NATIONS INSTITUTIONAL RESERVES, 485APOS, 1999-05-28

NATIONS INSTITUTIONAL RESERVES
485APOS, 1999-05-28

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As filed with the Securities and Exchange Commission
on May 28, 1999

Registration No. 33-33144; 811-6030

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|

Post-Effective Amendment No. 26 |X|

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|

Amendment No. 27 |X|

(Check appropriate box or boxes)

------------------------
THE CAPITOL MUTUAL FUNDS
(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):

|_| Immediately upon filing pursuant to Rule 485(b); or

|X| 60 days after filing pursuant to Rule 485(a), or

|_| 75 days after filing pursuant to paragraph (a)(2)

|_| on (date) pursuant to Rule 485(b), or

|_| on (date) pursuant to Rule 485(a)(1)

|_| on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE>

EXPLANATORY NOTE

The Registrant is filing this Post-Effective Amendment No. 26 to Nations
Institutional Reserves' Registration Statement for the purpose of filing
their prospectuses as prepared under new Form N-1A.

<PAGE>

THE CAPITOL MUTUAL FUNDS

D/B/A NATIONS INSTITUTIONAL RESERVES

CROSS REFERENCE SHEET

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

1. Front and Back Cover Pages ............................ Front and Back Cover Pages

2. Risk/Return Summary: Investments, Risks
and Performance........................................ About this Prospectus

3. Risk/Return Summary: Fee Tables........................ About the Funds; Financial Highlights

4. Investment Objectives, Principal
Investment Strategies, and Related Risks............... About the Funds; Other Important
Information

5. Management's Discussion of Fund
Performance............................................ About the Funds

6. Management, Organization, and
Capital Structure...................................... What's Inside; About the Funds;
How the Funds Are Managed;
About your Investment

7. Shareholder Information................................ About the Funds; About your
Investment

8. Distribution Arrangements.............................. Information for Investors

9. Financial Highlights Information....................... Financial Highlights; About the Funds

1
<PAGE>

Part B

Item No.
- --------

10. Cover Page and Table of Contents....................... Cover Page and Table of Contents

11. Fund History........................................... Introduction

12. Description of the Fund and Its
Investments and Risks.................................. Additional Information on Portfolio
Investments

13. Management of the Funds................................ Trustees And Officers; Investment
Advisory, Administration, Custody Transfer Agency,
Shareholder Servicing and Distribution Agreements
14. Control Persons and Principal
Holders of Securities.................................. Not Applicable

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

16. Brokerage Allocation and Other Practices............... Portfolio Transactions and
Brokerage--General Brokerage Policy

17. Capital Stock and Other
Securities............................................. Description Of Shares;
Investment Advisory, Administration, Custody, Transfer
Custody, Transfer Agency, Shareholder Servicing And
Distribution Agreements

18. Purchase, Redemption and Pricing
of Shares.............................................. Net Asset Value -- Purchases
And Redemptions; Distributor

19. Taxation of the Fund................................... Additional Information Concerning
Taxes

20. Underwriters........................................... Investment Advisory,
Administration Custody, Transfer Agency Shareholder
Servicing And Distribution Agreements; Distributor

2
<PAGE>

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

22. Financial Statements................................... Independent Accountant and
Reports
</TABLE>

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

3
<PAGE>
[GRAPHIC]

Equity Funds
Prospectus -- Primary A Shares

August 1, 1999

Equity Funds
Nations Value Fund The Securities and
Nations Equity Income Fund Exchange Commission
Nations Emerging Growth Fund (SEC) has not approved or
Nations Small Company Growth Fund disapproved these
Nations Disciplined Equity Fund securities or determined
Nations Capital Growth Fund if this prospectus is
Nations Marsico Focused Equities Fund truthful or complete. Any
Nations Marsico Growth & Income Fund representation to the
Nations Strategic Equity Fund contrary is a criminal
Nations Blue Chip Fund offense.
Nations Capital Income Fund
----------------------
International Funds NOT FDIC
Nations International Value Fund INSURED
Nations International Equity Fund ----------------------
Nations International Growth Fund May Lose Value
Nations Emerging Markets Fund ----------------------
No Bank Guarantee
Index Funds ----------------------
Nations Equity Index Fund
Nations Managed Index Fund
Nations Managed SmallCap Index Fund
Nations Managed Value Index Fund
Nations Managed SmallCap Value Index Fund

Balanced Funds
Nations Balanced Assets Fund
Nations Asset Allocation Fund

Fixed Income Funds
Nations Short-Term Income Fund
Nations Short-Intermediate Government Fund
Nations Government Securities Fund
Nations Strategic Fixed Income Fund
Nations U.S. Government Bond Fund
Nations Diversified Income Fund
Nations Intermediate Bond Fund

Municipal Bond Funds
Nations Short-Term Municipal Income Fund
Nations Intermediate Municipal Bond Fund
Nations Municipal Income Fund

<PAGE>

About this prospectus
- --------------------------------------------------------------------------------

[GRAPHIC]
Terms used in this prospectus

In this prospectus, we, us and our refer to the Nations Funds
Family (Nations Funds). Some other important terms we've used
may be new to you. These are printed in italics where they
first appear in a section and are described in Terms used in
this prospectus.

[GRAPHIC]
You'll find Terms used in
this prospectus on page 0

[GRAPHIC]
For more information

You'll find more information about the Funds in the Statement
of Additional Information (SAI). The SAI includes detailed
information about each Fund's investments, policies,
performance and management, among other things. The SAI is
legally considered to be part of this prospectus because it's
incorporated by reference. Turn to the back cover to find out
how you can get a copy of the SAI.

This booklet, which is called a prospectus, tells you about six groups of
Nations Funds -- our equity, international, index, balanced, fixed income and
municipal bond funds. Please read it carefully, because it contains
information that's designed to help you make informed investment decisions.

Each fund group has different objectives and strategies:

o equity funds invest primarily in equities securities of U.S.
companies

o international funds invest primarily in equity securities of
companies in countries around the world

o index funds intend to match the characteristics of a specific stock
market index, like the S&P 500, by investing primarily in equity
securities that are included in the index

o balanced funds invest in a mix of equity and fixed income securities,
and money market instruments

o fixed income funds focus on the potential to earn income by investing
primarily in fixed income securities

o municipal bond funds focus on the potential to earn income that is
generally free from federal income tax by investing primarily in
municipal securities

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

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

Fixed income securities and municipal securities have the potential to
increase in value because when interest rates fall, the value of these
securities tends to rise. When interest rates rise, however, the value of
these securities tends to fall.

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

NATIONS
FUNDS
Investments For A Lifetime(SM)

2
<PAGE>

Choosing the right funds for you
The equity, international and index funds all focus on long-term growth. They
may be suitable for you if:

o you have a longer-term investment goal

o they form part of a balanced portfolio

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

They may not be suitable for you if:

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

o you have short-term investment goals

o you are looking for a regular stream of income

The fixed income and municipal bond funds focus on the potential to earn
income. They may be suitable for you if:

o you are looking for income

o you are planning to invest your money for the longer term

The municipal bond funds may be suitable if you also want to reduce taxes on
your investment income.

They may not be suitable for you if:

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

o you have short-term income needs

You'll find a discussion of each Fund's principal investments, strategies and
risks in the Fund descriptions that start on page 00.

If you have any questions about the Funds, please call us at 1.800.765.2668 or
contact your financial adviser.

3
<PAGE>

What's inside
- --------------------------------------------------------------------------------

[GRAPHIC]

Banc of America Advisors, Inc.

Banc of America Advisors, Inc. (BAAI) is the investment adviser
to each of the Funds. BAAI is responsible for the overall
management and supervision of the investment management of each
Fund. BAAI and Nations Funds have engaged sub-advisers, which
are responsible for the day-to-day investment decisions for
each of the Funds.

[GRAPHIC]

You'll find more about
BAAI and the sub-advisers
starting on page 00.

The equity funds focus on long-term growth by investing
primarily in equity securities.

The international funds focus on long-term growth by investing
primarily in equity securities of companies in countries around
the world.

<TABLE>
<S> <C>
[GRAPHIC] About the funds
Equity Funds
Nations Value Fund 7
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Equity Income Fund 10
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Emerging Growth Fund 13
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Small Company Growth Fund 17
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Disciplined Equity Fund 20
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Capital Growth Fund 23
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Marsico Focused Equities Fund 26
Sub-adviser: Marsico Capital Management, LLC
- --------------------------------------------------------------------------
Nations Marsico Growth & Income Fund 29
Sub-adviser: Marsico Capital Management, LLC
- --------------------------------------------------------------------------
Nations Strategic Equity Fund 33
Sub-adviser: Bank of America Investment Management
- --------------------------------------------------------------------------
Nations Capital Income Fund 36
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Blue Chip Fund 39
Sub-adviser: Chicago Equity Partners Corporation

International Funds
Nations International Value Fund 43
Sub-adviser: Brandes Investment Partners, L.P.
- --------------------------------------------------------------------------
Nations International Equity Fund 47
Sub-advisers: Gartmore Global Partners, INVESCO Global Asset
Management (N.A.), Inc., Putnam Investment Management, Inc.
- --------------------------------------------------------------------------
Nations International Growth Fund 51
Sub-adviser: Gartmore Global Partners
- --------------------------------------------------------------------------
Nations Emerging Markets Fund 54
Sub-adviser: Gartmore Global Partners
</TABLE>
4
<PAGE>

The index funds are designed to match the characteristics of a
specific market index like the S&P 500 by investing primarily
in equity securities that are included in the index.

The balanced funds invest in a mix of equity and fixed income
securities and money market instruments.

The fixed income funds provide monthly income by investing in
bonds and other fixed income securities.

<TABLE>
<S> <C>
Index Funds
Nations Equity Index Fund 57
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Managed Index Fund 60
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Managed SmallCap Index Fund 64
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Managed Value Index Fund 68
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Managed SmallCap Value Index Fund 72
Sub-adviser: TradeStreet Investment Associates, Inc.

Balanced Funds
Nations Balanced Assets Fund 76
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Asset Allocation Fund 80
Sub-advisers: TradeStreet Investment Associates, Inc., Chicago
Equity Partners Corporation

Fixed Income Funds
Nations Short-Term Income Fund 84
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Short-Intermediate Government Fund 87
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Government Securities Fund 91
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Strategic Fixed Income Fund 94
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations U.S. Government Bond Fund 98
Sub-adviser: Boatmen's Capital Management, Inc.
- --------------------------------------------------------------------------
Nations Diversified Income Fund 101
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Intermediate Bond Fund 104
Sub-adviser: TradeStreet Investment Associates, Inc.
</TABLE>

5
<PAGE>

The municipal bond funds provide monthly income that is
generally free from federal tax by investing primarily in
municipal securities.

<TABLE>
<S> <C>
Municipal Bond Funds
Nations Short-Term Municipal Income Fund 108
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Intermediate Municipal Bond Fund 112
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Nations Municipal Income Fund 116
Sub-adviser: TradeStreet Investment Associates, Inc.
- --------------------------------------------------------------------------
Other important information 120
- --------------------------------------------------------------------------
How the Funds are managed 122

[GRAPHIC] About your investment
Information for investors
Buying, selling and exchanging shares 134
Distributions and taxes 137
- --------------------------------------------------------------------------
Financial highlights 140
- --------------------------------------------------------------------------
Terms used in this prospectus 141
- --------------------------------------------------------------------------
Where to find more information back cover
</TABLE>

6
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]

About the sub-adviser

TradeStreet Investment Associates, Inc. (TradeStreet) is this
Fund's sub-adviser. TradeStreet's Value Management Team makes
the day-to-day investment decisions for the Fund.

[GRAPHIC]

You'll find more about TradeStreet on page 00.

[GRAPHIC]

What is value investing?

Value investing means looking
for "undervalued" companies --
quality companies that may be currently out of favor and
selling at a reduced price, but that have good potential to
increase in value.

The management team uses fundamental analysis to help decide
whether the current stock price of a company may be lower than
the company's true value, and then looks for things that could
trigger a rise in price, like a new product line, new pricing
or a change in management. This trigger is often called a
"catalyst."

Nations Value Fund

[GRAPHIC] Investment objective

This Fund seeks growth of capital by investing in companies that are
believed to be undervalued.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in common stocks
of U.S. companies. It generally invests in companies in a broad range
of industries with market capitalizations of at least $1 billion and
daily trading volumes of at least $3 million.

The Fund also may invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The management team uses fundamental analysis to identify stocks of companies
that it believes are undervalued. When selecting investments, the management
team looks at, among other things:

o the quality of the company

o the company's projected earnings and dividends

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

o the stock's potential to provide total return

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

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

The team tries to provide above-average returns while trying to avoid above-
average risks.

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

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

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

o may offset capital gains by selling securities to realize a capital
loss

7
<PAGE>

[GRAPHIC]

You'll find more about
other risks of investing
in this Fund on page 00
and in the SAI.

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

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

[GRAPHIC] Risks and other things to consider

Nations Value Fund has the following general risks:

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

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

[GRAPHIC] A look at the Fund's performance

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A Fund's
past performance is no guarantee of how it will perform in the future.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

8
<PAGE>

[GRAPHIC]

There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

(1)The Fund's investment adviser and/or some of its other service
providers have agreed to waive fees and/or reimburse expenses until
July 31, 2000. The figures shown here are after waivers and/or
reimbursements. There is no guarantee that these waivers and/or
reimbursements will continue after this date.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

9
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]

About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's
Structured Products Management Team makes the day-to-day
investment decisions for the Fund.

[GRAPHIC]

You'll find more about
TradeStreet on page 00.

[GRAPHIC]

Why invest in an equity income fund?

Equity income funds are generally considered to be a more
conservative equity investment because they invest in large,
well-established companies that pay regular dividends. These
companies tend to be less volatile than other kinds of
companies.

Nations Equity Income Fund

[GRAPHIC] Investment objective

This Fund seeks current income and growth of capital by investing in
companies with above-average dividend yields.

[GRAPHIC] Principal investment strategies

The Fund normally invests in 100 to 150 companies in a broad range of
industries with market capitalizations of at least $5 billion. The Fund
generally invests at least 65% of its assets in income-producing
securities that are listed on a national exchange or are traded on an
established over-the-counter market, including common stocks that pay
dividends and convertible securities.

The Fund tries to provide a higher yield than the stocks that are included in
the S&P 500, and may invest in fixed income securities, preferred stocks and
warrants to try to increase the income that it earns. Fixed income securities
generally must be rated investment grade at the time of investment, or can be
unrated if the team believes they are of comparable quality at the time of
investment. Up to 5% of the Fund's assets may be invested in fixed income
securities rated below investment grade ("high yield" or "junk" bonds) if the
team believes they have relatively low credit risk.

The Fund may invest up to 20% of its assets in foreign securities. It also may
invest up to 10% of its assets in other kinds of securities, which are
described in the SAI.

The management team uses a quantitative process based on fundamental analysis
to identify stocks of companies whose earnings have the potential to grow.
When selecting investments, the management team looks at, among other things:

o value characteristics like book value, earnings yield and cash flow
to compare what the team believes to be a stock's true value to its
current market value

o growth characteristics like price momentum, earnings growth and
earnings acceleration to measure a stock's potential for growth

o a security's potential for above-average dividend yield

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

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

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

o may offset capital gains by selling securities to realize a capital
loss

10
<PAGE>

[GRAPHIC]

You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]

Risks and other things to consider

Nations Equity Income Fund has the following general risks:

o Investment strategy risk - The management team chooses stocks that it
believes have the potential for dividend growth and capital
appreciation. There is a risk that dividend payments and the value of
these investments will not rise as high as the team expects, or will
fall.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Interest rate risk - The prices of the Fund's fixed income securities
will tend to fall when interest rates rise. In general, fixed income
securities with longer terms tend to fall more in value when interest
rates rise than fixed income securities with shorter terms.

o Credit risk - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest or repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but generally is not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

[GRAPHIC] A look at the Fund's performance

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

11
<PAGE>

[GRAPHIC]

There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none
Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

12
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]

About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Strategic
Growth Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]

You'll find more about TradeStreet on page 00.

[GRAPHIC]

What is an emerging growth fund?

An emerging growth fund invests in emerging growth companies.
These are typically medium-sized and smaller companies whose
earnings are expected to grow or to continue growing, and whose
share prices are believed to be reasonably valued.

These companies may be expanding in existing markets, entering
into new markets, developing new products or increasing their
profit margins by gaining market share or streamlining their
operations.

Nations Emerging Growth Fund

[GRAPHIC] Investment objective

This Fund seeks capital appreciation by investing in emerging growth
companies that are believed to have superior long-term earnings growth
prospects.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in companies chosen
from a universe of emerging growth companies. The Fund generally holds
75 to 130 securities, which include common stocks, preferred stocks and
convertible securities like warrants, rights and convertible debt.

The Fund may invest up to 20% of its assets in foreign securities. The Fund
may also invest up to 10% of its assets in other kinds of securities, which
are described in its the SAI.

The team selects stocks using a disciplined process based on fundamental
analysis. It starts with a universe of nearly 1,500 companies with market
capitalizations of $750 million to $7 billion, and using quantitative
analysis, evaluates the companies based on the following criteria:

o earnings growth trends

o earnings momentum

o earnings estimate trends

o relative price performance

o valuation

The team then conducts a rigorous qualitative analysis of each company being
considered for investment. This involves, among other things:

o gaining an in-depth understanding of the company's business

o evaluating the company's growth potential, risks and competitive
strengths

o discussing its growth strategy with company management

o validating the growth strategy with external research

The team selects a stock only when its price is attractive relative to
forecasted growth.

13
<PAGE>

[GRAPHIC]

You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

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

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

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

o may offset capital gains by selling securities to realize a capital
loss

[GRAPHIC] Risks and other things to consider

Nations Emerging Growth Fund has the following general risks:

o Investment strategy risk - The team chooses stocks that it believes
have the potential for superior long-term growth. There is a risk
that the value of these investments will not rise as high as the team
expects, or will fall. Stocks of emerging companies also tend to have
greater price swings than stocks of larger companies because they
trade less frequently and in lower volumes. These securities may have
a higher potential for gains but also carry more risk if unexpected
company developments lower stock prices.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Futures risk - This Fund may use futures, [options, forward contracts
and swaps] to help manage liquidity or to hedge portfolio risk. There
is always a risk that this technique could result in losses, reduce
returns, increase costs and increase the Fund's volatility.

o Foreign investment risk - Although the Fund may only invest up to 20%
of its assets in foreign securities, it can be affected by the risks
of foreign investing. Foreign investments may be riskier than U.S.
investments because of international political and economic
conditions, changes in currency exchange rates, foreign controls on
investment, difficulties in selling securities and lack of financial
information. Withholding taxes also may apply to some foreign
investments.

[GRAPHIC] A look at the Fund's performance

14
<PAGE>

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]

There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<S> <C>
Primary A
Fees you pay directly Shares
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none
Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

15
<PAGE>

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

16
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]

About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Strategic
Growth Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]

You'll find more about TradeStreet on page 00.

[GRAPHIC]

Why invest in a small company growth fund?

A small company growth fund invests in smaller companies with
promising products or that are operating in a dynamic field.
These companies can have better potential for rapid earnings
growth than larger companies. They may, however, have a harder
time securing financing and may be more sensitive to a setback
in sales than larger, more established companies.

The portfolio management team looks for companies whose
earnings are growing quickly, and whose share prices are
reasonably valued.

Nations Small Company Growth Fund

[GRAPHIC] Investment objective

This Fund seeks long-term capital growth by investing primarily in
equity securities.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in companies with a
market capitalization of $1 billion or less. The Fund usually holds 75
to 130 securities, which include common stocks, preferred stocks and
convertible securities like warrants, rights and convertible debt.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The team selects stocks using a disciplined process based on fundamental
analysis. It starts with a universe of nearly 5,000 companies with market
capitalizations of $1 billion or less, and using quantitative analysis,
evaluates the companies based on the following criteria:

o earnings growth trends

o earnings momentum

o earnings estimate trends

o relative price performance

o valuation

The team then conducts a rigorous qualitative analysis of each company being
considered for investment. This involves, among other things:

o gaining an in-depth understanding of the company's business

o evaluating the company's growth potential, risks and competitive
strengths

o discussing its growth strategy with company management

o validating the growth strategy with external research

The team selects a stock only when its valuation is attractive relative to
forecasted growth.

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

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

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

o may offset capital gains by selling securities to realize a capital
loss

17
<PAGE>

[GRAPHIC]

You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC] Risks and other things to consider

Nations Small Company Growth Fund has the following general risks:

o Investment strategy risk - The team chooses stocks that it believes
have the potential for long-term growth. There is a risk that the
value of these investments will not rise as high as the team expects,
or will fall. Stocks of smaller companies also tend to have greater
price swings than stocks of larger companies for many reasons,
including because they trade less frequently and in lower volumes.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Futures risk - This Fund may use futures to help manage liquidity or
to hedge portfolio risk. There is always a risk that this could
result in losses, reduce returns, increase costs and increase the
Fund's volatility.

[GRAPHIC] A look at the Fund's performance

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on many
factors, including market conditions, the composition of the Fund's
holdings and the Fund's expenses. A Fund's past performance is no
guarantee of how it will perform in the future.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

18
<PAGE>

[GRAPHIC]

There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

19
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC] About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's
Structured Products Management Team makes the day-to-day
investment decisions for the Fund.

[GRAPHIC] You'll find more about TradeStreet on page 00.

[GRAPHIC] Why use a computer modeling system?

The management team uses a computer modeling system as a key
component in managing this Fund. The system ranks stocks based
on earnings momentum and valuation, which helps the team choose
stocks that have the potential to generate attractive returns.

Nations Disciplined Equity Fund

[GRAPHIC] Investment objective

This Fund seeks growth of capital by investing in companies that are
expected to produce significant increases in earnings per share.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in common stocks
of large and medium-sized U.S. companies. These companies typically
have a market capitalization of $1 billion or more.

The Fund may invest up to 20% of its assets in foreign securities. The Fund
may also invest up to 10% of its assets in other kinds of securities, which
are described in the SAI.

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

When selecting investments, the team looks for attractively priced securities
with increasing earnings. It uses quantitative analysis to:

o identify companies with improving profit potential and increasing
earnings

o identify companies with favorable price-to-earnings ratios

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

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

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

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

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

o may offset capital gains by selling securities to realize a capital
loss
20
<PAGE>

[GRAPHIC]

You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC] Risks and other things to consider

Nations Disciplined Equity Fund has the following general risks:

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

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Foreign investment risk - Although the Fund may invest up to 20% of
its assets in foreign securities, it can be affected by the risks of
foreign investing. Foreign investments may be riskier than U.S.
investments because of political and economic conditions, changes in
currency exchange rates, foreign controls on investment, difficulties
in selling securities and lack of financial information. Withholding
taxes also may apply to some foreign investments.

[GRAPHIC] A look at the Fund's performance

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

21
<PAGE>

[GRAPHIC]

There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

22
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Core
Growth Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]
You'll find more about TradeStreet on page 00.

[GRAPHIC]
What is a growth fund?

Growth funds invest in companies that have the potential for
significant increases in revenue or earnings. These are
typically companies that are developing or applying new
technologies, products or services in growing industry sectors.

Nations Capital Growth Fund

[GRAPHIC] Investment objective

This Fund seeks growth of capital by investing in companies that are
believed to have superior earnings growth potential.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in common stocks
of companies that have one or more of the following the
characteristics:

o above-average earnings growth compared with the S&P 500

o established operating histories, strong balance sheets and favorable
financial performance

o above-average return on equity compared with the S&P 500

The Fund may invest up to 20% of its assets in foreign securities. The Fund
may also invest up to 10% of its assets in other kinds of securities, which
are described in the SAI.

o whose earnings growth is projected to be higher than average

o that develop or apply new technologies, new and improved methods of
distribution, or new services

o that may benefit from changing consumer demands and lifestyles

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

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

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

o may offset capital gains by selling securities to realize a capital
loss

23
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC] Risks and other things to consider

Nations Capital Growth Fund has the following general risks:

o Investment strategy risk - The management team chooses stocks that it
believes have superior growth potential and are selling at reasonable
prices, with the expectation that they will rise in value. There is a
risk that the value of these investments will not rise as high as the
team expects, or will fall.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

[GRAPHIC] A look at the Fund's performance

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

24
<PAGE>

[GRAPHIC]
There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

25
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

Marsico Capital Management, LLC (Marsico Capital) is this
Fund's sub-adviser. Thomas F. Marsico is the portfolio manager
and makes the day-to-day investment decisions for the Fund.

[GRAPHIC]
You'll find more about
Marsico Capital and
Mr. Marsico on page 00.

[GRAPHIC]
What is a focused fund?

A focused fund concentrates its investments in a small number
of companies with earnings that are believed to have the
potential to grow significantly. This Fund focuses on large,
established and well-known U.S. companies.

Because a focused fund holds fewer investments than other kinds
of funds, this Fund can have greater price swings than more
diversified funds. It may earn relatively higher returns when
one of its investments performs well, or relatively lower
returns when an investment performs poorly.

Nations Marsico Focused Equities Fund

[GRAPHIC] Investment objective

This Fund seeks long-term growth of capital.

[GRAPHIC] Principal investment strategies

This Fund normally invests at least 65% of its assets in common stocks
of large companies. The Fund, which is non-diversified, generally holds
a core position of 20 to 30 of common stocks.

The Fund may invest up to 25% of its assets in foreign securities. The Fund
may also up to 10% of its assets in other kinds of securities, which are
described in the SAI.

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

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

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

o Global reach that can allow the Fund to take advantage of a broader
range of investment opportunities. Not limiting itself to the markets
of a single country can also help the Fund reduce risk.

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

Once an investment opportunity is identified, Marsico Capital uses a
disciplined analytical process to assess its potential as an investment. This
process includes a "top-down" analysis that takes into account economic
factors like interest rates, inflation, the regulatory environment, the
industry and global competition. The process also includes a "bottom-up"
analysis that considers individual company characteristics like commitment to
research, market franchise and quality of management.

26
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

For information about the performance of other equity funds
managed by Thomas Marsico, see How the Funds are managed.

[GRAPHIC]
Risks and other things to consider

Nations Marsico Focused Equities Fund has the following general risks:

o Investment strategy risk - This Fund is considered to be "non-
diversified" because it may hold fewer securities than other kinds of
equity funds. This increases the risk that its value could go down
significantly if one or more of its investments performs poorly. The
value of this Fund will tend to have greater price swings than the
value of more diversified equity funds. There also is a risk that the
value of the Fund's investments will not rise as high as Marsico
Capital expects, or will fall. The Fund may become a diversified fund
by limiting the investments in which more than 5% of its total assets
are invested.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

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

[GRAPHIC] A look at the Fund's performance

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>
27
<PAGE>

[GRAPHIC]
There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

28
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

Marsico Capital is this Fund's sub-adviser. Thomas F. Marsico
is the portfolio manager and makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]
You'll find more about
Marsico Capital and
Mr. Marsico on page 00.

[GRAPHIC]
Why invest in a growth and income fund?

Growth and income funds can invest in a mix of equity and fixed
income securities. This can help reduce volatility and provides
the fund with the flexibility to shift among securities that
offer the potential for higher returns.

