NATIONS FUND INC, 485APOS, 1997-02-07

NATIONS FUND INC
485APOS, 1997-02-07

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As filed with the Securities and Exchange Commission
on February 7, 1997
Registration No. 33-4038; 811-4614
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]

Post-Effective Amendment No. 32 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]

.. Amendment No. 33 [X]

(Check appropriate box or boxes)
------------------------
NATIONS FUND, INC.
(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., Suite 5500 919 Third Avenue
Washington, D.C. 20006 New York, New York 10022

It is proposed that this filing will become effective (check appropriate box):
<TABLE>
<CAPTION>

<S> <C>

[ ] Immediately upon filing pursuant to Rule 485(b); or [ ] on (date), pursuant to Rule
485(b), or
[ ] 60 days after filing pursuant to Rule 485(a), or [ ] on (date) pursuant to Rule
485(a)
[X] 75 days after filing pursuant to paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of
Rule 485
</TABLE>

If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number of shares of its Common
Stock, $.001 par value, under the Securities Act of 1933, pursuant to Rule 24f-2
under the Investment Company Act of 1940, as amended. The Registrant filed the
notice required by Rule 24f-2 for its most recent fiscal period ended March 31,
1996 on May 24, 1996.

<PAGE>

EXPLANATORY NOTE

This Post-Effective Amendment No. 32 to the Registration Statement of
Nations Fund, Inc. (the "Company") is being filed to register five classes of
shares for three new portfolios to the Company-Nations International Growth
Fund, Nations Small Company Growth Fund, and Nations U.S. Government Bond Fund
("New Funds"). Certain classes of the New Funds will be the successor funds to
corresponding portfolios of The Pilot Funds (SEC File Nos. 2-78440 and
811-3517), subject to shareholder approval in accordance with the Agreement and
Plan of Reorganization by and between The Pilot Funds and the Company.

<PAGE>

NATIONS FUND, INC.
CROSS REFERENCE SHEET

Part A
Item No. Prospectus

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.....Directors 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 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 -- The
Company And Its Common Stock

19. Purchase, Redemption and Pricing
of Securities Being Offered......Net Asset Value -- Purchases
And Redemptions

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

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

<PAGE>

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

23. Financial Statements.............Independent Accountant And
Reports

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

<PAGE>

Prospectus

PRIMARY A SHARES
MAY , 1997

NATIONS INTERNATIONAL GROWTH FUND

NATIONS SMALL COMPANY GROWTH FUND

NATIONS U.S. GOVERNMENT BOND FUND

(Nations Funds Logo appears here)

INVESTMENT ADVISER: NationsBanc Advisors, Inc.
INVESTMENT SUB-ADVISERS: Kleinwort Benson
Investment Management Americas Inc.
Boatmen's Trust Company
DISTRIBUTOR: Stephens Inc.

<PAGE>
Prospectus

PRIMARY A SHARES
MAY , 1997

This Prospectus describes NATIONS INTERNATIONAL
GROWTH FUND, NATIONS
SMALL COMPANY GROWTH FUND and NATIONS U.S.
GOVERNMENT BOND
FUND (the "Funds") of Nations Fund, Inc., 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 each Fund --
Primary A Shares.
This Prospectus sets forth concisely the information
about each 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, Inc. is contained in
a separate Statement of Additional Information (the
"SAI"), that has been filed with the Secur
ities 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, Inc.,
dated May , 1997, is incorporated by reference in
its entirety into this Prospectus. NationsBanc
Advisors, Inc. ("NBAI") is investment adviser to the
Funds. Kleinwort Benson Investment Management
Americas Inc. ("Kleinwort Benson") is investment
sub-adviser to Nations International Growth Fund,
and Boatmen's Trust Company ("Boatmen's") is
investment sub-adviser to Nations Small Company
Growth Fund and Nations U.S. Government Bond Fund.
As used herein the term "Adviser" shall mean NBAI,
Kleinwort Benson and/or Boatmen's as the context may
require.

SHARES OF NATIONS FUNDS ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR ISSUED, ENDORSED OR GUARANTEED
BY, NATIONSBANK, N.A. ("NATIONSBANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN THE FUNDS
INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.

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

Nations International
Growth Fund
Nations Small
Company Growth
Fund
Nations U.S.
Government Bond
Fund

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

(Nations Funds logo
appears here)

<PAGE>
Table Of Contents

Prospectus Summary 3
About The
Funds
Expenses Summary 4

Financial Highlights 5

Objectives 8

How Objectives Are Pursued 8

How Performance Is Shown 11

How The Funds Are Managed 12

Organization And History 14

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

How To Exchange Shares 16

How The Funds Value Their Shares 16

How Dividends And Distributions Are Made;
Tax Information 17

Appendix A -- Portfolio Securities 18

Appendix B -- Description Of Ratings 24

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
NATIONS 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 Funds

Prospectus Summary

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

(Bullet) INVESTMENT OBJECTIVES AND POLICIES:

(Bullet) Nations International Growth Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
companies domiciled in countries outside the United States and listed
on major stock exchanges primarily in Europe and the Pacific Basin.

(Bullet) Nations Small Company Growth Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities.

(Bullet) Nations U.S. Government Bond Fund's investment objective is to seek
total return and preservation of capital by investing in U.S.
Government securities and repurchase agreements.

(Bullet) INVESTMENT ADVISER: NBAI serves as the investment adviser to the Funds.
NBAI provides investment advice to more than 50 investment company
portfolios in the Nations Funds Family. Kleinwort Benson provides
sub-advisory services to Nations International Growth Fund, and
Boatmen's provides sub-advisory services to Nations Small Company
Growth Fund and Nations U.S. Government Bond Fund. See "How The Funds
Are Managed."

(Bullet) DIVIDENDS AND DISTRIBUTIONS: Nations International Growth Fund and
Nations Small Company Growth Fund declare and pay dividends from net
investment income quarterly and Nations U.S. Government Bond Fund
declares dividends daily and pays them monthly. Each Fund's net
realized capital gains, including net short-term capital gains, are
distributed at least annually.

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

Nations International Growth Fund is designed for long-term investors
seeking international diversification and who are willing to bear the
risks associated with international investing, such as foreign currency
fluctuations and economic and political risks. For a discussion of
these factors, see "How Objectives Are Pursued -- Special Risk
Considerations Relevant to an Investment in the Nations International
Growth Fund."

(Bullet) MINIMUM PURCHASE: $500,000 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 Funds. The
following tables summarize shareholder transaction and operating expenses for
Primary A Shares of the Funds. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in the Funds over specified
periods.

PRIMARY A SHARES
<TABLE>
<CAPTION>
<S> <C> <C>
Nations Nations
International Small Company
Growth Fund Growth Fund

SHAREHOLDER TRANSACTION EXPENSES

Sales Load Imposed on Purchases None None
Deferred Sales Load None None

<CAPTION>
Nations
U.S. Government
Bond Fund
SHAREHOLDER TRANSACTION EXPENSES
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> <C>
Management Fees (After Fee Waivers) .90% .75%
All Other Expenses .22% .20%
Total Operating Expenses (After Fee Waivers) 1.12% .95%

<CAPTION>
<S> <C>
Management Fees (After Fee Waivers) .40%
All Other Expenses .20%
Total Operating Expenses (After Fee Waivers) .60%
</TABLE>

EXAMPLES: You would pay the following expenses on a $1,000 investment in Primary
A Shares of the indicated Fund, assuming (1) a 5% annual return and (2)
redemption at the end of each time period.
<TABLE>
<CAPTION>
<S> <C> <C>
Nations Nations
International Small Company
Growth Fund Growth Fund

1 Year $ 11 $ 10
3 Years $ 36 $ 30
5 Years $ 62 $ 53
10 Years $ 136 $ 117

<CAPTION>
Nations
U.S. Government
Bond Fund
1 Year $ 6
3 Years $ 19
5 Years 33
10 Years $ 75
</TABLE>

The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Primary A Shares will bear either directly or indirectly. The figures in the
above tables are based on amounts incurred during each Fund's most recent fiscal
year and have been adjusted as necessary to reflect current service provider
fees. There is no assurance that any fee waivers and reimbursements will
continue beyond the current fiscal year. If fee waivers and/or reimbursements
are discontinued, the amounts contained in the "Examples" above may increase.
Absent fee waivers, "Management Fees" and "Total Operating Expenses" for the
following Funds would have been as follows: Nations Small Company Growth
Fund -- 1.00% and 1.20%, respectively; and Nations U.S. Government Bond
Fund -- .60% and .80%, respectively. For more complete descriptions of the
Funds' operating expenses, see "How The Funds Are Managed."

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>
Financial Highlights

The following information for Primary A Shares of Nations International Growth
Fund, Nations Small Company Growth Fund and Nations U.S. Government Bond Fund
has been derived from the Financial Highlights in the January 2, 1997
Prospectuses for the Pilot Shares of The Pilot Funds' Pilot International Equity
Fund, Pilot Small Capitalization Equity Fund and Pilot U.S. Government
Securities Fund, the predecessor Funds to the current Nations Funds listed
above. This information has been audited by Arthur Andersen LLP. This
information is provided to help you understand the historical performance of the
Funds and their predecessors. This information should be read in conjunction
with the predecessor Funds' annual financial statements and the respective notes
thereto, which are incorporated by reference into the SAI.

NATIONS INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR YEAR YEAR
ENDED ENDED ENDED
PRIMARY A SHARES (FORMERLY PILOT SHARES) 08/31/96 08/31/95 08/31/94
Operating performance:
Net asset value at the beginning of the period $ 16.24 $ 16.34 $ 14.14
Net investment income $ 0.18 $ 0.13(g) $ 0.11(g)
Net realized and unrealized capital gain/(loss) on investments $ 1.61 $ (0.22)(g) $ 1.65(g)
Net realized and unrealized gain/(loss) on foreign currency related
transactions (a) $ (0.13) $ 0.39(g) $ 0.59(g)
Total income (loss) from investments $ 1.66 $ 0.30 $ 2.35
Dividends from net investment income $ (0.46) $ (0.11) --
Dividends from net realized gain on investments and foreign currency
related transactions $ (0.39) $ (0.29) $ (0.15)
Net asset value at the end of the period $ 17.05 $ 16.24 $ 16.34
Total return (b) 10.64% 2.08% 16.75%
Portfolio turnover rate (h) 22.31% 35.91% 35.40%
Ratio of expenses to average net assets 1.08% 1.18% 1.12%
Ratio of net investment income (loss) to average net assets 0.69% 0.82% 0.75%
Net assets at end of period (in 000's) $ 579,019 $ 363,212 $ 307,561
Average Commission Rate (i) $0.0160

<CAPTION>
EIGHT
MONTHS
ENDED
PRIMARY A SHARES (FORMERLY PILOT SHARES) 08/31/93 (c)
Operating performance:
Net asset value at the beginning of the period $ 13.15
Net investment income $ (0.01)(g)
Net realized and unrealized capital gain/(loss) on investments $ 1.10(g)
Net realized and unrealized gain/(loss) on foreign currency related
transactions (a) $ (0.10)(g)
Total income (loss) from investments $ 0.99
Dividends from net investment income --
Dividends from net realized gain on investments and foreign currency
related transactions --
Net asset value at the end of the period $ 14.14
Total return (b) 7.53%(d)
Portfolio turnover rate (h) 26.65%(d)(f)
Ratio of expenses to average net assets 1.31%(e)
Ratio of net investment income (loss) to average net assets (0.56)%(e)
Net assets at end of period (in 000's) $ 195,548
Average Commission Rate (i)
</TABLE>

(a) For years preceding the fiscal year ended August 31, 1993, net realized and
unrealized gain/(losses) from foreign currency related transactions were
included in net realized and unrealized gain/(losses) from investments.
Effective January 1, 1993, realized and unrealized gain/(losses) from
foreign currency related transactions are disclosed separately from net
realized and unrealized gain/(losses) from investments.

(d) Not annualized.

(e) Annualized.

(f) Calculated on a portfolio-wide level and excludes the transfer of assets
effective on August 6, 1993.

(g) Calculated based on the average shares outstanding methodology.

(h) Portfolio turnover is calculated on the basis of the portfolio as a whole
without distinguishing between the classes of shares issued and is not
annualized.

(i) The average commission rate represents the total dollar amount of
commissions paid on portfolio transactions, for the time period of May 4,
1996 to August 31, 1996, divided by the total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for prior periods.

<PAGE>
NATIONS SMALL COMPANY GROWTH FUND
<TABLE>
<CAPTION>
<S> <C>
PRIMARY A SHARES (FORMERLY PILOT SHARES)
Operating performance:
Net asset value at the beginning of the period
Net investment income
Net realized and unrealized gain on investments and futures
Total income from investment operations
Dividends from net investment income
Net asset value at the end of the period
Total return (b)
Ratio of expenses to average net assets (c)
Ratio of net investment income to average net assets (c)
Portfolio turnover rate (e)
Net assets at end of period (in 000's)
Ratio of expenses to average net assets (assuming no waivers or expense reimbursements)
Ratio of net investment income to average net assets (assuming no waivers or expense reimbursements)
Average Commission Rate (d)

<CAPTION>
PERIOD

ENDED

PRIMARY A SHARES (FORMERLY PILOT SHARES) 08/31/96(a)
Operating performance:
Net asset value at the beginning of the period $ 10.00
Net investment income $ 0.09
Net realized and unrealized gain on investments and futures $ 0.64
Total income from investment operations $ 0.73
Dividends from net investment income $ (0.08)
Net asset value at the end of the period $ 10.65
Total return (b) 7.37%
Ratio of expenses to average net assets (c) 1.00%
Ratio of net investment income to average net assets (c) 1.06%
Portfolio turnover rate (e) 31%
Net assets at end of period (in 000's) $ 70,483
Ratio of expenses to average net assets (assuming no waivers or expense reimbursements) 1.54%(c)
Ratio of net investment income to average net assets (assuming no waivers or expense reimbursements) 0.52%(c)
Average Commission Rate (d) $.0340

</TABLE>

(a) Share activity commenced December 12, 1995.
(b) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no sales
charges. Total return is not annualized.
(c) Annualized.
(d) The average commission rate represents the total dollar amount of
commissions paid on portfolio transactions, for the time period of May 4,
1996 to August 31, 1996, divided by the total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for prior periods.
(e) Portfolio turnover is calculated on the basis of the portfolio as a whole
without distinguishing between the classes of shares issued.

<PAGE>
NATIONS U.S. GOVERNMENT BOND FUND
<TABLE>
<CAPTION>
<S> <C>
PERIOD
ENDED
PRIMARY A SHARES (FORMERLY PILOT SHARES) 08/31/96
Operating performance:
Net asset value at the beginning of the period $ 11.20
Net investment income $ 0.61
Net realized and unrealized gain on investment transactions $ (0.22)
Total income from investment operations $ 0.39
Dividends from net investment income $ (0.61)
Dividends from net realized gains $ (0.45)
Net asset value at the end of the period $ 10.53
Total return (b) 3.46%
Ratio of expenses to average net assets 0.65%
Ratio of net investment income to average net assets 5.61%
Portfolio turnover rate (d) 87%
Net assets at end of period (in 000's) $ 145,066
Ratio of expenses to average net assets (assuming no waiver or expense reimbursements) 0.82%
Ratio of net investment income to average net assets (assuming no waiver or expense reimbursements) 5.44%

<CAPTION>
PERIOD

ENDED

PRIMARY A SHARES (FORMERLY PILOT SHARES) 08/31/95(a)
Operating performance:
Net asset value at the beginning of the period $ 10.00
Net investment income $ 0.56
Net realized and unrealized gain on investment transactions $ 1.20
Total income from investment operations $ 1.76
Dividends from net investment income $ (0.56)
Dividends from net realized gains --
Net asset value at the end of the period $ 11.20
Total return (b) 18.03%
Ratio of expenses to average net assets 0.62%(c)
Ratio of net investment income to average net assets 6.45%(c)
Portfolio turnover rate (d) 132%
Net assets at end of period (in 000's) $ 137,621
Ratio of expenses to average net assets (assuming no waiver or expense reimbursements) 0.87%(c)
Ratio of net investment income to average net assets (assuming no waiver or expense reimbursements) 6.20%(c)

</TABLE>

(a) Pilot share activity commenced November 7, 1994.

