[Federal Register Volume 61, Number 157 (Tuesday, August 13, 1996)]
[Notices]
[Pages 42072-42074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20541]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22117/812-10160]
Nations Fund Trust, et al.; Notice of Application
August 6, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Nations Fund Trust (``NFT''), Nations Fund, Inc. (``NFI''),
[[Page 42073]]
NationsBanc Advisors, Inc. (``NBAI''), and Peachtree Funds
(``Peachtree'').
RELEVANT ACT SECTIONS: Order requested under section 17(b) for an
exemption from section 17(a).
SUMMARY OF APPLICATION: Applicants request an order to allow four
series of NFT and one series of NFI to acquire substantially all of the
assets of Peachtree's five series. Because of certain affiliations, the
series may not rely on rule 17a-8 under the Act.
FILING DATE: The application was filed on May 17, 1996, and amended on
July 24, 1996.
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 September 3,
1996, 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
SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants: (NFT, NFI and NBAI), One NationsBank Plaza,
Charlotte, North Carolina 28255; (Peachtree), Federated Investors
Tower, Pittsburgh, Pennsylvania 15222.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Staff Attorney, at
(202) 942-0574, or Robert A. Robertson, 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
SEC's Public Reference Branch.
Applicants' Representations
1. NFI, a Maryland corporation, is registered under the Act as an
open-end management investment company. NFI currently consists of five
series, one of which is the subject of this application: Nations Prime
Fund. NFT, a Massachusetts business trust, is registered under the Act
as an open-end management investment company. NFT currently consists of
32 series, four of which are the subject of this application: Nations
Capital Growth Fund, Nations Strategic Fixed Income Fund, Nations
Georgia Intermediate Municipal Bond Fund, and Nations Government Money
Market Fund (together with Nations Prime Fund, the ``Acquiring
Funds'').
2. Peachtree, a Massachusetts business trust, is registered under
the Act as an open-end management investment company. Peachtree
currently offers its shares in five series: Peachtree Equity Fund,
Peachtree Bond Fund, Peachtree Georgia Tax-Free Income Fund, Peachtree
Government Money Market Fund, and Peachtree Prime Money Market Fund
(collectively, the ``Acquired Funds'').
3. NBAI is the investment adviser to the Acquiring Funds and
TradeStreet Investment Associates, Inc. (``TSIA'') is sub-adviser to
the Acquiring Funds. NBAI is a wholly owned subsidiary of NationsBank,
N.A., which in turn is a wholly owned banking subsidiary of NationsBank
Corporation. On January 9, 1996, Bank South Corporation (``BSC'') was
merged into NationsBank Corporation (the ``Holding Company Merger'').
Prior to the Holding Company Merger, BSC was the parent of Bank South,
N.A. (``Bank South''), which was the adviser to the Acquired Funds.
Since the consummation of the Holding company Merger, the Acquired
Funds have been advised by NBAI and sub-advised TSIA.
4. Currently, Bank South and BHC Securities, Inc. (``BHC''), an
affiliate of Bank South, which are under common control with NBAI,
acting in various capacities for numerous accounts, together are record
holders of more than 25% of the outstanding shares of each of the
Acquired Funds. Currently, certain affiliates of NBAI, acting in
various capacities for numerous accounts, together are record holders
of more than 5% of the outstanding shares of some or all of the
Acquiring Funds. All such securities are held for the benefit of others
in a trust, agency, custodial, or other fiduciary or representative
capacity.
5. Shares of Nations Capital Growth Fund, Nations Strategic Fixed
Income Fund and Nations Georgia Intermediate Municipal Bond Fund are
divided into the following five classes of shares: Primary A Shares,
Primary B Shares, Investor A Shares, Investor C Shares, and Investor N
Shares. Shares of Nations Government Money Market Fund and Nations
Prime Fund are divided into the following six classes of shares:
Primary A Shares, Primary B Shares, Investor A Shares, Investor B
Shares, Investor C Shares, and Investor D Shares. (Primary A Shares are
the only class of shares involved in the proposed reorganization.)