While this Fund invests in a wide range of companies and
industries, it holds fewer securities than other kinds of
funds. This means it can have greater price swings than more
diversified funds. It may earn relatively higher returns when
one of its investments performs well, or relatively lower
returns when an investment performs poorly.

Nations Marsico Growth & Income Fund

[GRAPHIC] Investment objective

This Fund seeks long-term growth of capital with a limited emphasis on
income.

[GRAPHIC] Principal investment strategies

The Fund normally invests up to 75% of its assets in equity securities
that are believed to have significant growth potential and at least 25%
of its assets in equity and fixed income securities that are believed
to have income potential. The Fund generally holds 35 to 50 securities
and emphasizes large-capitalization common stocks.

Marsico Capital may shift assets between growth and income securities based on
its analysis of market, financial and economic conditions. It will emphasize
growth securities if it believes they will provide better returns than the
yields available or expected on income-producing securities. If Marsico
Capital believes it appropriate to do so, it may also reduce investments in
growth securities to 25% of the Fund's assets.

Since income is a part of the Fund's investment objective, Marsico Capital may
consider a company's anticipated dividends when selecting equity securities.
The Fund is not, however, designed to produce a consistent level of income. It
may also find opportunities for capital growth from fixed income securities
because of expected changes in interest rates, credit rating, currency
exchange rates or other factors.

The Fund may hold up to 25% of its assets in foreign securities. The Fund may
also invest up to 10% of its assets in other kinds of securities, which are
described in the SAI.

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

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

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

o Global reach that can allow the Fund to take advantage of a broader
range of investment opportunities. Not limiting itself to the markets
of a single country can also help the Fund reduce risk.

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

29
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC] Risks and other things to consider

Nations Marsico Growth & Income Fund has the following general risks:

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

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Interest rate risk - The prices of the Fund's fixed income securities
will tend to fall when interest rates rise and to rise when interest
rates fall. In general, fixed income securities with longer terms
tend to fall more in value when interest rates rise than fixed income
securities with shorter terms.

o Credit risk - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest or repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

[GRAPHIC] A look at the Fund's performance

30
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

For information about the performance of other equity funds
managed by Thomas Marsico, see How the Funds are managed.

[GRAPHIC]
There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

31
<PAGE>

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

32
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

Bank of America Investment Management (BAIM) is this Fund's
sub-adviser. Michael E. Kenneally makes the day-to-day
investment decisions for the Fund.

[GRAPHIC]
You'll find more about
BAIM and Mr. Kenneally
on page 00.

[GRAPHIC]
What is a strategic equity fund?

A strategic equity fund uses a disciplined approach to identify
companies that are leaders in their industry. Companies are
typically medium or large with earnings that are expected to
grow over the long term, and share prices that are believed to
be reasonably valued.

These companies may have exclusive products, superior
technology or distribution, or [favorable cost structures].

Nations Strategic Equity Fund

[GRAPHIC] Investment objective

This Fund seeks long-term, after-tax returns by investing in a
diversified portfolio of common stocks.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in common stocks
of companies from most major industry sectors. The Fund normally holds
60 to 80 securities, which include common stocks, preferred stocks and
convertible securities like warrants and rights.

The Fund may invest up to 25% of its assets in foreign securities. It may also
invest up to 10% of its assets in other kinds of securities, which are
described in its SAI.

The manager selects stocks using a disciplined analytical process. He starts
with a universe of companies with market capitalizations of at least $1
billion, and assesses the investment potential of these companies and their
industries. In particular, he evaluates:

o the growth prospects of the company's industry

o the company's relative competitive position in the industry

The manager believes that this analysis identifies companies with favorable
long-term growth potential, competitive advantages and sensible business
strategies.

The manager then uses quantitative analysis to decide when to invest in the
companies he has selected. He evaluates earnings trends and stock valuations,
among other things, to invest in the companies when he believes they are
reasonably valued.

The manager may use various strategies, consistent with the Fund's investment
objective, to try to reduce the amount of capital gains and income distributed
to shareholders. For example, he:

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

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

o may offset capital gains by selling securities to realize a capital
loss

o invest primarily in securities with lower dividend yields

33
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing
in this Fund on page 00
and in the SAI.

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]
Risks and other things to consider

Nations Strategic Equity Fund has the following general risks:

o Investment strategy risk - The manager chooses stocks that he
believes have the potential for long-term growth. There is a risk
that the value of these investments will not rise as high as he
expects, or will fall.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Foreign investment risk - Although the Fund may only invest up to 25%
of its assets in foreign securities, it can be affected by the risks
of foreign investing. Foreign investments may be riskier than U.S.
investments because of international political and economic
conditions, changes in currency exchange rates, foreign controls on
investment, difficulties in selling securities and lack of financial
information. Withholding taxes also may apply to some foreign
investments.

[GRAPHIC] A look at the Fund's performance

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

34
<PAGE>

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

[GRAPHIC] What it costs to invest in the Fund

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

35
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Value
Management Team makes the day-to-day investment decisions for
the Fund.

[GRAPHIC]
You'll find more about TradeStreet on page 00.

[GRAPHIC]
What are convertible securities?

Convertible securities, which include convertible bonds and
convertible preferred stocks, can be exchanged for common stock
at a specified rate and date. The common stock it converts to
is called the "underlying" common stock.

Convertible securities typically:

o have higher income potential than their underlying common
stock

o are affected less by changes in the stock market than their
underlying common stock

o have the potential to increase in value if the value of
their underlying common stock increases

Nations Capital Income Fund

[GRAPHIC] Investment objective

This Fund seeks to provide investors with a total investment return,
comprised of current income and capital appreciation, consistent with
prudent investment risk.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in convertible
securities mostly issued by U.S. issuers. The Fund may invest up to 15%
of its assets in Eurodollar convertible securities.

The portfolio management team generally chooses convertible securities that
are not investment grade, but are rated at least "B" by a nationally
recognized statistical rating organization (NRSRO).The team may choose unrated
securities if it believes they are of comparable quality to rated securities
at the time of investment.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in its SAI.

The portfolio management team looks for opportunities, through the conversion
feature, to participate in the growth potential of the underlying common
stocks, while earning income that is generally higher than the income earned
by the underlying common stocks.

When selecting individual investments, the portfolio management team evaluates
a number of factors, including:

o the issuer's revenue

o earnings trends, including changes in earnings estimates

o the security's conversion feature and other characteristics

The team tries to manage risk by diversifying the Fund's assets among
different sized companies, limiting conversion costs and selling securities
when they become equivalent to equity securities.

The portfolio management team may convert securities to common shares when
conditions may not be favorable or because of developments with the issuers or
markets of these securities.

36
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC] Risks and other things to consider

Nations Capital Income Fund has the following general risks:

o Investment strategy risk - The management team chooses convertible
securities that it believes have the potential for long-term growth.
There is a risk that the value of these investments will not rise as
high as he expects, or will fall.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Interest rate risk - The prices of fixed income securities will tend
to fall when interest rates rise. In general, fixed income securities
with longer terms tend to fall more in value when interest rates rise
than fixed income securities with shorter terms.

o Credit risk - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o Convertible security features - The issuer of a convertible security
may have the option to redeem it a specified price. If a convertible
security is redeemed, the Fund will have to allow the redemption,
convert the convertible security to common stock, or sell the
convertible security to a third party. Any of these transactions
could affect the Fund's ability to meet its objective.

[GRAPHIC] A look at the Fund's performance

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

37
<PAGE>

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
[S&P 500] 0.00% 0.00% 0.00%
</TABLE>

[The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.]

[GRAPHIC] What it costs to invest in the Fund

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

38
<PAGE>

About the equity funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

The Fund does not have its own
investment adviser or sub-adviser because it's a "feeder" fund.
Feeder funds invest all of their assets in another fund, which
is called a "master fund" or "master portfolio."

BAAI is the Master Portfolio's investment adviser, and Chicago
Equity Partners Corporation (Chicago Equity) is its sub-adviser.
Chicago Equity's Equity Management Team makes the day-to-day
investment decisions for the Master Portfolio.

[GRAPHIC]
You'll find more about
Chicago Equity on page 00.

[GRAPHIC]
What is a blue chip fund?

Blue chip funds are generally considered to be a more
conservative equity investment because blue chip companies tend
to be less volatile than other kinds of companies.

Nations Blue Chip Fund

[GRAPHIC] Investment objective

This Fund seeks to achieve long-term capital appreciation through
investments in blue chip stocks.

[GRAPHIC] Principal investment strategies

The Fund invests all of its assets in Nations Blue Chip Master Portfolio
(the Master Portfolio). The Master Portfolio has the same investment
objective as the Fund.

The Master Portfolio normally invests at least 65% of its assets in blue chip
stocks. These are stocks of well established, nationally known companies that
have a long record of profitability and a reputation for quality management,
products and services.

The Master Portfolio primarily invests in blue chip stocks that are included
in the S&P 500, but may invest up to 15% of its assets in stocks that are not
included in the index. It usually holds approximately 100 stocks.

The Master Portfolio may also invest 10% of its assets in other kinds of
securities, which are described in the SAI.

The portfolio management team uses quantitative analysis to build a portfolio
that matches the industry, sector, style and capitalization characteristics of
the S&P 500. The team will vary the Portfolio's holdings to try to provide
higher returns than the S&P 500 while maintaining a level of risk similar to
that of the index.

39
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC] Risks and other things to consider

Nations Blue Chip Fund has the following general risks:

o Investment strategy risk - The Master Portfolio uses quantitative
analysis to select blue chip stocks that are believed to have the
potential for long-term growth. There is a risk that the value of
these investments will not rise as high as expected, or will fall.

o Stock market risk - The value of the stocks the Master Portfolio
holds, like the stock market in general, can rise or fall over short
as well as long periods.

o Investing in the Master Portfolio - Other mutual funds and investors
can buy shares in the Master Portfolio. For example, the World
Horizon U.S. Equity Fund, which is also managed by BAAI or its
affiliates, invests all of its assets in the Master Portfolio.

The Fund can withdraw its entire investment from the Master Portfolio
if the Board of Trustees of Nations Institutional Reserves believes
it's in the best interest of the Fund to do so. It is unlikely that
this would happen, but if it did, the Fund's portfolio could be less
diversified and therefore less liquid. The Fund might also have to
pay brokerage, tax or other charges.

[GRAPHIC] A look at the Fund's performance

40
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none
Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)(1)
Management fees 0.00%
Service fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(2) 0.00%
</TABLE>

(1)These fees and expenses include the Fund's portion of the fees and
expenses deducted from the assets of the Master Portfolio.

(2)The Fund's investment adviser and/or some of its other service
providers have agreed to waive fees and/or reimburse expenses until
July 31, 2000. The figures shown here are after waivers and/or
reimbursements. There is no guarantee that these waivers and/or
reimbursements will continue after this date.

41
<PAGE>

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

42
<PAGE>

About the international funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

Brandes Investment Partners, L.P.
(Brandes) is this Fund's sub-adviser. Brandes' [Large Cap
Investment Committee] makes the day-to-day investment decisions
for the Fund.

[GRAPHIC]
You'll find more about
Brandes on page 00.

[GRAPHIC]
What is the Graham and Dodd
approach to investing?

Benjamin Graham is widely regarded as the founder of this
classic value approach to investing and a pioneer in modern
security analysis. In his 1934 book, Security Analysis,
co-written by David Dodd, Graham introduced the idea that
stocks should be chosen by identifying the "true" long-
term -- or intrinsic -- value of a company based on measurable
data.

The team follows this approach, looking at each stock as though
it's a business that's for sale. By buying stocks at what it
believes are favorable prices, the Fund looks for the potential
for growth over the business cycle.

Nations International Value Fund

[GRAPHIC] Investment objective

This Fund seeks long-term capital growth by investing primarily in
equity securities of foreign issuers, including emerging markets
countries.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in foreign
companies anywhere in the world that have a market capitalization of
more than $1 billion at the time of investment. The Fund typically
invests in at least three countries other than the United States at any
one time.

Securities the Fund invests in are principally common stocks, preferred
stocks, convertible securities, shares of closed-end investment companies, and
depositary receipts.

It may also may invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The portfolio management team uses the "Graham and Dodd" value approach to
selecting securities and managing the Fund. The team invests in a company when
its current price appears to be below its true long-term -- or
intrinsic -- value.

The team uses fundamental analysis to determine intrinsic value, and will look
at a company's book value, cash flow, capital structure, and management
record, as well its industry and its position in the industry. This analysis
includes a review of company reports, filings with the SEC, computer
databases, industry publications, general and business publications, brokerage
firm research reports and other information sources, as well as interviews
with company management.

The Fund may invest in foreign currency exchange contracts to convert foreign
currencies to and from the U.S. dollar, and to hedge against changes in
foreign currency exchange rates.

43
<PAGE>

[GRAPHIC]
Limits on investments

To help manage risk, the Fund puts limits on its investments.
These limits apply at the time an investment is made:

o The Fund will normally invest no more than 5% of its assets
in a single security.

o It may not invest more than:

20% of its assets in a single country or industry, or, if
higher,

150% of the weighting of a single country or industry in the
MSCI EAFE Index (to a maximum of 25% of its assets in a single
industry, other than U.S. government securities).

o It generally may not invest more than 20% of its assets in
emerging markets or developing countries.

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00
and in the SAI.

[GRAPHIC] Risks and other things to consider

Nations International Value Fund has the following general risks:

o Investment strategy risk - The management team chooses stocks it
believes are undervalued or out of favor with the expectation that
these stocks will eventually rise in value. There is a risk that the
value of these investments will not rise as high or as quickly as the
manager expects, or will fall.

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

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Futures risk - This Fund may use futures contracts to convert
currencies and to hedge against changes in foreign currency exchange
rates. There is always a risk that this could result in losses,
reduce returns, increase transaction costs and increase in the Fund's
volatility.

[GRAPHIC] A look at the Fund's performance

44
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

For information about the performance of other international
funds managed by Brandes, see How the Funds are managed.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
MSCI EAFE Index 0.00% 0.00% 0.00%
</TABLE>

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

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge
(load) when you sell your shares none
Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

45
<PAGE>

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

46
<PAGE>

About the international funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-advisers

This is a "multiple manager" fund, which means that it's
managed by more than one sub-adviser. Gartmore Global Partners
(Gartmore), INVESCO Global Asset Management (N.A.), Inc.
(Invesco) and Putnam Investment Management Inc. (Putnam) each
manage approximately one-third of the assets of the Fund. Five
portfolio managers from Gartmore, Invesco's International
Equity Portfolio Management Team and Putnam's Core
International Equity Group make the day-to-day investment
decisions for their
portion of the Fund.

[GRAPHIC]
You'll find more about
Gartmore, Invesco and
Putnam on page 00.

[GRAPHIC]
Why invest in an
international equity fund?

International equity funds invest in a diversified portfolio of
companies located in markets throughout the world. These
companies can offer investment opportunities that are not
available in the U.S.

Investing internationally can also help reduce the risks
associated with a portfolio of purely domestic investments,
because foreign economies can have different market cycles, and
are affected by different factors than the U.S. economy.
However, investing internationally also involves special risks
not associated with investing in the U.S. stock market.

Nations International Equity Fund

[GRAPHIC] Investment objective

This Fund seeks long-term capital growth by investing primarily in
equity securities of non-United States companies in Europe, Australia,
the Far East and other regions, including developing countries.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in established
companies located in at least three countries other than the United
States. The portfolio managers select countries, including emerging
market or developing countries, and companies they believe have the
potential for growth.

Securities the Fund invests in are principally common stocks, but the Fund may
also invest in equity interests in foreign investment funds or trusts, real
estate investment trust securities and depositary receipts.

The Fund may invest up to 35% of its assets in convertible securities,
preferred stocks, bonds, notes, and other fixed income securities, including
Eurodollar and foreign government securities. The Fund also may invest up to
10% of its assets in other kinds of securities, which are described in the
SAI.

This Fund is a "multiple manager" fund. It has three Fund managers, and each
is responsible for managing approximately one-third of the Fund's assets. The
managers all have different, but complementary, investment styles:

o Gartmore combines "top down," regional allocation with a stock
selection process that focuses on investing in securities when growth
is likely to be higher, or sustained longer, than other investors
expect

o Invesco uses a "bottom up" approach, focusing exclusively on stock
selection, and looking for long-term growth

o Putnam is a "core manager," focusing on stable, long-term
investments, rather than growth or value stocks. It combines "bottom
up" stock selection with "top down" country allocation

This strategy is based on the belief that having multiple managers may result
in better performance and more stable returns over time.

The Fund may invest in foreign currency exchange contracts to convert foreign
currencies to and from the U.S. dollar, and to hedge against changes in
foreign currency exchange rates. Under certain circumstances, the Fund may
invest a significant portion of its assets in these contracts.

47
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00
and in the SAI.

[GRAPHIC] Risks and other things to consider

Nations International Equity Fund has the following general risks:

o Investment strategy risk - The portfolio managers choose stocks they
believe have the potential for long-term growth. There is a risk that
the value of these investments will not rise as high as expected, or
will fall. There is also a risk that the Fund's multiple manager
strategy may not result in better performance or more stable returns.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

[GRAPHIC] A look at the Fund's performance

48
<PAGE>

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
MSCI EAFE Index 0.00% 0.00% 0.00%
</TABLE>

[GRAPHIC]

What it costs to invest in the Fund

49
<PAGE>

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

50
<PAGE>

About the international funds
- --------------------------------------------------------------------------------

[GRAPHIC]

About the sub-adviser

Gartmore is this Fund's sub-adviser. Brian O'Neill, the
principal senior investment manager of the Gartmore Global
Portfolio Team, makes the day-to-day investment decisions for
the Fund.

[GRAPHIC]
You'll find more about
Gartmore on page 00.

[GRAPHIC]
What is an international
growth fund?

International growth funds invest in companies around the world
that have the potential for significant increases in revenue or
earnings. These are typically companies that are developing or
applying new technologies, products or services in strong
industry sectors.

The portfolio management team looks for companies with earnings
growth that is expected to be higher than other investors
believe, and then sells these investments when growth may be
lower than others expect.

The team bases its strategy on the belief that superior
earnings growth is generally difficult to sustain for more than
three years.

Nations International Growth Fund

[GRAPHIC] Investment objective

This Fund seeks long-term capital growth by investing primarily in
equity securities of companies domiciled in countries outside the
United States and listed on major stock exchanges primarily in Europe
and the Pacific Basin.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in foreign
companies listed on major exchanges in Europe and the Pacific Basin.
These companies can be of any size. Securities the Fund invests in
include common stocks, preferred stocks and convertible securities,
such as warrants, rights and convertible debt.

The Fund may invest up to 35% of its assets in securities of issuers located
in developing countries in the Asia-Pacific region, Africa, Latin America and
Eastern Europe. It may also may invest up to 10% of its assets in other kinds
of securities, which are described in the SAI.

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

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

o high quality and sustainable earnings

o high growth potential over a two-year investment horizon

o quality management teams

o the ability to finance growth internally

o strong financial results

The manager follows general guidelines for selling securities and may sell
stocks if:

o their price target has changed

o a fundamental change has affected the company's prospects

o the manager changes the portfolio's country allocation

o the manager changes allocations to individual countries based on his
review of stock markets and economies

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

51
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00
and in the SAI.

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC] Risks and other things to consider

Nations International Growth Fund has the following general risks:

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

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

[GRAPHIC] A look at the Fund's performance

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
MSCI EAFE Index 0.00% 0.00% 0.00%
</TABLE>

52
<PAGE>

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

[GRAPHIC] What it costs to invest in the Fund

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

53
<PAGE>

About the international funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

Gartmore is this Fund's sub-adviser. Philip Ehrmann, the head
of the Gartmore Emerging Markets team, makes the day-to-day
investment decisions for the Fund.

[GRAPHIC]
You'll find more about
Gartmore on page 00.

[GRAPHIC]
What's an emerging market?

This Fund considers a country to
be an emerging market if:

o the International Finance Corporation has defined it as an emerging
market

o it has a low-to-middle income economy according to the World Bank, or

o it's listed as developing in World Bank publications.

There are over 25 countries that currently meet these criteria,
including Argentina, Brazil, Chile, China, the Czech Republic,
Colombia, Ecuador, Greece, Hong Kong, Indonesia, India,
Malaysia, Mexico, the Philippines, Poland, Portugal, Peru,
Russia, Singapore, South Africa, Thailand, Taiwan and Turkey.

Nations Emerging Markets Fund

[GRAPHIC] Investment objective

This Fund seeks long-term capital growth by investing primarily in
equity securities of companies in emerging market countries, such as
those in Latin America, Eastern Europe, the Pacific Basin, the Far East
and India.

[GRAPHIC] Principal investment strategies

The Fund normally invests at least 65% of its assets in companies in
emerging markets or developing countries. The Fund intends to invest in
securities of companies in at least three of these countries at any one
time.

The Fund normally invests in common stocks, preferred stocks, convertible
securities, equity interests in foreign investment funds or trusts, and
depositary receipts. The Fund may invest up to 10% of its assets in other
kinds of securities, which are described in the SAI.

The portfolio manager looks for emerging markets that have the potential for
strong economic growth, and tries to avoid emerging markets that might be
politically or economically risky.

The manager starts with approximately 800 companies in the most promising
markets, and

o uses fundamental research to select 80 to 100 stocks in 15 or more
countries, looking at earnings growth, financial resources,
marketability, and other factors

o may visit companies to confirm the corporate and industry factors
that led to a stock's selection as a potential investment

o regularly reviews the Fund's investments to determine whether
companies are meeting expected return targets and whether their
fundamental financial health has changed.

The Fund may invest in foreign currency exchange contracts to convert foreign
currencies to and from the U.S. dollar, and to hedge against changes in
foreign currency exchange rates.

54
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00
and in the SAI.

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC] Risks and other things to consider

Nations Emerging Markets Fund has the following general risks:

o Investment strategy risk - The manager invests in securities of
companies in emerging markets, which have high growth potential, but
can be more volatile than securities in more developed markets. There
is a risk that the value of these investments will not rise as high
as the manager expects, or will fall.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

[GRAPHIC] A look at the Fund's performance

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

55
<PAGE>

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
MSCI EAFE Index 0.00% 0.00% 0.00%
</TABLE>

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none
Ongoing fees and expenses deducted from
the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

(1) The Fund's investment adviser and/or some of its other service
providers have agreed to waive fees and/or reimburse expenses until
July 31, 2000. The figures shown here are after waivers and/or
reimbursements. There is no guarantee that these waivers and/or
reimbursements will continue after this date.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

56
<PAGE>

About the index funds
- --------------------------------------------------------------------------------

[GRAPHIC] About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's
Structured Products Management Team makes the day-to-day
investment decisions for the Fund.

[GRAPHIC]
You'll find more about
TradeStreet on page 00.

[GRAPHIC]
What is an index fund?

Index funds use a "passive" or "indexing" investment approach,
which attempts to duplicate the performance of a specific
market index.

Correlation measures how closely a fund's returns match those
of an index. A perfect correlation of 1.0 means that the net
asset value of the fund, including the value of its income and
capital gains distributions, increases or decreases in exact
proportion to changes in the index.

NATIONS EQUITY INDEX FUND

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks investment results that (before fees and expenses)
correspond to the total return of the Standard & Poor's 500 Composite
Stock Price Index (S&P 500).

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in common stocks
that are included in the S&P 500. The S&P 500 is an index of 500 common
stocks chosen by Standard & Poor's on a statistical basis.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

Different common stocks have different weightings in the S&P 500, depending on
the amount of stock outstanding and the stock's current price. In trying to
match the performance of the S&P 500, the management team will try to allocate
the Fund's portfolio among common stocks in the approximately the same
weightings as the S&P 500, beginning with the most heavily weighted stocks
that make up a larger portion of the S&P 500. The Fund may buy shares of Bank
of America Corporation, which is currently included in the S&P 500, subject to
applicable law and SEC guidance.

The team generally will try to match the composition of the S&P 500 as closely
as possible. The team starts with the stocks that make up a larger portion of
the value of the S&P 500. It may not always invest in stocks that make up the
smaller percentages because it may be more difficult and costly to make
relatively small transactions. The team may remove a stock from the Fund's
holdings or not invest in a stock if it believes that the stock is not liquid
enough, or for other reasons. The team can substitute stocks that are not
included in the S&P 500, if it believes these stocks will have similar price
movements to the stocks they're replacing.

The Fund tries to achieve a correlation of 0.95 with the S&P 500 on an annual
basis (before fees and expenses). The Fund's ability to track the S&P 500 is
affected by transaction costs and other expenses, changes in the composition
of the S&P 500, changes in the number of shares issued by the companies
represented in the S&P 500, and by the timing and amount of shareholder
purchases and redemptions, among other things.

The Fund may buy stock index futures and financial futures as substitutes for
the underlying securities in the S&P 500. The Fund may hold cash, cash
equivalents and U.S. GOVERNMENT OBLIGATIONS.

Equity mutual funds, like other investors in equity securities, incur
transaction costs, such as brokerage costs, when they buy and sell securities.
The management team tries to minimize these costs for the Fund by using
program trades and crossing NETWORKS.

57
<PAGE>

You'll find more about
other risks of investing in
this Fund on page 00
and in the SAI.

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A Shares. These
returns do not reflect deductions of account fees, if any, and would be lower if
they did.

[GRAPHIC] Risks and other things to consider

Nations Equity Index Fund has the following general risks:

o INVESTMENT STRATEGY RISK - This fund tries to match the returns of the
S&P 500, and is not actively managed. The value of the Fund will rise and
fall with the performance of the S&P 500.

o STOCK MARKET RISK - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o FUTURES RISK - This Fund may use future contracts as a substitute for the
securities included in the index. There is always a risk that this could
result in losses, reduce returns and increase transaction costs.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility

from year to year and its average returns. Performance will vary based
on many factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A Fund's past performance is
no guarantee of how it will perform in the future.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>
<S> <C>
BEST: 0 QUARTER 1900: 0%
WORST: 0 QUARTER 1900: 0%
</TABLE>

58
<PAGE>
[GRAPHIC]

There are two kinds of fees --
sales charges you pay directly, and ongoing fees and expenses
that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
PRIMARY A SHARES 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] WHAT IT COSTS TO INVEST IN THE FUND

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

59
<PAGE>

About the index funds
- --------------------------------------------------------------------------------

[GRAPHIC] About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's
Structured Products Management Team makes the day-to-day
investment decisions for the Fund.

[GRAPHIC] You'll find more about TradeStreet on page 00.

[GRAPHIC] What is a managed index fund?

A managed index fund combines the benefits of traditional index
funds -- relatively low costs and low portfolio
turnover -- with active management.

With a managed index fund, the portfolio manager starts with
the stocks of a specific market index -- in this case, the S&P
500 -- and then tries to achieve higher returns than the index
by emphasizing stocks in the index that are expected to
generate the highest returns.

There is no assurance that active management will result in a
higher return than the index.

