[Federal Register Volume 65, Number 237 (Friday, December 8, 2000)]
[Notices]
[Pages 77050-77051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31274]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24781; 812-12150]


Nations Fund Trust, et al.; Notice of Application

December 1, 2000.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 12(d)(1)(J) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
section 12(d)(1)(G)(i)(II) of the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit funds of 
funds relying on section 12(d)(1)(G) of the Act to invest in certain 
securities and other financial instruments.

APPLICANTS: Nations Fund Trust (``NFT''), Nations Fund, Inc. (``NFI''), 
Nations Reserves (``NR''), Nations Funds Trust (``NFST''), Nations 
Annuity Trust (``NAT'') and Nations Master Investment Trust (``NMIT'') 
(individually, a ``Company'' and collectively, the ``Companies''), and 
Banc of America Advisors, Inc. (together with any successor, 
``BAAI'').\1\
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    \1\ The term ``successor'' is limited to entities that result 
from a reorganization into another jurisdiction or a change in the 
type of business organization or other type of restructuring within 
the group of entities controlled by Bank of America Corporation.

FILING DATES: The application was filed on June 27, 2000. Applicants 
have agreed to file an amendment during the notice period, the 
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substance of which is reflected in this notice.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on December 26, 2000, and should be accompanied by proof of 
service on the 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 who wish to be notified of a hearing may 
request notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609; Applicants, c/o Robert B. Carroll, Esq., Bank of America 
Corporation, One Bank Of America Plaza, NC1-002-33-31, 101 South Tryon 
Street, Charlotte, NC 28255.

FOR FURTHER INFORMATION CONTACT: Jean. E. Minarick, Senior Counsel, at 
(202) 942-0527, or Christine Y. Greenless, Branch Chief, at (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 at the 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102 (telephone (202) 942-8090).

Applicant's Representation

    1. The Companies are all members of the Nations Funds, a family of 
funds currently including more than seventy funds. Each Company is an 
open-end management investment company registered under the Act and is 
organized as a Massachusetts or Delaware business trust, or a Maryland 
corporation. BAAI serves as the investment adviser to each Fund (as 
defined below), except the Funds which are ``feeder'' funds that invest 
all of their assets in the portfolios of NMIT and have no direct 
investment advisory arrangement. Nations Equity Income Fund is a series 
of NFI. Nations Equity Income Fund seeks to provide current income and 
growth of capital by investing in companies with above-average dividend 
yields. Nations Convertible Securities Fund is a series of NR. Nations 
Convertible Securities Fund seeks to provide investors with a total 
investment return, comprised of current income and capital 
appreciation, consistent with prudent investment risk.
    2. Nations Equity Income Fund will invest in shares of Nations 
Convertible Securities Fund, and will invest directly in certain debt 
and equity securities or other financial instruments (``Other 
Securities'').\2\ Applicants request that the relief also apply to (a) 
any existing or future registered open-end management investment 
company advised by BAAI, or any entity controlling, controlled by, or 
under common control with BAAI (also a ``Company''), and (b) any 
existing of future series of any Company advised by BAAI, or any entity 
controlling, controlled by, or under common control with BAAI 
(individually, a ``Fund'' and collectively, the ``Funds'') that is a 
series of, or part of the same ``group of investment companies'' (as 
defined in Section 12(d)(1)(G)(ii) of the Act) as NFT, NFI, NR, NFST, 
NAT and NMIT (any such Company or Fund that invests in an Underlying 
Fund (as defined below) is an ``Upper Tier Fund''). Any registered 
open-end management investment company (or series thereof) or 
registered unit investment trust whose shares are purchased by an Upper 
Tier Fund and which is part of the same group of investment companies, 
as defined in section 12(d)(1)(G)(ii) of the Act, as the Upper Tier 
Fund is an ``Underlying Fund.'' \3\
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    \2\ These investments will not include shares of any registered 
investment companies that are not in the same group of investment 
companies as the Companies.
    \3\ All existing investment companies that currently intend to 
rely on the order are named as applicants. Any registered open-end 
management investment company that may rely on the order in the 
future will do so only in accordance with the terms and conditions 
of the application.
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    3. Applicants state that BAAI may, but is not required to, reduce 
or waive advisory fees relating to an Upper Tier Fund's investment in 
shares of an Underlying Fund. Applicants further state that Nations 
Equity Income Fund intends to invest only in Primary A Shares of the 
Nations Convertible Securities Fund, which are not subject to front-end 
or contingent deferred sales

[[Page 77051]]

charges, distribution fees, or shareholder servicing fees.

