[FAF ADVISORS LOGO]
800 Nicollet Mall RICHARD J. ERTEL
BC-MN-HO5F COUNSEL
Minneapolis, MN 55402 Direct line: (612) 303-7987
Fax: (612) 303-4223
April 17, 2007
VIA EDGAR
Ms. Kimberly Browning
Office of Disclosure and Review
Division of Investment Management
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: First American Investment Funds, Inc.
SEC File Nos. 033-16905 and 811-05309
Response to Staff Comments on Preliminary Proxy Statement
(Form PRE 14A) Filed with the Commission on April 2, 2007
Dear Ms. Browning:
The purpose of this letter is to respond to the comments that you transmitted by
telephone on April 10, 2007 regarding the preliminary proxy statement for the
above-listed registrant (the "Registrant"), related to International Select Fund
(the "Fund"), a series of the Registrant. Following is our response to your
comments, which appear in bold-face type below.
1. ARE THE SERVICES TO BE PERFORMED UNDER THE PROPOSED SUB-ADVISORY AGREEMENT
WITH HANSBERGER GLOBAL INVESTORS, INC. ("HGI") THE SAME AS THE SERVICES
PERFORMED UNDER THE PRIOR SUB-ADVISORY AGREEMENT WITH HGI?
Yes, the services are the same under both the proposed and prior
sub-advisory agreements.
2. EXPLAIN IN THE PROXY STATEMENT WHETHER AND TO WHAT EXTENT THE REGISTRANT
AND THE ADVISOR WILL UTILIZE THE "MANAGER OF MANAGERS" STRUCTURE.
We have added the following disclosure regarding the Fund's multi-manager
approach and the Registrant's intent to utilize the "manager of managers"
structure going forward.
o The following replaces the first paragraph under "Background" on page 6
of the proxy statement:
The Fund employs a "multi-style, multi-manager" approach
whereby the Advisor allocates portions of the Fund's assets to
different sub-advisors who employ distinct investment styles. The
Advisor currently has agreements in place with three sub-advisors,
including HGI, who each manage a portion of the Fund's assets.
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o The following has been added as the first sentence of the first
paragraph under "Application of the Proposed Manager-of-Managers
Arrangement by the Fund" on page 8 of the proxy statement:
The Advisor intends to continue managing the Fund using the
"multi-style, multi-manager" approach, discussed above, and currently
must receive the approval of Fund shareholders to employ a new
sub-advisor, replace an existing sub-advisor with a new sub-advisor,
materially change the terms of a sub-advisory agreement, or continue
the employment of an existing sub-advisor when that sub-advisory
agreement terminates because of an assignment of the agreement.
3. IN THE DISCUSSION OF THE "MANAGER-OF MANAGERS" PROPOSAL, STATE THAT IF
SHAREHOLDERS APPROVE THE PROPOSAL THEY WILL NO LONGER HAVE THE RIGHT TO
VOTE ON SUB-ADVISORY ARRANGEMENTS BETWEEN THE FUND AND UNAFFILIATED
SUB-ADVISORS.
In response to this comment, the following has replaced the first two
sentences of the third paragraph under "Application of the Proposed
Manager-of-Managers Arrangement by the Fund" on page 8 of the proxy
statement:
If Proposal 2 is approved by shareholders of the Fund and the
Fund obtains an Order from the SEC, or the SEC adopts the Rule,
shareholders will no longer be asked to approve new sub-advisory
agreements and amendments to existing sub-advisory agreements. However,
the Board will continue to oversee the sub-advisor selection process to
help ensure that the interests of shareholders are protected whenever
the Advisor would seek to select a sub-advisor or modify a sub-advisory
agreement.
4. DISCLOSE IN THE PROXY STATEMENT HOW YOU ACCOUNT FOR PROXY CARDS THAT HAVE
BEEN EXECUTED AND RETURNED WITHOUT VOTING INSTRUCTIONS.
This disclosure was included on page 2 of the preliminary proxy statement
and is included on the same page in the definitive proxy statement filed on
April 16, 2007:
If you return an executed proxy card without instructions, your shares
will be voted "FOR" the proposals.
5. DISCLOSE IN THE PROXY STATEMENT HOW ABSTENTIONS AND BROKER NON-VOTES ARE
HANDLED IN RELATION TO A MOTION TO ADJOURN.
The following paragraph has been added to the proxy statement on page 2 to
clarify the handling of abstentions and broker non-votes:
Any abstentions and broker non-votes will be counted as shares
present for purposes of determining whether a quorum is present, but
will not be voted for or against any adjournment or proposal. (Broker
non-votes are shares for which (i) the underlying owner has not voted
and (ii) the broker holding the shares does not have discretionary
authority to vote on the particular matter.) This means that
abstentions and broker non-
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votes effectively will be a vote against adjournment or against any
proposal where the required vote is a percentage of the shares present.
