[Federal Register Volume 64, Number 149 (Wednesday, August 4, 1999)]
[Notices]
[Pages 42423-42424]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20071]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23927; 812-11654]
Nations Fund Trust, et al.; Notice of Application
July 30, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of an application under section 17(b) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 17(a) of
the Act.
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SUMMARY OF THE APPLICATION: Applicants request an order to permit
certain series of Nations Institutional Reserves (``NIR'') to acquire
all of the assets and liabilities of certain series of Nations Fund
Trust (``NFT'), Nations Fund, Inc. (``NFI''), and Nations Fund
Portfolios, Inc. (``NFP'') (the ``Reorganization''). Because of certain
affiliations, applicants may not rely on rule 17a-8 under the Act.
Applicants: NIR, NFT, NFI, NFP, and NationsBanc Advisors, Inc.
(``NBAI'').
Filing Dates: The application was filed on June 9, 1999. Applicants
have agreed to file an amendment to the application, the substance of
which is reflected in this notice, during the notice period.
Hearing of Notification of Hearing: An order granting the
application will be issued unless the SEC orders a hearing. Interested
persons may request a hearing by writing to the SEC's Secretary and
serving applicants with a copy of the request, personally or by mail.
Hearing requests should be received by the SEC by 5:30 p.m. on August
19, 1999 and should be accompanied by proof of service on applicants in
the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons may request
notification by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549-0609. Applicants, One Bank of America Plaza, 101 South Tryon
Street, Charlotte, NC 28255.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Staff Attorney,
(202) 942-0634, or Michael W. Mundt, Branch Chief, (202) 942-0564
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington,
D.C. 20549-0102 (telephone (202) 942-8090).
Applicants' Representations
1. NFT, a Massachusetts business trust, NFI, a Maryland
corporation, and NFP, a Maryland corporation, are open-end management
investment companies registered under the Act. NFT currently offers 28
series, 2 of which will participate in the Reorganization. NFI offers 9
series, 2 of which will participate in the Reorganization. NFP
currently offers one series, which will participate in the
Reorganization. The participating series of NFT, NFI, and NFP are
collectively referred to as the ``Acquired Funds.''
2. NIR, a Massachusetts business trust, is an open-end management
investment company registered under the Act. NIR is organizing five new
series, (the ``Acquiring Funds,'' and together with the Acquired Funds,
the ``Funds'').\1\ Three of the Acquiring Funds are feeder funds
(``Feeder Funds'') which will invest all of their assets in a
corresponding master portfolio of Nations Master Investment Trust
(``NMIT''), an open-end management investment company registered under
the Act.
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\1\ A registration statement for the five shell Acquiring Funds
was filed with the SEC on June 4, 1999.
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3. NBAI is registered under the Investment Advisers Act of 1940
(``Advisers Act'') and is the investment adviser for the Funds and
NMIT. NBAI is a wholly-owned subsidiary of Bank of America Corporation.
Bank of America Corporation, NationsBank, N.A., and/or certain of their
affiliates that are under common control with NBAI (the ``BankAmerica
Group''), hold of record, in their name and in the names of their
nominees, more than 5% (and with respect to certain of the Acquired
Funds more than 25%) of the outstanding voting securities of each of
the Acquired Funds. All of these securities are held for the benefit of
others in a trust, agency, custodial, or other fiduciary or
representative capacity.
4. On March 31, 1999, and May 26, 1999, respectively, the board of
trustees of NIR (the ``Acquiring Funds' Board'') and the boards of
directors or trustees of NFT, NFI and NFP (the ``Acquired Funds'
Boards,'' together with the Acquiring Funds' Board, the ``Boards'')
including a majority of the directors or trustees who are not
``interested persons,'' as defined in section 2(a)(19) of the Act
(``Disinterested Members''), approved Agreements and Plans of
Reorganization (each a ``Plan'' and collectively, the ``Plans'')
between each of the Acquiring and Acquired Funds. Pursuant to the
Plans, each Acquiring Fund will acquire all of the assets and
liabilities of the corresponding Acquired Fund in exchange for shares
of the Acquiring Fund.\2\
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\2\ The Acquired Funds and the corresponding Acquiring Funds
are: (i) NFT Nations Marsico Focused Equities Fund and NIR Nations
Marsico Focused Equities Fund; (ii) NFT Nations Marsico Growth and
Income Fund and NIR Nations Marsico Growth and Income Fund (iii) NFI
Nations International Equity Fund and NIR Nations International
Equity Fund; (iv) NFI Nations International Value Fund and NIR
Nations International Value Fund; (v) NFP Nations Emerging Markets
Fund and NIR Nations Emerging Markets Fund.
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5. Each of the Funds has five classes of shares: Primary A, Primary
B, Investor A, Investor B, and Investor C. The number of Acquiring Fund
shares to be issued to shareholders of the Acquired Fund will be
determined by dividing the aggregate net assets of each Acquired Fund
class by the net asset value per share of the corresponding Acquiring
Fund class, each computed as of the close of business on the closing
date (``Closing Date''). The Plans provide that these Acquiring Fund
shares will be distributed pro rata to the
[[Page 42424]]
shareholders of record in the applicable Acquired Fund class,
determined as of the close of business on the Closing Date, in complete
liquidation of each Acquired Fund. Applicants anticipate that the
Closing Date will be on or around August 20, 1999.
