[Federal Register Volume 66, Number 100 (Wednesday, May 23, 2001)]
[Notices]
[Pages 28585-28587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-12933]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24978; 812-12466]


Nations Fund Trust, et al.; Notice of Application

May 16, 2001.
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: Applicants request an order to permit certain series of 
Nations Funds Trust (``NFST'') to acquire all of the assets and 
liabilities of certain series of Nations Fund Trust (``NFT''), Nations 
Fund, Inc. (``NFI''), Nations Reserve (``NR''), and Nations LifeGoals 
Funds, Inc. (``NLG'') (the ``Reorganization''). Because of certain 
affiliations, applicants may not rely on rule 17a-8 under the Act.
    Applicants: NFT, NFI, NR, NLG, NFST and Banc of America Advisors, 
LLC. (``BAALLC'').
    Filing Date: The application was filed on February 26, 2001, and 
amended on May 16, 2001.
    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 June 7, 
2001, 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, NW., Washington, DC 20549-
0609. Applicants, One Bank of America Plaza, 101 South Tryon Street, 
Charlotte, NC 28255.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, 
(202) 942-0634, or Janet M. Grossnickle, 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, NW., Washington, 
DC 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. NFT, a Massachusetts business trust, NFI, a Maryland 
corporation, NR, a Massachusetts business trust, and NLG, a Maryland 
corporation, are open-end management investment companies registered 
under the Act. NFT currently offers 34 series, one of which will 
participate in the Reorganization. NFI offers six series, two of which 
will participate in the Reorganization. NR currently offers 16 series, 
two of which will participate in the Reorganization. NLG offers three 
series, all of which will participate in the Reorganization. The 
participating series of NFT, NFI, NR and NLG are collectively referred 
to as the ``Acquired Funds.'' Two of the Acquired Funds are feeder 
funds (``Acquired Feeder Funds'') which invest all of their assets in 
corresponding master portfolios (``Master Portfolios'') of Nations 
Master Investment Trust (``NMIT''), an open-end management

[[Page 28586]]

