[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