NATIONS MANAGED INDEX FUND

[GRAPHIC] Investment objective

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

[GRAPHIC] Principal investment strategies

The management team tries to maintain a portfolio that matches the industry
and risk characteristics of the S&P 500. The team will, from time to time,
vary the number and percentages of the Fund's holdings to try to provide
higher returns than the S&P 500 while reducing the risk of underperforming the
index over time. The Fund usually holds 300 to 400 of the stocks included in
the index. The Fund may also invest up to 10% of its assets in other kinds of
securities, which are described in the SAI.

When selecting investments for the Fund, the management team starts with the
stocks included in the S&P 500. The team uses quantitative analysis to:

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

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

The Fund may invest in financial futures traded on U.S. exchanges.

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

60
<PAGE>

[GRAPHIC] You'll find more about
other risks of investing in
this Fund on page 00
and in the SAI.

The management team uses various strategies, consistent with the Fund's
investment objective, to try to reduce the amount of capital gains distributed
to shareholders. For example, the team may:

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

o may offset capital gains by selling securities to realize a capital loss.
This will reduce capital gains distributions.

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

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

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Managed Index Fund has the following general risks:

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

o Stock market risk - The value of the stocks the Fund holds, like the stock
market in general, can rise or fall over short as well as long periods.

o Futures risk - This Fund may use futures contracts periodically to manage
liquidity. There is always a risk that this could result in losses, reduce
returns, increase transaction costs and increase the Fund's volatility.

[GRAPHIC] A look at the Fund's performance

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns. Performance will vary based
on many factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A Fund's past performance is
no guarantee of how it will perform in the future.

61
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

For information about the performance of other index funds
managed by TradeStreet, see How the Funds are managed.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

62
<PAGE>

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

63
<PAGE>

About the index funds
- --------------------------------------------------------------------------------

[GRAPHIC] About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's
Structured Products Management Team makes the day-to-day
investment decisions for the Fund.

[GRAPHIC] You'll find more about TradeStreet on page 00.

[GRAPHIC] What is the S&P SmallCap 600?

The S&P SmallCap 600 is designed to be a benchmark of the
performance of small capitalization stocks. It includes 600
U.S. stocks chosen by S&P based on market size, liquidity and
industry group.

NATIONS MANAGED SMALLCAP INDEX FUND

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks, over the long term, to provide a total return that (before fees
and expenses) exceeds the total return of the Standard & Poor's SmallCap 600
Composite Stock Price Index (S&P SmallCap 600).

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in common stocks that are
included in the S&P SmallCap 600. The S&P SmallCap 600 is designed to be a
benchmark of the performance of small capitalization stocks. It includes 600
U.S. stocks chosen by S&P based on market size, liquidity and industry group.

The management team tries to maintain a portfolio that matches the industry and
risk characteristics of the S&P SmallCap 600. The team will, from time to time,
vary the number and percentages of the Fund's holdings to try to provide higher
returns than the S&P SmallCap 600 while reducing the risk of under- performing
the index over time. The Fund usually holds 400 to 500 of the stocks included in
the index. The Fund may also invest up to 10% of its assets in other kinds of
securities, which are described in the SAI.

When selecting investments for the Fund, the management team starts with the
stocks included in the S&P SmallCap 600. It uses quantitative analysis to:

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

The Fund may invest in financial futures traded on U.S. exchanges.

64
<PAGE>

[GRAPHIC] You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

The management team uses various strategies, consistent with the Funds
investment objective, to try to reduce the amount of capital gains distributed
to shareholders. For example, the team may:

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

o may offset capital gains by selling securities to realize a capital loss.
This will reduce capital gains distributions

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

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Managed SmallCap Index Fund has the following general risks:

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

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Futures risk - This Fund may use futures contracts to manage liquidity.
There is always a risk that this could result in losses, reduce returns,
increase transaction costs and increase the Fund's volatility.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A FUND'S
PAST PERFORMANCE IS NO GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

65
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

For information about the performance of other index funds
managed by TradeStreet, see How the Funds are managed.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P SmallCap 600 0.00% 0.00% 0.00%
</TABLE>

The S&P SmallCap 600 (Standard & Poor's SmallCap 600) Index is an
index of 600 U.S. stocks chosen by S&P based on market size, liquidity
and industry group. The S&P SmallCap 600 is designed to be a benchmark
of the performance of small capitalizations stocks.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

66
<PAGE>
[GRAPHIC]
This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

67
<PAGE>

About the index funds
- --------------------------------------------------------------------------------

[GRAPHIC] About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's
Structured Products Management Team makes the day-to-day
investment decisions for the Fund.

[GRAPHIC] You'll find more about
TradeStreet on page 00.

[GRAPHIC] What is the BARRA Index?

The BARRA Index is designed to be a benchmark of the
performance of value stocks. It includes approximately 340
common stocks from the S&P 500 that have low price-to-book
ratios. These stocks generally tend to have higher yields and
less volatility than other stocks included in the S&P 500.

NATIONS MANAGED VALUE INDEX FUND

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks, over the long term, to provide a total return that
(before fees and expenses) exceeds the total return of the S&P 500
Index/BARRA Value Index (the BARRA Index).

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in common stocks
that are included in the BARRA Index.

The management team tries to maintain a portfolio that matches the industry
and risk characteristics of the BARRA Index. The team will, from time to time,
vary the number and percentages of the Fund's holdings to try to provide
higher returns than the BARRA Index while reducing the risk of underperforming
the index over time. The Fund usually holds 100 to 200 stocks.

The Fund may invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

When selecting investments for the Fund, the management team starts with the
stocks included in the S&P 500. It uses quantitative analysis to:

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

The Fund may invest in financial futures traded on U.S. exchanges.

68
<PAGE>

[GRAPHIC] You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

The management team uses various strategies, consistent with the Fund's
objective, to try to reduce the amount of capital gains distributed to
shareholders. For example, the team may:

o may offset capital gains by selling securities to realize a capital loss.
This will reduce capital gains distributions

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

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Managed Value Index Fund has the following general risks:

o Investment strategy risk - The team chooses stocks that it believes have
the potential for higher growth than the BARRA Index. There is a risk
that the value of these investments will not rise as high as the team
expects, or will fall.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A FUND'S
PAST PERFORMANCE IS NO GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

69
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
BARRA Index 0.00% 0.00% 0.00%
</TABLE>

The BARRA Index includes approximately 340 common stocks from the S&P
500 that have low price-to-book ratios. These stocks generally tend to
have higher yields and less volatility than other stocks included in
the S&P 500.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

70
<PAGE>
[GRAPHIC]
This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

71
<PAGE>

About the index funds
- --------------------------------------------------------------------------------

[GRAPHIC] About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's
Structured Products Management Team makes the day-to-day
investment decisions for the Fund.

[GRAPHIC] You'll find more about TradeStreet on page 00.

[GRAPHIC] What is the BARRA
SmallCap Index?

The BARRA SmallCap Index is designed to be a benchmark of the
performance of value stocks of small capitalization companies.
The index includes approximately 375 common stocks from the S&P
SmallCap 600 that have low price-to-book ratios. These stocks
generally tend to have higher yields and less volatility than
other stocks included in the S&P SmallCap 600.

NATIONS MANAGED SMALLCAP VALUE INDEX FUND

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks, over the long term, to provide a total return that (before
fees and expenses) exceeds the total return of the S&P SmallCap 600 Index/BARRA
Value Index (the BARRA SmallCap Index).

[GRAPHIC] Investment strategies

The Fund normally invests at least 80% of its assets in common stocks that are
included in the BARRA SmallCap Index.

The management team tries to maintain a portfolio that matches the industry
and risk characteristics of the BARRA SmallCap Index. The team will, from time
to time, vary the number and percentages of the Fund's holdings to try to
provide higher returns than the BARRA SmallCap Index while reducing the risk
of underperforming the index over time. The Fund usually holds 200 to 300
stocks.

The Fund may invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

When selecting investments for the Fund, the management team starts with the
stocks included in the S&P 500. It uses quantitative analysis to:

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

The Fund may invest in financial futures traded on U.S. exchanges.

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

72
<PAGE>

[GRAPHIC] You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

The management team uses various strategies, consistent with the Fund's
investment objective, to try to reduce the amount of capital gains distributed
to shareholders. For example, the team may:

o may offset capital gains by selling securities to realize a capital loss.
This will reduce capital gains distributions

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

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Managed SmallCap Value Index Fund has the following general risks:

o Investment strategy risk - The team chooses stocks that it believes have
the potential for higher growth than the BARRA SmallCap Index. There is a
risk that the value of these investments will not rise as high as the
team expects, or will fall. Smaller companies also tend to have greater
price swings than stocks of larger companies for many reasons, including
because they trade less frequently and in lower volumes.

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A FUND'S
PAST PERFORMANCE IS NO GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

73
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
BARRA SmallCap Value Index 0.00% 0.00% 0.00%
</TABLE>

The BARRA SmallCap Index includes approximately 375 common stocks from
the S&P SmallCap 600 that have low price-to-book ratios. These stocks
generally tend to have higher yields and less volatility than other
stocks included in the S&P SmallCap 600.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

74
<PAGE>
[GRAPHIC]
This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

75
<PAGE>

About the balanced funds
- --------------------------------------------------------------------------------

[GRAPHIC] About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Value
Management Team makes the day-to-day investment decisions for
the Fund.

[GRAPHIC] You'll find more about
TradeStreet on page 00.

[GRAPHIC] What is a balanced fund?

A balanced fund invests in a mix of equity and fixed income
securities, and money market instruments.

Each of these "asset classes" has different risk/return
characteristics. Combining them in one fund can help reduce risk
and increase returns because at least one asset class should
have the potential to be a stronger performer regardless of
market conditions.

Balanced funds like this one can provide a diversified asset
mix for you in a single investment.

NATIONS BALANCED ASSETS FUND

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks total return by investing in equity and fixed income
securities.

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

This Fund invests in a mix of equity and fixed income securities, and
money market instruments.

Equity securities the Fund invests in are primarily common stock of seasoned
companies believed to be financially strong.

Fixed income securities normally make up at least 25% of the Fund's assets.
Fixed income securities the Fund invests in are primarily bonds, notes and
mortgage-backed and asset-backed securities issued by U.S. companies and
government entities.

Money market instruments the Fund invests in are primarily cash equivalents.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

o current economic and financial market conditions in the U.S. and abroad

o current interest rate trends

o earnings and dividend prospects for common stocks

o the overall stability of financial markets

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

The team selects individual investments using the following process:

o For the equity portion of the Fund, the team uses fundamental research and
valuation analysis.

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

76
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

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

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

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

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

o may offset capital gains by selling securities to realize a capital loss

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Balanced Assets Fund has the following general risks:

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

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o Credit risk - The Fund could lose money if the issuer of a fixed income
security is unable to pay interest or repay principal when it's due.
Credit risk usually applies to most fixed income securities, but is
generally not a factor for securities that are issued or backed by the
U.S. government. Fixed income securities with the lowest investment grade
rating or that aren't investment grade are more speculative in nature
than securities with higher ratings, and they tend to be more sensitive
to credit risk, particularly during a downturn in the economy.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A FUND'S
PAST PERFORMANCE IS NO GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

77
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
Lehman Aggregate Bond Index 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

The Lehman Aggregate Bond Index is an index of fixed income securities
issued by the U.S. government and its agencies, and by corporations.

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

78
<PAGE>
[GRAPHIC]
This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

79
<PAGE>

About the balanced funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-advisers

This Fund is managed by two sub-advisers: TradeStreet and
Chicago Equity. TradeStreet's Fixed Income Management Team
makes the asset allocation decisions for the Fund, as well as
the day-to-day investment decisions for the fixed income and
money market portions. Chicago Equity's Equity Management Team
makes the day-to-day investment decisions for the equity
portion of the Fund.

[GRAPHIC]
You'll find more about
TradeStreet and Chicago
Equity, starting on
page 00.

[GRAPHIC]
What is an asset allocation fund?

This asset allocation fund invests in a mix of equity and fixed
income securities, and cash equivalents.

Each of these "asset classes" has different risk/return
characteris-tics. The portfolio management team changes the mix
based on its assessment of the expected risks and returns of
each class.

Asset allocation funds like this one can provide a diversified
asset mix for you in a single investment.

NATIONS ASSET ALLOCATION FUND

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks to obtain long-term growth from capital appreciation,
and dividend and interest income.

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

This Fund invests in a mix of equity and fixed income securities, and
cash equivalents.

Equity securities the Fund invests in are primarily common stock of blue chip
companies. These companies are well established, nationally known companies
that have a long record of profitability and a reputation for quality
management, products and services.

Fixed income securities the Fund invests in are primarily investment grade
bonds and notes. The Fund normally invests at least 25% of its assets in
senior securities. The Fund may also invest up to 35% of its assets in
mortgage-backed and asset-backed securities.

The Fund may invest up to 25% of its assets in foreign securities.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

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

For the equity portion of the Fund, the portfolio management team uses
quantitative analysis to build a portfolio that matches the industry, sector,
style and capitalization characteristics of the S&P 500. The team will vary
these holdings to try to provide higher returns than the S&P 500 while
maintaining a level of risk similar to that of the index.

80
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Asset Allocation Fund has the following general risks:

o Stock market risk - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods. There is a risk that the value of the blue chip stocks the Fund
holds will not rise as high as the team expects, or will fall.

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

o Credit risk - The Fund could lose money if the issuer of a fixed income
security is unable to pay interest or repay principal when it's due.
Credit risk usually applies to most fixed income securities, but is
generally not a factor for securities that are issued or backed by the
U.S. government. Fixed income securities with the lowest investment grade
rating or that aren't investment grade are more speculative in nature
than securities with higher ratings, and they tend to be more sensitive
to credit risk, particularly during a downturn in the economy.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

81
<PAGE>

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
[benchmark] 0.00% 0.00% 0.00%
</TABLE>

[benchmark description]

[GRAPHIC] What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

82
<PAGE>
[GRAPHIC]
This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

83
<PAGE>
<PAGE>

About the fixed income funds
- --------------------------------------------------------------------------------

[GRAPHIC]
ABOUT THE SUB-ADVISER

TradeStreet is this Fund's sub-adviser. TradeStreet's Fixed
Income Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]
You'll find more about TradeStreet on page 00.

[GRAPHIC]
Corporate fixed-income securities

This Fund focuses on fixed income securities that are issued by
corporations. Corporate fixed income securities have the
potential to pay higher income than U.S. Treasury securities
with similar maturities, but they also tend to be more
sensitive to changes in interest rates.

NATIONS SHORT-TERM INCOME FUND

[GRAPHIC]

INVESTMENT OBJECTIVE
This Fund seeks high current income consistent with minimal
fluctuations of principal.

[GRAPHIC]

PRINCIPAL INVESTMENT STRATEGIES
This Fund normally invests at least 65% of its total assets in
investment grade fixed income. The portfolio management team may choose
unrated securities if it believes they are of similar quality to rated
securities at the time of investment. The Fund may invest in:

o corporate debt securities, including bonds, notes and debentures

o mortgage-related securities issued by governments

o asset-backed securities

o U.S. government obligations.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be five years or
less, and its duration will be 3 years or less.

When selecting individual investments, the portfolio management team:

o looks at a fixed income security's potential to generate both income and
price appreciation

o allocates assets among U.S. government securities, including securities
issued by government agencies, mortgage-backed securities and U.S Treasury
securities; asset-backed securities and corporate securities, based on its
analysis of historical relationships and bond values. The team may change
the allocations when market conditions change

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk involved,
and that the credit quality is stable or improving. Structure analysis
evaluates the characteristics of a security, including its call features and
timing of cash flows, among other things

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

o tries to manage risk by diversifying the Fund's investments in securities of
many different issuers

84
<PAGE>

[GRAPHIC]
You'll find more about other risks of investing in this Fund on page 00 and in
the SAI.

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A Shares. These
returns do not reflect deductions of account fees, if any, and would be lower if
they did.

[GRAPHIC]

RISKS AND OTHER THINGS TO CONSIDER

Nations Short-Term Income Fund has the following general risks:

o Investment strategy risk - There is a risk that the value of the
investments the portfolio management team chooses will not rise as high
as the teams expects, or will fall.

o Interest rate risk - The prices of fixed income securities will tend to
fall when interest rates rise. In general, fixed income securities with
longer terms tend to fall more in value when interest rates rise than
fixed income securities with shorter terms.

o Credit risk - The Fund could lose money if the issuer of a fixed income
security is unable to pay interest and repay principal when it's due.
Credit risk usually applies to most fixed income securities, but is
generally not a factor for securities that are issued or backed by the
U.S. government. Fixed income securities with the lowest investment grade
rating or that aren't investment grade are more speculative in nature
than securities with higher ratings, and they tend to be more sensitive
to credit risk, particularly during a downturn in the economy.

o Changing dividend levels - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund holds. It
is not guaranteed and will change. Changes in the value of the
securities, however, generally should not affect the amount of income
they pay.

[GRAPHIC]

A LOOK AT THE FUND'S PERFORMANCE
Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A Fund's past performance is
no guarantee of how it will perform in the future.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

85
<PAGE>
[GRAPHIC]

There are two kinds of fees -- sales charges you pay directly, and ongoing fees
and expenses that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after deducting waivers
and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Merrill Lynch 1-3 Year Treasury Index 0.00% 0.00% 0.00%
</TABLE>

The Merrill Lynch 1-3 Year Treasury Index is an index of U.S. Treasury bonds
with maturities of 1 to 3 years. All dividends are reinvested.

[GRAPHIC]

What it costs to invest in the Fund
<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from
the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

86
<PAGE>

ABOUT THE FIXED INCOME FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Fixed Income Management
Team makes the day-to-day investment decisions for the Fund.

[GRAPHIC]

You'll find more about TradeStreet on page 00.

[GRAPHIC]

U.S. government securities

This Fund invests almost all of its assets in securities that are either issued
or guaranteed by the U.S. government. This means the Fund's value tends to
change less when interest rates change, but it could earn less income than funds
that invest in other kinds of fixed income securities.

NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND

[GRAPHIC]
INVESTMENT OBJECTIVE

This Fund seeks high current income consistent with modest fluctuation
of principal.

[GRAPHIC]

PRINCIPAL INVESTMENT STRATEGIES

This Fund invests almost all of its assets in U.S. government
obligations and repurchase agreements relating to these obligations. It
may invest in mortgage-related securities issued by governments or
corporations.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be five years or
less, and its duration will be four years or less.

When selecting individual investments, the portfolio management team:

o looks at a fixed income security's potential to generate both income and
price appreciation

o allocates assets primarily among U.S. government securities, including
securities issued by government agencies, mortgage-backed securities and U.S
Treasury securities, based on its analysis of historical relationships and
bond values. The team may change the allocations when market conditions
change

o selects securities using structure analysis, which evaluates the
characteristics of a security, including its call features and timing of
cash flows, among other things

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

87
<PAGE>

[GRAPHIC]

You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]

Risks and other things to consider

Nations Short-Intermediate Government Fund has the following general
risks:

o Investment strategy risk - There is a risk that the value of the
investments that the portfolio management team chooses will not rise
as high as the teams expects, or will fall.

o Interest rate risk - The prices of fixed income securities will tend to
fall when interest rates rise. In general, fixed income securities
with longer terms tend to fall more in value when interest rates
rise than fixed income securities with shorter terms.

o Credit risk - The Fund could lose money if the issuer of a fixed income
security is unable to pay interest and repay principal when it's
due. Credit risk usually applies to most fixed income securities,
but is generally not a factor for securities that are issued or
backed by the U.S. government. Fixed income securities with the
lowest investment grade rating or that aren't investment grade are
more speculative in nature than securities with higher ratings, and
they tend to be more sensitive to credit risk, particularly during a
downturn in the economy.

o Derivatives risk - This Fund may invest in derivatives. There is always
a risk that these investments could result in losses reduce returns,
increase transaction costs and increase the Fund's volatility.

o Changing dividend levels - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, should generally not affect the amount of
income they pay.

[GRAPHIC]

A look at the Fund's performance

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on a number of factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A Fund's
past performance is no guarantee of how it will perform in the future.

88
<PAGE>

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]

There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Intermediate Government Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Intermediate Government Bond Index is an index of U.S.
government agency and U.S. Treasury securities. All dividends are
reinvested.

[GRAPHIC]

What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none
Ongoing fees and expenses deducted
from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

89
<PAGE>

[GRAPHIC]

This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

EXAMPLE
This example is designed to help you compare the cost of investing in this Fund
with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

90
<PAGE>

About the fixed income funds
- --------------------------------------------------------------------------------

[GRAPHIC]
About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Fixed
Income Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]
You'll find more about TradeStreet on page 00.

[GRAPHIC]

Mortgage-backed securities

This Fund invests primarily in U.S. government obligations, but
part of its investment strategy is to invest in mortgage-backed
securities. Mortgage-backed securities tend to pay higher
income than U.S. Treasury bonds and other government-backed
bonds with similar maturities but also have specific risks
associated with them. They pay a monthly income that includes
interest as well as a portion of the principal on the
underlying mortgages.

Nations Government Securities Fund

[GRAPHIC]

Investment objective

This Fund seeks high current income consistent with moderate
fluctuation of principal.

[GRAPHIC]

Principal investment strategies

This Fund invests at least 65% of its assets in intermediate-term U.S.
government obligations. It may invest in:

o mortgage-related securities issued by governments or corporations

o asset-backed securities or municipal securities rated investment grade at
the time of investment, or unrated if the portfolio management team
believes they are of comparable quality to rated securities at the time
of investment.

o corporate debt securities, including bonds, notes and debentures rated
investment grade at the time of investment, or unrated it the portfolio
management team believes they are of comparable quality to rated
securities at the time of investment

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be between five and
30 years.

When selecting individual investments, the portfolio management team:

o looks at a fixed income security's potential to generate both income and
price appreciation.

o allocates assets primarily among U.S. government securities, including
securities issued by government agencies, mortgage-backed securities and
U.S Treasury securities, based on its analysis of historical
relationships and bond values. The team may change the allocations when
market conditions change

o selects securities using structure analysis, which evaluates the
characteristics of a security, including its call features and timing of
cash flows, among other things

91
<PAGE>

[GRAPHIC]

You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]

RISKS AND OTHER THINGS TO CONSIDER

Nations Government Securities Fund has the following general risks:

o INVESTMENT STRATEGY RISK - There is a risk that the value of the
investments that the portfolio management team chooses will not rise as
high as the teams expects, or will fall.

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed income
security is unable to pay interest and repay principal when it's due.
Credit risk usually applies to most fixed income securities, but is
generally not a factor for securities that are issued or backed by the
U.S. government. Fixed income securities with the lowest investment grade
rating or that aren't investment grade are more speculative in nature
than securities with higher ratings, and they tend to be more sensitive
to credit risk, particularly during a downturn in the economy.

o DERIVATIVES RISK - This Fund may invest in derivatives. There is always a
risk that these investments could result in losses, reduce returns,
increase transaction costs and increase the Fund's volatility.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund holds. It
is not guaranteed and will change. Changes in the value of the
securities, however, generally should not affect the amount of income
they pay.

[GRAPHIC]

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A Fund's past performance is
no guarantee of how it will perform in the future.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

92
<PAGE>

[GRAPHIC]

There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
PRIMARY A SHARES 0.00% 0.00% 0.00%
Lehman Intermediate Government Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Intermediate Treasury Index is an index of U.S. Treasury
securities with maturities of three to 10 years. All dividends are
reinvested.

[GRAPHIC]

WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none
Ongoing fees and expenses deducted
from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

93
<PAGE>

ABOUT THE FIXED INCOME FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Fixed
Income Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]

You'll find more about TradeStreet on page 00.

[GRAPHIC]

More investment opportunities

This Fund can invest in a wide range of fixed income securities
as long as they're investment grade. This allows the portfolio
management team to focus on securities that offer the potential
for higher returns. Fixed income securities with the lowest
investment grade rating, however, tend to be more sensitive to
credit risk.

NATIONS STRATEGIC FIXED INCOME FUND

[GRAPHIC]

INVESTMENT OBJECTIVE
This Fund seeks total return by investing in investment grade fixed
income securities.

[GRAPHIC]

PRINCIPAL INVESTMENT STRATEGIES
This Fund normally invests at least 65% of its assets in investment
grade fixed income securities. The portfolio management team may choose
unrated securities if it believes they are of comparable quality to
rated securities at the time of investment. The Fund may invest in:

o corporate debt securities, including bonds, notes and debentures

o U.S. government obligations

o foreign debt securities denominated in U.S. dollars

o mortgage-related securities issued by governments

o asset-backed securities

o municipal securities

o dividend-paying preferred and common stock

It may also invest any amount of its assets in high quality money market
instruments, repurchase agreements and cash, if market conditions warrant it.
These securities may be issued by foreign banks and foreign branches of U.S.
banks.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be [up to 10 years]
and will never be more than 15 years.

When selecting individual investments, the portfolio management team:

o looks at a fixed income security's potential to generate both income and
price appreciation

o allocates assets primarily among U.S. government securities, including
securities issued by government agencies, mortgage-backed securities and U.S
Treasury securities; and corporate securities, based on its analysis of
historical relationships and bond values. The team may change the
allocations when market conditions change

94
<PAGE>

[GRAPHIC]

You'll find more about other risks of investing in this Fund on page 00 and in
the SAI.

o tries to manage risk by diversifying the Fund's investments in securities of
many different issuers

[GRAPHIC]

Risks and other things to consider

Nations Strategic Fixed Income Fund has the following general risks:

o Investment strategy risk - There is a risk that the value of the
investments the portfolio management team chooses will not rise as high
as the teams expects, or will fall.

o Interest rate risk - The prices of fixed income securities will tend to
fall when interest rates rise. In general, fixed income securities with
longer terms tend to fall more in value when interest rates rise than
fixed income securities with shorter terms.

o Credit risk - The Fund could lose money if the issuer of a fixed income
security is unable to pay interest and repay principal when it's due.
Credit risk usually applies to most fixed income securities, but is
generally not a factor for securities that are issued or backed by the
U.S. government. Fixed income securities with the lowest investment grade
rating or that aren't investment grade are more speculative in nature
than securities with higher ratings, and they tend to be more sensitive
to credit risk, particularly during a downturn in the economy.

[GRAPHIC]

95
<PAGE>

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]

There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Aggregate Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Aggregate Bond Index is made up of the Lehman
Government/Corporate Index, the Asset-Backed Securities Index and the
Mortgage-Backed Securities Index. These indexes include U.S. government
agency and U.S. Treasury securities, corporate bonds and
mortgage-backed securities. All dividends are reinvested.

[GRAPHIC]

WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none
Ongoing fees and expenses deducted
from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

96
<PAGE>

[GRAPHIC]

This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your cost would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

97
<PAGE>

ABOUT THE FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
[GRAPHIC]
ABOUT THE SUB-ADVISER

Boatmen's Capital Management, Inc. (Boatmen's) is this Fund's
sub-adviser. The Investment Committee of Boatmen's Capital
makes the day-to-day investment decisions for the Fund.

[GRAPHIC]
You'll find more about Boatmen's on page 00.

[GRAPHIC]
Longer-term securities

This Fund invests in securities with longer terms. Longer-term
securities offer the potential for higher income than
securities with shorter terms, but they are also more sensitive
to changes in interest rates.