(b) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no sales
charges. Total return is not annualized.

(d) Portfolio turnover is calculated on the basis of the portfolio as a whole
without distinguishing between the classes of shares issued.

<PAGE>
Objectives

NATIONS INTERNATIONAL GROWTH FUND: Nations International Growth Fund's
investment objective is to seek long-term capital growth by investing primarily
in equity securities of companies domiciled in countries outside the United
States and listed on major stock exchanges primarily in Europe and the Pacific
Basin.

NATIONS SMALL COMPANY GROWTH FUND: Nations Small Company Growth Fund's
investment objective is to seek long-term capital growth by investing primarily
in equity securities.

NATIONS U.S. GOVERNMENT BOND FUND: Nations U.S. Government Bond Fund's
investment objective is to seek total return and preservation of capital by
investing in U.S. Government securities and repurchase agreements.

How Objectives Are Pursued

NATIONS INTERNATIONAL GROWTH FUND: In pursuing its investment objective, the
Fund will invest at least 65% of its total assets in foreign equity securities,
including securities convertible into equity securities and securities which are
listed on major stock exchanges, under normal circumstances. The Fund may
purchase the stock of small, mid- and large capitalization companies.

The Fund may invest up to 35% of its total assets in securities of issuers
domiciled in developing countries. These countries are generally located in
Eastern Europe, the Asia-Pacific region, Latin and South America, Africa and,
subject to approval by the Board of Directors, the former Soviet Union and the
Middle East. Debt securities, if any, purchased by the Fund will be rated in the
top two categories by a nationally recognized statistical rating organization
("NRSRO"), or, if unrated, determined by the Adviser to be of comparable
quality. For temporary defensive purposes, the Fund may invest up to 100% of its
assets in debt and equity securities of U.S. issuers. Debt securities in which
the Fund may invest include short-term and intermediate-term obligations of
corporations, foreign governments and international organizations (such as the
International Bank for Reconstruction and Development (the "World Bank")),
including money market instruments.

The Fund may invest in common stocks (including securities convertible into
common stocks) of foreign issuers and rights to purchase common stock, options
and futures contracts on securities, securities indexes and foreign currencies,
securities lending, forward foreign exchange contracts and repurchase
agreements. For more information concerning these and other permissible Fund
investments, see "Appendix A".

NATIONS SMALL COMPANY GROWTH FUND: In pursuing its investment objective, the
Fund will invest at least 65% of its total assets in equity securities,
including securities convertible into equity securities, under normal
circumstances. In addition, the Fund will invest at least 65% of its total
assets in companies with a market capitalization of $1 billion or less.

In making investment decisions for the Fund, the Adviser, on a quarterly basis,
classifies approximately 6,000 companies by market value and eliminates the
largest 20%. The remaining companies constitute the Fund's small-capitalization
universe and generally represent only one-tenth of the aggregate U.S. equity
market capitalization. Due to the large number of small stocks to choose from,
the Adviser's selection process uses advanced quantitative techniques to
identify, buy and sell candidates in a timely and objective manner. The strategy
is to own those investments offering both attractive fundamental valuation and
relatively good prospects for earnings improvement. Typically, two types of
companies are candidates for purchase: (i) mature companies which may have
fallen from a larger market due to business difficulties, but which now exhibit
improving prospects; and (ii) smaller or younger companies which are
experiencing strong trends in earnings growth, but remain reasonably valued and
therefore offer premium growth at a discount in comparison to other companies.

The Adviser's internally designed investment approach uses a sophisticated
valuation process which measures changes in current earnings estimates and
longer-term growth trends, compares recent earnings results with market
expectations, and evaluates a company's earnings power relative to its stock
price. Companies become purchase candidates based upon a composite ranking of
these factors, and the top 20% are further evaluated on additional criteria.
Candidates for investment must also possess a sound financial structure and
demonstrate consistent factor rankings before being added to the Fund's
portfolio.

<PAGE>
a stock may be sold if the composite rank falls into the bottom 20% of the
universe, financial quality weakens significantly, or if individual factors
demonstrate patterns of deterioration.

The Fund may invest up to 35% of its total assets in securities of issuers with
a market capitalization greater than $1 billion and in debt securities. However,
the Fund will not invest more than 10% of its total assets in debt securities,
unless the Fund assumes a temporary defensive position as discussed below. Debt
securities, if any, purchased by the Fund will be rated AA or above by Standard
& Poor's Corporation ("S&P") or Aa or above by Moody's Investor Services, Inc.
("Moody's") or, if unrated, determined by the Adviser to be of comparable
quality. For temporary defensive purposes, the Fund may invest up to 100% of its
assets in debt securities. Debt securities in which the Fund may invest include
short-term and intermediate-term obligations of corporations, the U.S. and
foreign governments and international organizations (such as the World Bank),
including money market instruments.

The Fund may invest in common stocks (including securities convertible into
common stocks) of foreign issuers and rights to purchase common stock, options
and futures contracts on securities, securities indexes and foreign currencies,
securities lending, forward foreign exchange contracts and repurchase
agreements. The Fund currently intends to limit any investment in foreign
securities to 5% of total assets. For more information concerning these and
other permissible Fund investments, see "Appendix A".

NATIONS U.S. GOVERNMENT BOND FUND: The Fund invests at least 65% of its total
assets in U.S. Government securities and repurchase agreements collateralized by
such securities. While the maturity of individual securities will not be
restricted, except during temporary defensive periods or unusual market
conditions, the average weighted maturity of the Fund will be between five and
thirty years. The Fund may invest in a variety of U.S. Government securities,
including U.S. Treasury bonds, notes and bills, and other obligations issued or
guaranteed as to payment of principal and interest by a number of U.S.
Government agencies and instrumentalities ("U.S. Government Obligations"). The
Fund may also invest in interests in the foregoing securities, including
collateralized mortgage obligations issued or guaranteed by a U.S. Government
agency or instrumentality. U.S. Government Obligations have historically had a
very low risk of loss of principal if held to maturity. The Fund, however, can
give no assurance that the U.S. Government would provide financial support to
its agencies or instrumentalities if it were not legally required to do so.

The Fund may also invest up to 35% of its total assets in debt securities of
U.S. and foreign corporate and foreign government issuers, American Depository
Receipts ("ADRs") and European Depository Receipts ("EDRs"), zero coupon bonds
and cash equivalents. The Fund will purchase only those non-government
investments which are rated investment grade or better by at least one NRSRO or,
if unrated, are determined by the Adviser to be of comparable quality. If a
portfolio security held by the Fund ceases to be rated investment grade by at
least one NRSRO or if the Adviser determines that an unrated portfolio security
held by the Fund is no longer of comparable quality to an investment grade
security, the security will be sold in an orderly manner as quickly as possible.
Additionally, the Fund may also invest in futures contracts, interest rate swaps
and options. From time to time, the Fund may also hold uninvested cash reserves
which do not earn income.

The value of the Fund's portfolio (and consequently its shares) is expected to
fluctuate inversely in relation to changes in the direction of interest rates.
For more information concerning these and other investments in which the Fund
may invest, see "Appendix A".

GENERAL: Each of the Funds 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 approved by the
Commodity Futures Trading Commission ("CFTC") and options thereon for market
exposure risk-management. Each of the Funds also may lend its portfolio
securities to qualified institutional investors and may invest in restricted,
private placement and other illiquid securities. Nations U.S. Government Bond
Fund may engage in reverse repurchase agreements and dollar roll transactions.
Additionally, each Fund may purchase securities issued by other investment
companies, consistent with the Fund's investment objective and policies.

For more information concerning these and other investments in which the Funds
may invest and their 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 Funds' shares, such changes will not
affect the income received by the Funds from such securities. However, since
available yields vary over time, no specific level of income can ever be
assured. The dividends paid by the Funds will increase or decrease in relation
to the income received by the Funds from their investments, which will in any
case be reduced by the Funds' expenses before being distributed to the Funds'
shareholders.

SPECIAL RISK CONSIDERATIONS RELEVANT TO AN INVESTMENT IN NATIONS INTERNATIONAL
GROWTH FUND: Investors should understand and consider carefully the special
risks involved in foreign investing.

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Investors in Nations International Growth Fund should be aware that the Fund
may, from time to time, invest in securities of companies located in Eastern
Europe. Economic and political reforms in this region are still in their
infancy. As a result, investment in such countries would be highly speculative
and could result in losses to the Fund and, thus, to its shareholders.

Investors should also understand and consider carefully the special risks
involved in investing in the Pacific Basin and Far East. Countries in the
Pacific Basin and Far East are in various stages of economic development,
ranging from emerging markets to mature economies, but each has unique risks.
Most countries in this region are heavily dependent on international trade, and
some are especially vulnerable to recessions in other countries. Some of these
countries are also sensitive to world commodity prices. Some countries that have
experienced rapid growth may still have obsolete financial systems, economic
problems or archaic legal systems. In addition, many of these nations are
experiencing political and social uncertainties.

The same is true, but even more so, for the emerging market countries in which
the Fund will invest. Although the Fund believes that its investments present
the possibility for significant growth over the long term, they also entail
significant risks. Many investments in emerging markets can be considered
speculative, and their prices can be much more volatile than in the more
developed nations of the world. This difference reflects the greater
uncertainties of investing in less established markets and economies. The
financial markets of emerging markets countries are generally less well
capitalized and thus securities of issuers based in such countries may be less
liquid.

The Fund's yield and share price will change based on changes in domestic or
foreign interest rates and in an issuer's creditworthiness. In general, bond
prices rise when interest rates fall, and vice versa.

Investing in securities denominated in foreign currencies and utilization of
forward foreign currency exchange contracts and other currency hedging
techniques involve certain considerations comprising both opportunities and
risks not typically associated with investing in U.S. dollar-denominated
securities. Additionally, changes in the value of foreign currencies can
significantly affect a Fund's share price. General economic and political
factors in the various world markets can also impact a Fund's share price.

The expenses to individual investors of investing directly in foreign securities
are very high relative to similar costs for investing in U.S. securities. While
the Fund offers a more efficient way for individual investors to participate in
foreign markets, their expenses, including custodial fees, are also higher than
the typical domestic equity mutual fund.

Risks unique to international investing include: (1) restrictions on foreign
investment and repatriation of capital; (2) fluctuations in currency exchange
rates; (3) costs of converting foreign currency into U.S. dollars and U.S.
dollars into foreign currencies; (4) greater price volatility and less
liquidity; (5) settlement practices, including delays, which may differ from
those customary in United States markets; (6) exposure to political and economic
risks, including the risk of nationalization, expropriation of assets and war;
(7) possible imposition of foreign taxes and exchange control and currency
restrictions; (8) lack of uniform accounting, auditing and financial reporting
standards; (9) less governmental supervision of securities markets, brokers and
issuers of securities; (10) less financial information available to investors;
and (11) difficulty in enforcing legal rights outside the United States. These
risks often are heightened for investments in emerging or developing countries.
See "Appendix A" for additional discussion of the risks associated with an
investment in the Nations International Growth Fund.

PORTFOLIO TURNOVER: Generally, Funds will purchase portfolio securities for
capital appreciation or investment income, or both, and not for short-term
trading profits. While it is not possible to predict exactly annual portfolio
turnover rates, it is expected that under normal market conditions, the annual
portfolio turnover rate will be 50% for Nations International Growth Fund, 125%
for Nations Small Company Growth Fund, and 100% for Nations U.S. Government Bond
Fund.

The value of a 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.

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

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

Each Fund may not:

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

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

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

The investment objective and policies of each Fund, unless otherwise specified,
are non-fundamental and may be changed without a vote of the Fund's
shareholders. Shareholders however, must receive at least 30 days' prior written
notice in the event an investment objective is changed. If the investment
objective or policies of a Fund change, shareholders should consider whether the
Fund remains an appropriate investment in light of their current position and
needs.

In order to register a Fund's shares for sale in certain states, a Fund may make
commitments more restrictive than the investment policies and limitations
described in this Prospectus and the SAI. Should a Fund determine that any such
commitment is no longer in the best interests of the Fund, it may consider
terminating sales of its shares in the states involved.

How Performance Is Shown

From time to time the Funds may advertise the total return and yield on a class
of shares. Nations U.S. Government Bond Fund also may advertise the tax
equivalent yield of a class of shares. TOTAL RETURN AND YIELD FIGURES ARE BASED
ON HISTORICAL DATA AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The
"total return" of a class of shares of a Fund may be calculated on an average
annual total return basis or an aggregate total return basis. Average annual
total return refers to the average annual compounded rates of return over one-,
five-, and ten-year periods or the life of 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.

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

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

In addition to Primary A Shares, the Funds offer Primary B, Investor A, Investor
C and Investor N Shares. Each class of shares may bear different sales charges,
shareholder servicing fees, loads 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

<PAGE>
a Fund's shares. Any fees charged by an institution directly to its customers'
accounts in connection with investments in the Funds will not be included in
calculations of total return or yield. Each Fund's annual report contains
additional performance information and is available upon request without charge
from the Funds' distributor or an investor's Institution, as defined below.

How The Funds Are Managed

The business and affairs of Nations Fund, Inc. are managed under the direction
of its Board of Directors. Nations Fund, Inc.'s SAI contains the names of and
general background information concerning each Director of Nations Fund, Inc.

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

Kleinwort Benson, with principal offices at 200 Park Avenue, New York, New York
10166, serves as investment sub-adviser to Nations International Growth Fund.
Kleinwort Benson is the SEC registered investment management subsidiary of the
London-based Kleinwort Benson Group plc, a holding company for a merchant
banking group whose origins date back to 1792. Kleinwort Benson has offices in
London, Hong Kong and Tokyo and may utilize the general expertise of Kleinwort
Benson Group plc and its affiliates in respect of, for example, economic
analyses and predictions and market developments and trends.

Boatmen's serves as investment sub-advisor to Nations Small Company Growth Fund
and Nations U.S. Government Bond Fund. Its principal offices are located at 100
North Broadway, St. Louis, Missouri 63178-4737. Boatmen's is an indirect
subsidiary of NationsBank Corporation, a registered bank holding company.

Subject to the general supervision of Nations Fund, Inc.'s Board of Directors,
and in accordance with each Fund's investment policies, the Adviser formulates
guidelines and lists of approved investments for each Fund, makes decisions with
respect to and places orders for each Fund's purchases and sales of portfolio
securities and maintains records relating to such purchases and sales. The
Adviser is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of agency
transactions, financial institutions which are affiliated with the Adviser or
which have sold shares in such Funds, if the Adviser believes that the quality
of the transaction and the commission are comparable to what they would be with
other qualified brokerage firms. From time to time, to the extent consistent
with its investment objective, policies and restrictions, each Fund may invest
in securities of companies with which NationsBank has a lending relationship.

For the services provided and expenses assumed pursuant to an Investment
Advisory Agreement, NBAI is entitled to receive advisory fees, computed daily
and paid monthly, at the rate of: .90% of the average daily net assets of
Nations International Growth Fund; 1.00% of the average daily net assets of
Nations Small Company Growth Fund; and .60% of the average daily net assets of
Nations U.S. Government Bond Fund.

For the services provided and the expenses assumed pursuant to various
Sub-Advisory Agreements, NBAI will pay Kleinwort Benson sub-advisory fees at the
rate of .40% of Nations International Growth Fund's average net assets up to and
including $325,000,000 in assets and .25% on assets in excess of $325,000,000.
NBAI will pay Boatmen's sub-advisory fees at the rate of .25% of the average net
assets of Nations Small Company Growth Fund and at the rate of .15% of the
average daily net assets of Nations U.S. Government Bond Fund.

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

Boatmen's has designated the following portfolio manager as being primarily
responsible for the management of Nations International Growth Fund. Michael E.
Kenneally, Chartered Financial Analyst ("CFA"), is a Senior Vice President and
Director of Research. In addition to his responsibilities in connection with the
management of the Fund, Mr. Kenneally is responsible for all fundamental and
quantitative research as well as the management of all small capitalization and
growth-style portfolios.

<PAGE>
ative strategies. Mr. Kenneally holds both a bachelor's degree in economics and
an MBA in finance from the University of Missouri. He joined Boatmen's in 1983
as an equity analyst, later became a quantitative analyst, and subsequently
worked as both a fixed-income portfolio manager and an equity portfolio manager.
Mr. Kenneally is also a member of the Association for Investment Management and
Research (AIMR), the St. Louis Society of Financial Analysts, the Chicago
Quantitative Alliance, and the Society of Quantitative Analysts.

