SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] Preliminary information statement [ ] Confidential, for use of
the Commission only
(as permitted by
Rule 14c-5(d)(2))
[X] Definitive information statement
TIFF INVESTMENT PROGRAM, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
TIFF INVESTMENT PROGRAM, INC.
TIFF EMERGING MARKETS FUND
2405 Ivy Road
Charlottesville, Virginia 22903
INFORMATION STATEMENT
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WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
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This Information Statement is being furnished to all persons owning shares
(members) of TIFF Emerging Markets Fund (the Fund), a Fund of the TIFF
Investment Program, Inc. (TIP), to provide such members with information
regarding an amendment to the money manager agreement between Emerging Markets
Management, LLC (EMM) and TIP. On March 1, 2001, TIP's board of directors
unanimously approved an amendment to the money manager agreement (the EMM
amendment) that, as more fully described herein, replaces the Fund's
performance-based fee arrangement with an asset-based fee. The EMM amendment
has been fully executed on behalf of TIP (for the accounts of the Fund) and
EMM, and it now governs the fee relationship between the Fund and EMM.
TIP was not required to obtain the approval of the Fund's members before
entering into the EMM amendment because TIP has obtained an exemptive order
(the Order) from the Securities and Exchange Commission exempting TIP from
certain provisions of the Investment Company Act of 1940, as amended (the 1940
Act) and the regulations thereunder that would otherwise mandate such approval.
(The Order permits TIP to enter into new agreements or amend existing
agreements with money managers without obtaining member approval, but the
exemption does not apply to the advisory agreement with TIP's investment
advisor, Foundation Advisers, Inc., or any amendments to such agreement.) This
Information Statement is being provided to all members as required by one of
the conditions of the Order.
The board of directors of TIP expects to mail this Information Statement to
members on or about May 1, 2001.
FUND INFORMATION
MEMBER INFORMATION. As of April 2, 2001, the Emerging Markets Fund had
outstanding 6,545,373 shares of beneficial interests of common stock
representing a total net asset value of $39,233,710, each dollar of beneficial
interest being entitled to one vote.
As of April 2, 2001, the following members owned of record or beneficially 5%
or more of the shares of common stock of the Fund:
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF FUND
- ------------------- ----------------------- -------
Mayo Foundation 1,967,939 30.1%
200 First Street, SW
Rochester, MN 55905
Pew Memorial Trust 1,469,013 22.4%
c/o Glenmede
1 Liberty Place, Suite 1200
1650 Market Street
Philadelphia, PA 19103
The Commonwealth Fund 653,114 10.0%
One E. 75th Street
New York, NY 10021
William T. Grant Foundation, 523,417 8.0%
Inc.
570 Lexington Avenue,
18th Floor
New York, NY 10022-6837
Foundation for Seacoast Health 376,700 5.8%
100 Campus Drive, Suite 1
Portsmouth, NH 03801
The Fund will furnish, without charge, a copy of TIP's annual report for the
period ended December 31, 2000 to any member upon request. To request a copy,
please write to TIP at 2405 Ivy Road, Charlottesville, Virginia 22903 or call
TIP at (800) 984-0084.
ADMINISTRATOR AND DISTRIBUTOR. Investors Capital Services, Inc., the address of
which is 600 Fifth Avenue, 26th Floor, New York, New York 10020, serves as the
Fund's administrator. First Fund Distributors, Inc., the address of which is
4455 East Camelback Road, Suite 261 E, Phoenix, Arizona 85018, serves as the
Fund's distributor.
INVESTMENT ADVISOR AND MONEY MANAGERS. TIP's executive offices are located at
2405 Ivy Road, Charlottesville, Virginia 22903. The Fund's investment advisor
is Foundation Advisers, Inc. (FAI), a registered investment advisor with an
address at 2405 Ivy Road, Charlottesville, Virginia 22903. Pursuant to its
investment advisory agreement with TIP (the advisory agreement), FAI (a)
develops investment programs, selects money managers who each act as
sub-advisors with respect to a portion of each of the Fund's assets, and
monitors money manager investment activities and results; (b) provides or
oversees the provision of all general management, investment advisory, and
portfolio management services to TIP; and (c) provides TIP with office space,
equipment, and personnel.
At a meeting of TIP's board of directors held on March 1, 2001, the board
unanimously approved the EMM amendment, which replaced the Fund's
performance-based fee structure with an asset-based fee. The following summary
provides information about EMM, its investment strategy, and the terms and
conditions of the money manager agreement between EMM and TIP and the EMM
amendment. Please see the section of this Information Statement entitled
"Evaluation and Action by TIP Directors" for
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information regarding the deliberations of the board of directors concerning
approval of the EMM amendment.