Primary A Shares of the Acquiring Funds are distributed by Stephens
Inc. (``Stephens''), a registered broker dealer, and are offered at net
asset value, without a sales load. Stephens receives no compensation in
connection with the distribution of Primary A Shares. The Acquired
Funds consist of one class of shares. The Acquired Funds charge up to a
0.75% (or in the case of the Peachtree Government Money Market Fund and
Peachtree Prime Money Market Fund, up to 0.25%) distribution fee
pursuant to rule 12b-1 under the Act, and up to a 0.25% shareholder
services fee. Shares of the Peachtree Government Money Market Fund and
Peachtree Prime Money Market Fund are offered at net asset value,
without a sales load. The maximum sales charge payable with respect to
the Peachtree Equity Fund shares is 3.75%. The maximum sales charge
payable with respect to the Peachtree Bond Fund and the Peachtree
Georgia Tax-Free Income Fund is 2.50%.
6. The investment objectives, policies and restrictions of each
Acquired Fund are substantially similar to those of the corresponding
Acquiring Fund. The Peachtree Equity's Fund's investment objective is
to achieve long-term growth of capital and income, and the Nations
Capital Growth Fund's investment objective is to seek long-term capital
appreciation. The Peachtree Bond Fund's investment objective is to
achieve current income, while the Nations Strategic Fixed Income Fund's
investment objective is to maximize total investment return through the
active management of fixed income securities. The Peachtree Georgia
Tax-Free Income Fund and the Nations Georgia Intermediate Municipal
Bond Fund have substantially identical investment objectives--to
provide current income exempt from federal and state income taxes. The
Peachtree Government Money Market Fund and the Nations Government Money
Market Fund also have substantially identical investment objectives--to
achieve as high a level of current income as is consistent with
liquidity and stability of principal. The Peachtree Prime Money Market
Fund's investment objective is to achieve current income consistent
with stability of principal and liquidity, while the Nations Prime
Fund's investment objective is to seek the maximization of current
income to the extent consistent with preservation of capital and the
maintenance of liquidity.
7. Peachtree has entered into a separate agreement and plan of
reorganization with each of NFI and
[[Page 42074]]
NFT (each a ``Plan'' and, collectively, the ``Plans''), providing for
the transfer of all, of the assets of each of Peachtree Equity Fund,
Peachtree Bond Fund, Peachtree Georgia Tax-Free Income Fund, Peachtree
Government Money Market Fund, and Peachtree Prime Money Market Fund to
Nations Capital Growth Fund, Nations Strategic Fixed Income Fund,
Nations Georgia Intermediate Municipal Fund, Nations Government Money
Market Fund, and Nations Prime Fund, respectively, in exchange for
Primary A Shares of each corresponding Acquiring Fund. The aggregate
net asset value of Acquiring Fund shares to be issued to shareholders
of an Acquired Fund will equal the value of the aggregate net assets of
the Acquired Fund as of the close of business on the business day
immediately prior to the closing (the ``Valuation Date''). Primary A
Shares of the Acquiring Funds will be distributed pro rata to
shareholders of each Acquired Fund in liquidation of the Acquired Fund,
and each of the Acquired Funds, and Peachtree, will be dissolved.
8. The board of directors of NFI and the board of trustees of NFT,
including the disinterested directors/trustees, considered and
unanimously approved each Plan on January 18, 1996. The board of
trustees of Peachtree (together with the directors/trustees of NFI and
NFI, the ``Boards''), including the disinterested trustees, considered
and unanimously approved the Plan on February 19, 1996. Each of the
Boards has determined that participation in the reorganization is in
the best interests of each of the Acquired Funds and the Acquiring
Funds, and that the interests of the shareholders of the Acquiring
Funds and the Acquiring Funds will not be diluted as a result of the
reorganization.