Mr. Daniel N. Ginsparg, Senior Portfolio Manager and Manager of Quantitative
Research is part of the team responsible for the day to day management of the
Nations Small Company Growth Fund's investment activities. Mr. Ginsparg is
responsible for quantitative research applications and is involved in the
management of the Fund. Mr. Ginsparg received both his bachelor's degree and MBA
from the University of Missouri. He joined Boatmen's in 1989 and is a member of
the Chicago Quantitative Alliance, the Society of Quantitative Analysts, and the
St. Louis Society of Financial Analysts.

C. Thomas Clapp, CFA, is Director of the Equity Management Group for TradeStreet
and Portfolio Manager of Nations Emerging Growth Fund. Mr. Clapp has been
Portfolio Manager for Nations Emerging Growth Fund since September, 1996. He is
also part of the Adviser's team responsible for the day to day management of
Nations Small Company Growth Fund and has been an officer of Boatmen's since
January, 1997. Prior to assuming his position with TradeStreet in 1995, he was
Senior Vice President and Director of Research for the Investment Management
Group at NationsBank. Prior to joining NationsBank in 1992, Mr. Clapp was a
Senior Portfolio Manager with Royal Insurance Group. Mr. Clapp has worked in the
investment community since 1984. He received his B.A. in Economics from the
University of North Carolina at Chapel Hill and an M.B.A. from the University of
South Carolina. He also holds the Chartered Financial Analyst designation and is
a member of the Association for Investment Management and Research and the North
Carolina Society of Financial Analysts, Inc.

The Fixed Income Committee of Boatmen's is responsible for the day-to-day
management of the investment portfolio of Nations U.S. Government Bond 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 various Investment
Advisory Agreements and this Prospectus without violation of the Glass-Steagall
Act. Such counsel has pointed out, however, that there are no controlling
judicial or administrative interpretations or decisions and that future judicial
or administrative interpretations of, or decisions relating to, present federal
or state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in such federal or state statutes, regulations and
judicial or administrative decisions or interpretations, could prevent such
entities from continuing to perform, in whole or in part, such services. If any
such entity were prohibited from performing any of such services, it is expected
that new agreements would be proposed or entered into with another entity or
entities qualified to perform such services.

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

First Data Investor Services Group, Inc. ("First Data"), 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 Funds 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 Funds. For the services rendered pursuant to the Administration
and Co-Administration Agreements, Stephens and First Data are entitled to
receive a combined fee at the annual rate of up to 0.10% of each 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 Funds' administrative operations. For
providing such services, NationsBank shall be entitled to receive a monthly fee
from Stephens based on an annual rate of .01% of the Funds' average daily net
assets.

Shares of the Funds are sold on a continuous basis by Stephens, as the Funds'
sponsor and distributor. Stephens is a registered broker/dealer with principal
offices at 111 Center Street, Little Rock, Arkansas 72201. Nations Funds has
entered into a distribution agreement with Stephens which provides that Stephens
has the exclusive right to distribute shares of the Funds. Stephens may pay
service fees or commissions to
Institu-

<PAGE>
tions which assist customers in purchasing Primary A Shares of the Funds.

NationsBank of Texas, N.A. ("NationsBank of Texas" and, collectively with Bank
of New York ("BONY"), called "Custodians") serves as custodian for the assets of
each Fund. NationsBank of Texas, which also serves as the sub-transfer agent for
each Fund's Primary A Shares, is located at 1401 Elm Street, Dallas, Texas
75202, and is a wholly owned subsidiary of NationsBank Corporation. In return
for providing custodial services, NationsBank of Texas is entitled to receive,
in addition to out-of-pocket expenses, fees 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 serves as sub-custodian for the assets of Nations International Growth
Fund, Nations Small Company Growth Fund and Nations U.S. Government Bond Fund.
BONY is located at 90 Washington Street, New York, New York 10286. In return for
providing sub-custodial services, BONY shall receive, 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 the Funds up to $10 billion; and (ii) 1/2 of one basis
point on the excess.

First Data serves as the Transfer Agent for each of the Fund's Primary A Shares.

In return for providing sub-transfer agency services for the Primary A Shares of
Nations Funds, NationsBank of Texas is entitled to receive an annual fee from
First Data of $251,000.

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

EXPENSES: The accrued expenses of each Fund are deducted from the Fund's total
accrued income before dividends are declared. These expenses include, but are
not limited to: fees paid to the Adviser, NationsBank, Stephens and First Data;
taxes; interest; fees (including fees paid to Nations Fund's trustees, directors
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, NationsBank, Stephens
or First Data under their respective agreements with Nations Funds; and any
extraordinary expenses. Any general expenses of Nations Fund, Inc. 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, Inc. or in such other manner as the Board
of Directors determines is fair and equitable.

Organization And History

The Funds are members of the Nations Funds Family, which consists of Nations
Fund Trust, Nations Fund, Inc., Nations Portfolios and Nations Institutional
Reserves. The Nations Funds Family currently has more than 50 distinct
investment portfolios and total assets in excess of $20 billion.

Nations Fund, Inc. was incorporated in Maryland on December 13, 1983, but had no
operations prior to December 15, 1986. Nations Fund, Inc.'s fiscal year end is
March 31; prior to 1996, Nations Fund, Inc.'s fiscal year end was May 31. As of
the date of this Prospectus, the authorized capital stock of Nations Fund, Inc.
consists of 420,000,000,000 shares of common stock, par value of $.001 per
share, which are divided into series or funds each of which consists of separate
classes of shares. This Prospectus relates only to the Primary A Shares of the
following funds of Nations Fund, Inc.: Nations International Growth Fund,
Nations Small Company Growth Fund and Nations U.S. Government Bond Fund. To
obtain additional information regarding the Funds' other classes of shares which
may be available to you, contact your Institution (as defined below) or Nations
Funds at 1-800-626-2275.

Shares of each fund and class have equal rights with respect to voting, except
that the holders of shares of a particular fund or class will have the exclusive
right to vote on matters affecting only the rights of the holders of such fund
or class. In the event of dissolution or liquidation, holders of each class will
receive pro rata, subject to the rights of creditors, (a) the proceeds of the
sale of that portion of the assets allocated to that class held in the
respective fund of Nations Fund, Inc., less (b) the liabilities of Nations Fund,
Inc. attributable to the respective fund or class or allocated among the funds
or classes based on the respective liquidation value of each fund or class.

<PAGE>
Meetings of shareholders may be called upon the request of 10% or more of the
outstanding shares of Nations Fund, Inc. There are no preemptive rights
applicable to any of Nations Fund, Inc.'s shares. Nations Fund, Inc.'s shares,
when issued, will be fully paid and non-assessable.

As of May , 1997, NationsBank and its affiliates possessed or shared power to
dispose of or vote with respect to more than 25% of the outstanding shares of
Nations Fund, Inc. and therefore could be considered to be a controlling person
of Nations Fund, Inc. for purposes of the 1940 Act. For more detailed
information concerning the percentage of each class or series over which
NationsBank and its affiliates possessed or shared power to dispose or vote as
of a certain date, see Nations Fund, Inc.'s SAI. It is anticipated that Nations
Fund, Inc. will not hold annual shareholder meetings on a regular basis unless
required by the 1940 Act or Maryland law.

About Your Investment

How To Buy Shares

Primary A Shares may be sold to NationsBank and its affiliates acting on behalf
of bona fide trust customers. Primary A Shares also may be sold to employee
benefit plans, charitable foundations, endowments and to other funds in the
Nations 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 Funds may be effected on days on which the New York Stock
Exchange (the "Exchange") is open for business (a "Business Day").

There is a minimum initial investment of $500,000 for each record holder; there
is no minimum subsequent investment.

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 Funds, and share
certificates are not issued. It is the responsibility of Institutions, when
applicable, to record beneficial ownership of Primary A Shares and to reflect
such ownership in the account statements provided to their Customers.

Purchase orders for Primary A Shares in the Funds which are received by Stephens
or by the Transfer Agent before the close of regular trading hours on the
Exchange (currently 4:00 p.m., Eastern time) on any Business Day are priced
according to the net asset value determined on that day but are not executed
until 4:00 p.m., Eastern time, on the Business Day on which immediately
available funds in payment of the purchase price are received by the 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.

How To Redeem Shares

Redemption proceeds are normally remitted in federal funds wired to the
redeeming Institution or investor within three Business Days following receipt
of the order.

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 Funds
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

<PAGE>
property under certain circumstances in accordance with the 1940 Act.

Institutions are responsible for transmitting redemption orders to Stephens or
to the Transfer Agent and for crediting their Customers' accounts with the
redemption proceeds on a timely basis. It is the responsibility of Stephens to
transmit orders it receives to Nations 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.

How To Exchange Shares

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

The Funds and each of the other funds of Nations 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 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.

How The Funds Value Their Shares

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

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

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

DIVIDENDS AND DISTRIBUTIONS

Even though the Funds seek to manage taxable distributions, the Funds may be
expected to earn and distribute taxable income and may also be expected to
realize and distribute capital gains from time to time. Nations International
Growth Fund and Nations Small Company Growth Fund declare and pay dividends from
net investment income each calendar quarter, and Nations U.S. Government Bond
Fund declares dividends daily and pays them monthly. Each Fund's net realized
capital gains (including net short-term capital gains) are distributed at least
annually.

Primary A Shares of Nations U.S. Government Bond 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. Primary A Shares of Nations International
Growth Fund and Nations Small Company Growth Fund are eligible to receive
dividends when declared, provided, however, that the purchase order for such
shares is received at least one day prior to the dividend declaration and such
shares continue to be eligible for dividends through and including the day
before the redemption order is executed. Distributions paid by the Funds 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 Primary A Shares in the Funds will be reduced by the
amount of any dividend or distribution. Dividends and distributions are paid in
cash within five Business Days of the end of the 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
same 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.

TAX INFORMATION

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

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

Corporate shareholders in the Funds may be entitled to the dividends-received
deduction for distributions from those Funds investing in the stock of domestic
corporations to the extent of the total qualifying dividends received by the
distributing Fund. Corporate shareholders of Nations International Growth Fund
and Nations Small Company Growth Fund, may be eligible for the
dividends-received deduction on the dividends (excluding the net capital gains
dividends) paid by such Fund to the extent that each such Fund's income is
derived from dividends (which, if received directly, would qualify for such
deduction) received from domestic corporations. In order to qualify for the
dividends-received deduction, a corporate shareholder must hold the fund shares
paying the dividends upon which the deduction is based for at least 46 days.

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

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

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

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

Portions of each Fund's investment income may be subject to foreign income taxes
withheld at their source. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. Generally, more than 50% of
the value of the total assets of each Fund will consist of securities of foreign
issuers, and therefore each Fund may elect to "pass through" to its shareholders
these foreign taxes, if any. In such event each shareholder will be required to
include his or her pro rata portion thereof in his or her gross income, but will
be able to deduct or (subject to various limitations) claim a foreign tax credit
against U.S. income tax for such amount.

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

Appendix A -- Portfolio Securities

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

The life of an asset-backed security varies depending upon rate of the
prepayment of the underlying debt instruments. The rate of such prepayments will
be a function of current market interest rates and other economic and
demographic factors. For example, falling interest rates generally result in an
increase in the rate of prepayments of mortgage loans while rising interest
rates generally decrease the rate of prepayments. An acceleration in prepayments
in response to sharply falling interest rates will shorten the security's
average maturity and limit the potential appreciation in the security's value
relative to a conventional debt security. Consequently, asset-backed securities
may not be as effective in locking in high, long-term yields. Conversely, in
periods of sharply rising rates, prepayments are generally slow, increasing the
security's average life and its potential for price depreciation.

MORTGAGE-BACKED SECURITIES: Mortgage-backed securities represent an ownership
interest in a pool of mortgage loans.

Mortgage pass-through securities may represent participation interests in pools
of residential mortgage loans originated by U.S. governmental or private lenders
and guaranteed, to the extent provided in such securities, by the U.S.
Government or one of its agencies, authorities or instrumentalities. Such
securities, which are ownership interests in the underlying mortgage loans,
differ from conventional debt securities, which provide for periodic payment of
interest in fixed amounts (usually semi-annually) and principal payments at
maturity or on specified call dates. Mortgage pass-through securities provide
for monthly payments that are a "pass-through" of the monthly interest and
principal payments (including any prepayments) made by the individual borrowers
on the pooled mortgage loans, net of any fees paid to the guarantor of such
securities and the servicer of the underlying mortgage loans.

The guaranteed mortgage pass-through securities in which a Fund may invest may
include those issued or guaranteed by GNMA, by FNMA and FHLMC. Such Certificates
are mortgage-backed securities which represent a partial ownership interest in a
pool of mortgage loans issued by lenders such as mortgage bankers, commercial
banks and savings and loan associations. Such mortgage loans may have fixed or
adjustable rates of interest.

<PAGE>
The average life of a mortgage-backed security is likely to be substantially
less than the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return of the greater part of principal invested far in advance of
the maturity of the mortgages in the pool.

The yield which will be earned on mortgage-backed securities may vary from their
coupon rates for the following reasons: (i) Certificates may be issued at a
premium or discount, rather than at par; (ii) Certificates may trade in the
secondary market at a premium or discount after issuance; (iii) interest is
earned and compounded monthly which has the effect of raising the effective
yield earned on the Certificates; and (iv) the actual yield of each Certificate
is affected by the prepayment of mortgages included in the mortgage pool
underlying the Certificates and the rate at which principal so prepaid is
reinvested. In addition, prepayment of mortgages included in the mortgage pool
underlying a GNMA Certificate purchased at a premium may result in a loss to the
Fund.

Mortgage-backed securities issued by private issuers, whether or not such
obligations are subject to guarantees by the private issuer, may entail greater
risk than obligations directly or indirectly guaranteed by the U.S. Government.

Collateralized Mortgage Obligations or "CMOs" are debt obligations
collateralized by mortgage loans or mortgage pass-through securities (collateral
collectively hereinafter referred to as "Mortgage Assets"). Multi-class pass-
through securities are interests in a trust composed of Mortgage Assets and all
references herein to CMOs will include multi-class pass-through securities.
Payments of principal of and interest on the Mortgage Assets, and any
reinvestment income thereon, provide the funds to pay debt service on the CMOs
or make scheduled distribution on the multi-class pass-through securities.

Moreover, principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates, resulting in a loss of all or part of the premium if any has been paid.
Interest is paid or accrues on all classes of the CMOs on a monthly, quarterly
or semiannual basis.

The principal and interest payments on the Mortgage Assets may be allocated
among the various classes of CMOs in several ways. Typically, payments of
principal, including any prepayments, on the underlying mortgages are applied to
the classes in the order of their respective stated maturities or final
distribution dates, so that no payment of principal is made on CMOs of a class
until all CMOs of other classes having earlier stated maturities or final
distribution dates have been paid in full.

Stripped mortgage-backed securities ("SMBS") are derivative multi-class mortgage
securities. A Fund will only invest in SMBS that are obligations backed by the
full faith and credit of the U.S. Government. SMBS are usually structured with
two classes that receive different proportions of the interest and principal
distributions from a pool of mortgage assets. A Fund will only invest in SMBS
whose mortgage assets are U.S. Government Obligations.

A common type of SMBS will be structured so that one class receives some of the
interest and most of the principal from the Mortgage Assets, while the other
class receives most of the interest and the remainder of the principal. If the
underlying Mortgage Assets experience greater than anticipated prepayments of
principal, a Fund may fail to fully recoup its initial investment in these
securities. The market value of any class which consists primarily or entirely
of principal payments generally is unusually volatile in response to changes in
interest rates.

The average life of mortgage-backed securities varies with the maturities of the
underlying mortgage instruments. The average life is likely to be substantially
less than the original maturity of the mortgage pools underlying the securities
as the result of mortgage prepayments, mortgage refinancings, or foreclosures.
The rate of mortgage prepayments, and hence the average life of the
certificates, will be a function of the level of interest rates, general
economic conditions, the location and age of the mortgage and other social and
demographic conditions. Such prepayments are passed through to the registered
holder with the regular monthly payments of principal and interest and have the
effect of reducing future payments. Estimated average life will be determined by
the Adviser and used for the purpose of determining the average weighted
maturity and duration of the Funds. For additional information concerning
mortgage backed securities, see the SAI.

