SEC Company Response from AHA INVESTMENT FUNDS INC (CIK 0000831957) — Dec 3, 2004
AHA INVESTMENT FUNDS INC (CIK 0000831957)
Date: Dec. 3, 2004 · CIK: 0000831957 · Accession: 0000894189-04-002596
AI Filing Summary & Sentiment
Letter
VIA EDGAR Securities and Exchange Commission Division of Investment Management 450 Fifth Street, N.W. Washington, DC 20549 AHA Investment Funds, Inc.
Dear Ms. Browning:
This letter responds to the additional comments you gave to me on December 1 and 2, 2004 regarding the proposed post-effective amendment to the registration statement filed on behalf of AHA Investment Funds, Inc. on Form N-1A relating to Socially Responsible Equity Fund (the “Fund”). Each of your comments, as I understood them, is repeated below, with our responses immediately following. For convenience, I have attached clean and marked versions of the revised prospectus and SAI. The documents are marked against the versions provided on November 29, 2004.
Prospectus
1. Fixed Income Securities
Comment: Please disclose the credit quality of the fixed income securities in which the Fund invests.
Response: Agreed. The Fund invests in investment grade fixed-income securities that receive one of the three highest ratings of Moody’s or S&P. We have included that disclosure under “Temporary Defensive Investments” on page 3 of the enclosed prospectus.
2. Principal Investment Strategies
Comment: Please disclose the screens that the Fund uses to select investments.
Response: Agreed. The following disclosure has been added: “The Fund screens a company’s involvement in tobacco, alcohol, gambling, abortion, weaponry, and nuclear power.” See page 1 of the enclosed prospectus.
Ms. Kimberly Browning
December 3, 2004
Page 2
3. American Depository Receipts
Comment: Please confirm that the Fund’s investment in ADRs is not a principal investment strategy. If it is not a principal investment strategy, please disclose that, while the Fund may invest up to 15% of its total assets in ADRs, it currently does not intend to do so.
Response: We have confirmed with the Fund’s investment adviser that investing in ADRs is not a principal investment strategy of the Fund. To achieve its investment objective of long-term capital growth, the Fund will invest primarily in the common stocks of U.S. issuers. The Fund may invest in ADRs as a secondary strategy. Under “Non-Principal Investment Policies and Risks,” we revised the disclosure to read: “The Fund may invest up to 15% of its total assets in sponsored American Depository Receipts (ADRs), although it currently does not intend to do so.” See page 3 of the enclosed prospectus.
4. Sponsored or Unsponsored ADRs
Comment: Please disclose whether the Fund has the ability to invest in sponsored or unsponsored ADRs.
Response: Agreed. We have confirmed with the Fund’s investment adviser that the Fund may invest in sponsored ADRs. Under “Non-Principal Investment Policies and Risks,” we revised the disclosure to state that the Fund has the ability to invest in sponsored ADRs. See page 3 of the enclosed prospectus.
5. Non-Principal Investment Policies and Risks
Comment: Please change the sub-heading “Other Investment Policies and Risks” to “Non-Principal Investment Policies and Risks.”
Response: Agreed. The requested change has been made. See page 3 of the enclosed prospectus.
6. Policy of Investing at least 80% of Fund’s Assets in Common Stock
Comment: If the Fund’s policy of investing at least 80% of its assets in common stocks is not a fundamental policy, please disclose that the Funds’ Board of Directors can change the policy without shareholder approval.
Response: Agreed. The following disclosure has been added under “Investment Selection Process:” “The Fund is authorized to change its strategy of normally investing at least 80% of its total assets in common stocks of U.S. issuers that meet certain social criteria without shareholder approval, although it currently does not intend to do so. The Fund will not change that strategy without providing shareholders at least 60 days’ notice.” See page 3 of the enclosed prospectus.
Ms. Kimberly Browning
December 3, 2004
Page 3
7. Principal Risk Considerations
Comment: Please include disclosure on market risk.
Response: Agreed. The requested disclosure has been added under “Principal Investment Risks.” See page 2 of the enclosed prospectus.
8. Investment Selection Process
Comment: Please provide more information about the investment selection process.
Response: Agreed. We have revised the disclosure under “Investment Selection Process.” See pages 2-3 of the enclosed prospectus.
9. Company Research
Comment: Please include the names of the “several well known third party organizations in the socially responsible community” that the Fund uses to gather information on companies’ involvement in certain activities.
Response: Agreed. We have deleted the reference to the “several well known third party organizations in the socially responsible community.” We have modified the disclosure on page 3 to read: “To evaluate a company’s involvement in socially responsible activity, the Fund reviews information provided by various third party organizations, including KLD Research & Analytics, Inc. (KLD) and Investor Research Responsibility Center (IRRC). The Fund may not review information from KLD and IRRC on every company considered for investment and may review information from other organizations in the future.”
10. Company Revenue
Comment: Please disclose whether the Fund considers a company’s gross or net revenue in analyzing that company’s involvement in specific revenue-generating activities. Please disclose that the Fund does not invest in companies that derive more than 5% of their total revenue from tobacco, alcohol, gambling, abortion or weaponry, or that are involved in nuclear power.
Response: We have confirmed with the Fund’s investment adviser that the Fund considers a company’s gross revenue in analyzing the company’s involvement in specific revenue-generating activities. We have disclosed that fact under “Investment Selection Process.” See page 3 of the enclosed prospectus. In the SAI, the Fund discloses that it does not invest in companies that derive more than 5% of their total revenue from tobacco, alcohol, gambling, abortion or weaponry, or that are involved in nuclear power. We believe that such disclosure is appropriately contained in the SAI and that the Fund provides sufficient detail regarding the investment selection process in the prospectus.
Ms. Kimberly Browning
December 3, 2004
Page 4
11. Estimated Other Expenses
Comment: In footnote 2 on page 5, please state that the amount of the Fund’s “other expenses” is estimated for the current fiscal year.
Response: Agreed. We have revised footnote 2 on page 5 to read as follows: “Because the Fund is new, the amount shown for “other expenses” is the estimated amount that the Fund will incur for the current fiscal year.”
12. Fee Waiver
Comment: Please confirm that the management fee remains the same before and after the fee waiver for each share class.
Response: We have confirmed with the Fund’s investment adviser that the management fee remains the same before and after the fee waiver for each share class.
13. Fair Value Determinations
Comment: Under “Pricing of Fund Shares,” please specify the party that makes fair value determinations on behalf of the Fund.
Response: Agreed. We have revised the language on page 7 of the enclosed prospectus to read: “When reliable market quotations are not readily available, the Investment Manager, in coordination with CCM Advisors, values securities at their fair value under the direction of and in accordance with procedures approved by the Fund’s Board of Directors. The Investment Manager may also use fair-value pricing if the value of a security the Fund holds is materially affected by events occurring after the close of the primary market on which the security is traded. The effect of fair-value pricing will be that the security’s value will not be based on a quoted price, but on a price that reflects fair value of the security. The Fund’s Board of Directors reviews all fair value determinations.”
14. How to Exchange Shares
Comment: Please define “excessive exchange” under “How to Exchange Shares.”
Response: Agreed. The requested disclosure has been added. See page 11 of the enclosed prospectus.
15. Investment Manager
Comment: Please disclose the fee that CCM Advisors will pay SKBA, the Fund’s Investment Manager.
Ms. Kimberly Browning
December 3, 2004
Page 5
Response: Agreed. The following disclosure has been added: “CCM Advisors will pay SKBA an annual fee based on the Fund’s average daily net assets. That fee will be equivalent to 0.25% of the Fund’s average daily net assets.” See page 18 of the enclosed prospectus.
16. Prior Performance of SKBA
Comment: Under “Prior Performance of SKBA,” please define “SRV composite.”
Response: Agreed. The requested disclosure has been added. See page 21 of the enclosed prospectus.
Statement of Additional Information
1. Principal Investment Strategies
Comment: Under “Types of Equity Securites,” please verify that the Fund uses those securities as part of its principal investment strategy.
Response: Agreed. The Fund does not use all of the securities included in that section as part of its principal investment strategy. We moved that disclosure to “Non-Principal Investment Strategies.” We revised the disclosure under “Principal Investment Strategies” to include only the equity securities that the Fund uses as part of its principal investment strategy. See pages 1 and 6 of the enclosed SAI.
2. ADRs
Comment: Please disclose that while the Fund may invest up to 15% of its total assets in ADRS, it does not currently intend to do so. Please include additional disclosure on the Fund’s investment in ADRs, including whether the Fund may invest in sponsored or unsponsored ADRs.
Response: Agreed. The requested disclosure has been added. See pages 7-8 of the enclosed SAI.
3. Leverage
Comment: Add the following disclosure: “The Fund does not use leverage.”
Response: Agreed. The requested disclosure has been added. See page 16 of the enclosed SAI.
Ms. Kimberly Browning
December 3, 2004
Page 6
* * * * *
On behalf of the Fund, I acknowledge that the Fund is responsible for the adequacy and accuracy of the disclosure in the filings; Staff comments or changes to disclosure in response to Staff comments in the filings reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filing; and the Fund may not assert Staff comments as a defense in an proceeding initiated by the Commission or any person under the federal securities laws of the United States.
* * * * *
We believe that this information responds to all of your comments. We intend to file the amendment to the Fund’s registration statement pursuant to Rule 485(b) today. As we agreed, if you have any additional comments to the registration statement, those comments will be addressed in the Fund’s Rule 497 filing. Please call me to confirm the adequacy of our response at 312/807-4219.
Very truly yours,
/s/ Laura E. Simpson
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CORRESP 1 correspondence.htm AHA INVESTMENT FUNDS CORRESPONDENCE AHA Investment Funds Correspondence LAURA E. SIMPSON 312.807-4219 lsimpson@bellboyd.com DIRECT FAX: 312.345.9979 VIA EDGAR December 3, 2004 Ms. Kimberly Browning Securities and Exchange Commission Division of Investment Management 450 Fifth Street, N.W. Washington, DC 20549 AHA Investment Funds, Inc. Dear Ms. Browning: This letter responds to the additional comments you gave to me on December 1 and 2, 2004 regarding the proposed post-effective amendment to the registration statement filed on behalf of AHA Investment Funds, Inc. on Form N-1A relating to Socially Responsible Equity Fund (the “Fund”). Each of your comments, as I understood them, is repeated below, with our responses immediately following. For convenience, I have attached clean and marked versions of the revised prospectus and SAI. The documents are marked against the versions provided on November 29, 2004. Prospectus 1. Fixed Income Securities Comment: Please disclose the credit quality of the fixed income securities in which the Fund invests. Response: Agreed. The Fund invests in investment grade fixed-income securities that receive one of the three highest ratings of Moody’s or S&P. We have included that disclosure under “Temporary Defensive Investments” on page 3 of the enclosed prospectus. 2. Principal Investment Strategies Comment: Please disclose the screens that the Fund uses to select investments. Response: Agreed. The following disclosure has been added: “The Fund screens a company’s involvement in tobacco, alcohol, gambling, abortion, weaponry, and nuclear power.” See page 1 of the enclosed prospectus. Ms. Kimberly Browning December 3, 2004 Page 2 3. American Depository Receipts Comment: Please confirm that the Fund’s investment in ADRs is not a principal investment strategy. If it is not a principal investment strategy, please disclose that, while the Fund may invest up to 15% of its total assets in ADRs, it currently does not intend to do so. Response: We have confirmed with the Fund’s investment adviser that investing in ADRs is not a principal investment strategy of the Fund. To achieve its investment objective of long-term capital growth, the Fund will invest primarily in the common stocks of U.S. issuers. The Fund may invest in ADRs as a secondary strategy. Under “Non-Principal Investment Policies and Risks,” we revised the disclosure to read: “The Fund may invest up to 15% of its total assets in sponsored American Depository Receipts (ADRs), although it currently does not intend to do so.” See page 3 of the enclosed prospectus. 4. Sponsored or Unsponsored ADRs Comment: Please disclose whether the Fund has the ability to invest in sponsored or unsponsored ADRs. Response: Agreed. We have confirmed with the Fund’s investment adviser that the Fund may invest in sponsored ADRs. Under “Non-Principal Investment Policies and Risks,” we revised the disclosure to state that the Fund has the ability to invest in sponsored ADRs. See page 3 of the enclosed prospectus. 5. Non-Principal Investment Policies and Risks Comment: Please change the sub-heading “Other Investment Policies and Risks” to “Non-Principal Investment Policies and Risks.” Response: Agreed. The requested change has been made. See page 3 of the enclosed prospectus. 6. Policy of Investing at least 80% of Fund’s Assets in Common Stock Comment: If the Fund’s policy of investing at least 80% of its assets in common stocks is not a fundamental policy, please disclose that the Funds’ Board of Directors can change the policy without shareholder approval. Response: Agreed. The following disclosure has been added under “Investment Selection Process:” “The Fund is authorized to change its strategy of normally investing at least 80% of its total assets in common stocks of U.S. issuers that meet certain social criteria without shareholder approval, although it currently does not intend to do so. The Fund will not change that strategy without providing shareholders at least 60 days’ notice.” See page 3 of the enclosed prospectus. Ms. Kimberly Browning December 3, 2004 Page 3 7. Principal Risk Considerations Comment: Please include disclosure on market risk. Response: Agreed. The requested disclosure has been added under “Principal Investment Risks.” See page 2 of the enclosed prospectus. 8. Investment Selection Process Comment: Please provide more information about the investment selection process. Response: Agreed. We have revised the disclosure under “Investment Selection Process.” See pages 2-3 of the enclosed prospectus. 9. Company Research Comment: Please include the names of the “several well known third party organizations in the socially responsible community” that the Fund uses to gather information on companies’ involvement in certain activities. Response: Agreed. We have deleted the reference to the “several well known third party organizations in the socially responsible community.” We have modified the disclosure on page 3 to read: “To evaluate a company’s involvement in socially responsible activity, the Fund reviews information provided by various third party organizations, including KLD Research & Analytics, Inc. (KLD) and Investor Research Responsibility Center (IRRC). The Fund may not review information from KLD and IRRC on every company considered for investment and may review information from other organizations in the future.” 10. Company Revenue Comment: Please disclose whether the Fund considers a company’s gross or net revenue in analyzing that company’s involvement in specific revenue-generating activities. Please disclose that the Fund does not invest in companies that derive more than 5% of their total revenue from tobacco, alcohol, gambling, abortion or weaponry, or that are involved in nuclear power. Response: We have confirmed with the Fund’s investment adviser that the Fund considers a company’s gross revenue in analyzing the company’s involvement in specific revenue-generating activities. We have disclosed that fact under “Investment Selection Process.” See page 3 of the enclosed prospectus. In the SAI, the Fund discloses that it does not invest in companies that derive more than 5% of their total revenue from tobacco, alcohol, gambling, abortion or weaponry, or that are involved in nuclear power. We believe that such disclosure is appropriately contained in the SAI and that the Fund provides sufficient detail regarding the investment selection process in the prospectus. Ms. Kimberly Browning December 3, 2004 Page 4 11. Estimated Other Expenses Comment: In footnote 2 on page 5, please state that the amount of the Fund’s “other expenses” is estimated for the current fiscal year. Response: Agreed. We have revised footnote 2 on page 5 to read as follows: “Because the Fund is new, the amount shown for “other expenses” is the estimated amount that the Fund will incur for the current fiscal year.” 12. Fee Waiver Comment: Please confirm that the management fee remains the same before and after the fee waiver for each share class. Response: We have confirmed with the Fund’s investment adviser that the management fee remains the same before and after the fee waiver for each share class. 