investment company registered under the Act.
    2. NFST, a Delaware business trust, is an open-end management 
investment company registered under the Act. NFST is organizing seven 
new series, (the ``Acquiring Funds,'' and together with the Acquired 
Funds, the ``Funds'').\1\ Two of the Acquiring Funds will be feeder 
funds (``Acquiring Feeder Funds,'' together with the Acquired Feeder 
Funds, the ``Feeder Funds'') which will invest all of their assets in 
corresponding Master Portfolios of NMIT.\2\
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    \1\ A registration statement for the seven shell Acquiring Funds 
was filed with the SEC on October 13, 2000 and became effective on 
December 27, 2000.
    \2\ The Acquired Funds and the corresponding Acquiring Funds 
are: (i) NFT Nations Balanced Assets Fund and NR Nations Asset 
Allocation Fund into NFST Nations Government Securities Fund; (ii) 
NFI Nations U.S. Government Bond Fund and NFI Nations Government 
Securities Fund into NFST Nations Government Securities Fund; (iii) 
NR Nations Marsico Focused Equities Fund into NFST Nations Marsico 
Focused Equities Fund; (iv) NR Nations Marsico Growth and Income 
Fund into NFST Nations Marsico Growth and Income Fund; (v) NLG 
Nations LifeGoal Growth Portfolio into NFST Nations LifeGoal Growth 
Portfolio; (vi) NLG Nations LifeGoal Balanced Growth Portfolio into 
NFST Nations Lifegoal Balanced Growth Portfolio; and (vii) NLG 
Nations LifeGoal Income and Growth Portfolio into NFST Nations 
Lifegoal Income and Growth Portfolio.
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    3. BAALLC is registered under the Investment Advisers Act of 1940 
(``Advisers Act'') and is the investment adviser for the Acquired Funds 
that are not Feeder Funds as well as the Acquired Feeder Funds' 
corresponding Master Portfolios. The Acquired Funds that are not Feeder 
Funds and the Acquired Feeder Funds' corresponding Master Portfolios 
are currently subadvised by either Banc of America Capital Management 
Inc. (``BACAP'') or Marsico Capital Management, LLC (``Marsico 
Capital''), which are investment advisers registered under the Advisers 
Act. BAALLC is also the investment adviser, and BACAP and Marsico 
Capital are also the investment subadvisers, respectively, for the 
Acquiring Funds that are not Feeder Funds, and the Acquiring Feeder 
Funds' corresponding Master Portfolios, except for one Acquiring Fund 
where BACAP and Chicago Equity Partners LLC (``Chicago Equity'') are 
co-subadvisers. BAALLC, BACAP and Marsico Capital are wholly-owned 
subsidiaries of Bank of America Corporation. Chicago Equity is not an 
affiliated person of BAALLC or any other company in the Bank of America 
Group (as defined below).
    4. Bank of America Corporation, Bank of America, N.A., and/or 
certain of their affiliates that are under common control with BAALLC 
(the ``Bank of America Group''), hold of record, in their name and in 
the names of their nominees, more than 5% (and in some cases, more than 
25%) of the outstanding voting securities of each of the Acquired 
Funds. All such 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 any of the Funds.
    5. On August 23, 2000, the board of trustees of NFST (the 
``Acquiring Funds' Board,'') and the board of directors or trustees of 
NFT, NFI, NR and NLG (the ``Acquired Funds' Boards,'' together with the 
Acquiring Funds' Board, the ``Boards''), including all of the directors 
or trustees who are not ``interested persons,'' as defined in section 
2(a)(19) of the Act (``Independent Members'') of the respective Funds, 
approved an agreement and plan of reorganization (``Plans'') on behalf 
of each Acquiring Fund and Acquired Fund. Under the Plans, on the date 
following the closing date (``Closing Date''), which is currently 
anticipated to be June 8, 2001, each class of each Acquiring Fund will 
acquire all of the assets and liabilities of the corrresponding class 
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 class 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 NFT's, 
NFI's, NR's, NLG's and NFST's then current valuation procedures stated 
in their prospectuses. On the date following each Closing Date, the 
Acquired Funds will make a pro rata distribution of shares of the 
Acquiring Fund to its shareholders and liquidate.
    6. Applicants state that the Acquiring Funds will pursue investment 
objectives and following principal investment strategies that are 
either identical or similar to those of the Acquired Funds. Each of the 
Acquired Funds has multiple classes of shares, and the respective 
Acquiring Fund will have the same classes of shares. Applicants state 
that the distribution and shareholder servicing arrangements for the 
respective classes of the Acquired Fund are substantially identical to 
the arrangements of the corresponding classes of the Acquiring Fund. 
For purposes of calculating any deferred sales charge, each Acquired 
Fund's shareholders will be deemed to have held shares of the 
respective 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.
    7. The Boards, including all of the Independent Members, found that 
participation in the Reorganization is in the best interest of each of 
their respective Funds and that the interests of each Fund's existing 
shareholders 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 compability of the 
investment objectives and investment strategies of the Funds; (d) the 
terms and conditions of the Reorganization; and (e) the tax-free nature 
of the Reorganization. The Boards also noted that BAALLC and its 
affiliates (but not the Funds) will bear the expenses associated with 
the Reorganization, and considered potential benefits of the 
Reorganization to BAALLC and its affiliates.
    8. Each Plan may be terminated at any time by mutual written 
consent of the Acquiring Fund and the Acquired Fund at any time through 
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 
Acquiring Funds will have become effective; (b) the Acquired Funds' 
shareholders will have approved their respective 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 conerning 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.
    9. Definitive proxy solicitation materials have been filed with the 
SEC and were mailed to the Acquired Funds' shareholders on or about 
January 29, 2001. A special meeting of the Acquired Funds' shareholders 
was held on April 12, 2001, and the Acquired Funds' shareholders 
approved their respective Plan.

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

[[Page 28587]]

principal, from selling any security or other property to, or 
purchasing any security or other property 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, consolidation, 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 Bank of America Group holds of record 
more than 5% (and in some cases, more than 25%) of the outstanding 
voting securities of each of the 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 Reorganizaiton satisfy 
the standards set forth in section 17(b). Applicants note that the 
Boards, including a majority of the Independent Members, found that 
participation in the Reorganization is in the best interests of each 
Fund 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 Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-12933 Filed 5-20-01; 8:45 am]
BILLING CODE 8010-01-M