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

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
selec-

<PAGE>
tion 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 a Fund borrows money, the net asset value of a share may be
subject to greater fluctuation until the borrowing is paid off. The Funds may
borrow money from banks for temporary purposes in amounts of up to one-third of
their respective total assets, provided that borrowings in excess of 5% of the
value of the Funds' total assets must be repaid prior to the purchase of
portfolio securities. Pursuant to line of credit arrangements, certain of the
Funds may borrow primarily for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities.

Reverse repurchase agreements and dollar roll transactions may be considered to
be borrowings. When a Fund invests in a reverse repurchase agreement, it sells a
portfolio security to another party, such as a bank or broker/dealer, in return
for cash, and agrees to buy the security back at a future date and price.
Reverse repurchase agreements may be used to provide cash to satisfy unusually
heavy redemption requests without having to sell portfolio securities, or for
other temporary or emergency purposes. In addition, certain of the Funds may use
reverse repurchase agreements for the purpose of investing the proceeds in
tri-party repurchase agreements. Generally, the effect of such a transaction is
that the Funds can recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase agreement, while
they will be able to keep the interest income associated with those portfolio
securities. Such transactions are only advantageous if the interest cost to the
Funds of the reverse repurchase transaction is less than the cost of obtaining
the cash otherwise.

At the time a Fund enters into a reverse repurchase agreement, it may establish
a segregated account with its custodian bank in which it will maintain cash,
U.S. Government Securities or other liquid high grade debt obligations equal in
value to its obligations in respect of reverse repurchase agreements. Reverse
repurchase agreements involve the risk that the market value of the securities
the Funds are obligated to repurchase under the agreement may decline below the
repurchase price. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, the Funds' use
of proceeds of the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Funds'
obligation to repurchase the securities. In addition, there is a risk of delay
in receiving collateral or securities or in repurchasing the securities covered
by the reverse repurchase agreement or even of a loss of rights in the
collateral or securities in the event the buyer of the securities under the
reverse repurchase agreement files for bankruptcy or becomes insolvent. The Fund
only enters into reverse repurchase agreements (and repurchase agreements) with
counterparties that are deemed by the Adviser to be credit worthy. Reverse
repurchase agreements are speculative techniques involving leverage, and are
subject to asset coverage requirements if the Funds do not establish and
maintain a segregated account (as described above). Under the requirements of
the 1940 Act, the Funds are required to maintain an asset coverage (including
the proceeds of the borrowings) of at least 300% of all borrowings. Depending on
market conditions, the Funds' asset coverage and other factors at the time of a
reverse repurchase, the Funds may not establish a segregated account when the
Adviser believes it is not in the best interests of the Funds to do so. In this
case, such reverse repurchase agreements will be considered borrowings subject
to the asset coverage described above.

Dollar roll transactions consist of the sale by a Fund of mortgage-backed or
other asset-backed securities, together with a commitment to purchase similar,
but not identical, securities at a future date, at the same price. In addition,
a Fund is paid a fee as consideration for entering into the commitment to
purchase. If the broker/dealer to whom a Fund sells the security becomes
insolvent, the Fund's right to purchase or repurchase the security may be
restricted; the value of the security may change adversely over the term of the
dollar roll; the security that the Fund is required to repurchase may be worth
less than the security that the Fund originally held, and the return earned by
the Fund with the proceeds of a dollar roll may not exceed transaction costs.

COMMON AND PREFERRED STOCKS: Common stocks are generally more volatile than
other securities. Preferred stocks share some of the characteristics of both
debt and equity and are generally preferred over common stocks with respect to
dividends and in liquidation.

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

<PAGE>
ally negotiated, the Fund expects to achieve an acceptable degree of correlation
between its portfolio investments and its currency swap positions. Currency
swaps usually involve the delivery of the entire principal value of one
designated currency in exchange for the other designated currency. Therefore,
the entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations.

The use of currency swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If Kleinwort Benson is incorrect in its
forecasts of market values and currency exchange rates, the investment
performance of the Fund would be less favorable than it would be if this
investment technique were not used.

EMERGING MARKETS: Nations International Growth Fund may invest up to 35% of its
total assets in one or more countries with emerging economies. These countries
are located in the Asia-Pacific region, Eastern Europe, Latin and South America,
Africa and, subject to approval by the Board of Directors, the former Soviet
Union and the Middle East. Political and economic structures in many of such
countries may be undergoing significant evolution and rapid development, and
such countries may lack the social, political and economic stability
characteristic of more developed countries. Certain of such countries may have
in the past failed to recognize private property rights and have at times
nationalized or expropriated the assets of private companies. As a result, the
risks described above, including the risks of nationalization or expropriation
of assets, may be heightened. In addition, unanticipated political or social
developments may affect the values of the Fund's investments in those countries
and the availability to the Fund of additional investments in those countries.
The small size and inexperience of the securities markets in certain of such
countries and the limited volume of trading in securities in those countries may
make the Fund's investments in such countries illiquid and more volatile than
investments in most other non-major U.S. markets, and the Fund may be required
to establish special custodial or other arrangements before making certain
investments in those countries. There may be little financial or accounting
information available with respect to issuers located in certain of such
countries, and it may be difficult as a result to assess the value of prospects
of an investment in such issuers.

FOREIGN CURRENCY TRANSACTIONS: Certain of the Funds may enter into foreign
currency exchange transactions to convert foreign currencies to and from the
U.S. dollar. A Fund either enters into these transactions on a spot (I.E., cash)
basis at the spot rate prevailing in the foreign currency exchange market, or
uses forward contracts to purchase or sell foreign currencies. A forward foreign
currency exchange contract is an obligation by a Fund to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract.

Foreign currency hedging transactions are an attempt to protect a Fund against
changes in foreign currency exchange rates between the trade and settlement
dates of specific securities transactions or changes in foreign currency
exchange rates that would adversely affect a portfolio position or an
anticipated portfolio position. Although these transactions tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time they tend to limit any potential gain that might be realized should the
value of the hedged currency increase. Neither spot transactions nor forward
foreign currency exchange contracts eliminate fluctuations in the prices of a
Fund's portfolio securities or in foreign exchange rates, or prevent loss if the
prices of these securities should decline.

A Fund will generally enter into forward currency exchange contracts only under
two circumstances: (i) when the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, to "lock" in the U.S.
dollar price of the security; and (ii) when the Adviser believes that the
currency of a particular foreign country may experience a substantial movement
against another currency. Under certain circumstances, the Fund may commit a
substantial portion of its portfolio to the execution of these contracts. The
Adviser will consider the effects such a commitment would have on the investment
program of the Fund and the flexibility of the Fund to purchase additional
securities. Although forward contracts will be used primarily to protect the
Fund from adverse currency movements, they also involve the risk that
anticipated currency movements will not be accurately predicted.

FOREIGN SECURITIES: Foreign securities include debt and equity obligations
(dollar- and non-dollar-denominated) of foreign corporations and banks as well
as obligations of foreign governments and their political subdivisions (which
will be limited to direct government obligations and government-guaranteed
securities). Such investments may subject a Fund to special investment risks,
including future political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure or nationalization of
foreign deposits, the possible establishment of exchange controls, or the
adoption of other foreign governmental restrictions which might adversely affect
the payment of principal and interest on such obligations. In addition, foreign
issuers in general may be subject to different accounting, auditing, reporting,
and record keeping standards than those applicable to domestic companies, and
securities of foreign issuers may be less liquid and their prices more volatile
than those of comparable domestic issuers.

Investments in foreign securities may present additional risks, whether made
directly or indirectly, including the political or economic instability of the
issuer or the
coun-

<PAGE>
try of issue and the difficulty of predicting international trade patterns. In
addition, there may be less publicly available information about a foreign
company than about a U.S. company. Further, foreign securities markets are
generally not as developed or efficient as those in the U.S., and in most
foreign markets volume and liquidity are less than in the United States. Fixed
commissions on foreign securities exchanges are generally higher than the
negotiated commissions on U.S. exchanges, and there is generally less government
supervision and regulation of foreign securities exchanges, brokers, and
companies than in the United States. With respect to certain foreign countries,
there is a possibility of expropriation or confiscatory taxation, limitations on
the removal of funds or other assets, or diplomatic developments that could
affect investments within those countries. Because of these and other factors,
securities of foreign companies acquired by a Fund may be subject to greater
fluctuation in price than securities of domestic companies.

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

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

PARTICIPATIONS AND TRUST RECEIPTS: Each Fund may purchase from domestic
financial institutions and trusts created by such institutions participation
interests and trust receipts in high quality debt securities. A participation
interest or receipt gives a Fund an undivided interest in the security in the
proportion that a Fund's participation interest or receipt bears to the total
principal amount of the security. Each Fund intends only to purchase
participations and trust receipts from an entity or syndicate, and does not
intend to serve as a co-lender in any such activity.

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

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

<PAGE>
company and unseasoned stocks are the less certain growth prospects of smaller
firms, the lower degree of liquidity in the markets for such stocks, and the
greater sensitivity of small companies to changing economic conditions. For
example, these companies are associated with higher investment risk than that
normally associated with larger firms due to the greater business risks of small
size and limited product lines, markets, distribution channels and financial and
managerial resources.

STRIPPED SECURITIES: Each Fund may invest in instruments known as "stripped"
securities. These instruments include U.S. Treasury bonds and notes and federal
agency obligations on which the unmatured interest coupons have been separated
from the underlying obligation. These obligations are usually issued at a
discount to their "face value", and because of the manner in which principal and
interest are returned may exhibit greater price volatility than more
conventional debt securities. Each Fund may invest in "interest only" stripped
securities that have been issued by a federal instrumentality known as the
Resolution Funding Corporation and other stripped securities issued or
guaranteed by the U.S. Government, where the principal and interest components
are traded independently under the Separate Trading of Registered Interest and
Principal Securities program ("STRIPS"). Each Fund may also invest in
instruments that have been stripped by their holder, typically a custodian bank
or investment brokerage firm, and then resold in a custodian receipt program
under such names as TIGRS (Treasury Income Growth Receipts) and CATS
(Certificates of Accrual on Treasuries).

In addition, each Fund may purchase SMBS issued by the U.S. Government (or a
U.S. Government agency or instrumentality) or by private issuers such as banks
and other institutions. SMBS, in particular, may exhibit greater price
volatility than ordinary debt securities because of the manner in which their
principal and interest are returned to investors.

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 and foreign 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. Certain Funds may
invest in securities with demand features where (a) the security or its issuer
has received a short-term rating from an NRSRO; and (b) the issuer of the demand
feature, or another institution, undertakes to notify promptly the holder of the
security in the event that the demand feature is substituted with a demand
feature provided by another issuer. (Note, however, that certain securities
first issued on or before June 3, 1996 are not subject to these rating and
notice requirements.) 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 take
place at a future date. Because actual payment for and delivery of such
securities generally take place 15 to 45 days after the purchase date,
purchasers of such securities bear the risk that interest rates on debt
securities at the time of delivery may be higher or lower than those contracted
for on the security purchased.

<PAGE>
bonds which pay interest throughout the period to maturity, a Fund will realize
no cash until the cash payment date and, if the issuer defaults, the Fund may
obtain no return at all on its investment.

A Fund will be required to include in income daily portions of original issue
discount accrued which will cause the Fund to be required to make distributions
of such amounts to shareholders annually, even if no payment is received before
the distribution date. These distributions must be made from the Fund's cash
assets or, if necessary, from the proceeds of sales of portfolio securities. The
Fund will not be able to purchase additional income producing securities with
cash used to make such distributions and its current income ultimately may be
reduced as a result.

Appendix B -- Description Of Ratings

The following summarizes the highest six ratings used by S&P for corporate and
municipal bonds. The first four ratings denote investment grade securities.

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.

BB, B -- Bonds rated BB and B are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB represents the lowest
degree of speculation and B a higher degree of speculation. While such
bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

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 six ratings used by Moody's for corporate
and municipal bonds. The first four ratings denote investment grade securities.

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.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.

<PAGE>
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 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

<PAGE>
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 two 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 obligations. Issuers
rated Prime-2 (or related supporting institutions) are considered to have a
strong capacity for repayment of senior short-term 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.

For commercial paper, D&P uses the short-term debt ratings described above.

For commercial paper, Fitch uses the short-term debt ratings described above.

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.

<PAGE>
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 two highest short-term debt ratings used by IBCA:

A1+ -- When 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>
Prospectus

PRIMARY B SHARES
MAY , 1997

This Prospectus describes NATIONS INTERNATIONAL
GROWTH FUND, NATIONS SMALL COMPANY GROWTH FUND and
NATIONS U.S. GOVERNMENT BOND FUND (the "Funds") of
Nations Fund, Inc. 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 each Fund --
Primary B Shares.

This Prospectus sets forth concisely the information
about Nations Funds that a prospective purchaser of
Primary B Shares should consider before investing.
Investors should read this Prospectus and retain it
for future reference. Additional information about
Nations Fund, Inc. is contained in a separate
Statement of Additional Information, 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, Inc. is dated May , 1997, is
incorporated by reference in its entirety into this
Prospectus. NationsBanc Advisors, Inc. ("NBAI") is
investment adviser to the Funds. Kleinwort Benson
Investment Management Americas Inc. ("Kleinwort
Benson") is investment sub-adviser to Nations
International Growth Fund, and Boatmen's Trust
Company ("Boatmen's") is investment sub-adviser to
Nations Small Company Growth Fund and Nations U.S.
Government Bond Fund. As used herein the "Adviser"
shall mean NBAI, Kleinwort Benson and/or Boatmen's
as the context may require.

NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE
CERTAIN OTHER SERVICES TO NATIONS FUNDS, FOR WHICH
THEY ARE COMPENSATED. STEPHENS INC., WHICH IS NOT
AFFILIATED WITH NATIONSBANK, IS THE SPONSOR AND
ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR FOR
NATIONS FUNDS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Nations International
Growth Fund

Nations Small
Company Growth
Fund

Nations U.S.
Government Bond
Fund

For Fund information call:
1-800-621-2192
Nations Funds
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
(NATIONS FUNDS logo)

<PAGE>
Table Of Contents

About The Funds

Prospectus Summary 3

Expenses Summary 4

Objectives 6

How Objectives Are Pursued 6

How Performance Is Shown 9

How The Funds Are Managed 10

Organization And History 12

About Your
Investment

How To Buy Shares 13

How To Redeem Shares 14

How To Exchange Shares 14

Shareholder Administration Arrangements 15

How The Funds Value Their Shares 15

How Dividends And Distributions Are Made; Tax
Information 16

Appendix A -- Portfolio Securities 17

Appendix B -- Description Of Ratings 23

<PAGE>
About The Funds

Prospectus Summary

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

(Bullet) INVESTMENT OBJECTIVES AND POLICIES:

(Bullet) Nations International Growth Fund's investment objective is to
seek long-term capital growth by investing primarily in equity
securities of companies domiciled in countries outside the
United States and listed on major stock exchanges primarily in
Europe and the Pacific Basin.

(Bullet) Nations Small Company Growth Fund's investment objective is
to seek long-term capital growth by investing primarily in
equity securities.

(Bullet) Nations U.S. Government Bond Fund's investment objective is
to seek total return and preservation of capital by
investing in U.S. Government securities and repurchase
agreements.

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

Nations International Growth Fund, is designed for long-term investors
seeking international diversification and who are willing to bear the
risks associated with international investing, such as foreign currency
fluctuations and economic and political risks. For a discussion of
these factors, see "How Objectives Are Pursued -- Special Risk
Considerations Relevant to an Investment in Nations International
Growth Fund."

(Bullet) MINIMUM PURCHASE: $1,000 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 Funds. The
following tables summarize shareholder transaction and operating expenses for
Primary B Shares of the Funds. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in the Funds over specified
periods.