13. Fair Value Determinations Comment: Under “Pricing of Fund Shares,” please specify the party that makes fair value determinations on behalf of the Fund. Response: Agreed. We have revised the language on page 7 of the enclosed prospectus to read: “When reliable market quotations are not readily available, the Investment Manager, in coordination with CCM Advisors, values securities at their fair value under the direction of and in accordance with procedures approved by the Fund’s Board of Directors. The Investment Manager may also use fair-value pricing if the value of a security the Fund holds is materially affected by events occurring after the close of the primary market on which the security is traded. The effect of fair-value pricing will be that the security’s value will not be based on a quoted price, but on a price that reflects fair value of the security. The Fund’s Board of Directors reviews all fair value determinations.” 14. How to Exchange Shares Comment: Please define “excessive exchange” under “How to Exchange Shares.” Response: Agreed. The requested disclosure has been added. See page 11 of the enclosed prospectus. 15. Investment Manager Comment: Please disclose the fee that CCM Advisors will pay SKBA, the Fund’s Investment Manager. Ms. Kimberly Browning December 3, 2004 Page 5 Response: Agreed. The following disclosure has been added: “CCM Advisors will pay SKBA an annual fee based on the Fund’s average daily net assets. That fee will be equivalent to 0.25% of the Fund’s average daily net assets.” See page 18 of the enclosed prospectus. 16. Prior Performance of SKBA Comment: Under “Prior Performance of SKBA,” please define “SRV composite.” Response: Agreed. The requested disclosure has been added. See page 21 of the enclosed prospectus. Statement of Additional Information 1. Principal Investment Strategies Comment: Under “Types of Equity Securites,” please verify that the Fund uses those securities as part of its principal investment strategy. Response: Agreed. The Fund does not use all of the securities included in that section as part of its principal investment strategy. We moved that disclosure to “Non-Principal Investment Strategies.” We revised the disclosure under “Principal Investment Strategies” to include only the equity securities that the Fund uses as part of its principal investment strategy. See pages 1 and 6 of the enclosed SAI. 2. ADRs Comment: Please disclose that while the Fund may invest up to 15% of its total assets in ADRS, it does not currently intend to do so. Please include additional disclosure on the Fund’s investment in ADRs, including whether the Fund may invest in sponsored or unsponsored ADRs. Response: Agreed. The requested disclosure has been added. See pages 7-8 of the enclosed SAI. 3. Leverage Comment: Add the following disclosure: “The Fund does not use leverage.” Response: Agreed. The requested disclosure has been added. See page 16 of the enclosed SAI. Ms. Kimberly Browning December 3, 2004 Page 6 * * * * * On behalf of the Fund, I acknowledge that the Fund is responsible for the adequacy and accuracy of the disclosure in the filings; Staff comments or changes to disclosure in response to Staff comments in the filings reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filing; and the Fund may not assert Staff comments as a defense in an proceeding initiated by the Commission or any person under the federal securities laws of the United States. * * * * * We believe that this information responds to all of your comments. We intend to file the amendment to the Fund’s registration statement pursuant to Rule 485(b) today. As we agreed, if you have any additional comments to the registration statement, those comments will be addressed in the Fund’s Rule 497 filing. Please call me to confirm the adequacy of our response at 312/807-4219. Very truly yours, /s/ Laura E. Simpson Laura E. Simpson Enclosures Copy to Savitri P. Pai, Esq.