
yield or value due to their structure or contract terms.

<PAGE>
Prospectus

INVESTOR C SHARES
OCTOBER 15, 1996

This Prospectus describes NATIONS MANAGED INDEX
FUND and NATIONS MANAGED SMALLCAP INDEX FUND (the
"Funds") of Nations Fund Trust, an open-end
management investment company in the Nations Fund
Family ("Nations Fund" or "Nations Fund Family").
This Prospectus describes one class of shares of
the Funds -- Investor C Shares.

This Prospectus sets forth concisely the
information about the Funds that a prospective
purchaser of Investor C Shares should consider
before investing. Investors should read this
Prospectus and retain it for future reference.
Additional information about Nations Fund Trust is
contained in a separate Statement of Additional
Information (the "SAI") that has been filed with
the Securities and Exchange Commission (the "SEC")
and is available upon request without charge by
writing or calling Nations Fund at its address or
telephone number shown below. The SAI, dated
October 15, 1996, is incorporated by reference in
its entirety into this Prospectus. NationsBanc
Advisors, Inc. ("NBAI") is the investment adviser
to the Funds. TradeStreet Investment Associates,
Inc. ("TradeStreet") is investment sub-adviser to
the Funds. As used herein the "Adviser" shall mean
NBAI and/or TradeStreet as the context may require.

THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

Nations
Managed
Index Fund
Nations
Managed SmallCap
Index Fund

For Fund information call:
1-800-321-7854
Nations Fund
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
NATIONS FUND

NF-96696-1096

<PAGE>
Table Of Contents

About The Funds

Prospectus Summary 3

Expenses Summary 4

Objectives 5

How The Objectives Are Pursued 5

How Performance Is Shown 9

How The Funds Are Managed 10

Organization And History 13

About Your Investment

How To Buy Shares 14

How To Redeem Shares 15

How To Exchange Shares 17

Shareholder Servicing And Distribution Plans 18

How The Funds Value Their Shares 19

How Dividends And Distributions are Made; Tax
Information 20

Appendix A -- Portfolio Securities 21

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION
WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY NATIONS FUND OR ITS DISTRIBUTOR. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING BY NATIONS FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.

<PAGE>
About The Funds

Prospectus Summary

(Bullet) TYPE OF COMPANY: Open-end management investment company.

(Bullet) INVESTMENT OBJECTIVES AND POLICIES:

(BULLET) Nations Managed Index Fund's investment objective is to seek,
over the long-term, to provide a total return which (gross of
fees and expenses) exceeds the total return of the Standard &
Poor's 500 Composite Stock Price Index.

(Bullet) Nations Managed SmallCap Index Fund's investment
objective is to seek, over the long-term, to provide
a total return which (gross of fees and expenses)
exceeds the total return of the Standard & Poor's
SmallCap 600 Index.

(Bullet) When consistent with the Funds' objectives,
the Funds will employ various techniques to
manage capital gain distributions.

<PAGE>
Expenses Summary

Expenses are one of several factors to consider when investing in the Funds. The
following tables summarize shareholder transaction and operating expenses for
Investor C Shares of the Funds. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in Investor C Shares of the
indicated Fund over specified periods.

INVESTOR C SHARES

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (After Fee Waivers) .30% 0.30%
Rule 12b-1 Fees (After Fee Waivers) .25% 0.25%
Shareholder Servicing Fees .25% 0.25%
Other Expenses .20% 0.20%
Total Operating Expenses (After Fee Waivers) 1.00% 1.00%
</TABLE>

EXAMPLES:

You would pay the following expenses on a $1,000 investment in Investor C Shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.

Nations Nations
Managed Managed
Index SmallCap
Fund Index Fund
<S> <C> <C>
1 Year $ 10 $ 10
3 Years $ 32 $ 32
</TABLE>

You would pay the following expenses on a $1,000 investment in Investor C Shares
of the Funds, assuming a 5% annual return but no redemption.

Nations Nations
Managed Managed
Index SmallCap
Fund Index Fund
<S> <C> <C>
1 Year $ 10 $ 10
3 Years $ 32 $ 32
</TABLE>

<PAGE>

The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Investor C Shares will bear either directly or indirectly. The figures in the
above tables are based on estimates for the fiscal year and have been restated
as necessary to reflect anticipated fee waivers. There is no assurance that any
fee waivers and reimbursements will continue beyond the current fiscal year. If
fee waivers and/or reimbursements are discontinued, the amounts contained in the
"Examples" above may increase. For a more complete description of the Funds'
operating expenses, see "How The Funds Are Managed." For a more complete
description of the Rule 12b-1 and shareholder servicing fees payable by the
Funds, see "Shareholder Servicing And Distribution Plan."