PRIMARY B SHARES

<TABLE>
<CAPTION>
<S> <C> <C>
Nations
Nations Small
International Company
Growth Fund Growth Fund

SHAREHOLDER TRANSACTION EXPENSES

Sales Load Imposed on Purchases1 None None
Deferred Sales Load None None

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

Management Fees
(After Fee Waivers) .90% .75%
Other Expenses
(After Expense Reimbursements) .72% .70%
Total Operating Expenses (After Fee Waivers
and Expense Reimbursements) 1.62% 1.45%

<CAPTION>
Nations
U.S.
Government
Bond Fund
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases1 None
Deferred Sales Load None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees
(After Fee Waivers) .40%
Other Expenses
(After Expense Reimbursements) .70%
Total Operating Expenses (After Fee Waivers
and Expense Reimbursements) 1.10%
</TABLE>

1 Primary B Shares are purchased at net asset value per share without the
imposition of a sales charge according to procedures established by the
Institution (as defined below). Institutions, however, may charge the accounts
of their customers for services provided in connection with the purchase or
redemption of shares.

<PAGE>
EXAMPLES:

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

<TABLE>
<CAPTION>
<S> <C> <C>
Nations Nations
International Small Company
Growth Fund Growth Fund

1 Year $ 16 $ 15
3 Years $ 51 $ 46

<CAPTION>
Nations
U.S. Government
Bond Fund
1 Year $ 11
3 Years $ 35
</TABLE>

The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Primary B Shares will bear either directly or indirectly. The "Other Expenses"
figures in the above tables are based on estimated amounts for each Fund's
current fiscal year and reflect anticipated fee waivers and reimbursements.
There is no assurance that any fee waivers and reimbursements will continue
beyond the current fiscal year. If fee waivers and/or reimbursements are
discontinued, the amounts contained in the "Examples" above may increase.
Long-term shareholders of the Funds could pay more in sales charges than the
economic equivalent of the maximum front-end sales charges applicable to mutual
funds sold by members of the National Association of Securities Dealers, Inc.
("NASD"). For more complete descriptions of the Funds' operating expenses, see
"How The Funds Are Managed."

Absent fee waivers and expense reimbursements, "Management Fees," "Other
Expenses" and "Total Operating Expenses" for Primary B Shares of the indicated
fund would have been as follows: Nations Small Company Growth Fund -- 1.00%,
.80% and 1.80%, respectively; and Nations U.S. Government Bond Fund -- .60%,
.80%, and 1.40%, respectively. Absent fee waivers and expense reimbursements,
"Other Expenses" and "Total Operating Expenses" for Primary B Shares of the
indicated Fund would have been as follows: Nations International Growth
Fund -- .82% and 1.72%, 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>
Objectives

NATIONS SMALL COMPANY GROWTH FUND: Nations Small Company Growth Fund's
investment objective is to seek long-term capital growth by investing primarily
in equity securities.

Although the Adviser will seek to achieve the investment objective of each Fund,
there is no assurance that it will be able to do so. No single Fund should be
considered, by itself, to provide a complete investment program for any
investor. The net asset value of the shares of the Funds will fluctuate based on
market conditions. Therefore, investors should not rely upon the Funds for
short-term financial needs, nor are the Funds meant to provide a vehicle for
participating in short-term swings in the stock market.

How Objectives Are Pursued

The Fund may invest up to 35% of its total assets in securities of issuers
domiciled in developing countries. These countries are generally located in
Eastern Europe, the Asia-Pacific region, Latin and South America, Africa and,
subject to approval by the Board of Directors, the former Soviet Union and the
Middle East. Debt securities, if any, purchased by the Fund will be rated in the
top two categories by a nationally recognized statistical rating organization
("NRSRO") or, if unrated, determined by the Adviser to be of comparable quality.
For temporary defensive purposes, the Fund may invest up to 100% of its assets
in debt and equity securities of U.S. issuers. Debt securities in which the Fund
may invest include short-term and intermediate-term obligations of corporations,
foreign governments and international organizations (such as the International
Bank for Reconstruction and Development (the "World Bank")), including money
market instruments.

In making investment decisions for the Fund, the Adviser, on a quarterly basis,
classifies approximately 6,000 companies by market value and eliminates the
largest 20%. The remaining companies constitute the Fund's small-capitalization
universe and generally represent only one-tenth of the aggregate U.S. equity
market capitalization. Due to the large number of small stocks to choose from,
the Adviser's selection process uses advanced quantitative techniques to
identify, buy and sell candidates in a timely and objective manner. The strategy
is to own those investments offering both attractive fundamental valuation and
relatively good prospects for earnings improvement. Typically, two types of
companies are candidates for purchase: (i) mature companies which may have
fallen from a larger market value due to business difficulties, but which now
exhibit improving prospects; and (ii) smaller or younger companies which are
experiencing strong trends in earnings growth, but remain reasonably valued and
therefore offer premium growth at a discount in comparison to other companies.

<PAGE>

additional criteria. Candidates for investment must also possess a sound
financial structure and demonstrate consistent factor rankings before being
added to the Fund's portfolio.

The Fund's weighted median capitalization generally is not expected to exceed
125% of the weighted median capitalization of the Russell 2000 Small Stock Index
(the "Russell 2000") as measured on a quarterly basis, although this may vary
from time to time. Furthermore, a stock may be sold if the composite rank falls
into the bottom 20% of the universe, financial quality weakens significantly, or
if individual factors demonstrate patterns of deterioration.

The Fund may invest in common stocks (including securities convertible into
common stocks) of foreign issuers and rights to purchase common stock, options
and futures contracts on securities, securities indexes and foreign currencies,
securities lending and repurchase agreements. The Fund currently intends to
limit any investment in foreign securities to 5% of total assets. For more
information concerning these and other permissible Fund investments, see
"Appendix A".

GENERAL: Each Equity Fund may invest in certain specified derivative securities,
including: exchange-traded options; over-the-counter options executed with
primary dealers, including long calls and puts and covered calls to enhance
return; and U.S. and foreign exchange-traded financial futures approved by the
Commodity Futures Trading Commission ("CFTC") and options thereon for market
exposure risk management. Each Fund may lend its portfolio securities to
qualified institutional investors. Each Fund also may invest in restricted,
private placement and other illiquid securities. Each Fund also may invest in
real estate investment trust securities. In addition, each Fund may invest in
securities issued by other investment companies, consistent with the Fund's
investment objective and policies. Nations International Growth Fund, Nations
Small Company Growth Fund and Nations U.S. Government Bond Fund may invest in
forward foreign exchange contracts and repurchase agreements. Additionally,
Nations U.S. Government Bond Fund may engage in reverse repurchase agreements
and dollar roll transactions.

For more information concerning these and other instruments in which the Funds
may invest and their 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 Funds' shares, such changes will not
affect the

<PAGE>
income received by the Funds from such securities. However, since available
yields vary over time, no specific level of income can ever be assured. The
dividends paid by the Funds will increase or decrease in relation to the income
received by the Funds from their investments, which will in any case be reduced
by the Funds' expenses before being distributed to the Funds' shareholders.

SPECIAL RISK CONSIDERATIONS RELEVANT TO AN INVESTMENT IN NATIONS INTERNATIONAL
GROWTH FUND: Investors should understand and consider carefully the special
risks involved in foreign investing.

Investors in Nations International Growth Fund should be aware that the Fund
may, from time to time, invest in securities of companies located in Eastern
Europe. Economic and political reforms in this region are still in their
infancy. As a result, investment in such countries would be highly speculative
and could result in losses to the Fund and, thus, to its shareholders.

PORTFOLIO TURNOVER: Generally, the Funds will purchase portfolio securities for
capital appreciation or investment income, or both, and not for short-term
trading profits. While it is not possible to predict exactly annual portfolio
turnover rates, it is expected that under normal market conditions, the annual
portfolio turnover rate will be 50% for Nations International Growth Fund, 125%
for Nations Small Company Growth Fund, and 100% for Nations U.S. Government Bond
Fund.

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

<PAGE>
The value of a 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, I.E., that the issuer may not be able to
pay principal and/or interest when due.

Certain of the Funds' 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 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."

Each Fund may not:

In order to register a Fund's shares for sale in certain states, a Fund may make
commitments more restrictive than the investment policies and limitations
described in this Prospectus and the SAI. Should a Fund determine that any such
commitment is no longer in the best interest of the Fund, it may consider
terminating sales of its shares in the states involved.

How Performance Is Shown

<PAGE>
paring a Fund's investment results to those of other mutual funds and other
investment vehicles. Since yields fluctuate, yield data cannot necessarily be
used to compare an investment in the Funds with bank deposits, savings accounts,
and similar investment alternatives which often provide an agreed-upon or
guaranteed fixed yield for a stated period of time.

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

How The Funds Are Managed

The business and affairs of each of Nations Fund, Inc. are managed under the
direction of its Board of Directors. Nations Fund, Inc. SAI contains the names
of and general background information concerning each Director of Nations Fund,
Inc.

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

Boatmen's serves as investment sub-adviser to Nations Small Company Growth Fund
and Nations U.S. Government Bond Fund. Its principal offices are located at 100
North Broadway, St. Louis, Missouri 63178-4737. Boatmen's is an indirect
subsidiary of NationsBank Corporation, a registered bank holding company.

For the services provided and the expenses assumed pursuant to various
Sub-Advisory Agreements, NBAI will pay Kleinwort Benson sub-advisory fees at the
rate of .40% of Nations International Growth Fund's average net assets, up to
and including $325,000,000 in assets and .25% on assets in excess of
$325,000,000. NBAI will pay Boatmen's sub-advisory fees at the rate of .25% of
the average net assets of Nations Small Company Growth Fund and at the rate of
.15% of the average daily net assets of Nations U.S. Government Bond Fund.

From time to time, NBAI (and/or Kleinwort Benson and/or Boatmen's) may waive or
reimburse (either vol-

<PAGE>

untarily or pursuant to applicable state limitations) advisory fees or expenses
payable by a Fund.

Mr. Kenneally is also part of the team responsible for the day to day management
of the Nations Small Company Growth Fund's investment activities. His additional
responsibilities include investment product development, international equity
investment, and equity derivative strategies. Mr. Kenneally holds both a
bachelor's degree in economics and an MBA in finance from the University of
Missouri. He joined Boatmen's in 1983 as an equity analyst, later became a
quantitative analyst, and subsequently worked as both a fixed-income portfolio
manager and an equity portfolio manager. Mr. Kenneally is also a member of the
Association for Investment Management and Research (AIMR), the St. Louis Society
of Financial Analysts, the Chicago Quantitative Alliance, and the Society of
Quantitative Analysts.

C. Thomas Clapp, CFA, is Director of the Equity Management Group for TradeStreet
and Portfolio Manager of Nations Emerging Growth Fund. Mr. Clapp has been
Portfolio Manager for Nations Emerging Growth Fund since September, 1996. He is
also part of the Adviser's team responsible for the day to day management of
Nations Small Company Growth Fund, and has been an officer of Boatmen's since
January, 1997. Prior to assuming his position with TradeStreet in 1995, he was
Senior Vice President and Director of Research for the Investment Management
Group at NationsBank. Prior to joining NationsBank in 1992, Mr. Clapp was a
Senior Portfolio Manager with Royal Insurance Group. Mr. Clapp has worked in the
investment community since 1984. He received his B.A. in Economics from the
University of North Carolina at Chapel Hill and an M.B.A. from the University of
South Carolina. He also holds the Chartered Financial Analyst designation and is
a member of the Association for Investment Management and Research and the North
Carolina Society of Financial Analysts, Inc.

The Fixed Income Committee of Boatmen's is responsible for the day-to-day
management of the investment portfolio of Nations U.S. Government Bond 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 various Investment
Advisory Agreements, and this Prospectus without violation of the Glass-Steagall
Act. Such counsel has pointed out, however, that there are no controlling
judicial or administrative interpretations or decisions and that future judicial
or administrative interpretations of, or decisions relating to, present federal
or state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in federal or state statutes, including the
Glass-Steagall Act, and regulations and judicial or administrative decisions or
interpretations thereof, could prevent such entities from continuing to perform,
in whole or in part, such services. If any such entity were prohibited from
performing any such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.

First Data Investor Services Group, Inc. ("First Data"), 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 Funds including performing the calculations necessary to determine the net
asset value per share and dividends of each class of the Funds, preparing tax
returns and financial statements and maintaining the portfolio records and
certain of the general accounting records for the Funds.

For the services rendered pursuant to the Administration and Co-Administration
Agreements, Stephens and First Data are entitled to receive a combined fee at
the

<PAGE>
annual rate of up to 0.10% of each Fund's average daily net assets.

NationsBank of Texas, N.A. ("NationsBank of Texas" and, collectively with Bank
of New York ("BONY"), called "Custodians") serves as custodian for the assets of
each Fund. NationsBank of Texas, which also serves as the sub-transfer agent for
each Fund's Primary B Shares, is located at 1401 Elm Street, Dallas, Texas
75202, and is a wholly owned subsidiary of NationsBank Corporation. In return
for providing custodial services, 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.

First Data serves as the Transfer Agent for each of the Fund's Primary B Shares.

In return for providing sub-transfer agency services for the Primary B Shares of
Nations Funds, NationsBank of Texas is entitled to receive an annual fee from
First Data of $251,000.

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

EXPENSES: The accrued expenses of each Fund, as well as certain expenses
attributable to Primary B Shares, are deducted from the Fund's total accrued
income before dividends are declared. These expenses include, but are not
limited to: fees paid to the Adviser, NationsBank, Stephens and First Data;
taxes; interest; fees (including fees paid to Nations Fund's trustees, directors
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, NationsBank, Stephens
or First Data under their respective agreements with Nations Funds; and any
extraordinary expenses. Primary B Shares also bear certain shareholder servicing
costs. Any general expenses of Nations Fund, Inc. 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, Inc. or in such other manner as the Board of
Directors determines is fair and equitable.

Organization And History

Nations Fund, Inc. was incorporated in Maryland on December 13, 1983, but had no
operations prior to December 15, 1986. Nations Fund, Inc.'s fiscal year end is
March 31; prior to 1996, Nations Fund, Inc.'s fiscal year end was May 31. As of
the date of this Prospectus, the authorized capital stock of Nations Fund, Inc.
consists of 420,000,000,000 shares of common stock, par value of $.001 per
share, which are divided into series or funds each of which consists of separate
classes of shares. This Prospectus relates only to the Primary B Shares of the
following funds of Nations Fund, Inc.: Nations International Growth Fund,
Nations Small Company Growth Fund and Nations U.S. Government Bond Fund. To
obtain additional information regarding the Funds' other classes of shares which
may be avail-

<PAGE>

able to you, contact your Institution (as defined below) or Nations Funds at
1-800-621-2192.

Shareholders of Nations Fund, Inc. do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of all funds
voting together for election of directors may elect all of the members of the
Board of Directors of Nations Fund, Inc. Meetings of shareholders may be called
upon the request of 10% or more of the outstanding shares of Nations Fund, Inc.
There are no preemptive rights applicable to any of Nations Fund, Inc.'s shares.
Nations Fund, Inc.'s shares, when issued, will be fully paid and non-assessable.

As of May , 1997, NationsBank and its affiliates possessed or shared power to
dispose of or vote with respect to more than 25% of the outstanding shares of
Nations Fund, Inc. and therefore could be considered to be a controlling person
of Nations Fund, Inc. for purposes of the Investment Company Act of 1940 ("the
1940 Act"). For more detailed information concerning the percentage of each
class or series over which NationsBank and its affiliates possessed or shared
power to dispose or vote as of a certain date, see Nations Fund, Inc.'s SAI. It
is anticipated that Nations Fund, Inc. will not hold annual shareholder meetings
on a regular basis unless required by the 1940 Act or Maryland law.

About Your Investment

How To Buy Shares

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

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

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

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

Nations Funds and Stephens reserve the right to reject any purchase order. The
issuance of Primary B Shares is recorded on the books of the Funds, and share
certificates are not issued.

Purchase orders for Primary B Shares in the Funds which are received by Stephens
or by the Transfer Agent before the close of regular trading hours on the
Exchange (currently 4:00 p.m., Eastern time) on any Business Day are priced
according to the net asset value determined on that day but are not executed
until 4:00 p.m., Eastern time, on the Business Day on which immediately
available funds in payment of the purchase price are received by the 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 placing the order. Payment for orders which are not
received or accepted will be returned after prompt inquiry to the sending
Institution.

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

<PAGE>
How To Redeem Shares

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

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

Nations Funds may redeem a shareholder's Primary B Shares if the balance in such
shareholder's account drops below $500 as a result of redemptions, and the
shareholder does not increase his or her balance to at least $500 on 60 days'
written notice. If a shareholder has agreed with a particular Institution to
maintain a minimum balance in his or her account at the Institution, and the
balance in such Institution account falls below that minimum, the shareholder
may be obliged to redeem all or a part of his or her Primary B Shares in the
Funds to the extent necessary to maintain the required minimum balance in such
Institution account. Nations 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.

How To Exchange Shares

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

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

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

<PAGE>
Shareholder Administration Arrangements

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

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

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

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

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

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

How The Funds Value Their Shares

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

The Funds' 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 Directors.

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

DIVIDENDS AND DISTRIBUTIONS: Even though the Funds seek to manage taxable
distributions, the Funds may be expected to earn and distribute taxable income
and may also be expected to realize and distribute capital gains from time to
time. Nations International Growth Fund and Nations Small Company Growth Fund
declare and pay dividends from net investment income each calendar quarter, and
Nations U.S. Government Bond Fund declares dividends daily and pays them
monthly. Each Fund's net realized capital gains (including net short-term
capital gains) are distributed at least annually.

Primary B Shares of Nations U.S. Government Bond 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. Primary B Shares of Nations International
Growth Fund and Nations Small Company Growth Fund are eligible to receive
dividends when declared, provided however, that the purchase order for such
shares is received at least one day prior to the dividend declaration and such
shares continue to be eligible for dividends through and including the day
before the redemption order is executed. Distributions paid by the Funds 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 Primary B Shares in the Funds will be reduced by the
amount of any dividend or distribution. Dividends and distributions are paid in
cash within five Business Days of the end of the month or quarter to which the
dividend relates. Certain purchasing Institutions may provide for the
reinvestment of dividends in additional Primary B Shares of the same Fund.
Dividends and distributions payable to a shareholder are paid in cash within
five Business Days after a shareholder's complete redemption of his or her
Primary B Shares in a Fund. Each Fund's net investment income available for
distribution to the holders of Primary B Shares will be reduced by the amount of
administration fees payable to Institutions under the Administration Agreements.

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

Corporate shareholders in the Funds may be entitled to the dividends-received
deduction for distributions from those Funds investing in the stock of domestic
corporations to the extent of the total qualifying dividends received by the
distributing Fund. Corporate shareholders of Nations International Growth Fund
and Nations Small Company Growth Fund may be eligible for the dividends-received
deduction on the dividends (excluding the net capital gains dividends) paid by
these Funds to the extent that each such Fund's income is derived from dividends
(which, if received directly, would qualify for such deduction) received from
domestic corporations. In order to qualify for the dividends-received deduction,
a corporate shareholder must hold the fund shares paying the dividends upon
which the deduction is based for at least 46 days.

Dividends declared in October, November or December of any year payable to
shareholders of record on a specified date in such months will be deemed to have
been

<PAGE>
received by shareholders and paid by a Fund on December 31 of such year in the
event such dividends are actually paid during January of the following year.

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

Appendix A -- Portfolio Securities

ASSET-BACKED SECURITIES: Asset-backed securities arise through the grouping by
governmental, government-related, and private organizations of loans,
receivables, or other assets originated by various lenders. Asset-backed
securities consist of both mortgage- and non-mortgage-backed securities.
Interests in pools of these assets may differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal paid at maturity or specified call dates. Conversely,
asset-backed securities provide periodic payments which may consist of both
interest and principal payments.
The life of an asset-backed security varies depending upon the rate of the
prepayment of the underlying debt instruments. The rate of such prepayments will
be a function of current market interest rates and other economic and
demographic factors. For example, falling interest rates generally result in an
increase in the rate of prepayments of mortgage loans while rising interest
rates generally decrease the rate of prepayments. An acceleration in prepayments
in response to sharply falling interest rates will shorten the security's
average maturity and limit the potential appreciation in the security's value
relative to a conventional debt security. Consequently, asset-backed securities
may not be as effective in locking in high, long-term yields. Conversely, in
periods of sharply rising rates, prepayments are generally slow, increasing the
security's average life and its potential for price depreciation.

MORTGAGE-BACKED SECURITIES: Mortgage-backed securities represent an ownership
interest in a pool of mortgage loans.

The average life of a mortgage-backed security is likely to be substantially
less than the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return of the greater part of

<PAGE>
principal invested far in advance of the maturity of the mortgages in the pool.

Stripped mortgage-backed securities ("SMBS") are derivative multi-class mortgage
securities. A Fund will only invest in SMBS that are obligations backed by the
full faith and credit of the U.S. Government. SMBS are usually structured with
two classes that receive different proportions of the interest and principal
distributions from a pool of Mortgage Assets. A Fund will only invest in SMBS
whose Mortgage Assets are U.S. Government obligations.

The average life of mortgage-backed securities varies with the maturities of the
underlying mortgage instruments, which have maximum maturities of 40 years. The
average life is likely to be substantially less than the original maturity of
the mortgage pools underlying the securities as the result of mortgage
prepayments, mortgage refinancings, or foreclosures. The rate of mortgage
prepayments, and hence the average life of the certificates, will be a function
of the level of interest rates, general economic conditions, the location and
age of the mortgage and other social and demographic conditions. Such
prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest and have the effect of reducing future
payments. Estimated average life will be determined by the Adviser and used for
the purpose of determining the average weighted maturity and duration of the
Funds. For additional information concerning mortgage-backed securities, see the
SAI.

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 concern-

<PAGE>
ing 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.

Reverse repurchase agreements and dollar roll transactions may be considered to
be borrowings. When a Fund invests in a reverse repurchase agreement, it sells a
portfolio security to another party, such as a bank or broker/dealer, in return
for cash, and agrees to buy the security back at a future date and price.
Reverse repurchase agreements may be used to provide cash to satisfy unusually
heavy redemption requests without having to sell portfolio securities, or for
other temporary or emergency purposes. In addition, certain of the Funds may use
reverse repurchase agreements for the purpose of investing the proceeds in
tri-party repurchase agreements as discussed below. Generally, the effect of
such a transaction is that the Funds can recover all or most of the cash
invested in the portfolio securities involved during the term of the reverse
repurchase agreement, while they will be able to keep the interest income
associated with those portfolio securities. Such transactions are only
advantageous if the interest cost to the Funds of the reverse repurchase
transaction is less than the cost of obtaining the cash otherwise.

At the time a Fund enters into a reverse repurchase agreement, it may establish
a segregated account with its custodian bank in which it will maintain cash,
U.S. Government Securities or other liquid high grade debt obligations equal in
value to its obligations in respect of reverse repurchase agreements. Reverse
repurchase agreements involve the risk that the market value of the securities
the Funds are obligated to repurchase under the agreement may decline below the
repurchase price. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, the Funds' use
of proceeds of the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Funds'
obligation to repurchase the securities. In addition, there is a risk of delay
in receiving collateral or securities or in repurchasing the securities covered
by the reverse repurchase agreement or even of a loss of rights in the
collateral or securities in the event the buyer of the securities under the
reverse repurchase agreement files for bankruptcy or becomes insolvent. The Fund
only enters into reverse repurchase agreements (and repurchase agreements) with
counterparties that are deemed by the Adviser to be credit worthy. Reverse
repurchase agreements are speculative techniques involving leverage, and are
subject to asset coverage requirements if the Funds do not establish and
maintain a segregated account (as described above). Under the requirements of
the 1940 Act, the Funds are required to maintain an asset coverage (including
the proceeds of the borrowings) of at least 300% of all borrowings. Depending on
market conditions, the Fund's asset coverage and other factors at the time of a
reverse repurchase, the Funds may not establish a segregated account when the
Adviser believes it is not in the best interests of the Funds to do so. In this
case, such reverse repurchase agreements will be considered borrowings subject
to the asset coverage described above.

<PAGE>

specified currencies. Since currency swaps are individually negotiated, the Fund
expects to achieve an acceptable degree of correlation between its portfolio
investments and its currency swap positions. Currency swaps usually involve the
delivery of the entire principal value of one designated currency in exchange
for the other designated currency. Therefore, the entire principal value of a
currency swap is subject to the risk that the other party to the swap will
default on its contractual delivery obligations.

FOREIGN CURRENCY TRANSACTIONS: Certain of the Funds may enter into foreign
currency exchange transactions to convert foreign currencies to and from the
U.S. Dollar. A Fund either enters into these transactions on a spot (I.E., cash)
basis at the spot rate prevailing in the foreign currency exchange market, or
uses forward contracts to purchase or sell foreign currencies. A forward foreign
currency exchange contract is an obligation by a Fund to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract.

<PAGE>
and their prices more volatile than those of comparable domestic issuers.

Investments in foreign securities may present additional risks, whether made
directly or indirectly, including the political or economic instability of the
issuer or the country of issue and the difficulty of predicting international
trade patterns. In addition, there may be less publicly available information
about a foreign company than about a U.S. company. Further, foreign securities
markets are generally not as developed or efficient as those in the U.S., and in
most foreign markets volume and liquidity are less than in the United States.
Fixed commissions on foreign securities exchanges are generally higher than the
negotiated commissions on U.S. exchanges, and there is generally less government
supervision and regulation of foreign securities exchanges, brokers, and
companies than in the United States. With respect to certain foreign countries,
there is a possibility of expropriation or confiscatory taxation, limitations on
the removal of funds or other assets, or diplomatic developments that could
affect investments within those countries. Because of these and other factors,
securities of foreign companies acquired by a Fund may be subject to greater
fluctuation in price than securities of domestic companies.

FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS: Certain of the Funds may
attempt to reduce the overall level of investment risk of particular securities
and attempt to protect a Fund against adverse market movements by investing in
futures, options and other derivative instruments. These include the purchase
and writing of options on securities (including index options) and 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 equity swap contracts, interest rate swaps,
currency swaps, caps, collars and floors.

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

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

<PAGE>

SMALL CAPITALIZATION COMPANIES: Nations International Growth Fund may invest in
smaller, lesser-known companies which Kleinwort Benson believes offer greater
growth potential than larger, more mature, better-known firms. Investing in the
securities of such companies, however, may also involve greater risk and the
possibility of greater portfolio price volatility. Among the reasons for the
greater price volatility of these small company and unseasoned stocks are the
less certain growth prospects of smaller firms, the lower degree of liquidity in
the markets for such stocks, and the greater sensitivity of small companies to
changing economic conditions. For example, these companies are associated with
higher investment risk than that normally associated with larger firms due to
the greater business risks of small size and limited product lines, markets,
distribution channels and financial and managerial resources.

In addition, each Fund may purchase stripped mortgage-backed securities ("SMBS")
issued by the U.S. Government (or a U.S. Government agency or instrumentality)
or by private issuers such as banks and other institutions. SMBS, in particular,
may exhibit greater price volatility than ordinary debt securities because of
the manner in which their principal and interest are returned to investors.

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 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.

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>

(the "cash payment date") and therefore are issued and traded at a discount from
their face amounts or par value. Such bonds carry an additional risk in that,
unlike bonds which pay interest throughout the period to maturity, a Fund will
realize no cash until the cash payment date and, if the issuer defaults, the
Fund may obtain no return at all on its investment.

Appendix B -- Description Of Ratings

The following summarizes the highest six ratings used by S&P for corporate and
municipal bonds. The first four ratings denote investment grade securities.

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 six ratings used by Moody's for corporate
and municipal bonds. The first four ratings denote investment grade securities.

<PAGE>
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.

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:

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.

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.

<PAGE>
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 two 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+.

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.

For commercial paper, D&P uses the short-term debt ratings described above.

For commercial paper, Fitch uses the short-term debt ratings described above.

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.

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

TBW-3 -- The lowest investment grade category; indicates that while more
susceptible to adverse

<PAGE>
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:

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

The following summarizes the two 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>
Prospectus

INVESTOR A SHARES
MAY , 1997

This Prospectus describes NATIONS INTERNATIONAL
GROWTH FUND, NATIONS SMALL COMPANY GROWTH FUND AND
NATIONS U.S. GOVERNMENT BOND FUND (the "Funds") of
Nations Fund, Inc., 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
Funds -- Investor A Shares.

This Prospectus sets forth concisely the
information about the Funds 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, Inc. 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, Inc., dated May , 1997, is incorporated by
reference in its entirety into this Prospectus.
NationsBanc Advisors, Inc. ("NBAI") is investment
adviser to the Funds. Kleinwort Benson Investment
Management Americas Inc. ("Kleinwort Benson") is
investment sub-adviser to Nations International
Growth Fund, and Boatmen's Trust Company
("Boatmen's") is investment sub-adviser to Nations
Small Company Growth Fund and Nations U.S.
Government Bond Fund. As used herein the "Adviser"
shall mean NBAI, Kleinwort Benson and/or Boatmen's
as the context may require.

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

Nations International
Growth Fund

Nations Small Company
Growth Fund

Nations U.S. Government
Bond Fund

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

(NATIONS FUNDS logo)
<PAGE>

Table Of Contents

About The Funds

Prospectus Summary 3

Expenses Summary 4

Financial Highlights 6

Objectives 10

How Objectives Are Pursued 10

How Performance Is Shown 14

How The Funds Are Managed 15

Organization And History 19

About Your Investment

How To Buy Shares 19

How To Redeem Shares 21

How To Exchange Shares 23

Shareholder Servicing And Distribution Plans 24

How The Funds Value Their Shares 25

How Dividends And Distributions Are Made;
Tax Information 25

Appendix A -- Portfolio Securities 27

Appendix B -- Description Of Ratings 34

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS'
SAI INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE OFFERING MADE BY
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY NATIONS 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 Funds

Prospectus Summary

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

(Bullet) INVESTMENT OBJECTIVES AND POLICIES:

(Bullet) Nations International Growth Fund's investment objective is to
seek long-term capital growth by investing primarily in equity
securities of companies domiciled in countries outside the
United States and listed on major stock exchanges primarily in
Europe and the Pacific Basin.

(Bullet) Nations Small Company Growth Fund's investment objective is
to seek long-term capital growth by investing primarily in
equity securities.

(Bullet) Nations U.S. Government Bond Fund's investment objective is
to seek total return and preservation of capital by
investing in U.S. Government securities and repurchase
agreements.

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

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

<PAGE>
quent investment is $100, except for investments pursuant to the
Systematic Investment Plan. See "How To Buy Shares."

Expenses Summary

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

INVESTOR A SHARES

<TABLE>
<CAPTION>
<S> <C> <C>
Nations
Nations Small Company
International Growth
Growth Fund Fund

SHAREHOLDER TRANSACTION EXPENSES

Maximum Sales Load Imposed on Purchases None None
Maximum Deferred Sales Charge None None

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

Management Fees (After Fee Waivers) .90% .75%
Rule 12b-1 Fees (Including Shareholder Servicing Fees) .25% .25%
Other Expenses .22% .20%
Total Operating Expenses (After Fee Waivers) 1.37% 1.20%

<CAPTION>
Nations
U.S. Government
Bond
Fund
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases None
Maximum Deferred Sales Charge None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (After Fee Waivers) .40%
Rule 12b-1 Fees (Including Shareholder Servicing Fees) .25%
Other Expenses .20%
Total Operating Expenses (After Fee Waivers) .85%
</TABLE>

<PAGE>
EXAMPLES:

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

<TABLE>
<CAPTION>
<S> <C> <C>
Nations
Small
Nations Company
International Growth
Growth Fund Fund

1 Year $ 14 $ 12
3 Years $ 43 $ 38
5 Years $ 75 $ 66
10 Years $ 165 $ 145

Nations
U.S. Government
Bond
Fund
1 Year $ 9
3 Years $ 27
5 Years $ 47
10 Years $ 105
</TABLE>

The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Investor A Shares of the Funds will bear either directly or indirectly. The
amounts in the above tables are based on amounts incurred during each Fund's
most recent fiscal year and have been adjusted as necessary to reflect current
service provider fees. There is no assurance that any fee waivers and
reimbursements will continue beyond the current fiscal year. If fee waivers
and/or reimbursements are discontinued, the amounts contained in the "Examples"
above may increase. For more complete descriptions of the Funds' operating
expenses, see "How The Funds Are Managed." For a more complete description of
the Rule 12b-1 and shareholder servicing fees payable by the Funds, see
"Shareholder Servicing And Distribution Plans." Absent fee waivers, "Management
Fees" and "Total Operating Expenses" for the following Funds would have been as
follows: Nations Small Company Growth Fund -- 1.00% and 1.45%, respectively; and
Nations U.S. Government Bond Fund -- .60% and 1.05%, 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>

Financial Highlights

The following information for Investor A Shares of Nations International Growth
Fund, Nations Small Company Growth Fund and Nations U.S. Government Bond Fund
has been derived from the Financial Highlights in the January 2, 1997
Prospectuses for the Class A Shares of The Pilot Funds' Pilot International
Equity Fund, Pilot Small Capitalization Equity Fund and Pilot U.S. Government
Securities Fund, the predecessor Funds to the current Nations Funds listed
above. This information (except for the years from 12/31/87 to 12/31/92 with
respect to the Pilot International Equity Fund) has been audited by Arthur
Andersen LLP. This information is provided to help you understand the historical
performance of the Funds and their predecessors. This information should be read
in conjunction with the predecessor Funds' annual financial statements and the
respective notes thereto, which are incorporated by reference into the SAI.