9. Each Board based its decision to approve the reorganization on a
number of factors, including: (a) The compatibility of each Acquired
Fund's investment objective, policies and restrictions with those of
its corresponding Acquiring Fund; (b) the terms and conditions of the
reorganizations and whether they would result in a dilution of the
existing shareholders' interests; (c) the conditioning of the
reorganizations on the receipts of a legal opinion confirming the
absence of any adverse federal tax consequences to the Acquired Funds
or their shareholders; (d) the similarities between the Acquired Funds'
and the Acquiring Funds' respective distribution, administrative,
transfer agency, shareholder service and custody arrangements; (e) the
potential expense savings and benefits that could result from combining
the assets and operations of the Acquiring Funds and the Acquiring
Funds; and (f) information regarding fees and expenses of the Acquired
Funds and the Acquiring Funds.
10. Applicants anticipate that special meetings of shareholders of
the Acquired Funds will be held on or about September 23, 1996, and,
subject to shareholder approval, the reorganizations will be completed
on or about September 30, 1996. The registration statements were filed
with the SEC on July 3, 1996. Applicants also anticipate that the
combined prospectus/proxy statements will be mailed to shareholders of
the Acquired Funds after the registration statement becomes effective,
on or about August 2, 1996.
11. The expenses incurred in connection with entering into and
carrying out the provisions of the Plans will be borne by NationsBank,
NBAI, or Stephens.
12. Applicants agree not to make any material changes to the Plans
that affect representations in the application without the prior
approval of the SEC.
Applicant's Legal Analysis
1. Section 17(a), in pertinent part, prohibits an affiliated person
of a registered investment company, acting as principal, from selling
to or purchasing from such registered company, any security or other
property. Section 17(b) provides that the SEC may exempt a transaction
from section 17(a) if 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 the registered investment company concerned and with the
general purposes of the Act.
2. Section 2(a)(3) of the Act defines the term ``affiliated
person'' of another person to include, in pertinent part, (a) any
person owning, controlling, or holding with power to vote, 5% or more
of the outstanding voting securities of such other person; (b) any
person 5% or more of whose outstanding voting securities are owned,
controlled, or held with power to vote by such other person; (c) any
person controlling, controlled by, or under common control with, such
other person; and (d) if such other person is an investment company,
any investment adviser thereof.
3. Rule 17a-8 under the Act exempts from section 17(a) mergers,
consolidations, or purchases or sales of substantially all the assets
involving registered investment companies that may be affiliated
persons solely by reason of having a common investment adviser, common
directors/trustees and/or common officers provided that certain
conditions are satisfied.
4. The reorganization may not be exempt from the prohibitions of
section 17(a) pursuant to rule 17a-8 because the Acquiring Funds and
the Acquired Funds may be affiliated for reasons other than those set
forth in the rule. Bank South and BHC, which are under common control
with NBAI, together hold of record more than 25% of the outstanding
voting securities of the Acquired Funds. Certain affiliates of NBAI
hold of record more than 5% of the outstanding voting securities of
each of the Acquiring Funds. Because of this record ownership each
Acquiring Fund may be deemed an affiliated person of an affiliated
person of the corresponding Acquired Fund, and vice versa, for reasons
not based solely on their common adviser, common directors/trustees
and/or common officers.
5. Applicants believe that the terms of the proposed
reorganizations satisfy the standards set forth in section 17(b). The
Boards of NFI, NFT and Peachtree have determined that the
reorganizations, including the consideration to be paid or received,
are in the best interest of such entities and their shareholders, and
that the interests of the shareholders will not be diluted as a result
of the reorganizations. Applicants state that the trustees/directors,
including the disinterested trustees/directors, have made the findings
required by rule 17a-8. Applicants believe that the investment
objectives, policies and restrictions of the Acquiring Funds are
compatible with, and substantially similar to, those of the Acquired
Funds. Accordingly, applicants believe that the reorganizations are
consistent with the policies of each of the Acquiring Funds and the
Acquired Funds.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 96-20541 Filed 8-12-96; 8:45 am]
BILLING CODE 8010-01-M