Absent fee waivers, "Management Fees," "Rule 12b-1 Fees" and "Total Operating
Expenses" would be .50%, .75% and 1.20%, respectively, for both Nations Managed
Index Fund and Nations Managed SmallCap Index Fund.

THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN.

Objectives

How The Objectives Are Pursued

The initial stock universe considered by the Adviser is the S&P 500 Index. The
Adviser ranks the attractiveness of each security according to a multi-factor
valuation model. Both value and momentum factors are considered in the ranking
process. Value factors such as book value, earnings yield and cash flow measure
a stock's intrinsic worth versus its market price, while momentum
characteristics such as price momentum, earnings growth and earnings
acceleration measure a stock relative to others in the same industry. Each stock
is assigned a ranking from one to 10 (best to worst). The Adviser then screens
out the lower rated stocks resulting in a portfolio of 350 to 400 holdings that
capture the investment characteristics of the Index.

(1) "Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation ("S&P").

<PAGE>

The S&P 500 Index consists of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. Different stocks have different
weightings in the Index, depending on the amount of stock outstanding and its
current price.

Under normal conditions, the Adviser will attempt to invest as much of the
Fund's assets as is practical and, in any event at least 65% of its total
assets, in common stocks which are included in the S&P 500 Index. The Fund is
expected, however, to maintain a position in high-quality short-term debt
securities and money market instruments to meet redemption requests. If the
Adviser believes that market conditions warrant a temporary defensive posture,
the Fund may invest without limitation in high-quality short-term debt
securities and money market instruments. These securities and money market
instruments may include domestic and foreign commercial paper, certificates of
deposit, bankers' acceptances and time deposits, U.S. Government obligations,
("U.S. Government Obligations") and repurchase agreements.

Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 600 Index while minimizing
the downside risk of underperforming the Index over time.

(2) "Standard & Poor's 600" is a registered service mark of S&P.

<PAGE>

others in the same industry. Each stock is assigned a ranking from 1 to 10 (best
to worst). The Adviser then screens out the lower rated stocks resulting in a
portfolio of approximately 450-500 holdings that capture the investment
characteristics of the Index.

The Fund also may invest in certain specified derivative securities including:
exchange-traded options; over-the-counter options executed with primary dealers,
including long calls and puts and covered calls to enhance return; and U.S.
exchange-traded financial futures approved by the CFTC and options thereon for
market exposure risk management. The Fund may lend its portfolio securities to
qualified institutional investors. The Fund also may invest in restricted,
private placement and other illiquid securities. In addition, the Fund may
invest in securities issued by other investment companies, consistent with the
Fund's investment objective and policies.

RISK CONSIDERATIONS: Although the Adviser will seek to achieve the investment
objective of each Fund, there is no assurance that it will be

<PAGE>

able to do so. No single fund should be considered, by itself, to provide a
complete investment program for any investor. Investments in a Fund are not
insured against loss of principal.

Investments by a Fund in common stocks and other equity securities are subject
to stock market risk. The value of the stocks that the Fund holds, like the
broader stock market, may decline over short or even extended periods.

Each Fund may not:

1. Purchase any securities which would cause 25% or more of the value of the
Fund's total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal activities in the
same industry. (For purposes of this limitation, U.S. Government securities are
not considered members of any industry.)

<PAGE>

How Performance Is Shown

AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS INDICATED THROUGH SEPTEMBER 30, 1996*

Since
One Three Five Inception
Year Year Year (12/31/88)**
<S> <C> <C> <C> <C>
Enhanced Equity
Index Common
Trust Fund 19.78% 16.91% 14.90% 16.03%
S&P 500 Index 20.33% 17.40% 15.21% 15.79%
Lipper Equity+ 19.77% 16.90% 14.70% 15.18%
Index Funds
Average
</TABLE>

ANNUAL TOTAL RETURNS*

<PAGE>

TOTAL RETURNS FOR THE PERIODS INDICATED
THROUGH SEPTEMBER 30, 1996*

Since
Year-To- Inception
Three Month Date (10/1/95)
<S> <C> <C> <C>
Enhanced Small Cap
Equity Index
Common Trust
Fund 4.35% 16.33% 17.25%
S&P 600 Index 3.21% 14.79% 15.31%
</TABLE>

+The Lipper Equity Index Funds Average represents the average performance of
mutual funds with similar objectives monitored by Lipper Analytical Services,
Inc. during the periods shown.

