23484 Federal Register / Vol. 63, No. 82 /Wednesday, April 29, 1998 / Notices

1Registration statements for the two shell

Acquiring Funds were declared effective on April

6, 1998, and April 7, 1998. These funds are

expected to commence operations upon the

consummation of the Reorganizations (as defined

below).

6. Applicants state that, given the

frequency of the failure of shareholders

to return proxies, and the large number

of beneficial owners of shares of the

Funds, 150 days is necessary to obtain

shareholder approval of the New

Agreements. Applicants state that

during the Interim Period, each Fund

would operate under the New

Agreements, which are substantially

identical to the Existing Agreements,

except for the effective dates,

termination dates and the updated

names of the Funds. Applicants also

state that no changes are anticipated in

the personnel providing investment

management services to the Funds

during the Interim Period. Applicants

therefore submit that each Fund should

receive, during the Interim Period, the

same investment advisory services,

provided in the same manner, at the

same fee levels, and by substantially the

same personnel as before the

Transaction.

Applicants’ Conditions

Applicants agree that the requested

order will be subject to the following

conditions:

1. The New Agreements will have the

same terms and conditions as the

Existing Agreements, except for the

effective dates, termination dates, and

the updated names of the Funds.

2. Fees earned by the Adviser in

respect of the New Agreements during

the Interim Period will be maintained in

an interest-bearing escrow account, and

amounts in the account, (including

interest earned on such paid fees), will

be paid (a) to the Adviser, after the

requisite approval of shareholders are

obtained, or (b) to the respective Fund,

in the absence of such approvals.

3. The Funds will hold meetings of

shareholders to vote on approval of the

New Agreements on or before the 150th

day following the termination of the

Existing Agreements (but in no event

later than October 31, 1998).

4. The Advisor and/or Parent will

bear the costs of preparing and filing the

application and the costs relating to the

solicitation of shareholder approval of

the New Agreements.

5. The Adviser will take all

appropriate steps to ensure that the

scope and quality of advisory and other

services provided to the Funds during

the Interim Period will be at least

equivalent, in the judgment of the

Boards, including a majority of the

Independent Trustees, to the scope and

quality of services previously provided

under the Existing Agreements. If

personnel providing material services

during the Interim Period change

materially, the Adviser will apprise and

consult with the Board of the affected

Funds to assure that they, including a

majority of the Independent Trustees,

are satisfied that the services provided

will not be diminished in scope or

quality.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–11288 Filed 4–28–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act, Release No.

23124; 812–11022]

Nations Fund Trust, et al.; Notice of

Application

April 22, 1998.

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.

SUMMARY OF THE APPLICATION:

Applicants request an order to permit

certain series of Nations Fund Trust

(‘‘NFT’’), Nations Fund, Inc. (‘‘NFI’’),

and Nations Institutional Reserves

(‘‘NIR’’) to acquire all of the assets and

liabilities of all of the series of Emerald

Funds (‘‘Emerald’’).

APPLICANTS: NFT, NFI, NIR,

NationsBanc Advisors, Inc. (‘‘NBAI’’),

Emerald, and Barnett Capital Advisors,

Inc. (‘‘Barnett’’).

FILING DATES: The application was filed

on February 23, 1998. Applicants have

agreed to file an amendment, the

substance of which is included 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

May 13, 1998 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.

Applicants: NFT, NFI, NIR, and NBAI,

One NationsBank Plaza, Charlotte, NC

28255; Emerald, 3435 Stelzer Road,

Columbus, OH 43219; and Barnett, 9000

Southside Boulevard, Building 100,

Jacksonville, FL 32256.

FOR FURTHER INFORMATION CONTACT:

Rachel H. Graham, Senior Counsel,

(202) 942–0583, or Christine Y.

Greenlees, 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

(telephone (202) 942–8090).

Applicants’ Representations

1. Emerald, a Massachusetts business

trust, is an open-end management

investment company registered under

the Act. Emerald currently offers shares

in fourteen series (the ‘‘Acquired

Funds’’).

2. NFT and NIR, each a Massachusetts

business trust, and NFI, a Maryland

corporation, are open-end management

investment companies registered under

the Act. Each company offers shares in

certain series, some of which constitute

the ‘‘Acquiring Funds’’ (together with

the Acquired Funds, the ‘‘Funds’’). NFT

offers shares in thirty-nine series, seven

of which are Acquiring Funds. NFI

offers shares in eight series, four of

which are Acquiring Funds. NIR offers

shares in four series, one of which is an

Acquiring Fund. Each of NFI and NIR is

organizing a new shell series, which

also will be Acquiring Funds.1

3. Barnett is registered under the

Investment Advisers Act of 1940

(‘‘Advisers Act’’) and is the investment

adviser to the Acquired Funds. Barnett

is a wholly-owned subsidiary of Barnett

Bank, N.A., which, in turn, is a whollyowned subsidiary of Barnett Banks, Inc.

As of the date of the application, Barnett

and its affiliates, all of which are part of

a common control group (the ‘‘Barnett

Group’’), held of record, in their name

and in the names of their nominees,

more than 25% of the outstanding

voting shares of certain classes of shares

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, except that Barnett Bank, N.A.
Federal Register / Vol. 63, No. 82 /Wednesday, April 29, 1998 / Notices 23485

2Prior to implementation of the Reorganization

Plans, the Acquired Funds intend to discharge

substantially all of their liabilities. Each Acquiring

Fund will assume all remaining liabilities of its

corresponding Acquired Fund.

3The Acquired Funds and the corresponding

Acquiring Funds are: (i) Emerald Balanced Fund

and Nations Balanced Assets Fund; (ii) Emerald

Equity Fund and Nations Disciplined Equity Fund;

(iii) Emerald Equity Value Fund and Nations Value

Fund; (iv) Emerald Florida Tax-Exempt Fund and

Nations Florida Municipal Bond Fund; (v) Emerald

International Equity Fund and Nations International

Value Fund (shell); (vi) Emerald Managed Bond

Fund and Nations Strategic Fixed Income Fund;

(vii) Emerald Prime Fund and Nations Prime Fund;

(viii) Emerald Prime Advantage Institutional Fund

and Nations Money Market Reserves (shell); (ix)

Emerald Short-Term Fixed Income Fund and

Nations Short-Term Income Fund; (x) Emerald

Small Capitalization Fund and Nations Small

Company Growth Fund; (xi) Emerald Tax-Exempt

Fund and Nations Tax-Exempt Fund: (xii) Emerald

Treasury Fund and Nations Treasury Fund; (xiii)

Emerald Treasury Advantage Institutional Fund and

Nations Treasury Reserves; and (xiv) Emerald U.S.

Government Securities Fund and Nations

government Securities Fund.

may, from time to time, own more than

5% but less than 10% of a certain class

of shares of certain Acquired Funds for

its own account.

4. NBAI is registered under the

Advisers Act and is the investment

adviser for the Acquiring Funds. NBAI

is a wholly-owned subsidiary of

NationsBank, N.A., which, in turn, is a

wholly-owned subsidiary of

NationsBank Corporation

(‘‘NationsBank’’).

5. On January 9, 1998, Barnett Banks,

Inc. merged into NB Holdings

Corporation, a subsidiary of

NationsBank (the ‘‘Holding Company

Merger’’). As a result of the Holding

Company Merger, Barnett became an

indirect wholly-owned subsidiary of

NationsBank.

6. On January 16, 1998, and February

12, 1998, respectively, the boards of

directors and trustees of NFT, NFI, and

NIR (the ‘‘Nations Funds’ Boards’’) and

the board of trustees of Emerald (the

‘‘Emerald Board’’), including their

disinterested directors and trustees,

unanimously approved Agreements and

Plans of Reorganization between

Emerald and each of NFT, NFI, and NIR

(each a ‘‘Reorganization Plan’’ and

collectively, the ‘‘Reorganization

Plans’’). Pursuant to the Reorganization

Plans, each Acquiring Fund will acquire

all of the assets and liabilities 2 of the

corresponding Acquired Fund in

exchange for shares of designated

classes of the Acquiring Fund (the

‘‘Reorganizations’’).3 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 Reorganization Plans

provide that these Acquiring Fund

shares will be distributed pro rata to the

shareholders of record in the applicable

Acquired Fund class, determined as of

the close of business on the Closing

Date. This distribution will be

accomplished by issuing the Acquiring

Fund shares to open accounts on the

share records of the Acquiring Funds in

the names of the Acquired Fund

shareholders. Simultaneously, all issued

and outstanding shares of the Acquired

Funds will be cancelled on the books of

the Acquired Funds. Each Acquired

Fund, and Emerald, thereafter will be

dissolved.

