Securities and Exchange Commission (“SEC” or “Commission”).
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.
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.
Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549-0609. Applicants, One Bank of America Plaza, 101 South Tryon Street, Charlotte, NC 28255.Start Further Info
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).End Further Info End Preamble Start Supplemental 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).
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 Start Printed Page 28586investment 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”). 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.
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 Start Printed Page 28587principal, 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.Start Signature
For the Commission, by the Division of Investment Management, under delegated authority.
Jonathan G. Katz,
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.Back to Citation
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.Back to Citation
[FR Doc. 01-12933 Filed 5-20-01; 8:45 am]
BILLING CODE 8010-01-M