In addition to Investor C Shares, the Funds offer Primary A, Primary B and
Investor A Shares. Each class of shares may bear different sales charges,
shareholder servicing fees and other expenses, which may cause the performance
of a class to differ from the performance of the other classes. Total return and
yield quotations will be computed separately for each class of the Funds'
shares. Any fees charged by a selling agent and/or servicing agent directly to
its customers' accounts in connection with investments in the Funds will not be
included in calculations of total return or yield. Each Fund's annual report
contains additional performance information and is available upon request
without charge from the Funds' distributor or your selling agent.

How The Funds Are Managed

<PAGE>

Subject to the general supervision of Nations Fund Trust's Board of Trustees,
and in accordance with each Fund's investment policies, the Adviser formulates
guidelines and lists of approved investments for each Fund, makes decisions with
respect to and places orders for each Fund's purchases and sales of portfolio
securities and maintains records relating to such purchases and sales. The
Adviser is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of agency
transactions, financial institutions which are affiliated with the Adviser or
which have sold shares in such Funds, if the Adviser believes that the quality
of the transaction and the commission are comparable to what they would be with
other qualified brokerage firms. From time to time, to the extent consistent
with its investment objective, policies and restrictions, each Fund may invest
in securities of companies with which NationsBank has a lending relationship.
For the services provided and expenses assumed pursuant to an Investment
Advisory Agreement, NBAI is entitled to receive an advisory fee, computed daily
and paid monthly, at the annual rate of 0.50% of the average daily net assets of
each Fund.

From time to time, NBAI (and/or TradeStreet) may waive or reimburse (either
voluntarily or pursuant to applicable state limitations) advisory fees and/or
expenses payable by a Fund.

Morrison & Foerster LLP, counsel to Nations Fund and special counsel to
NationsBank, has advised Nations Fund and NationsBank that NationsBank and its
affiliates may perform the services contemplated by the Investment Advisory
Agreement and this Prospectus without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in federal or state statutes, including the
Glass-Steagall Act, and regulations and judicial or administrative decisions or
interpretations thereof, could prevent such entities from continuing to perform,
in whole or in part, such services. If any such entity were prohibited from
performing any of such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.

<PAGE>

First Data Investor Services Group, Inc. ("First Data"), formerly The
Shareholder Services Group, Inc., a wholly owned subsidiary of First Data
Corporation, with principal offices at One Exchange Place, Boston, Massachusetts
02109, serves as the co-administrator of Nations Fund pursuant to a
Co-Administration Agreement. Under the Co-Administration Agreement, First Data
provides various administrative and accounting services to the Funds including
performing the calculations necessary to determine the net asset value per share
and dividends of each class of shares of the Funds, preparing tax returns and
financial statements and maintaining the portfolio records and certain of the
general accounting records for the Funds.

NationsBank serves as sub-administrator for Nations Fund pursuant to a
Sub-Administration Agreement. Pursuant to the terms of the Sub-Administration
Agreement, NationsBank assists Stephens in supervising, coordinating and
monitoring various aspects of the Funds' administrative operations. For
providing such services NationsBank shall be entitled to receive a monthly fee
from Stephens based on an annual rate of 0.01% of the Funds' average daily net
assets.

Shares of the Funds are sold on a continuous basis by Stephens, as the Funds'
sponsor and distributor. Stephens is a registered broker/dealer with principal
offices at 111 Center Street, Little Rock, Arkansas 72201. Nations Fund has
entered into a distribution agreement with Stephens which provides that Stephens
has the exclusive right to distribute shares of the Funds. Stephens may pay
service fees or commissions to selling agents that assist customers in
purchasing Investor C Shares of the Funds. See "Shareholder Servicing And
Distribution Plan."

First Data serves as transfer agent (the "Transfer Agent") for the Funds'
Investor C Shares. The Transfer Agent is located at One Exchange Place, Boston,
Massachusetts 02109.

Price Waterhouse LLP serves as independent accountant to Nations Fund. Its
address is 160 Federal Street, Boston, Massachusetts 02110.