NATIONS U.S. GOVERNMENT BOND FUND
[GRAPHIC]
INVESTMENT OBJECTIVE

This Fund seeks total return and preservation of capital by investing in
U.S. government securities and repurchase agreements collateralized by
such securities.

[GRAPHIC]

PRINCIPAL INVESTMENT STRATEGIES
This Fund normally invests at least 65% of its assets in U.S. government
securities and repurchase agreements secured by these securities. The
Fund may also invest in:

o zero coupon bonds

o corporate debt securities rated investment grade at the time of
investment, or unrated it the portfolio management team believes they
are of comparable quality to investment grade securities at the time of
investment

o foreign debt securities denominated in U.S. dollars.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be between five and
30 years. [What is the Fund's duration?]

When selecting individual investments, the portfolio management team uses a
disciplined, prudent approach, based on its analysis of economic trends. The
team:

o looks at a fixed income security's potential to generate both income
and price appreciation

o emphasizes securities with a longer duration when it believes that the
economy is in a period of stable inflation

o emphasizes securities with a shorter duration when it expects a period
of rising inflation

o uses a variety of other techniques to help manage risk

The Fund may engage in dollar roll transactions.

98
<PAGE>
[GRAPHIC]

You'll find more about other risks of investing in this Fund on page 00 and in
the SAI.

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A Shares. These
returns do not reflect deductions of account fees, if any, and would be lower if
they did.

[GRAPHIC]

RISKS AND OTHER THINGS TO CONSIDER
Nations U.S. Government Bond Fund has the following general risks:

o Investment strategy risk - There is a risk that the value of the
investments the portfolio management team chooses will not rise as
high as the team expects, or will fall.

o Credit risk - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income securities,
but is generally not a factor for securities that are issued or backed
by the U.S. government. Fixed income securities with the lowest
investment grade rating or that aren't investment grade are more
speculative in nature than securities with higher ratings, and they
tend to be more sensitive to credit risk, particularly during a
downturn in the economy.

o Derivatives risk - This Fund may invest in derivatives. There is
always a risk that these investments could result in losses, reduce
returns, increase transaction costs and increase the Fund's
volatility.

o Changing dividend levels - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund holds.
It is not guaranteed and will change. Changes in the value of the
securities, however, generally should not affect the amount of income
they pay.

[GRAPHIC]

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

99
<PAGE>
[GRAPHIC]

There are two kinds of fees -- sales charges you pay directly, and ongoing fees
and expenses that are deducted from the Fund's assets.

Total net expenses are actual expenses paid by the Fund after deducting waivers
and/or reimbursements.

[GRAPHIC]

This is an example only. Your actual costs could be higher or lower, depending
on the amount you invest, and on the Fund's actual expenses and performance.

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Government Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Government Bond Index is an index of [U.S.] government bonds
with an average maturity of approximately nine years. All dividends are
reinvested.

[GRAPHIC]

WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted
from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

100
<PAGE>

ABOUT THE FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
[GRAPHIC]

About the Sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Fixed
Income Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]
You'll find more about TradeStreet on page 00.

[GRAPHIC]
High yield bonds

Although this Fund invests primarily in investment grade
securities, it can invest up to 35% of its assets in high yield
bonds. High yield bonds offer the potential for higher income
than other kinds of bonds with similar maturities, but they
also have higher credit risk.

The Fund tries to manage this risk by holding a large part of
its assets in investment grade debt securities. This allows the
Fund to maintain an average quality well within the investment
grade category.

NATIONS DIVERSIFIED INCOME FUND

[GRAPHIC]

INVESTMENT OBJECTIVE
This Fund seeks total return with an emphasis on current income by
investing in a diversified portfolio of fixed income securities.

[GRAPHIC]

PRINCIPAL INVESTMENT STRATEGIES
This Fund normally invests at least 65% of its assets in investment
grade debt securities. The Fund may invest in:

o corporate debt securities

o U.S. government obligations

o foreign debt securities denominated in U.S. dollars or foreign
currencies

o mortgage-related securities issued by governments and non- government
issuers

The Fund may invest up to 35% of its assets in lower-quality fixed income
securities ("junk bonds" or "high yield bonds") rated "B"or better by Moody's
or S&P. The portfolio management team may choose unrated securities if it
believes they are of comparable quality to rated securities at the time of
investment.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be more than five
years.

When selecting individual investments, the portfolio management team:

o looks at a fixed income security's potential to generate both income and
price appreciation

o allocates assets primarily among U.S. government securities and U.S.
corporate securities, including high yield corporate bonds. The allocation
is structured to provide the potential for the best return, based on its
analysis of historical relationships and bond values. The team may change
the allocations when market conditions change

101
<PAGE>

[GRAPHIC]

You'll find more about other risks of investing in this Fund on page 00 and in
the SAI.

[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A Shares. These
returns do not reflect deductions of account fees, if any, and would be lower if
they did.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

o tries to manage risk by diversifying the Fund's investments in securities of
many different issuers

[GRAPHIC]

RISKS AND OTHER THINGS TO CONSIDER
Nations Diversified Income Fund has the following general risks:

o Investment strategy risk - There is a risk that the value of the
investments that the portfolio management team chooses will not rise
as high as the teams expects, or will fall.

o Credit risk - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income securities,
but is generally not a factor for securities that are issued or backed
by the U.S. government. Fixed income securities with the lowest
investment grade rating or that aren't investment grade are more
speculative in nature than securities with higher ratings, and they
tend to be more sensitive to credit risk, particularly during a
downturn in the economy.

o Changing dividend levels - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund holds.
It is not guaranteed and will change. Changes in the value of the
securities, however, generally should not affect the amount of income
they pay.

[GRAPHIC]

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

102
<PAGE>

[GRAPHIC]

There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]
This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Average annual total return as of December 31, 1998
<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Intermediate Government Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Corporate Bond Index is an index of U.S. government, U.S.
Treasury and agency securities, and corporate and Yankee bonds. All
dividends are reinvested.

[GRAPHIC]

WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted
from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

103
<PAGE>

ABOUT THE FIXED INCOME FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

About the Sub-adviser

BAAI is the Master Portfolio's investment adviser, and
TradeStreet is its sub-adviser. TradeStreet's Fixed Income
Management Team makes the day-to-day investment decisions for
the Master Portfolio.

[GRAPHIC]

You'll find more about
TradeStreet on page 00.

[GRAPHIC]

Longer-term securities

The Master Portfolio invests in securities with longer terms.
Longer-term securities offer the potential for higher income
than securities with shorter terms, but they are also more
sensitive to changes in interest rates.

The Master Portfolio can invest up to 35% of its assets in
mortgage-backed securities. Mortgage-backed securities tend to
pay higher income than U.S. Treasury bonds and other
government-backed bonds with similar maturities. Mortgage-backed
securities pay a monthly income that includes interest as well
as a portion of the principal on the underlying mortgages.

NATIONS INTERMEDIATE BOND FUND

[GRAPHIC]

INVESTMENT OBJECTIVE
This Fund seeks to provide interest income and capital appreciation.
[GRAPHIC]

PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its investment objectively investing all of its assets
in Nations Intermediate Bond Master Portfolio (the Master Portfolio).
The Master Portfolio has the same investment objective as the Fund.

The Master Portfolio normally invests at least 65% of its assets in
intermediate and longer term fixed income securities that are investment
grade. The Master Portfolio can invest up to 35% of its assets in
mortgage-backed securities, including collateralized mortgage obligations
(CMOs), that are backed by the U.S government or one of its agencies or
instrumentalities.

The Master Portfolio may also invest 10% of its assets in other kinds of
securities, which are described in the SAI.

The Master Portfolio's average portfolio maturity will normally be between
three and six years. Its average portfolio duration generally will be
approximately the same as the Lehman Brothers Intermediate/Corporate Bond
Index.

When selecting individual investments, the portfolio management team:

o looks at a fixed income security's potential to generate both income
and price appreciation.

o allocates assets primarily among U.S. corporate securities and
mortgage- backed securities, based on its analysis of historical
relationships and bond values. The team may change the allocations
when market conditions change

o selects securities using structure analysis, which evaluates the
characteristics of a security, including its call features and timing
of cash flows, among other things

o tries to maintain a duration that is similar to the duration of the
Fund's benchmark. This can help manage interest rate risk

o tries to manage risk by diversifying the Fund's investments in
securities of many different issuers

104
<PAGE>

[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations Intermediate Bond Fund has the following general risks:

o Investment strategy risk - There is a risk that the value of the
investments the portfolio management team chooses for the Master
Portfolio will not rise as high as the teams expects, or will fall.

o Credit risk - The Master Portfolio could lose money if the issuer of a
fixed income security is unable to pay interest and repay principal
when it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade are
more speculative in nature than securities with higher ratings, and
they tend to be more sensitive to credit risk, particularly during a
downturn in the economy.

o Changing dividend levels - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund holds.
It is not guaranteed and will change. Changes in the value of the
securities, however, generally should not affect the amount of income
they pay.

o Prepayment risk - The value of mortgage-backed securities can fall if
the owners of underlying mortgages pay off their mortgages sooner than
expected.

o Derivatives risk - The Master Portfolio may invest in derivatives.
There is always a risk that these investments could result in losses,
reduce returns, increase transaction costs and increase the Master
Portfolio's volatility.

o Investing in the Master Portfolio - Other mutual funds and investors
can buy shares in the Master Portfolio. For example, the World Horizon
U.S. Bond Fund, which is also managed by BAAI or its affiliates,
invests all of its assets in the Master Portfolio.

105
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

[GRAPHIC]
A LOOK AT THE FUND'S PERFORMANCE
Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A Fund's past performance is
no guarantee of how it will perform in the future.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Intermediate
Government Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Corporate Bond Index is an index of U.S. government, U.S.
Treasury and agency securities, and corporate and Yankee bonds. All
dividends are reinvested.

[GRAPHIC]
What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none
Ongoing fees and expenses deducted
from the Fund's assets
(the Fund's operating expenses)(1)
Management fees 0.00%
Service Fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(2) 0.00%
</TABLE>

106
<PAGE>

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

(1)These fees and expenses include the Fund's portion of the fees and
expenses deducted from the assets of the Master Portfolio.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

107
<PAGE>

ABOUT THE MUNICIPAL BOND FUNDS
- --------------------------------------------------------------------------------
[GRAPHIC]

About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Municipal
Fixed Income Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]
You'll find more about
TradeStreet on page 00.

[GRAPHIC]
Shorter-term securities

This Fund invests in securities with shorter terms. This means
the Fund's value tends to change less when interest rates
change, but it could also earn less income than funds that
invest in longer-term securities.

NATIONS SHORT-TERM MUNICIPAL INCOME FUND
[GRAPHIC]
INVESTMENT OBJECTIVE
This Fund seeks high current income exempt from federal income tax
consistent with minimal fluctuation of principal.

[GRAPHIC]
PRINCIPAL INVESTMENT STRATEGIES
This Fund normally invests at least 80% of its assets in investment
grade municipal securities, which pay interest that is generally free
from federal income tax.

The Fund may invest up to 20% of its assets in:

o short-term debt securities that are taxable

o debt securities issued by certain trusts, partnerships or other
special purpose issuers

The Fund may also invest smaller percentages of its assets in other kinds of
securities, which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be less than three
years, and its duration will be between 1.25 and 2.75 years.

When selecting individual investments, the portfolio management team looks at
a security's potential to generate both income and price appreciation. The
portfolio management team:

o allocates assets among revenue bonds, general obligation bonds, insured
bonds and pre-refunded bonds based on its analysis of historical
relationships and bond values. The team may change the allocations when
market conditions change.

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and the
credit quality is stable or improving. Structure analysis evaluates the
characteristics of a security, including its call features and timing of
cash flows, among other things.

The team also reviews public policy issues that may affect the municipal
bond market. Securities with different coupon rates may also represent
good investment opportunities based on supply and demand conditions for
bonds.

108
<PAGE>

[GRAPHIC]

You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

o tries to manage risk by diversifying the Fund's investments in securities of
many different issuers

[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER

Nations Short-Term Municipal Income Fund has the following general
risks:

o Investment strategy risk - There is a risk that the value of the
investments that the portfolio management team chooses will not rise
as high as the teams expects, or will fall.

o Credit risk - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income securities,
but is generally not a factor for securities that are issued or backed
by the U.S. government. Fixed income securities with the lowest
investment grade rating or that aren't investment grade are more
speculative in nature than securities with higher ratings, and they
tend to be more sensitive to credit risk, particularly during a
downturn in the economy.

o Changing dividend levels - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund holds.
It is not guaranteed and will change. Changes in the value of the
securities, however, should not affect the amount of income they pay.

o Tax considerations - Most of the dividends distributed by the Fund
come from interest paid by municipal securities, and is generally free
from federal income tax, but may be subject to state and local taxes.
Any dividend or portion of a dividend that comes from income paid by
other kinds of securities or from realized capital gains is generally
subject to federal, state and local taxes.

[GRAPHIC]

109
<PAGE>

[GRAPHIC]
The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.
[GRAPHIC]
There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Intermediate
Government Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Corporate Bond Index is an index of U.S. government, U.S.
Treasury and agency securities, and corporate and Yankee bonds. All
dividends are reinvested.

[GRAPHIC]

WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted
from the Fund's assets
(the Fund's operating expenses)
Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

110
<PAGE>

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

111
<PAGE>

ABOUT THE MUNICIPAL BOND FUNDS
- --------------------------------------------------------------------------------
[GRAPHIC]

About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Municipal
Fixed Income Management Team makes the day-to-day investment
decisions for the Fund.

[GRAPHIC]
You'll find more about
TradeStreet on page 00.

[GRAPHIC]
Intermediate-term securities

This Fund invests in securities with intermediate terms. This
means the Fund's value tends to change more when interest rates
change, but it could also earn more income than funds that
invest in shorter-term securities.

Its value tends to change less when interest rates change, but
it could also earn less income than funds that invest in
longer-term securities.

NATIONS INTERMEDIATE MUNICIPAL INCOME FUND
[GRAPHIC]
INVESTMENT OBJECTIVE
This Fund seeks high current income exempt from federal income tax
consistent with moderate fluctuation of principal.

The Fund may invest up to 20% of its assets in:

o short-term debt securities that are taxable

o debt securities issued by certain trusts, partnerships or other
special purpose issuers

The Fund may also invest smaller percentages of its assets in other kinds of
securities, which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be between three and
10 years, and its duration will be between three and six years.

When selecting individual investments, the portfolio management team looks at
a security's potential to generate both income and price appreciation. The
portfolio management team:

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will
invest in securities with lower credit ratings only if it believes that
the potential for a higher yield is substantial compared with the risk,
and the credit quality is stable or improving. Structure analysis
evaluates the characteristics of a security, including its call features
and timing of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

o tries to manage risk by diversifying the Fund's investments in securities
of many different issuers

112
<PAGE>
[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.
[GRAPHIC]
RISKS AND OTHER THINGS TO CONSIDER
Nations Intermediate Municipal Income Fund has the following general
risks:

o Investment strategy risk - There is a risk that the value of the
investments that the portfolio management team chooses will not rise as
high as the teams expects, or will fall.

o Credit risk - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when it's
due. Credit risk usually applies to most fixed income securities, but
is generally not a factor for securities that are issued or backed by
the U.S. government. Fixed income securities with the lowest investment
grade rating or that aren't investment grade are more speculative in
nature than securities with higher ratings, and they tend to be more
sensitive to credit risk, particularly during a downturn in the
economy.

o Changing dividend levels - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund holds.
It is not guaranteed and will change. Changes in the value of the
securities, however, should not affect the amount of income they pay.

113
<PAGE>
[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]

There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%
Best and worst quarterly returns during this period:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Intermediate
Government Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Corporate Bond Index is an index of U.S. government, U.S.
Treasury and agency securities, and corporate and Yankee bonds. All
dividends are reinvested.

[GRAPHIC]
WHAT IT COSTS TO INVEST IN THE FUND
<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

114
<PAGE>

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

115
<PAGE>

ABOUT THE MUNICIPAL BOND FUNDS
- --------------------------------------------------------------------------------
[GRAPHIC]

About the sub-adviser

TradeStreet is this Fund's sub-adviser. TradeStreet's Municipal
Fixed Income Management Team makes the day-to-day investment
decisions for the Fund.
[GRAPHIC]

You'll find more about
TradeStreet on page 00.
[GRAPHIC]

Longer-term securities

This Fund invests in securities with longer terms. This means
the Fund's value tends to change more when interest rates
change, but it could also earn more income than funds that
invest in shorter-term securities.

NATIONS MUNICIPAL INCOME FUND

[GRAPHIC]
INVESTMENT OBJECTIVE
This Fund seeks high current income exempt from federal income tax
with the potential for principal fluctuation associated with
investments in long-term municipal securities.

The Fund may invest up to 20% of its assets in:

o short-term debt securities that are taxable

o debt securities issued by certain trusts, partnerships or other
special purpose issuers

The Fund may also invest smaller percentages of its assets in other kinds of
securities, which are described in the SAI.

The Fund's average dollar-weighted maturity will normally be more than 8.5
years, and its duration will be between six and nine years.

When selecting individual investments, the portfolio management team looks at
a security's potential to generate both income and price appreciation. The
portfolio management team:

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will
invest in securities with lower credit ratings only if it believes that
the potential for a higher yield is substantial compared with the risk,
and the credit quality is stable or improving. Structure analysis
evaluates the characteristics of a security, including its call features
and timing of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

o tries to manage risk by diversifying the Fund's investments in securities
of many different issuers

116
<PAGE>
[GRAPHIC]
You'll find more about
other risks of investing in
this Fund on page 00 and
in the SAI.

[GRAPHIC]

Risks and other things to consider

Nations Municipal Income Fund has the following general risks:

o Investment strategy risk - There is a risk that the value of the
investments1 that the portfolio management team chooses will not rise
as high as the teams expects, or will fall.

o Credit risk - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when it's
due. Credit risk usually applies to most fixed income securities, but
is generally not a factor for securities that are issued or backed by
the U.S. government. Fixed income securities with the lowest investment
grade rating or that aren't investment grade are more speculative in
nature than securities with higher ratings, and they tend to be more
sensitive to credit risk, particularly during a downturn in the
economy.

o Changing dividend levels - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund holds.
It is not guaranteed and will change. Changes in the value of the
securities, however, should not affect the amount of income they pay.

o Tax considerations - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally free
from federal income tax, but may be subject to state and local taxes.
Any dividend or portion of a dividend that comes from income paid by
other kinds of securities or from realized capital gains is generally
subject to federal, state and local taxes.

[GRAPHIC]

A look at the Fund's performance

117
<PAGE>
[GRAPHIC]

The bar chart shows you the performance of the Fund's Primary A
Shares. These returns do not reflect deductions of account
fees, if any, and would be lower if they did.

[GRAPHIC]

There are two kinds of fees -- sales charges you pay directly,
and ongoing fees and expenses that are deducted from the Fund's
assets.

Total net expenses are actual expenses paid by the Fund after
deducting waivers and/or reimbursements.

Year by year total return (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

Best and worst quarterly returns during this period:
<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

Average annual total return as of December 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Intermediate
Government Bond Index 0.00% 0.00% 0.00%
</TABLE>

The Lehman Corporate Bond Index is an index of U.S. government, U.S.
Treasury and agency securities, and corporate and Yankee bonds. All
dividends are reinvested.

[GRAPHIC]

What it costs to invest in the Fund

<TABLE>
<CAPTION>
Primary A
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge
(load) when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

118
<PAGE>

[GRAPHIC]

This is an example only. Your actual costs could be higher or
lower, depending on the amount you invest, and on the Fund's
actual expenses and performance.

Example
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000
</TABLE>

119
<PAGE>
[GRAPHIC]

OTHER IMPORTANT INFORMATION

You'll find specific information about each Fund's principal investments,
strategies and risks in the descriptions starting on page 00. The following
are some other risks and information you should consider before you invest:

o Your investment in these Funds is not a bank deposit and is not insured
or guaranteed by Bank of America National Trust and Savings Association
(Bank of America), the Federal Deposit Insurance Corporation or any other
government agency. Your investment may lose money.

o Affiliates of Bank of America are paid for the services they provide to
the Funds.

o Changing investment objectives and policies - The investment objective
and certain investment policies of any Fund can be changed without
shareholder approval. Other investment policies may be changed only with
shareholder approval.

o Holding other kinds of investments - The Funds may hold investments that
aren't part of their principal investment strategies. Please refer to the
SAI for more information.

o Foreign investment risk - The equity funds can invest up to [00]% of
their assets in foreign securities, except Nations Marsico Focused
Equities Fund, Nations Marsico Growth & Income Fund, Nations Strategic
Equity Fund, and Nations Asset Allocation Fund, which can invest up to
25% of their assets in foreign securities. The international funds can
invest all of their assets in foreign securities. Funds that invest in
foreign securities may be affected by changes in currency exchange rates
and the costs of converting currencies; foreign government controls on
foreign investment, repatriation of capital, and currency and exchange;
foreign taxes; inadequate supervision and regulation of some foreign
markets; volatility from a lack of liquidity; different settlement
practices or delayed settlements in some markets; difficulty getting
complete or accurate information about foreign companies; less strict
accounting, auditing and financial reporting standards than those in the
U.S.; political, economic or social instability; and difficulty enforcing
legal rights outside the U.S.

Securities issued by companies in developing or emerging market
countries, like those in Eastern Europe, the Pacific Basin and the Far
East, may be more sensitive to the risks of foreign investing. In
particular, these countries may experience instability resulting from
rapid social, political and economic development. Many of these countries
are dependent on international trade, which makes them sensitive to world
commodity prices and economic downturns in other countries. Some emerging
countries have a higher risk of currency devaluation, and some countries
may experience long periods of high inflation or rapid changes in
inflation rates.

120
<PAGE>

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

o Portfolio turnover - A Fund that replaces -- or turns over -- more than
100% of its securities in a year may have higher brokerage costs than a
Fund that is trading less frequently. This may also result in larger
distributions of capital gains to shareholders. All of the Funds
generally buy securities for capital appreciation, investment income, or
both, and do not engage in short-term trading. The annual portfolio
turnover rate for Nations Managed Index Fund, Nations Managed SmallCap
Index Fund, Nations Managed Value Index Fund and Nations Managed SmallCap
Value Index Fund is expected to be no more than 25%. You'll find the
portfolio turnover rate for each Fund in the Financial highlights.

o Preparing for the year 2000 - The year 2000 is an issue for
organizations, companies and entities around the world that rely on
computer systems to process date-related information. Computer systems
that cannot read a four-digit year may not be able to calculate and
process information on or after January 1, 2000.

All of the Funds' primary service providers have confirmed that they have
been working to make the necessary changes to their systems, and that
they expect them to be adapted in time. There is no guarantee, however,
that their computer systems will ready by the year 2000. If their
computer systems are not ready in time, there could be a negative effect
on Fund operations.

A Fund's performance could also be affected if securities it holds
decrease in value because of year 2000 issues. Funds that invest in
foreign securities may be at greater risk because the computer systems of
many foreign issuers, governments or other entities may not be ready for
the year 2000.

121
<PAGE>
[GRAPHIC]

Banc of America Advisors, Inc.

One Bank of America Plaza
Charlotte, North Carolina 28255

[GRAPHIC]

HOW THE FUNDS ARE MANAGED

INVESTMENT ADVISER

BAAI is the investment adviser to the equity, international, index balanced,
fixed income and municipal bond funds, as well as to over 60 other mutual fund
portfolios in the Nations Funds Family.

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

BAAI has agreed to waive fees and/or reimburse expenses for certain Funds
until July 31, 2000. You'll find a discussion of any waiver and/or
reimbursement in the Fund descriptions. There is no assurance that BAAI will
continue to waive and/or reimburse any fees and/or expenses after this date.

The following chart shows the maximum advisory fees BAAI can receive, along
with the actual advisory fees it received during the Funds' last fiscal period
(April 1, 1998 to March 31, 1999), after waivers and reimbursements:

122
<PAGE>

ANNUAL INVESTMENT ADVISORY FEE, AS A % OF AVERAGE DAILY NET ASSETS

<TABLE>
<CAPTION>
Maximum Actual fee
advisory paid last
fee fiscal year
<S> <C> <C>
Nations Value Fund 0.00 0.00
Nations Equity Income Fund 0.00 0.00
Nations Emerging Growth Fund 0.00 0.00
Nations Small Company Growth Fund 0.00 0.00
Nations Disciplined Equity Fund 0.00 0.00
Nations Capital Growth Fund 0.00 0.00
Nations Marsico Focused Equities Fund 0.00 0.00
Nations Marsico Growth & Income Fund 0.00 0.00
Nations Strategic Equity Fund 0.00 0.00
Nations Blue Chip Fund 0.00 0.00
Nations Capital Income Fund 0.00 0.00
Nations International Value Fund 0.00 0.00
Nations International Equity Fund 0.00 0.00
Nations International Growth Fund 0.00 0.00
Nations Emerging Markets Fund 0.00 0.00
Nations Equity Index Fund 0.00 0.00
Nations Managed Index Fund 0.00 0.00
Nations Managed SmallCap Index Fund 0.00 0.00
Nations Managed Value Index Fund 0.00 0.00
Nations Managed SmallCap Value Index Fund 0.00 0.00
Nations Balanced Assets Fund 0.00 0.00
Nations Asset Allocation Fund 0.00 0.00
Nations Short-Term Income Fund 0.00 0.00
Nations Short-Intermediate Government Fund 0.00 0.00
Nations Government Securities Fund 0.00 0.00
Nations Strategic Fixed Income Fund 0.00 0.00
Nations U.S. Government Bond Fund 0.00 0.00
Nations Diversified Income Fund 0.00 0.00
Nations Intermediate Bond Fund 0.00 0.00
Nations Short-Term Municipal Income Fund 0.00 0.00
Nations Intermediate Municipal Bond Fund 0.00 0.00
Nations Municipal Income Fund 0.00 0.00
</TABLE>

123
<PAGE>

[GRAPHIC]

TradeStreet Investment
Associates, Inc.

One Bank of America Plaza
Charlotte, North Carolina 28255

INVESTMENT SUB-ADVISERS

Nations Funds and BAAI have engaged investment sub-advisers to provide day-
to-day portfolio management for the Funds. These sub-advisers function under
the supervision of the Boards of Directors/Trustees of Nations Funds and BAAI.

TRADESTREET INVESTMENT ASSOCIATES, INC.
TradeStreet is a registered investment adviser and a wholly-owned subsidiary
of Bank of America. Its management expertise covers all major domestic asset
classes.

Currently managing more than [$70] billion, TradeStreet has more than 140
institutional clients and is sub-adviser to [48] mutual funds in the Nations
Funds Family. TradeStreet uses a team approach to investment management. Each
team has access to the latest analytic technology and expertise.

TradeStreet is the investment sub-adviser to the Funds shown in the table
below. TradeStreet also makes the asset allocation decisions and the
day-to-day investment decisions for the fixed income and money market portions
of Nations Asset Allocation Fund. The table tells you which internal
TradeStreet asset management team is responsible for making the day-to-day
investment decisions for the other Funds.

<TABLE>
<CAPTION>
Fund TradeStreet Team
<S> <C>
Nations Value Fund Value Management Team
Nations Equity Income Fund Structured Products Management Team
Nations Emerging Growth Fund Strategic Growth Management Team
Nations Small Company Growth Fund Strategic Growth Management Team
Nations Disciplined Equity Fund Structured Products Management Team
Nations Capital Growth Fund Core Growth Management Team
Nations Capital Income Fund [Value] Management Team
Nations Equity Index Fund Structured Products Management Team
Nations Managed Index Fund Structured Products Management Team
Nations Managed SmallCap Index Fund Structured Products Management Team
Nations Managed Value Index Fund Structured Products Management Team
Nations Managed SmallCap Value Index Fund Structured Products Management Team
Nations Balanced Assets Fund Value Management Team
Nations Asset Allocation Fund Fixed Income Management Team
for the fixed income and money market
portions of the Fund
Nations Short-Term Income Fund Fixed Income Management Team
Nations Short-Intermediate Government Fund Fixed Income Management Team
Nations Government Securities Fund Fixed Income Management Team
Nations Strategic Fixed Income Fund Fixed Income Management Team
Nations Diversified Income Fund Fixed Income Management Team
Nations Intermediate Bond Fund1 Fixed Income Management Team
Nations Short-Term Municipal Income Fund Municipal Fixed Income Management Team
Nations Intermediate Municipal Bond Fund Municipal Fixed Income Management Team
Nations Municipal Income Fund Municipal Fixed Income Management Team
</TABLE>

(1)Nations Intermediate Bond Fund doesn't have its own investment sub-adviser
because it invests in Nations Intermediate Bond Master Portfolio. TradeStreet
is the investment sub-adviser to the Master Portfolio.

124
<PAGE>
PERFORMANCE OF OTHER FUNDS AND ACCOUNTS MANAGED BY TRADESTREET

Nations Managed Index Fund and Nations Managed SmallCap Index Fund have been
in operation since 1996. The tables below are designed to show you how similar
index funds and composites of accounts managed by TradeStreet performed in the
past.

The Enhanced S&P 500 Composite has an investment objective, policies and
strategies that are similar to Nations Managed Index Fund.

The table below shows the returns for Nations Managed Index Fund and the
composite compared with the S&P 500 and the Lipper S&P 500 Index Funds Average
for the periods ending December 31, 1998. The Lipper S&P 500 Index Funds
average measures the average performance of mutual funds with similar
objectives monitored by Lipper Inc. during the periods shown. The returns
reflect deductions of fees and expenses, except for any account level charges,
and assume all dividends and distributions have been reinvested.

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
Lipper
Nations Enhanced S&P 500
Managed S&P 500 Index
Index Index Funds
Fund Composite S&P 500 Average
(%) (%) (%) (%)
<S> <C> <C> <C> <C>
one year 0.00 0.00 0.00 0.00
three years -- 0.00 0.00 0.00
five years -- 0.00 0.00 0.00
since inception
(July 31, 1996) 0.00 0.00 0.00 0.00
</TABLE>

Average annual total returns as of December 31, 1998

<TABLE>
<CAPTION>
Nations S&P 500
Managed Enhanced Index
Index S&P 500 Funds
Fund Composite S&P 500 Average
Year (%) (%) (%) (%)
<S> <C> <C> <C> <C>
1998 0.00 0.00 0.00 0.00
1997 33.46 33.42 33.23 32.61
1996 -- 24.12 23.08 22.30
1995 -- 37.84 37.45 36.82
1994 -- 0.69 1.31 0.90
1993 -- 10.52 9.99 9.52
1992 -- 5.55 7.64 7.12
1991 -- 30.86 30.56 29.65
1990 -- -1.52 -3.15 -3.57
1989 -- 34.28 31.55 30.58
</TABLE>

125
<PAGE>

This information is designed to demonstrate the historical track record of
TradeStreet. It does not indicate how the Fund has performed or will perform
in the future.

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

The composite includes accounts, including pooled funds, managed by
TradeStreet. Bank of America and its predecessors managed these accounts
before TradeStreet was formed in 1995. The accounts don't pay the same
expenses that mutual funds pay and aren't subject to the diversification
rules, tax restrictions and investment limits under the 1940 Act or Subchapter
M of the Internal Revenue Code. Returns could have been lower if the accounts
had been subject to these expenses and regulations. The aggregate returns of
the accounts in the composite don't reflect the returns of any particular
account of TradeStreet.

The Enhanced Small Cap Index Composite has an investment objective, policies
and strategies that are similar to Nations Managed SmallCap Index Fund.

The table below shows the returns for Nations Managed SmallCap Index Fund and
the composite compared with the S&P SmallCap 600 for the periods ending
December 31, 1998. The returns reflect deductions of fees and expenses, except
for any account level charges, and assume all dividends and distributions have
been reinvested.

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
Nations Enhanced
Managed Small Cap S&P
SmallCap Index SmallCap
Index Fund (%) Composite (%) 600 (%)
<S> <C> <C> <C>
one year 0.00 0.00 0.00
three years -- 0.00 0.00
five years -- 0.00 0.00
since inception
(October 15, 1996) 0.00 0.00 0.00
</TABLE>

Average annual total returns as of December 31, 1998
<TABLE>
<CAPTION>
Nations Enhanced
Managed Small Cap S&P
SmallCap Index SmallCap
Year Index Fund (%) Composite (%) 600 (%)
<S> <C> <C> <C>
1998 0.00 0.00 0.00
1997 0.00 0.00 0.00
1996 -- 0.00 0.00
1995 -- 0.00 0.00
1994 -- 0.00 0.00
1993 -- 0.00 0.00
1992 -- 0.00 0.00
1991 -- 0.00 0.00
1990 -- 0.00 0.00
1989 -- 0.00 0.00
</TABLE>

126
<PAGE>

[GRAPHIC]

Marsico Capital
Management, LLC

1200 17th Street
Suite 1300
Denver, Colorado 80202

This information is designed to demonstrate the historical track record of
TradeStreet. It does not indicate how the Fund has performed or will perform
in the future.

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

MARSICO CAPITAL MANAGEMENT, LLC

Marsico Capital is a full service investment advisory firm founded by Thomas
F. Marsico in September 1997. It is a registered investment adviser,
specializing in large capitalization stocks, and currently has [$65] billion
in assets under management.

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

Marsico Capital is the investment sub-adviser to:

o Nations Marsico Focused Equities Fund

o Nations Marsico Growth & Income Fund

Thomas F. Marsico, Chairman and Chief Executive Officer of Marsico Capital, is
the portfolio manager responsible for making the day-to-day investment
decisions for these Funds. Before forming the company, Mr. Marsico was an
executive vice president and portfolio manager at Janus Capital Corporation.
He has more than 20 years of experience as a securities analyst and portfolio
manager.

127
<PAGE>

PERFORMANCE OF OTHER EQUITY FUNDS MANAGED BY THOMAS MARSICO

Nations Marsico Focused Equities Fund and Nations Marsico Growth & Income Fund
have been in operation since December 31, 1997, so they have a short
performance history. The tables below are designed to show you how similar
equity funds managed by Thomas Marsico performed in the past.

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

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

AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 7, 1997

<TABLE>
<CAPTION>
Janus Twenty
Fund (%) S&P 500 (%)
<S> <C> <C>
one year 48.21 46.41
three years 32.07 30.63
five years 20.02 20.98
during the period of Mr. Marsico's management
(January 31, 1988 to August 7, 1997) 23.38 18.20
</TABLE>

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

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

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

128
<PAGE>
[GRAPHIC]

Bank of America
Investment Management

100 North Broadway
St. Louis, Missouri 63102

[GRAPHIC]

Chicago Equity Partners
Corporation

231 South LaSalle
Chicago, Illinois 60697

The table below shows the returns for the Janus Growth and Income Fund
compared with the S&P 500 for the period ending August 7, 1997. The S&P 500 is
a broadly based index of 500 large U.S. companies. The returns reflect
deductions of fees and expenses, except for any account level charges, and
assume all dividends and distributions have been reinvested.

AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 7, 1997

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

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

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

BANK OF AMERICA INVESTMENT MANAGEMENT

BAIM, a division of Bank of America, is the investment sub-adviser to Nations
Strategic Equity Fund.

The Fund is managed by Michael E. Kenneally, president and chief investment
officer of BAIM since 1997. He has managed the Fund since [0]. Before joining
BAIM, Mr. Kenneally was managing director at Boatmen's, in charge of
fundamental and quantitative research, small-capitalization, passive and
international equity investment. He holds a bachelor's degree in economics and
an MBA in finance from the University of Missouri.

CHICAGO EQUITY PARTNERS CORPORATION
Chicago Equity is a wholly-owned subsidiary of Bank of America.

Chicago Equity is the investment sub-adviser to Nations Blue Chip Master
Portfolio, and is one of two sub-advisers to Nations Asset Allocation Fund.

Chicago Equity's Equity Management Team is responsible for making the day-
to-day investment decisions for Nations Blue Chip Master Portfolio and for the
equity portion of Nations Asset Allocation Fund.

129
<PAGE>
[GRAPHIC]
Brandes Investment
Partners, L.P.

12750 High Bluff Drive
San Diego, California 92130

Brandes Investment Partners, L.P.
Founded in 1974, Brandes is an investment advisory firm with 37 investment
professionals who manage more than $20 billion in assets. Brandes uses a
value-oriented approach to managing international investments, seeking to
build wealth by buying high quality, undervalued stocks.

Brandes is the investment sub-adviser to Nations International Value Fund.
Brandes' [Large Cap Investment Committee] is responsible for making the day-
to-day investment decisions for the Fund.

Performance of other international equity funds and accounts managed by
Brandes
Nations International Value Fund has been in operation since [0], so it has a
short performance history. The table below is designed to show you how a
similar composite of international equity accounts managed by Brandes
performed over a longer period in the past.

The Brandes composite has an investment objective, policies and strategies
that are similar to Nations International Value Fund.

The table below shows the returns for the Brandes composite compared with the
MSCI EAFE Index for the periods ending December 31, 1998. The MSCI EAFE Index
is an index of over 1,100 stocks from 21 developed markets in Europe,
Australia, New Zealand and Asia. The index reflects the relative size of each
market. The returns reflect deductions of fees and expenses, except for any
account level charges, and assume all dividends and distributions have been
reinvested.

Average annual total returns as of December 31, 1998
<TABLE>
<CAPTION>
Brandes MSCI EAFE
Composite (%) Index (%)
<S> <C> <C>
one year 0.00 0.00
three years 0.00 0.00
five years 0.00 0.00
since inception
(0, 0 , 0) 0.00 0.00

Average annual total returns as of December 31, 1998

Brandes MSCI EAFE
Composite (%) Index (%)
1998 0.00 0.00
1997 20.00 1.78
1996 16.34 6.05
1995 13.75 11.21
1994 (2.98) 7.78
1993 40.86 32.56
1992 6.28 (12.17)
1991 40.17 12.13
</TABLE>

130
<PAGE>
[GRAPHIC]
Gartmore Global Partners

One Bank of America Plaza
Charlotte, North Carolina 28255

This information is designed to demonstrate the historical track record of
Brandes. It does not indicate how the Fund has performed or will perform in
the future.

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

The Brandes composite includes Brandes International Equity Fund and
international equity accounts managed by Brandes. The accounts don't pay the
same expenses that mutual funds pay and aren't subject to the diversification
rules, tax restrictions and investment limits under the 1940 Act or Subchapter
M of the Internal Revenue Code. Returns could have been lower if the composite
had been subject to these expenses and regulations. The aggregate returns of
the accounts in the composite don't reflect the returns of any particular
account of Brandes.

Gartmore Global Partners
Gartmore is a global asset manager dedicated to serving the needs of U.S.
based investors. Gartmore was formed in 1995 as a registered investment
adviser and manages more than $0 billion in assets.

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

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

Gartmore is one of three investment sub-advisers to:

o Nations International Equity Fund

Gartmore is the investment sub-adviser to:

o Nations International Growth Fund

o Nations Emerging Markets Fund

Nations International Equity Fund is co-managed by five portfolio managers:

Phillip Ehrmann has been responsible since June 1998 for the Fund's investments
in developing countries. He has also been the principal portfolio manager for
Nations Emerging Markets Fund since he joined Gartmore in 1995, and is head of
the Gartmore Emerging Markets Team. Before he joined Gartmore, Mr. Ehrmann was
the director of emerging markets for Invesco in London. He began his career in
1981 as an institutional stock broker with Rowe & Pitman Inc. and also spent a
brief period with Prudential Bache Securities as an institutional salesman
before joining Invesco in 1984. Mr. Ehrmann graduated from the London School
of Economics with a degree in Economics, Industry and Trade.

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<PAGE>
Seok Teoh has been responsible since June 1998 for the Fund's investments in
Asia. She has also been principal portfolio manager of Nations Pacific Growth
Fund since it was formed in June 1995. Ms. Teoh has been with Gartmore since
1990 as the London based manager of its Far East Team. Previously, she managed
four equity funds for Rothschild Asset Management in Tokyo and Singapore, and
was also responsible for Singaporean and Malaysian equity sales at Overseas
Union Bank Securities in Singapore. Ms. Teoh is native to Singapore and is
fluent in Mandarin and Cantonese. She received an Economics degree from the
University of Durham.

Mark Fawcett has been responsible since June 1998 for the Fund's investments
in Japan. He is also senior investment manager for the Gartmore Japanese
Equities Team and has specific responsibility for large stock research. Before
joining Gartmore in 1991, he worked on the Far East desk of Provident Mutual
managing funds invested in Japan. He graduated from Oxford University in 1986
with an honors degree in Mathematics and Philosophy.

Stephen Jones has been responsible for the Fund's investments in Europe since
1998. He is also head of Gartmore European Equities. Mr. Jones joined Gartmore
in 1994 and was appointed head of the European equity team in 1995. He began
his career at The Prudential in 1984, and became a European equities
investment manager in 1987, focusing on France, Belgium and Switzerland. He
graduated from Manchester University in 1984 with an honors degree in
Economics.

Stephen Watson has been responsible since June 1998 for allocating the Fund's
assets among the various regions in which it invests, and for determining the
funds investments in regions not covered by the other portfolio managers. He
was the Fund's sole portfolio manager from February 1995 to June 1998. Mr.
Watson joined Gartmore in 1993 as a global fund manager, and is the chief
investment officer of Gartmore Global Partners and a member of Gartmore's
global policy group. Before joining Gartmore, he was a director and global
fund manager with James Capel Fund Managers, London, as well as client service
manager for international clients. He was in Capel-Cure Myers' portfolio
management division from 1980 to 1987, and began his career in 1976 with
Samuel Motagu. He is a member of the Securities Institute.

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

Nations Emerging Markets Fund is managed by Philip Ehrmann, the head of
Gartmore Emerging Markets Team. He has managed the Fund since 1995. He also
co-manages Nations International Equity Fund.

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[GRAPHIC]
INVESCO Global Asset
Management (N.A), Inc.

1315 Peachtree Street, N.E.
Atlanta, Georgia 30309

[GRAPHIC]
Putnam Investment
Management, Inc.

One Post Office Square
Boston, Massachusetts 02109
[GRAPHIC]
Boatmen's Capital
Management, Inc.

100 North Broadway
St. Louis, Missouri 63102

[GRAPHIC]
Stephens Inc.

111 Center Street
Little Rock, Arkansas 72201

[GRAPHIC]
First Data Investor
Services Group, Inc.

One Exchange Place
Boston, Massachusetts 02109

INVESCO Global Asset Management (N.A), Inc.
Invesco is a division of INVESCO Global, a publicly traded investment
management firm located in London, England, and a wholly owned subsidiary of
AMVESCAP PLC, a publicly traded UK financial holding company, which is also
located in London.

Invesco is one of three investment sub-advisers to Nations International
Equity Fund. Invesco's International Equity Portfolio Management Team is
responsible for making the day-to-day investment decisions for its portion of
the Fund.

Putnam Investment Management, Inc.
Putnam is a wholly owned subsidiary of Putnam Investments, Inc., which, except
for shares held by employees, is owned by Marsh & McLennan Companies.

Putnam is one of three investment sub-advisers to Nations International Equity
Fund. Putnam's Core International Equity Group is responsible for making the
day-to-day investment decisions for its portion of the Fund.

Boatmen's Capital Management, Inc.
Boatmen's is a wholly-owned subsidiary of Bank of America. Boatmen's is the
investment sub-adviser to Nations U.S. Government Bond Fund. Boatmen's Fixed
Income Committee is responsible for making the day-to-day investment decisions
for the Fund.

Other service providers
The Funds are distributed and co-administered by Stephens Inc., a registered
broker/dealer. Stephens may pay service fees or commissions to companies that
assist investors in buying shares of the Funds.

BAAI is also co-administrator of the Funds, and assists in overseeing the
administrative operations of the Funds. The Funds pay BAAI and Stephens a
combined fee for their services, plus certain out of pocket expenses. The fee
is paid monthly, and is calculated as an annual percentage of the average
daily net assets of the Funds, as follows:

<TABLE>
<S> <C>
Domestic equity funds 0.23%
International funds 0.22%
Fixed income funds 0.22%
</TABLE>

First Data Investor Services Group, Inc. (First Data) is the transfer agent
for the Funds' shares. Its responsibilities include processing purchases,
sales and exchanges, calculating and paying distributions, keeping shareholder
records, preparing account statements and providing customer service.

133
<PAGE>
About your investment
- --------------------------------------------------------------------------------
[GRAPHIC]
Financial institutions and intermediaries may have different
limits, charge other fees, or have different policies for
buying, selling and exchanging shares than those described in
this prospectus.

[GRAPHIC]
A business day is any day that the New York Stock Exchange
(NYSE) is open. A business day ends at the close of regular
trading on the New York Stock Exchange (NYSE), usually at 4:00
p.m. Eastern time. If the NYSE closes early, the business day
ends as of the time the NYSE closes.

The NYSE is closed on weekends and on the following national
holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.

[GRAPHIC]
Buying, selling and exchanging shares

In general, only the following categories of investors can buy Primary A
Shares:

o financial institutions and intermediaries, including Bank of America, its
affiliates, and other financial institutions, and fee-based investment
advisers and financial planners, for their own accounts or [fiduciary]
client accounts

o employee benefit plans

o charitable foundations

o endowments

o other Funds in the Nations Funds Family

The minimum initial investment for each investor of record is $250,000.
Investments made on behalf of client accounts of a single financial
institution or intermediary are aggregated for the purposes of this minimum
initial investment amount. There is no minimum for additional investments.

Investors don't pay any sales charges when they buy, sell or exchange Primary
A Shares.

Please contact your financial adviser, or call us at 1.800.765.2668 if you
have any questions about how to place an order.

How shares are priced
All transactions are based on the price of a Fund's shares -- or its net asset
value per share. We calculate net asset value per share for each class of each
Fund at the end of each business day. First, we calculate the net asset value
for each class of a Fund by determining the value of the Fund's assets in the
class and then subtracting its liabilities. Next, we divide this amount by the
number of shares that investors are holding in the class. International
markets may be open on days when U.S. markets are closed. The value of foreign
securities owned by a Fund could change on days when Fund shares may not be
bought or sold.

Valuing securities in a Fund
The value of a Fund's assets is based on the total market value of all of the
securities it holds. The prices reported on stock exchanges and securities
markets around the world are usually used to value securities in a Fund. If
prices aren't readily available, we'll base the price of a security on its
fair market value. We use the amortized cost method, which approximates market
value, to value short-term investments maturing in 60 days or less.

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<PAGE>
How orders are processed
Orders to buy, sell or exchange shares are processed on business days. Orders
received by Stephens, First Data or their agents before the end of a business
day (usually 4:00 p.m. Eastern time, unless the NYSE closes early) will
receive that day's net asset value per share. Orders received after the end of
a business day will receive the next business day's net asset value per share.
The business day that applies to your order is also called the trade date. We
may refuse any order. If this happens, we'll return any money we've received
to the investor.

[GRAPHIC]
Buying shares

Here are some general rules for buying shares:

o Investors buy Primary A Shares at net asset value per share.

o If we don't receive payment within three business days of receiving
an order, we'll refuse the order and notify the investor. We'll
return any payment for orders that we refuse or do not receive to
the investor.

o Financial institutions and intermediaries are responsible for
sending us orders for their clients and for ensuring that we receive
payment on time. Telephone orders may be difficult to complete
during periods of significant economic or market change.

o Shares purchased are recorded on the books of the Fund. We don't
issue certificates.

o Financial institutions and intermediaries are responsible for
recording the beneficial ownership of the shares of their clients,
and for reporting this ownership on account statements they send to
their clients.

[GRAPHIC]
Selling shares

Here are some general rules for selling shares:

o We normally send the sale proceeds by federal funds wire to
investors within three business days after Stephens, First Data or
their agents receive the order.

o Financial institutions and intermediaries are responsible for
sending us orders for their clients and for depositing the sale
proceeds to their accounts on time.

o Under certain circumstances allowed under the 1940 Act, we can pay
investors in securities or other property when they sell shares, or
delay payment of the sale proceeds for up to seven days.

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<PAGE>
[GRAPHIC]
You should make sure you understand the investment objectives
and policies of the Fund you're exchanging into. Please read
its prospectus carefully.

We may sell shares:

o if the value of an investor's account after the shares are sold
falls below $500. We'll provide 60 days notice in writing if we're
going to do this

o if a financial institution or intermediary tells us to sell the
shares for a client under arrangements it has made with its clients

o under certain other circumstances allowed under the 1940 Act.

[GRAPHIC]
Exchanging shares

Investors can sell shares of a Fund to buy shares of another Nations
Fund. This is called an exchange, and may be appropriate if investment
goals or tolerance for risk change.

Here's how exchanges work:

o Investors can exchange Primary A Shares of a Fund for Primary A
Shares of all other Nations Funds.

o The rules for buying a Fund, including any minimum investment
requirements, apply to exchanges into that Fund.

o Exchanges can only be made into a Fund that is legally sold in the
investor's state of residence.

o Exchanges can generally only be made into a Fund that is accepting
investments.

o We may limit the number of exchanges that can be made within a
specified period of time.

o We may change or cancel the right to make an exchange by giving the
amount of notice required by regulatory authorities (currently 60
days for a material change or cancellation), unless we are required
to do so because of unusual circumstances.

o Shares that are held in certificate form cannot be exchanged until
First Data has received the certificate and deposited the shares to
the investor's account.

o Telephone orders may be difficult to complete during periods of
significant economic or market change.

136
<PAGE>
[GRAPHIC]
The power of compounding

You can choose to reinvest your distributions in additional
shares of the same Fund and class.

Reinvesting your distributions buys you more shares of a
Fund -- which lets you take advantage of the potential for
compound growth.

Putting the money you earn back into your investment means it,
in turn, may earn even more money. Over time, the power of
compounding has the potential to significantly increase the
value of your investment.

[GRAPHIC]
Distributions and taxes

About distributions
A mutual fund can make money two ways:

o It can earn income. Examples are interest paid on bonds and dividends paid
on common stocks.

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

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

All of the Funds distribute any net realized capital gains, including net
short-term capital gains, at least once a year.

The frequency of distributions of net investment income vary by Fund:

<TABLE>
<CAPTION>
<S> <C>
Frequency of
Fund income distributions
Nations Value Fund monthly
Nations Equity Income Fund monthly
Nations Emerging Growth Fund quarterly
Nations Small Company Growth Fund monthly
Nations Disciplined Equity Fund monthly
Nations Capital Growth Fund monthly
Nations Marsico Focuses Equities Fund quarterly
Nations Marsico Growth & Income Fund quarterly
Nations Strategic Equity Fund monthly
Nations Blue Chip Fund quarterly
Nations Capital Income Fund [quarterly]
Nations International Value Fund annually
Nations International Equity Fund quarterly
Nations International Growth Fund annually
Nations Emerging Markets Fund quarterly
Nations Equity Index Fund quarterly
Nations Managed Index Fund monthly
Nations Managed SmallCap Index Fund quarterly
Nations Managed Value Index Fund quarterly
Nations Managed SmallCap Value Index Fund quarterly
Nations Balanced Assets Fund quarterly
Nations Asset Allocation Fund quarterly
Nations Short-Term Income Fund monthly
Nations Short-Intermediate Government Fund monthly
Nations Government Securities Fund monthly
</TABLE>

137
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Frequency of
Fund income distributions
Nations Strategic Fixed Income Fund monthly
Nations U.S. Government Bond Fund monthly
Nations Diversified Income Fund monthly
Nations Intermediate Bond Fund monthly
Nations Short-Term Municipal Income Fund monthly
Nations Intermediate Municipal Bond Fund monthly
Nations Municipal Income Fund monthly
</TABLE>

A distribution is paid based on the number of shares you hold on the day
before the distribution is declared. Shares of the equity, international,
index and balanced funds are eligible to receive distributions from the trade
date of the purchase, as long as it's at least one day before a distribution
is declared, up to the day before the shares are sold. Shares of the fixed
income and municipal bond funds are eligible to receive distributions from the
trade date of the purchase up to and including the day before the shares are
sold.

Different share classes of a Fund usually pay different distribution amounts,
because each class has different expenses. Each time a distribution is made,
the net asset value per share of the share class is reduced by the amount of
the distribution.

We'll automatically reinvest distributions in additional shares of the same
Fund unless you tell us you want to receive your distributions in cash.

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

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

138
<PAGE>
[GRAPHIC]
This information is a summary of how federal income taxes may
affect your investment in the Funds. It is not intended as a
substitute for careful tax planning. You should consult with
your own tax advisor about your situation, including any
foreign, state and local taxes that may apply.

[GRAPHIC]
For more information about
taxes, please see the SAI.

How taxes affect your investment
Distributions of net investment income, including net foreign currency gains
and any excess of net short-term capital gain over net long-term capital loss,
generally are taxable to you as ordinary income. Corporate shareholders may be
able to exclude a portion of these distributions from their taxable income.

Distributions of net capital gain (generally the excess of net long-term
capital gain over net short-term capital loss), generally are taxable to you
as net capital gains. Individual, trust and estate shareholders may be taxed
on these distributions at preferential rates.

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

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

Municipal Bond Funds
Distributions that come from a Fund's tax-exempt interest income are generally
free from federal income tax, but may be subject to state or local tax. All or
a portion of these distributions may also be subject to the federal
alternative minimum tax.

Any distributions that come from taxable income or realized capital gains are
generally subject to tax. Distributions that come from net investment income
and any net short-term capital gain (generally the excess of net short-term
capital gain over net long-term capital loss) generally are taxable to you as
ordinary income. Distributions of net capital gain (generally the excess of
net long-term capital gain over net short-term capital loss), generally are
taxable to you as net capital gains. Individual, trust and estate shareholders
may be taxed on these distributions at preferential rates. Corporate
shareholders will not be able to deduct any distributions from a Fund when
determining their taxable income.

Withholding tax
We're required by federal law to withhold tax of 31% on any distributions and
sale proceeds paid to you (including amounts deemed to be paid for "in kind"
redemptions and exchanges) if:

o you haven't given us a correct Taxpayer Identification Number (TIN) and
haven't certified that the TIN is correct and withholding doesn't apply

o the Internal Revenue Service (IRS) has notified us that the TIN listed on
your account is incorrect according to its records

o the IRS informs us that you are otherwise subject to backup withholding.

The IRS may also impose penalties against you if you don't give us a correct
TIN.

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<PAGE>
Amounts we withhold are applied to your federal income tax liability. You may
receive a refund from the IRS if the withholding tax results in an overpayment
of taxes.

We're also required by federal law to withhold tax on distributions paid to
some foreign shareholders.

Foreign taxes
Mutual funds that maintain most of their portfolio in foreign
securities -- like the international funds -- have special tax considerations.
You'll generally be required to:

o include in your gross income your proportional amount of foreign taxes paid
by the fund

o treat this amount as foreign taxes you paid directly

o either deduct this amount when calculating your income, or subject to
certain conditions and limitations, claim this amount as a foreign tax
credit against your federal income tax liability

In general, you can claim up to $300 ($600 if you're filing jointly) as a
foreign tax credit.

Taxation of redemptions and exchanges
Your redemptions (including redemptions "in kind") and exchanges of Fund
shares will usually result in a taxable capital gain or loss to you, depending
on the amount you receive for your shares (or are deemed to receive in the
case of exchanges) and the amount you paid (or are deemed to have paid) for
them.

[GRAPHIC]
Financial highlights

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

This information has been audited by PricewaterhouseCoopers LLP. You'll find
the auditor's report and Nations Funds financial statements in the SAI. Please
see the back cover to find out how you can get a copy.

[financial highlights tables for each Fund here]

140
<PAGE>
[GRAPHIC]
Terms used in this prospectus

Asset-backed security - a debt security that gives you a share in a pool of
assets that is backed by loan paper, accounts receivable or other assets,
including mortgages, generally issued by banks, credit card companies or other
lenders. Some securities may be issued or guaranteed by the U.S. government or
by any of its agencies, authorities or instrumentalities. Asset-backed
securities make periodic payments, which may be interest or a combination of
interest and a portion of the principal of the underlying assets.

Average dollar-weighted maturity - the average length of time until the debt
securities held by a Fund reach maturity and are repaid. In general, the
longer the average dollar-weighted maturity, the more a Fund's share price
will fluctuate in response to changes in interest rates.

Bank obligation - a money market instrument issued by a bank, including
certificates of deposit, time deposits and bankers' acceptances.

BARRA Index(1) - an index of approximately 340 common stocks from the S&P 500
that have low price-to-book ratios. These stocks generally tend to have higher
yields and less volatility than other stocks included in the S&P 500.

BARRA SmallCap Index(1) - an index of approximately 375 common stocks from the
S&P 600 that have low price-to-book ratios. These stocks generally tend to
have higher yields and less volatility than other stocks included in the S&P
600.

Capital gain (capital loss) - the difference between the purchase price of a
security and its selling price. You realize a capital gain (or loss) when you
sell a security for more (or less) than you paid for it.

Collateralized mortgage obligation (CMO) - a debt security that is backed by
mortgage loans or mortgage pass-through certificates. The underlying assets of
a CMO are separated into classes, called tranches, based on maturity. Each
tranch pays a different rate of interest. Payments of principal and interest
on the underlying assets fund the income payments on the CMO.

Commercial paper - a money market instrument issued by a large company.

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

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

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

141
<PAGE>
Corporate obligation - a money market instrument issued by a corporation or
commercial bank.

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

Depositary receipts - securities representing securities of companies based in
countries other than the U.S. Examples include ADRs, ADSs, GDRs and EDRs.

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

Dollar roll transactions - the sale by a Fund of mortgage-backed or other
asset-backed securities, together with a commitment to buy similar, but not
identical, securities at a future date.

Duration - a measure used to estimate how much a Fund's share price will
fluctuate in response to a change in interest rates. For example, if interest
rates rise by one percentage point, the share price of a Fund with a duration
of five years would decline by about 5%. If interest rates fall by one
percentage point, the Fund's share price would rise by about 5%.

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

First-tier security - according to Rule 2a-7 under the 1940 Act, a debt
security that is an eligible investment for money market funds and has the
highest short-term rating from a nationally recognized statistical rating
organization (NRSRO), or if unrated, is determined by the fund's board of
directors to be of comparable quality, or is a money market fund issued by a
registered investment company, or is a government security.

Fixed income security - an intermediate to long-term debt security that
matures in more than one year.

Foreign security - a debt or equity security issued by a foreign government or
corporation.

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

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<PAGE>
Futures contract - a contract to buy or sell an asset or an index of
securities at a specified price on a specified date. The price is set through
a futures exchange.

Guaranteed investment contract - an investment instrument issued by a highly
rated insurance company. Under a contract, a fund makes a cash contribution to
the insurance company's general or separate account in return for guaranteed
interest.

High quality - a debt security that has been given a high credit rating by an
NRSRO. In the case of municipal securities, high quality means a long-term
rating of A or higher from Duff & Phelps Credit Rating Co. (D&P), Fitch IBCA
(Fitch), S&P, Thomson BankWatch, Inc. (BankWatch), or Moody's Investor
Services, Inc. (Moody's). Please see the SAI for more information about credit
ratings.

Investment grade - a debt security that has been given a medium to high credit
rating (BBB or higher) by an NRSRO based on the issuer's ability to pay
interest and repay principal on time. A debt security that has not been rated,
but is believed to be of comparable quality, may also be considered investment
grade. Please see the SAI for more information about credit ratings.

Lehman (3)-Year Municipal Bond Index - a broad-based, unmanaged index of
investment grade bonds with maturities of two to four years. All dividends are
reinvested.

Lehman (7)-Year Municipal Bond Index - a broad-based, unmanaged index of
investment grade bonds with maturities of seven to eight years. All dividends
are reinvested.

Lehman Aggregate Bond Index - an index made up of the Lehman
Government/Corporate Index, the Asset-Backed Securities Index and the
Mortgage-Backed Securities Index. These indexes include U.S. government agency
and U.S. Treasury securities, corporate bonds and mortgage-backed securities.
All dividends are reinvested.

Lehman Corporate Bond Index - an index of U.S. government, U.S. Treasury and
agency securities, and corporate and Yankee bonds. All dividends are
reinvested.

Lehman Government Bond Index - an index of [U.S.] government bonds with an
average maturity of approximately nine years. All dividends are reinvested.

Lehman Intermediate Government Bond Index - an index of U.S. government agency
and U.S. Treasury securities. All dividends are reinvested.

Lehman Intermediate Treasury Index - an index of U.S. Treasury securities with
maturities of three to 10 years. All dividends are reinvested.

Lehman Municipal Bond Index - a broad-based, unmanaged index of 8,000
investment grade bonds with maturities of [10] years or more.

143
<PAGE>
Liquidity - a measurement of how easily a security can be bought or sold at a
price that is close to its market value.

Merrill Lynch 1-3 Year Treasury Index - an index of U.S. Treasury bonds with
maturities of 1 to 3 years. All dividends are reinvested.

Money market instrument - a short-term debt security that matures in one year
or less. Money market instruments include U.S. Treasury obligations, U.S.
government obligations, certificates of deposit, bankers' acceptances,
commercial paper, repurchase agreements and municipal securities.

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

Mortgage-related security - a debt security that is backed by a mortgage or
pool of mortgages.

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

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

Non-diversified - a fund that holds fewer securities than other kinds of
funds. This increases the risk that its value could go down significantly if
one or more of its investments performs poorly. Non-diversified funds tend to
have greater price swings than more diversified funds.

Over-the-counter market - a market where dealers trade securities through a
telephone or computer network rather than through a public stock exchange.

Participation - a pass-through certificate representing a share in a pool of
debt obligations or other instruments.

Pass-through certificate - an asset-backed security that passes income from
the original borrower through an intermediary to investors.

144
<PAGE>
Preferred stock - an equity security that gives you an ownership right in a
company, on a different basis than common stock. Preferred stock generally
pays a fixed annual dividend. If the company goes bankrupt, preferred
shareholders generally receive their share of the company's remaining assets
before common shareholders and after bondholders and other creditors.

Prerefunded bonds - bonds that are repaid before their maturity date. The
repayment is financed by a new bond issue. Issuers prerefund bonds during
periods of lower interest rates to lower their interest costs.

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

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

Real Estate Investment Trust (REIT) - a managed portfolio of real estate
investments which may include office buildings, apartment complexes, hotels
and shopping malls, and real-estate-related loans or interests.

Repurchase agreement - a short-term (often overnight) investment agreement.
The investor agrees to buy certain securities from the borrower and the
borrower promises to buy them back at a specified date and price. The
difference between the purchase price paid by the investor and the repurchase
price paid by the borrower represents the investor's return.

Reverse repurchase agreement - a repurchase agreement in which an investor
sells a security to another party, like a bank or dealer, in return for cash,
and agrees to buy the security back at a specified date and price.

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

S&P 500(1) - Standard & Poor's 500 Composite Stock Price Index, an index of 500
common stocks chosen by S&P on a statistical basis.

S&P 600(1) - Standard & Poor's SmallCap 600 Index, is designed to be a
benchmark of the performance of small capitalization stocks. It includes 600
U.S. stocks chosen by S&P based on market size, liquidity and industry group.

Second-tier security - according to Rule 2a-7 under the 1940 Act, a debt
security that is an eligible investment for money market funds, but is not a
first-tier security.

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

145
<PAGE>
Special purpose issuer - an entity organized solely to issue asset-backed
securities on a pool of debt obligations it owns.

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

U.S. government obligation - a debt security issued or guaranteed by the U.S.
government or any of its agencies, authorities or instrumentalities.

U.S. Treasury obligation - a debt security issued by the U.S. Treasury.

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

Zero-coupon bond - a bond that makes no periodic interest payments. Zero
coupon bonds are sold at a deep discount to their face value and mature at
face value. The difference between the face value at maturity and the purchase
price represents the return to the investor.

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

146
<PAGE>
[GRAPHIC]
Where to find more information

You'll find more information about the Equity Funds, International Funds,
Index Funds, Balanced Funds, Fixed Income Funds and Municipal Bond Funds in
the following documents:

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

[GRAPHIC]
Statement of Additional Information
The SAI contains additional information about the Funds and their
policies. The SAI is legally part of this prospectus (it's incorporated
by reference). A copy has been filed with the SEC.

You can obtain a free copy of these documents by contacting Nations
Funds:

By telephone: 1.800.765.2668

By mail:
Nations Funds
c/o Stephens Inc.
One Bank of America Plaza
33rd Floor
Charlotte, NC 28255

On the Internet: www.nationsbank.com/nationsfund

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

Public Reference Section of the SEC
Washington, DC 20549-6009
1.800.SEC.0330
http://www.sec.gov

[NATIONS FUND LOGO APPEARS HERE]

SEC file numbers:
[Nations Fund Trust, 811-04305]
NF-00000-8/99

<PAGE>

[GRAPHIC]

STATE MUNICIPAL BOND FUNDS
PROSPECTUS -- PRIMARY A SHARES

AUGUST 1, 1999

State Municipal Bond Funds
NATIONS CALIFORNIA MUNICIPAL BOND FUND
NATIONS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
NATIONS FLORIDA MUNICIPAL BOND FUND
NATIONS GEORGIA INTERMEDIATE MUNICIPAL BOND FUND
NATIONS GEORGIA MUNICIPAL BOND FUND
NATIONS MARYLAND INTERMEDIATE MUNICIPAL BOND FUND
NATIONS MARYLAND MUNICIPAL BOND FUND
NATIONS NORTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND
NATIONS NORTH CAROLINA MUNICIPAL BOND FUND
NATIONS SOUTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND
NATIONS SOUTH CAROLINA MUNICIPAL BOND FUND
NATIONS TENNESSEE INTERMEDIATE MUNICIPAL BOND FUND
NATIONS TENNESSEE MUNICIPAL BOND FUND
NATIONS TEXAS INTERMEDIATE MUNICIPAL BOND FUND
NATIONS TEXAS MUNICIPAL BOND FUND
NATIONS VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
NATIONS VIRGINIA MUNICIPAL BOND FUND

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

- ---------------------
NOT FDIC INSURED
- ---------------------
May Lose Value
- ---------------------
No Bank Guarantee
- ---------------------

[NATIONS FUND LOGO APPEARS HERE]
<PAGE>

ABOUT THIS PROSPECTUS

- --------------------------------------------------------------------------------

[GRAPHIC]

TERMS USED IN THIS PROSPECTUS

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

[GRAPHIC]

YOU'LL FIND TERMS USED IN
THIS PROSPECTUS ON PAGE 00.

[GRAPHIC]

FOR MORE INFORMATION

YOU'LL FIND MORE INFORMATION ABOUT THE FUNDS IN THE STATEMENT OF
ADDITIONAL INFORMATION (SAI). THE SAI INCLUDES DETAILED
INFORMATION ABOUT EACH FUND'S INVESTMENTS, POLICIES, PERFORMANCE
AND MANAGEMENT, AMONG OTHER THINGS. THE SAI IS LEGALLY
CONSIDERED TO BE PART OF THIS PROSPECTUS BECAUSE IT'S
INCORPORATED BY REFERENCE. TURN TO THE BACK COVER TO FIND OUT
HOW YOU CAN GET A COPY OF THE SAI.

This booklet, which is called a prospectus, tells you about Nations Funds state
municipal bond funds. Please read it carefully because it contains information
that's designed to help you make informed investment decisions.

These Funds invest most of their assets in securities issued by one state and
are generally appropriate only for residents of that state.

The Funds focus on the potential to earn income that is generally free from
income tax by investing primarily in MUNICIPAL SECURITIES.

Municipal securities also have the potential to increase in value because when
interest rates fall, the value of these securities tends to rise. When interest
rates rise, however, the value of these securities tends to fall. There's a
risk that you'll lose money, or you may not earn as much as you expect.

Because they invest primarily in securities issued by one state, the Funds are
considered to be "non-diversified", which means that they may have greater
price swings than more diversified bond funds.

This makes these Funds best suited for investors who want to reduce taxes on
their investment income and have longer-term investment goals. These Funds may
not be suitable for people who are not prepared to accept or are unable to
bear the risks associated with fixed income securities, or who have
short-term income needs.

COMPARING THE FUNDS

There are two groups of state municipal bond funds in the Nations Funds Family:
Intermediate Municipal Bond Funds and Municipal Bond Funds. The main difference
between the two groups is their DURATION -- a measure used to estimate how much
a Fund's share price will fluctuate in response to a change in interest rates.

The Municipal Bond Funds, which have longer durations, generally have the
potential to earn more income than the Intermediate Municipal Bond Funds, but
they also have more risk because their prices tend to change more when interest
rates change.

The table below is designed to help you understand the differences between the
two groups of Funds and their relative income and risk potential -- you should
not use it to compare these Funds with other mutual funds or other kinds of
investments. A Fund's income and risk potential can change over time.

Relative Relative
income risk
Duration potential potential

<S> <C> <C> <C>
Intermediate Municipal Bond Funds 3 to 6 yrs moderate moderate
Municipal Bond Funds 6 to 9 yrs high high

</TABLE>

You'll find a discussion of each Fund's principal investments, strategies and
risks in the Fund descriptions that start on page 00.

If you have any questions about the Funds, please call us at 1.800.765.2668 or
contact your financial adviser.

[NATIONS FUNDS LOGO APPEARS HERE]

<PAGE>

WHAT'S INSIDE

- --------------------------------------------------------------------------------

[GRAPHIC]

BANC OF AMERICA ADVISORS, INC.

BANC OF AMERICA ADVISORS, INC. (BAAI) IS THE INVESTMENT ADVISER
TO EACH OF THE FUNDS. BAAI IS RESPONSIBLE FOR THE OVERALL
MANAGEMENT AND SUPERVISION OF THE INVESTMENT MANAGEMENT OF EACH
FUND. BAAI AND NATIONS FUNDS HAVE ENGAGED A SUB-
ADVISER -- TRADESTREET INVESTMENT ASSOCIATES, INC.
(TRADESTREET), WHICH IS RESPONSIBLE FOR THE DAY-TO-DAY
INVESTMENT DECISIONS FOR EACH OF THE FUNDS.

[GRAPHIC]

YOU'LL FIND MORE ABOUT
BAAI AND TRADESTREET
STARTING ON PAGE 00.

THE STATE MUNICIPAL BOND FUNDS FOCUS ON THE POTENTIAL TO EARN
INCOME THAT IS GENERALLY FREE FROM FEDERAL AND STATE INCOME TAX
BY INVESTING PRIMARILY IN MUNICIPAL SECURITIES.

<TABLE>
[GRAPHIC]

<S> <C>

About the funds

State Municipal Bond Funds

NATIONS CALIFORNIA MUNICIPAL BOND FUND 5
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND 9
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS FLORIDA MUNICIPAL BOND FUND 13
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS GEORGIA INTERMEDIATE MUNICIPAL BOND FUND 17
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS GEORGIA MUNICIPAL BOND FUND 21
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS MARYLAND INTERMEDIATE MUNICIPAL BOND FUND 25
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS MARYLAND MUNICIPAL BOND FUND 29
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS NORTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND 33
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS NORTH CAROLINA MUNICIPAL BOND FUND 37
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS SOUTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND 41
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS SOUTH CAROLINA MUNICIPAL BOND FUND 45
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS TENNESSEE INTERMEDIATE MUNICIPAL BOND FUND 49
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS TENNESSEE MUNICIPAL BOND FUND 53
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS TEXAS INTERMEDIATE MUNICIPAL BOND FUND 57
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS TEXAS MUNICIPAL BOND FUND 61
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND 65
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
NATIONS VIRGINIA MUNICIPAL BOND FUND 69
Sub-adviser: TradeStreet Investment Associates, Inc.

- ---------------------------------------------------------
OTHER IMPORTANT INFORMATION 73

- ---------------------------------------------------------
HOW THE FUNDS ARE MANAGED 74

</TABLE>

<PAGE>

<TABLE>
[GRAPHIC]

<S> <C>

About your investment

INFORMATION FOR INVESTORS

Choosing a share class 77
Buying, selling and exchanging shares 77
How selling agents are paid 77
Distributions and taxes 81
- -----------------------------------------
FINANCIAL HIGHLIGHTS 83

- -----------------------------------------
TERMS USED IN THIS PROSPECTUS 84

- -----------------------------------------
WHERE TO FIND MORE INFORMATION BACK COVER

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

[GRAPHIC]

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

[GRAPHIC]

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

[GRAPHIC]

THIS FUND AT A GLANCE

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF CALIFORNIA

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

Nations California Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks as high a level of current interest income free of
federal income tax and California state personal income tax as is
consistent with prudent investment management and preservation of
capital.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free
from federal income tax and the California state personal income tax.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than seven
years, and its DURATION will be more than six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o allocates assets among revenue bonds, general obligation bonds, insured
bonds and PRE-REFUNDED BONDS based on its analysis of historical
relationships and bond values. The team may change the allocations when
market conditions change

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations California Municipal Bond Fund has the following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax and California state personal income
tax. Any dividend or portion of a dividend that comes from income
paid by other kinds of securities or from realized capital gains is
generally subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES
THAT ARE DEDUCTED FROM THE FUND'S ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)

[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A
Fees you pay directly Shares
<S> <C>

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

(1) The Fund's investment adviser and/or some of its other service
providers have agreed to waive fees and/or reimburse expenses until
July 31, 2000. The figures shown here are after waivers and/or
reimbursements. There is no guarantee that these waivers and/or
reimbursements will continue after this date.

<PAGE>
(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------
(GRAPHIC)
ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)
YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)
COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO FLORIDA
STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF FLORIDA

o DURATION: 3 TO 6 YEARS

o RELATIVE INCOME POTENTIAL: MODERATE

o RELATIVE RISK POTENTIAL: MODERATE

Nations Florida Intermediate Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
the Florida state intangibles taxes consistent with moderate fluctuation
of principal.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE MUNICIPAL SECURITIES that pay interest that is generally free
from federal income tax and the Florida state intangibles taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be between three and
10 years, and its DURATION will be between three and six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o allocates assets among revenue bonds, general obligation bonds,
insured bonds and PRE-REFUNDED BONDS based on its analysis of
historical relationships and bond values. The team may change the
allocations when market conditions change.

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Florida Intermediate Municipal Bond Fund has the following
general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax and the Florida state intangibles taxes.
Any dividend or portion of a dividend that comes from income paid by
other kinds of securities or from realized capital gains is generally
subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)
THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES
THAT ARE DEDUCTED FROM THE FUND'S ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman 7-Year Municipal Bond Index 0.00% 0.00% 0.00%
</TABLE>
The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged index
of investment grade bonds with maturities of seven to eight years. All
dividends are reinvested.
(GRAPHIC)
WHAT IT COSTS TO INVEST IN THE FUND
<TABLE>
<CAPTION>
Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

11
<PAGE>
(GRAPHIC)
THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.
EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------
(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO FLORIDA
STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF FLORIDA

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

NATIONS FLORIDA MUNICIPAL BOND FUND

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
the Florida state intangibles taxes with the potential for principal
fluctuation associated with investments in long-term MUNICIPAL
SECURITIES.
(GRAPHIC)
PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free from
federal income tax and the Florida state intangibles taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than 8.5
years, and its DURATION will be between six and nine years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Florida Municipal Bond Fund has the following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)
THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.
(GRAPHIC)
THERE ARE TWO KINDS OF FEES --SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 00%
Worst: 0 quarter 1900: 00%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO GEORGIA
STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF GEORGIA

o DURATION: 3 TO 6 YEARS

o RELATIVE INCOME POTENTIAL:
MODERATE

o RELATIVE RISK POTENTIAL: MODERATE

Nations Georgia Intermediate Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
Georgia state income taxes consistent with moderate fluctuation of
principal.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE MUNICIPAL SECURITIES that pay interest that is generally free from
federal income tax and Georgia state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be between three and
10 years, and its DURATION will be between three and six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Georgia Intermediate Municipal Bond Fund has the following
general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax and Georgia state income taxes. Any
dividend or portion of a dividend that comes from income paid by
other kinds of securities or from realized capital gains is generally
subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman 7-Year Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged index
of investment grade bonds with maturities of seven to eight years. All
dividends are reinvested.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO GEORGIA
STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF GEORGIA

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

Nations Georgia Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
Georgia state income taxes with the potential for principal fluctuation
associated with investments in long-term MUNICIPAL SECURITIES.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free from
federal income tax and Georgia state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than 8.5
years, and its DURATION will be between six and nine years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Georgia Municipal Bond Fund has the following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES --SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO
MARYLAND STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF MARYLAND

o DURATION: 3 TO 6 YEARS

o RELATIVE INCOME POTENTIAL: MODERATE

o RELATIVE RISK POTENTIAL: MODERATE

Nations Maryland Intermediate Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
Maryland state income taxes consistent with moderate fluctuation of
principal.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE MUNICIPAL SECURITIES that pay interest that is generally free from
federal income tax and Maryland state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be between three and
10 years, and its DURATION will be between three and six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Maryland Intermediate Municipal Bond Fund has the following
general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax and Maryland state income taxes. Any
dividend or portion of a dividend that comes from income paid by
other kinds of securities or from realized capital gains is generally
subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF OR ACCOUNT
FEES, IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman 7-Year Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged index
of investment grade bonds with maturities of seven to eight years. All
dividends are reinvested.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO
MARYLAND STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF MARYLAND

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

Nations Maryland Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
Maryland state income taxes with the potential for principal fluctuation
associated with investments in long-term MUNICIPAL SECURITIES.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free from
federal income tax and Maryland state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than 8.5
years, and its DURATION will be between six and nine years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Maryland Municipal Bond Fund has the following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF SALES
CHARGES OR ACCOUNT FEES, IF ANY, AND WOULD BE LOWER IF THEY
DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO NORTH
CAROLINA STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF NORTH CAROLINA

o DURATION: 3 TO 6 YEARS

o RELATIVE INCOME POTENTIAL: MODERATE

o RELATIVE RISK POTENTIAL: MODERATE

Nations North Carolina Intermediate Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
North Carolina state income taxes consistent with moderate fluctuation
of principal.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE MUNICIPAL SECURITIES that pay interest that is generally free from
federal income tax and North Carolina state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be between three and
10 years, and its DURATION will be between three and six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations North Carolina Intermediate Municipal Bond Fund has the
following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax and North Carolina state income taxes.
Any dividend or portion of a dividend that comes from income paid by
other kinds of securities or from realized capital gains is generally
subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF SALES CHARGES
OR ACCOUNT FEES, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman 7-Year Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged index
of investment grade bonds with maturities of seven to eight years. All
dividends are reinvested.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO NORTH
CAROLINA STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF NORTH CAROLINA

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

Nations North Carolina Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
North Carolina state income taxes with the potential for principal
fluctuation associated with investments in long-term MUNICIPAL
SECURITIES.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free from
federal income tax and North Carolina state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than 8.5
years, and its DURATION will be between six and nine years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations North Carolina Municipal Bond Fund has the following general
risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>

<S> <C> <C> <C> <C>
1 year 3 years 5 years 10 years

Primary A Shares $000 $000 $000 $000
</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO SOUTH
CAROLINA STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF SOUTH CAROLINA

o DURATION: 3 TO 6 YEARS

o RELATIVE INCOME POTENTIAL: MODERATE

o RELATIVE RISK POTENTIAL: MODERATE

Nations South Carolina Intermediate Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
South Carolina state income taxes consistent with moderate fluctuation
of principal.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE MUNICIPAL SECURITIES that pay interest that is generally free from
federal income tax and South Carolina state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be between three and
10 years, and its DURATION will be between three and six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations South Carolina Intermediate Municipal Bond Fund has the
following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax and South Carolina state income taxes.
Any dividend or portion of a dividend that comes from income paid by
other kinds of securities or from realized capital gains is generally
subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman 7-Year Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged index
of investment grade bonds with maturities of seven to eight years. All
dividends are reinvested.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)(1)

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO SOUTH
CAROLINA STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF SOUTH CAROLINA

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

Nations South Carolina Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
South Carolina state income taxes with the potential for principal
fluctuation associated with investments in long-term MUNICIPAL
SECURITIES.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free from
federal income tax and South Carolina state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than 8.5
years, and its DURATION will be between six and nine years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations South Carolina Municipal Bond Fund has the following general
risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO
TENNESSEE STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF TENNESSEE

o DURATION: 3 TO 6 YEARS

o RELATIVE INCOME POTENTIAL: MODERATE

o RELATIVE RISK POTENTIAL: MODERATE

Nations Tennessee Intermediate Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
the Tennessee Hall Income Tax on unearned income consistent with
moderate fluctuation of principal.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE MUNICIPAL SECURITIES that pay interest that is generally free from
federal income tax and the Tennessee Hall Income Tax on unearned income.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be between three and
10 years, and its DURATION will be between three and six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Tennessee Intermediate Municipal Bond Fund has the following
general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax and the Tennessee Hall Income Tax on
unearned income. Any dividend or portion of a dividend that comes
from income paid by other kinds of securities or from realized
capital gains is generally subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman 7-Year Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged index
of investment grade bonds with maturities of seven to eight years. All
dividends are reinvested.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO
TENNESSEE STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF TENNESSEE

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

Nations Tennessee Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
the Tennessee Hall Income Tax on unearned income with the potential for
principal fluctuation associated with investments in long-term MUNICIPAL
SECURITIES.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free from
federal income tax and the Tennessee Hall Income Tax on unearned income.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than 8.5
years, and its DURATION will be between six and nine years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Tennessee Municipal Bond Fund has the following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THRE ARE TWO KINDS OF FEES --

SALES CHARGES YOU PAY DIRECTLY, AND ONGOING FEES AND EXPENSES
THAT ARE DEDUCTED FROM THE FUND'S ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)(1)

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO TEXAS
STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF TEXAS

o DURATION: 3 TO 6 YEARS

o RELATIVE INCOME POTENTIAL: MODERATE

o RELATIVE RISK POTENTIAL: MODERATE

Nations Texas Intermediate Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax
consistent with moderate fluctuation of principal.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE MUNICIPAL SECURITIES that pay interest that is generally free from
federal income tax.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be between three and
10 years, and its DURATION will be between three and six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Texas Intermediate Municipal Bond Fund has the following
general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax, but may be subject to state and local
taxes. Any dividend or portion of a dividend that comes from income
paid by other kinds of securities or from realized capital gains is
generally subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman 7-Year Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged index
of investment grade bonds with maturities of seven to eight years. All
dividends are reinvested.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO TEXAS
STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF TEXAS

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

Nations Texas Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax with
the potential for principal fluctuation associated with investments in
long-term MUNICIPAL SECURITIES.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free from
federal income tax.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than 8.5
years, and its DURATION will be between six and nine years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Texas Municipal Bond Fund has the following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF SALES CHARGES
OR ACCOUNT FEES, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO
VIRGINIA STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF VIRGINIA

o DURATION: 3 TO 6 YEARS

o RELATIVE INCOME POTENTIAL: MODERATE

o RELATIVE RISK POTENTIAL: MODERATE

Nations Virginia Intermediate Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
Virginia state income taxes consistent with moderate fluctuation of
principal.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE MUNICIPAL SECURITIES that pay interest that is generally free from
federal income tax and Virginia state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be between three and
10 years, and its DURATION will be between three and six years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Virginia Intermediate Municipal Bond Fund has the following
general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

o TAX CONSIDERATIONS - Most of the dividends distributed by the Fund
comes from interest paid by municipal securities, and is generally
free from federal income tax and Virginia state income taxes. Any
dividend or portion of a dividend that comes from income paid by
other kinds of securities or from realized capital gains is generally
subject to federal, state and local taxes.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.

(GRAPHIC)

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman 7-Year Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman 7-Year Municipal Bond Index is a broad-based, unmanaged index
of investment grade bonds with maturities of seven to eight years. All
dividends are reinvested.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

ABOUT THE STATE MUNICIPAL BOND FUNDS

- --------------------------------------------------------------------------------

(GRAPHIC)

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S MUNICIPAL
FIXED INCOME MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

(GRAPHIC)

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 0.

(GRAPHIC)

COMPARING THE FUNDS

THIS INFORMATION IS DESIGNED TO HELP YOU COMPARE THE TWO
VIRGINIA STATE MUNICIPAL BOND FUNDS.

o WHO SHOULD CONSIDER INVESTING: RESIDENTS OF VIRGINIA

o DURATION: 6 TO 9 YEARS

o RELATIVE INCOME POTENTIAL: HIGH

o RELATIVE RISK POTENTIAL: HIGH

Nations Virginia Municipal Bond Fund

(GRAPHIC)

INVESTMENT OBJECTIVE

This Fund seeks high current income exempt from federal income tax and
Virginia state income taxes with the potential for principal fluctuation
associated with investments in long-term MUNICIPAL SECURITIES.

(GRAPHIC)

PRINCIPAL INVESTMENT STRATEGIES

This Fund normally invests at least 80% of its assets in INVESTMENT
GRADE municipal securities that pay interest that is generally free from
federal income tax and Virginia state income taxes.

The Fund may invest up to 20% of its assets in:

o short-term DEBT SECURITIES that are taxable

o debt securities issued by certain trusts, partnerships or other SPECIAL
PURPOSE ISSUERS

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The Fund's AVERAGE DOLLAR-WEIGHTED MATURITY will normally be more than 8.5
years, and its DURATION will be between six and nine years.

When selecting individual investments, the portfolio management team:

o looks at a security's potential to generate both income and price
appreciation

o selects securities using credit and structure analysis. Credit analysis
evaluates the creditworthiness of individual issuers. The team will invest
in securities with lower credit ratings only if it believes that the
potential for a higher yield is substantial compared with the risk, and
the credit quality is stable or improving. Structure analysis evaluates
the characteristics of a security, including its call features and timing
of cash flows, among other things.

o tries to maintain a duration that is similar to the duration of the Fund's
benchmark. This can help manage interest rate risk

<PAGE>

(GRAPHIC)

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

(GRAPHIC)

RISKS AND OTHER THINGS TO CONSIDER

Nations Virginia Municipal Bond Fund has the following general risks:

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest and repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but is generally not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

o CHANGING DIVIDEND LEVELS - The level of dividends paid by the Fund
depends on the amount of income paid by the securities the Fund
holds. It is not guaranteed and will change. Changes in the value of
the securities, however, generally should not affect the amount of
income they pay.

(GRAPHIC)

A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on a
number of factors, including market conditions, the composition of the
Fund's holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

<PAGE>

(GRAPHIC)

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY A
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT FEES,
IF ANY, AND WOULD BE LOWER IF THEY DID.
(GRAPHIC)
THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)
[BAR CHART APPEARS HERE]

1900 1900 1900 1900 1900 1900 1900
---- ---- ---- ---- ---- ---- ----
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>

<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%

</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

1 year 5 years 10 years
<S> <C> <C> <C>
Primary A Shares 0.00% 0.00% 0.00%
Lehman Municipal Bond Index 0.00% 0.00% 0.00%

</TABLE>

The Lehman Municipal Bond Index is a broad-based, unmanaged index of
8,000 investment grade bonds with maturities of 10 years or more.

(GRAPHIC)

WHAT IT COSTS TO INVEST IN THE FUND

Primary A

Fees you pay directly Shares
<S> <C>

Maximum sales charge (load)
when you buy your shares none

Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)1

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%

</TABLE>

<PAGE>

(GRAPHIC)

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE

This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary A Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary A Shares $000 $000 $000 $000

</TABLE>

<PAGE>

(GRAPHIC)

Other important information

You'll find specific information about each Fund's principal investments,
strategies and risks in the descriptions starting on page 00. The following are
some other risks and information you should consider before you invest:

o YOUR INVESTMENT IN THESE FUNDS IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (BANK OF AMERICA), THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. YOUR INVESTMENT MAY LOSE
MONEY.

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

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

o HOLDING OTHER KINDS OF INVESTMENTS - The Funds may hold investments
that aren't part of their principal investment strategies. Please
refer to the SAI for more information.

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

o PREPARING FOR THE YEAR 2000 - The year 2000 is an issue for
organizations, companies and entities around the world that rely on
computer systems to process date-related information. Computer
systems that cannot read a four-digit year may not be able to
calculate and process information on or after January 1, 2000.

All of the Funds' primary service providers have confirmed that they
have been working to make the necessary changes to their systems, and
that they expect them to be adapted in time. There is no guarantee,
however, that their computer systems will ready by the year 2000. If
their computer systems are not ready in time, there could be a
negative effect on Fund operations.

A Fund's performance could also be affected if securities it holds
decrease in value because of year 2000 issues.

<PAGE>

(GRAPHIC)

BANC OF AMERICA ADVISORS, INC.

ONE BANK OF AMERICA PLAZA
CHARLOTTE, NORTH CAROLINA 28255

(GRAPHIC)

How the Funds are managed

INVESTMENT ADVISER

BAAI is the investment adviser to the state municipal bond funds, as well as to
over 60 other mutual fund portfolios in the Nations Funds Family.

BAAI is a registered investment adviser. It's a wholly owned subsidiary of Bank
of America, which is owned by Bank of America Corporation.

Nations Funds pays BAAI an annual fee for its investment advisory services. The
fee is calculated daily based on the average net assets of each Fund and is
paid monthly. BAAI uses part of this money to pay investment sub-advisers for
the services they provide to Nations Funds.

BAAI has agreed to waive fees and/or reimburse expenses for certain Funds until
July 31, 2000. You'll find a discussion of any waiver and/or reimbursement in
the Fund descriptions. There is no assurance that BAAI will continue to waive
and/or reimburse any fees and/or expenses after this date.

<PAGE>

ANNUAL INVESTMENT ADVISORY FEE, AS A % OF AVERAGE DAILY NET ASSETS

Maximum Actual fee
advisory paid last
fee fiscal year

<S> <C> <C>
Nations California Municipal Bond Fund 0.00 0.00
Nations Florida Intermediate Municipal Bond Fund 0.00 0.00
Nations Florida Municipal Bond Fund 0.00 0.00
Nations Georgia Intermediate Municipal Bond Fund 0.00 0.00
Nations Georgia Municipal Bond Fund 0.00 0.00
Nations Maryland Intermediate Municipal Bond Fund 0.00 0.00
Nations Maryland Municipal Bond Fund 0.00 0.00
Nations North Carolina Intermediate Municipal Bond Fund 0.00 0.00
Nations North Carolina Municipal Bond Fund 0.00 0.00
Nations South Carolina Intermediate Municipal Bond Fund 0.00 0.00
Nations South Carolina Municipal Bond Fund 0.00 0.00
Nations Tennessee Intermediate Municipal Bond Fund 0.00 0.00
Nations Tennessee Municipal Bond Fund 0.00 0.00
Nations Texas Intermediate Municipal Bond Fund 0.00 0.00
Nations Texas Municipal Bond Fund 0.00 0.00
Nations Virginia Intermediate Municipal Bond Fund 0.00 0.00
Nations Virginia Municipal Bond Fund 0.00 0.00
</TABLE>

<PAGE>

(GRAPHIC)

TRADESTREET INVESTMENT ASSOCIATES, INC.

ONE BANK OF AMERICA PLAZA
CHARLOTTE, NORTH CAROLINA 28255

(GRAPHIC)

STEPHENS INC.

111 CENTER STREET
LITTLE ROCK, ARKANSAS 72201

(GRAPHIC)

FIRST DATA INVESTOR
SERVICES GROUP, INC.

ONE EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109

INVESTMENT SUB-ADVISER

Nations Funds and BAAI have engaged an investment sub-adviser, TradeStreet
Investment Associates, Inc., to provide day-to-day portfolio management for the
Funds. TradeStreet and the sub-advisers for all other Nations Funds function
under the supervision of the Boards of Directors/Trustees of Nations Funds and
BAAI.

TRADESTREET INVESTMENT ASSOCIATES, INC.

TradeStreet is a registered investment adviser and a wholly-owned subsidiary of
Bank of America. Its management expertise covers all major domestic asset
classes.

Currently managing more than billion, TradeStreet has more than 140
institutional clients and is sub-adviser to mutual funds in the Nations Funds
Family. TradeStreet uses a team approach to investment management. Each team
has access to the latest analytic technology and expertise.

TradeStreet is the investment sub-adviser to the Funds. TradeStreet's Municipal
Fixed Income Management Team is responsible for making the day-to-day
investment decisions for each Fund.

OTHER SERVICE PROVIDERS

The Funds are distributed and co-administered by Stephens Inc., a registered
broker/dealer. Stephens may pay service fees or commissions to companies that
assist investors in buying shares of the Funds.

BAAI is also co-administrator of the Funds, and assists in overseeing the
administrative operations of the Funds. The Funds pay BAAI and Stephens a
combined fee of 0.22% for their services, plus certain out of pocket expenses.
The fee is calculated as an annual percentage of the average daily net assets
of the Funds, and is paid monthly.

First Data Investor Services Group, Inc. (First Data) is the transfer agent for
the Funds' shares. Its responsibilities include processing purchases, sales and
exchanges, calculating and paying distributions, keeping shareholder records,
preparing account statements and providing customer service.

<PAGE>

ABOUT YOUR INVESTMENT

- --------------------------------------------------------------------------------

(GRAPHIC)

FINANCIAL INSTITUTIONS AND INTERMEDIARIES MAY HAVE DIFFERENT
LIMITS, CHARGE OTHER FEES, OR HAVE DIFFERENT POLICIES FOR
BUYING, SELLING AND EXCHANGING SHARES THAN THOSE DESCRIBED IN
THIS PROSPECTUS.

(GRAPHIC)

Buying, selling and exchanging shares

In general, only the following categories of investors can buy Primary A
shares:

o employee benefit plans

o charitable foundations

o endowments

o other Funds in the Nations Funds Family

The minimum initial investment for each investor of record is $250,000.
Investments made on behalf of client accounts of a single financial institution
or intermediary are aggregated for the purposes of this minimum initial
investment amount. There is no minimum for additional investments.

Investors don't pay any sales charges when they buy, sell or exchange Primary A
Shares.

Please contact your financial adviser, or call us at 1.800.765.2668 if you have
any questions about how to place an order.

<PAGE>

(GRAPHIC)

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

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

DAY.

HOW SHARES ARE PRICED

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

VALUING SECURITIES IN A FUND

The value of a Fund's assets is based on the total market value of all of the
securities it holds. The prices reported on stock exchanges and securities
markets around the world are usually used to value securities in a Fund. If
prices aren't readily available, we'll base the price of a security on its fair
market value. We use the amortized cost method, which approximates market
value, to value short-term investments maturing in 60 days or less.

HOW ORDERS ARE PROCESSED

Orders to buy, sell or exchange shares are processed on business days. Orders
received by Stephens, First Data or their agents before the end of a business
day (usually 4:00 p.m. Eastern time, unless the NYSE closes early) will receive
that day's net asset value per share. Orders received after the end of a
business day will receive the next business day's net asset value per share.
The business day that applies to your order is also called the TRADE DATE. We
may refuse any order. If this happens, we'll return any money we've received to
the investor.

<PAGE>

(GRAPHIC)

BUYING SHARES

Here are some general rules for buying shares:

o Investors buy Primary A Shares at net asset value per share.

o If we don't receive payment within three business days of
receiving an order, we'll refuse the order and notify the
investor. We'll return any payment for orders that we refuse or do
not receive to the investor.

o Financial institutions and intermediaries are responsible for
sending us orders for their clients and for ensuring that we
receive payment on time. Telephone orders may be difficult to
complete during periods of significant economic or market change.

o Shares purchased are recorded on the books of the Fund. We don't
issue certificates.

(GRAPHIC)

SELLING SHARES

Here are some general rules for selling shares:

o We normally send the sale proceeds by federal funds wire to
investors within three business days after Stephens, First Data or
their agents receive the order.

o Financial institutions and intermediaries are responsible for
sending us orders for their clients and for depositing the sale
proceeds to their accounts on time.

o Under certain circumstances allowed under the 1940 Act, we can pay
investors in securities or other property when they sell shares,
or delay payment of the sale proceeds for up to seven days.

We may sell shares:

o if the value of an investor's account after the shares are sold
falls below $500. We'll provide 60 days notice in writing if we're
going to do this

o if a financial institution or intermediary tells us to sell the
shares for a client under arrangements it has made with its
clients

o under certain other circumstances allowed under the 1940 Act.

<PAGE>

(GRAPHIC)

YOU SHOULD MAKE SURE YOU UNDERSTAND THE INVESTMENT OBJECTIVES
AND POLICIES OF THE FUND YOU'RE EXCHANGING INTO. PLEASE READ
ITS PROSPECTUS CAREFULLY.

(GRAPHIC)

EXCHANGING SHARES

Investors can sell shares of a Fund to buy shares of another Nations
Fund. This is called an exchange, and may be appropriate if investment
goals or tolerance for risk change.

Here's how exchanges work:

o Investors can exchange Primary A Shares of a Fund for Primary A
Shares of all other Nations Funds.

o The rules for buying a Fund, including any minimum investment
requirements, apply to exchanges into that Fund.

o Exchanges can only be made into a Fund that is legally sold in the
investor's state of residence.

o Exchanges can generally only be made into a Fund that is accepting
investments.

o We may limit the number of exchanges that can be made within a
specified period of time.

o We may change or cancel the right to make an exchange by giving
the amount of notice required by regulatory authorities (currently
60 days for a material change or cancellation), unless we are
required to do so because of unusual circumstances.

o Shares that are held in certificate form cannot be exchanged until
First Data has received the certificate and deposited the shares
to the investor's account.

o Telephone orders may be difficult to complete during periods of
significant economic or market change.

<PAGE>

(GRAPHIC)

THE POWER OF COMPOUNDING

YOU CAN CHOOSE TO REINVEST YOUR DISTRIBUTIONS IN ADDITIONAL
SHARES OF THE SAME FUND AND CLASS.

REINVESTING YOUR DISTRIBUTIONS BUYS YOU MORE SHARES OF A
FUND -- WHICH LETS YOU TAKE ADVANTAGE OF THE POTENTIAL FOR

COMPOUND GROWTH.

PUTTING THE MONEY YOU EARN BACK INTO YOUR INVESTMENT MEANS IT,
IN TURN, MAY EARN EVEN MORE MONEY. OVER TIME, THE POWER OF
COMPOUNDING HAS THE POTENTIAL TO SIGNIFICANTLY INCREASE THE

VALUE OF YOUR INVESTMENT.

(GRAPHIC)

Distributions and taxes

ABOUT DISTRIBUTIONS A mutual fund can make money two ways:

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

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

All of the Funds distribute any net realized capital gains, including net
short-term capital gains, at least once a year.

The Funds declare distributions of net investment income daily and pay them
monthly.

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

We'll automatically reinvest distributions in additional shares of the same
Fund unless you tell us you want to receive your distributions in cash.

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

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

<PAGE>

(GRAPHIC)

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

(GRAPHIC)

FOR MORE INFORMATION ABOUT TAXES, PLEASE SEE THE SAI.
HOW TAXES AFFECT YOUR INVESTMENT

Distributions that come from a Fund's tax-exempt interest income are generally
free from federal income tax and state income taxes (in Florida, the tax on
intangible personal property). Texas doesn't impose income tax. All or a
portion of these distributions may also be subject to the federal alternative
minimum tax.

Any distributions that come from taxable income or realized capital gains are
generally subject to tax. Distributions that come from net investment income
and any net short-term capital gain (generally the excess of net short-term
capital gain over net long-term capital loss) generally are taxable to you as
ordinary income. Distributions of net capital gain (generally the excess of net
long-term capital gain over net short-term capital loss), generally are taxable
to you as net capital gains. Individual, trust and estate shareholders may be
taxed on these distributions at preferential rates. Corporate shareholders will
not be able to deduct any distributions from a Fund when determining their
taxable income.

WITHHOLDING TAX

We're required by federal law to withhold tax of 31% on any distributions and
sale proceeds paid to you (including amounts deemed to be paid for "in kind"
redemptions and exchanges) if:

o you haven't given us a correct Taxpayer Identification Number (TIN) and
haven't certified that the TIN is correct and withholding doesn't apply

o the Internal Revenue Service (IRS) has notified us that the TIN listed on
your account is incorrect according to its records

o the IRS informs us that you're otherwise subject to backup withholding.

The IRS may also impose penalties against you if you don't give us a correct
TIN.

Amounts we withhold are applied to your federal income tax liability. You may
receive a refund from the IRS if the withholding tax results in an overpayment
of taxes.

We're also required by federal law to withhold tax on distributions paid to
some foreign shareholders.

<PAGE>

TAXATION OF REDEMPTIONS AND EXCHANGES

Your redemptions (including redemptions "in kind") and exchanges of Fund shares
will usually result in a taxable capital gain or loss, depending on the amount
you receive for your shares (or are deemed to receive in the case of exchanges)
and the amount you paid (or are deemed to have paid) for them.

(GRAPHIC)

Financial highlights

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

[financial highlights tables for each Fund here]

<PAGE>

(GRAPHIC)

Terms used in this prospectus

ASSET-BACKED SECURITY - a debt security that gives you a share in a pool of
assets that is backed by loan paper, accounts receivable or other assets,
including mortgages, generally issued by banks, credit card companies or other
lenders. Some securities may be issued or guaranteed by the U.S. government or
by any of its agencies, authorities or instrumentalities. Asset-backed
securities make periodic payments, which may be interest or a combination of
interest and a portion of the principal of the underlying assets.

AVERAGE DOLLAR-WEIGHTED MATURITY - the average length of time until the debt
securities held by a Fund reach maturity and are repaid. In general, the longer
the average dollar-weighted maturity, the more a Fund's share price will
fluctuate in response to changes in interest rates.

BANK OBLIGATION - a money market instrument issued by a bank, including
certificates of deposit, time deposits and bankers' acceptances.

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

COLLATERALIZED MORTGAGE OBLIGATION (CMO) - a debt security that is backed by
mortgage loans or mortgage pass-through certificates. The underlying assets of
a CMO are separated into classes, called tranches, based on maturity. Each
tranch pays a different rate of interest. Payments of principal and interest on
the underlying assets fund the income payments on the CMO.

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

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

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

CORPORATE OBLIGATION - a money market instrument issued by a corporation or
commercial bank.

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

<PAGE>

DEPOSITARY RECEIPTS - securities representing securities of companies based in
countries other than the U.S. Examples include ADRs, ADSs, GDRs and EDRs.

DOLLAR ROLL TRANSACTIONS - the sale by a Fund of mortgage-backed or other
asset-backed securities, together with a commitment to buy similar, but not
identical, securities at a future date.

DURATION - a measure used to estimate how much a Fund's share price will
fluctuate in response to a change in interest rates. For example, if interest
rates rise by one percentage point, the share price of a Fund with a duration
of five years would decline by about 5%. If interest rates fall by one
percentage point, the Fund's share price would rise by about 5%.

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

FIRST-TIER SECURITY - according to Rule 2a-7 under the 1940 Act, a debt
security that is an eligible investment for money market funds and has the
highest short-term rating from a nationally recognized statistical rating
organization (NRSRO), or if unrated, is determined by the fund's board of
directors to be of comparable quality, or is a money market fund issued by a
registered investment company, or is a government security.

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

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

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

GUARANTEED INVESTMENT CONTRACT - an investment instrument issued by a highly
rated insurance company. Under a contract, a fund makes a cash contribution to
the insurance company's general or separate account in return for guaranteed
interest.

HIGH QUALITY - a debt security that has been given a high credit rating by an
NRSRO. In the case of municipal securities, high quality means a long-term
rating of A or higher from Duff & Phelps Credit Rating Co. (D&P), Fitch IBCA
(Fitch), S&P, Thomson BankWatch, Inc. (BankWatch), or Moody's Investor
Services, Inc. (Moody's). Please see the SAI for more information about credit
ratings.

INVESTMENT GRADE - a debt security that has been given a medium to high credit
rating (BBB or higher) by an NRSRO based on the issuer's ability to pay
interest and repay principal on time. A debt security that has not been rated,
but is believed to be of comparable quality, may also be considered investment
grade. Please see the SAI for more information about credit ratings.

<PAGE>

LEHMAN 3-YEAR MUNICIPAL BOND INDEX - a broad-based, unmanaged index of
investment grade bonds with maturities of two to four years. All dividends are
reinvested.

LEHMAN 7-YEAR MUNICIPAL BOND INDEX - a broad-based, unmanaged index of
investment grade bonds with maturities of seven to eight years. All dividends
are reinvested.

LEHMAN AGGREGATE BOND INDEX - an index made up of the Lehman
Government/Corporate Index, the Asset-Backed Securities Index and the
Mortgage-Backed Securities Index. These indexes include U.S. government agency
and U.S. Treasury securities, corporate bonds and mortgage-backed securities.
All dividends are reinvested.

LEHMAN CORPORATE BOND INDEX - an index of U.S. government, U.S. Treasury and
agency securities, and corporate and Yankee bonds. All dividends are
reinvested.

LEHMAN GOVERNMENT BOND INDEX - an index of government bonds with an average
maturity of approximately nine years. All dividends are reinvested.

LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX - an index of U.S. government agency
and U.S. Treasury securities. All dividends are reinvested.

LEHMAN INTERMEDIATE TREASURY INDEX - an index of U.S. Treasury securities with
maturities of three to 10 years. All dividends are reinvested.

LEHMAN MUNICIPAL BOND INDEX - a broad-based, unmanaged index of 8,000
investment grade bonds with maturities of [10] years or more.

MERRILL LYNCH 1-3 YEAR TREASURY INDEX - an index of U.S. Treasury bonds with
maturities of 1 to 3 years. All dividends are reinvested.

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

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

MORTGAGE-RELATED SECURITY - a debt security that is backed by a mortgage or
pool of mortgages.

<PAGE>

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

NON-DIVERSIFIED - a fund that holds fewer securities than other kinds of funds.
This increases the risk that its value could go down significantly if one or
more of its investments performs poorly. Non-diversified funds tend to have
greater price swings than more diversified funds.

PARTICIPATION - a pass-through certificate representing a share in a pool of
debt obligations or other instruments.

PASS-THROUGH CERTIFICATE - an asset-backed security that passes income from the
original borrower through an intermediary to investors.

PREFERRED STOCK - an equity security that gives you an ownership right in a
company, on a different basis than common stock. Preferred stock generally pays
a fixed annual dividend. If the company goes bankrupt, preferred shareholders
generally receive their share of the company's remaining assets before common
shareholders and after bondholders and other creditors.

PREREFUNDED BONDS - bonds that are repaid before their maturity date. The
repayment is financed by a new bond issue. Issuers prerefund bonds during
periods of lower interest rates to lower their interest costs.

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

REPURCHASE AGREEMENT - a short-term (often overnight) investment agreement. The
investor agrees to buy certain securities from the borrower and the borrower
promises to buy them back at a specified date and price. The difference between
the purchase price paid by the investor and the repurchase price paid by the
borrower represents the investor's return.

REVERSE REPURCHASE AGREEMENT - a repurchase agreement in which an investor
sells a security to another party, like a bank or dealer, in return for cash,
and agrees to buy the security back at a specified date and price.

<PAGE>

SECOND-TIER SECURITY - according to Rule 2a-7 under the 1940 Act, a debt
security that is an eligible investment for money market funds, but is not a
first-tier security.

SPECIAL PURPOSE ISSUER - an entity organized solely to issue asset-backed
securities on a pool of debt obligations it owns.

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

U.S. GOVERNMENT OBLIGATION - a debt security issued or guaranteed by the U.S.
government or any of its agencies, authorities or instrumentalities.

U.S. TREASURY OBLIGATION - a debt security issued by the U.S. Treasury.

ZERO-COUPON BOND - a bond that makes no periodic interest payments. Zero coupon
bonds are sold at a deep discount to their face value and mature at face value.
The difference between the face value at maturity and the purchase price
represents the return to the investor.

<PAGE>

(GRAPHIC)

Where to find more information

You'll find more information about the State Municipal Bond Funds in the
following documents:

(GRAPHIC)

ANNUAL AND SEMI-ANNUAL REPORTS

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

(GRAPHIC)

STATEMENT OF ADDITIONAL INFORMATION

The SAI contains additional information about the Funds and their
policies. The SAI is legally part of this prospectus (it's incorporated
by reference). A copy has been filed with the SEC.

