Nations Fund, Inc., et al.; Notice of application

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.

SUMMARY OF THE APPLICATION:

Applicants request an order to permit a series of Nations Reserves (“NR”) to acquire all of the assets and liabilities of a series of Nations Fund, Inc. (“NFI”) (the “Reorganization”). Because of certain affiliations, applicants may not rely on rule 17a-8 under the Act.

Applicants:

NFI, NR and Banc of America Advisors, Inc. (“BAAI”).

Filing Date:

The application was filed on June 29, 2000. Applicants have agreed to file an amendment to the application, the substance of which is reflected 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 September 7, 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 may request notification by writing to the SEC's Secretary.

ADDRESSES:

Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Applicants, One Bank of America Plaza, 101 South Tryon Street, Charlotte, NC 28255.

FOR FURTHER INFORMATION CONTACT:

Bruce R. MacNeil, Staff Attorney, (202) 942-0634, or Michael W. Mundt, 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. 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

1. NFI, a Maryland corporation, is an open-end management investment company registered under the Act. NFI currently offers 7 series, including Nations International Growth Fund (the “Acquired Fund”). NR, a Massachusetts business trust, is an open-end management investment company registered under the Act. NR currently offers 16 series, including Nations International Equity Fund (the “Acquiring Fund,” together with the Acquired Fund, the “Funds”). The Acquiring Fund is a feeder fund which invests all of its assets in a corresponding master portfolio of Nations Master Investment Trust, an open-end management investment company registered under the Act (“Master Portfolio”).

2. BAAI is registered under the Investment Advisers Act of 1940 (“Advisers Act”) and is the investment adviser for the Acquired Fund and the Master Portfolio. BAAI is a wholly-owned subsidiary of Bank of America Corporation. The Acquired Fund is currently subadvised by Gartmore Global Partners (“Gartmore”), an investment adviser registered under the Advisers Act. The Master Portfolio is subadvised by Gartmore and by INVESCO Global Asset Management (N.A.) Inc. (“INVESCO”) and Putnam Investment Management, Inc. (“Putnam”), which are also investment advisers registered under the Advisers Act. Gartmore, INVESCO, and Putnam are not affiliated persons of BAAI.

3. Bank of America Corporation, Bank of America, N.A., and/or certain of their affiliates 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 25% of the outstanding voting securities of each of the Funds. All of these 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 either of the Funds.

4. On April 26, 2000, the board of trustees of NR (the “Acquiring Fund's Board”) and the board of directors of NFI (the “Acquired Fund's Board,” together with the Acquiring Fund's Board, the “Boards”), including a majority of the directors or trustees who are not “interested persons,” as defined in section 2(a)(19) of the Act (“Disinterested Members”) of the respective Funds, approved a plan of reorganization (“Plan”) between the Acquiring Fund and the Acquired Fund. Under the Plan, on the date following the closing date (“Closing Date”), which is currently anticipated to be September 8, 2000, the Acquiring Fund will acquire all of the assets and liabilities 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 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 NFI's and NR's then current valuation procedures. On the date following the Closing Date, the Acquired Fund will make a pro rata distribution of share of the Acquiring Fund to its shareholders and liquidate.

5. Applicants state that the Acquiring Fund will pursue investment objectives and follow principal investment strategies that are substantially similar to those of the Acquired Fund. Each of the Funds has four classes of shares. Applicants state that the distribution and shareholder servicing arrangements for the respective classes of the Acquired Fund. For purposes of calculating any deferred sales charge, the Acquired Fund's shareholders will be deemed to have held shares of the 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.

6. The Boards, including all of their Disinterested Members, found that participation in the Reorganization is in the best interest of each Fund and that the interests of existing shareholders of each Fund 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 compatibility of the investment objectives and investment strategies of the Funds; (d) the tax-free nature of the Reorganization; and (e) the advantages of the master-feeder structure. The Boards also noted that BAAI and Gartmore or their affiliates (other than the Funds), will bear the expenses associated with the Reorganization.

7. The Plan may be terminated at any time by mutual written consent of the Acquiring Fund and the Acquired Fund at any time prior to 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 Acquired Fund will have become effective; (b) the Acquired Fund's shareholders will have approved the 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 concerning 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.

8. Definitive proxy solicitation materials have been filed with the SEC and were mailed to the Acquired Fund's shareholders on or about June 15, 2000. A special meeting of the Acquired Fund's shareholders was held on August 1, 2000, and the Acquired Fund's shareholders approved the Plan.

Applicant's 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, conditions, 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 director/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 25% of the outstanding voting securities of the Acquired Fund and the Acquiring Fund. 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 Reorganization satisfy the standards set forth in section 17(b). Applicants note that the Boards, including a majority of the Disinterested Members, found that participation in the Reorganization is in the best interests of each Fund and that the interests of the existing shareholders of each Fund will not be diluted as a result of the Reorganization. Applicants also that the Reorganization will be based on the Funds' relative net asset values.