EXPENSES: The accrued expenses of each Fund, as well as certain expenses
attributable to Investor C Shares, are deducted from accrued income before
dividends are declared. The Funds' expenses include, but are not limited to:
fees paid to the Adviser, NationsBank, Stephens and First Data; interest;
Trustees' fees; federal and state securities registration and qualification
fees; brokerage fees and commissions; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; charges of the Custodian and Transfer Agent; certain insurance
premiums; outside auditing and legal expenses; costs of shareholder reports and
shareholder meetings; other expenses which are not expressly assumed by the
Adviser, NationsBank, Stephens or First Data under their respective agreements
with Nations Fund; and any extraordinary expenses. Investor C Shares bear
certain class specific retail transfer agency expenses and also bear certain
additional shareholder service and/or sales support costs. Any general expenses
of Nations Fund Trust that are not readily identifiable as belonging to a
particular investment portfolio are allocated among all portfolios in the
proportion that the assets of a portfolio bears to the assets of Nations Fund
Trust or in such other manner as the Board of Trustees deems appropriate.

<PAGE>
Organization And History

NATIONS FUND TRUST: Nations Fund Trust was organized as a Massachusetts business
trust on May 6, 1985. Nations Fund Trust's fiscal year end is March 31; prior to
1996, Nations Fund Trust's fiscal year end was November 30. The Funds currently
offer four classes of shares -- Primary A Shares, Primary B Shares, Investor A
Shares and Investor C Shares. This Prospectus relates only to the Investor C
Shares of Nations Managed Index Fund and Nations Managed SmallCap Index Fund. To
obtain additional information regarding the Funds' other classes of shares which
may be available to you, contact your Agent (as defined below) or Nations Fund
at 1-800-321-7854.

<PAGE>
About Your Investment

How To Buy Shares

The Funds have established various procedures for purchasing Investor C Shares
in order to accommodate different investors. Purchase orders for Investor C
Shares may be placed through banks, broker/dealers or other financial
institutions (including certain affiliates of NationsBank) that have entered
into a shareholder servicing agreement ("Servicing Agreement") with Nations Fund
("Servicing Agents") and/or a Sales Support Agreement") with Stephens ("Selling
Agents").

There is a minimum initial investment of $1,000, except that the minimum initial
investment is:

(Bullet) $500 for "IRA" investors;

(Bullet) $250 for non-working spousal IRAs; and

(Bullet) $100 for investors participating on a monthly basis in the Systematic
Investment Plan described below.

There is no minimum investment amount for investments by 401(k) plans,
simplified employee pension plans ("SEPs"), salary reduction-simplified employee
pension plans ("SAR-SEPs") or salary reduction-Individual Retirement Account
("SAR-IRAs"). However, the assets of such plans must reach an asset value of
$1,000 ($500 for SEPs, SAR-SEPs and SAR-IRAs) within one year of the account
open date. If the assets of such plans do not reach the minimum asset size
within one year, Nations Fund reserves the right to redeem the shares held by
such plans on 60 days' written notice. The minimum subsequent investment is
$100, except for investments pursuant to the Systematic Investment Plan
described below.

Investor C Shares are purchased at net asset value per share. Purchases may be
effected on days on which the New York Stock Exchange (the "Exchange") is open
for business (a "Business Day").

The Servicing Agents will provide various shareholder services for, and the
Selling Agents will provide sales support assistance to, their respective
customers ("Customers") who own Investor C Shares. Servicing Agents and Selling
Agents are sometimes referred to hereafter as "Agents." From time to time the
Agents, Stephens and Nations Fund may agree to voluntarily reduce the maximum
fees payable for sales support or shareholder services.

Nations Fund reserves the right to reject any purchase order. The issuance of
Investor C Shares is recorded on the books of the Funds, and share certificates
are not issued unless expressly requested in writing. Certificates are not
issued for fractional shares.

EFFECTIVE TIME OF PURCHASES: Purchase orders for Investor C Shares of the Funds
which are received by Stephens or by the Transfer Agent before the close of
regular trading hours on the Exchange (currently 4:00 p.m., Eastern time) on any
Business Day are priced according to the net asset value determined on that day
but are not executed until 4:00 p.m., Eastern time, on the Business Day on which
immediately available funds in payment of the purchase price are received by the
Funds' Custodian. Such payment must be received no later than 4:00 p.m., Eastern
time, by the third Business Day following receipt of the order. If funds are not
received by such date, the order will not be accepted and notice thereof will be
given to the Agent placing the order. Payment for orders which are not received
or accepted will be returned after prompt inquiry to the sending Agent.

