[Federal Register Volume 65, Number 164 (Wednesday, August 23, 2000)]
[Notices]
[Pages 51372-51374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21629]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24600; 812-12152]


Nations Fund, Inc., et al.; Notice of application

AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

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 a 
series of Nations Reserves (``NR'') to acquire all of the assets and 
liabilities of a series of Nations Fund, Inc. (``NFI'') (the 
``Reorganization''). Because of certain affiliations, applicants may 
not rely on rule 17a-8 under the Act.

Applicants: NFI, NR and Banc of America Advisors, Inc. (``BAAI'').

Filing Date: The application was filed on June 29, 2000. Applicants 
have agreed to file an amendment to the application, the substance of 
which is reflected in this notice, during the notice period.

Hearing or 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 September 7, 
2000, 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. NFI, a Maryland corporation, is an open-end management 
investment company registered under the Act. NFI currently offers 7 
series, including Nations International Growth Fund (the ``Acquired 
Fund''). NR, a Massachusetts business trust, is an open-end management 
investment company registered under the Act. NR currently offers 16 
series, including Nations International Equity Fund (the ``Acquiring 
Fund,'' together with the Acquired Fund, the ``Funds''). The Acquiring 
Fund is a feeder fund which invests all of its assets in a 
corresponding master portfolio of Nations Master Investment Trust, an 
open-end management investment

[[Page 51373]]

company registered under the Act (``Master Portfolio'').
    2. BAAI is registered under the Investment Advisers Act of 1940 
(``Advisers Act'') and is the investment adviser for the Acquired Fund 
and the Master Portfolio. BAAI is a wholly-owned subsidiary of Bank of 
America Corporation. The Acquired Fund is currently subadvised by 
Gartmore Global Partners (``Gartmore''), an investment adviser 
registered under the Advisers Act. The Master Portfolio is subadvised 
by Gartmore and by INVESCO Global Asset Management (N.A.) Inc. 
(``INVESCO'') and Putnam Investment Management, Inc. (``Putnam''), 
which are also investment advisers registered under the Advisers Act. 
Gartmore, INVESCO, and Putnam are not affiliated persons of BAAI.
    3. Bank of America Corporation, Bank of America, N.A., and/or 
certain of their affiliates that are under common control with BAAI 
(the ``Bank of America Group''), hold of record, in their name and in 
the names of their nominees, more than 25% of the outstanding voting 
securities of each of the Funds. All of these securities are held for 
the benefit of others in a trust, agency, custodial, or other fiduciary 
or representative capacity. None of the companies of the Bank of 
America Group owns an economic interest in either of the Funds.
    4. On April 26, 2000, the board of trustees of NR (the ``Acquiring 
Fund's Board'') and the board of directors of NFI (the ``Acquired 
Fund's Board,'' together with the Acquiring Fund's 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'') of the respective Funds, approved a plan of 
reorganization (``Plan'') between the Acquiring Fund and the Acquired 
Fund. Under the Plan, on the date following the closing date (``Closing 
Date''), which is currently anticipated to be September 8, 2000, the 
Acquiring Fund will acquire all of the assets and liabilities of the 
Acquired Fund in exchange for shares of designated classes of the 
Acquiring Fund that have an aggregate net asset value equal to the 
value of the Acquired Fund's net assets, determined as of the Closing 
Date unless mutually agreed otherwise (``Valuation Time''). The value 
of the assets will be determined in accordance with NFI's and NR's then 
current valuation procedures. On the date following the Closing Date, 
the Acquired Fund will make a pro rata distribution of share of the 
Acquiring Fund to its shareholders and liquidate.
    5. Applicants state that the Acquiring Fund will pursue investment 
objectives and follow principal investment strategies that are 
substantially similar to those of the Acquired Fund. Each of the Funds 
has four classes of shares. Applicants state that the distribution and 
shareholder servicing arrangements for the respective classes of the 
Acquired Fund. For purposes of calculating any deferred sales charge, 
the Acquired Fund's shareholders will be deemed to have held shares of 
the Acquiring Fund since the date the shareholder initially purchased 
shares of the Acquired Fund. No sales charge will be imposed in 
connection with the Reorganization.
    6. The Boards, including all 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 each Fund 
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 respective expense 
ratios of the Funds; (c) the compatibility of the investment objectives 
and investment strategies of the Funds; (d) the tax-free nature of the 
Reorganization; and (e) the advantages of the master-feeder structure. 
The Boards also noted that BAAI and Gartmore or their affiliates (other 
than the Funds), will bear the expenses associated with the 
Reorganization.
    7. The Plan may be terminated at any time by mutual written consent 
of the Acquiring Fund and the Acquired Fund at any time prior to the 
Closing Date. In addition, either Board may terminate the Plan under 
certain circumstances specified in the Plan. The consummation of the 
Reorganization is subject to the following conditions: (a) A 
registration statement under the Securities Act of 1933 for the 
Acquired Fund will have become effective; (b) the Acquired Fund's 
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) the 
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 Plan that affect the application without prior SEC staff 
approval.
    8. Definitive proxy solicitation materials have been filed with the 
SEC and were mailed to the Acquired Fund's shareholders on or about 
June 15, 2000. A special meeting of the Acquired Fund's shareholders 
was held on August 1, 2000, and the Acquired Fund's shareholders 
approved the Plan.

Applicant's 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, conditions, 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 director/trustees, and/or common officers, provided 
that certain conditions set forth in the rule are satisfied.
    3. Applicants state that the Bank of America Group holds of record 
more than 25% of the outstanding voting securities of the Acquired Fund 
and the Acquiring Fund. 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

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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 that the 
Reorganization will be based on the Funds' relative net asset values.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-21629 Filed 8-21-00; 12:48 pm]
BILLING CODE 8010-01-M