NATIONS FUND TRUST, 485APOS, 1998-01-14

NATIONS FUND TRUST
485APOS, 1998-01-14

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As filed with the Securities and Exchange Commission
on January 14, 1997
Registration No. 2-97817; 811-4305

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Post-Effective Amendment No. 51 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 53 [X]

(Check appropriate box or boxes)
-----------------------
NATIONS FUND TRUST
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
--------------------------
Registrant's Telephone Number, including Area Code: (800) 321-7854
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With copies to:
Robert M. Kurucza, Esq. Carl Frischling, Esq.
Marco E. Adelfio, Esq. Kramer, Levin, Naftalis
Morrison & Foerster LLP & Frankel
2000 Pennsylvania Ave., N.W. 919 3rd Avenue
Suite 5500 New York, New York 10022
Washington, D.C. 20006

It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant [ ] on (date), pursuant
to Rule 485(b), or to Rule 485(b), or
[ ] 60 days after filing pursuant [ ] on (date) pursuant
to Rule 485(a), or to Rule 485(a).
[X] 75 days after filing pursuant to [ ] on (date) pursuant to
paragraph (a)(2) paragraph (a)(2) of Rule 485

If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE>

EXPLANATORY NOTE

This Post-Effective Amendment No. 51 to the Registration Statement of
Nations Fund Trust (the "Trust") is being filed in order to add two new Funds to
the Trust: Nations Kansas Intermediate Municipal Bond Fund and Nations Missouri
Intermediate Municipal Bond Fund.

<PAGE>

NATIONS FUND TRUST
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
Part A
Item No. Prospectus
- -------- ----------
<S> <C>
1. Cover Page ................................................ Cover Page

2. Synopsis .................................................. Expenses Summary

3. Condensed Financial
Information ................................................ Financial Highlights; How
Performance Is Shown
4. General Description of
Registrant ................................................. Cover Page; Objectives; How
Objectives Are Pursued; Organization
And History

5. Management of the Fund ..................................... How The Funds Are Managed

6. Capital Stock and Other
Securities ................................................. How To Buy Shares; How The
Funds Value Their Shares; How
Dividends And Distributions Are
Made; Tax Information
7. Purchase of Securities Being
Offered .................................................... Cover Page; How To Buy Shares

8. Redemption or Repurchase ................................... How To Redeem Shares; How To
Exchange Shares

9. Legal Proceedings .......................................... Organization And History

Part B
Item No.
- --------

10. Cover Page.................................................. Cover Page

11. Table of Contents........................................... Table of Contents

12. General Information and
History..................................................... Introduction

<PAGE>

13. Investment Objectives and
Policies.................................................... Additional Information on Fund
Investments

14. Management of the Registrant................................ Trustees And Officers

15. Control Persons and Principal
Holders of Securities....................................... Miscellaneous--Certain Record
Holders

16. Investment Advisory and Other Services...................... Investment Advisory, Administration,
Custody, Transfer Agency,
Shareholder Servicing,
Shareholder Administration And
Distribution Agreements

17. Brokerage Allocation ....................................... Fund Transactions and Brokerage--
General Brokerage Policy

18. Capital Stock and Other
Securities.................................................. Description Of Shares;
Investment Advisory, Administration,
Custody, Transfer Agency,
Shareholder Servicing And
Distribution Agreements
19. Purchase, Redemption and Pricing
of Securities Being Offered................................. Net Asset Value -- Purchases
And Redemptions; Distributor

20. Tax Status.................................................. Additional Information Concerning
Taxes

21. Underwriters................................................ Investment Advisory, Administration
Custody, Transfer Agency,
Shareholder Servicing,
Shareholder Administration And
Distribution Agreements

22. Calculation of Performance Data............................. Additional Information on
Performance

23. Financial Statements........................................ Independent Accountant and
Reports
<PAGE>

Part C
Item No. Other Information
- -------- -----------------

Information required to be included in
Part C is set forth under the appropriate
Item, so numbered, in Part C of this
Document
</TABLE>

<PAGE>

Prospectus

Primary A Shares
April , 1998

Nations Kansas Intermediate
Municipal Bond Fund

Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.

(Nations Funds Logo appears here)

<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

PRELIMINARY PROSPECTUS SUBJECT
TO COMPLETION DATED JANUARY 15, 1998

Prospectus

Primary A Shares Nations Kansas
April , 1998 Intermediate
Municipal Bond
Fund

This Prospectus describes Nations Kansas
Intermediate Municipal Bond Fund (the "Fund") of
Nations Fund Trust, an open-end management
investment company in the Nations Funds Family
("Nations Funds" or "Nations Funds Family"). This
Prospectus describes one class of shares of the Fund
-- Primary A Shares.

This Prospectus sets forth concisely the information
about the Fund 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 Funds
at its address or telephone number shown below. The
SAI for Nations Fund Trust, dated April , 1998, is
incorporated by reference in its entirety into this
Prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI, material
incorporated by reference in this Prospectus and
other information regarding registrants that file
electronically with the SEC. NationsBanc Advisors,
Inc. ("NBAI") is the investment adviser to the Fund.
TradeStreet Investment Associates, Inc.
("TradeStreet") is investment sub-adviser to the
Fund. As used herein the term "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.

For Fund information call:
1-800-765-2668
Nations Funds
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255

(Nations Funds Logo appears here)

<PAGE>
Table Of Contents

About The Prospectus Summary 3
Fund
Expenses Summary 4

Objective 5

How The Objective Is Pursued 5

How Performance Is Shown 7

How The Fund Is Managed 8

Organization And History 10

About Your How To Buy Shares 10
Investment
How To Redeem Shares 11

How To Exchange Shares 11

How The Fund Values Its Shares 12

How Dividends And Distributions Are Made;
Tax Information 12

Appendix A -- Portfolio Securities 14

Appendix B -- Description Of Ratings 18

No person has been authorized to give any
information or to make any representations not
contained in this Prospectus, or in the Fund's 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 Funds or its distributor. This Prospectus
does not constitute an offering by Nations Funds or
by the distributor in any jurisdiction in which such
offering may not lawfully be made.

<PAGE>
About The Fund

Prospectus Summary

(Bullet) Type of Company: Open-end management investment company.

(Bullet) Investment Objective and Policies:

(Bullet) Nations Kansas Intermediate Municipal Bond Fund's investment
objective is to seek high current income exempt from Federal and
Kansas state income taxes consistent with moderate fluctuation of
principal. The Fund invests in investment grade, intermediate-term
municipal securities.

(Bullet) Investment Adviser: NationsBanc Advisors, Inc. serves as the investment
adviser to the Fund. NBAI provides investment advice to more than 52
investment company portfolios in the Nations Funds Family. TradeStreet
Investment Associates, Inc. provides sub-advisory services to the Fund.
See "How The Fund Is Managed."

(Bullet) Dividends and Distributions: The Fund declares dividends daily and pays
them monthly. The 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 Fund, there is no assurance that it will be able to do
so. Investments in the Fund are not insured against loss of principal.
Investments by the Fund in debt securities are subject to interest rate
risk, which is the risk that increases in market interest rates will
adversely affect the Fund's investments in debt securities. The value
of the Fund's investments in debt securities, including U.S. Government
Obligations (as defined below), will tend to decrease when interest
rates rise and increase when interest rates fall. In general,
longer-term debt instruments tend to fluctuate in value more than
shorter-term debt instruments in response to interest rate movements.
In addition, debt securities which are not backed by the United States
Government are subject to credit risk, which is the risk that the
issuer may not be able to pay principal and/or interest when due.
Certain of the Fund's investments constitute derivative securities.
Certain types of derivative securities can, under certain
circumstances, significantly increase an investor's exposure to market
or other risks. Since the Fund invests primarily in securities issued
by entities located in a single state, the Fund is more susceptible to
changes in value due to political or economic changes affecting the
state or its subdivisions. For a discussion of these and other factors,
see "How The Objective Is Pursued -- Risk Considerations" and "Appendix
A -- Portfolio Securities."

(Bullet) Minimum Purchase: $250,000 minimum initial investment per
record holder. See "How To Buy Shares."

<PAGE>
Expenses Summary

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

PRIMARY A SHARES

<TABLE>
<CAPTION>
<S> <C>
Nations
Kansas
Intermediate
Municipal
Shareholder Transaction Expenses Bond Fund

Sales Load Imposed on Purchases None
Deferred Sales Load None
</TABLE>

Annual Fund Operating Expenses
(as a percentage of average net assets)

<TABLE>
<S> <C>
Management Fees (After Fee Waivers) .30%
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 Fund, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.

<TABLE>
<CAPTION>
<S> <C>
Nations
Kansas
Intermediate
Municipal
Bond Fund

1 Year $ 5
3 Years $16
</TABLE>

The purpose of the foregoing table 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 "Other Expenses"
figure contained in the above table is based on estimates. There is no assurance
that any fee waivers and/or reimbursements will continue. In particular, to the
extent other expenses are less than expected, waivers and/or reimbursements of
management fees, if any, may decrease. Shareholders will be notified of any
decrease that materially increases Total Operating Expenses. If fee waivers
and/or reimbursements are discontinued, the amounts contained in the "Examples"
above may increase. For more complete descriptions of the Fund's operating
expenses, see "How The Fund Is Managed."

Absent fee waivers and expense reimbursements, "Management Fees" and "Total
Operating Expenses" for Primary A Shares of the Fund would have been .50% and
.70%, respectively.

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>
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Objective

NATIONS KANSAS INTERMEDIATE MUNICIPAL BOND FUND: Nations Kansas Intermediate
Municipal Bond Fund's investment objective is to seek high current income exempt
from Federal and Kansas state income taxes consistent with moderate fluctuation
of principal. The Fund invests in investment grade, intermediate-term municipal
securities.