The Agents are responsible for transmitting orders for purchases of Investor C
Shares by their Customers, and delivering required funds, on a timely basis.
Stephens is responsible for transmitting orders it receives to Nations Fund.

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SYSTEMATIC INVESTMENT PLAN: Under the Funds' Systematic Investment Plan ("SIP")
a shareholder may automatically purchase Investor C Shares. On a bi-monthly,
monthly or quarterly basis, a shareholder may direct cash to be transferred
automatically from his/her checking or savings account at any bank to his/her
Fund account. Transfers will occur on or about the 15th and/or 30th day of the
applicable month. The systematic investment amount may be in any amount from $25
to $100,000. For more information concerning the SIP, contact your Agent.

TELEPHONE TRANSACTIONS: Investors may effect purchases, redemptions (up to
$50,000) and exchanges by telephone. See "How To Redeem Shares" and "How To
Exchange Shares" below. If a shareholder desires to elect the telephone
transaction feature after opening an account, a signature guarantee will be
required. Shareholders should be aware that by using the telephone transaction
feature, such shareholders may be giving up a measure of security that they may
have if they were to authorize written requests only. A shareholder may bear the
risk of any resulting losses from a telephone transaction. Nations Fund will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, and if Nations Fund and its service providers fail to
employ such measures, they may be liable for any losses due to unauthorized or
fraudulent instructions. Nations Fund requires a form of personal identification
prior to acting upon instructions received by telephone and provides written
confirmation to shareholders of each telephone share transaction. In addition,
Nations Fund reserves the right to record all telephone conversations.

How To Redeem Shares

Redemption orders should be transmitted by telephone or in writing through the
same Agent that transmitted the original purchase order. Redemption orders are
effected at the net asset value per share next determined after receipt of the
order by Stephens or by the Transfer Agent, less any applicable Contingent
Deferred Sales Charge ("CDSC"). The Agents are responsible for transmitting
redemption orders to Stephens or to the Transfer Agent and for crediting their
Customers' accounts with the redemption proceeds on a timely basis. No charge
for wiring redemption payments is imposed by Nations Fund. Except for any CDSC
which may be applicable upon redemption of Investor C Shares, as described
below, there is no redemption charge.

Redemption proceeds are normally wired to the redeeming Agent within three
Business Days after receipt of the order by Stephens or by the Transfer Agent.
However, redemption proceeds for shares purchased by check may not be remitted
until at least 15 days after the date of purchase to ensure that the check has
cleared; a certified check, however, is deemed to be cleared immediately.

Nations Fund may redeem a shareholder's Investor C Shares upon 60 days' written
notice if the balance in the shareholder's account drops below $500 as a result
of redemptions. Share balances also may be redeemed at the direction of an Agent
pursuant to arrangements between the Agent and its Customers. Nations Fund also
may redeem shares of the Funds involuntarily or make payment for redemption in
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.

Prior to effecting a redemption of Investor C Shares represented by
certificates, the Transfer Agent must have received such certificates at its
principal office. All such certificates must be endorsed by the redeeming
shareholder or accompanied by a signed stock power, in each instance with the
signature guaranteed by a commercial bank or a member of a major stock exchange,
unless other arrangements satisfactory to Nations Fund have previously been
made. Nations Fund may require any additional

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information reasonably necessary to evidence that a redemption has been duly
authorized.

CONTINGENT DEFERRED SALES CHARGE: Subject to certain waivers, Investor C Shares
of the Funds that are redeemed within one year of the date of purchase may be
subject to a CDSC equal to 0.50% of the lesser of the net asset value or the
purchase price of the shares being redeemed. No CDSC is imposed on increases in
net asset value above the initial purchase price, including shares acquired by
reinvestment of distributions.

Solely for purposes of determining the period of time that has elapsed from the
purchase of any Investor C Shares, all purchases are deemed to have been made on
the trade date of the transaction. In determining whether a CDSC is applicable
to a redemption, the calculation will be made in the manner that results in the
lowest possible charge being assessed. In this regard, it will be assumed that
the redemption is first of shares held for the longest period of time or shares
acquired pursuant to reinvestment of dividends or distributions. The charge will
not be applied to dollar amounts representing an increase in the net asset value
since the time of purchase.

The CDSC will be waived on redemptions of Investor C Shares (i) following the
death or disability (as defined in the Internal Revenue Code of 1986, as amended
(the "Code")) of a shareholder (including a registered joint owner), (ii) in
connection with the following retirement plan distributions: (a) by qualified
plans, (except in cases of plan level terminations); (b) distributions from an
IRA following attainment of age 59 1/2; (c) a tax-free return of an excess
contribution to an IRA, and (d) distributions from a qualified retirement plan
that are not subject to the 10% additional Federal withdrawal tax pursuant to
Section 72(t)(2) of the Code, (iii) effected pursuant to Nations Fund's right to
liquidate a shareholder's account, including instances where the aggregate net
asset value of the Investor C shares held in the account is less than the
minimum account size, (iv) in connection with the combination of Nations Fund
with any other registered investment company by merger, acquisition of assets or
by any other transaction, and (v) effected pursuant to the Automatic Withdrawal
Plan discussed below, provided that such redemptions do not exceed, on an annual
basis, 12% of the net asset value of the Investor C Shares in the account.
Shareholders are responsible for providing evidence sufficient to establish that
they are eligible for any waiver of the CDSC. Nations Fund may terminate any
waiver of the CDSC by providing notice in the Funds' Prospectus, but any such
termination would affect only shares purchased after such termination.

Within 120 days after a redemption of Investor C Shares of a Fund, a shareholder
may reinvest any portion of the proceeds of such redemption in Investor C Shares
of the same Fund. The amount which may be so reinvested is limited to an amount
up to, but not exceeding, the redemption proceeds (or to the nearest full share
if fractional shares are not purchased). A shareholder exercising this privilege
would receive a pro rata credit for any CDSC paid in connection with the prior
redemption. A shareholder may not exercise this privilege with the proceeds of a
redemption of shares previously purchased through the reinvestment privilege. In
order to exercise this privilege, a written order for the purchase of Investor C
Shares must be received by the Transfer Agent or by Stephens within 120 days
after the redemption.

AUTOMATIC WITHDRAWAL PLAN: An Automatic Withdrawal Plan ("AWP") may be
established by a new or existing shareholder of the Funds if the value of the
Investor C Shares in his/her accounts within the Nations Fund Family (valued at
the net asset value at the time of the establishment of the AWP) equals $10,000
or more. Investor C Shares redeemed under the AWP will not be subject to a CDSC,
provided that the shares so redeemed do not exceed, on an annual basis, 12% of
the net asset value of the Investor C Shares in the account. Otherwise, any
applicable CDSC will be imposed on shares redeemed under the AWP. Shareholders
who elect to establish an AWP may receive a monthly, quarterly or annual check
or automatic transfer to a checking or savings account in a stated amount of not
less than $25 on or about the 10th or 25th day of the applicable month of
withdrawal. Investor C Shares will be redeemed (net of any applicable CDSC) as
necessary to

<PAGE>
meet withdrawal payments. Withdrawals will reduce principal and may eventually
deplete the shareholder's account. If a shareholder desires to establish an AWP
after opening an account, a signature guarantee will be required. An AWP may be
terminated by a shareholder on 30 days' written notice to his/her Agent or by
Nations Fund at any time.

How To Exchange Shares

The exchange feature enables a shareholder of Investor C Shares of a Nations
Fund non-money market fund to acquire shares of the same class that are offered
by another non-money market fund of Nations Fund or Investor D Shares of any
Nations Fund money market fund when he or she believes that a shift between
funds is an appropriate investment decision. A qualifying exchange is based on
the next calculated net asset value per share of each fund after the exchange
order is received.

No CDSC will be imposed in connection with an exchange of Investor C Shares that
meets the requirements discussed in this section.

If a shareholder acquired Investor C Shares of a Nations Fund non-money market
fund or Investor D Shares of a Nations Fund money market fund through an
exchange, the CDSC applicable to the original shares purchased will be applied
to any redemption of the acquired shares. Additionally, when an investor
exchanges Investor C Shares of a Nations Fund non-money market fund for shares
of the same class of another non-money market fund or Investor D Shares of any
money market fund of Nations Fund, the remaining period of time (if any) that
the CDSC is in effect will be computed from the time of the initial purchase of
the previously held Investor C Shares.

AUTOMATIC EXCHANGE FEATURE: Under the Funds' Automatic Exchange Feature ("AEF")
a shareholder may automatically exchange at least $25 on a monthly or quarterly
basis. A shareholder may direct proceeds to be exchanged from one Nations Fund
to another as allowed by the applicable exchange rules within the prospectus.
Exchanges will occur on or about the 15th or 30th day of the applicable month.
The shareholder must have an existing position in both Funds in order to
establish the AEF. This feature may be established by directing a request to the
Transfer Agent by telephone or in writing. For additional information, an
investor should contact his/her Selling Agent.