NATIONS INTERNATIONAL GROWTH FUND

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
EIGHT
YEAR YEAR YEAR MONTHS YEAR
INVESTOR A SHARES ENDED ENDED ENDED ENDED ENDED
(FORMERLY CLASS A SHARES) 08/31/96 08/31/95(i) 08/31/94 08/31/93 12/31/92(a)(b)
Operating performance:
Net asset value at the beginning of the
period $ 16.14 $ 16.29 $ 14.13 $ 11.85 $ 12.29
Net investment income $ 0.04 $ 0.08(h) $ 0.07(h) $ 0.02(h) $ 0.04(h)
Net realized and unrealized capital
gain/(loss) on investments $ 1.69 $ (0.22)(h) $ 1.65(h) $ 2.51(h) $ (0.46)(h)
Net realized and unrealized gain/(loss)
on foreign currency related
transactions (c) $ (0.12) $ 0.39(h) $ 0.59(h) $ (0.25)(h) --
Total income (loss) from investments $ 1.61 $ 0.25 $ 2.31 $ 2.28 $ (0.42)
Dividends from net investment income $ (0.46) $ (0.11) $ -- $ -- $ (0.02)
Dividends from net realized gain on
investments and foreign currency
related transactions $ (0.39) $ (0.29) $ (0.15) $ -- $ --
Net asset value at the end of the period $ 16.90 $ 16.14 $ 16.29 $ 14.13 $ 11.85
Total return (d) 10.40% 1.77% 16.48% 19.24%(e) (3.42)%
Portfolio turnover rate (k) 22.31% 35.91% 35.40% 26.65%(e)(g) 58.55%
Ratio of expenses to average net assets 1.32% 1.42% 1.37% 2.17%(f) 1.78%
Ratio of net investment income (loss) to
average net assets 0.48% 0.50% 0.48% 0.25%(f) 0.35%
Net assets at end of period (in 000's) $ 26,730 $ 27,625 $ 44,990 $ 55,816 $ 56,358
Average Commission Rate (j) $ 0.0160
</TABLE>

<PAGE>

NATIONS INTERNATIONAL GROWTH FUND

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR YEAR YEAR YEAR YEAR
INVESTOR A SHARES ENDED ENDED ENDED ENDED ENDED
(FORMERLY CLASS A SHARES) 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
Operating performance:
Net asset value at the beginning of the
period $ 12.65 $ 15.58 $ 14.66 $ 13.21 $ 22.92
Net investment income $ 0.06 $ 0.12 $ 0.07 $ (0.01) --
Net realized and unrealized capital
gain/(loss) on investments $ 1.36 $ (2.40) $ 3.22 $ 2.73 $ 2.11
Net realized and unrealized gain/(loss)
on foreign currency related
transactions (c) -- -- -- -- --
Total income (loss) from investments $ 1.42 $ (2.28) $ 3.29 $ 2.72 $ 2.11
Dividends from net investment income $ (0.08) $ (0.14) $ (0.22) -- --
Dividends from net realized gain on
investments and foreign currency
related transactions $ (1.70) $ (0.51) $ (2.15) $ (1.27) $ (11.82)
Net asset value at the end of the period $ 12.29 $ 12.65 $ 15.58 $ 14.66 $ 13.21
Total return (d) 11.81% (14.77)% 22.99% 21.03% 9.28%
Portfolio turnover rate (k) 51.88% 52.00% 61.54% 54.84% 58.98%
Ratio of expenses to average net assets 1.79% 1.82% 2.00% 2.31% 1.72%
Ratio of net investment income (loss) to
average net assets 0.45% 0.76% 0.39% (0.07)% 0.01%
Net assets at end of period (in 000's) $ 65,939 $ 72,007 $ 80,224 $ 59,864 $ 53,800
</TABLE>

(a) Prior to a tax-free organization into Pilot Administration shares effective
July 12, 1993, the Pilot Kleinwort Benson International Equity Portfolio was
a separate portfolio of Kleinwort Benson Investment Strategies known as
Kleinwort Benson International Equity Fund. The predecessor portfolio was
advised by Kleinwort Benson International Investment Limited and had a
December 31 fiscal year end.

(b) Prior to July 12, 1993, the Pilot Administration shares were not subject to
an Administration Plan.

(c) For years preceding the fiscal year ended August 31, 1993, net realized and
unrealized gain/(losses) from foreign currency related transactions were
included in net realized and unrealized gain/(losses) from investments.
Effective January 1, 1993, realized and unrealized gain/(losses) from
Foreign currency related transactions are disclosed separately from net
realized and unrealized gain/(losses) from investments.

(d) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no sales
charges. Total return would be reduced if sales charges were taken for the
Class A Shares.

(e) Not annualized.

(f) Annualized.

(g) Calculated on a portfolio-wide level and excludes the transfer of assets
effective on August 6, 1993.

(h) Calculated based on the average shares outstanding methodology.

(i) Effective August 21, 1995 the Administration Class Shares were redesignated
as the Class A Shares.

(j) Represents the total dollar amount of commissions paid on security
transactions, for the time periods of May 4, 1996 to August 31, 1996,
divided by total number of security shares purchased and sold for which
commissions were charged. Disclosure is not required for prior periods.

(k) Portfolio turnover is calculated on the basis of the portfolio as a whole
without distinguishing between the classes of shares issued and is not
annualized.

<PAGE>

NATIONS SMALL COMPANY GROWTH FUND

<TABLE>
<CAPTION>
<S> <C>
PERIOD
ENDED
INVESTOR A SHARES (FORMERLY CLASS A SHARES) 08/31/96(a)
Operating performance:
Net asset value, beginning of the period $ 10.00
Net investment income $ 0.05
Net realized and unrealized gain on investments and futures $ 0.64
Total income from investment operations $ 0.69
Dividends from net investment income $ (0.05)
Net asset value at the end of the period $ 10.64
Total return (b) 6.88%
Ratio of expenses to average net assets (c) 1.25%
Ratio of net investment income to average net assets 0.66%
Portfolio turnover rate (e) 31%
Net assets at end of period (in 000's) $ 2,611
Ratio of expenses to average net assets (assuming no waiver or expense reimbursements) 1.65%(c)
Ratio of net investment income to average net assets (assuming no waiver or expense reimbursements) 0.26%(c)
Average Commission Rate (d) $ .0340
</TABLE>

(a) Share activity commenced December 12, 1995.

(d) The average commission rate represents the total dollar amount of
commissions paid on portfolio transactions, for the time period of May 4,
1996 to August 31, 1996, divided by the total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for prior periods.

(e) Portfolio turnover is calculated on the basis of the portfolio as a whole
without distinguishing between the classes of shares issued.

<PAGE>

NATIONS U.S. GOVERNMENT BOND FUND

<TABLE>
<CAPTION>
<S> <C> <C>
YEAR YEAR
ENDED ENDED
INVESTOR A SHARES (FORMERLY CLASS A SHARES) 08/31/96 08/31/95(a)
Operating performance:
Net asset value, at the beginning of the period $ 11.19 $ 10.48
Net investment income $ 0.59 $ 0.37
Net realized and unrealized gain on investment transactions $ (0.20) $ 0.71
Total income from investment operations $ 0.39 $ 1.08
Dividends from net investment income $ (0.59) $ (0.37)
Dividends from net realized gains $ (0.45) --
Net asset value at the end of the period $ 10.54 $ 11.19
Total return (b) 3.44% 10.41%
Ratio of expenses to average net assets 0.85% 0.82%(c)
Ratio of net investment income to average net assets 5.44% 5.76%(c)
Portfolio turnover rate (d) 87% 132%
Net assets at end of period (in 000's) $632 $87
Ratio of expenses to average net assets (assuming no waiver or expense
reimbursements) 1.07% 1.12%(c)
Ratio of net investment income to average net assets (assuming no waiver or expense
reimbursements) 5.22% 5.46%(c)
</TABLE>

(a) Class A Shares activity commenced February 7, 1995.

(d) Portfolio turnover is calculated on the basis of the portfolio as a whole
without distinguishing between the classes of shares issued.

<PAGE>

Objectives

NATIONS SMALL COMPANY GROWTH FUND: Nations Small Company Growth Fund's
investment objective is to seek long-term capital growth by investing primarily
in equity securities.

How Objectives Are Pursued

The Fund may invest up to 35% of its total assets in securities of issuers
domiciled in developing countries. These countries are generally located in
Eastern Europe, the Asia-Pacific region, Latin and South America, Africa and,
subject to approval by the Board of Directors, the former Soviet Union and the
Middle East. Debt securities, if any, purchased by the Fund will be rated in the
top two categories by a nationally recognized statistical rating organization
("NRSRO") or, if unrated, determined by the Adviser to be of comparable quality.
For temporary defensive purposes, the Fund may invest up to 100% of its assets
in debt and equity securities of U.S. issuers. Debt securities in which the Fund
may invest include short-term and intermediate-term obligations of corporations,
foreign governments and international organizations (such as the International
Bank for Reconstruction and Development (the "World Bank")), including money
market instruments.

<PAGE>

damental valuation and relatively good prospects for earnings improvement.
Typically, two types of companies are candidates for purchase: (i) mature
companies which may have fallen from a larger market value due to business
difficulties, but which now exhibit improving prospects; and (ii) smaller or
younger companies which are experiencing strong trends in earnings growth, but
remain reasonably valued and therefore offer premium growth at a discount in
comparison to other companies.

The Fund may invest in common stocks (including securities convertible into
common stocks) of foreign issuers and rights to purchase common stock, options
and futures contracts on securities, securities indexes and foreign currencies,
securities lending and repurchase agreements. The Fund currently intends to
limit any investment in foreign securities to 5% of total assets. For more
information concerning these and other permissible Fund investments, see
"Appendix A".

<PAGE>

which are rated investment grade or better by at least one NRSRO or, if unrated,
are determined by the Adviser to be of comparable quality. If a portfolio
security held by the Fund ceases to be rated investment grade by at least one
NRSRO or if the Adviser determines that an unrated portfolio security held by
the Fund is no longer of comparable quality to an investment grade security, the
security will be sold in an orderly manner as quickly as possible. Additionally,
the Fund may also invest in futures contracts, interest rate swaps and options.
From time to time, the Fund may also hold uninvested cash reserves which do not
earn income.

GENERAL: Each Fund may invest in certain specified derivative securities,
including: exchange-traded options; over-the-counter options executed with
primary dealers, including long calls and puts and covered calls to enhance
return; and U.S. and foreign exchange-traded financial futures approved by the
Commodity Futures Trading Commission ( the "CFTC") and options thereon for
market exposure risk management. Each Fund may lend its portfolio securities to
qualified institutional investors. Each Fund also may invest in restricted,
private placement and other illiquid securities and securities issued by other
investment companies, consistent with the Fund's investment objective and
policies. Each Fund may invest in real estate investment trust securities.
Additionally, Nations U.S. Government Bond Fund may engage in reverse repurchase
agreements and dollar roll transactions.

For more information concerning these and other instruments in which the Funds
may invest and their investment practices, see "Appendix A."

SPECIAL RISK CONSIDERATIONS RELEVANT TO AN INVESTMENT IN NATIONS INTERNATIONAL
GROWTH FUND: Investors should understand and consider carefully the special
risks involved in foreign investing.

Investors should be aware that the Fund may, from time to time, invest in
securities of companies located in Eastern Europe. Economic and political
reforms in this region are still in their infancy. As a result, investment in
such countries would be highly speculative and could result in losses to the
Fund and, thus, to its shareholders.

Investing in securities denominated in foreign currencies and utilization of
forward foreign cur-

<PAGE>

rency exchange contracts and other currency hedging techniques involve certain
considerations comprising both opportunities and risks not typically associated
with investing in U.S. dollar-denominated securities. Additionally, changes in
the value of foreign currencies can significantly affect a Fund's share price.
General economic and political factors in the various world markets can also
impact a Fund's share price.

RISK CONSIDERATIONS: Although the Adviser will seek to achieve the investment
objective of each Fund, there is no assurance that it will be able to do so. No
single Fund should be considered, by itself, to provide a complete investment
program for any investor. The net asset value of the shares of the Funds will
fluctuate based on market conditions. Therefore, investors should not rely upon
the Funds for short-term financial needs, nor are the Funds meant to provide a
vehicle for participating in short-term swings in the stock market. Investments
in a Fund are not insured against loss of principal.

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

Certain of the Funds' investments constitute derivative securities, which are
securities whose

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

Each Fund may not:

In order to register a Fund's shares for sale in certain states, a Fund may make
commitments more restrictive than the investment policies and limitations
described in this Prospectus and the SAI. Should a Fund determine that any such
commitment is no longer in the best interest of the Fund, it may consider
terminating sales of its shares in the states involved.

How Performance Is Shown

From time to time the Funds may advertise the total return and yield on a class
of shares. Nations U.S. Government Bond Fund also may advertise the tax
equivalent yield of a class of shares. BOTH TOTAL RETURN AND YIELD FIGURES ARE
BASED ON HISTORICAL DATA AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE.
The "total return" of a class of shares of the Funds may be calculated on an
average annual total return basis or an aggregate total return basis. Average
annual total return refers to the average annual compounded rates of return on a
class of shares over one-, five-, and ten-year periods or the life of a Fund (as
stated in the advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the investment
(reflecting the deduction of any applicable contingent deferred sales charge
("CDSC")), assuming the reinvestment of all dividend and capital gain dis-

<PAGE>
tributions. 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 or may not reflect a deduction of any
applicable CDSC.

Investment performance, which will vary, is based on many factors, including
market conditions, the composition of the Funds' portfolios and the Funds'
operating expenses. Investment performance also often reflects the risks
associated with a Fund's investment objective and policies. These factors should
be considered when comparing the Funds' 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 Funds 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 Funds offer Primary A, Primary B, Investor
C and Investor N Shares. Each class of shares may bear different sales charges,
shareholder servicing fees, loads and other expenses, which may cause the
performance of a class to differ from the performance of the other classes.
Total return and yield quotations will be computed separately for each class of
the Funds' shares. Any quotation of total return or yield not reflecting CDSCs
would be reduced if such sales charges were reflected.

Any fees charged by a selling agent and/or servicing agent directly to its
customers' accounts in connection with investments in the Funds will not be
included in calculations of total return or yield. Each Fund's annual report
contains additional performance information and is available upon request
without charge from the Funds' distributor or an investor's Agent (as defined
below).

How The Funds Are Managed

<PAGE>

Subject to the general supervision of Nations Fund, Inc.'s Board of Directors,
and in accordance with each Fund's investment policies, the Adviser formulates
guidelines and lists of approved investments for each Fund, makes decisions with
respect to and places orders for each Fund's purchases and sales of portfolio
securities and maintains records relating to such purchases and sales. The
Adviser is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, in the case of agency
transactions, financial institutions which are affiliated with the Adviser or
which have sold shares in the Funds, if the Adviser believes that the quality of
the transaction and the commission are comparable to what they would be with
other qualified brokerage firms. From time to time, to the extent consistent
with its investment objective, policies and restrictions, each Fund may invest
in securities of companies with which NationsBank has a lending relationship.

For the services provided and expenses assumed pursuant to an Investment
Advisory Agreement, NBAI is entitled to receive advisory fees, computed daily
and paid monthly, at the monthly rate of: .90% of the average daily net assets
of Nations International Growth Fund; 1.00% of the average daily net assets of
Nations Small Company Growth Fund; and .60% of the average daily net assets of
Nations U.S. Government Bond Fund.