6. Applicants state that the Acquiring Funds will pursue investment
objectives and follow principal investment strategies that are
identical to those of the corresponding Acquired Fund. Applicants state
that the distribution and shareholder servicing arrangements for the
respective classes of the Acquired and Acquiring Funds are also
identical. Primary A and Primary B shares of the Funds do not have a
sales charge. Investor A shares of the Funds are subject to a maximum
front-end sales charge of 5.75%, and certain holders of Investor A
shares of the Acquired Funds may be subject to a maximum deferred sales
charge of 1% or a redemption fee of 1%. Investor B shares of the Funds
are subject to a maximum deferred sales charge of 5%. Investor C shares
of the Funds are subject to a maximum deferred sales charge of 1%. No
sales charge will be imposed in connection with the Reorganization.
7. The Boards, including a majority of their Disinterested Members,
found that participation in the Reorganization is in the best interest
of each Fund and that the interests of existing shareholders of the
Funds will not be diluted as a result of the Reorganization. In
approving the Reorganization, the Boards considered, among other
things: (a) the potential effect of the Reorganization; (b) the expense
ratios of the Acquiring Funds and the Acquired Funds; (c) the
compatibility of the investment objectives and investment strategies of
the Acquiring Funds and Acquired Funds; (d) the terms and conditions of
the Plans; (e) the tax-free nature of the Reorganization; and (f) the
advantages of the master-feeder structure. The Funds will bear the
expenses associated with the Reorganization, as determined by the Board
of each Fund.
8. The Plans may be terminated by mutual written consent of the
Acquiring Fund and the respective Acquired Fund at any time prior to
the Closing Date. In addition, either party may terminate a Plan if:
(a) the other party materially fails to perform its obligations prior
to the Closing Date; (b) the other party materially breaches its
representations, warranties, or covenants; or (c) a condition precedent
to the party's obligations cannot be met.
9. Definitive proxy solicitation materials have been filed with the
SEC and were mailed to the Acquired Fund's shareholders on July 7,
1999. A special meeting of the Acquired Funds' shareholders will be
held on or about August 13, 1999.
10. The consummation of the Reorganization is subject to the
following conditions: (a) A registration statement under the Securities
Act of 1933 for the Acquiring Funds will have become effective; (b) the
Acquired Fund shareholders will have approved the Plan; (c) applicants
will have received exemptive relief from the SEC with respect to the
issues in the application; (d) the Funds will have received an opinion
of counsel concerning the tax-free nature of the Reorganization; and
(e) each Acquired Fund will have declared a dividend to distribute
substantially all of its investment company taxable income and net
capital gain, if any, to its shareholders. Applicants agree not to make
any material changes to the Plans that affect the application without
prior SEC staff approval.
Applicants' Legal Analysis
1. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company, or an affiliated person of
that person, acting as principal, from selling any security to, or
purchasing any security from, the company. Section 2(a)(3) of the Act
defines an ``affiliated person'' of another person to include (a) any
person that directly or indirectly owns, controls, or holds with power
to vote 5% or more of the outstanding voting securities of the other
person; (b) any person 5% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held with
power to vote by the other person; (c) any person directly or
indirectly controlling, controlled by, or under common control with the
other person; and (d) if the other person is an investment company, any
investment adviser of that company.
2. Rule 17a-8 under the Act exempts from the prohibitions of
section 17(a) mergers, consolidations, or purchases or sales of
substantially all of the assets of registered investment companies that
are affiliated persons solely by reason of having a common investment
adviser, common directors/trustees, and/or common officers, provided
that certain conditions set forth in the rule are satisfied.
3. Applicants state that the BankAmerica Group holds of record more
than 5% of the outstanding voting securities of each of the Acquired
Funds, and more than 25% of certain Acquired Funds. Because of this
ownership, applicants state that the funds may be deemed affiliated
persons for reasons other than those set forth in rule 17a-8 and
therefore unable to rely on the rule. Applicants request an order
pursuant to section 17(b) of the Act exempting them from section 17(a)
to the extent necessary to consummate the Reorganization.
4. Section 17(b) of the Act provides that the SEC may exempt a
transaction from the provisions of section 17(a) if the evidence
establishes that the terms of the proposed transaction, including the
consideration to be paid, are reasonable and fair and do not involve
overreaching on the part of any person concerned, and that the proposed
transaction is consistent with the policy of each registered investment
company concerned and with the general purposes of the Act.
5. Applicants submit that the terms of the Reorganization satisfy
the standards set forth in section 17(b). Applicants note that the
Boards, including a majority of the Disinterested Members, found that
participation in the Reorganization is in the best interests of each
Fund and that the interests of the existing shareholders of each Fund
will not be diluted as a result of the Reorganization. Applicants also
note that the Reorganization will be based on the Funds' relative net
asset values.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-20071 Filed 8-3-99; 8:45 am]
BILLING CODE 8010-01-M