GENERAL: The Funds and each of the other funds of Nations Fund may limit the
number of times this exchange feature may be exercised by a shareholder within a
specified period of time. Also, the exchange feature may be terminated or
revised at any time by Nations Fund upon such notice as may be required by
applicable regulatory agencies (presently 60 days for termination or material
revision), absent unusual circumstances.

The Investor C Shares exchanged must have a current value of at least $1,000
(except for exchange through the AEF). Nations Fund reserves the right to reject
any exchange request. Only shares that may legally be sold in the state of the
investor's residence may be acquired in an exchange. Only shares of a class that
is accepting investments generally may be

<PAGE>
acquired in an exchange. An investor may telephone an exchange request by
calling his/her Agent which is responsible for transmitting such request to
Stephens or to the Transfer Agent.

During periods of significant economic or market change, telephone exchanges may
be difficult to complete. In such event, shares may be exchanged by mailing the
request directly to the Agent through which the original shares were purchased.
An investor should consult his/her Agent or Stephens for further information
regarding exchanges.

Shareholder Servicing And Distribution
Plans

Pursuant to Rule 12b-1 under the 1940 Act, the Trustees have approved a
Distribution Plan with respect to Investor C Shares of the Funds. Pursuant to
the Distribution Plan, the Funds may compensate or reimburse Stephens for any
activities or expenses primarily intended to result in the sale of the Funds'
Investor C Shares. Payments under the Investor C Distribution Plan will be
calculated daily and paid monthly at a rate or rates set from time to time by
the Trustees, provided that the annual rate may not exceed 0.75% of the average
daily net asset value of the Funds' Investor C Shares.

The fees payable under the Distribution Plan are used (i) to compensate Selling
Agents for providing sales support assistance relating to Investor C Shares,
(ii) to pay for promotional activities intended to result in the sale of
Investor C Shares such as the preparation, printing and distribution of
prospectuses to other than current shareholders, and (iii) to compensate Selling
Agents for providing sales support services with respect to their Customers who
are, from time to time, beneficial and record holders of Investor C Shares.
Currently, substantially all fees paid pursuant to the Distribution Plan are
paid to compensate Selling Agents for providing the services described in (i)
and (iii) above, with any remaining amounts being used by Stephens to partially
defray other expenses incurred by Stephens in distributing Investor C Shares.
Fees received by Stephens pursuant to the Distribution Plan will not be used to
pay any interest expenses, carrying charges or other financing costs (except to
the extent permitted by the SEC) and will not be used to pay any general and
administrative expenses of Stephens.

Nations Fund and Stephens may suspend or reduce payments under the Distribution
Plan at any time, and payments are subject to the continuation of the
Distribution Plan described above and the terms of the Sales Support Agreement
between Selling Agents and Stephens. See the SAI for more details on the
Distribution Plan.

The Trustees also have approved a shareholder servicing plan ("Servicing Plan")
for the Funds which permits the Funds to compensate Servicing Agents for
services provided to their Customers that own Investor C Shares. Payments under
the Servicing Plan are calculated daily and paid monthly at a rate or rates set
from time to time by the Funds, provided that the annual rate may not exceed
0.25% of the average daily net asset value of the Funds' Investor C Shares.

The fees payable under the Servicing Plan are used primarily to compensate or
reimburse Servicing Agents for shareholder services provided, and related
expenses incurred, by such Servicing Agents. The shareholder services provided
by Servicing Agents may include: (i) aggregating and processing purchase and
redemption requests for Investor C Shares from Customers and transmitting net
purchase and redemption orders to Stephens or the Transfer Agent; (ii) providing
Customers with a service that invests the assets of their accounts in Investor C
Shares pursuant to specific or preauthorized instructions; (iii) processing
dividend and distribution payments from the Funds on behalf of

<PAGE>
Customers; (iv) providing information periodically to Customers showing their
positions in Investor C Shares; (v) arranging for bank wires; and (vi) providing
general shareholder liaison services.

Nations Fund may suspend or reduce payments under the Servicing Plan at any
time, and payments are subject to the continuation of the Servicing Plan
described above and the terms of the Servicing Agreements. See the SAI for more
details on the Servicing Plan.

