[Federal Register Volume 60, Number 54 (Tuesday, March 21, 1995)]
[Notices]
[Pages 14998-14999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6936]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20960/812-9352]
The Roulston Family of Funds, et al.; Notice of Application
March 16, 1995.
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: The Roulston Family of Funds (``Roulston Funds''), the
Advisors' Inner Circle Fund (``Advisors' Fund), and Roulston & Company,
Inc. (``Roulston'').
RELEVANT ACT SECTIONS: Order requested under section 17(b) granting an
exemption from section 17(a).
SUMMARY OF APPLICATION: Applicants request an order to permit the
series of the Roulston Funds to acquire all of the assets of
corresponding series of the Advisors' Fund, in exchange for shares of
the Roulston Funds series. Because of certain affiliations, the funds
may not rely on rule 17a-8 under the Act.
FILING DATES: The application was filed on December 9, 1994 and amended
on February 9, 1995.
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
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on April 10, 1995,
and should be accompanied by proof of service on applicant, 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. Roulston Funds and Roulston, 4000 Chester Avenue, Cleveland,
Ohio 44103; Advisors' Fund, 2 Oliver Street, Boston, MA 02109.
FOR FURTHER INFORMATION CONTACT:
Felice R. Foundos, Senior Attorney, at (202) 942-0571, 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. Roulston Funds, an Ohio business trust, is registered as an
open-end management investment company. Roulston Midwest Growth Fund
(``Roulston 1''), Roulston Growth and Income Fund (``Roulston 2''), and
Roulston Government Securities Fund (``Roulston 3'') (collectively, the
``Acquiring Funds'') are series of the Roulston Funds. Roulston
Research Corporation, a wholly-owned subsidiary of Roulston, is the
principal underwriter to the Roulston Funds and receives no
compensation for serving in such capacity. Roulston Funds, however, has
adopted a rule 12b-1 plan pursuant to which Roulston Research will
provide certain shareholder services and will be paid a fee at an
annual rate of .25% of the average aggregate net asset value of shares
held in customer accounts during the period for which Roulston Research
provides such services. The Fund/Plan Services Inc. is the
administrator and transfer agent to the Roulston Funds.
2. Advisors' Fund, a Massachusetts business trust, is registered as
an open-end management investment company. Advisors' Fund has fifteen
series. Three of these series are Roulston Midwest Growth Fund
(``Advisors 1''), Roulston Growth and Income Fund (``Advisors 2''), and
Roulston Government Securities Fund (``Advisors 3'') (collectively, the
``Acquired Funds''). SEI Financial Services Company, a wholly-owned
subsidiary of SEI Corporation (``SEI''), is the principal underwriter
to the Advisors' Fund and receives no compensation for serving in such
capacity. SEI Financial Management Corporation, a wholly-owned
subsidiary of SEI, provides administrative and shareholder services for
the Acquired Funds. Supervised Service Company, Inc. serves as transfer
agent and dividend disbursing agent for the Acquired Funds.
3. Roulston serves as investment adviser to both the Acquiring
Funds and Acquired Funds. Thomas H. Roulston, chairman and a director
of Roulston, together with members of his immediate family, own a
controlling interest in Roulston and beneficially owns more than 5% of
the outstanding shares of Advisors 2 and Advisors 3.
4. Roulston 1, Roulston 2, and Roulston 3 were created to acquire
the assets and liabilities respectively of Advisors 1, Advisors 2, and
Advisors 3. In exchange for these assets, each Acquired Fund will
receive shares of the respective Acquiring Fund having an aggregate net
asset value equal to the value of net assets the Acquired Fund
exchanged. After the exchange, each [[Page 14999]] Acquiring Fund will
liquidate and distribute pro rata to its respective unitholders the
shares of the Acquiring Fund it received pursuant to the
reorganization. Unitholders of the Acquired Funds will not incur any
sales load in connection with their acquisition of Acquiring Fund
shares.
5. In connection with the proposed reorganization, the board of
trustees of Roulston Funds, including a majority of its disinterested
trustees, approved an agreement and plan of reorganization (the
``Plan'') on October 20, 1994. The board of trustees of the Advisors'
fund, including a majority of its disinterested trustees, approved the
Plan on November 14, 1994. In assessing the Plan, each board considered
the following factors: (a) The compatibility of the objectives,
policies and restrictions of the respective Acquiring Funds and
Acquired Funds, (b) the terms and conditions of the Plan, (c) the tax-
free nature of the reorganization, and (d) the expense ratios of the
Acquiring Funds and Acquired Funds, including certain fee waivers.\1\
In addition, applicants represent that a principal business
consideration influencing Roulston's recommendation of the
reorganization, and the Roulston board's approval of the
reorganization, was their belief, based in part on input from
unitholders, that services to unitholders of the Acquired Funds,
particularly transfer agency services, could be more effectively
structured, delivered, and monitored in a different organizational
setting.
\1\Roulston and Roulston Research have agreed to waive their
respective investment advisory and 12b-1 fees and absorb certain
expenses for one year following the reorganization to the extent
necessary to ensure that the expense ratios of the Acquiring Funds
do not exceed certain limits.
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6. The Acquired Funds will submit the Plan to their unitholders for
approval at a meeting scheduled for March 24, 1995. Applicants will
deliver to unitholders of the Acquired Funds a prospectus/proxy
statement describing the Plan prior to their vote. In addition to
unitholder approval, the consummation of the reorganization is
conditioned upon, among other things, receipt from the SEC of the order
requested herein.
7. The expenses of the reorganization are to be paid by the party
directly incurring such expenses, subject to certain exceptions set
forth in the Plan. Applicants estimate the expenses of the
reorganization to be $70,000, of which Roulston Funds will pay $50,000
and Advisors' Fund will pay $20,000.
Applicants' Legal Analysis
1. Section 17(a) of the Act, in pertinent part, prohibits an
affiliated person of a registered investment company, or any affiliated
person of such a person, 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. Rule 17a-8 under the Act exempts from the prohibitions of
section 17(a) mergers, consolidations, or purchases or sales of
substantially all the assets involving registered investment companies
that may be 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 are satisfied. Applicants may not rely on rule 17a-8. Thomas
H. Roulston may be an affiliated person of the Acquiring Funds because
he may indirectly control the Acquiring Funds by owning, together with
his immediate family, a controlling interest in Roulston. Mr. Roulston
is also an affiliated person of two of the Acquired Funds because he
beneficially owns more than 5% of the outstanding shares of these
funds. Therefore, the Acquiring Funds may be deemed affiliated with the
Acquired Funds for reasons other than those set forth in the rule.
3. Applicants, however, believe that the terms of the
reorganization satisfy the standards of section 17(b). Each Fund's
board, including the disinterested trustees, has reviewed the terms of
the reorganization and have found that participation in the
reorganization as contemplated by the Plan is in the best interests of
the Acquiring Funds and Acquired Funds, and that the interests of the
unitholders of each Fund will not be diluted as a result of the
reorganization. Each board also considered the fact that the Acquiring
Funds were established for the express purpose of acquiring the assets
of the Acquiring Funds, and, therefore, the objectives of each
Acquiring Fund are identical or substantially similar to that of its
corresponding Acquired Fund. Applicants further submit that the terms
of the reorganization, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-6936 Filed 3-20-95; 8:45 am]
BILLING CODE 8010-01-M