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How The Objective Is Pursued

NATIONS KANSAS INTERMEDIATE MUNICIPAL BOND FUND: Under normal market conditions,
at least 80% of the total net assets of the Fund will be invested in investment
grade obligations issued by or on behalf of states, territories, and possessions
of the United States, the District of Columbia, and their political
subdivisions, agencies, instrumentalities, and authorities, the interest on
which, in the opinion of counsel to the issuer or bond counsel, is exempt from
Federal income tax ("Municipal Securities"). In addition, at least 80% of the
Fund's total net assets will be invested in debt instruments, issued by or on
behalf of the state and its political subdivisions, agencies, instrumentalities
and authorities.

Under normal market conditions, the average dollar-weighted maturity of the Fund
is expected to be between three and 10 years and the duration is expected to be
between five and six years.

The Fund operates as a non-diversified fund (except to the extent
diversification is required for Federal income tax purposes).

Dividends paid by the Fund which are derived from interest attributable to
tax-exempt obligations of Kansas and its political subdivisions, agencies,
instrumentalities and authorities, as well as certain other governmental issuers
such as Puerto Rico, will be exempt from regular Federal and Kansas income tax.
Dividends derived from interest on obligations of other governmental issuers
will be exempt from regular Federal income tax, but generally will be
subject to Kansas income tax. (See "How Dividends And Distributions are Made;
Tax Information.") During normal market conditions and as a matter of
fundamental investment policy, the Fund will invest at least 80% of its total
net assets in obligations the interest on which will be exempt from regular
Federal and Kansas income tax.

Municipal Securities acquired by the Fund will be rated investment grade at the
time of purchase by at least one nationally recognized statistical rating
organization ("NRSRO") or, if unrated, determined by the Adviser to be of
comparable quality at the time of purchase to rated obligations that may be
acquired by the Fund. Obligations rated in the lowest of the top four investment
grade rating categories (E.G. rated "BBB" by S&P or "Baa" by Moody's) have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade debt obligations.
Subsequent to its purchase by the Fund, an issue of Municipal Securities may
cease to be rated or its rating may be reduced below the minimum rating required
for purchase by the Fund. The Adviser will consider such an event in determining
whether the Fund should continue to hold the obligation. See "Appendix B" below
for a description of these rating designations.

During temporary defensive periods, the Fund may invest in short-term taxable
and non-taxable obligations in such proportions as, in the opinion of the
Adviser, prevailing market or economic conditions warrant. Taxable obligations
that may be acquired by the Fund include repurchase agreements and short-term
debt securities. Under normal market conditions, the Fund's investments in
taxable obligations and private activity bonds, the interest on which may be
treated as a specific tax preference item under the Federal alternative minimum
tax, will not exceed 20% of its total net assets at the time of purchase.

GENERAL: The Fund may invest in certain specified derivative securities,
including: interest rate swaps, caps and floors for hedging purposes;
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. and
foreign exchange-traded financial futures and options thereon approved by the
Commodity Futures Trading Commission ("CFTC") for market exposure
risk-management. The Fund also may lend its portfolio securities to qualified
institutional investors and may invest in repurchase agreements, restricted,
private placement and other illiquid securities. Additionally, the Fund may
purchase securities issued by other investment companies, consistent with the
Fund's investment objective and policies. The Fund also may invest in
instruments issued by certain trusts,

<PAGE>
partnerships or other special purpose issuers, including pass-through
certificates representing participations in, or debt instruments backed by, the
securities and other assets owned by such issuers.

Certain government securities that have variable or floating interest rates or
demand, put or prepayment features may be deemed to have remaining maturities
shorter than their nominal maturities for purposes of determining the average
weighted maturity and duration of the Fund.

For more information concerning these and other investments in which the Fund
may invest and its investment practices, see "Appendix A."

Although changes in the value of securities subsequent to their acquisition are
reflected in the net asset value of the Fund's shares, such changes will not
affect the income received by the Fund from such securities. However, since
available yields vary over time, no specific level of income can ever be
assured. The dividends paid by the Fund will increase or decrease in relation to
the income received by the Fund from its investments, which will in any case be
reduced by the Fund's expenses before being distributed to the Fund's
shareholders.

PORTFOLIO TURNOVER: Generally, the Fund will purchase portfolio securities for
capital appreciation or investment income, or both, and not for short-term
trading profits. If the Fund's annual portfolio turnover rate exceeds 100%, it
may result in higher brokerage costs and possible tax consequences for the Fund
and its shareholders. 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 the Fund will not exceed 100%.

RISK CONSIDERATIONS: The value of the Fund's investments in debt securities,
including U.S. Government Obligations, will tend to decrease when interest rates
rise and increase when interest rates fall. In general, longer-term debt
instruments tend to fluctuate in value more than shorter-term debt instruments
in response to interest rate movements. In addition, debt securities that are
not backed by the United States Government are subject to credit risk, which is
the risk that the issuer may not be able to pay principal and/or interest when
due. Since the Fund invests primarily in securities issued by entities located
in a single state, the Fund is more susceptible to changes in value due to
political or economic changes affecting that state or its subdivisions.

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

INVESTMENT LIMITATIONS: The 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 the Fund's outstanding shares. Other investment limitations that
cannot be changed without such a vote of shareholders are described in the SAI.

The 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, provided that this limitation does not apply to investments in
obligations issued or guaranteed by the U.S. Government or its agencies and
instrumentalities.

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 25% of the value of the Fund's total
assets would be invested in the securities of one issuer, and with respect to
50% of the Fund's total assets, more than 5% of its assets would be invested in
the securities of one issuer.

Also, as a matter of fundamental policy, except during defensive periods, the
Fund will invest at least 80% of its total net assets in Municipal Securities
the interest on which is exempt from Federal income tax and the state income
tax. For purposes of these fundamental policies, private activity bonds are
included in the term "Municipal Securities" only if the interest paid thereon is
exempt from Federal income tax and not treated as a specific tax preference item
under the Federal alternative minimum tax.

The investment objective and policies of the Fund, unless otherwise specified,
are non-fundamental and may be changed without shareholder approval. If the
investment objective or policies of the Fund change, shareholders should
consider whether the Fund remains an appropriate investment in light of their
current position and needs.

<PAGE>
- --------------------------------------------------------------------------------
How Performance Is Shown

From time to time the Fund may advertise the total return and yield on a class
of shares. The Fund also may advertise the tax-equivalent yield of a class of
shares. TOTAL RETURN, YIELD AND TAX-EQUIVALENT YIELD FIGURES ARE BASED ON
HISTORICAL DATA AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total
return" of a class of shares of the 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 the 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.

The "tax-equivalent yield" of the Fund also may be quoted from time to time,
which shows the level of taxable yield needed to produce an after-tax equivalent
to the Fund's tax-free yield. This is done by increasing the Fund's yield
(calculated as above) by the amount necessary to reflect the payment of Federal
income tax at a stated tax rate.

Set forth below is certain performance data for the Nations Kansas Common Trust
Fund (the "CTF"), which is currently managed on behalf of NationsBank by
TradeStreet. (Prior to the formation of TradeStreet in 1995, the CTF was managed
solely by NationsBank.) The performance data for the CTF is deemed relevant
because the Nations Kansas Common Trust Fund has investment objectives and
policies that are substantially similar to those of Nations Kansas Intermediate
Municipal Bond Fund. Moreover, the portfolio manager of TradeStreet (who
currently manages the CTF and the Fund) employs the same quantitative investment
process for the Fund that has, and continues to be, utilized for the CTF. THIS
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE OF THE CTF AND IS NOT NECESSARILY
INDICATIVE OF THE FUTURE PERFORMANCE OF THE CTF OR THE FUND.

AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED THROUGH DECEMBER 31, 1997

<TABLE>
<CAPTION>
---------- ----------
<S> <C> <C> <C> <C>
Since
One Three Five Inception
Year Year Year (12/31/ )
Nations Kansas
Common Trust
Fund*
- ----------------------------------------------------------------------------------
Lehman 7-Year
Municipal Bond
Index**
- ----------------------------------------------------------------------------------
Lipper Other States
Intermediate
Municipal Debt***
</TABLE>

ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
Lipper
Nations Lehman Other States
Kansas 7-Year Intermediate
Common Municipal Municipal
Year Trust Fund* Bond Index ** Debt***
<S> <C> <C> <C>
1989
- --------------------------------------------------------------------------
1990
- --------------------------------------------------------------------------
1991
- --------------------------------------------------------------------------
1992
- --------------------------------------------------------------------------
1993
- --------------------------------------------------------------------------
1994
- --------------------------------------------------------------------------
1995
- --------------------------------------------------------------------------
1996
- --------------------------------------------------------------------------
1997
</TABLE>

* The total returns above reflect the deduction of % of fees and expenses
per annum. The CTF is 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 CTF.

** The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged, total
return index composed of investment grade bonds with maturities of 7 to 8
years.

*** The Lipper Other States Intermediate Municipal Debt Funds Average includes
funds that invest in municipal debt issues with dollar-weighted average
maturities of 5 to 10 years and which are exempt from taxation on a
specified city or state basis.

Investment performance, which will vary, is based on many factors, including
market conditions, the composition of the Fund's portfolio and the Fund's
operating expenses. Investment performance also often reflects the risks
associated with the Fund's investment objective and policies. These factors
should be considered when comparing the 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 the Fund with bank
deposits, savings accounts, and similar investment alternatives

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

In addition to Primary A Shares, the Fund offers Investor A, Investor 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. Performance
quotations will be computed separately for each class of the Fund's shares. Any
fees charged by an institution directly to its customers' accounts in connection
with investments in the Fund will not be included in calculations of total
return or yield. The Fund's annual report contains additional performance
information and is available upon request without charge from the Fund's
distributor or an investor's Institution, as defined below or by calling Nations
Funds at the toll-free number indicated on the cover of this Prospectus.

- --------------------------------------------------------------------------------
How The Fund Is Managed

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

Nations Funds 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 Group on Personal Investing of the Investment Company
Institute.

INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as investment adviser to
the Fund. 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 Fund. 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 the Fund's investment policies, the Adviser formulates
guidelines and lists of approved investments for the Fund, makes decisions with
respect to and places orders for the 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 the Fund, 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, the Fund may invest in
securities of companies with which NationsBank has a lending relationship.

For the services provided and expenses assumed pursuant to the Investment
Advisory Agreement, NBAI is entitled to receive advisory fees, computed daily
and paid monthly, at the annual rate of .50% of the Fund's average daily net
assets.

For the services provided pursuant to a sub-advisory agreement, NBAI will pay
TradeStreet sub-advisory fees, computed daily and paid monthly, at the annual
rate of .07% of the Fund's average daily net assets.

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

Dawn Daggy-Mangerson is a Portfolio Manager, Municipal Fixed Income Management
for TradeStreet and is Portfolio Manager of Nations Kansas Intermediate
Municipal Bond Fund. Ms. Daggy-Mangerson has been Portfolio Manager of the Fund
since its inception. Prior to assuming her position with TradeStreet, she was a
Portfolio Manager for Boatmen's Trust Company since 1995. Ms. Daggy-Mangerson
has worked in the investment community since 1988. Her past experience also
includes portfolio management and trading for Stein Roe Farnham, a large
investment advisory firm. Ms. Daggy-Mangerson received a B.A. in Commerce and
Finance from DePaul University.

<PAGE>
tions 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 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 Funds pursuant to an Administration Agreement. Pursuant to the terms of
the Administration Agreement, Stephens provides various administrative and
corporate secretarial services to the Fund, 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 Fund.

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 Funds pursuant to a
Co-Administration Agreement. Under the Co-Administration Agreement, First Data
provides various administrative and accounting services to the Fund including
performing the calculations necessary to determine net asset value per share and
dividends, preparing tax returns and financial statements and maintaining the
portfolio records and certain of the general accounting records for the Fund.
For the services rendered pursuant to the Administration and Co-Administration
Agreements, Stephens and First Data are entitled to receive a combined fee at
the annual rate of up to 0.10% of the Fund's average daily net assets.

NationsBank serves as sub-administrator for Nations Funds 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 Fund's 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 Fund's average daily net
assets.

Shares of the Fund are sold on a continuous basis by Stephens, as the Fund's
sponsor and distributor. Stephens is a registered broker/dealer. Nations Funds
has entered into a distribution agreement with Stephens which provides that
Stephens has the exclusive right to distribute shares of the Fund. Stephens may
pay service fees or commissions to Institutions which assist customers in
purchasing Primary A Shares of the Fund.

NationsBank of Texas, N.A. ("NationsBank of Texas" and, collectively with The
Bank of New York ("BONY"), called "Custodians") serves as Custodian for the
assets of all Nations Funds, except the international portfolios. NationsBank of
Texas is located at 1401 Elm Street, Dallas, Texas 75202, and is a wholly owned
subsidiary of NationsBank Corporation. In return for providing custodial
services to the Nations Funds Family, NationsBank of Texas is entitled to
receive, in addition to out-of-pocket expenses, fees at the rate of (i) $300,000
per annum, to be paid monthly in payments of $25,000 for custodian services for
up to and including 50 Funds; and (ii) $6,000 per annum, to be paid in equal
monthly payments, for custodian services for each additional Fund above 50
Funds.

BONY has entered into an agreement with each of the Nations Funds and
NationsBank of Texas, whereby BONY will serve as sub-custodian ("Sub-Custodian")
for the assets of all Nations Funds except the international portfolios, for
which BONY is already serving as Custodian. BONY is located at 90 Washington
Street, New York, New York 10286. In return for providing sub-custodial
services, BONY receives, in addition to out of pocket expenses, fees at the rate
of (i) 3/4 of one basis point per annum on the aggregate net assets of all
Nations' Non-Money Market Funds up to $10 billion; and (ii) 1/2 of one basis
point on the excess, including all Nations' Money Market Funds.

First Data serves as transfer agent (the "Transfer Agent") for the Fund's
Primary Shares. The Transfer Agent is located at One Exchange Place, Boston,
Massachusetts 02109. NationsBank of Texas also serves as the sub-transfer agent
for the Fund's Primary Shares and is entitled to receive an annual fee of
$251,000 from First Data for performing such services.

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

EXPENSES: The accrued expenses of the 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, Stephens and First Data; taxes;
interest; fees (including fees paid to Nations Funds' trustees and officers);
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
Custodians 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, Stephens or First Data
under their respective agreements with Nations Funds; 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 deems appropriate.

<PAGE>
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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 Fund currently
offers four classes of shares -- Primary A Shares, Investor A Shares, Investor B
Shares and Investor C Shares. This Prospectus relates only to the Primary A
Shares of Nations Kansas Intermediate Municipal Bond Fund. To obtain additional
information regarding the Fund's other classes of shares which may be available
to you, contact your Institution (as defined below) or Nations Funds at
1-800-765-2668.

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 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
1940 Act requires voting by fund.

As of April , 1998, NationsBank and its affiliates possessed or shared power
to dispose or vote with respect to more than 25% of the outstanding shares of
Nations Fund Trust and therefore could be considered to be a controlling person
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 of $250,000 for each record holder; there
is no minimum subsequent investment.

Primary A Shares of the Fund may be sold to financial institutions (including
NationsBank and its affiliated and correspondent banks) and fee-based planners
acting on behalf of their customers, employee benefit plans, charitable
foundations, endowments and to other funds in the Nations Funds 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 of the Fund may be
effected on days on which the New York Stock Exchange (the "Exchange") is open
for business (a "Business Day").

Nations Funds and Stephens reserve the right to reject any purchase order. The
issuance of Primary A Shares is recorded on the books of the Fund, 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 in the Fund
which are received by Stephens or by the Transfer Agent before the close of
regular trading hours on the Exchange (currently 4:00

<PAGE>
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 Fund's 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 Funds.
Institutions should be aware that during periods of significant economic or
market change, telephone transactions may be difficult to complete.

- --------------------------------------------------------------------------------
How To Redeem Shares

With respect to the Fund, redemption proceeds are normally remitted in federal
funds wired to the redeeming Institution or investor within three Business Days
following receipt of the order.

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 Funds. No charge for wiring redemption
payments is imposed by Nations Funds, 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.

Nations Funds may redeem a shareholder's Primary A Shares if the balance in such
shareholder's account with the 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 the Fund to
the extent necessary to maintain the required minimum balance in such
Institution account. Nations Funds 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.

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How To Exchange Shares

The exchange feature enables a shareholder of Primary A Shares of the 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 Fund and each of the other funds of Nations Funds 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 Funds 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 Funds 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 Funds 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

<PAGE>
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, such 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.

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How The Fund Values Its 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 Fund 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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Veterans 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

Dividends from net investment income are declared daily and paid monthly by the
Fund. Dividends from net investment income are declared and paid each calendar
quarter by the Fund. The Fund's net realized capital gains (including net
short-term capital gains) are distributed at least annually.

Primary A Shares of the Fund are eligible to begin earning dividends that are
declared on the day the purchase order is executed and 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 in the Fund will be reduced by the
amount of any dividend or distribution. Accordingly, dividends and distributions
on newly purchased shares represent, in substance, a return of capital. However,
such dividends and distributions would nevertheless be taxable. Dividends and
distributions are paid in cash within five Business Days of the end of the month
or quarter to which the dividend relates. Dividends are paid within five
Business Days after the end of each month. Dividends are paid in the form of
additional Primary A Shares of the Fund unless the Customer or investor has
elected prior to the date of distribution to receive payment in cash. Such
election, or any revocation thereof, must be made in writing to the Fund's
Transfer Agent and will become effective with respect to dividends paid after
its receipt. 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 the Fund.

TAX INFORMATION

Dividends distributed from the Funds' net investment income attributable to
tax-exempt securities will not be subject to Federal income tax. To the extent
that the Fund earns taxable income or realizes capital gains, distributions to
shareholders from such sources will be subject to Federal income tax, regardless
of whether such distributions are paid in cash or reinvested in additional
shares. Distributions from the Fund's net capital gain are designated as capital
gain distributions and taxable to the Fund's shareholders as long-term capital
gain. Under the Tax Relief Act of 1997, noncorporate shareholders may be taxed
on such distributions at preferential rates. (See "Additional Information
Concerning Taxes -- Capital Gain Distributions" in the SAI.) Distributions will
generally be taxable when paid, whether you take such distributions in cash or
have them automatically reinvested in additional Fund shares. However,
distributions declared in October, November, and December and distributed by the
following January will be taxable as if they were paid by December 31.

Your redemptions (including redemptions in-kind) and exchanges of Fund
shares will ordinarily result in a taxable capital gain or loss, depending on
the amount you receive for your shares (or are deemed to receive in the case of
exchanges) and the cost of your shares. (See "Additional Information Concerning
Taxes -- Disposition of Fund Shares" in the SAI.)

In certain circumstances, U.S. residents may also be subject to backup
withholding. (See "Additional Information Concerning Taxes -- Backup
Withholding" in the SAI.)

<PAGE>

It is anticipated that dividends derived from interest paid on municipal
obligations of Kansas and its political subdivisions, agencies,
instrumentalities and authorities, and certain other issuers, including Puerto
Rico & Guam, will be exempt from Kansas income tax. See Nations Fund Trust's SAI
for further details about the Kansas tax treatment relevant to shareholders of
the Fund.

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.

In addition to annual disclosures as to Federal tax consequences of dividends
and distributions, shareholders will also be advised as to the Kansas tax
consequences of dividends and distributions made each year.

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

<PAGE>
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Appendix A -- Portfolio Securities

The following are summary descriptions of certain types of instruments in which
the Fund may invest. The "How The Objective Is Pursued" section of the
Prospectus identifies the 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 Fund will limit its investments in
bank obligations so they do not exceed 25% of the Fund's total assets at the
time of purchase.