6. PLEASE DISCLOSE IN YOUR RESPONSE WHETHER HGI IS AFFILIATED WITH A
BROKER-DEALER(s) THROUGH WHOM IT EFFECTS TRANSACTIONS ON BEHALF OF THE
FUND. IF HGI DOES EFFECT TRANSACTIONS THROUGH AN AFFILIATED BROKER(s),
CONSIDER DISCLOSING THIS FACT UNDER "COMPARISON OF PRIOR AND PROPOSED
AGREEMENTS--BROKERAGE" ON PAGE 4 OF THE PROXY STATEMENT.
Upon the change of control in HGI's parent, HGI became affiliated with a
number of broker-dealers, but does not execute trades on behalf of the Fund
through such affiliates.
7. UNDER "INVESTMENT PERFORMANCE" ON PAGE 5, CONSIDER MENTIONING THAT HGI HAS
SERVED AS A SUB-ADVISOR TO THE FUND FOR LESS THAN 4 MONTHS.
We modified the first sentence, as follows, to disclose more clearly that
the Prior Agreement was for the initial engagement of HGI and that the
Board could not, therefore, consider HGI's performance in sub-advising a
portion of the Fund's assets.
In considering the Prior Agreement, the Board could not
evaluate the performance of HGI's Sub-Advisory Portfolio since the
Prior Agreement related to the initial engagement of HGI.
The "Investment Performance" section of the proxy statement, referenced in
the Staff's comment, relates to the Board's consideration of the initial
engagement of HGI as a sub-advisor to the Fund. Therefore, we determined
that a reference in this section to the limited time in which HGI has
served as sub-advisor would not be relevant to the discussion in this
section and did not include such a reference.
8. ON PAGE 8, IN THE FIRST SENTENCE OF THE PARAGRAPH FOLLOWING THE BULLETED
LIST, IT READS, "THE RULE ALSO PERMITS THE FUND TO DISCLOSE IN ITS
STATEMENT OF ADDITIONAL INFORMATION ('SAI') THE AGGREGATE COMPENSATION PAID
TO SUB-ADVISORS, WITHOUT DISCLOSING SEPARATELY THE SPECIFIC FEES PAID TO
EACH SUB-ADVISOR." SINCE THE RULE IS NOT FINAL, THE SENTENCE SHOULD BEGIN
"THE RULE WOULD PERMIT . . . ."
This change is reflected in the definitive proxy statement filed April 16,
2007.
9. UNDER "APPLICATION OF THE PROPOSED MANAGER-OF-MANAGERS ARRANGEMENT BY THE
FUND," IN THE FIRST FULL PARAGRAPH ON PAGE 8, IT READS, "THESE COSTS ARE
OFTEN BORNE BY THE FUND (AND THEREFORE INDIRECTLY BY THE FUND'S
SHAREHOLDERS)." PLEASE PROVIDE THE SUPPORT FOR THIS STATEMENT IN YOUR
RESPONSE TO US.
The Advisor is not contractually obligated to cover the expenses associated
with a shareholder proxy. Section 3 of the Investment Advisory Agreement
between FAF Advisors and the Registrant, dated April 2, 1991, as amended,
states that "[T]he Advisor . . . shall not be responsible for costs of . .
. shareholder meetings . . . ." However, in some cases, the
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Advisor or another party may agree to pay the expenses associated with a
proxy, as is the case with this proxy.
In lieu of completing an analysis of how frequently the Fund would pay the
expenses associated with a proxy, we modified the paragraph containing the
above-referenced language, as follows:
The process of seeking shareholder approval is
administratively expensive, and may cause delays in executing changes
that the Board and the Advisor have determined are necessary or
desirable. Some of the costs may be borne by the Fund (and therefore
indirectly by the Fund's shareholders). If shareholders approve the
policy authorizing a manager-of-managers arrangement for the Fund, the
Board would be able to act more quickly and with less expense to
appoint an unaffiliated sub-advisor, in instances in which the Board
and the Advisor believe that the appointment would be in the best
interests of the Fund and its shareholders.
In connection with the review of the above-referenced filing by the staff of the
Securities and Exchange Commission (the "Commission"), the Registrant hereby
acknowledges that:
1. The Registrant is responsible for the adequacy and accuracy of the
disclosure in the filing.
2. Staff comments or changes to disclosure in response to staff comments
in the filing reviewed by the staff do not foreclose the Commission
from taking any action with respect to the filing.
3. The Registrant may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
If you need anything further, please contact me at your earliest convenience at
612-303-7987. Thank you for your help.
Sincerely,
/s/ Richard J. Ertel
Richard J. Ertel
Assistant Secretary to the Registrant