[Federal Register Volume 60, Number 154 (Thursday, August 10, 1995)]
[Notices]
[Pages 40875-40876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19716]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-21268; 812-8892]


TIFF Investment Program, Inc. and Foundation Advisers Inc.; 
Notice of Application

    Dated: August 3, 1995.
Agency: Securities and Exchange Commission (``SEC'').

Action: Notice of application for exemption under the Investment 
Company Act of 1940 (the ``Act'').

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Applicants: TIFF Investment Program, Inc. (``TIP'') and Foundation 
Advisers Inc. (``FAI'').

Relevant Act Sections: Order requested under section 6(c) for an 
exemption from section 15(a) and rule 18f-2.

Summary of Application: TIP is a registered investment company advised 
by FAI. FAI oversees the selection of other investment advisers for the 
TIP portfolios, monitors such investment advisers, and allocates assets 
among them. The order would permit an investment adviser other than FAI 
to serve as an investment adviser to one or more portfolios of TIP 
without receiving prior shareholders approval.

Filing Dates: The application was filed on March 18, 1994, and amended 
on July 6, 1994, October 21, 1994, and July 19, 1995.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on August 29, 1995, 
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 SEC's 
Secretary.

Addresses: Secretary, SEC, 450 Fifth Street NW., Washington, DC 20549. 
Applicants, c/o AMT Capital Services, Inc., 430 Park Avenue, 17th 
Floor, New York, New York 10022.

For Further Information Contact: Marc Duffy, Senior Attorney, at (202) 
942-0565, or C. David Messman, Branch Chief, at (202) 942-0564 
(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 from 
the SEC's Public Reference Branch.

Applicants' Representations

    1. TIP is a registered open-end management investment company 
consisting of seven series: TIFF U.S. Equity Fund, TIFF International 
Equity Fund, TIFF Emerging Markets Fund, TIFF Bond Fund, TIFF Short-
Term Fund, TIFF Global Equity Fund, and TIFF Multi-Asset Fund (each a 
``Fund,'' and together, the ``Funds''). Investment in TIP is available 
only to grantmaking foundations and other organizations that qualify 
for exemption from federal income taxation under Section 501(c)(3) of 
the Internal Revenue Code of 1986 (``501(c)(3) organizations''), other 
than educational endowments.
    2. FAI is registered as an investment adviser under the Investment 
Advisers Act of 1940. FAI serves as investment adviser for the TIP 
Funds. FAI is a not-for-profit corporation the purpose of which is to 
facilitate investment by foundations and other 501(c)(3) organizations, 
other than educational endowments, in securities and other assets. The 
fee schedule between TIP and FAI reflects the essentially cost-
recovery, not-for-profit orientation of the undertaking.
    3. Applicants believe that returns can be enhanced by careful 
selection and blending of styles of several investment managers within 
a single asset class. Accordingly, the Funds are structured as multi-
manager investment vehicles for implementation of long-term asset 
allocation strategies. Investment advisory services for each Fund will 
be provided by two or more outside money managers, each of whom will 
have different but complementary styles and specific, targeted 
performance objectives. Applicants believe that TIP's use of multiple 
managers for each Fund will be a principal reason that foundations will 
invest in the TIP Funds.
    4. Applicants seek an exemption from section 15(a) and rule 18f-2 
to permit an investment adviser other than FAI (a ``Money Manager'') to 
serve as an investment adviser to one or more series funds established 
and maintained by TIP under a written contract that has not been 
approved by a vote of the majority of the outstanding voting securities 
of the TIP series, including a contract that has terminated as a result 
of its ``assignment.'' Although shareholders will not vote on Money 
Manager changes, applicants will provide shareholders with an 
information statement that includes all the information that would be 
included in proxy statement within 60 days of the hiring of any new 
Money Manager or the implementation of any proposed material change in 
a Money Manager contract.
    5. FAI bears responsibility for identifying, evaluating, selecting, 
and monitoring Money Managers, formulating and refining objectives and 
guidelines appropriate to each Money Manager, and evaluating and 
negotiating advisory fees. To discharge its duties, FAI must recommend 
the replacement of Money Managers, and propose changes in the agreement 
between each Money Manager and the TIP Fund that employs it.
    6. TIP will rely on FAI to monitor the performance of each Money 
Manager employed by TIP, as well as other attributed that could affect 
a Money Manager's future performance (e.g., growth in assets under 
management, personnel turnover, etc.). Applicants believe that it is in 
the best interest of TIP's shareholders for TIP's directors to be able 
to respond promptly to FAI's recommendations by negotiating changes in 
Money Managers' contracts or, if necessary, by adding one or more new 
Money Managers.

[[Page 40876]]


Applicants' Legal Analysis

    1. Section 15(a) makes it unlawful for any person to act as 
investment adviser to a registered investment company except pursuant 
to a written contract that has been approved by a majority of the 
investment company's outstanding voting securities. Rule 18f-2 provides 
that each series or class of stock in a series company affected by a 
matter must approve such matter if the Act requires shareholder 
approval.
    2. Applicants believe the Funds would incur substantial unnecessary 
expenses if they were required to obtain shareholder approval of Money 
Manager changes deemed necessary for the effective functioning of TIP's 
multi-manager program. Further, the delay associated with holding a 
meeting solely for this purpose would hamper FAI in performing its 
manager selection and allocation duties.
    3. TIP's multi-manager structure is prominently featured in its 
Prospectus and Statement of Additional Information. Descriptions of the 
criteria used by FAI to select Money Managers and to establish 
appropriate compensation structures for the Money Managers, as well as 
descriptions of each Money Manager, are included in TIP's Prospectus 
and Statement of Additional Information.\1\

    \1\ Since TIP commenced operations in May 1994, it has disclosed 
in its prospectus that it was seeking an exemptive order from the 
SEC exempting it from the requirement that each agreement between 
TIP and a Money Manager be approved by a vote of a majority of the 
shareholders of the affected Fund.
    4. Given TIP's multi-manager structure, a decision to hire a new 
Money Manager for the TIP Funds is closely analogous to the decision by 
a money management firm to hire another portfolio manager or analyst. 
Under TIP's investment advisory agreements, the duties and 
responsibilities of a Money Manager employed by TIP is limited to the 
management of a defined portion of a Fund's assets allocated to the 
Money Manager by FAI. No Money Manager has responsibility for the on-
going administration and corporate maintenance of TIP or for the 
servicing of its shareholders, those functions being exclusively the 
responsibility of FAI and AMT Capital Services, Inc., which acts 
pursuant to contract with TIP as administrator and distributor of the 
TIP Funds.
    5. The relationship between FAI acting on behalf of TIP on the one 
hand, and a Money Manager on the other, is entirely at arm's length. 
The Money Managers employed by TIP have not sponsored the TIP Funds. 
The order will be conditioned to ensure that there can be no officer or 
director of TIP or FAI who will own (other than through a pooled 
investment vehicle) any interest in a Money Manager except for 
ownership of less than 1% of the outstanding securities of a publicly-
traded company that is a Money Manager or an entity that controls, is 
controlled by, or is under common control with a Money Manager.
    6. Section 6(c) of the Act provides that the SEC may exempt any 
person, security, or transaction from any provision of the Act, if and 
to the extent that such exemption is necessary or appropriate in the 
public interest and consistent with the protection of investors and the 
policies and purposes fairly intended by the policies and provisions of 
the Act. Applicants believe that the requested relief meets this 
standard.

Applicants' Conditions

    Applicants agree that the requested exemption will be subject to 
the following conditions:
    1. FAI will not enter into a Money Manager contract with any Money 
Manager that is an affiliated person (as defined in section 2(a)(3) of 
the Act) of TIP or FAI other than by reason of serving as a Money 
Manager to one or more of the Funds (an ``Affiliated Money Manager'') 
without such agreement, including the compensation to be paid 
thereunder, being approved by the shareholders of the applicable Fund.
    2. At all times, a majority of the directors of TIP will be persons 
each of whom is not an ``interested person'' of TIP (as defined in 
section 2(a)(19) of the Act) (the ``Independent Directors''), and the 
nomination of new or additional Independent Directors will be placed 
with the discretion of the then existing Independent Directors.
    3. When a Money Manager change is proposed for a Fund with an 
Affiliated Money Manager, the directors of TIP, including a majority of 
the Independent Directors, will make a separate finding, reflected in 
TIP's board minutes, that such change is in the best interests of the 
Fund and its shareholders and does not involve a conflict of interest 
from which FAI or the Affiliated Money Manager derives an inappropriate 
advantage.
    4. FAI will provide general management and administrative services 
to TIP, and, subject to review and approval by TIP's directors, will: 
(a) set the Funds' overall investment strategies; (b) select Money 
Managers; (c) allocate and, when appropriate, reallocate the Funds' 
assets among Money Managers; (d) monitor and evaluate the performance 
of Money Managers; and (e) ensure that the Money Managers comply with 
TIP's investment objectives, policies, and restrictions.
    5. New Funds of TIP created after the issuance of the order will 
disclose their reliance on the order in their prospectuses and will 
have such reliance approved by consent of their sole shareholder.
    6. Within 60 days of the hiring of any new Money Manager or the 
implementation of any proposed material change in a Money Manager 
contract, FAI will furnish shareholders all information about a new 
Money Manager or Money Manager contract that would be included in a 
proxy statement. Such information will include any change in such 
disclosure caused by the addition of a new Money Manager or any 
proposed material change in the Fund's Money Manager contract. FAI will 
meet this condition by providing shareholders, within 60 days of the 
hiring of the Money Manager or the implementation of any material 
change to the terms of a Money Manager contract, with an information 
statement meeting the requirements of Regulation 14C and Schedule 14C 
under the Securities Exchange Act of 1934 (the ``Exchange Act''). The 
information statement also will meet the requirements of Schedule 14A 
under the Exchange Act.
    7. No director or officer of TIP or FAI will own directly or 
indirectly (other than through a pooled investment vehicle that is not 
controlled by any such director or officer) any interest in a Money 
Manager except for: (a) ownership of interests in FAI or any entity 
that controls, is controlled by, or is under common control with FAI; 
or (b) ownership of less than 1% of the outstanding securities of any 
class of equity or debt of a publicly-traded company that is either a 
Money Manager or an entity that controls, is controlled by, or is under 
common control with a Money Manager.
    8. TIP will disclose in all prospectuses relating to any Fund the 
existence, substance, and effect of any order granted pursuant to the 
application.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 95-19716 Filed 8-9-95; 8:45 am]
BILLING CODE 8010-01-M