Applicant's Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company (``acquiring company'') may acquire securities of 
another investment company (``acquired company'') if such securities 
represent more that 3% of the acquired company's outstanding voting 
stock or more than 5% of the acquiring company's total assets, or if 
such securities, together with the securities of other investment 
companies, represent more than 10% of the acquiring company's total 
assets. Section 12(d)(1)(B) of the Act provides that no registered 
open-end investment company may sell its securities to another 
investment company if the sale will cause the acquiring company to own 
more than 3% of the acquired company's voting stock, or if the sale 
will cause more than 10% of the acquired company's voting stock to be 
owned by investment companies.
    2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) 
will not apply to securities of an acquired company purchased by an 
acquiring company if: (a) The acquiring company and the acquired 
company are part of the same group of investment companies; (b) the 
acquiring company holds only securities of acquired companies that are 
part of the same group of investment companies, government securities, 
and short-term paper; (c) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not 
excessive under rules adopted pursuant to section 22(b) or section 
22(c) of the Act by a securities association registered under section 
15A of the Securities Exchange Act of 1934 or by the Commission; and 
(d) the acquired company has a policy that prohibits it from acquiring 
securities of registered open-end management investment companies or 
registered unit investment trusts in reliance on section 12(d)(1)(F) or 
(G). Applicants state that the proposed arrangement would comply with 
the provisions of section 12(d)(1)(G), but for the fact that an Upper 
Tier Fund's investments will include shares of one or more Underlying 
Funds as well as Other Securities.
    3. Section 12(d)(1)(J) of the Act provides that the Commission may 
exempt persons or transactions from any provision of section 12(d)(1) 
if, and to the extent that, the exemption is consistent with the public 
interest and the protection of investors. Applicants request an order 
under section 12(d)(1)(J) exempting them from section 
12(d)(1)(G)(i)(II). Applicants assert that permitting the Upper Tier 
Funds to invest in the Underlying Funds and Other Securities as 
described in the application would not raise any of the concerns that 
the requirements of section 12(d)(1)(G) were designed to address.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. Before approving any advisory contract under section 15 of the 
Act, the board of directors of NFI (on behalf of Nations Equity Income 
Fund) or any other Company (on behalf of another Upper Tier Fund), 
including a majority of the independent directors who are not 
``interested persons,'' as defined in section 2(a)(19) of the Act, will 
find that advisory fees, if any, charged under the contract are based 
on services provided that are in addition to, rather than duplicative 
of, services provided pursuant to any Underlying Fund's advisory 
contract; provided, however, that no such finding will be necessary if: 
(a) The Upper Tier Fund pays no advisory fee on assets invested in an 
Underlying Fund; or (b) the Upper Tier Fund pays an advisory fee on 
asserts invested in an Underlying Fund and either (i) the Underlying 
Fund pays no advisory fee, or (ii) the advisory fee paid by the Upper 
Tier Fund is reduced by the proportional amount of the advisory fee 
paid by the Underlying Funds with respect to the shares held by the 
Upper Tier Fund. If a finding is necessary, the finding, and the basis 
upon which the finding was made, will be recorded fully in the minute 
books of NFI or other relevant Company (on behalf of another Upper Tier 
Fund).
    2. Applicants will comply with all provisions of section 
12(d)(1)(G), except for section 12(d)(1)(G)(i)(II) to the extent that 
it restricts Nations Equity Income Fund or any Upper Tier Fund from 
investing in Other Securities as described in the application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-31274 Filed 12-7-00; 8:45 am]
BILLING CODE 8010-01-M