INVESTMENT MANAGEMENT SERVICES PROVIDED BY EMM
Pursuant to a money manager agreement dated January 1, 1997, by and between EMM
and TIP (the EMM agreement), EMM provides professional investment equity
management to the Fund and manages the assets of the Fund TIP allocates to EMM.
TIP's board of directors provides EMM with a set of investment management
guidelines that EMM must follow in investing the assets of the Fund. EMM has
managed assets for the Fund since 1994.
TERMS AND CONDITIONS OF THE EMM AGREEMENT
The first money manager agreement with EMM was unanimously approved by TIP's
board of directors on September 13, 1994. This agreement was later amended and
approved unanimously by TIP's directors on December 10, 1996. Members are not
being asked to approve the EMM agreement.
MONEY MANAGEMENT FEE. As compensation for the services performed and the
facilities and personnel provided by EMM pursuant to the EMM agreement, prior
to March 1, 2001, the Fund paid EMM a fee according to the following schedule:
Fee = 105 + [0.394 x (Excess Return - 205)]; subject to Floor of 40
b.p., Cap of 300 b.p.
For purposes of this performance fee calculation, the term Excess
Return shall be defined as the return of the money manager that
exceeds the return of the manager's benchmark, which is the MSCI
Emerging Markets Free Index.
BASIC TERMS. The EMM agreement has an initial term of two years and provides
that it will thereafter continue in effect from year to year only if such
continuation is specifically approved at least annually by (a) either (i) a
vote of a majority of the board of directors of TIP or (ii) a vote of a
majority of the outstanding voting securities of the Fund and (b) a vote of a
majority of the Fund's directors who are not interested persons as defined in
the 1940 Act (the independent directors). The EMM agreement provides that it
may be terminated by the Fund, by TIP's board of directors, or by a vote of a
majority of the outstanding voting securities of the Fund, or by EMM, in each
case at any time upon 30 days' written notice to the other party. In addition,
the EMM agreement provides for its automatic termination in the event of
assignment.
The EMM agreement provides that EMM is required to manage the securities held
by the Fund, subject to the supervision and stated direction of FAI, the Fund's
investment advisor, and ultimately TIP's board of directors, in accordance with
the Fund's investment objective and policies; make investment decisions for the
Fund; and place orders to purchase and sell securities on behalf of the Fund.
The EMM agreement provides that EMM is not liable to the Fund for any error of
judgment but shall be liable to the Fund for any loss resulting from willful
misfeasance, bad faith, or gross negligence by EMM in providing services under
the EMM agreement or from reckless disregard by EMM of its obligations and
duties under the EMM agreement.
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AMENDMENT TO EMM AGREEMENT
The EMM amendment replaces the performance-based fee described above with an
asset-based fee of 1.25% per annum for the first US$100 million of the Fund's
average daily net assets and 1.00% in excess of US$100 million of the Fund's
average daily net assets. The replacement of the performance-based fee with an
asset-based fee is intended to lower the expense ratio of the Fund.
For the year ended December 31, 2000, EMM was paid $1,189,543 by the Fund under
the performance-based fee structure described above. If the asset-based fee
described in the EMM amendment had been in place for the year ended December
31, 2000, the Fund would have paid EMM $460,921.
BACKGROUND INFORMATION REGARDING EMM
EMM is located at 1001 Nineteenth Street North, 16th Floor, Arlington, Virginia
22209. The principal executive officers of EMM and their principal occupations
are as follows:
NAME POSITION
- ---- --------
Antoine W. van Agtmael President, CIO, and portfolio manager
Felicia Morrow Managing director and portfolio manager
Michael Duffy Managing director
EVALUATION AND ACTION BY TIP DIRECTORS
At a meeting on March 1, 2001, the directors of TIP were informed that
management wished to replace the Fund's performance-based fee structure with an
asset-based fee. The board considered that the Fund's performance-based fee was
calculated using average assets over a rolling 12-month period, subject to a
two-month lag, and that EMM's fee for the month of January 2001 had been based
on average assets over the 12-month period ending November 30, 2000. Under this
method, the combination of declining Fund performance and net cash withdrawals
from the Fund in recent months had resulted in inflated fees. The board
considered that the proposed asset-based fee would eliminate the two-month lag,
thereby reducing the Fund's overall fee, and determined that replacing the
performance-based fee with an asset-based fee would be in the best interests of
the Fund and its members.
Based upon its review, the board of directors concluded that the EMM amendment
was reasonable, fair, and in the best interests of the Fund and its members,
and that the fees provided in the EMM amendment were fair and reasonable, as
such fees were intended to lower the overall expense ratio of the Fund. In the
board's view, retaining EMM to serve as money manager of the Fund under the
terms of the EMM amendment was desirable and in the best interests of the Fund
and its members. Accordingly, after consideration of the above factors and such
other factors and information as it deemed relevant, the board of directors,
including all of the independent directors in attendance at the meeting,
unanimously approved the EMM amendment.
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