You can obtain a free copy of these documents by contacting Nations
Funds:

By telephone: 1.800.765.2668

By mail:

NATIONS FUNDS
C/O STEPHENS INC.

ONE BANK OF AMERICA PLAZA

33RD FLOOR
CHARLOTTE, NC 28255

On the Internet: WWW.NATIONSBANK.COM/NATIONSFUND

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

PUBLIC REFERENCE SECTION OF THE SEC
WASHINGTON, DC 20549-6009

1.800.SEC.0330

HTTP://WWW.SEC.GOV

(GRAPHIC)

SEC file numbers:

[Nations Fund Trust, 811-04305]

NF-00000-8/99

<PAGE>

[GRAPHIC]

EQUITY FUNDS
PROSPECTUS -- PRIMARY B SHARES

AUGUST 1, 1999
Equity Funds
NATIONS VALUE FUND THE SECURITIES AND
NATIONS EQUITY INCOME FUND EXCHANGE COMMISSION
NATIONS EMERGING GROWTH FUND (SEC) HAS NOT APPROVED OR
NATIONS SMALL COMPANY GROWTH FUND DISAPPROVED THESE
NATIONS DISCIPLINED EQUITY FUND SECURITIES OR DETERMINED
NATIONS CAPITAL GROWTH FUND IF THIS PROSPECTUS IS
NATIONS MARSICO FOCUSED EQUITIES FUND TRUTHFUL OR COMPLETE. ANY
NATIONS MARSICO GROWTH & INCOME FUND REPRESENTATION TO THE
NATIONS BLUE CHIP FUND CONTRARY IS A CRIMINAL
OFFENSE.
International Funds
NATIONS INTERNATIONAL VALUE FUND ----------------------
NATIONS INTERNATIONAL EQUITY FUND NOT FDIC
NATIONS INTERNATIONAL GROWTH FUND INSURED
NATIONS EMERGING MARKETS FUND ----------------------
May Lose Value
Index Funds ----------------------
NATIONS EQUITY INDEX FUND No Bank Guarantee
NATIONS MANAGED INDEX FUND ----------------------
NATIONS MANAGED SMALLCAP INDEX FUND
NATIONS MANAGED VALUE INDEX FUND NATIONS
NATIONS MANAGED SMALLCAP VALUE INDEX FUND FUNDS
Investments For A Lifetime(SM)
Balanced Funds
NATIONS BALANCED ASSETS FUND
NATIONS ASSET ALLOCATION FUND

Fixed Income Funds
NATIONS SHORT-TERM INCOME FUND
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND
NATIONS GOVERNMENT SECURITIES FUND
NATIONS STRATEGIC FIXED INCOME FUND
NATIONS U.S. GOVERNMENT BOND FUND
NATIONS DIVERSIFIED INCOME FUND

<PAGE>

ABOUT THIS PROSPECTUS
- --------------------------------------------------------------------------------

[GRAPHIC]

TERMS USED IN THIS PROSPECTUS

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

[GRAPHIC]

YOU'LL FIND TERMS USED IN
THIS PROSPECTUS ON PAGE 0.

[GRAPHIC]

FOR MORE INFORMATION

YOU'LL FIND MORE INFORMATION ABOUT THE FUNDS IN THE STATEMENT
OF ADDITIONAL INFORMATION (SAI). THE SAI INCLUDES DETAILED
INFORMATION ABOUT EACH FUND'S INVESTMENTS, POLICIES,
PERFORMANCE AND MANAGEMENT, AMONG OTHER THINGS. THE SAI IS
LEGALLY CONSIDERED TO BE PART OF THIS PROSPECTUS BECAUSE IT'S
INCORPORATED BY REFERENCE. TURN TO THE BACK COVER TO FIND OUT
HOW YOU CAN GET A COPY OF THE SAI.

This booklet, which is called a prospectus, tells you about five groups of
Nations Funds -- our equity, international, index, balanced, and fixed income
funds. Please read it carefully, because it contains information that's
designed to help you make informed investment decisions.

Each fund group has different objectives and strategies:

o equity funds invest primarily in EQUITIES SECURITIES of U.S.
companies

o international funds invest primarily in equity securities of
companies in countries around the world

o index funds intend to match the characteristics of a specific stock
market index, like the S&P 500, by investing primarily in equity
securities that are included in the index

o balanced funds invest in a mix of equity and FIXED INCOME SECURITIES,
and MONEY MARKET INSTRUMENTS

o fixed income funds focus on the potential to earn income by investing
primarily in fixed income securities

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

Fixed income securities have the potential to increase in value because when
interest rates fall, the value of these securities tends to rise. When
interest rates rise, however, the value of these securities tends to fall.

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

NATIONS
FUNDS
Investments For A Lifetime(SM)

2
<PAGE>

CHOOSING THE RIGHT FUNDS FOR YOU
The equity, international and index funds all focus on long-term growth. They
may be suitable for you if:

o you have longer-term investment goals

o they form part of a balanced portfolio

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

They may not be suitable for you if:

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

o you have short-term investment goals

o you are looking for a regular stream of income

The fixed income funds focus on the potential to earn income. They may be
suitable for you if:

o you are looking for income

o you are planning to invest your money for the longer term

They may not be suitable for you if:

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

o you have short-term income needs

You'll find a discussion of each Fund's principal investments, strategies and
risks in the Fund descriptions that start on page 00.

If you have any questions about the Funds, please call us at 1.800.765.2668 or
contact your financial adviser.

3
<PAGE>

WHAT'S INSIDE
- --------------------------------------------------------------------------------

[GRAPHIC]

BANC OF AMERICA ADVISORS, INC.

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

[GRAPHIC]

YOU'LL FIND MORE ABOUT BAAI AND THE SUB-ADVISERS STARTING ON
PAGE 00.

THE EQUITY FUNDS FOCUS ON LONG-TERM GROWTH BY INVESTING
PRIMARILY IN EQUITY SECURITIES.

THE INTERNATIONAL FUNDS FOCUS ON LONG-TERM GROWTH BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF COMPANIES IN COUNTRIES AROUND
THE WORLD.

<TABLE>
<S> <C>
[GRAPHIC] About the funds
Equity Funds
NATIONS VALUE FUND 6
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS EQUITY INCOME FUND 9
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS EMERGING GROWTH FUND 12
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS SMALL COMPANY GROWTH FUND 16
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS DISCIPLINED EQUITY FUND 19
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS CAPITAL GROWTH FUND 22
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS MARSICO FOCUSED EQUITIES FUND 25
Sub-adviser: Marsico Capital Management, LLC
- ------------------------------------------------------------------------
NATIONS MARSICO GROWTH & INCOME FUND 28
Sub-adviser: Marsico Capital Management, LLC
- ------------------------------------------------------------------------
NATIONS BLUE CHIP FUND 32
Sub-adviser: Chicago Equity Partners Corporation

International Funds
NATIONS INTERNATIONAL VALUE FUND 36
Sub-adviser: Brandes Investment Partners, L.P.
- ------------------------------------------------------------------------
NATIONS INTERNATIONAL EQUITY FUND 40
Sub-advisers: Gartmore Global Partners, INVESCO Global Asset
Management (N.A.), Inc., Putnam Investment Management, Inc.
- ------------------------------------------------------------------------
NATIONS INTERNATIONAL GROWTH FUND 44
Sub-adviser: Gartmore Global Partners
- ------------------------------------------------------------------------
NATIONS EMERGING MARKETS FUND 47
Sub-adviser: Gartmore Global Partners
</TABLE>

4
<PAGE>

THE INDEX FUNDS ARE DESIGNED TO MATCH THE CHARACTERISTICS OF A
SPECIFIC MARKET INDEX LIKE THE S&P 500 BY INVESTING PRIMARILY
IN EQUITY SECURITIES THAT ARE INCLUDED IN THE INDEX.

THE BALANCED FUNDS INVEST IN A MIX OF EQUITY AND FIXED INCOME
SECURITIES AND MONEY MARKET INSTRUMENTS.

THE FIXED INCOME FUNDS PROVIDE MONTHLY INCOME BY INVESTING IN
BONDS AND OTHER FIXED INCOME SECURITIES.

<TABLE>
<S> <C>
Index Funds
NATIONS EQUITY INDEX FUND 50
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS MANAGED INDEX FUND 53
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS MANAGED SMALLCAP INDEX FUND 57
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS MANAGED VALUE INDEX FUND 61
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS MANAGED SMALLCAP VALUE INDEX FUND 65
Sub-adviser: TradeStreet Investment Associates, Inc.

Balanced Funds
NATIONS BALANCED ASSETS FUND 69
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS ASSET ALLOCATION FUND 73
Sub-advisers: TradeStreet Investment Associates, Inc.,
Chicago Equity Partners Corporation

Fixed Income Funds
NATIONS SHORT-TERM INCOME FUND 77
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND 80
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS GOVERNMENT SECURITIES FUND 84
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS STRATEGIC FIXED INCOME FUND 87
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
NATIONS U.S. GOVERNMENT BOND FUND 91
Sub-adviser: Boatmen's Capital Management, Inc.
- ------------------------------------------------------------------------
NATIONS DIVERSIFIED INCOME FUND 94
Sub-adviser: TradeStreet Investment Associates, Inc.
- ------------------------------------------------------------------------
OTHER IMPORTANT INFORMATION 97
- ------------------------------------------------------------------------
HOW THE FUNDS ARE MANAGED 99

[GRAPHIC] About your investment
INFORMATION FOR INVESTORS
Buying, selling and exchanging shares 111
Distributions and taxes 115
- ------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 118
- ------------------------------------------------------------------------
TERMS USED IN THIS PROSPECTUS 119
- ------------------------------------------------------------------------
WHERE TO FIND MORE INFORMATION BACK COVER
</TABLE>

5
<PAGE>

ABOUT THE EQUITY FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

ABOUT THE SUB-ADVISER

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

[GRAPHIC]

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 00.

[GRAPHIC]

WHAT IS VALUE INVESTING?

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

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

Nations Value Fund

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks growth of capital by investing in companies that are
believed to be undervalued.

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

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

The Fund also may invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The management team uses FUNDAMENTAL ANALYSIS to identify stocks of companies
that it believes are undervalued. When selecting investments, the management
team looks at, among other things:

o the quality of the company

o the company's projected earnings and dividends

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

o the stock's potential to provide total return

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

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

The team tries to provide above-average returns while trying to avoid above-
average risks.

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

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

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

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

6
<PAGE>

[GRAPHIC]

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

[GRAPHIC]

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY B
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT
FEES, IF ANY, AND WOULD BE LOWER IF THEY DID.

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Value Fund has the following general risks:

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

o STOCK MARKET RISK - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A FUND'S
PAST PERFORMANCE IS NO GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary B Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

7
<PAGE>

[GRAPHIC]

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

[GRAPHIC]

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

[GRAPHIC]

WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary B
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary B Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary B Shares $000 $000 $000 $000
</TABLE>

8
<PAGE>

ABOUT THE EQUITY FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

ABOUT THE SUB-ADVISER

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

[GRAPHIC]

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 00.

[GRAPHIC]

WHY INVEST IN AN EQUITY INCOME FUND?

EQUITY INCOME FUNDS ARE GENERALLY CONSIDERED TO BE A MORE
CONSERVATIVE EQUITY INVESTMENT BECAUSE THEY INVEST IN LARGE,
WELL-ESTABLISHED COMPANIES THAT PAY REGULAR DIVIDENDS. THESE
COMPANIES TEND TO BE LESS VOLATILE THAN OTHER KINDS OF
COMPANIES.

Nations Equity Income Fund

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks current income and growth of capital by investing in
companies with above-average DIVIDEND YIELDS.

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

The Fund normally invests in 100 to 150 companies in a broad range of
industries with market capitalizations of at least $5 billion. The Fund
generally invests at least 65% of its assets in income-producing
securities that are listed on a national exchange or are traded on an
established OVER-THE-COUNTER MARKET, including COMMON STOCKS that pay
dividends and CONVERTIBLE SECURITIES.

The Fund tries to provide a higher yield than the stocks that are included in
the S&P 500, and may invest in FIXED INCOME SECURITIES, PREFERRED STOCKS and
WARRANTS to try to increase the income that it earns. Fixed income securities
generally must be rated INVESTMENT GRADE at the time of investment, or can be
unrated if the team believes they are of comparable quality at the time of
investment. Up to 5% of the Fund's assets may be invested in fixed income
securities rated below investment grade ("high yield" or "junk" bonds) if the
team believes they have relatively low credit risk.

The Fund may invest up to 20% of its assets in FOREIGN SECURITIES. It also may
invest up to 10% of its assets in other kinds of securities, which are
described in the SAI.

The management team uses a quantitative process based on FUNDAMENTAL ANALYSIS
to identify stocks of companies whose earnings have the potential to grow.
When selecting investments, the management team looks at, among other things:

o value characteristics like book value, earnings yield and cash flow
to compare what the team believes to be a stock's true value to its
current market value

o growth characteristics like price momentum, earnings growth and
earnings acceleration to measure a stock's potential for growth

o a security's potential for above-average dividend yield

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

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

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

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

9
<PAGE>

[GRAPHIC]

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

[GRAPHIC]

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY B
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT
FEES, IF ANY, AND WOULD BE LOWER IF THEY DID.

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Equity Income Fund has the following general risks:

o INVESTMENT STRATEGY RISK - The management team chooses stocks that it
believes have the potential for dividend growth and capital
appreciation. There is a risk that dividend payments and the value of
these investments will not rise as high as the team expects, or will
fall.

o STOCK MARKET RISK - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

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

o CREDIT RISK - The Fund could lose money if the issuer of a fixed
income security is unable to pay interest or repay principal when
it's due. Credit risk usually applies to most fixed income
securities, but generally is not a factor for securities that are
issued or backed by the U.S. government. Fixed income securities with
the lowest investment grade rating or that aren't investment grade
are more speculative in nature than securities with higher ratings,
and they tend to be more sensitive to credit risk, particularly
during a downturn in the economy.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A FUND'S
PAST PERFORMANCE IS NO GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

10
<PAGE>

[GRAPHIC]

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

[GRAPHIC]

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
[Year-to-date return as of 0: 0%]
</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary B Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary B
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary B Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary B Shares $000 $000 $000 $000
</TABLE>
11
<PAGE>

ABOUT THE EQUITY FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S STRATEGIC
GROWTH MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

[GRAPHIC]

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 00.

[GRAPHIC]

WHAT IS AN EMERGING GROWTH FUND?

AN EMERGING GROWTH FUND INVESTS IN EMERGING GROWTH COMPANIES.
THESE ARE TYPICALLY MEDIUM-SIZED AND SMALLER COMPANIES WHOSE
EARNINGS ARE EXPECTED TO GROW OR TO CONTINUE GROWING, AND WHOSE
SHARE PRICES ARE BELIEVED TO BE REASONABLY VALUED.

THESE COMPANIES MAY BE EXPANDING IN EXISTING MARKETS, ENTERING
INTO NEW MARKETS, DEVELOPING NEW PRODUCTS OR INCREASING THEIR
PROFIT MARGINS BY GAINING MARKET SHARE OR STREAMLINING THEIR
OPERATIONS.

Nations Emerging Growth Fund

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks capital appreciation by investing in emerging growth
companies that are believed to have superior long-term earnings growth
prospects.

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its assets in companies chosen
from a universe of emerging growth companies. The Fund generally holds
75 to 130 securities, which include COMMON STOCKS, PREFERRED STOCKS and
CONVERTIBLE SECURITIES like WARRANTS, RIGHTS and CONVERTIBLE DEBT.

The Fund may invest up to 20% of its assets in FOREIGN SECURITIES. The Fund
may also invest up to 10% of its assets in other kinds of securities, which
are described in its the SAI.

The team selects stocks using a disciplined process based on FUNDAMENTAL
ANALYSIS. It starts with a universe of nearly 1,500 companies with market
capitalizations of $750 million to $7 billion, and using QUANTITATIVE
ANALYSIS, evaluates the companies based on the following criteria:

o earnings growth trends

o earnings momentum

o earnings estimate trends

o relative price performance

o valuation

The team then conducts a rigorous qualitative analysis of each company being
considered for investment. This involves, among other things:

o gaining an in-depth understanding of the company's business

o evaluating the company's growth potential, risks and competitive
strengths

o discussing its growth strategy with company management

o validating the growth strategy with external research

The team selects a stock only when its price is attractive relative to
forecasted growth.

12
<PAGE>

[GRAPHIC]

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

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

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

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

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

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Emerging Growth Fund has the following general risks:

o INVESTMENT STRATEGY RISK - The team chooses stocks that it believes
have the potential for superior long-term growth. There is a risk
that the value of these investments will not rise as high as the team
expects, or will fall. Stocks of emerging companies also tend to have
greater price swings than stocks of larger companies because they
trade less frequently and in lower volumes. These securities may have
a higher potential for gains but also carry more risk if unexpected
company developments lower stock prices.

o STOCK MARKET RISK - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o FUTURES RISK - This Fund may use FUTURES, [options, forward contracts
and swaps] to help manage LIQUIDITY or to hedge portfolio risk. There
is always a risk that this could result in losses, reduce returns,
increase transaction costs and increase the Fund's volatility.

o FOREIGN INVESTMENT RISK - Although the Fund may only invest up to 20%
of its assets in foreign securities, it can be affected by the risks
of foreign investing. Foreign investments may be riskier than U.S.
investments because of international political and economic
conditions, changes in currency exchange rates, foreign controls on
investment, difficulties in selling securities and lack of financial
information. Withholding taxes also may apply to some foreign
investments.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A FUND'S
PAST PERFORMANCE IS NO GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

13
<PAGE>

[GRAPHIC]

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY B
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT
FEES, IF ANY, AND WOULD BE LOWER IF THEY DID.

[GRAPHIC]

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary B Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<S> <C>
Primary B
Fees you pay directly Shares
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

14
<PAGE>

[GRAPHIC]

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary B Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary B Shares $000 $000 $000 $000
</TABLE>

15
<PAGE>

ABOUT THE EQUITY FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S STRATEGIC
GROWTH MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

[GRAPHIC]

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 00.

[GRAPHIC]

WHY INVEST IN A SMALL COMPANY GROWTH FUND?

A SMALL COMPANY GROWTH FUND INVESTS IN SMALLER COMPANIES WITH
PROMISING PRODUCTS OR THAT ARE OPERATING IN A DYNAMIC FIELD.
THESE COMPANIES CAN HAVE BETTER POTENTIAL FOR RAPID EARNINGS
GROWTH THAN LARGER COMPANIES. THEY MAY, HOWEVER, HAVE A HARDER
TIME SECURING FINANCING AND MAY BE MORE SENSITIVE TO A SETBACK
IN SALES THAN LARGER, MORE ESTABLISHED COMPANIES.

THE PORTFOLIO MANAGEMENT TEAM LOOKS FOR COMPANIES WHOSE
EARNINGS ARE GROWING QUICKLY, AND WHOSE SHARE PRICES ARE
REASONABLY VALUED.

Nations Small Company Growth Fund

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks long-term capital growth by investing primarily in
equity securities.

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its assets in companies with a
market capitalization of $1 billion or less. The Fund usually holds 75
to 130 securities, which include COMMON STOCKS, PREFERRED STOCKS and
CONVERTIBLE SECURITIES like WARRANTS, RIGHTS and CONVERTIBLE DEBT.

The Fund may also invest up to 10% of its assets in other kinds of securities,
which are described in the SAI.

The team selects stocks using a disciplined process based on FUNDAMENTAL
ANALYSIS. It starts with a universe of nearly 5,000 companies with market
capitalizations of $1 billion or less, and using quantitative analysis,
evaluates the companies based on the following criteria:

o earnings growth trends

o earnings momentum

o earnings estimate trends

o relative price performance

o valuation

The team then conducts a rigorous qualitative analysis of each company being
considered for investment. This involves, among other things:

o gaining an in-depth understanding of the company's business

o evaluating the company's growth potential, risks and competitive
strengths

o discussing its growth strategy with company management

o validating the growth strategy with external research

The team selects a stock only when its valuation is attractive relative to
forecasted growth.

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

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

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

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

16
<PAGE>

[GRAPHIC]

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

[GRAPHIC]

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY B
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT
FEES, IF ANY, AND WOULD BE LOWER IF THEY DID.

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Small Company Growth Fund has the following general risks:

o STOCK MARKET RISK - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

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

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
and its average returns over time. Performance will vary based on many
factors, including market conditions, the composition of the Fund's
holdings and the Fund's expenses. A FUND'S PAST PERFORMANCE IS NO
GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

17
<PAGE>

[GRAPHIC]

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

[GRAPHIC]

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary B Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary B
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary B Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all of your shares at the end of the period, your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary B Shares $000 $000 $000 $000
</TABLE>

18
<PAGE>

ABOUT THE EQUITY FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

ABOUT THE SUB-ADVISER

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

[GRAPHIC]

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 00.

[GRAPHIC]

WHY USE A COMPUTER MODELING SYSTEM?

THE MANAGEMENT TEAM USES A COMPUTER MODELING SYSTEM AS A KEY
COMPONENT IN MANAGING THIS FUND. THE SYSTEM RANKS STOCKS BASED
ON EARNINGS MOMENTUM AND VALUATION, WHICH HELPS THE TEAM CHOOSE
STOCKS THAT HAVE THE POTENTIAL TO GENERATE ATTRACTIVE RETURNS.

Nations Disciplined Equity Fund

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks growth of capital by investing in companies that are
expected to produce significant increases in earnings per share.

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

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

The Fund may invest up to 20% of its assets in FOREIGN SECURITIES. The Fund
may also invest up to 10% of its assets in other kinds of securities, which
are described in the SAI.

When selecting investments, the team looks for attractively priced securities
with increasing earnings. It uses QUANTITATIVE ANALYSIS to:

o identify companies with improving profit potential and increasing
earnings

o identify companies with favorable PRICE-TO-EARNINGS RATIOS

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

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

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

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

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

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

19
<PAGE>

[GRAPHIC]

YOU'LL FIND MORE ABOUT OTHER RISKS OF INVESTING IN THIS FUND ON
PAGE 00 AND IN THE SAI.

[GRAPHIC]

THE BAR CHART SHOWS YOU THE PERFORMANCE OF THE FUND'S PRIMARY B
SHARES. THESE RETURNS DO NOT REFLECT DEDUCTIONS OF ACCOUNT
FEES, IF ANY, AND WOULD BE LOWER IF THEY DID.

[GRAPHIC] RISKS AND OTHER THINGS TO CONSIDER

Nations Disciplined Equity Fund has the following general risks:

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

o STOCK MARKET RISK - The value of the stocks the Fund holds, like the
stock market in general, can rise or fall over short as well as long
periods.

o FOREIGN INVESTMENT RISK - Although the Fund may invest up to 20% of
its assets in foreign securities, it can be affected by the risks of
foreign investing. Foreign investments may be riskier than U.S.
investments because of political and economic conditions, changes in
currency exchange rates, foreign controls on investment, difficulties
in selling securities and lack of financial information. Withholding
taxes also may apply to some foreign investments.

[GRAPHIC] A LOOK AT THE FUND'S PERFORMANCE

Looking at past performance can give you an idea of a Fund's volatility
from year to year and its average returns over time. Performance will
vary based on many factors, including market conditions, the
composition of the Fund's holdings and the Fund's expenses. A FUND'S
PAST PERFORMANCE IS NO GUARANTEE OF HOW IT WILL PERFORM IN THE FUTURE.

YEAR BY YEAR TOTAL RETURN (%)

(A bar chart appears here. See the table below for plot points.)

1900 1900 1900 1900 1900 1900 1900
00% 00% 00% 00% 00% 00% 00%

BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD:

<TABLE>
<S> <C>
Best: 0 quarter 1900: 0%
Worst: 0 quarter 1900: 0%
</TABLE>

20
<PAGE>

[GRAPHIC]

THERE ARE TWO KINDS OF FEES -- SALES CHARGES YOU PAY DIRECTLY,
AND ONGOING FEES AND EXPENSES THAT ARE DEDUCTED FROM THE FUND'S
ASSETS.

TOTAL NET EXPENSES ARE ACTUAL EXPENSES PAID BY THE FUND AFTER
DEDUCTING WAIVERS AND/OR REIMBURSEMENTS.

[GRAPHIC]

THIS IS AN EXAMPLE ONLY. YOUR ACTUAL COSTS COULD BE HIGHER OR
LOWER, DEPENDING ON THE AMOUNT YOU INVEST, AND ON THE FUND'S
ACTUAL EXPENSES AND PERFORMANCE.

AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
1 year 5 years 10 years
<S> <C> <C> <C>
Primary B Shares 0.00% 0.00% 0.00%
S&P 500 0.00% 0.00% 0.00%
</TABLE>

The S&P 500 (Standard & Poor's 500 Composite Stock Price Index) is an
index of 500 common stocks chosen by Standard & Poor's on a statistical
basis.

[GRAPHIC] WHAT IT COSTS TO INVEST IN THE FUND

<TABLE>
<CAPTION>
Primary B
Fees you pay directly Shares
<S> <C>
Maximum sales charge (load)
when you buy your shares none
Maximum deferred sales charge (load)
when you sell your shares none

Ongoing fees and expenses deducted from the Fund's assets
(the Fund's operating expenses)

Management fees 0.00%
Other expenses 0.00%
Total annual fund operating expenses 0.00%
Fee waivers and/or reimbursements 0.00%
Total net expenses(1) 0.00%
</TABLE>

EXAMPLE
This example is designed to help you compare the cost of investing in
this Fund with the cost of investing in other mutual funds.

This example assumes:

o you invest $10,000 in Primary B Shares of the Fund

o your investment has a 5% return each year

o the Fund's operating expenses remain the same as shown in the table
above.

If you sold all your shares at the end of the period, your costs would
be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Primary B Shares $000 $000 $000 $000
</TABLE>

21
<PAGE>

ABOUT THE EQUITY FUNDS
- --------------------------------------------------------------------------------

[GRAPHIC]

ABOUT THE SUB-ADVISER

TRADESTREET IS THIS FUND'S SUB-ADVISER. TRADESTREET'S CORE
GROWTH MANAGEMENT TEAM MAKES THE DAY-TO-DAY INVESTMENT
DECISIONS FOR THE FUND.

[GRAPHIC]

YOU'LL FIND MORE ABOUT TRADESTREET ON PAGE 00.

[GRAPHIC]

WHAT IS A GROWTH FUND?

GROWTH FUNDS INVEST IN COMPANIES THAT HAVE THE POTENTIAL FOR
SIGNIFICANT INCREASES IN REVENUE OR EARNINGS. THESE ARE
TYPICALLY COMPANIES THAT ARE DEVELOPING OR APPLYING NEW
TECHNOLOGIES, PRODUCTS OR SERVICES IN GROWING INDUSTRY SECTORS.

Nations Capital Growth Fund

[GRAPHIC] INVESTMENT OBJECTIVE

This Fund seeks growth of capital by investing in companies that are
believed to have superior earnings growth potential.

[GRAPHIC] PRINCIPAL INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its assets in COMMON STOCKS
of companies that have one or more of the following the
characteristics: