FAF ADVISORS, INC.
800 Nicollet Mall RICHARD J. ERTEL
BC-MN-HO5F COUNSEL
Minneapolis, MN 55402 Direct line: (612) 303-7987
Fax: (612) 303-4223
December 20, 2007
VIA EDGAR
Mr. Richard Pfordte
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 related to Post-Effective Amendment to
Registration Statement (No. 88) filed with the Securities and Exchange
Commission ("SEC") on October 3, 2007
Dear Mr. Pfordte:
The purpose of this letter is to respond to the disclosure comments transmitted
by the SEC Staff by telephone on December 18, 2007, regarding the
above-referenced amendment to the registration statement for First American
Investment Funds, Inc. ("FAIF") related to the addition of a new series, Global
Infrastructure Fund (the "Fund"). Following is our response to the comments,
which appear in bold-face type below.
PROSPECTUS COMMENTS
1. IN THE DEFINITION OF "INFRASTRUCTURE-RELATED COMPANIES," UNDER "PRINCIPAL
INVESTMENT STRATEGIES," PROVIDE FURTHER DEFINITION OF THE TERM "FINANCING."
We have revised the sentence to read:
Infrastructure-related companies are defined as companies that derive
at least 50% of their revenues or profits from the ownership,
development, construction, or operation of infrastructure assets or
financing of infrastructure-related companies, or have at least 50% of
the fair market value of their assets invested in infrastructure
assets.
2. YOUR REVISED DEFINITION OF "INFRASTRUCTURE ASSETS" IS STILL TOO BROAD IN
THE STAFF'S OPINION. HOW DO SHIPPING, TIMBER AND ALTERNATIVE ENERGY RELATE
TO THE "INFRASTRUCTURE INDUSTRY"? PLEASE PROVIDE US WITH INDEPENDENT
SOURCES (E.G., MARKET INDICES, THIRD-PARTY RESEARCH) SUPPORTING YOUR
DEFINITION.
We have revised the definition to read:
Infrastructure assets are the physical structures and networks upon
which the operation, growth and development of a community depends,
which includes water, sewer, and energy utilities; transportation and
communication networks; health care facilities, government
accommodations, and other public service facilities; and shipping,
timber, steel, alternative energy, and other services and raw materials
necessary for the construction and maintenance of these physical
structures and networks.
In addition to the above changes, we are adding the following to the
prospectus under "More about the Fund--Investment Strategies and Other
Investment Matters--Investment Strategies" to provide further definition of
"infrastructure assets."
Under normal market conditions, Global Infrastructure Fund invests
primarily (at least 80% of its net assets, plus the amount of any
borrowings for investment purposes) in equity securities issued by U.S.
and non-U.S. infrastructure-related companies. Infrastructure-related
companies may include, but are not necessarily limited to, those
companies that are active in utilities (including electricity
generation, transmission and distribution, gas and transmission, water
distribution, and sewage treatment), transportation services (including
toll roads, bridges, tunnels, parking facilities, railroads, rapid
transit links, airports, air traffic control, refueling facilities and
seaports), communication networks (broadcast and wireless towers,
cable, fibre optic and satellite networks), social assets (including
courthouses, hospitals, schools, school housing, correctional
facilities, stadiums and subsidized housing), and those companies whose
products and services are related to the infrastructure industry (such
as manufacturers and distributors of building supplies and financial
institutions that issue or service debt secured by infrastructure
assets).
Below are three independent sources we believe to be supportive of our
description of "infrastructure assets." We are providing you with copies of
each report via electronic mail.
- "Alternative Benchmarks: Macquarie Global Infrastructure,"
FTSE Global Research, March 2007.
- "Meeting the World's Need for Infrastructure Investment," Credit
Suisse, April 2006
- "Investing in Infrastructure," Linda McDonald, Non-Traditional
Research, Rogers Casey, January 2007.
3. IN YOUR RESPONSE TO PROSPECTUS COMMENT 6, DATED DECEMBER 13, 2007, RELATED
TO ITEM 6(a)(3) OF FORM N-1A, YOU ADDED THE SENTENCE, "[T]HE FUND DOES NOT
CALCULATE ITS NAV ON NATIONAL HOLIDAYS, OR ANY OTHER DAYS, ON WHICH THE NEW
YORK STOCK EXCHANGE IS CLOSED FOR TRADING." ADD "AS PERMITTED BY THE SEC"
TO THE END OF THIS SENTENCE.
We have modified the sentence as requested.
4. UNDER "PURCHASE, REDEMPTION, AND EXCHANGE PROCEDURES--PURCHASING CLASS A
SHARES," ON PAGE 11, IT READS, "THE FUND ALSO HAS THE RIGHT TO REJECT ANY
PURCHASE ORDER." THE STAFF'S POSITION ON THIS TYPE OF POLICY IS THAT THE
FUND SHOULD REJECT THE PURCHASE WITHIN TWO DAYS OR LESS AND THAT THE POLICY
SHOULD BE STATED IN THE PROSPECTUS.
PLEASE MODIFY THIS LANGUAGE ACCORDINGLY.
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The Fund's administrator has reasonable service level standards and
controls in place to help ensure that all Fund transactions are processed
with the quality and timeliness that our investors demand, including the
processing of purchase order rejections. In order to satisfy the Staff's
new position on the handling of purchase order rejections, the
administrator would be required to make certain operational adjustments.
Before taking such a step, we note that, where the Fund and administrator's
operations are unable to prevent a complaint from occurring in the first
place, both the Fund and the SEC have policies and procedures in place to
handle investor and prospective investor complaints to ensure that no
investor or prospective investor is harmed. The complaint handling process
is the final safeguard that supports the Fund's overriding desire to meet
and exceed the service expectations that our investors and the market
demand. We also note that, after reviewing the prospectus disclosure of a
number of other funds, we have not yet found any other funds that have
included disclosure describing its processing turnaround standards for
rejection of purchase orders. Given the lack of formal, written SEC
guidance on the matter, the operational changes that the Staff's position
may require of the fund's administrator, the safeguards currently in place,
and the lack of other funds' disclosing such a policy in their prospectus,
we respectfully request that the Staff's request be withdrawn until the
time that such guidance is provided.
SAI COMMENTS
1. UNDER "DISCLOSURE OF PORTFOLIO HOLDINGS--NONPUBLIC DISCLOSURE--DISCLOSURE
WITHIN FAF ADVISORS AND ITS AFFILIATES AND TO FUND DIRECTORS," IT READS,
"(b) TO INDIVIDUALS EMPLOYED BY AFFILIATES OF FAF ADVISORS WHO ARE NOT
OTHERWISE ENTITLED TO RECEIVE SUCH INFORMATION." THE DISCLOSURE FURTHER
DESCRIBES THE CONDITIONS THAT MUST BE SATISFIED BEFORE UNDISCLOSED
PORTFOLIO HOLDINGS MAY BE PROVIDED TO SUCH INDIVIDUALS. ADD DISCLOSURE TO
CLARIFY THAT THESE INDIVIDUALS ARE SUBJECT TO A DUTY NOT TO TRADE ON SUCH
INFORMATION.
We have modified the sentence as follows:
"if (1) such individuals are subject to FAF Advisors Code of Ethics, or
that of an affiliate, which imposes a duty not to trade on such
information. . . ."
In connection with the receipt of the foregoing comments from the staff of the
SEC with respect to the above-referenced filings, FAIF hereby acknowledges that:
1. FAIF 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. FAIF 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 have any questions or comments regarding any of our responses, please
contact me at your earliest convenience at 612-303-7987. Thank you for your help
with this filing.
Sincerely,
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/s/ Richard J. Ertel
Richard J. Ertel
Assistant Secretary
First American Investment Funds, Inc.
cc: Ms. Kimberly Browning
Office of Disclosure and Review
Division of Investment Management
Securities and Exchange Commission
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