U.S. dollar-denominated obligations issued by foreign branches of domestic banks
("Eurodollar" obligations) and domestic branches of foreign banks ("Yankee
dollar" obligations) and other foreign obligations involve special investment
risks, including the possibility that liquidity could be impaired because of
future political and economic developments, the obligations may be less
marketable than comparable domestic obligations of domestic issuers, a foreign
jurisdiction might impose withholding taxes on interest income payable on such
obligations, deposits may be seized or nationalized, foreign governmental
restrictions such as exchange controls may be adopted which might adversely
affect the payment of principal of and interest on such obligations, the
selection of foreign obligations may be more difficult because there may be less
publicly available information concerning foreign issuers, there may be
difficulties in enforcing a judgment against a foreign issuer or the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign issuers may differ from those applicable to domestic
issuers. In addition, foreign banks are not subject to examination by U.S.
Government agencies or instrumentalities.

BORROWINGS: When the Fund borrows money, the net asset value of a share may be
subject to greater fluctuation until the borrowing is paid off. The Fund may
borrow money from banks for temporary purposes in amounts of up to one-third of
its 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. Pursuant to line of credit arrangements, the Fund may borrow
primarily for temporary or emergency purposes, including the meeting of
redemption requests that otherwise might require the untimely disposition of
securities.

FIXED INCOME INVESTING: The performance of the fixed income debt component of
the Fund's portfolio depends primarily on interest rate changes, the average
weighted maturity of the portfolio and the quality of the securities held. The
debt component of the Fund's portfolio will tend to decrease in value when
interest rates rise and increase when interest rates fall. The Fund's share
price and yield depend, in part, on the maturity and quality of its debt
instruments.

FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS: The Fund may attempt to
reduce the overall level of investment risk of particular securities and attempt
to protect the 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 options on foreign
currencies, 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. or foreign 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 the 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, the 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. The 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.

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

<PAGE>
4(2) of the 1933 Act. Any such security will not be considered illiquid so long
as it is determined by the Fund's Board of Trustees or the Adviser, acting under
guidelines approved and monitored by the 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 the Fund holding such securities may increase during
such period.

INTEREST RATE TRANSACTIONS: In order to attempt to protect the value of its
portfolios from interest rate fluctuations, the Fund may enter into various
hedging transactions, such as interest rate swaps and the purchase or sale of
interest rate caps and floors. Interest rate swaps involve the exchange by the
Fund with another party of their respective commitments to pay or receive
interest, E.G., an exchange of floating-rate payments for fixed-rate payments.
The Fund will enter into a swap transaction on a net basis, I.E. the payment
obligations of the Fund and the counterparty will be netted out with the Fund
receiving or paying, as the case may be, only the net amount of the two payment
obligations. The Fund will segregate, on a daily basis, cash or liquid high
quality debt securities with a value at least equal to the Fund's net
obligations, if any, under a swap agreement.

The purchase of an interest rate cap entitles the purchaser, to the extent that
a specified index exceeds a predetermined interest rate, to receive payments of
interest on a notional principal amount from the party selling such interest
rate cap. The purchase of an interest rate floor entitles the purchaser to
receive payments of interest on a notional principal amount from the party
selling such interest rate floor. The Adviser expects to enter into these
transactions on behalf of the Fund primarily to preserve a return or spread on a
particular investment or portion of its portfolio or to protect against any
increase in the price of securities the Fund anticipated purchasing at a later
date rather than for speculative purposes. The Fund will not sell interest rate
caps or floors that it does not own.

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.

MUNICIPAL SECURITIES: The two principal classifications of Municipal Securities
are "general obligation" securities and "revenue" securities. General obligation
securities are secured by the issuer's pledge of its full faith, credit, and
taxing power for the payment of principal and interest. Revenue securities are
payable only from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or other
specific revenue source such as the user of the facility being financed. Private
activity bonds held by the Fund are in most cases revenue securities and are not
payable from the unrestricted revenues of the issuer. Consequently, the credit
quality of private activity bonds is usually directly related to the credit
standing of the corporate user of the facility involved.

Municipal Securities may include "moral obligation" bonds, which are normally
issued by special purpose public authorities. If the issuer of moral obligation
bonds is unable to meet its debt service obligations from current revenues, it
may draw on a reserve fund, the restoration of which is a moral commitment but
not a legal obligation of the state or municipality which created the issuer.

Municipal Securities may include variable- or floating-rate instruments issued
by industrial development authorities and other governmental entities. While
there may not be an active secondary market with respect to a particular
instrument purchased by the Fund, the Fund may demand payment of the principal
and accrued interest on the instrument or may resell it to a third party as
specified in the instruments. The absence of an active secondary market,
however, could make it difficult for the Fund to dispose of the instrument if
the issuer defaulted on its payment obligation or during periods the Fund is not
entitled to exercise its demand rights, and the Fund could, for these or other
reasons, suffer a loss.

Some of these instruments may be unrated, but unrated instruments purchased by
the Fund will be determined by the Adviser to be of comparable quality at the
time of purchase to instruments rated "high quality" by any major rating
service. Where necessary to ensure that an instrument is of comparable "high
quality," the Fund will require that an issuer's obligation to pay the principal
of the note may be backed by an unconditional bank letter or line of credit,
guarantee, or commitment to lend.

<PAGE>
however, may not have such a demand provision and may not be otherwise
marketable. To the extent these securities are illiquid, they will be subject to
the Fund's limitation on investments in illiquid securities. Recovery of an
investment in any such loan that is illiquid and payable on demand may depend on
the ability of the municipal borrower to meet an obligation for full repayment
of principal and payment of accrued interest within the demand period, normally
seven days or less (unless the Fund determines that a particular loan issue,
unlike most such loans, has a readily available market). As it deems
appropriate, the Adviser will establish procedures to monitor the credit
standing of each such municipal borrower, including its ability to meet
contractual payment obligations.

Municipal Securities may include units of participation in trusts holding pools
of tax-exempt leases. Municipal participation interests may be purchased from
financial institutions, and give the purchaser an undivided interest in one or
more underlying municipal security. To the extent that municipal participation
interests are considered to be "illiquid securities," such instruments are
subject to the Fund's limitation on the purchase of illiquid securities.
Municipal leases and participating interests therein which may take the form of
a lease or an installment sales contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities. Interest payments on qualifying leases are exempt from Federal
income taxes.

In addition, the Fund may acquire "stand-by commitments" from banks or
broker/dealers with respect to municipal securities held in its portfolio. Under
a stand-by commitment, a dealer would agree to purchase at the Fund's option
specified Municipal Securities at a specified price. The Fund will acquire
stand-by commitments solely to facilitate portfolio liquidity and does not
intend to exercise its rights thereunder for trading purposes.

Although the Fund does not presently intend to do so on a regular basis, it may
invest more than 25% of its total assets in Municipal Securities the interest on
which is paid solely from revenues of similar projects if such investment is
deemed necessary or appropriate by the Adviser. To the extent that more than 25%
of the Fund's total assets are invested in Municipal Securities that are payable
from the revenues of similar projects, the Fund will be subject to the peculiar
risks presented by such projects to a greater extent than it would be if its
assets were not so concentrated.

Since the Fund will invest primarily in securities issued by issuers located in
one state, the Fund is susceptible to changes in value due to political and
economic factors affecting that state's issuers. A comparable municipal bond
fund which is not concentrated in obligations issued by issuers located in one
state would be less susceptible to these risks. If any issuer of securities held
by the Fund is unable to meets its financial obligations, the Fund's income,
capital, and liquidity may be adversely affected.

Traditionally a farm-based economy, recent growth in the trade, services and
manufacturing sectors has decreased Kansas' strong dependence on agriculture. At
present, the Kansas economy has four major economic sectors (wholesale and
retail trade, manufacturing, services, and government) which employ from 16 to
24 percent of the labor force. Agriculture employed an estimated 4.7 percent of
the work force in 1994. The Kansas economy was characterized by strong
employment growth in the manufacturing and construction sectors in 1995,
exceeding the national average. In only three of the prior thirteen years had
the state average surpassed national job growth. Primary sources of state
revenue are a 4.9% sales tax, a corporate income tax between 4% and 7.35% and an
individual income tax between 3.5% and 7.75%. General property taxes generate a
large portion of local tax revenue. Local sales and use taxes have provided an
increased amount of revenue, from $30 million in 1980 to $307.9 million in 1994,
as voters in more cities and counties have elected to impose the tax or to raise
the tax rate to the maximum permitted by state law. As of March 1996, the State
had no long-term debt; therefore, there is no rating for Kansas general
obligation bonds. Certain certificates of participation issued by the State of
Kansas are rated A by Moody's and A+ by S&P.

There can be no assurance that the economic conditions on which the above
ratings are based will continue or that particular bond issues may not be
adversely affected by changes in economic or political conditions. More detailed
information about matters relating to the Fund is contained in Nations Fund
Trust's SAI.

OTHER INVESTMENT COMPANIES: The 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, the 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 the Fund bears directly in connection with its
own operations. Pursuant to an exemptive order issued by the SEC, the Nations'
Non-Money Market Funds may purchase shares of Nations' Money Market Funds.

REPURCHASE AGREEMENTS: A repurchase agreement involves the purchase of a
security by the 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
uninvested cash. A risk associated with repurchase agreements is the failure of
the seller to repurchase the securities as agreed, which may cause the 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 con-

<PAGE>
sidered illiquid securities and are subject to the limit stated above. The Fund
may enter into joint repurchase agreements jointly with other investment
portfolios of Nations Funds.

SECURITIES LENDING: To increase return on portfolio securities, the Fund may
lend its 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 their
judgment, the income to be earned from the loan justifies the attendant risks.
The aggregate of all outstanding loans of the Fund may not exceed 33% of the
value of its total assets. Cash collateral received by a Nations Fund may be
invested in a Nations' Money Market Fund.