7. The Acquiring Funds fall into three

categories. First, there are three

Acquiring Funds that offer shares in six

classes (Primary A, Primary B, Investor

A, Investor B, Investor C, and Daily)

(‘‘Category 1 Acquiring Funds’’).

Second, there are nine Acquiring Funds

that offer shares in four classes (Primary

A, Investor A, Investor B [formerly

Investor N], and Investor C) (‘‘Category

2 Acquiring Funds’’). Seven of the

Category 2 Acquiring Funds also offer

Primary B class shares. Third, there are

two Acquiring Funds that offer shares in

four classes (Adviser, Capital, Liquidity,

and Market) (‘‘Category 3 Acquiring

Funds’’). Shares in the following classes

will be issued in the Reorganizations:

Primary A, Investor A, and Daily shares

in the Category 1 Acquiring Funds;

Primary A and Investor A shares in the

Category 2 Acquiring Funds; and

Capital shares in the Category 3

Acquiring Funds. No distribution fees

are paid by the Primary A shares in

either the Category 1 or Category 2

Acquiring Funds or by the Capital

shares in the Category 3 Acquiring

Funds. Investor A shares in both the

Category 1 and Category 2 Acquiring

Funds are subject to distribution and

shareholder servicing fees under a rule

12b–1 plan. Daily shares in the Category

1 Acquiring Funds also are subject to

distribution and servicing fees. None of

the Acquiring Funds is subject to a

front-end or contingent deferred sales

load.

8. The Acquired Funds also fall into

three categories. First, there are three

Acquired Funds that offer Institutional,

Retail, and Service class shares

(‘‘Category 1 Acquired Funds’’). Second,

there are nine Acquired Funds that offer

Institutional and Retail class shares

(‘‘Category 2 Acquired Funds’’). Third,

there are two Acquired Funds that offer

shares in a single, unnamed class

(‘‘Category 3 Acquired Funds’’). None of

the Acquired Funds is subject to a frontend or contingent deferred sales load.

Retail shares in the Category 1 and

Category 2 Acquired Funds are subject

to distribution and servicing fees. No.

rule 12b–1 fees are paid by the

Institutional shares in the Category 1

and Category 2 Acquired Funds. Service

shares in the Category 1 Acquiring

Funds also do not pay rule 12b–1 fees,

but they are subject to fees under a

shareholder and processing services

plan. Neither of the Category 3 Acquired

Funds is subject to any rule 12b–1 or

shareholder servicing fees.

9. As a result of the Reorganizations,

holders of the Institutional, Retail, and

Service shares of the Category 1

Acquired Funds will become holders,

respectively, of Primary A, Daily and

Investor A shares of the Category 1

Acquiring Funds. Holders of the

Institutional and Retail shares of the

Category 2 Acquired Funds will become

holders, respectively, of Primary A and

Investor A shares of the Category 2

Acquiring Funds. Holders of shares of

the Category 3 Acquired Funds will

become holders of Capital shares of the

Category 3 Acquiring Funds. The rights

and obligations of each class of shares

of the Acquired Funds are similar to

those of the corresponding class of

shares of the Acquiring Funds. No sales

load will be imposed with respect to the

shares of the Acquiring Funds to be

issued in the Reorganizations, but those

shares will be subject to the asset-based

distribution and shareholder servicing

fees of the particular Acquiring Fund.

10. The investment advisory fees for

the Acquiring Funds and the Acquired

Funds are paid monthly. At the present

time, NBAI and Barnett are waiving a

portion of their advisory fees. NBAI

does not presently intend to reduce or

eliminate any waivers following the

Reorganizations.

11. The investment objectives,

policies, and restrictions of each

Acquired Fund and its corresponding

Acquiring Fund are substantially

similar.

12. The Nations Funds’ Boards and

the Emerald Board (collectively, the

‘‘Boards’’), including a majority of their

disinterested directors and trustees,

found that participation in the

Reorganizations is in the best interest of

each Fund and that the interests of

existing shareholders in the Funds will

not be diluted as a result of the

Reorganizations.