For the services provided and the expenses assumed pursuant to various
Sub-Advisory Agreements, NBAI will pay Kleinwort Benson sub-advisory fees at the
rate of .40% of Nations International Growth Fund's average net assets up to and
including $325,000,000 in assets and .25% on assets in excess of $325,000,000.
NBAI will pay Boatmen's sub-advisory fees at the rate of .25% of the average net
assets of Nations Small Company Growth Fund and .15% of the average daily net
assets of Nations U.S. Government Bond Fund.

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

<PAGE>

the Society of Quantitative Analysts, and the St. Louis Society of Financial
Analysts.

C. Thomas Clapp, CFA, is Director of the Equity Management Group for TradeStreet
and Portfolio Manager of Nations Emerging Growth Fund. Mr. Clapp has been
Portfolio Manager for Nations Emerging Growth Fund since September, 1996. He is
also part of the Adviser's team responsible for the day to day management of
Nations Small Company Growth Fund, and has been an officer of Boatmen's since
January, 1997. Prior to assuming his position with TradeStreet in 1995, he was
Senior Vice President and Director of Research for the Investment Management
Group at NationsBank. Prior to joining NationsBank in 1992, Mr. Clapp was a
Senior Portfolio Manager with Royal Insurance Group. Mr. Clapp has worked in the
investment community since 1984. He received his B.A. in Economics from the
University of North Carolina at Chapel Hill and an M.B.A. from the University of
South Carolina. He also holds the Chartered Financial Analyst designation and is
a member of the Association for Investment Management and Research and the North
Carolina Society of Financial Analysts, Inc.

The Fixed Income Committee of Boatmen's is responsible for the day-to-day
management of the investment portfolio of Nations U.S. Government Bond 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 various Investment
Advisory Agreements and this Prospectus, without violation of the Glass-Steagall
Act. Such counsel has pointed out, however, that there are no controlling
judicial or administrative interpretations or decisions and that future judicial
or administrative interpretations of, or decisions relating to, present federal
or state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in federal or state statutes, including the
Glass-Steagall Act, and regulations and judicial or administrative decisions or
interpretations thereof, could prevent such entities from continuing to perform,
in whole or in part, such services. If any such entity were prohibited from
performing any of such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.

First Data Investor Services Group, Inc. ("First Data"), 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 Funds including performing the calculations necessary to determine the net
asset value per share and dividends of each class of the Funds, preparing tax
returns and financial statements and maintaining the portfolio records and
certain of the general accounting records for the Funds.

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

<PAGE>
rate of 0.01% of the Funds' average daily net assets.

NationsBank of Texas, N.A. ("NationsBank of Texas" and, collectively with Bank
of New York ("BONY"), called "Custodians") serves as custodian for the assets of
each Fund. 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, 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.

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

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

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

<PAGE>

Organization And History

The Funds are members of the Nations Funds Family, which consists of Nations
Fund Trust, Nations Fund, Inc., Nations Fund Portfolios, Inc. and Nations
Institutional Reserves. The Nations Funds Family currently has more than 50
distinct investment portfolios and total assets in excess of $20 billion.

Nations Fund, Inc. was incorporated in Maryland on December 13, 1983, but had no
operations prior to December 15, 1986. Nations Fund, Inc.'s fiscal year end is
March 31; prior to 1996, Nations Fund, Inc.'s fiscal year end was May 31. As of
the date of this Prospectus, the authorized capital stock of Nations Fund, Inc.
consists of 420,000,000,000 shares of common stock, par value of $.001 per
share, which are divided into series or funds each of which consists of separate
classes of shares. This Prospectus relates only to the Investor A Shares of
Nations International Growth Fund, Nations Small Company Growth Fund and Nations
U.S. Government Bond Fund of Nations Fund, Inc. To obtain additional information
regarding the Fund's other classes of shares which may be available to you,
contact your Selling Agent (as defined below) or Nations Funds at
1-800-321-7854.

About Your Investment

How To Buy Shares

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

<PAGE>
port agreement ("Sales Support Agreement") with Stephens ("Selling Agents").
Servicing Agents and Selling Agents are sometimes referred to hereafter as
"Agents."

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

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

(Bullet) $500 for IRA investors;
(Bullet) $250 for non-working spousal IRAs; and

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

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

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

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

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

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

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

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

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

Account Name

Account Number

Fund Name

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

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

ADDITIONAL PURCHASES: Additional purchases may be made by mail or wire. To
purchase additional shares by mail, send a check made payable to the 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 of the Funds
which are received by Stephens or by the Transfer Agent before the close of
regular trading hours on the Exchange (currently 4:00 p.m., Eastern time) on any
Business Day are priced according to the net

<PAGE>
asset value determined on that day but are not executed until 4:00 p.m., Eastern
time, on the Business Day on which immediately available funds in payment of the
purchase price are received by the Funds' Custodian. Such payment must be
received no later than 4:00 p.m., Eastern time, by the third Business Day
following receipt of the order. If funds are not received by such date, the
order will not be accepted and notice thereof will be given to the Agent placing
the order. Payment for orders which are not received or accepted will be
returned after prompt inquiry to the sending Agent.

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

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

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

How To Redeem Shares

For shareholders who open and maintain an account directly with a Fund,
redemption orders should be communicated to such Fund by calling Investor
Services at 1-800-982-2271 or in writing. (Shareholders must have established
telephone features on their account in order to effect telephone transactions.)
Redemption proceeds are normally sent by mail or wired within three Business
Days after receipt of the order by 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
wired to the redeeming Agent within three Business Days after receipt of the
order by Stephens or by the Transfer Agent. Redemption orders are effected at
the net asset value per share next determined after receipt of the order by 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
Fund. There is no redemption charge.

Nations Fund may redeem a shareholder's Investor A Shares upon 60 days' written
notice if the balance in the shareholder's account drops below $500 as a result
of redemptions. Share balances also may be redeemed at the direction of an Agent
pursuant to arrangements between the

<PAGE>
Agent and its Customers. Nations Fund also may redeem shares of the Funds
involuntarily or make payment for redemption in readily marketable securities or
other property under certain circumstances in accordance with the 1940 Act.

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

CONTINGENT DEFERRED SALES CHARGE: Subject to certain waivers specified below,
Investor A Shares of the Funds that were purchased prior to January 1, 1996 in
amounts of $1 million or more or through the Nations Fund Personal Investment
Planner may be subject to a CDSC equal to 1.00% of the lesser of the net asset
value or the purchase price of the shares being redeemed if such shares are
redeemed within one year of purchase, declining to 0.50% in the second year
after purchase and eliminated thereafter. No CDSC is imposed on increases in net
asset value above the initial purchase price, including shares acquired by
reinvestment of distributions.

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

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

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

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

<PAGE>
ued at the net asset value at the time of the establishment of the AWP) equals
$10,000 or more. Investor A Shares redeemed under the AWP will not be subject to
a CDSC, provided that the shares so redeemed do not exceed, on an annual basis,
12% of the net asset value of the Investor A Shares in the account. Otherwise,
any applicable CDSC will be imposed on shares redeemed under the AWP.
Shareholders who elect to establish an AWP may receive a monthly, quarterly or
annual check or automatic transfer to a checking or savings account in a stated
amount of not less than $25 on or about the 10th or 25th day of the applicable
month of withdrawal. Investor A Shares will be redeemed (net of any applicable
CDSC) as necessary to meet withdrawal payments. Withdrawals will reduce
principal and may eventually deplete the shareholder's account. If a shareholder
desires to establish an AWP after opening an account, a signature guarantee will
be required. An AWP may be terminated by a shareholder on 30 days' written
notice to his/her Agent or by Nations Fund at any time.

How To Exchange Shares

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

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

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

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

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

If Investor A Shares of the Funds purchased prior to January 1, 1996 are
exchanged for shares of the same class of another fund, any CDSC applicable to
the original shares purchased will be applied upon the redemption of the
acquired shares. The holding period of such Investor A Shares (for purposes of
determining whether a CDSC is applicable upon redemption)

<PAGE>
will be computed from the time of the initial purchase of the Investor A Shares
of a Fund.

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

Shareholder Servicing And
Distribution Plans

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

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

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

Stephens may, from time to time, at its expense or as an expense for which it
may be reimbursed under the Investor A Plan, pay a bonus or other consideration
or incentive to Agents who sell a minimum dollar amount of shares of the Funds
during a specified period of time. Stephens also may, from time to time, pay
additional consideration to Agents not to exceed 1.00% of the offering price per
share on all sales of Investor A Shares as an expense of Stephens or for which
Stephens may be reimbursed under the Investor A Plan or upon receipt of a CDSC.
Any such additional consideration or incentive program may be terminated at any
time by Stephens.

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

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

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

How The Funds Value Their Shares

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

How Dividends And Distributions Are
Made; Tax Information

Investor A Shares of Nations U.S. Government Bond 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. Investor A Shares of the Funds are eligible
to receive dividends when declared, provided, how-

<PAGE>
ever, that the purchase order for such shares is received at least one day prior
to the dividend declaration and such shares continue to be eligible for
dividends through and including the day before the redemption order is executed.
Distributions paid by the Funds 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. Certain Agents may provide for the reinvestment of
dividends in the form of additional Investor A Shares of the same class in the
same Fund. Dividends and distributions are paid in cash within five Business
Days of the end of the quarter to which the dividend relates. Dividends and
distributions payable to a shareholder are paid in cash within five Business
Days after a shareholder's complete redemption of his/her Investor A Shares.

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

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

Corporate investors in Nations International Growth Fund and Nations Small
Company Growth Fund may be entitled to the dividends-received deduction on all
or a portion of such Fund's dividends to the extent that the Fund's income is
derived from dividends (which, if received directly, would qualify for such
deduction) received from domestic corporations. In order to qualify for the
dividends-received deduction, a corporate shareholder must hold the fund shares
paying the dividends upon which the deduction is based for at least 46 days.

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

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

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

The foregoing discussion is based on tax laws and regulations which were in
effect as of the date of this Prospectus and summarizes only

<PAGE>

some of the important Federal tax considerations generally affecting the Funds
and their shareholders. It is not intended as a substitute for careful tax
planning; investors should consult their tax advisors with respect to their
specific tax situations as well as with respect to state and local taxes.
Further tax information is contained in the SAI.

Appendix A -- Portfolio Securities

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

MORTGAGE-BACKED SECURITIES: Mortgage-backed securities represent an ownership
interest in a pool of mortgage loans.

<PAGE>

Collateralized Mortgage Obligations or "CMOs" are debt obligations
collateralized by mortgage loans or mortgage pass-through securities (collateral
collectively hereinafter referred to as "Mortgage Assets"). Multi-class
pass-through securities are interests in a trust composed of Mortgage Assets and
all references herein to CMOs will include multi-class pass-through securities.
Payments of principal of and interest on the Mortgage Assets, and any
reinvestment income thereon, provide the funds to pay debt service on the CMOs
or make scheduled distribution on the multi-class pass-through securities.

<PAGE>

Reverse repurchase agreements and dollar roll transactions may be considered to
be borrowings. When a Fund invests in a reverse repurchase agreement, it sells a
portfolio security to another party, such as a bank or broker/dealer, in return
for cash, and agrees to buy the security back at a future date and price.
Reverse repurchase agreements may be used to provide cash to satisfy unusually
heavy redemption requests without having to sell portfolio securities, or for
other temporary or emergency purposes. Generally, the effect of such a
transaction is that the Funds can recover all or most of the cash invested in
the portfolio securities involved during the term of the reverse repurchase
agreement, while they will be able to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Funds of the reverse repurchase transaction is less than
the cost of obtaining the cash otherwise.

At the time a Fund enters into a reverse repurchase agreement, it may establish
a segregated account with its custodian bank in which it will maintain cash,
U.S. Government securities or other liquid high grade debt obligations equal in
value to its obligations in respect of reverse repurchase agreements. Reverse
repurchase agreements involve the risk that the market value of the securities
the Funds are obligated to repurchase under the agreement may decline below the
repurchase price. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, the Funds' use
of proceeds of the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Funds'
obligation to repurchase the securities. In addition, there is a risk of delay
in receiving collateral or securities or in repurchasing the securities covered
by the reverse repurchase agreement or even of a loss of rights in the
collateral or securities in the event the buyer of the securities under the
reverse repurchase agreement files for bankruptcy or becomes insolvent. The
Funds only enter into reverse repurchase agreements (and repurchase agreements)
with counterparties that are deemed by the Adviser to be credit worthy. Reverse
repurchase agreements are speculative techniques involving leverage, and are
subject to asset coverage described above. Under the requirements of the 1940
Act, the Funds are required to maintain an asset coverage (includ-

<PAGE>
ing the proceeds of the borrowings) of at least 300% of all borrowings.
Depending on market conditions, the Funds' asset coverage and other factors at
the time of a reverse repurchase, the Funds may not establish a segregated
account when the Adviser believes it is not in the best interests of the Funds
to do so. In this case, such reverse repurchase agreements will be considered
borrowings subject to the asset coverage described above.

CURRENCY SWAPS: Nations International Growth Fund may enter into currency swaps
for hedging purposes and to seek to increase total return. Currency swaps
involve the exchange of rights to make or receive payments in specified
currencies. Since currency swaps are individually negotiated, the Fund expects
to achieve an acceptable degree of correlation between its portfolio investments
and its currency swap positions. Currency swaps usually involve the delivery of
the entire principal value of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its
contractual delivery obligations.

<PAGE>

required to establish special custodial or other arrangements before making
certain investments in those countries. There may be little financial or
accounting information available with respect to issuers located in certain of
such countries, and it may be difficult as a result to assess the value of
prospects of an investment in such issuers.

FOREIGN CURRENCY TRANSACTIONS: To the extent provided under "How Objectives Are
Pursued," the Funds may enter into foreign currency exchange transactions to
convert foreign currencies to and from the U.S. Dollar. A Fund either enters
into these transactions on a spot (I.E., cash) basis at the spot rate prevailing
in the foreign currency exchange market, or uses forward contracts to purchase
or sell foreign currencies. A forward foreign currency exchange contract is an
obligation by a Fund to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract.

<PAGE>
tain foreign countries, there is a possibility of expropriation or confiscatory
taxation, limitations on the removal of funds or other assets, or diplomatic
developments that could affect investments within those countries. Because of
these and other factors, securities of foreign companies acquired by a Fund may
be subject to greater fluctuation in price than securities of domestic
companies.

FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS: To the extent provided under
"How Objectives Are Pursued" the Funds may attempt to reduce the overall level
of investment risk of particular securities and attempt to protect a Fund
against adverse market movements by investing in futures, options and other
derivative instruments. These include the purchase and writing of options on
securities (including index options) and 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.

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

<PAGE>
the market value of the securities loaned. There is a risk of delay in receiving
collateral or in recovering the securities loaned or even a loss of rights in
the collateral should the borrower of the securities fail financially. However,
loans are made only to borrowers deemed by the Adviser to be credit worthy and
when, in its judgment, the income to be earned from the loan justifies the
attendant risks. The aggregate of all outstanding loans of a Fund may not exceed
30% of the value of its total assets.

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

<PAGE>
Obligations are subject to fluctuations in yield or value due to their structure
or contract terms.

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

ZERO COUPON SECURITIES: Each Fund may invest in zero coupon securities. Zero
coupon securities are debt obligations which do not entitle the holder to any
periodic payments of interest prior to maturity or a specified date when the
securities begin paying current interest (the "cash payment date") and therefore
are issued and traded at a discount from their face amounts or par value. Such
bonds carry an additional risk in that, unlike bonds which pay interest
throughout the period to maturity, a Fund will realize no cash until the cash
payment date and, if the issuer defaults, the Fund may obtain no return at all
on its investment.

Appendix B -- Description Of Ratings

The following summarizes the highest six ratings used by S&P for corporate and
municipal bonds. The first four ratings denote investment grade securities.

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.

BB, B -- Bonds rated BB and B are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance

<PAGE>
with the terms of the obligation. BB represents the lowest degree of
speculation and B a higher degree of speculation. While such bonds will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.

The following summarizes the highest six ratings used by Moody's for corporate
and municipal bonds. The first four ratings denote investment grade securities.

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.

<PAGE>
However, risk factors are more variable and greater in periods of economic
stress.