[Federal Register Volume 72, Number 189 (Monday, October 1, 2007)]
[Notices]
[Pages 55838-55839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-19281]


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

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 27977; 812-13413]


MMA Praxis Mutual Funds, et al.; Notice of Application

September 24, 2007.
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.

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

Summary of Application: Applicants request an order to permit certain 
entities excluded from the definition of investment company under 
section 3(c)(10) or 3(c)(11) of the Act to transfer certain classes of 
assets held in separate accounts to a series of a registered open-end 
management investment company in exchange for shares of that series.

Applicants: MMA Praxis Mutual Funds (``Trust''), The Mennonite 
Foundation, Inc. (``MF''), Mennonite Retirement Trust (``MRT'') and 
Mennonite Insurance Services Inc. d/b/a MMA Capital Management 
(``MMA'').

Filing Dates: The application was filed on August 7, 2007. 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 October 19, 2007 and should be accompanied by proof of service 
on the 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, Commission, 100 F Street, NE., Washington, DC 
20549-0102; Applicants, c/o MMA Praxis Mutual Funds, 303 Broadway, 
Suite 1100, Cincinnati, OH 45202.

FOR FURTHER INFORMATION, CONTACT: Lewis Reich, Senior Counsel, at (202) 
551-6919, or Nadya Roytblat, Assistant Director, at (202) 551-6821 
(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 
Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 
20549-0102 (telephone (202) 551-5850).

Applicants' Representations

    1. The Trust, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company. The Trust is 
organized as a series investment company consisting of 6 series, one of 
which is the MMA Praxis Growth Index Fund (``Growth Index Fund'' or 
``Fund''). The Growth Index Fund invests in equity securities intended 
to parallel the investment performance of the U.S. large cap growth 
equities market, while incorporating socially responsible investing 
criteria. MMA, an Indiana corporation, is an investment adviser 
registered under the Investment Advisers Act of 1940 ands serves as 
investment adviser to the Fund pursuant to an investment advisory 
agreement with the Trust.
    2. MF, a not-for-profit corporation organized under the laws of 
Indiana, is excluded from the definition of investment company under 
the Act pursuant to Section 3(c)(10) of the Act. MF's board of 
directors manages and controls the business of MF. MF's portfolio 
securities are segregated by asset class and are held in separate 
accounts. Each separate account is a sub-account of MF and is not a 
legal entity separate from MF. One of these sub-accounts, MF Large Cap 
Growth Index Fund, is managed by MMA.
    3. MRT, a qualified retirement plan, is excluded from the 
definition of investment company under the Act pursuant to Section 
3(c)(11) of the Act. MRT's board of trustees manages its investment 
activities. MRT's portfolio securities are segregated by asset class 
and are held in separate accounts. Each separate account is a sub-
account of MRT and is not a legal entity separate from MRT. One of 
these sub-accounts, MRT Large Cap Growth Index Fund, is managed by MMA. 
The directors/trustees of MRT and MF (MRT and MF are referred to 
collectively as the ``Unregistered Funds'') also serve as directors of 
Mennonite Mutual Aid, Inc., the controlling company of MMA.
    4. Applicants seek relief to permit MF and MRT to transfer 
substantially all of the assets in MF's Growth Index Fund and MRT's 
Large Cap Growth Index Fund, respectively, (the ``Assets'') to the 
Growth Index Fund in exchange for shares (``Shares'') of that Fund. 
That proposed transfer is referred to as the ``Exchange''.
    5. The Assets of the Unregistered Funds contemplated for transfer 
to the Fund in the Exchange will consist of individual securities that 
are substantially similar to those held as investments by the Fund. The 
Assets will be valued by the Fund at the time of acquisition at the 
independent ``current market price'' of the securities as defined in 
rule 17a-7 under the Act, the same valuation procedures set forth in 
the Fund's registration statement. The Shares of the Growth Index Fund 
received in the Exchange will have an aggregate net asset value 
(``NAV'') equal to the NAV of the Assets transferred by MF and MRT to 
the Fund. The Unregistered Funds and the Fund will each pay their own 
expenses incurred in connection with the Exchange. After the Exchange, 
MF's Growth Index Fund and MRT's Large Cap Growth Index Fund each will 
not make any investments other than investments in shares of the Fund.

Applicants' Legal Analysis

    1. Section 17(a) of the Act, in relevant 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 that investment company any security or other property.
    2. Section 2(a)(3) of the Act defines an ``affiliated person'' of 
another person to include (a) any person directly or indirectly 
controlling, controlled by, or under common control with the other 
person and (b) if the other person is an investment company, any 
investment adviser of that company. Applicants state that the 
Unregistered Funds and MMA may be considered to be under common control 
because a majority of the directors/trustees serving on the

[[Page 55839]]

Unregistered Funds' boards of directors/trustees also serve as 
directors of MMA. Applicants also state that the Unregistered Funds and 
the Fund may be considered to be under common control and therefore may 
be considered affiliated persons of each other under Section 2(a)(3) of 
the Act. Thus, Applicants state that the proposed Exchange may be 
prohibited under Section 17(a) of the Act.
    3. Rule 17a-7 exempts certain purchase and sale transactions 
otherwise prohibited by Section 17(a) of the Act if an affiliation 
exists solely by reason of having a common investment adviser, 
investment advisers that are affiliated persons of each other, common 
directors, and/or common officers, provided, among other requirements, 
that the transaction is for no consideration other than cash. 
Applicants state that the relief provided by Rule 17a-7 may not be 
available for the Exchange because the Exchange will involve 
consideration other than cash (i.e., Shares of the Fund). Applicants 
also state that the Unregistered Funds may be deemed to be affiliated 
with the Fund for reasons other than those set forth in Rule 17a-7.
    4. Rule 17a-8 exempts certain transactions (including mergers, 
consolidations or purchases or sales of substantially all of the assets 
of a company) between registered investment companies and eligible 
unregistered funds, as defined in rule 17a-8 (``Eligible Unregistered 
Fund''). Applicants state that the relief provided by rule 17a-8 is not 
available for the Exchange because the Unregistered Funds are not 
registered investment companies or Eligible Unregistered Funds, and the 
Exchange does not involve substantially all of the assets of the 
Unregistered Funds.\1\
---------------------------------------------------------------------------

    \1\ Although the Exchange will involve substantially all of the 
assets of MF's Large Cap Growth Index Fund and MRT's Large Cap 
Growth Index Fund, these entities do not have an existence separate 
from the Unregistered Funds.
---------------------------------------------------------------------------

    5. Section 17(b) of the Act provides that the Commission may exempt 
a transaction from the provisions of section 17(a) of the Act 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.
    6. Applicants submit that the terms of the Exchange satisfy the 
standards set forth in Section 17(b) of the Act. Applicants state that 
the board of the Trust, including a majority of the trustees who are 
not interested persons as defined in Section 2(a)(19) of the Act, found 
that participation in the Exchange is in the best interests of the Fund 
and that the interests of the existing shareholders of the Fund will 
not be diluted as a result of the Exchange. Applicants state that the 
Exchange will comply with the terms of paragraphs (a) (other than the 
cash payment requirement) through (g) of Rule 17a-7 and the provisions 
of Rule 17a-8 (as those provisions apply to the merger of an Eligible 
Unregistered Fund with a registered investment company). No brokerage 
commissions, fees (except for customary transfer fees, if any) or other 
remuneration will be paid by the Fund or the Unregistered Funds in 
connection with the Exchange.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    The Exchange will comply with the terms of paragraphs (a) (other 
than the cash payment requirement) through (g) of rule 17a-7 and the 
provisions of rule 17a-8 (as those provisions apply to the merger of an 
Eligible Unregistered Fund with a registered investment company).

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Nancy M. Morris,
Secretary.
 [FR Doc. E7-19281 Filed 9-28-07; 8:45 am]
BILLING CODE 8011-01-P