[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]



-----------------------------------------------------------------------

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'').

-----------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    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