[Federal Register Volume 65, Number 77 (Thursday, April 20, 2000)]
[Notices]
[Pages 21214-21215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9877]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24392; 812-11958]


Nations Fund Trust and Banc of America Advisors, Inc.; Notice of 
Application

April 13, 2000.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 17(b) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 17(a) 
of the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit certain 
series of a registered open-end management investment company to 
acquire all of the assets and assume all of the liabilities of certain 
other series of the investment company. Because of certain 
affiliations, applicants may not rely on rule 17a-8 under the Act.

Applicants: Nations Fund Trust (``NFT'') and Banc of America Advisors, 
Inc. (``BAAI'').

Filing Dates: The application was filed on February 1, 2000. Applicants 
have agreed to file an amendment during the notice period, the 
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 May 8, 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 
who wish to be notified of a hearing may request notification by 
writing to the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 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: Lawrence W. Pisto, Senior Counsel, at 
(202) 942-0527, or George J. Zornada, Branch Chief, at (202) 942-0564 
(Office of Investment Company Regulation, Division of Investment 
Management).

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 (tel. (202) 942-8090).

Applicants' Representations

    1. NFT, a Massachusetts business trust, is registered under the Act 
as an open-end management investment company. NFT presently offers 36 
series, including Nations Managed Value Index Fund and Nations Managed 
SmallCap Value Index Fund (the ``Acquired Series'') and Nations Managed 
Index Fund and Nations Small Cap Index Fund (the ``Acquiring Series''). 
Collectively, the Acquired Series and the Acquiring Series are referred 
to as the ``Series.'' \1\
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    \1\ The Acquired Series and the Acquiring Series correspond with 
each other as follows: Nations Managed Value Index Fund with Nations 
Managed Index Fund; and Nations Managed SmallCap Value Index Fund 
with Nations SmallCap Index Fund.
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    2. BAAI is the investment adviser to each of the Series. The 
adviser is a wholly-owned indirect subsidiary of the Bank of America 
Corporation and is registered as an investment adviser under the 
Investment Advisers Act of 1940.
    3. Currently, Bank of America Corporation and entities 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 5% 
(and with respect to certain of the Series more than 25%) of the 
outstanding voting securities of the Series. All of the securities are 
held for the benefit of others in a fiduciary or representative 
capacity. None of the Bank of America Group owns an economic interest 
in any of the Series.
    4. On December 9, 1999, the board of trustees of NFT (the 
``Board''), including a majority of the trustees who are not 
``interested persons'' within the meaning of section 2(a)(19) of the 
Act (``Disinterested Trustees''), approved an Agreement and Plan of 
Reorganization (the ``Reorganization Agreement,'' and the transaction 
the ``Reorganization''). Under the Reorganization Agreement, on the day 
following the closing date (the ``Closing Date''), which is currently

[[Page 21215]]

anticipated to be May 12, 2000, the Acquiring Series will acquire all 
the assets and liabilities of the corresponding Acquired Series in 
exchange for shares of the Acquiring Series that have an aggregate net 
asset value (``NAV'') equal to the aggregate NAV of the Acquired Series 
determined as of 4 p.m. EST on the Closing Date (``Valuation Time''). 
The value of assets will be determined in the manner set forth in the 
Series' then-current prospectus and statement of additional 
information. On the day following the Closing Date or on such other 
date as may be mutually agreed, each Acquired Series will make a pro 
rata distribution of shares of the Acquiring Series to shareholders of 
the Acquired Series and liquidate.
    5. Applicants state that the Acquired Series pursue investment 
objectives, follow investment strategies and present investments risks 
that are generally similar to those of the corresponding Acquiring 
Series. Applicants state that all of the Series offer identical Primary 
A and Investor A shares.\2\ Shareholders of the Acquired Series will 
not incur any sales charges in connection with the Reorganization. BAAI 
or another entity in the Bank of America Group will be responsible for 
the customary expenses of the Reorganization.
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    \2\One of the Acquiring Series, Nations Managed Index Fund, also 
offers Primary B Shares. Such shares will not be part of the 
Reorganization.
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    6. The Board, including all the Disinterested Trustees, determined 
that the Reorganization is in the best interests of each of the 
Acquired Series and each of the Acquiring Series, and that the 
interests of the shareholders of the Acquired Series and Acquiring 
Series would not be diluted by the Reorganization. In assessing the 
Plan, the factors considered by the Board included, among others, (a) 
the terms and conditions of the Reorganization, (b) the expense ratios, 
fees and expenses of the Acquired Series compared to the Acquiring 
Series, (c) the compatibility of investment objectives, (d) the fact 
that BAAI or an affiliate will bear the expenses incurred in connection 
with the Reorganization, and (e) the tax-free nature of the 
Reorganization.
    7. The Reorganization Agreement is subject to a number of 
conditions precedent, including that: (1) The shareholders of the 
Acquired Series approve the Reorganization Agreement, (b) definitive 
proxy solicitation materials shall have been filed with the Commission 
and distributed to shareholders of the Acquired Series, (c) the 
Acquiring and Acquired Series receive an opinion of tax counsel that 
the Reorganization will be tax-free for each Series and its 
shareholders, and (d) applicants receive from the Commission an 
exemption from section 17(a) of the Act for the Reorganization. The 
Reorganization Agreement may be terminated and the Reorganization 
abandoned at any time by consent of the Board; the Board may also 
terminate the Reorganization Agreement if its conditions are not 
satisfied. Applicants agree not to make any material changes to the 
Reorganization Agreement without prior Commission approval.
    8. Definitive proxy solicitation materials have been filed with the 
Commission and were mailed to shareholders of the Acquired Series on 
February 4, 2000. A special meeting of shareholders is scheduled for 
April 21, 2000.

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. Applicants state that the Series 
may be deemed affiliated persons and thus the Reorganization prohibited 
by section 17(a).
    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, or affiliated persons of an affiliated person, 
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 they may not rely on rule 17a-8 in 
connection with the Reorganization because each of the Series may be 
deemed to be affiliated for reasons other than having a common 
investment adviser, common directors, and/or common officers. Because 
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 Series, each Acquired Series may be deemed an affiliated person of 
an affiliated person of each Acquiring Series.
    4. Section 17(b) of the Act provides that the Commission 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 set forth in section 17(b). Applicants note that the 
Board, including a majority of the Disinterested Trustees, found that 
participation in the Reorganization is in the best interests of each 
Series and that the interests of the existing shareholders of each 
Series will not be diluted as a result of the Reorganization. 
Applicants also note that the exchange of the Acquired Series' assets 
for shares in the Acquiring Series will be based on the Series' 
relative net asset values.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 00-9877 Filed 4-19-00; 8:45 am]
BILLING CODE 8010-01-M