Nations Fund understands that Agents may charge fees to their Customers who are
the owners of Investor C Shares for various services provided in connection with
Customers' accounts. These fees would be in addition to any amounts received by
a Selling Agent under its Sales Support Agreement with Stephens or by a
Servicing Agent under its Servicing Agreement with Nations Fund. The Sales
Support Agreements and Servicing Agreements require Agents to disclose to their
Customers any compensation payable to the Agent by Stephens or Nations Fund and
any other compensation payable by the Customers for various services provided in
connection with their accounts. Customers should read this Prospectus in light
of the terms governing their accounts with their Agents.

Stephens may, from time to time, at its expense or as an expense for which it
may be reimbursed under the Distribution Plan, pay a bonus or other
consideration or incentive to Agents who sell a minimum dollar amount of shares
of the Funds during a specified period of time. Stephens also may, from time to
time, pay additional consideration to Agents not to exceed 0.75% of the offering
price per share on all sales of Investor C Shares as an expense of Stephens or
for which Stephens may be reimbursed under the Distribution Plan or upon receipt
of a CDSC. Any such additional consideration or incentive program may be
terminated at any time by Stephens.

How The Funds Value Their Shares

Portfolio securities for which market quotations are readily available are
valued at market value. Short-term investments that will mature in 60 days or
less are valued at amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following procedures
approved by the Trustees.

<PAGE>
How Dividends And Distributions Are
Made; Tax Information

Investor C Shares of the Funds are eligible to receive dividends when declared,
provided however, that the purchase order for such shares is received at least
one day prior to the dividend declaration and such shares continue to be
eligible for dividends through and including the day before the redemption order
is executed.

The net asset value of Investor C Shares will be reduced by the amount of any
dividend or distribution. Certain Agents may provide for the reinvestment of
dividends in the form of additional Investor C Shares of the same class in the
same Fund. Dividends and distributions are paid in cash within five Business
Days of the end of the quarter to which the dividend relates. Dividends and
distributions payable to a shareholder are paid in cash within five Business
Days after a shareholder's complete redemption of his/her Investor C Shares.

TAX INFORMATION: Each Fund intends to qualify as a "regulated investment
company" under the Code. Such qualification relieves a Fund of liability for
Federal income tax on amounts distributed in accordance with the Code.

Corporate investors in a Fund may be entitled to the dividends-received
deduction on all or a portion of such Fund's dividends.

Substantially all of the Funds' net realized long-term capital gains will be
distributed at least annually. The Funds will generally have no tax liability
with respect to such gains, and the distributions will be taxable to
shareholders who are not exempt from Federal income taxes as long-term capital
gains, regardless of how long the shareholders have held such Funds' shares and
whether such gains are received in cash or reinvested in additional shares.

<PAGE>

be obtained from the Internal Revenue Service if withholding results in
overpayment of taxes. Federal law also requires the Funds to withhold 30% or the
applicable tax treaty rate from dividends paid to certain nonresident alien,
non-U.S. partnership and non-U.S. corporation shareholder accounts.

Appendix A -- Portfolio Securities

<PAGE>
swaps and swap-related products such as interest rate swaps, currency swaps,
caps, collars and floors.

If otherwise consistent with its investment objective and policies, certain
Funds may purchase securities that are not registered under the Securities Act
of 1933, as amended (the "1933 Act") but which can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the 1933 Act, or which
were issued under Section 4(2) of the 1933 Act. Any such security will not be
considered illiquid so long as it is determined by a Fund's Board of Trustees or
the Adviser, acting under guidelines approved and monitored by such Fund's
Board, after considering trading activity, availability of reliable price
information and other relevant information that an adequate trading market
exists for that security. To the extent that, for a period of time, qualified
institutional or other buyers cease purchasing such restricted securities
pursuant to Rule 144A or otherwise, the level of illiquidity of a Fund holding
such securities may increase during such period.

<PAGE>

WHEN-ISSUED, DELAYED DELIVERY AND FORWARD COMMITMENT SECURITIES: The purchase of
new issues of securities on a "when-issued," "delayed delivery" or "forward
commitment" basis occurs when the payment for and delivery of securities take
place at a future date. Because actual payment for and delivery of such
securities generally take place 15 to 45 days after the purchase date,
purchasers of such securities bear the risk that interest rates on debt
securities at the time of delivery may be higher or lower than those contracted
for on the security purchased.

23
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