13. In approving the Reorganizations,

the Boards considered, among other

things: (a) The terms and conditions of

the Reorganizations; (b) the capabilities,

practices, and resources of NBAI and

other service providers to the Acquiring

Funds; (c) the expected cost savings for
23486 Federal Register / Vol. 63, No. 82 /Wednesday, April 29, 1998 / Notices

certain of the Acquired Funds; (d) the

relative performance of the Funds and

the compatibility of their investment

objectives, policies, and limitations; (e)

the tax-free status of the

Reorganizations; (f) the number of

investment portfolio options that would

be available to shareholders after the

Reorganizations; (g) the shareholder

services of the Acquiring Funds; and (h)

the investment advisory and other fees

paid by the Acquiring Funds, and the

historical and projected expense ratios

of the Acquiring Funds as compared

with those of the Acquired Funds. In

addition, the Emerald Board considered

that the Acquired Fund shareholders

would benefit from the distribution and

shareholder servicing plans of the

Acquiring Funds, as well as their fee

structure and shareholder services. The

Emerald Board also considered that

seven of the twenty-nine classes of

Acquired Funds will be reorganized into

Acquiring Fund classes with greater

operating expense ratios. It noted,

however, that those seven classes are

comprised of institutional investors,

many of which have fiduciary or other

arrangements through which they

receive other related services and pay

other fees outside of the fund. Further,

the Emerald Board considered that, as a

result of the Reorganizations, Acquired

Fund shareholders should benefit from

improved economies of scale and will

have access to a larger and more diverse

family of mutual funds.

14. NBAI will assume all expenses

incurred by the Funds in connection

with the Reorganizations.

15. The Reorganization Plans may be

terminated by mutual written consent of

the Emerald Board and the applicable

Nations Board at any time prior to the

Closing Date. In addition, either party

may terminate the Reorganization Plan

if: (a) The closing has not occurred prior

to December 31, 1998; (b) the other

party materially fails to perform its

obligations; (c) the other party

materially breaches its representations,

warranties, or covenants; or (d) a

condition precedent to the party’s

obligations cannot be met.

16. Registration statements on Form

N–14 (‘‘N–14 Registration Statements’’)

were filed with the SEC on February 23,

1998 and became effective on March 25,

1998. Applicants mailed a prospectus/

proxy statement to shareholders of the

Acquired Funds on March 30, 31, and

April 1, 1998. A special meeting of the

Acquired Fund shareholders will be

held on or about May 4, 1998.

17. The consummation of the

Reorganizations is subject to the

following conditions, as set forth in the

Reorganization Plans: (a) The N–14

Registration Statements will have

become effective; (b) the Acquired Fund

shareholders will have approved the

Reorganization Plans; (c) applicants will

have received exemptive relief from the

SEC with respect to the issues in the

application; (d) the Acquired Funds will

have received an opinion of counsel

concerning the federal income tax

aspects of the Reorganizations; and (e)

each Acquired Fund will have declared

a dividend or dividends 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 Reorganization

Plans that affect the application without

prior SEC 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 believe that they may

not rely on rule 17a–8 because the

Funds may be affiliated for reasons

other than those set forth in the rule.

First, the Barnett Group holds of record

more than 25% of the outstanding

voting securities of certain classes of

each Acquired Fund. Because of this

ownership, each Acquired Fund may be

deemed an affiliated person of Barnett

under section 2(a)(3)(B). Second, as a

result of the Holding Company Merger,

NBAI and Barnett are under the

common ownership and control of

NationsBank. Because of this

ownership, each Acquiring Fund may

be deemed an ‘‘affiliated person of an

affiliated person’’ of each Acquired

Fund. Accordingly, the Reorganizations

may not meet the ‘‘solely by reason of’’

requirement of rule 17a–8. Applicants

thus are requesting an order pursuant to

section 17(b) of the Act exempting them

from section 17(a) to the extent

necessary to consummate the

Reorganizations.

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 Reorganizations satisfy the

standards set forth in section 17(b).

Applicants note that the Boards,

including a majority of the disinterested

directors and trustees, found that

participation in the Reorganizations is

in the best interests of the Funds and

that the interests of the existing

shareholders of the Funds will not be

diluted as a result of the

Reorganizations. Applicants also note

that the exchange of the Acquired

Funds’ shares for shares in the

Acquiring Funds 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. 98–11287 Filed 4–28–98; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Reporting and Recordkeeping

Requirements Under OMB Review

ACTION: Notice of Reporting

Requirements Submitted for Review.

SUMMARY: Under the provisions of the

Paperwork Reduction Act (44 U.S.C.

Chapter 35), agencies are required to

submit proposed reporting and

recordkeeping requirements to OMB for

review and approval, and to publish a

notice in the Federal Register notifying

the public that the agency has made

such a submission.

DATES: Comments should be submitted

on or before May 29, 1998. If you intend

to comment but cannot prepare

comments promptly, please advise the