STOCK INDEX, INTEREST RATE AND CURRENCY FUTURES CONTRACTS: The Fund may purchase
and sell futures contracts and related options with respect to non-U.S. stock
indices, non-U.S. interest rates and foreign currencies, that have been approved
by the CFTC for investment by U.S. investors, for the purpose of hedging against
changes in values of the Fund's securities or changes in the prevailing levels
of interest rates or currency exchange rates. The contracts entail certain
risks, including but not limited to the following: no assurance that futures
contracts transactions can be offset at favorable prices; possible reduction of
the Fund's total return due to the use of hedging; possible lack of liquidity
due to daily limits on price fluctuation; imperfect correlation between the
contracts and the securities or currencies being hedged; and potential losses in
excess of the amount invested in the futures contracts themselves.

Trading on foreign commodity exchanges presents additional risks. Unlike trading
on domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the CFTC and may be subject to greater risks than trading on
domestic exchanges. For example, some foreign exchanges are principal markets
for which no common clearing facility exists and a trader may look only to the
broker for performance of the contract. In addition, unless the Fund hedges
against fluctuations in the exchange rate between the U.S. dollar and the
currencies in which trading is done on foreign exchanges, any profits that the
Fund might realize could be eliminated by adverse changes in the exchange rate,
or the Fund could incur losses as a result of those changes.

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.

VARIABLE- AND FLOATING-RATE INSTRUMENTS: Certain instruments issued, guaranteed
or sponsored by the U.S. Government or its agencies, state and local government
issuers, and certain debt instruments issued by domestic banks and corporations
may carry variable or floating rates of interest. Such instruments bear interest
rates which are not fixed, but which vary with changes in specified market rates
or indices, such as a Federal Reserve composite index. A variable-rate demand
instrument is an obligation with a variable or floating interest rate and an
unconditional right of demand on the part of the holder to receive payment of
unpaid principal and accrued interest. An instrument with a demand period
exceeding seven days may be considered illiquid if there is no secondary market
for such security.

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>
- --------------------------------------------------------------------------------
Appendix B -- Description Of Ratings

The following summarizes the highest four ratings used by S&P for corporate and
municipal bonds, each of which denotes that the securities are investment grade.

AAA -- This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay principal.

AA -- Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in a small
degree.

A -- Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher-rated
categories.

BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for those in
higher-rated categories.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.

The following summarizes the highest four ratings used by Moody's for corporate
and municipal bonds,each of which denotes that the securities are investment
grade.

Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.

Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.

A -- Bonds that are rated A possess many favorable investment attributes
and are to be considered upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Baa -- Bonds that are rated Baa are considered medium grade obligations,
I.E., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Moody's applies numerical modifiers (1, 2 and 3) with respect to corporate bonds
rated Aa through B. The modifier 1 indicates that the bond being rated ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category. With regard to municipal bonds, those bonds
in the Aa, A and Baa groups which Moody's believes possess the strongest
investment attributes are designated by the symbols Aa1, A1 or Baa1,
respectively.

The following summarizes the highest four ratings used by D&P for bonds, each of
which denotes that the securities are investment grade:

AAA -- Bonds that are rated AAA are of the highest credit quality. The risk
factors are considered to be negligible, being only slightly more than for
risk-free U.S. Treasury debt.

AA -- Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest, but may vary slightly from time to time
because of economic conditions.

A -- Bonds that are rated A have protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.

BBB -- Bonds that are rated BBB have below average protection factors but
still are considered sufficient for prudent investment. Considerable
variability in risk exists during economic cycles.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major categories.

The following summarizes the highest four ratings used by Fitch for bonds, each
of which denotes that the securities are investment grade:

AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an

<PAGE>
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.

AA -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.

A -- Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to
be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds
with higher ratings.

The following summarizes the two highest ratings used by Moody's for short-term
municipal notes and variable-rate demand obligations:

MIG-1/VMIG-1 -- Obligations bearing these designations are of the best
quality, enjoying strong protection from established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

MIG-2/VMIG-2 -- Obligations bearing these designations are of high quality,
with ample margins of protection although not so large as in the preceding
group.

The following summarizes the two highest ratings used by S&P for short-term
municipal notes:

SP-1 -- Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given
a "plus" (+) designation.

SP-2 -- Satisfactory capacity to pay principal and interest.

The three highest rating categories of D&P for short-term debt, each of which
denotes that the securities are investment grade, are D-1, D-2 and D-3. D&P
employs three designations, D-1+, D-1 and D-1-, within the highest rating
category. D-1+ indicates highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of funds, is judged to be "outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations." D-1 indicates very high
certainty of timely payment. Liquidity factors are excellent and supported by
good fundamental protection factors. Risk factors are considered to be minor.
D-1- indicates high certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are very
small. D-2 indicates good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small. D-3 indicates satisfactory liquidity and other protection factors which
qualify the issue as investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.

The following summarizes the three highest rating categories used by Fitch for
short-term obligations, each of which denotes securities that are investment
grade:

F-1+ securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1 securities possess very strong credit quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less in degree
than issues rated F-1+.

F-2 securities possess good credit quality. Issues carrying this rating
have a satisfactory degree of assurance for timely payment, but the margin
of safety is not as great as for issues assigned the F-1+ and F-1 ratings.

Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.

The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of senior short-term promissory
obligations. Issuers rated Prime-2 (or related supporting institutions) are
considered to have a strong capacity for repayment of senior short-term
promissory obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

<PAGE>
D&P uses the short-term ratings described above for commercial paper.

Fitch uses the short-term ratings described above for commercial paper.

BankWatch ratings are based upon a qualitative and quantitative analysis of all
segments of the organization including, where applicable, holding company and
operating subsidiaries. BankWatch ratings do not constitute a recommendation to
buy or sell securities of any of these companies. Further, BankWatch does not
suggest specific investment criteria for individual clients.

BankWatch long-term ratings apply to specific issues of long-term debt and
preferred stock. The long-term ratings specifically assess the likelihood of
untimely payment of principal or interest over the term to maturity of the rated
instrument. The following are the four investment grade ratings used by
BankWatch for long-term debt:

AAA -- The highest category; indicates ability to repay principal and
interest on a timely basis is extremely high.

AA -- The second highest category; indicates a very strong ability to repay
principal and interest on a timely basis with limited incremental risk
versus issues rated in the highest category.

A -- The third highest category; indicates the ability to repay principal
and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with
higher ratings.

BBB -- The lowest investment grade category; indicates an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however,
more vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.

The BankWatch short-term ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned. The BankWatch short-term ratings specifically assess
the likelihood of an untimely payment of principal or interest.

TBW-1 -- The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.

TBW-2 -- The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree
of safety is not as high as for issues rated "TBW-1".

TBW-3 -- The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest
in a timely fashion is considered adequate.

TBW-4 -- The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.

The following summarizes the four highest long-term ratings used by IBCA:

AAA -- Obligations for which there is the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk significantly.

AA -- Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions
may increase investment risk albeit not very significantly.

A -- Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong, although
adverse changes in business, economic or financial conditions may lead to
increased investment risk.

BBB -- Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial
conditions are more likely to lead to increased investment risk than for
obligations in other categories.

A plus or minus sign may be appended to a rating below AAA to denote relative
status within major rating categories.

The following summarizes the three highest short-term debt ratings used by IBCA:

A1+ -- Where issues possess a particularly strong credit feature.

A1 -- Obligations supported by the highest capacity for timely repayment.

A2 -- Obligations supported by a good capacity for timely repayment.

<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

PRELIMINARY PROSPECTUS SUBJECT
TO COMPLETION DATED JANUARY 15, 1998
Prospectus

INVESTOR A SHARES
Nations Kansas
APRIL , 1998 Intermediate
Municipal Bond
Fund

This Prospectus describes Nations Kansas
Intermediate Municipal Bond Fund
(the "Fund") of Nations Fund Trust, an
open-end management invest
ment company in the Nations Funds Family ("Nations
Funds" or "Nations Funds Family"). This Prospectus
describes one class of shares of the
Fund -- Investor A Shares.

This Prospectus sets forth concisely the
information about the Fund that prospective
purchasers 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 Funds at its address or
telephone number shown below. The SAI dated April
, 1998 is incorporated by reference in its
entirety into this Prospectus. The SEC maintains a
Web site (http://www.sec.gov) that contains the
SAI, material incorporated by reference in this
Prospectus and other information regarding
registrants that file electronically with the SEC.
NationsBanc Advisors, Inc. ("NBAI") is the
investment adviser to the Fund. TradeStreet
Investment Associates, Inc. ("TradeStreet") is
investment sub-adviser to the Fund. As used herein
the term "Adviser" shall mean NBAI and/or
TradeStreet as the context may require.

THESE SECURITIES HAVE NOT BEEN APPROVED OR For Fund information call:
DISAPPROVED BY THE SECURITIES AND EXCHANGE 1-800-321-7854
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR Nations Funds
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY c/o Stephens Inc.
STATE SECURITIES COMMISSION PASSED UPON THE One NationsBank Plaza
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY 33rd Floor
REPRESENTATION TO THE CONTRARY IS A CRIMINAL Charlotte, NC 28255
OFFENSE.
(logo appears here.)

64642A

<PAGE>
Table Of Contents

Prospectus Summary 3
About The
Fund
Expenses Summary 4

Objective 6

How The Objective Is Pursued 6

How Performance Is Shown 8

How The Fund Is Managed 10

Organization And History 12

How To Buy Shares 13
About Your
Investment
How To Redeem Shares 15

How To Exchange Shares 17

Shareholder Servicing And Distribution Plan 18

How The Fund Values Its Shares 19

How Dividends And Distributions Are Made;
Tax Information 19

Appendix A -- Portfolio Securities 21

Appendix B -- Description Of Ratings 26

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S 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 FUNDS OR ITS DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
NATIONS FUNDS OR BY THE DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

<PAGE>
About The Fund

Prospectus Summary

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

(Bullet) INVESTMENT OBJECTIVE AND POLICIES:

(BULLET) TAX-EXEMPT FUND:

(BULLET) Nations Kansas Intermediate Municipal Bond Fund's investment
objective is to seek high current income exempt from Federal and
Kansas state income taxes consistent with moderate fluctuation of
principal. The Fund invests in investment grade, intermediate-term
municipal securities.

(Bullet) INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as the investment
adviser to the Fund. NBAI provides investment advice to more than 52
investment company portfolios in the Nations Funds Family. TradeStreet
Investment Associates, Inc. provides sub-advisory services to the Fund.
See "How The Fund Is Managed."

(Bullet) DIVIDENDS AND DISTRIBUTIONS: The Fund declares dividends daily and pays
them monthly. The 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 Fund, there is no assurance that it will be able to do
so. Investments in the Fund are not insured against loss of principal.
Investments by the Fund in debt securities are subject to interest rate
risk, which is the risk that increases in market interest rates will
adversely affect the Fund's investments in debt securities. The value
of the Fund's investments in debt securities, including U.S. Government
Obligations (as defined below), will tend to decrease when interest
rates rise and increase when interest rates fall. In general,
longer-term debt instruments tend to fluctuate in value more than
shorter-term debt instruments in response to interest rate movements.
In addition, debt securities which are not backed by the United States
Government are subject to credit risk, which is the risk that the
issuer may not be able to pay principal and/or interest when due.
Certain of the Fund's investments constitute derivative securities.
Certain types of derivative securities can, under certain
circumstances, significantly increase an investor's exposure to market
or other risks. Since the Fund invests primarily in securities issued
by entities located in a single state, the Fund is more susceptible to
changes in value due to political or economic changes affecting the
state or its subdivisions. For a discussion of these and other factors,
see "How The Objective Is Pursued -- Risk Considerations" and "Appendix
A -- Portfolio Securities."

(Bullet) MINIMUM PURCHASE: $1,000 minimum initial investment per record holder
except that the minimum initial investment is $100 for investors
participating on a monthly basis in the Systematic Investment Plan. 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 Fund. The
following table summarizes shareholder transaction and operating expenses for
the Investor A Shares of the Fund. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in Investor A Shares of the
Fund over specified periods.

INVESTOR A SHARES

<TABLE>
<CAPTION>
<S> <C>
Nations Kansas
Intermediate
Municipal Bond
SHAREHOLDER TRANSACTION EXPENSES Fund

Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (as a percentage of the lower of the original purchase price
or redemption proceeds) None
Redemption Fees Payable to the Fund (1) 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (After Fee Waivers) .30%
Rule 12b-1 Fees (including shareholder servicing fees) (After Fee Waivers) .20%
Other Expenses .20%
Total Operating Expenses (After Fee Waivers) .70%
</TABLE>

1 There is a 1% redemption fee retained by the Fund or Funds which is imposed
only on certain redemptions of Investor A Shares held less than 18 months. See
"How To Redeem Shares -- Redemption Fee."

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

<TABLE>
<CAPTION>
<S> <C>
Nations Kansas
Intermediate
Municipal
Bond Fund

1 Year $ 7
3 Years $ 22
</TABLE>

The purpose of the foregoing table is to assist an investor in understanding the
various shareholder transaction and operating expenses that an investor in
Investor A Shares of the Fund will bear either directly or indirectly. The
"Other Expenses" figure in the above table for Investor A Shares of the Fund are
based on estimated amounts for the Fund's current fiscal year and reflect
anticipated fee waivers and reimbursements. There is no assurance that any fee
waivers and/or reimbursements will continue. In particular, to the extent other
expenses are less than expected, waivers and/or reimbursements of management
fees, if any, may decrease. Shareholders will be notified of any decrease that
materially increases Total Operating Expenses. If fee waivers and/or
reimbursements are discontinued, the amounts contained in the "Examples" above
may increase. For more complete descriptions of the Fund's operating expenses,
see "How The Fund Is Managed." For a more complete description of the Rule 12b-1
and shareholder servicing fees payable by the Fund, see "Shareholder Servicing
And Distribution Plan."

Absent fee waivers, "Management Fees," "Rule 12b-1 Fees" and "Total Operating
Expenses" for Investor A Shares of the Fund would have been .50%, .25% and .95%,
respectively.

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.

<PAGE>
Objective

Although the Adviser will seek to achieve the investment objective of the 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. The net asset value of the shares of the Fund will fluctuate based on
market conditions. Therefore, investors should not rely upon the Fund for
short-term financial needs, nor is the Fund meant to provide a vehicle for
participating in short-term swings in the stock market. Investments in the Fund
are not insured against loss of principal.

How The Objective Is Pursued

Under normal market conditions, the average dollar-weighted maturity of the Fund
is expected to be between three and 10 years and the duration is expected to be
between five and six years.

The Fund operates as a non-diversified fund (except to the extent
diversification is required for Federal income tax purposes).

Dividends paid by the Fund which are derived from interest attributable to
tax-exempt obligations of Kansas and its political subdivisions, agencies,
instrumentalities and authorities, as well as certain other governmental issuers
such as Puerto Rico, will be exempt from regular Federal and Kansas income tax.
Dividends derived from interest on obligations of other governmental issuers
will be exempt from regular Federal income tax, but generally will be subject to
Kansas income tax. (See "How Dividends And Distributions Are Made; Tax
Information.") During normal market conditions and as a matter of fundamental
investment policy, each of these Funds will invest at least 80% of its total net
assets in obligations the interest on which will be exempt from regular Federal
and Kansas income tax.

<PAGE>
likely to lead to a weakened capacity to make principal and interest payments
than is the case with higher grade debt obligations. Subsequent to its purchase
by the Fund, an issuer of Municipal Securities may cease to be rated, or its
rating may be reduced below the minimum rating required for purchase by the
Fund. The Adviser will consider such an event in determining whether the Fund
should continue to hold the obligation. See "Appendix B" below for a description
of these rating designations.

GENERAL: The Fund may invest in certain specified derivative securities,
including: interest rate swaps, caps and floors for hedging purposes;
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. and
foreign exchange-traded financial futures and options thereon approved by the
Commodity Futures Trading Commission ("CFTC") for market exposure risk
management. The Fund also may lend its portfolio securities to qualified
institutional investors and may invest in repurchase agreements, restricted,
private placement and other illiquid securities and may purchase securities
issued by other investment companies, consistent with the Fund's investment
objective and policies. The Fund also may invest in instruments issued by
certain trusts, partnerships or other special purpose issuers, including
pass-through certificates representing participations in, or debt instruments
backed by, the securities and other assets owned by such issuers.

Certain government securities that have variable or floating interest rates or
demand, put or prepayment features or paydown schedules may be deemed to have
remaining maturities shorter than their nominal maturities for purposes of
determining the average weighted maturity and duration of the Fund.

For more information concerning these and other investments in which the Fund
may invest and the Fund's investment practices, see "Appendix A."

<PAGE>
more susceptible to changes in value due to political or economic changes
affecting that state or its subdivisions.

Certain of the Fund's investments 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 Fund's Adviser, however, only purchases derivative
securities in circumstances where it believes such purchases are consistent with
the 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 Fund may not:

2. Make loans, except that the 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 25% of the value of the Fund's total
assets would be invested in the securities of one issuer, and with respect to
50% of the Fund's total assets, more than 5% of its assets would be invested in
the securities of one issuer.

As a matter of fundamental policy, except during defensive periods, the Fund
will invest at least 80% of its total net assets in Municipal Securities the
interest on which is exempt from Federal income taxes and the state income
taxes. For purposes of these fundamental policies, private activity bonds are
included in the term "Municipal Securities" only if the interest paid thereon is
exempt from Federal income tax and not treated as a specific tax preference item
under the Federal alternative minimum tax.

The investment objective and policies of the Fund, unless otherwise specified,
may be changed without shareholder approval. If the investment objective or
policies of the Fund change, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current positions and
needs.

How Performance Is Shown

From time to time the Fund may advertise the total return and yield on a class
of shares. The Fund may also advertise the tax-equivalent yield of a class of
shares. TOTAL RETURN, YIELD AND TAX EQUIVIALENT YIELD FIGURES ARE BASED ON
HISTORICAL DATA AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total
return" of a class of shares of the 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

<PAGE>
ten-year periods or the life of the 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.

The "tax-equivalent yield" of the Fund also may be quoted from time to time,
which shows the level of taxable yield needed to produce an after-tax equivalent
to the particular class's tax-free yield. This is done by increasing such
class's yield (calculated as above) by the amount necessary to reflect the
payment of Federal income tax at a stated tax rate.
Set forth below is certain performance data for the Nations Kansas Common Trust
Fund (the "CTF"), which is currently managed on behalf of NationsBank by
TradeStreet. (Prior to the formation of TradeStreet in 1995, the CTF was managed
solely by NationsBank.) The performance data for the CTF is deemed relevant
because the Nations Kansas Common Trust Fund has investment objectives and
policies that are substantially similar to those of Nations Kansas Intermediate
Municipal Bond Fund. Moreover, the portfolio manager of TradeStreet (who
currently manages the CTF and the Fund) employs the same quantitative investment
process for the Fund that has, and continues to be, utilized for the CTF. THIS
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE OF THE CTF AND IS NOT NECESSARILY
INDICATIVE OF THE FUTURE PERFORMANCE OF THE CTF OR THE FUND.

AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED THROUGH DECEMBER 31, 1997

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Since
One Three Five Inception
Year Year Year (12/31/ )
Nations Kansas
Common Trust
Fund*
Lehman
7-Year
Municipal Bond
Index**
Lipper Other
States
Intermediate
Municipal Debt***
</TABLE>

ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Nations Lehman Lipper
Kansas 7-Year Other States
Common Municipal Bond Intermediate
Year Trust Fund* Index** Municipal Debt***

1989
1990
1991
1992
1993
1994
1995
1996
1997
</TABLE>

** The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged, total
return index composed of investment grade bonds with maturities of 7 to 8
years.

<PAGE>
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of the Fund's portfolio and the Fund's
operating expenses. Investment performance also often reflects the risks
associated with the Fund's investment objective and policies. These factors
should be considered when comparing the 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 the 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 Investor A Shares, the Fund offers Primary A Shares, Investor B
Shares 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 Fund's shares. Any fees charged by a selling agent and/or servicing agent
directly to its customers' accounts in connection with investments in the Fund
will not be included in calculations of total return or yield. The Fund's annual
report contains additional performance information and is available upon request
without charge from the Fund's distributor or your Agent (as defined below) or
by calling Nations Funds at the toll-free number indicated on the cover of this
Prospectus.

How The Fund Is Managed

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

INVESTMENT ADVISER: NationsBanc Advisors, Inc., serves as investment adviser to
the Fund. 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 sub-investment
adviser to the Fund. 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 the Fund's investment policies, the Adviser formulates
guidelines and lists of approved investments for the Fund, makes decisions with
respect to and places orders for the 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 the Fund, 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, the Fund may invest in
securities of companies with which NationsBank has a lending relationship.

<PAGE>
For the services provided and expenses assumed pursuant to the Investment
Advisory Agreement, NBAI is entitled to receive advisory fees, computed daily
and paid monthly, at the annual rate of .50% of the Fund's average daily net
assets.

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

Morrison & Foerster LLP, counsel to Nations Funds and special counsel to
NationsBank, has advised Nations Funds 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 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 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
the Fund pursuant to an Administration Agreement. Pursuant to the terms of the
Administration Agreement, Stephens provides various administrative and corporate
secretarial services to the Fund, 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 Fund.

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 the Fund pursuant to a
Co-Administration Agreement. Under the Co-Administration Agreement, First Data
provides various administrative and accounting services to the Fund, including
performing calculations necessary to determine net asset values and dividends,
preparing tax returns and financial statements and maintaining the portfolio
records and certain general accounting records for the Fund. For the services
rendered pursuant to the Administration and Co-Administration Agreements,
Stephens and First Data are entitled to receive a combined fee at the annual
rate of up to .10% of the Fund's average daily net assets.

<PAGE>
rate of .01% of the Fund's average daily net assets.

Shares of the Fund are sold on a continuous basis by Stephens, as the Fund's
sponsor and distributor. Stephens is a registered broker/dealer. Nations Funds
has entered into a distribution agreement with Stephens which provides that
Stephens has the exclusive right to distribute shares of the Fund. Stephens may
pay service fees or commissions to selling agents that assist customers in
purchasing Investor A Shares of the Fund. See "Shareholder Servicing And
Distribution Plans."

BONY has entered into an agreement with each of the Nations Funds and
NationsBank of Texas, N.A., whereby BONY will serve as sub-custodian
("Sub-Custodian") for the assets of all Nations Funds except the international
portfolios, for which BONY is already serving as Custodian. BONY is located at
90 Washington Street, New York, New York 10286. In return for providing
sub-custodial services, BONY receives, in addition to out of pocket expenses,
fees at the rate of (i) 3/4 of one basis point per annum on the aggregate net
assets of all Nations' Non-Money Market Funds up to $10 billion; and (ii) 1/2 of
one basis point on the excess, including all Nations' Money Market Funds.

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

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

EXPENSES: The accrued expenses of the Fund, as well as certain expenses
attributable to Investor A Shares, are deducted from accrued income before
dividends are declared. The Fund's expenses include, but are not limited to:
fees paid to the Adviser, Stephens and First Data; interest; trustees' fees and
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, Stephens or First Data under
their respective agreements with Nations Funds; and any extraordinary expenses.
Investor A Shares may bear certain class specific 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 bear to the assets of Nations Fund
Trust, or in such other manner as the Board of Trustees deems appropriate.

<PAGE>
Organization And History

The Fund is a member of the Nations Funds Family, which consists of Nations Fund
Trust, Nations Fund, Inc., Nations Fund Portfolios, Inc., Nations Institutional
Reserves and Nations LifeGoal Funds, Inc. The Nations Funds Family currently has
more than 52 distinct investment portfolios and total assets in excess of $30
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 Fund currently
offers four classes of shares -- Primary A Shares, Investor A Shares, Investor B
Shares and Investor C Shares. This Prospectus relates only to the Investor A
Shares of Nations Kansas Intermediate Municipal Bond Fund. To obtain additional
information regarding the Fund's other classes of shares which may be available
to you, contact your Agent (as defined below) or Nations Funds at
1-800-321-7854.

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 of shares. See the SAI for examples of instances where
the Investment Company Act of 1940 (the "1940 Act") requires voting by fund.

About Your Investment

How To Buy Shares

Investor A Shares are available to the following categories of Investors:

(Bullet) Investors who purchase through accounts established with certain
fee-based investment advisers or financial planners, including Nations
Funds Personal Investment Planner accounts, wrap fee accounts and
other managed agency/asset allocation accounts.

<PAGE>
(Bullet) Directors, officers and employees of NationsBank Corporation, its
affiliates and subsidiaries.

(Bullet) Individuals investing a distribution received from a NationsBank trust
account and certain other rollovers or distributions received from
NationsBank fiduciary accounts.

(Bullet) Current Investor A Shareholders (other than Investor A Shareholders
who own such shares exclusively through a cash sweep option) who
purchased Investor A Shares prior to August 1, 1997.

(Bullet) Investors (other than those described above) investing $1 million or
more in the Nations Funds Family through an Agent (as defined below)
(a "Substantial Investor"). In determining whether an investor
qualifies as a Substantial Investor, all current holdings of Funds in
the Nations Funds Family other than the Nations Funds money market or
index funds, Nations Short-Term Income Fund and Nations Short-Term
Municipal Income Fund, will be considered.

Purchase orders for Investor A Shares may be placed directly with the 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 Funds ("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."

Purchases of Investor A Shares through a Nations Funds Personal Investment
Planner account, which is a managed agency/asset allocation account established
with NBAI (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 the Fund, except that the
minimum initial investment is $100 for investors participating on a monthly
basis in the Systematic Investment Plan described below.

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

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

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

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

BY WIRE: Investors should call Nations Funds at 1-800-321-7854 for an account
number and use the following wire instructions:

Nations Funds
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.

ADDITIONAL PURCHASES: Additional purchases may be made by mail or wire. To
purchase additional shares by mail, send a check made payable to the 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 Fund
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
Fund's 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 Funds.

SYSTEMATIC INVESTMENT PLAN: Under the Fund's Systematic Investment Plan ("SIP")
a 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 the last day of the applicable month. Subject
to certain exceptions for employees of NationsBank and its affiliates and pre-
existing SIP accounts, the systematic investment amount may be in any amount
from $50 to $100,000. For more information concerning the SIP, contact your
Agent or Nations Funds.

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 Funds will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, and if Nations Funds and its service providers fail to
employ such measures, they may be liable for any losses due to unauthorized or
fraudulent instructions. Nations Funds 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 Funds reserves the right to record all
telephone conversations. Shareholders should be aware that during periods of
significant economic or market change, telephone transactions may be difficult
to complete.

<PAGE>
How To Redeem Shares

For shareholders who open and maintain an account directly with the Fund,
redemption orders should be communicated to the Fund by calling Nations Funds at
1-800-321-7854 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 the 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 remitted in
federal funds wired to the redeeming Agent or investor 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 the 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 Funds. There is no redemption charge.

Nations Funds 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 Funds also
may redeem shares of the Fund 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 Funds have previously been
made. Nations Funds may require any additional information reasonably necessary
to evidence that a redemption has been duly authorized.

REINSTATEMENT PRIVILEGE: Within 120 days after a redemption of Investor A Shares
of the Fund, a shareholder may reinvest any portion of the proceeds of such
redemption in Investor A Shares of the 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 A Shares must be
received by the Transfer Agent or by Stephens within 120 days after the
redemption.

REDEMPTION FEE: A redemption fee of 1% of the current net asset value will be
assessed on certain Investor A Shares purchased after July 31, 1997 and redeemed
within 18 months of the date of purchase by a Substantial Investor. In addition,
a 1% redemption fee will be assessed on Investor A Shares purchased after such
date by an employee benefit plan that (i) made its initial investment after such
date and (ii) redeemed such shares within 18 months of purchase in connection
with a complete liquidation of such plan's holdings in the Nations Funds Family.
This fee is retained by the Fund for the benefit of the remaining shareholders
and is intended to encourage long-term investment in the Fund and to avoid
transaction and other expenses associated with short-term investments. The

16
<PAGE>

Fund reserves the right to modify the terms of or terminate this fee at any
time.

AUTOMATIC WITHDRAWAL PLAN: An Automatic Withdrawal Plan ("AWP") may be
established by a new or existing shareholder of the Fund if the value of the
Investor A Shares in his/her accounts within the Nations Funds 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 Funds at any time.

How To Exchange Shares

The exchange feature enables a shareholder of a fund of Nations Funds to acquire
shares of the same class that are offered by another fund (other than an index
fund) of Nations Funds 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 the Fund, exchange
requests should be communicated to the Fund by calling Nations Funds at
1-800-321-7854 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 Funds 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. 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 Funds and Stephens reserve 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.

If Investor A Shares are exchanged for shares of the same class of another fund,
any redemption fee applicable to the original shares purchased will be assessed
upon the redemption of the
17
<PAGE>

acquired shares. The holding period of such shares (for purposes of determining
whether a redemption fee is applicable) will be computed from the time of the
initial purchase of the Investor A Shares of a Fund, except that the holding
period will not accrue while the shares owned are Investor A Shares of Nations
Short-Term Municipal Income Fund, Nations Short-Term Income Fund or a Nations
Funds money market fund. If a redemption fee ultimately is charged, it will be
retained by the initial Fund purchased.

AUTOMATIC EXCHANGE FEATURE: Under the Fund's 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 Funds to another as allowed by the applicable exchange rules within the
prospectus. Exchanges will occur on or about the 15th or the last 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 Nations
Funds.

Shareholder Servicing And Distribution
Plan

The Fund's Shareholder Servicing and Distribution Plan (the "Investor A Plan"),
adopted pursuant to Rule 12b-1 under the 1940 Act, permits the Fund 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 Fund, provided that the
annual rate may not exceed 0.25% of the average daily net asset value of the
Investor A Shares of the Fund.

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 Fund
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 Funds 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.

GENERAL: 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 Fund 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 offering
price per share on all sales of Investor A Shares as an expense of Stephens

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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 Fund
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 Funds 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 Agreements and Sales Support
Agreements. See the SAI for more details on the Investor A Plan.

Nations Funds 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 Funds 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 Funds. The Sales
Support Agreements and Servicing Agreements require Agents to disclose to their
Customers any compensation payable to the Agent by Stephens or Nations Funds 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 Fund Values Its Shares

The Fund calculates 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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Veterans 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.

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How Dividends And Distributions Are
Made; Tax Information

DIVIDENDS AND DISTRIBUTIONS: The Fund declares dividends daily and pays them
monthly. Distributions from capital gains are made after applying any available
capital loss carryovers. Distributions paid by the Fund with respect to one
class of shares may be greater or less than those paid with respect to another
class of shares due to the different expenses of the different classes.

The net asset value of Investor A Shares will be reduced by the amount of any
dividend or distribution. Accordingly, dividends and distributions on newly
purchased shares represent, in substance, a return of capital. However, such
dividends and distributions would nevertheless be taxable. Certain Selling or
Servicing Agents may provide for the reinvestment of dividends in the form of
additional Investor A Shares of the same class of the Fund. Dividends and
distributions are paid in cash within five Business Days of the end of the month
or 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: Dividends distributed from the Funds' net investment income
attributable to tax-exempt securities will not be subject to Federal income tax.
To the extent that the Fund earns taxable income or realizes capital gains,
distributions to shareholders from such sources will be subject to Federal
income tax, regardless of whether such distributions are paid in cash or
reinvested in additional shares. Distributions from the Fund's net capital gain
are designated as capital gain distributions and taxable to the Fund's
shareholders as long-term capital gain. Under the Tax Relief Act of 1997,
noncorporate shareholders may be taxed on such distributions at preferential
rates. (See "Additional Information Concerning Taxes -- Capital Gain
Distributions" in the SAI.) Distributions will generally be taxable when paid,
whether you take such distributions in cash or have them automatically
reinvested in additional Fund shares. However, distributions declared in
October, November, and December and distributed by the following January will be
taxable as if they were paid by December 31.

In certain circumstances, U.S. residents may also be subject to backup
withholding. (See "Additional Information Concerning Taxes -- Backup
Withholding" in the SAI.)

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It is anticipated that dividends derived from interest paid on municipal
obligations of Kansas and its political subdivisions, agencies,
instrumentalities, and authorities, and certain other issuers, including Puerto
Rico and Guam, will be exempt from Kansas income tax. See the SAI for further
details about the Kansas tax treatment relevant to shareholders of the Fund.

In addition to annual disclosures as to Federal tax consequences of dividends
and distributions, shareholders of Nations Kansas Intermediate Municipal Bond
Fund will also be advised as to the Kansas tax consequences of dividends and
distributions made each year.

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 Fund and its shareholders.
It is not intended as a substitute for careful tax planning. Accordingly,
potential investors should consult their own tax advisors with specific
reference to their own tax situations. Further tax information is contained in
the SAI.

Appendix A -- Portfolio Securities

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may be adopted which might adversely affect the payment of principal of and
interest on such obligations, the selection of foreign obligations may be more
difficult because there may be less publicly available information concerning
foreign issuers, there may be difficulties in enforcing a judgment against a
foreign issuer or the accounting, auditing and financial reporting standards,
practices and requirements applicable to foreign issuers may differ from those
applicable to domestic issuers. In addition, foreign banks are not subject to
examination by U.S. Government agencies or instrumentalities.

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will not be considered illiquid so long as it is determined by the Fund's Board
of Trustees or the Adviser, acting under guidelines approved and monitored by
the 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 the
Fund holding such securities may increase during such period.

INTEREST RATE TRANSACTIONS: In order to attempt to protect the value of its
portfolio from interest rate fluctuations, the Fund may enter into various
hedging transactions, such as interest rate swaps and the purchase or sale of
interest rate caps and floors. Interest rate swaps involve the exchange by the
Fund with another party of their respective commitments to pay or receive
interest, E.G., an exchange of floating-rate payments for fixed-rate payments.
The Fund will enter into a swap transaction on a net basis, I.E. the payment
obligations of the Fund and the counterparty will be netted out with the Fund
receiving or paying, as the case may be, only the net amount of the two payment
obligations. The Fund will segregate, on a daily basis, cash or liquid high
quality debt securities with a value at least equal to the Fund's net
obligations, if any, under a swap agreement.

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periods the Fund is not entitled to exercise its demand rights, and the Fund
could, for these or other reasons, suffer a loss.

Municipal Securities may include participations in privately arranged loans to
municipal borrowers, some of which may be referred to as "municipal leases."
Generally such loans are unrated, in which case they will be determined by the
Adviser to be of comparable quality at the time of purchase to rated instruments
that may be acquired by the Fund. Frequently, privately arranged loans have
variable interest rates and may be backed by a bank letter of credit. In other
cases, they may be unsecured or may be secured by assets not easily liquidated.
Moreover, such loans in most cases are not backed by the taxing authority of the
issuers and may have limited marketability or may be marketable only by virtue
of a provision requiring repayment following demand by the lender. Such loans
made by the Fund may have a demand provision permitting the Fund to require
payment within seven days. Participations in such loans, however, may not have
such a demand provision and may not be otherwise marketable. To the extent these
securities are illiquid, they will be subject to the Fund's limitation on
investments in illiquid securities. Recovery of an investment in any such loan
that is illiquid and payable on demand may depend on the ability of the
municipal borrower to meet an obligation for full repayment of principal and
payment of accrued interest within the demand period, normally seven days or
less (unless the Fund determines that a particular loan issue, unlike most such
loans, has a readily available market). As it deems appropriate, the Adviser
will establish procedures to monitor the credit standing of each such municipal
borrower, including its ability to meet contractual payment obligations.

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located in one state would be less susceptible to these risks. If any issuer of
securities held by the Fund is unable to meets its financial obligations, the
Fund's income, capital, and liquidity may be adversely affected.

STOCK INDEX, INTEREST RATE AND CURRENCY FUTURES CONTRACTS: The Fund may purchase
and sell futures contracts and related options

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with respect to non-U.S. stock indices, non-U.S. interest rates and foreign
currencies, that have been approved by the CFTC for investment by U.S.
investors, for the purpose of hedging against changes in values of the Fund's
securities or changes in the prevailing levels of interest rates or currency
exchange rates. The contracts entail certain risks, including but not limited to
the following: no assurance that futures contracts transactions can be offset at
favorable prices; possible reduction of the Fund's total return due to the use
of hedging; possible lack of liquidity due to daily limits on price fluctuation;
imperfect correlation between the contracts and the securities or currencies
being hedged; and potential losses in excess of the amount invested in the
futures contracts themselves.

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Appendix B -- Description Of Ratings

The following summarizes the highest four ratings used by S&P for corporate and
municipal bonds, each of which denotes that the securities are investment grade.

AAA -- This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay principal.

AA -- Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in a small
degree.

The following summarizes the highest four ratings used by Moody's for corporate
and municipal bonds,each of which denotes that the securities are investment
grade.

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standing investment characteristics and in fact have speculative
characteristics as well.

generic rating category. With regard to municipal bonds, those bonds in the Aa,
A and Baa groups which Moody's believes possess the strongest investment
attributes are designated by the symbols Aa1, A1 or Baa1, respectively.

The following summarizes the highest four ratings used by D&P for bonds, each of
which denotes that the securities are investment grade:

AAA -- Bonds that are rated AAA are of the highest credit quality. The risk
factors are considered to be negligible, being only slightly more than for
risk-free U.S. Treasury debt.

AA -- Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest, but may vary slightly from time to time
because of economic conditions.

A -- Bonds that are rated A have protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.

BBB -- Bonds that are rated BBB have below average protection factors but
still are considered sufficient for prudent investment. Considerable
variability in risk exists during economic cycles.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major categories.

The following summarizes the highest four ratings used by Fitch for bonds, each
of which denotes that the securities are investment grade:

AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

The following summarizes the two highest ratings used by Moody's for short-term
municipal notes and variable-rate demand obligations:

MIG-2/VMIG-2 -- Obligations bearing these designations are of high quality,
with ample margins of protection although not so large as in the preceding
group.

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The following summarizes the two highest ratings used by S&P for short-term
municipal notes:

SP-1 -- Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given
a "plus" (+) designation.

SP-2 -- Satisfactory capacity to pay principal and interest.

The following summarizes the three highest rating categories used by Fitch for
short-term obligations, each of which denotes securities that are investment
grade:

F-1+ securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1 securities possess very strong credit quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less in degree
than issues rated F-1+.

D&P uses the short-term ratings described above for commercial paper.

Fitch uses the short-term ratings described above for commercial paper.

BankWatch long-term ratings apply to specific issues of long-term debt and
preferred stock. The long-term ratings specifically assess the likelihood of
untimely payment of principal or inter-

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est over the term to maturity of the rated instrument. The following are the
four investment grade ratings used by BankWatch for long-term debt: