DEF 14A
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a36732.txt
FIRST EAGLE FUNDS, INC.
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
FIRST EAGLE FUNDS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[LOGO OF FIRST EAGLE FUNDS] IMPORTANT
PROXY
INFORMATION
February 13, 2004
Dear Shareholder:
We are writing to inform you that a Special Meeting of Shareholders for
First Eagle Funds, Inc., a Maryland corporation (the 'Fund'), will be held at
the Warwick Hotel, 65 West 54th Street, New York, New York, at 10:00 a.m. on
March 31, 2004. The Meeting has been called in order to vote on a number of
important issues. As a shareholder of the Fund, you have the opportunity to
voice your opinion on these matters.
In recent years a number of mutual funds have reorganized as Delaware
statutory trusts to minimize operating expenses and to obtain favorable
operational flexibility and legal protections for shareholders and trustees.
Your Fund is seeking your approval for this new organizational structure, which
is expected to improve organizational efficiencies and may lower operating
costs. Also, you are being asked to consider a number of other related
proposals, including election of the Board of Trustees of the new Delaware
statutory trust, and changes to certain investment restrictions and similar
limitations.
Your vote will permit your Fund to reorganize as a Delaware statutory trust,
which will be called the First Eagle Funds Trust. Pursuant to this tax-free
reorganization, each portfolio of the Fund will continue to operate with its
same investment objectives and policies, except as described herein.
The Board of Directors of the Fund has fixed the close of business on
January 9, 2004 as the record date for determining shareholders entitled to
receive notice of and to vote at the Meeting. We have enclosed a proxy
statement, proxy card, business reply envelope and voting instructions for your
review. Please look over the material and cast your vote on the proposals set
forth above.
THE FUND'S BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THAT THESE PROPOSALS ARE
IN THE BEST INTERESTS OF THE FUND AND ITS SHAREHOLDERS. THE BOARD URGES YOU TO
VOTE IN FAVOR OF EACH PROPOSAL.
The Fund has enlisted the services of Georgeson Shareholder Communications
Inc., a professional proxy solicitation firm, to assist shareholders with the
proxy process. As the meeting date approaches, you may receive a call from
Georgeson encouraging you to exercise your right to vote.
Again, we urge you to review the enclosed proxy material and vote your
shares utilizing one of the convenient methods found on the proxy card. By
voting your shares, you will help us eliminate the possibility of additional
expenses incurred from further solicitation efforts.
If you have any questions regarding the enclosed material or the execution
of your vote, please call Georgeson Shareholder Communications Inc. toll free at
1-866-831-1631.
We appreciate your time and continued commitment to the First Eagle Funds.
Sincerely,
JOHN P. ARNHOLD and JEAN-MARIE EVEILLARD
Co-Presidents
First Eagle Funds, Inc.
IMPORTANT NEWS
February 13, 2004
FIRST EAGLE FUNDS, INC.
PROXY STATEMENT
Although we recommend that you read the complete Proxy Statement, for your
convenience, we have provided a brief overview of the issues to be voted.
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Q&A
Q: WHY AM I RECEIVING THIS PROXY STATEMENT?
A: The purpose of this Proxy Statement is to seek shareholder approval of four
matters recommended by the Board of Directors:
Proposal 1. The reorganization of the Fund from a Maryland corporation into a
Delaware statutory trust, which will be called the First Eagle Funds Trust;
Proposal 2. The re-election of certain individuals to serve as Directors on the
Board of Directors of the Fund (if the reorganization is approved, these
individuals will also serve as Trustees on the Board of Trustees of the new
Delaware Trust);
Proposal 3. Changes to certain fundamental investment restrictions applicable to
several of the Fund's portfolios; and
Proposal 4. Change of the classification of the First Eagle Gold Fund for
purposes of the Investment Company Act of 1940 from diversified to
non-diversified.
Q: WHY AM I BEING ASKED TO VOTE ON THE REORGANIZATION OF THE FUND AS A DELAWARE
STATUTORY TRUST?
A: The organization of mutual funds as Delaware statutory trusts has certain
advantages over those funds organized as Maryland corporations as it permits
stream-lining the corporate formalities required of management. In turn, this
will provide greater flexibility to respond to future business contingencies,
which may create cost savings and operating efficiencies. This additional
flexibility could help to assure that the new Trust continues to operate under
the most advanced form of organization and may reduce the expense and frequency
of future Shareholders' meetings for non-investment related issues.
A description of key differences between the Fund and the new Trust, including
more detail regarding the additional flexibility that will be available to
management, is included on page 15 of the body of this Proxy Statement.
Q: WHAT IS A DELAWARE STATUTORY TRUST?
A: A statutory trust is a limited liability entity with corporate-like
characteristics and is a very popular form of organization for mutual funds. A
statutory trust may operate with multiple series or portfolios, so that each
portfolio of the Fund can be operated as a separate entity. First Eagle Funds
Trust is being organized in the State of Delaware, which has favorable business
laws.
Q: WILL THE INVESTMENT ADVISER AND PORTFOLIO MANAGERS REMAIN THE SAME?
A: Yes, you can expect the same level of management expertise and high quality
shareholder service to which you've grown accustomed. Arnhold and S.
Bleichroeder Advisers, LLC will continue to advise the portfolios of First Eagle
Funds, Inc., which are the First Eagle Global Fund, the First Eagle Overseas
Fund, the First Eagle U.S. Value Fund, the First Eagle Gold Fund, and the First
Eagle Fund of America. Iridian Asset Management LLC will continue to serve as
subadviser to the First Eagle Fund of America.
The portfolio managers will also remain the same. Jean-Marie Eveillard and
Charles De Vaulx, respectively Co-President and Senior Vice President of the
Fund, will continue to be primarily responsible for the day-to-day management of
the First Eagle Global Fund, First Eagle Overseas Fund, First Eagle U.S. Value
Fund and First Eagle Gold Fund. Harold Levy and David Cohen of Iridian Asset
Management LLC will continue to be primarily responsible for the day-to-day
management of First Eagle Fund of America.
Q: WHAT ABOUT THE INVESTMENT ADVISORY FEES?
A: None of the fees will change as a result of these proposals. Arnhold and S.
Bleichroeder Advisers, LLC will receive the same investment advisory fees as
currently applied to each of the portfolios of the Fund (other than First Eagle
Global Fund for which a slight reduction in fees is contemplated, as described
immediately below).
With respect to the First Eagle Global Fund, the Fund's board of directors and
the investment adviser recently agreed to a new fee. Presently, the Global Fund
pays the investment adviser a 1% fee on the first $25 million of assets and
0.75% on the balance. Effective March 1, 2004, the fee will be reduced to a
level 0.75% of Global Fund's assets.
Q: IS THIS REORGANIZATION A TAXABLE EVENT FOR ME?
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A: No. There will be an opinion of counsel to the effect that there will be no
recognition of gain or loss for a shareholder due to reorganization of the Fund
from a Maryland corporation to a Delaware statutory trust.
Q: ARE YOU RECOMMENDING RE-ELECTION OF THE FUND'S BOARD?
A: Yes. The Board of Directors of the Fund has nominated individuals to serve as
Directors on the Fund's Board of Directors (if the reorganization is approved,
these individuals will also serve as Trustees on the Board of Trustees for the
new Delaware Trust). All of the nominees already serve as Directors on the
Fund's current Board of Directors.
Q: WHAT ARE 'FUNDAMENTAL' INVESTMENT RESTRICTIONS, AND WHY ARE CHANGES PROPOSED
TO CERTAIN OF THESE RESTRICTIONS?
A: The law requires that certain mutual fund investment policies and
restrictions be changed only by a shareholder vote -- even if the changes are
minor. These are referred to as 'fundamental' policies and restrictions. Because
a shareholder vote is already required with respect to Proposals 1 and 2, the
Board considers it efficient to propose changes to certain of the Fund's
fundamental investment policies at the same time. The proposed changes, which
are described individually in the Proxy Statement, apply to First Eagle Global
Fund, First Eagle Overseas Fund, First Eagle U.S. Value Fund and First Eagle
Gold Fund.
Only two fundamental investment restrictions are proposed to be changed
(described in the Proxy Statement as Proposals 3A and 3B), and not all of these
changes will apply to every portfolio of the Fund. (For example, none of the
proposed changes apply to First Eagle Fund of America.) Accordingly, although
all share-holders will vote on the other proposals described above, you should
review the table in the Proxy Statement headed 'Who Votes?' to identify which
investment restriction changes apply to your investment portfolio. You will
vote only on those proposed changes.
The Board also believes that fundamental investment restrictions that are not
legally required to be so designated should be reclassified as
'non-fundamental'. Because non-fundamental investment restrictions may be
changed from time to time by the Board with notice to shareholders, this will
provide greater investment flexibility for the Fund. One such reclassification
is proposed for the First Eagle Global Fund and First Eagle U.S. Value Fund
(described in the Proxy Statement as Proposal 3C).
Q: DO THESE PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS CHANGE THE
INVESTMENT OBJECTIVE OF ANY OF THE FUND'S PORTFOLIOS?
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A: No. The investment objective of each portfolio will remain the same.
Q: WHAT WILL BE THE EFFECT OF THESE PROPOSED CHANGES?
A: The Board does not believe that the proposed changes to the investment
restrictions will result in more than modest restructuring of any of the Fund's
investment portfolios. The changes simply allow the portfolios greater
flexibility in pursuing their current investment objectives. For example, it is
proposed that each of the Fund's portfolios other than First Eagle Fund of
America be permitted to invest in loans made by other parties and that First
Eagle Global Fund and First Eagle U.S. Value Fund be permitted greater
investment flexibility with respect to precious metals investing. The expected
benefits, as well as certain risks, related to these types of investments are
described in the complete Proxy Statement.
Q: WHY ARE CHANGES PROPOSED TO RECLASSIFY THE FIRST EAGLE GOLD FUND AS
NON-DIVERSIFIED?
A: In response to changing market conditions and other considerations affecting
the precious metals industry, especially ongoing consolidation among leading
gold mining companies, the Board of Directors has determined that it is in the
best interests of the Portfolio and its Shareholders to reclassify the Portfolio
as a non-diversified investment company. Doing so should increase the
flexibility available to the Portfolio's managers by allowing them to consider
larger investments on the merits of the relevant companies and without regard to
meeting the specific diversification standards outlined above.
Q: HOW DOES A DIVERSIFIED FUND DIFFER FROM A NON-DIVERSIFIED FUND?
A: A diversified fund is limited in its investment in any one issuer (other than
government securities or securities of other investment companies), with respect
to 75% of its total assets, to an amount not greater in value than 5% of the
value of the fund's total assets and to not more than 10% of the outstanding
voting securities of that issuer. A non-diversified fund is not subject to this
requirement. By law, the diversified status of a fund may be changed only with
shareholder approval.
Q: HOW CAN I VOTE?
A: To vote, you may use any of the following methods:
By Mail. Please complete, date and sign your proxy card before mailing it in
the enclosed postage-paid envelope.
By Internet. Have your proxy card available. Go to the web site on the proxy
card. Enter your control number from your proxy card. Follow the simple
instructions found on the web site.
By Telephone. Have your proxy card available. Call the toll free number on the
proxy card. Enter your control number from your
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proxy card. Follow the simple instructions.
Shareholders can also vote in person at the meeting.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
A: After careful consideration, the Board unanimously recommends that you vote
'FOR' each of Proposals 1, 3 and 4 and 'FOR' each of the nominees to serve as a
Director of the Fund and Trustee of the Trust (as proposed in Proposal 2).
Q: WILL MY VOTE MAKE A DIFFERENCE?
A: Yes. Your vote is needed to ensure that the proposals can be acted upon. Your
immediate response will help save on the costs of further solicitations for a
shareholder vote. We encourage you to participate in the governance of your
Fund.
Q: HOW DO I CONTACT YOU?
A: If you have any questions, call Georgeson Shareholder Communications Inc.
toll free at 1-866-831-1631.
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PLEASE VOTE.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY
SHARES YOU OWN.
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5
FIRST EAGLE FUNDS
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
---------------------
PROXY STATEMENT
---------------------
NOTICE OF MEETING OF SHAREHOLDERS TO BE HELD ON MARCH 31, 2004
This Proxy Statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of First Eagle Funds, Inc. for use at the Special Meeting of Shareholders to be
held on March 31, 2004 at 10:00 a.m. at the Warwick Hotel, 65 West 54th Street,
New York, New York, including any adjournment thereof (the 'Meeting'), for the
purposes set forth in the accompanying Notice of Special Meeting of the
Shareholders (the 'Notice'). This Proxy Statement is expected to be mailed on or
about February 13, 2004 to Shareholders of record on January 9, 2004 (the
'Record Date').
If the accompanying proxy card is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions thereon. If no instructions are given, proxies will be voted FOR
approval of each Proposal as to which the shares represented by proxy are
entitled to vote and in the discretion of the proxies named on the proxy card
with respect to any other matters properly brought before the Meeting or any
adjournment thereof. You may revoke the enclosed proxy at any time prior to the
exercise thereof by submitting a written notice of revocation or subsequently
executed proxy to the Fund at any time prior to the Meeting or at the Meeting to
the Secretary of the Meeting. Signing and mailing the proxy will not affect your
right to give a later proxy or to attend the Meeting and vote your shares in
person.
The cost of this solicitation, including legal, printing, mailing and
telephone solicitation expenses, is expected to be approximately $1 million,
which will be borne by the Fund. The solicitation will be largely by mail but
may include telephonic or oral communications by Georgeson Shareholder
Communications Inc., a professional proxy solicitation firm retained by the Fund
to assist Shareholders with understanding and completing the proxy process.
(Fees payable to Georgeson are estimated to be $383,000.) As the meeting date
approaches, you may receive a call from Georgeson encouraging you to exercise
your right to vote. Regular employees of Arnhold and S. Bleichroeder Advisers,
LLC, the Fund's investment adviser (the 'Adviser'), or DST Systems Inc., the
Fund's transfer agent, may also contact you (at no additional cost to the Fund).
6
GENERAL INFORMATION ABOUT THE FUND:
First Eagle Global Fund ('Global Fund'), First Eagle Overseas Fund
('Overseas Fund'), First Eagle U.S. Value Fund ('U.S. Value Fund'), First Eagle
Gold Fund ('Gold Fund') and First Eagle Fund of America ('First Eagle Fund of
America'), are five separate portfolios (collectively, the 'Portfolios', and
each, a 'Portfolio') of First Eagle Funds, Inc. (the 'Fund'), an open-end
management investment company organized as a Maryland corporation. Each
Portfolio is a separate, diversified portfolio of assets (other than the First
Eagle Fund of America, which is a non-diversified portfolio of assets) and has a
different investment objective which it pursues through separate investment
policies.
The Fund's investment adviser is Arnhold and S. Bleichroeder Advisers, LLC,
New York, NY; its custodian is The Bank of New York, New York, NY; and its
transfer agent is DST Systems, Inc., Kansas City, MO. In those capacities, both
The Bank of New York and DST Systems, Inc. maintain certain financial and
accounting books and records on behalf of the Fund. The Adviser also performs
certain administrative and book-keeping services on behalf of the Fund. The
investment subadviser ('Subadviser') to the First Eagle Fund of America is
Iridian Asset Management LLC, Westport, CT.
The Fund and its business are described in its Prospectus and Statement of
Additional Information and in its most recent Annual and Semi-Annual reports. A
copy of the Fund's Annual Report for the fiscal year ended October 31, 2003 was
mailed to Shareholders on or about December 31, 2003, and a copy of the Fund's
Semi-Annual Report for the semi-annual period ended April 30, 2003, was mailed
to Shareholders on or about June 30, 2003. A copy of the Fund's most recent
Annual and Semi-Annual Reports will be sent to you without charge upon written
request to the Fund, at 1345 Avenue of the Americas, New York, New York, 10105,
or by calling toll-free at 1-800-334-2143. At the close of business on the
Record Date, the net assets of each portfolio of the Fund were as follows:
$5,031,460,833.73 for Global Fund, $5,318,392,292.58 for Overseas Fund,
$121,336,618.79 for U.S. Value Fund, $572,656,338.76 for Gold Fund and
$601,029,733.35 for First Eagle Fund of America. The Fund is not a party to any
pending legal proceedings and no such proceedings are known to be contemplated
by any governmental authorities.
SUMMARY OF PROPOSALS:
During the Meeting, Shareholders of the Fund will vote on the following
Proposals (which are described more fully below):
7
Proposal 1. Changing the domicile of the Fund from Maryland to Delaware and
reorganizing the Portfolios as separate Series of the new Trust;
Proposal 2. Re-electing certain individuals to serve as Directors on the
Board of Directors of the Fund (if the reorganization is approved, these
individuals will also serve as Trustees on the Board of Trustees for the
new Delaware Trust);
Proposal 3. Changing certain of the fundamental investment restrictions
applicable to several of the Fund's Portfolios, as follows:
(3A) Modification of the fundamental investment restriction regarding
making loans by First Eagle Global Fund, First Eagle Overseas Fund,
First Eagle U.S. Value Fund and First Eagle Gold Fund so as to
permit each of these Portfolios to purchase or sell loans and other
direct debt instruments.
(3B) Modification of the fundamental investment restriction regarding
investments in commodities and commodity contracts by First Eagle
Global Fund and First Eagle U.S. Value Fund so as to permit each of
these Portfolios to purchase or sell precious metals, such as gold
or silver, and to purchase or sell precious metal commodity
contracts and options on such contracts.
(3C) Reclassification of the fundamental investment restriction
regarding investments in bank certificates of deposit and similar
instruments by First Eagle Global Fund and First Eagle U.S. Value
Fund as a non-fundamental investment policy; and
Proposal 4. Changing the classification of the First Eagle Gold Fund for
purposes of the Investment Company Act of 1940 from diversified to
non-diversified.
The adoption of these Proposals is intended to promote the ability of the
Fund to adapt to economic, market and regulatory changes without the expense and
delay of costly additional Shareholders meetings, while preserving the basic
investment characteristics and management style of each of the Fund's
Portfolios.
WHO VOTES?
All Shareholders are being asked to vote on Proposals 1 and 2. As to
Proposals 3A, 3B and 3C and Proposal 4, only the Shareholders identified in the
table below are being asked to vote and will vote on each on a
Portfolio-by-Portfolio basis (for example as to Proposal 3A, First Eagle
8
Global Fund Shareholders vote on modifying the restriction as to First Eagle
Global Fund, First Eagle Overseas Fund Shareholders vote on modifying the
restriction as to First Eagle Overseas Fund, First Eagle U.S. Value Fund
Shareholders vote on modifying the restriction as to First Eagle U.S. Value
Fund, and First Eagle Gold Fund Shareholders vote on modifying the restriction
as to First Eagle Gold Fund).
PROPOSAL WHO VOTES?
-------- ----------
1. Reorganization of the Fund All Shareholders
as a Delaware statutory
trust
2. Re-election of the Board All Shareholders
3A. Modification of the Shareholders of Global Fund, Overseas
fundamental restriction Fund, U.S. Value Fund and Gold Fund,
regarding making loans by voting on a Portfolio-by-Portfolio basis
Global Fund, Overseas
Fund, U.S. Value Fund and
Gold Fund
3B. Modification of the Shareholders of Global Fund and U.S. Value
fundamental restriction Fund, voting on a Portfolio-by-Portfolio
regarding making basis
investments in commodities
and commodity contracts by
Global Fund and U.S. Value
Fund
3C. Reclassification as Shareholders of Global Fund and U.S. Value
non-fundamental of the Fund, voting on a Portfolio-by-Portfolio
fundamental investment basis
restriction regarding
investments in bank
certificates of deposit
and similar instruments by
Global Fund and U.S. Value
Fund
4. Reclassification of Gold Shareholders of Gold Fund
Fund as non-diversified
Although it is not anticipated that business other than that contemplated by
these Proposals will be presented at or acted upon at the Meeting, the
accompanying proxy card authorizes the proxy holders to vote according to the
best judgment of each as to any other matter that properly comes before the
Meeting.
QUORUM REQUIREMENT AND ADJOURNMENT:
A quorum of Shareholders is necessary to hold a valid meeting. A quorum for
the Meeting will exist if Shareholders entitled to vote one-third (33 1/3%) of
the issued and outstanding shares of the Fund on the Record
9
Date are present in person or by proxy at the Meeting. Abstentions and 'broker
non-votes' (as described below) will count as shares present at the Meeting for
purposes of establishing a quorum.
Under the rules applicable to broker-dealers, if a broker holds shares in
its name, the broker will be entitled to vote those shares even if it has not
received instructions from the Shareholder on whose behalf the shares are held.
A 'broker non-vote' occurs when a broker has not received voting instructions
from a Shareholder and is barred from voting the shares without Shareholder
instructions because the proposal is non-routine.
If a quorum is not present at the Meeting or a quorum is present but
sufficient votes to approve a Proposal are not received, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those shares represented at the Meeting in person or by proxy.
The persons named as proxies will vote those proxies that they are entitled to
vote FOR a Proposal in favor of such an adjournment and will vote those proxies
required to be voted AGAINST such Proposal against such an adjournment. A
Shareholder vote may be taken on a Proposal in this Proxy Statement prior to any
such adjournment if sufficient votes have been received and it is otherwise
appropriate.
VOTE NECESSARY TO APPROVE EACH PROPOSAL:
Proposal 1. Approval of Proposal 1 requires the affirmative vote of a
majority of the issued and outstanding shares of the Fund. Abstentions and
broker non-votes are counted as present but are not considered votes cast at the
Meeting. As a result, they have the same effect as a vote against Proposal 1
because its approval requires the affirmative vote of a percentage of the
outstanding voting securities.
Proposal 2. The affirmative vote of a majority of votes cast at the Meeting
is necessary to elect Directors/Trustees. Abstentions will not count as votes
cast and will have no effect on the outcome of this Proposal. We expect that
brokers will be entitled to vote on this proposal, but any broker non-vote will
have no effect on the outcome of this Proposal.
All Remaining Proposals (Proposals 3A, 3B, 3C and Proposal 4). As already
described, only Shareholders of the Portfolios to which the changes proposed by
Proposals 3A, 3B, 3C and Proposal 4 would apply will vote on those Proposals,
and the Shareholders will vote on them on a Portfolio-by Portfolio basis.
Approval of each of these Proposals by a Portfolio requires the affirmative vote
of the lesser of either (i) a majority of the issued and outstanding shares of
the relevant Portfolio (the 'majority outstanding
10
requirement') or (ii) two-thirds of the votes cast by Shareholders of the
relevant Portfolio at the Meeting (the 'two-thirds cast requirement'), if at
least a majority of the issued and outstanding shares of the relevant Portfolio
on the Record Date are present in person or by proxy. Abstentions and broker
non-votes are counted as present but are not considered votes cast at the
Meeting. As a result, they will have the same effect as a vote against Proposals
3A, 3B, 3C and Proposal 4 if the vote is calculated pursuant to the majority
outstanding requirement, but will have no effect on the outcome of voting on
Proposals 3A, 3B, 3C and Proposal 4 if the vote is calculated pursuant to the
two-thirds cast requirement.
As to each of the Proposals, each share of the Fund is entitled to one vote
for each dollar of net asset value of such share owned by a Shareholder. Shares
for fractional dollar amounts vote proportionally.
If a Shareholder executes and returns a proxy but fails to indicate how the
votes should be cast, the proxy will be voted in favor of the election of each
of the nominees to serve as a Director/Trustee named in this Proxy Statement and
in favor of Proposals 1, 3 and 4. A Shareholder may revoke his or her previously
granted proxy at any time before it is exercised (i) by delivering a written
notice to the Fund expressly revoking his or her proxy, (ii) by signing and
forwarding to the Fund a later-dated proxy or (iii) by attending the Meeting and
casting his or her votes in person.
RECORD DATE AND OUTSTANDING SHARES:
At the close of business on the Record Date, when aggregated across the
Fund's five Portfolios, there were 496,619,330.727 shares of the Fund
outstanding and entitled to vote, representing 11,587,215,095.93 number of
votes. Although none of the Proposals require a class-by-class vote, SEC
regulations applicable to the solicitation of proxies require inclusion of the
following chart, which sets out the number of shares of each Portfolio of the
Fund outstanding and entitled to vote at the close of business on the Record
Date, as well as the number of votes for each class of shares:
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PORTFOLIO NUMBER OF SHARES NUMBER OF VOTES
--------- ---------------- ---------------
Global Fund -- Class A............... 113,086,280.855 3,840,410,097.84
Global Fund -- Class C............... 24,976,691.294 847,708,902.52
Global Fund -- Class I............... 9,456,538.436 321,427,741.44
Overseas Fund -- Class A............. 168,406,787.745 3,140,786,591.44
Overseas Fund -- Class C............. 31,978,587.735 591,923,658.97
Overseas Fund -- Class I............. 83,001,369.668 1,554,615,653.88
U.S. Value Fund -- Class A........... 3,573,205.551 46,701,796.55
U.S. Value Fund -- Class C........... 1,713,720.230 22,501,146.62
U.S. Value Fund -- Class I........... 3,947,569.241 51,910,535.52
Gold Fund -- Class A................. 25,494,478.081 457,625,881.55
Gold Fund -- Class C................. 3,253,244.087 58,558,393.57
Gold Fund -- Class I................. 2,934,857.720 52,768,741.81
First Eagle Fund of
America -- Class A................. 547,305.278 13,118,907.51
First Eagle Fund of
America -- Class C................. 338,111.690 7,803,617.81
First Eagle Fund of
America -- Class Y................. 23,910,583.116 579,353,428.90
PROPOSAL ONE:
PROPOSAL TO APPROVE THE REORGANIZATION OF THE FUND FROM A
MARYLAND CORPORATION INTO A DELAWARE STATUTORY TRUST.
INTRODUCTION
If the Shareholders of First Eagle Funds, Inc. (the 'Fund') approve this
Proposal, the Fund will be reorganized from a Maryland corporation into a
Delaware statutory trust, to be known as First Eagle Funds Trust (the 'Trust').
The proposed reorganization as a Delaware statutory trust (the 'Reorganization')
would take place pursuant to an Agreement and Plan of Reorganization and
Termination (the 'Plan of Reorganization') in the form attached as Exhibit A to
this Proxy Statement.
Currently, the Fund is a corporation organized under the laws of the State
of Maryland having multiple Portfolios, each with multiple classes of shares. If
the Shareholders approve the Reorganization, the Fund will be reorganized as a
Delaware statutory trust with multiple Series and classes. The Trust would
initially have five Series corresponding to the current Portfolios of the Fund:
the Global Fund portfolio will be reorganized as a successor Series to be known
as 'First Eagle Global Fund' (the 'Global Series'), the Overseas Fund portfolio
will be reorganized as a successor Series to be known as 'First Eagle Overseas
Fund' (the 'Overseas Series'), the U.S. Value Fund portfolio will be reorganized
as a successor Series to be known as 'First Eagle U.S. Value Fund' (the 'U.S.
Value Series'), the Gold Fund portfolio will be reorganized as a successor
Series
12
to be known as 'First Eagle Gold Fund' (the 'Gold Series'), and the First Eagle
Fund of America portfolio will be reorganized as a successor Series to be known
as 'First Eagle Fund of America' (the 'First Eagle Fund of America Series', and
collectively with the Global Series, the Overseas Series, the U.S. Value Series
and the Gold Series, the 'New Series').
On March 12, 2003, the Board of Directors of the Fund approved a proposal
made by the Adviser to change the jurisdiction and organizational structure of
the Fund from a Maryland corporation into a Delaware statutory trust and
reorganize the Portfolios of the Fund as separate Series of the Trust. The
Reorganization of the Fund as a Delaware statutory trust is being recommended
for the purpose of providing the Fund with certain advantages over its current
organizational structure. These advantages include: (1) more flexibility and
efficiency in the administration of the Fund and its Portfolios, (2) a clearer
and more developed body of law (the law of Delaware) regulating the Fund and (3)
the potential to obtain certain cost savings for the Fund and its Shareholders.
See 'Evaluation by the Board of Directors' below.
DESCRIPTION OF THE CURRENT FUND
Currently, the Fund's Charter, as filed with the Maryland State Department
of Assessments and Taxation, authorizes the Directors to issue 3,500,000,000
shares of common stock, par value $.001 (the 'Fund Shares'), at an aggregate par
value of three million five hundred thousand dollars ($3,500,000). These
authorized shares were designated and classified as follows: (1) two hundred
million (200,000,000) shares are designated and classified as First Eagle Global
Fund Class A Common Stock; (2) three hundred million (300,000,000) shares are
designated and classified as First Eagle Global Fund Class I Common Stock; (3)
two hundred million (200,000,000) shares are designated and classified as First
Eagle Global Fund Class C Common Stock; (4) two hundred million (200,000,000)
shares are designated and classified as First Eagle Overseas Fund Class A Common
Stock; (5) two hundred million (200,000,000) shares are designated and
classified as First Eagle Overseas Fund Class I Common Stock; (6) two hundred
million (200,000,000) shares are designated and classified as First Eagle
Overseas Fund Class C Common Stock; (7) two hundred million (200,000,000) shares
are designated and classified as First Eagle Gold Fund Common Stock; (8) two
hundred million (200,000,000) shares are designated and classified as First
Eagle U.S. Value Fund Class A Common Stock; (9) two hundred million
(200,000,000) shares are designated and classified as First Eagle U.S. Value
Fund Class I Common Stock; (10) two hundred million (200,000,000) shares are
designated and classified as First Eagle U.S. Value Fund Class C Common Stock;
(11) two hundred
13
million (200,000,000) shares are designated and classified as First Eagle Fund
of America Class A Common Stock; (12) two hundred million (200,000,000) shares
are designated and classified as First Eagle Fund of America Class C Common
Stock; (13) two hundred million (200,000,000) shares are designated and
classified as First Eagle Fund of America Class Y Common Stock; and (14) eight
hundred million (800,000,000) shares remain undesignated and unclassified. The
Fund's Charter authorizes the Directors to classify and reclassify any unissued
Shares in additional classes by setting or changing the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualification, or terms or conditions or redemption privileges of such unissued
Shares.
ADVANTAGES OF A DELAWARE STATUTORY TRUST
The Trust would be established pursuant to a trust instrument under the laws
of Delaware substantially in the form attached hereto as Exhibit B (the
'Delaware Trust Instrument'). As a Delaware statutory trust, the Trust's
operations will be governed by a Delaware Trust Instrument and By-laws and
applicable Delaware law rather than by the Fund's current Charter and By-laws
and applicable Maryland law. Except as described in this Proxy Statement, the
Reorganization will not affect the operations of the Fund, which will continue
to have the same investment objectives and policies (except to the extent the
investment restrictions may be modified as described in this Proxy Statement)
and be subject to the provisions of the Investment Company Act of 1940, the
rules and regulations thereunder, and applicable state securities laws.
Delaware has achieved a favorable national reputation for its business laws
and business environment. The Delaware courts, which may be called upon to
interpret the Delaware Statutory Trust Act, adopted in 1988, are among the
nation's most highly respected and have an expertise in corporate matters that
in part grew out of the fact that Delaware corporate legal issues are
concentrated in the Court of Chancery, where there are no juries and where
judges issue written opinions explaining their decisions. Thus, there is a
well-established body of precedent that may be relevant in deciding issues
pertaining to a Delaware statutory trust.
Under Delaware law, the Trust will have greater flexibility to respond to
future business contingencies. For example, the Board of Trustees will have the
power to incorporate the Trust, to merge or consolidate it with another entity,
to cause each Series to become a separate trust and to change the Trust's
domicile without a Shareholder vote. The Trustees may also create additional
Series and classes of the Trust without making any further state filings. This
flexibility could help to assure that the Trust operates under the most advanced
form of organization and may reduce
14
the expense and frequency of future Shareholder's meetings for non-investment
related issues.
The provisions of the Delaware Trust Instrument are similar to those of the
Maryland Charter of the Fund, except that various ambiguities and deficiencies
have been addressed and clarified in the Delaware Trust Instrument. In addition,
the Delaware Trust Instrument provides additional flexibility as to certain
matters that were not addressed in the Charter of the Fund. Shareholders will be
deemed to have pre-authorized certain changes that the Board of Trustees could
adopt for the structural form of the Trust.
DIFFERENCES BETWEEN THE CURRENT FUND AND THE SUCCESSOR TRUST
The Delaware Trust Instrument differs from the Maryland Charter of the Fund
in several important ways. For example, the Delaware Trust Instrument provides
for (1) elimination of the need for Shareholder votes in certain instances; (2)
flexible indemnification provisions for Trustees and Officers; and (3) different
mechanics with respect to the termination of the Trust, a Series or a Class, as
described more fully below.
Shareholder Proxies. Certain matters that require a Shareholder vote under
Maryland corporate law such as mergers, consolidations, and changes in corporate
domicile may be more readily effected without such a vote under Delaware law if
the Delaware Trust Instrument provides otherwise. This will improve
organizational efficiency while reducing costs.
Indemnification of Shareholders or Trustees. Delaware law permits the
governing instrument of a Delaware statutory trust to indemnify and hold
harmless any Shareholder or Trustee from and against any and all claims and
demands whatsoever. In contrast, Maryland corporate law provides for
indemnification unless the act or omission was committed in bad faith, was the
result of deliberate dishonesty or resulted in improper personal benefit. Thus,
Delaware law permits the Delaware Trust Instrument to provide for broader, more
flexible indemnification than does Maryland corporate law. However, the scope of
indemnification is in either case limited by the provisions of the Investment
Company Act of 1940, which precludes indemnification for acts of gross
negligence, willful misconduct, bad faith or reckless disregard of duty.
Termination of the Trust. Currently, a vote of a majority of the outstanding
voting securities of the Fund may be required to sell or convey the assets of
the Fund to another trust, partnership, association or corporation organized
under the laws of any state that is a diversified open-end management investment
company, as defined in the Investment Company Act of 1940, or to convert all the
assets of the Fund into cash. In
15
comparison, the Trust, or any Series or class of the Trust, may be terminated at
any time by vote of a majority of the Shares entitled to vote. The Trust, or any
Series or class of the Trust, may also be terminated by the Trustees by written
notice to the Shareholders of the Trust or the affected Series or class. Again,
this will improve organizational efficiency while reducing costs.
Although the Reorganization would result in certain changes that are
described in this Proxy Statement, many aspects of administering the operations
of the Fund as a Delaware statutory trust will remain unchanged.
THE PLAN OF REORGANIZATION
Summary of the Plan of Reorganization. The following discussion summarizes
the important terms of the Plan of Reorganization. This summary is qualified in
its entirety by reference to the Plan of Reorganization itself, which is
included as Exhibit A to this Proxy Statement. A Delaware Certificate of Trust
will be filed to establish the Trust as a Delaware statutory trust. Each
successor Series initially will have only nominal assets and no liabilities.
On the exchange date of the Reorganization (the 'Exchange Date'), Global
Fund will transfer all of its assets to the Global Series, and the Global Series
will acquire all of the assets and assume all of the liabilities of Global Fund
in exchange for shares of beneficial interest of the Global Series (the 'Global
Series Shares') equal in number to the outstanding Shares of the Global Fund.
Also on the Exchange Date, Overseas Fund will transfer all of its assets to the
Overseas Series, and the Overseas Series will acquire all of the assets and
assume all of the liabilities of Overseas Fund in exchange for shares of
beneficial interest of the Overseas Series (the 'Overseas Series Shares') equal
in number to the outstanding Shares of the Overseas Fund; U.S. Value Fund will
transfer all of its assets to the U.S. Value Series, and the U.S. Value Series
will acquire all of the assets and assume all of the liabilities of U.S. Value
Fund in exchange for shares of beneficial interest of the U.S. Value Series (the
'U.S. Value Series Shares') equal in number to the outstanding Shares of the
U.S. Value Fund; Gold Fund will transfer all of its assets to the Gold Series,
and the Gold Series will acquire all of the assets and assume all of the
liabilities of Gold Fund in exchange for shares of beneficial interest of the
Gold Series (the 'Gold Series Shares') equal in number to the outstanding Shares
of the Gold Fund; First Eagle Fund of America will transfer all of its assets to
the First Eagle Fund of America Series, and the First Eagle Fund of America
Series will acquire all of the assets and assume all of the liabilities of First
Eagle Fund of America in exchange for shares of beneficial interest
16
of the First Eagle Fund of America Series (the 'First Eagle Fund of America
Series Shares' and, together with the Global Series Shares, the Overseas Series
Shares, the U.S. Value Series Shares, and the Gold Series Shares, the 'Delaware
Trust Shares') equal in number to the outstanding Shares of the First Eagle Fund
of America. Thereafter, the Portfolios will distribute to their Shareholders the
same number of Delaware Trust Shares of the successor Series as are then owned
by each Shareholder.
Upon completion of the Reorganization, each Portfolio Shareholder will be
the owner of corresponding Delaware Trust Shares equal in number and aggregate
net asset value to his or her corresponding Portfolio Shares. Of course, the
value of a Shareholder's investment will continue to fluctuate thereafter, based
on the future investment performance of the successor Series of the Trust. As
soon as practicable thereafter, the Maryland corporation will be wound up and
dissolved.
If the Reorganization is approved, Delaware Trust Shares will be held by the
various Portfolios on the Exchange Date pending distribution to Shareholders.
Approval by Shareholders of this Proposal will be deemed to authorize the
Portfolios (as sole initial shareholders of each corresponding successor Series
of the Trust on the Exchange Date) to vote in favor of each of the Proposals set
forth in this Proxy Statement as approved by the Shareholders, so that the
approval of the Proposals may be made effective with respect to the Trust as
well as the Funds.
Approval of this Proposal will authorize the Portfolios (as sole initial
shareholders on the Exchange Date) to render approval on such matters as may be
necessary, for regulatory purposes, in order to adopt or enter into any
agreements or plans on behalf of the Trust and corresponding successor Series
that had previously been approved by Shareholders and are currently in effect
for the Fund. The Plan of Reorganization contemplates that the Fund as the then
sole initial shareholders of the successor Series will approve (1) the election
of Trustees for the Trust; (2) the investment advisory agreement with the
Adviser for the Trust and the subadvisory agreement with respect to the
Subadviser for the First Eagle Fund of America; (3) the distribution agreement
and services agreement with First Eagle Funds Distributors, a division of ASB
Securities LLC (the 'Distributor'), for the Trust; (4) selection of KMPG LLP as
independent auditors; (5) a subadvisory agreement between the Advisor and
Iridian Asset Management LLC, and (6) continuation of all other contracts and
agreements currently in effect with the Fund, including, but not limited to,
accounting, custody, transfer agency, service, procedural and safekeeping and
repurchase agreements.
Each Trustee will hold office without limit in time until such Trustee
resigns, reaches a mandatory retirement age of 70, dies, is declared
17
bankrupt or incompetent by a court of appropriate jurisdiction, is not reelected
by a vote of the outstanding Shares at a meeting to elect Trustees, or is
removed by a vote of the Trustees or the outstanding Shares of the Trust. If
less than a majority of the Trustees holding office has been elected by
Shareholders, the Trustees then in office shall call a Shareholders meeting for
the purpose of electing a Board of Trustees. By voting in favor of the Plan of
Reorganization, each Shareholder casting a favorable vote will be voting in
favor of the election of the slate of Trustees for the new Delaware Trust
identified in Proposal 2.
Assuming the Plan of Reorganization is approved, it is currently
contemplated that the Reorganization will become effective at the close of
business on March 31, 2004, unless the Directors determine that it would not be
in the best interests of the Shareholders to do so at that time or at all. The
Plan of Reorganization will apply to all Portfolios such that, following the
Plan's approval by the Fund's Shareholders, each Portfolio will transfer its
assets to the corresponding Series of the Trust.
The obligations of the Fund and the Trust under the Plan of Reorganization
are subject to various conditions as stated herein. Notwithstanding the approval
of the Plan of Reorganization by the Shareholders of the Fund, the Plan of
Reorganization may be terminated or amended at any time prior to the transfer of
assets on the Exchange Date by action of the Board of Directors if (1) there is
a material breach by the other party of any representation, warranty or
agreement contained in the Plan of Reorganization; (2) it reasonably appears
that a party cannot meet a condition of the Plan of Reorganization; or (3)
circumstances should develop that, in the opinion of either the Board of
Directors of the Fund or the Board of Trustees of the Trust, make proceeding
with the Plan of Reorganization in its current form unadvisable. The Fund and
the Trust may at any time waive compliance with any of the covenants and
conditions contained in, or may amend, the Plan of Reorganization, provided that
such waiver or amendment does not materially adversely affect the interests of
the Fund's Shareholders.
Temporary Waiver of Certain Investment Policies. Certain investment policies
of the Fund (e.g., those that (1) prohibit the Fund from making investments for
the purpose of exercising control over or management of an issuer; (2) restrict
the percentage of the Fund's total assets that may be invested in any one
industry; and (3) require diversification of investments), might be construed as
restricting the Fund's ability to carry out the Reorganization. To the extent
that any of the investment policies of the Fund could be construed as
restricting the ability of the Fund to effect the Reorganization, a vote to
approve the Plan of Reorganization will also constitute a vote to waive, to the
extent necessary to effect the
18
Reorganization, any such investment policy. Apart from the Reorganization, this
Proxy Statement also solicits Shareholder approval to modify certain of the
Portfolios' investment restrictions.
Tax Consequences of the Reorganization. The Fund and the Trust have been
advised by their counsel, Shearman & Sterling LLP, that no gain or loss will be
recognized for federal income tax purposes by the Fund, the Trust or the
Shareholders upon the transfer of the assets of each Portfolio of the Fund in
exchange solely for the Delaware Trust Shares and the assumption by each Series
of the Trust of the liabilities of the corresponding Portfolio of the Fund or
upon the distribution of Delaware Trust Shares to the Fund's Shareholders in
liquidation of their current Shares. The opinion of counsel further provides,
among other things, that the basis for federal income tax purposes of the
Delaware Trust Shares to be received by each of the current Shareholders will be
the same as that of his or her Portfolio Shares, and a Shareholder's holding
period for his or her Delaware Trust Shares will include a Shareholder's holding
period for his or her Portfolio Shares, provided that said Portfolio Shares were
held as capital assets on the date of the exchange.
Shareholders should consult their tax advisers regarding the effect of the
Reorganization in light of their individual circumstances. As the foregoing
relates only to federal income tax consequences, shareholders also should
consult their tax advisers as to the foreign, state, local and other tax
consequences of the Reorganization.
EVALUATION BY THE BOARD OF DIRECTORS OF THE FUND
Based on a recommendation by the Adviser, the Board of Directors of the Fund
reviewed the potential benefits associated with the proposed Reorganization and
adoption of the proposed Delaware Trust Instrument. In this regard, the
Directors considered the following:
(1) the advantages described above that apply to managing the
corresponding successor Series as a Series of a Delaware statutory trust,
including the increased flexibility afforded to the Trustees to direct the
operations of the Trust;
(2) the advantages and protections to be gained by the Fund in adopting
the Delaware Trust Instrument;
(3) the fact that the Reorganization itself will not affect the
investment advisory arrangements applicable to the Fund, the investment
objectives or policies of the Fund, or otherwise affect in any significant
manner the general characteristics of the Portfolios or a Shareholder's
investment therein, except to the extent certain invest-
19
ment policies may be modified pursuant to a Shareholder vote at this
Meeting;
(4) the expected lack of federal income tax consequences to the Fund,
the Trust, the successor Series and Shareholders resulting from the proposed
Reorganization, and the likelihood that there will be no recognition of
income, gain or loss for federal income tax purposes to the Fund, the Trust,
the successor Series or Shareholders; and
(5) the fact that the interests of the Shareholders of the Fund will not
be diluted as a result of the proposed Reorganization.
The Board of Directors of the Fund also noted that a significant portion of
the costs associated with this Meeting would have been required in the near
future in any event in connection with the election of Directors. (Currently,
the Board of Directors includes the maximum number of Directors appointed solely
by action of the Board, and election of Directors at this time will give the
Board the opportunity to add additional qualified members in the future without
the expense of a separate meeting of Shareholders.) The Board therefore
concluded that it would be efficient to offer this proposal at the same time as
that related to the election of Directors (as is proposed in Proposal 2).
CONCLUSION. The Board of Directors of the Fund has concluded that the
proposed Reorganization of the Fund as a Delaware statutory trust is in the best
interests of its Fund's Shareholders and recommends a vote 'FOR' the approval of
the Reorganization.
A vote in favor of the Plan of Reorganization is deemed to be a vote in
favor of the Reorganization of the Fund as a Delaware statutory trust; temporary
waiver of certain investment policies of the Fund to permit the Reorganization;
approval, and authorization of the Fund to approve (1) the election of Trustees
for the Trust; (2) the investment advisory agreement with the Adviser for the
Trust and the subadvisory agreement with the Subadviser with respect to the
First Eagle Fund of America; (3) the distribution agreement and services
agreement with the Distributor for the Trust; (4) selection of KPMG LLP as
independent auditors; and (5) continuation of all other contracts and agreements
currently in effect with the Fund, including, but not limited to, accounting,
custody, transfer agency, service, procedural and safekeeping and repurchase
agreements. Approval of the proposed reorganization of the Fund into the Trust
shall constitute approval of each of the foregoing actions, including approval
of the continuation of the Fund's contracts with the Trust. If the Plan of
Reorganization is not approved, the Fund will continue to operate as a Maryland
corporation. Appraisal rights are not available to Shareholders with respect to
the Reorganization.
20
The Board of Directors of the Fund unanimously recommends that Shareholders
vote 'FOR' approval of the Reorganization described in this Proposal 1.
* * *
PROPOSAL TWO:
PROPOSAL TO RE-ELECT CERTAIN INDIVIDUALS TO SERVE AS
DIRECTORS ON THE BOARD OF DIRECTORS OF THE FUND
(THESE INDIVIDUALS WILL ALSO SERVE AS TRUSTEES ON THE BOARD
OF TRUSTEES OF THE NEW DELAWARE TRUST).
Currently, the Board of Directors of the Fund consists of eight members. The
Board of Directors of the Fund have voted to nominate the individuals set forth
in Table 2.1 (Independent Directors/Trustees) and Table 2.2 (Interested
Directors/Trustees) below to serve as Directors of the Fund (and to serve as
Trustees of the Trust, if Shareholders vote to approve the Reorganization). All
of these individuals currently serve as Directors of the Fund.
If Shareholders vote to approve the Reorganization, these individuals will
be appointed as Trustees of the Trust by the Initial Trustee identified in the
Plan of Reorganization. By ratifying this Proposal, Shareholders are approving
the appointment by the Initial Trustee of the individuals in Table 2.1 and Table
2.2 below as Trustees of the Trust.
Unless otherwise noted, the address of each nominee is c/o First Eagle
Funds, Inc., 1345 Avenue of the Americas, New York, New York 10105. The term of
office for each Director and Trustee is until he or she reaches a mandatory
retirement age of 70.
TABLE 2.1
NOMINEES AS INDEPENDENT DIRECTORS/TRUSTEES*
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX** OTHER
PRINCIPAL OVERSEEN DIRECTORSHIPS/
TERM OF OFFICE OCCUPATION(S) BY TRUSTEESHIPS
NAME, AGE POSITION(S) HELD AND LENGTH OF DURING PAST NOMINEE HELD BY NOMINEE
AND ADDRESS WITH FUND TIME SERVED 5 YEARS FOR TRUSTEE FOR TRUSTEE
----------- --------- ----------- ------- ----------- -----------
Candace K. Beinecke Director December 1999 Chair, Hughes 6 Director, ALSTOM;
One Battery Park (Chair) to present & Reed LLP Director, Jacob's
Plaza Hubbard Pillow Dance Festival,
New York, NY 10004 Inc., Director, Merce
(age 57) Cunningham Dance
Foundation, Inc.;
Director (Chair), First
Eagle Variable
Funds, Inc.
(1 portfolio)
21
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX** OTHER
PRINCIPAL OVERSEEN DIRECTORSHIPS/
TERM OF OFFICE OCCUPATION(S) BY TRUSTEESHIPS
NAME, AGE POSITION(S) HELD AND LENGTH OF DURING PAST NOMINEE HELD BY NOMINEE
AND ADDRESS WITH FUND TIME SERVED 5 YEARS FOR TRUSTEE FOR TRUSTEE
----------- --------- ----------- ------- ----------- -----------
Jean D. Hamilton*** Director March 2003 to Independent 6 Director,
1345 Avenue of the present Consultant/Private Women's Economic
Americas Investor; prior Round Table;
New York, NY 10105 to November Director and
(age 57) 2002, Chief Treasurer, New
Executive York Women's
Officer, Forum; Director,
Prudential Four Nations;
Institutional, Director,
and Executive Standing Tall;
Vice President, Director, Glass
Prudential Roots; Director,
Financial, Inc.; First Eagle
prior to Variable Funds,
November 1998, Inc. (1
various portfolio)
executive
positions within
the Prudential
organization
William M. Kelly Director December 1999 Senior 6 Trustee, New
500 Fifth Avenue to present Associate, York Foundation;
50th Floor Lingold Treasurer and
New York, NY 10110 Associates Trustee, Black
(age 59) Rock Forest
Consortium;
Director, First
Eagle Variable
Funds, Inc. (1
portfolio)
Paul J. Lawler Director March 2002 to Vice President 6 Director, Junior
One Michigan Avenue present Investments and Achievement of
East Battle Creek, Chief Investment Southwest
Michigan 49017 Officer, W.K. Michigan;
(age 55) Kellogg Finance
Foundation; Committee
prior to June Member, Battle
1997, Vice Creek Community
President for Foundation;
Finance, Custody Advisory
Renssalaer Committee
Polytechnic Member, The Bank
Institute of New York;
Director, First
Eagle Variable
Funds, Inc. (1
portfolio)
Dominique Raillard Director April 1987 to Independent 6 Director, First
15 Boulevard present Consultant/Private Eagle Variable
Delessert 75016 Investor; prior Funds, Inc. (1
Paris, France to December portfolio)
(age 65) 2001, Managing
Director of Act
2 International
(Consulting)
22
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX** OTHER
PRINCIPAL OVERSEEN DIRECTORSHIPS/
TERM OF OFFICE OCCUPATION(S) BY TRUSTEESHIPS
NAME, AGE POSITION(S) HELD AND LENGTH OF DURING PAST NOMINEE HELD BY NOMINEE
AND ADDRESS WITH FUND TIME SERVED 5 YEARS FOR TRUSTEE FOR TRUSTEE
----------- --------- ----------- ------- ----------- -----------
Nathan Snyder Director March 1983 to Independent 6 Director, First
1345 Avenue of the present Consultant/Private Eagle Variable
Americas Investor Funds, Inc. (1
New York, NY 10105 portfolio)
(age 69)
---------
* Not 'interested persons' within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940.
** The Fund belongs to a Fund Complex including the Fund and First Eagle
Variable Funds, Inc.
*** Ms. Hamilton was previously employed by certain of the Prudential companies,
which provide portfolio brokerage and distribution services with respect to
the Funds. She retired from her positions with those companies on November
16, 2002.
TABLE 2.2
NUMBER OF
PORTFOLIOS IN OTHER DIRECTORSHIPS/
PRINCIPAL FUND TRUSTEESHIPS HELD
TERM OF OFFICE OCCUPATION(S) COMPLEX BY DIRECTOR AND
NAME, AGE AND POSITION(S) HELD AND LENGTH OF DURING PAST OVERSEEN BY NOMINEE FOR
ADDRESS WITH FUND TIME SERVED 5 YEARS DIRECTOR TRUSTEE
------- --------- ----------- ------- -------- -------
John P. Arnhold Co-President; December 1999 Co-President, 6 Director, Aquila
1345 Avenue of the Director to present Co-CEO and International Fund,
Americas Director, Ltd.; Director,
New York, NY 10105 Arnhold and S. Arnhold Ceramics;
(age 50) Bleichroeder Co-President and
Holdings, Inc; Director, First
Chairman, CEO Eagle Variable
and Director, Funds, Inc. (1
Arnhold and S. portfolio)
Bleichroeder
Advisers, LLC
and ASB
Securities, LLC;
President and
Director,
Natexis
Bleichroeder,
Inc. and Natexis
Bleichroeder UK
Ltd.; President,
WorldVest, Inc.
23
NUMBER OF
PORTFOLIOS IN OTHER DIRECTORSHIPS/
PRINCIPAL FUND TRUSTEESHIPS HELD
TERM OF OFFICE OCCUPATION(S) COMPLEX BY DIRECTOR AND
NAME, AGE AND POSITION(S) HELD AND LENGTH OF DURING PAST OVERSEEN BY NOMINEE FOR
ADDRESS WITH FUND TIME SERVED 5 YEARS DIRECTOR TRUSTEE
------- --------- ----------- ------- -------- -------
James E. Jordan Director December 1999 Managing 6 Director, Leucadia
1345 Avenue of the to present Director, National
Americas Arnhold and S. Corporation;
New York, NY 10105 Bleichroeder Director, Empire
(age 59) Advisers, LLC Insurance Company;
and Director, Director, JZ Equity
ASB Securities, Partners Plc (U.K.
LLC and ASB investment trust
Advisers UK, company); Director,
Ltd. since July Columbia University
2002; prior School of
thereto, private International and
investor and Public Affairs; Vice
consultant to Chairman, New York
The Jordan State Board of The
Company (private Nature Conservancy;
investment Director, First
banking firm) Eagle Variable
since June 1997; Funds, Inc. (1
prior thereto, portfolio)
President and
Chief Investment
Officer of The
William Penn
Company (a
registered
investment
adviser)
---------
**** 'Interested persons' within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940. Each of Messrs. Arnhold and Jordan is an
interested person of the Fund for these purposes by virtue of his position
as an officer and/or director of the investment adviser and principal
underwriter to the Fund.
It is intended that the proxies of the Fund will be voted 'FOR' the election
of the nominees listed above in Table 2.1 and Table 2.2. Each Trustee so elected
will serve as a Trustee until the next meeting of Shareholders of the Trust, if
any, called for the purpose of electing Trustees and until the election and
qualification of his successor or until such Trustee sooner dies, resigns or is
removed as provided in the Declaration of Trust of the Trust. Since the Trust
does not intend to hold annual Shareholder meetings, Trustees may hold office
for an indefinite period up to age 70.
If Proposal 1 is approved by the Shareholders, the individuals listed in
Table 2.1 and Table 2.2 shall be elected by the Fund, as sole shareholders of
each successor Series, as Trustees to serve on the Board of Trustees of the
Trust. These individuals will also serve as Directors of the Fund until its
termination (to follow the Reorganization, if approved).
Each nominee has consented to serve as a Director of the Fund and as a
Trustee of the Trust, if elected. In case any nominee shall be unable or shall
fail to act as a Director/Trustee because of an unexpected occurrence,
24
the proxies may be voted for such other person(s) as shall be determined by the
persons acting under the proxies in their discretion.
As required by SEC regulations applicable to the solicitation of proxies for
a registered investment company, certain information regarding the Fund's
officers (who will serve the Trust in the same capacity if the Reorganization is
approved by Shareholders) and additional information regarding the Board
nominees is provided in Appendix I to this Proxy statement. Information
regarding KPMG LLP, the principal accountant to the Fund (which will serve the
Trust in the same capacity if the Reorganization is approved by Shareholders),
is also provided in that Appendix.
CONCLUSION. The Board of Directors of the Fund unanimously recommends that
Shareholders vote 'FOR' the election of the nominees listed above to serve as
Directors of the Fund and to serve as Trustees of the Trust.
* * *
PROPOSAL THREE:
PROPOSAL TO MODIFY CERTAIN OF THE FUNDAMENTAL
INVESTMENT RESTRICTIONS APPLICABLE TO
SEVERAL OF THE PORTFOLIOS.
Three of the various fundamental investment restrictions applicable to the
Portfolios are proposed to be changed (designated as Proposals 3A, 3B and 3C
below), but not all of these changes will apply to every Portfolio. (For
example, none of the proposed changes apply to First Eagle Fund of America.)
Accordingly, although all Shareholders will vote on Proposals 1 and 2 described
above, the descriptions of each of Proposals 3A, 3B and 3C identify which
Shareholders will vote on which of these proposed changes.
Proposals 3A, 3B and 3C relate to investment restrictions that have been
designated as 'fundamental' policies of certain Portfolios. Mutual funds may
designate investment restrictions as either fundamental or non-fundamental
policies. Fundamental policies can be changed only with the prior approval of
shareholders, while non-fundamental policies can be changed or eliminated by a
resolution of a mutual fund's board of directors with notice of the change to
its shareholders. The Fund's current designation of an investment restriction as
a fundamental policy requires a vote of the Shareholders each time the Fund may
need to amend or otherwise adjust an investment restriction. This results in the
Fund incurring the costs of Shareholders' meetings.
Dynamic changes in the market and economy as well as in the regulation of
the securities industry require that the Fund be flexible in its ability to
adapt its investment policies to such changes. Since the Fund is
25
currently having a Shareholders' meeting, the Board of Directors recommends that
Shareholders vote to modify certain fundamental investment restrictions
applicable to Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund (see
Proposals 3A and 3B below). For the same reason, the Board of Directors of the
Fund recommends that Shareholders vote to reclassify one of the investment
restrictions applicable to the Global Fund and U.S. Value Fund as a
non-fundamental policy (see Proposal 3C below).
PROPOSAL 3A. MODIFICATION OF THE FUNDAMENTAL RESTRICTION REGARDING MAKING
LOANS BY GLOBAL FUND, OVERSEAS FUND, U.S. VALUE FUND AND GOLD FUND TO PERMIT
THESE PORTFOLIOS TO PURCHASE OR SELL LOANS AND OTHER DIRECT DEBT INSTRUMENTS.
(PROPOSAL 3A APPLIES TO ALL PORTFOLIOS EXCEPT FIRST EAGLE FUND OF AMERICA.)
The Board of Directors recommends that Shareholders vote to modify the
investment restriction regarding making loans by Global Fund, Overseas Fund,
U.S. Value Fund and Gold Fund. Currently, this restriction permits these
Portfolios to purchase and sell bonds and other debt instruments, but does not
permit them to purchase or sell loans or other direct debt instruments,
including loan participations. This Proposal 3A would permit such investment
activities.
If approved by Shareholders, the fundamental investment restriction of each
Portfolio listed above will be modified to read as follows (changes are
underlined):
In pursuing its investment objective, each of the Global Fund, Overseas
Fund, U.S. Value Fund and Gold Fund will not make direct loans, but this
restriction shall not prevent a Portfolio from:
(a) buying part of an issue of bonds, debentures or other obligations
that are publicly distributed, or from investing up to an aggregate
of 15% of its total assets (taken at market value at the time of
each purchase) in parts of issues of bonds, debentures or other
obligations of a type privately placed with financial institutions,
(b) buying loans (or portions of them), or other direct debt instruments
including loan participations, originated by another party or
parties with respect to corporate borrowers, or
(c) lending portfolio securities, provided that a Portfolio may not lend
securities if, as a result, the aggregate value of all securities
loaned would exceed 33% of its total assets (taken at market value
at the time of the loan).(1)
---------
(1) These Portfolios have no present intention of lending their portfolio
securities.
26
The Board of Directors, on recommendation of the Adviser, believes the
ability to invest directly in loans (through buying loans or other direct debt
instruments originated by other lenders or lending syndicates) will permit the
Portfolios to take advantage of certain opportunities that the Adviser may
consider more attractive than bonds and similar debt instruments. For example,
because a loan may carry risks to which the loan's creditors no longer wish to
be exposed, the Adviser may be able to purchase interests in such a loan at a
discount to the debtor's obligations. (Such risks include the risk of default,
which refers to the possibility that the borrower may be unable or unwilling to
repay all or part of the amount owed; the risk of delayed payment, which refers
to the possibility that the borrower may be unable or unwilling to make payment
at the time expected; and the risk of inadequate collateral, which refers to the
possibility that any property that may have been pledged to secure the
borrower's promise to pay may be worth less when delivered than expected). Of
course, such an investment by a Portfolio would itself carry the risks just
identified, but the Adviser will seek to manage these risks by applying the same
fundamental value analysis to the debtor's loan obligations that the Adviser
applies to traditional equity or debt investments.
Investments in loans are also less liquid than investments in publicly
traded securities and carry less legal protections in the event of fraud or
misrepresentation. Unlike debt instruments that are securities, investments in
loans are not regulated by federal securities laws or the SEC. In addition, loan
participations involve a risk of insolvency by the lending bank or other
financial intermediary.
CONCLUSION. The Board of Directors of the Fund, based upon the Adviser's
recommendation, believes that the Proposal to modify this investment restriction
of the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund in the manner
described above is in the best interests of each of these Portfolios and their
Shareholders and unanimously recommends a vote 'FOR' Proposal 3A.
PROPOSAL 3B. MODIFICATION OF THE FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING INVESTMENTS IN COMMODITIES AND COMMODITY CONTRACTS BY GLOBAL FUND AND
U.S. VALUE FUND SO AS TO PERMIT EACH OF THESE PORTFOLIOS TO PURCHASE OR SELL
PRECIOUS METALS, SUCH AS GOLD OR SILVER, AND TO PURCHASE OR SELL PRECIOUS METAL
COMMODITY CONTRACTS AND OPTIONS ON SUCH CONTRACTS.
(PROPOSAL 3B APPLIES TO GLOBAL FUND AND U.S. VALUE FUND ONLY.)
The Board of Directors recommends that Shareholders vote to modify the
investment restriction regarding investments in commodities and commodity
contracts by Global Fund and U.S. Value Fund. Currently, this restriction
prevents these Portfolios from engaging in such investment activities, but
Proposal 3B would modify the restriction to permit Global Fund and U.S. Value
Fund to invest directly in precious metals, such as
27
gold or silver, and to purchase or sell precious metal commodity contracts and
options on such contracts.
If approved by Shareholders, the Fundamental investment restriction of each
Portfolio listed above will be modified to read as follows (changes are
underlined):
In pursuing its investment objective, each of the Global and U.S. Value
Fund will not purchase and sell real estate or interests therein,
commodities or commodity contracts, except as described below. The
Portfolio may, however, invest in real estate investment trusts and
companies holding real estate and may sell commodities received by it as
distributions on portfolio investments (To the extent the Portfolio holds a
commodity distributed to it, the Portfolio will be subject to the risk of
change in the value of such commodity). Notwithstanding the foregoing, the
portfolio may purchase or sell precious metals directly and purchase or
sell precious metal commodity contracts or options on such contracts in
compliance with applicable commodities laws;
The Board of Directors, on recommendation of the Adviser, believes the
ability to invest in precious metals and precious metals commodity contracts or
options on those contracts may allow the Adviser to obtain more attractive
exposure to such investments than is currently possible through investments in
various derivative instruments whose returns are linked to a precious metal.
Such direct precious metals investments may provide greater diversification of
the holdings of these Portfolios than is currently possible. However, precious
metals investments also carry certain risks. The price of gold and other
precious metals has traditionally been more volatile than investments in
securities markets and typically stays flat or falls during periods when the
U.S. dollar is strong, inflation is low and general economic conditions are
stable. The price of gold and other precious metals also is subject to economic
and political conditions (including national tax, currency, monetary and
environmental policies) in major metals-producing countries, which include
emerging markets. Investing in precious metals directly carries custody and
transaction (i.e., brokerage) costs that may be higher than investments in
securities, as well as custody risks related to the solvency of the custodian
holding the precious metals. Moreover, holding precious metals directly results
in no income being derived from such holding, unlike securities that may pay
dividends or make other current payments. Finally, investing in futures
contracts and similar 'derivative' instruments related to precious metals also
carries risks, in that these types of instruments are (i) often more volatile
than direct investments in the commodity underlying them, because they commonly
involve significant 'built in' leverage, and (ii) subject to the risk of default
by the counterparty to the contract.
28
CONCLUSION. The Board of Directors of the Fund, based upon the Adviser's
recommendation, believes that the Proposal to modify this investment restriction
of the Global Fund and U.S. Value Fund in the manner described above is in the
best interests of each of these Portfolios and their Shareholders and
unanimously recommends a vote 'FOR' Proposal 3B.
PROPOSAL 3C. RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING INVESTMENTS IN BANK CERTIFICATES OF DEPOSIT AND SIMILAR INSTRUMENTS BY
GLOBAL FUND AND U.S. VALUE FUND AS A NON-FUNDAMENTAL INVESTMENT POLICY.
(PROPOSAL 3C APPLIES TO GLOBAL FUND AND U.S. VALUE FUND ONLY.)
The Board of Directors recommends that Global Fund and U.S. Value Fund
Shareholders vote to reclassify the following investment restriction of those
Portfolios as a non-fundamental policy:
In pursuing its investment objective, each Portfolio listed above will not:
Purchase certificates of deposit or other short-term bank instruments
except to the extent deemed appropriate for short-term investment purposes
or as a temporary defensive measure. The Fund will limit its purchases of
certificates of deposit and other short-term bank instruments to those
issued by United States banks and savings and loan associations, including
foreign branches of such banks, and United States branches or agencies of
foreign banks, which have total assets (as of the date of their most
recently published financial statements) of at least $1 billion.
If this investment restriction is re-classified as non-fundamental, the
Board would be able to modify it from time to time, with notice to shareholders
of any change. For example, the Board could modify the restriction to require a
different capitalization level (e.g., greater or lower than the current $1
billion) for banks issuing certificates of deposit or other short-term bank
instruments in which the Global Fund and U.S. Value Fund may invest. Although no
such modification is currently anticipated, the ability to do so without
incurring the cost and delay of an additional Shareholders' meeting should
permit the Fund to respond more promptly to future market or economic
contingencies.
CONCLUSION. The Board of Directors of the Fund, based upon the Adviser's
recommendation, believes that the Proposal to reclassify this investment
restriction of the Global Fund and U.S. Value Fund as a non-fundamental
investment policy is in the best interests of the Global Fund and U.S. Value
Fund and their Shareholders and unanimously recommends a vote 'FOR' Proposal 3C.
29
* * *
PROPOSAL FOUR:
PROPOSAL TO CHANGE THE CLASSIFICATION OF
FIRST EAGLE GOLD FUND FROM
DIVERSIFIED TO NON-DIVERSIFIED
(PROPOSAL 4 APPLIES TO GOLD FUND ONLY.)
The First Eagle Gold Fund is currently a diversified investment company
under the 1940 Act. This means that with respect to 75% of its total assets, the
Portfolio is limited in its investment in any one issuer (other than government
securities or securities of other investment companies) to an amount not greater
in value than 5% of the value of the Portfolio's total assets and to not more
than 10% of the outstanding voting securities of that issuer. A non-diversified
fund is not subject to this requirement. By law, the diversified status of the
Portfolio may be changed only with shareholder approval.
Changing market conditions and other considerations affecting the precious
metals industry, especially ongoing consolidation among leading gold mining
companies, have made it more difficult for the Portfolio to comply with these
diversification standards. This is because as mining companies deemed attractive
under the rigorous fundamental value analysis applied by the Portfolio merge
with each other, fewer companies are available for consideration by the
Portfolio's managers. As a result, investments in individual companies tend to
be larger. Changing the Portfolio's classification to that of a non-diversified
company should increase the flexibility of the managers to consider such larger
investments on the merits of the relevant companies and without regard to
meeting the specific diversification standards of the 1940 Act.
The proposed reclassification would permit the Portfolio to invest its
assets in fewer issuers than permissible now, which may result in increased
volatility of returns. This volatility may also be increased by the Portfolio's
practice of concentrating its assets in a particular industry. Specifically, the
precious metals industry may be particularly vulnerable to market cycles and can
be significantly affected by, among other things, increased competition,
depletion of natural resources, changes in search and extraction techniques, and
changes of government regulation.
The proposed reclassification would not, however, affect the Portfolio's
intention to continue to satisfy the diversification requirements necessary to
qualify as a regulated investment company under the Internal Revenue Code of
1986, as amended (the 'Code'). In this regard, the applicable diversification
requirements imposed by the Code provide that the Portfolio must diversify its
holdings so that at the end of each quarter of the taxable year (i) at least 50%
of the market value of the Portfolio's assets is represented by cash and cash
items, U.S. government securities,
30
the securities of other regulated investment companies and other securities,
with such other securities of any one issuer limited for purposes of this
calculation to an amount not greater than 5% of the value of the Portfolio's
total assets and 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its total assets is invested in the
securities of any one issuer (other than U.S. government securities or the
securities of other regulated investment companies).
CONCLUSION. The Board of Directors, based upon the Adviser's recommendation,
believes that the Proposal to change the classification of the First Eagle Gold
Fund for purposes of the 1940 Act from diversified to non-diversified is in the
best interests of the Portfolio and its Shareholders and unanimously recommends
a vote 'FOR' Proposal 4.
* * *
OTHER MATTERS
The Fund does not know of any other matters to be presented at the Special
Meeting of Shareholders. If any other business should come before the Meeting,
the proxies will vote thereon in accordance with their best judgment.
If you cannot attend the Meeting in person, please complete, sign and return
the enclosed proxy in the envelope provided so that the Meeting may be held and
action taken with the greatest possible number of Shares participating.
SHAREHOLDER PROPOSALS FOR SUBSEQUENT MEETINGS
The Fund does not hold regular annual meetings of Shareholders. Any
Shareholder who wishes to submit proposals to be considered at a subsequent
meeting of Shareholders should send such proposals to the Fund at 1345 Avenue of
the Americas, New York, New York 10105.
HELP AVOID THE COST OF ADDITIONAL SOLICITATIONS. PLEASE COMPLETE, SIGN, DATE AND
RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE.
31
APPENDIX I
As required by the SEC regulations applicable to the solicitation of proxies
for a registered investment company, certain additional information regarding
the Board nominees, the Fund's officers and certain large Fund shareholders is
provided below. Also provided below is information regarding KMPG LLP, the
principal accountant to the Fund.
The Fund belongs to a Fund Complex including the Fund and First Eagle
Variable Funds, Inc. Unless otherwise noted, the address of all persons
identified in this Appendix is c/o First Eagle Funds, Inc., 1345 Avenue of the
Americas, New York, New York 10105. Also unless otherwise noted, the term of
office of each such person is indefinite.
OFFICERS
NAME, AGE AND POSITION(S) HELD WITH TERM OF OFFICE AND PRINCIPAL OCCUPATION(S)
ADDRESS THE FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS
------- -------- --------------------- -------------------
John P. Arnhold Co-President; December 1999 to present Co-President and
1345 Avenue of Director Director, First Eagle
the Americas Funds, Inc. (5 portfolios)
New York, NY and First Eagle Variable
10105 Funds, Inc. (1 portfolio);
(age 50) Co-President, Co-CEO
and Director, Arnhold
and S. Bleichroeder
Holdings, Inc; Chairman,
CEO and Director,
Arnhold and
S. Bleichroeder Advisers,
LLC and ASB Securities,
LLC; President and
Director, Natexis
Bleichroeder, Inc. and
Natexis Bleichroeder UK
Ltd.; President,
WorldVest, Inc.; Director,
Aquila International
Fund, Ltd.; Director,
Arnhold Ceramics
Jean-Marie Co-President December 1999 to present Senior Vice President,
Eveillard (portfolio manager) (with portfolio Arnhold and
1345 Avenue of the management S. Bleichroeder Advisers,
Americas responsibility since LLC; Co-President, First
New York, NY 10105 1979) Eagle Funds, Inc. and
(age 64) First Eagle Variable
Funds, Inc.; prior to
1999, Director and
President or Executive
Vice President of Societe
Generale Asset Management
Corp.
32
NAME, AGE AND POSITION(S) HELD WITH TERM OF OFFICE AND PRINCIPAL OCCUPATION(S)
ADDRESS THE FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS
------- -------- --------------------- -------------------
Charles de Vaulx Senior Vice President December 1999 to present Senior Vice President,
1345 Avenue of the (portfolio manager) (with portfolio Arnhold and
Americas management S. Bleichroeder Advisers,
New York, NY 10105 responsibility since LLC; Senior Vice
(age 42) December 1996) President, First Eagle
Funds, Inc. and First
Eagle Variable Funds,
Inc.; prior to December
1999, Senior Vice
President, Societe
Generale Asset Management
Corp. since 1998,
Associate Portfolio
Manager from December
1996, and Securities
Analyst prior to December
1996
Robert Bruno Vice President, December 1999 to present Senior Vice President,
1345 Avenue of the Secretary and Arnhold and
Americas Treasurer S. Bleichroeder Advisers,
New York, NY 10105 LLC; Senior Vice
(age 39) President, ASB
Securities, LLC; Vice
President, Secretary and
Treasurer, First Eagle
Funds, Inc. and First
Eagle Variable Funds,
Inc.
Andrew DeCurtis Vice President November 2000 to present Vice President, Arnhold
1345 Avenue of the and S. Bleichroeder
Americas Advisers, LLC; Vice
New York, NY 10105 President, First Eagle
(age 35) Funds, Inc. and First
Eagle Variable Funds,
Inc.
Edwin S. Olsen Vice President November 2000 to present Vice President, Arnhold
1345 Avenue of the and S. Bleichroeder
Americas Advisers, LLC; Vice
New York, NY 10105 President, First Eagle
(age 64) Funds, Inc. and First
Eagle Variable Funds,
Inc.; prior to 1999, Vice
President, SG Cowen
Securities Corp.
Suzan Afifi Vice President and December 1999 to present Vice President, Arnhold
1345 Avenue of the Assistant Secretary and S. Bleichroeder
Americas Advisers, LLC; Vice
New York, NY 10105 President, ASB
(age 51) Securities, LLC; Vice
President and Assistant
Secretary, First Eagle
Funds, Inc. and First
Eagle Variable Funds,
Inc.
Stefanie Spritzler Assistant Treasurer May 2000 to present Vice President, Arnhold
1345 Avenue of the and S. Bleichroeder
Americas Advisers, LLC; Vice
New York, NY 10105 President, ASB
(age 30) Securities, LLC;
Assistant Treasurer,
First Eagle Funds, Inc.
and First Eagle Variable
Funds, Inc.
Winnie Chin Assistant Treasurer March 2001 to present Assistant Treasurer,
1345 Avenue of the First Eagle Funds, Inc.
Americas and First Eagle Variable
New York, NY 10105 Funds, Inc.
(age 29)
33
COMPENSATION OF DIRECTORS
The following table sets out the compensation received by each of the
Directors from the Fund for the Fund's most recently completed fiscal year ended
October 31, 2003. Previously, the Fund paid each of its Independent Directors an
annual fee of $12,000 plus $2,000 per meeting of the Board and $1,000 per
meeting of a Committee. Effective January 1, 2003, compensation to Directors
paid by the Fund increased to an annual fee of $18,000 plus $2,000 per meeting
of the Board and $1,000 per meeting of a Committee of the Board. Also effective
January 1, 2003, Independent Directors serving as the chair of any of the
Board's Audit and Nominating and Governance Committees are paid an annual fee of
$2,500 by the Fund. All such fees are allocated, generally, between the Fund and
First Eagle Variable Funds, Inc. on a pro-rata basis in relationship to their
relative net assets. The Fund does not pay any compensation to interested
Directors nor does it provide any retirement or pension benefits for the
Directors. During the fiscal year ended October 31, 2003, an aggregate of
$246,157 was paid, accrued or owed for Directors' fees and expenses by the Fund.
TOTAL COMPENSATION
AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL FROM FUND AND FUND
COMPENSATION BENEFITS ACCRUED AS BENEFITS UPON COMPLEX PAID TO
NAME OF PERSON, POSITION FROM FUND PART OF FUND EXPENSES RETIREMENT DIRECTORS***
------------------------ --------- --------------------- ---------- ------------
John P. Arnhold,
Director*............ $ 0 N/A N/A $ 0(1)
Candace K. Beinecke,
Director............. $35,899 N/A N/A $36,340(1)
Jean D. Hamilton,
Director**........... $17,850 N/A N/A $18,090(1)
James E. Jordan,
Director*............ $ 0 N/A N/A $ 0(1)
William M. Kelly,
Director............. $38,876 N/A N/A $39,340(1)
Paul J. Lawler,
Director............. $36,406 N/A N/A $36,840(1)
Dominique Raillard,
Director............. $32,164 N/A N/A $32,590(1)
Nathan Snyder,
Director............. $31,194 N/A N/A $31,590(1)
---------
* Interested Director
** Ms. Hamilton joined the Board of Directors in March 2003.
*** For this purpose, the fund complex consists of five portfolios of the Fund
(Global Fund, Overseas Fund, U.S. Value Fund, Gold Fund and First Eagle Fund
of America), plus the First Eagle Overseas Variable Fund. The number in
parentheses indicates the total number of other boards in the fund complex
on which the Director served as of October 31, 2003.
34
SECURITY OWNERSHIP BY DIRECTORS
The following table sets forth information as of December 31, 2003,
regarding ownership of the Directors of the Fund of equity securities of the
Fund or any other fund in the same fund complex for which each is also a
director or trustee. ('Fund Complex' has the same meaning as in the footnote to
the table above.) Dollar ranges of ownership are indicated as follows:
A = None; B = $1 to $10,000; C = $10,001 to $50,000; D = $50,001 to $100,000;
E = over $100,000.
INDEPENDENT DIRECTORS
AGGREGATE DOLLAR RANGE OF
DOLLAR RANGE OF EQUITY SECURITIES IN ALL FUNDS
EQUITY SECURITIES IN OVERSEEN BY DIRECTOR OR
THE FUND AS OF NOMINEE IN FUND COMPLEX AS
NAME OF DIRECTOR DECEMBER 31, 2003 OF DECEMBER 31, 2003
---------------- ----------------- --------------------
Candace K. Beinecke..................... C C
Jean D. Hamilton........................ C C
William M. Kelly........................ D D
Paul J. Lawler.......................... E E
Dominique Raillard...................... C C
Nathan Snyder........................... D D
INTERESTED DIRECTORS
AGGREGATE DOLLAR RANGE OF
DOLLAR RANGE OF EQUITY SECURITIES IN ALL FUNDS
EQUITY SECURITIES IN OVERSEEN BY DIRECTOR IN
THE FUND AS OF FUND COMPLEX AS OF
NAME OF DIRECTOR DECEMBER 31, 2003 DECEMBER 31, 2003
---------------- ----------------- -----------------
John P. Arnhold......................... E E
James E. Jordan......................... E E
Since January 1, 2002, none of the Independent Directors who is a director
of another investment company whose adviser and principal underwriter are ASB
Advisers and First Eagle Distributors, respectively (e.g., First Eagle Variable
Funds, Inc.), has held any other position with (i) the Fund (other than as a
director), (ii) an investment company having the same adviser or principal
underwriter as the Fund and First Eagle Variable Fund, Inc. or an adviser or
principal underwriter that controls, is controlled by, or is under common
control with the Adviser or the Distributor (other than as a director),
(iii) the Adviser, the Distributor or other affiliate of the Company, or
(iv) any person controlling, controlled by or under common control with the
Adviser or the Distributor. Also since January 1, 2002, none of these
individuals owns, beneficially or of record, securities issued by (i) the
Adviser or the Distributor or (ii) any person (other than a registered
investment company) directly or indirectly controlling, controlled by or under
common control with the Adviser or the Distributor. Finally, none of these
individuals or their immediate family
35
members has an interest in a transaction with a 'related person' of the Fund. A
'related person' is (i) an executive officer of the Fund, (ii) an investment
company having the same adviser or principal underwriter as the Fund or an
adviser or principal underwriter that controls, is controlled by or is under
common control with the Adviser or the Distributor, (iii) an executive officer
of such an investment company, (iv) the Adviser or the Distributor, (v) an
executive officer of the Adviser or the Distributor, (vi) a person directly or
indirectly controlling, controlled by, or under common control with the Adviser
or the Distributor, or (vii) an executive officer of a person described in
clause (vi) above.
COMMITTEES
There were four meetings of the Board of Directors held during the fiscal
year ended October 31, 2003. For the fiscal year ended October 31, 2003, each
current Director attended at least 75% of the meetings of the Board and of any
committees on which he or she served.
The following table describes the Board's standing committees:
NUMBER OF
COMMITTEE MEETINGS IN
COMMITTEE NAME MEMBERS FUNCTIONS THE LAST FISCAL YEAR
-------------- ------- --------- --------------------
Audit Committee Jean D. Hamilton Reviews the 2
William M. Kelly contract between
Paul J. Lawler the Fund and its
auditors (in this
regard, assists the
Board in selecting
the auditors and is
directly responsible
for supervising
auditor
compensation and
performance),
oversees the Fund's
accounting and
financial reporting
policies, procedures
and internal controls
and acts as liaison
to auditors; reviews
and, as appropriate,
approves in advance
non-audit services
provided by the
auditors to the
Fund, the Adviser,
and, in certain
cases, other Fund
affiliates.
(table continued on next page)
36
NUMBER OF
COMMITTEE MEETINGS IN
COMMITTEE NAME MEMBERS FUNCTIONS THE LAST FISCAL YEAR
-------------- ------- --------- --------------------
Nominating and Candace K. Beinecke Nominates new 3
Governance Committee William M. Kelly Independent
Dominique Raillard Directors of the
Fund; sets
compensation for
the Independent
Directors of the
Fund; oversees
other governance
matters related to
the service on the
Board by the
Independent
Directors. The
Nominating
Committee does not
consider
shareholder
recommendations
Valuation Committee John P. Arnhold Sets and recommends 2
Nathan Snyder securities
valuation policies,
supervises the
Adviser in the
valuation of Fund
assets and, in
certain
circumstances,
values Fund assets
directly
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE FUND
As of the Record Date, the Directors and officers of the Fund, as a group,
owned beneficially approximately 0.52% of the outstanding shares of the Gold
Fund and 1.25% of the outstanding shares of First Eagle Fund of America. As to
the remaining Portfolios, and also as of that date, the Directors and officers
of the Fund, as a group, owned less than 1% of outstanding shares of each. With
respect to each Portfolio of the Fund as of the Record Date, the following
shareholders owned (of record or beneficially) 5% or more of the outstanding
shares of the indicated class of shares of the Fund:
37
AMOUNT AND NATURE OF
NAME AND ADDRESS OF RECORD OR RECORD OR BENEFICIAL PERCENTAGE
PORTFOLIO BENEFICIAL INTEREST HOLDER OWNERSHIP OWNERSHIP
--------- -------------------------- --------- ---------
First Eagle Global Charles Schwab & Co INC 10,886,725.285 9.62%
Fund -- Class A. 101 Montgomery Street
San Francisco, CA 94104
First Eagle Global Merrill Lynch Pierce Fenner 3,979,261.222 15.93%
Fund -- Class C..... & Smith
4800 Deer Lake Drive
Jacksonville, FL 32246-6486
First Eagle Global Merrill Lynch Pierce Fenner 1,726,380.619 18.26%
Fund -- Class I..... & Smith
4800 Deer Lake Drive
Jacksonville, FL 32246-6486
Raymond James & 977,354.064 10.34%
Assoc Inc
FBO Electrical Work
880 Carillon PKWY
St. Petersburg, FL 33716
Charles Schwab & Co INC 754,185.581 7.98%
101 Montgomery Street
San Francisco, CA 94104
Fleet National Bank 487,062.405 5.15%
Danbury Pension Plan
PO BOX 92800
Rochester, NY 14692
First Eagle Overseas Charles Schwab & Co INC 46,540,084.787 27.64%
Fund -- Class A..... 101 Montgomery Street
San Francisco, CA 94104
Prudential Securities Inc 9,447,112.550 5.61%
1 New York PLZ
New York, NY 10292
First Eagle Overseas Merrill Lynch Pierce Fenner 7,922,899.133 24.78%
Fund -- Class C..... & Smith
4800 Deer Lake Drive
Jacksonville, FL 32246-6486
First Eagle Overseas Merrill Lynch Pierce Fenner 12,576,434.583 15.15%
Fund -- Class I..... & Smith
4800 Deer Lake Drive
Jacksonville, FL 32246-6486
Charles Schwab & Co INC 9,384,539.786 11.31%
101 Montgomery Street
San Francisco, CA 94104
First Eagle U.S. Charles Schwab & Co INC 436,690.149 12.22%
Value Fund -- Class 101 Montgomery Street
A................... San Francisco, CA 94104
First Eagle U.S. Merrill Lynch Pierce Fenner 194,527.164 11.35%
Value Fund -- Class & Smith
C................... 4800 Deer Lake Drive
Jacksonville, FL 32246-6486
First Eagle U.S. Natexis Bleichroeder, INC 2,606,803.888 66.04%
Value Fund -- Class 1345 Avenue of the Americas
I................... New York, NY 10105
Charles Schwab & Co INC 385,735.288 9.77%
101 Montgomery Street
San Francisco, CA 94104
38
AMOUNT AND NATURE OF
NAME AND ADDRESS OF RECORD OR RECORD OR BENEFICIAL PERCENTAGE
PORTFOLIO BENEFICIAL INTEREST HOLDER OWNERSHIP OWNERSHIP
--------- -------------------------- --------- ---------
First Eagle Gold Charles Schwab & Co INC 3,414,808.626 13.39%
Fund -- Class A..... 101 Montgomery Street
San Francisco, CA 94104
Merrill Lynch Pierce Fenner 1,888,842.797 7.40%
& Smith
4800 Deer Lake Drive
Jacksonville, FL 32246-6486
First Eagle Gold Merrill Lynch Pierce Fenner 673,863.774 20.71%
Fund -- Class C..... & Smith
4800 Deer Lake Drive
Jacksonville, FL 32246-6486
First Eagle Gold Natexis Bleichroeder, INC 631,980.411 21.53%
Fund -- Class I..... 1345 Avenue of the Americas
New York, NY 10105
BNP Paribas Securities 523,419.424 17.83%
Services
23 Avenue De La Porte
Neuve L-2085
Luxembourg
MB Childrens LLC 305,064.063 10.39%
110 N Wacker Drive
Chicago, IL 60606
Northern Trust Company 178,983.554 6.10%
FBO The Rose Hills
Foundation
801 S Canal
PO BOX 92956
Chicago, IL 60675
First Eagle Fund of Natexis Bleichroeder, INC 36,271.892 10.73%
America -- Class 1345 Avenue of the Americas
C................... New York, NY 10105
First Eagle Fund of Charles Schwab & Co INC 4,305,372.219 18.00%
America -- Class 101 Montgomery Street
Y................... San Francisco, CA 94104
National Financial Services 1,768,406.070 7.40%
One World Financial Center
200 Liberty Street
New York, NY 10281
Boston Safe Deposit & Trust 1,620,157.005 6.78%
FBO Eastman Kodak
Employee's Savings
And Investment Plan
525 William Penn Way
PO BOX 3198
Pittsburgh, PA 15230
39
AUDITORS
KMPG LLP serves as the Fund's independent accountants and in that capacity
audits the Fund's year-end financial statements. No representatives of KPMG are
expected to attend the Special Meeting of Shareholders.
Audit fees paid by the Fund for professional services rendered by KPMG
related to the audit of the Fund's annual financial statements or provided in
connection with statutory and regulatory engagements (such as review of
financial information included in the Fund's Prospectus and Statement of
Information) were $262,300 for the fiscal year ended October 31, 2003.
There were no financial information systems design and implementation fees
paid by the Fund for professional services rendered by KPMG related to the
design, implementation and operation of financial information management
services for the fiscal year ended October 31, 2003. (Nor during the same period
were any such fees paid to KPMG by the Adviser or any other affiliated entity
providing services to the Fund.)
All other fees paid by the Fund to KPMG (i.e., for services other than those
described with respect to audit fees and financial information systems design
and implementation fees above) were $127,420 for the fiscal year ended
October 31, 2003. (During the same period, no such fees were paid to KPMG by the
Adviser or any of its affiliates providing services to the Fund.)
Total fees paid to KPMG during the period by other domestic and foreign
funds receiving advisory or similar services from the Adviser were $452,300.
The Fund's Audit Committee has adopted procedures to review in advance and,
if appropriate, approve the provision of non-audit services provided by KPMG to
the Fund, to the Adviser and, in some cases, to other affiliates of the Fund.
These procedures apply to new service engagements entered into on or after
May 6, 2003. To date, no such services have required review by the Audit
Committee. The Audit Committee has, however, considered whether the payment of
the various fees outlined above are compatible with maintaining KPMG's
independence with respect to the Fund.
40
EXHIBIT A
AGREEMENT AND PLAN OF
REORGANIZATION AND TERMINATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION (the 'Agreement')
is made and entered into as of March 31, 2004, by and among FIRST EAGLE FUNDS,
INC. (the 'Fund'), a Maryland corporation having an office at 1345 Avenue of the
Americas, New York, New York 10105 and FIRST EAGLE FUNDS TRUST, a Delaware
statutory trust having an office at 1345 Avenue of the Americas, New York, New
York 10105 (the 'Trust').
WHEREAS, each of the Board of Directors of the Fund and Initial Trustee of
the Trust has determined that it is in the best interests of the Fund and the
Trust, respectively, that the assets of the Fund be acquired by the Trust
pursuant to this Agreement and in accordance with the applicable laws of the
State of Maryland and the State of Delaware; and
WHEREAS, the parties desire to enter into a plan of exchange pursuant to
Section 368(a) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. Plan of Exchange.
(a) Subject to the requisite approval of the shareholders of the
Fund and to the terms and conditions contained herein, on March 31,
2004, or such earlier or later date as may be mutually agreed upon by
the parties (the 'Exchange Date'), First Eagle Global Fund, a series of
First Eagle Funds, Inc. (the 'Global Fund') shall assign, transfer and
convey its assets to the First Eagle Global Fund series (the 'Global
Series') of the Trust; First Eagle Overseas Fund, a series of First
Eagle Funds, Inc. (the 'Overseas Fund') shall assign, transfer and
convey its assets to the First Eagle Overseas Fund series (the 'Overseas
Series') of the Trust; First Eagle U.S. Value Fund, a series of First
Eagle Funds, Inc. (the 'U.S. Value Fund') shall assign, transfer and
convey its assets to the First Eagle U.S. Value Fund series (the 'U.S.
Value Series') of the Trust; First Eagle Gold Fund, a series of First
Eagle Funds, Inc. (the 'Gold Fund') shall assign, transfer and convey
its assets to the First Eagle Gold Fund series (the 'Gold Series') of
the Trust; First Eagle Fund of America, a series of First Eagle Funds,
Inc. (the First Eagle Fund of America with Global Fund, Overseas Fund,
U.S. Value Fund and Gold Fund,
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each a 'Portfolio' and collectively the 'Portfolios') shall assign,
transfer and convey its assets to the First Eagle Fund of America series
(the 'First Eagle Fund of America Series') of the Trust (each a
'Successor Series' and collectively, the 'Successor Series'); the Global
Series shall acquire all of the assets of Global Fund; the Overseas
Series shall acquire all of the assets of Overseas Fund; the U.S. Value
Series shall acquire all of the assets of the U.S. Value Fund; the Gold
Series shall acquire all of the assets of Gold Fund; and the First Eagle
Fund of America Series shall acquire all of the assets of the First
Eagle Fund of America; and the Trust shall accept such assignment,
transfer and conveyance.
(b) Subject to the requisite approval of the shareholders of the
Fund and to the terms and conditions contained herein, on the Exchange
Date, Global Fund shall assign, transfer and convey the obligations,
duties and liabilities of, or attributable to, Global Fund to the Global
Series; Overseas Fund shall assign, transfer and convey the obligations,
duties and liabilities of, or attributable to, Overseas Fund to the
Overseas Series; U.S. Value Fund shall assign, transfer and convey the
obligations, duties and liabilities of, or attributable to, U.S. Value
Fund to the U.S. Value Series; Gold Fund shall assign, transfer and
convey the obligations, duties and liabilities of, or attributable to,
Gold Fund to the Gold Series; First Eagle Fund of America shall assign,
transfer and convey the obligations, duties and liabilities of, or
attributable to, First Eagle Fund of America to the First Eagle Fund of
America Series; and the Global Series shall acquire the obligations,
duties and liabilities attributable to the Global Fund; the Overseas
Series shall acquire the obligations, duties and liabilities
attributable to the Overseas Fund; the U.S. Value Series shall acquire
the obligations, duties and liabilities attributable to the U.S. Value
Fund; the Gold Series shall acquire the obligations, duties and
liabilities attributable to the Gold Fund; and the First Eagle Fund of
America Series shall acquire the obligations, duties and liabilities
attributable to the First Eagle Fund of America.
(c) Global Fund shall assign, transfer and convey its assets, as
provided in Section 1(a), in exchange for shares of beneficial interest
of the Global Series (the 'Global Trust Shares') equal in number to the
outstanding shares of the Global Fund; Overseas Fund shall assign,
transfer and convey its assets, as provided in Section 1(a), in exchange
for shares of beneficial interest of the Overseas Series (the 'Overseas
Trust Shares') equal in number to
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the outstanding shares of the Overseas Fund; U.S. Value Fund shall
assign, transfer and convey its assets, as provided in Section 1(a), in
exchange for shares of beneficial interest of the U.S. Value Series (the
'U.S. Value Trust Shares') equal in number to the outstanding shares of
the U.S. Value Fund; Gold Fund shall assign, transfer and convey its
assets, as provided in Section 1(a), in exchange for shares of
beneficial interest of the Gold Series (the 'Gold Trust Shares') equal
in number to the outstanding shares of the Gold Fund; and First Eagle
Fund of America shall assign, transfer and convey its assets, as
provided in Section 1(a), in exchange for shares of beneficial interest
of the First Eagle Fund of America Series (the 'America Trust Shares'
and the Global Trust Shares, Overseas Trust Shares, U.S. Value Trust
Shares, Gold Trust Shares and America Trust Shares being collectively
referred to as the 'Trust Shares') equal in number to the outstanding
shares of the First Eagle Fund of America. In lieu of delivering
certificates for the Trust Shares, the Trust shall credit the Trust
Shares to the corresponding Portfolio's account on the share record
books of the Trust and shall deliver a confirmation thereof to the
Portfolios. The Portfolios shall then deliver written instructions to
the Trust's transfer agent to establish accounts for the shareholders of
each Portfolio on the share record books relating to each corresponding
Successor Series.
(d) Global Fund agrees to distribute Global Trust Shares equal in
number to the corresponding number of then outstanding shares of Global
Fund to its shareholders; Overseas Fund agrees to distribute Overseas
Trust Shares equal in number to the corresponding number of then
outstanding shares of Overseas Fund to its shareholders; U.S. Value Fund
agrees to distribute U.S. Value Trust Shares equal in number to the
corresponding number of then outstanding shares of U.S. Value Fund to
its shareholders; Gold Fund agrees to distribute Gold Trust Shares equal
in number to the corresponding number of then outstanding shares of Gold
Fund to its shareholders; and First Eagle Fund of America agrees to
distribute America Trust Shares equal in number to the corresponding
number of then outstanding shares of First Eagle Fund of America to its
shareholders.
(e) The Trust further assumes and agrees to observe, perform and be
bound by all of the grants, terms, covenants, representations,
warranties, and conditions contained in all contracts and agreements
currently in effect with the Fund, including, but not limited to, the
Distribution Agreements, the Services Agreements,
A-3
and the other agreements and documents delivered thereunder which are
binding upon, and to be observed or performed by, the Fund thereunder,
as though the Trust were the Fund, and hereby ratifies and confirms the
validity of all contracts and agreements currently in effect with the
Fund, including, but not limited to, the Distribution Agreement and the
Services Agreement.
(f) All references to the Fund in all agreements to which the Fund
is a party will be deemed to refer to the Trust.
(g) It is contemplated that the net asset value of each outstanding
share of each Successor Series of the Trust immediately after the
effectiveness of this Agreement will be equivalent to the net asset
value of each outstanding share of the corresponding Portfolios.
(h) Delivery of the assets of the Portfolios to be transferred shall
be made not later than the next business day following the Exchange
Date. Assets transferred shall be delivered to The Bank of New York, the
Trust's custodian (the 'Custodian'). Such delivery shall be made for the
account of the Trust and the Successor Series, with all securities not
in bearer or book entry form duly endorsed, or accompanied by duly
executed separate assignments or stock powers, in proper form for
transfer, with signatures guaranteed, and with all necessary stock
transfer stamps, sufficient to transfer good and marketable title
thereto (including all accrued interest and dividends and rights
pertaining thereto) to the Custodian for the account of the Trust and
the Successor Series free and clear of all liens, encumbrances, rights,
restrictions and claims. All cash delivered shall be in the form of
immediately available funds payable to the order of the Custodian for
the account of the Trust and the Successor Series. All assets of Global
Fund delivered to the Custodian as provided herein shall be allocated by
the Trust to the Global Series; all assets of Overseas Fund delivered to
the Custodian as provided herein shall be allocated by the Trust to the
Overseas Series; all assets of U.S. Value Fund delivered to the
Custodian as provided herein shall be allocated by the Trust to the U.S.
Value Series; all assets of Gold Fund delivered to the Custodian as
provided herein shall be allocated by the Trust to the Gold Series; all
assets of First Eagle Fund of America delivered to the Custodian as
provided herein shall be allocated by the Trust to the First Eagle Fund
of America Series. All of the liabilities of Global Fund shall, on and
as of the Effective Date, be deemed liabilities of, and shall be deemed
assumed by, the Global Series; all of the liabilities of
A-4
Overseas Fund shall, on and as of the Effective Date, be deemed
liabilities of, and shall be deemed assumed by, the Overseas Series; all
of the liabilities of U.S. Value Fund shall, on and as of the Effective
Date, be deemed liabilities of, and shall be deemed assumed by, the U.S.
Value Series; all of the liabilities of Gold Fund shall, on and as of
the Effective Date, be deemed liabilities of, and shall be deemed
assumed by, the Gold Series; and all of the liabilities of First Eagle
Fund of America shall, on and as of the Effective Date, be deemed
liabilities of, and shall be deemed assumed by, the First Eagle Fund of
America Series.
(i) The Portfolios will pay or cause to be paid to the Trust any
interest received on or after the Exchange Date with respect to assets
transferred to the corresponding Successor Series hereunder and the
Trust shall allocate any such interest to the appropriate Successor
Series. The Fund will transfer to the Trust any distributions, rights or
other assets received by the Fund after the Exchange Date as
distributions on or with respect to the securities transferred from the
Portfolios to the corresponding Successor Series hereunder. The Trust
shall allocate any such distributions, rights or other assets to the
appropriate Successor Series. All such assets shall be deemed included
in assets transferred from the Portfolios on the Exchange Date and shall
not be separately valued.
(j) If the requisite number of shareholders of the Fund does not
approve this Agreement, the Fund will continue to operate as a Maryland
corporation.
(k) As soon as practicable after the Exchange Date, and following
distribution by each Portfolio of the Trust Shares of each of the
Successor Series received by it among its shareholders in proportion to
the number of shares each such shareholder holds in such corresponding
Portfolio, the Fund will dissolve and terminate.
2. The Fund's Representations and Warranties. The Fund represents and
warrants to and agrees with the Trust as follows:
(a) It is a corporation duly organized and validly existing under
the laws of the State of Maryland and has power to own all of its
properties and assets and, subject to the approval of its shareholders
as contemplated hereby, to carry out this Agreement.
(b) It is registered under the Investment Company Act of 1940, as
amended (the '1940 Act'), as an open-end, diversified,
A-5
management investment company, and such registration has not been
revoked or rescinded and is in full force and effect, except that with
respect to the First Eagle Fund of America such Portfolio is a
non-diversified portfolio of assets.
(c) On the Exchange Date, it will have full right, power and
authority to sell, assign, transfer and deliver the assets to be
transferred by it hereunder.
3. The Trust's Representations and Warranties. The Trust represents and
warrants to and agrees with the Fund as follows:
(a) The Trust is a statutory trust duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
power to carry on its business and to carry out this Agreement.
(b) On the Exchange Date, the Trust Shares to be issued to the Fund
will have been duly authorized and, when issued and delivered pursuant
to this Agreement, will be legally and validly issued and will be fully
paid and non-assessable by the Trust. No Trust or Successor Series
shareholder will have any preemptive right of subscription or purchase
in respect thereof.
4. The Trust's Conditions Precedent. The obligations of the Trust
hereunder shall be subject to the following conditions:
(a) The Fund shall have furnished to the Trust a statement of its
assets, including a list of securities with their respective values
owned by it.
(b) As of the Exchange Date, all representations and warranties of
the Fund made in this Agreement shall be true and correct as if made on
and as of such date, and the Fund each shall have complied with all the
agreements and satisfied all the conditions to be performed or satisfied
by each of them on or prior thereto.
(c) A vote approving this Agreement and the transactions and
exchange contemplated hereby shall have been adopted by the affirmative
vote of at least a majority of the outstanding shares (within the
meaning of the 1940 Act) of the Fund entitled to vote and the
shareholders of the Fund shall have voted, by the vote specified in the
proxy materials of the Fund relating to this Agreement, to direct the
Fund to vote, and the Fund shall have voted by or on the Exchange Date,
as sole shareholder of the Trust, (i) to vote on each of the proposals
set forth in the Proxy Statements and approved by the shareholders, so
that the
A-6
approval of the respective proposals may be made effective with respect
to the Trust as well as the Fund; (ii) to elect the nominees as trustees
of the Trust, (iii) to render approval on such matters as may be
necessary, for regulatory purposes, in order to adopt or enter into any
agreements or plans on behalf of the Trust that had previously been
approved by shareholders of the Fund and are then in effect with respect
to the Fund, and (iv) to approve all other contracts and agreements
currently in effect with the Fund, including, but not limited to,
accounting, custody, transfer agency, distribution, services, procedural
and safekeeping and repurchase agreements.
5. The Fund's Conditions Precedent. The obligations of the Fund
hereunder shall be subject to the condition that, as of the Exchange Date,
all representations and warranties of the Trust made in this Agreement shall
be true and correct as if made on and as of such date, and that the Trust
shall have complied with all of the agreements and satisfied all the
conditions on its part to be performed or satisfied on or prior to such
date.
6. The Trust's and the Fund's Conditions Precedent. The obligations of
both the Trust and the Fund hereunder shall be subject to the following
conditions:
(a) This Agreement and the transactions contemplated hereby having
been approved by the affirmative vote of at least a majority of the
outstanding shares (within the meaning of the 1940 Act) of the Fund
entitled to vote as of the close of business on January 9, 2004, or such
earlier or later proxy record date as may be mutually agreed upon by the
parties.
(b) The Trust and the Fund shall have received an opinion of
Shearman & Sterling LLP, in form and substance satisfactory to the Trust
and the Fund, to the effect that, for federal income tax purposes,
(1) the transfer of the assets of each Portfolio in exchange solely
for the shares of a corresponding Successor Series and the assumption by
such Successor Series of the liabilities of such Portfolio, as provided
for in the Agreement, will constitute a reorganization within the
meaning of Section 368(a) of the Code, and each Portfolio and the
corresponding Successor Series will be deemed to be a 'party to a
reorganization' within the meaning of Section 368(b) of the Code;
(2) in accordance with Section 361(a) of the Code, no gain or loss
will be recognized to each Portfolio under Section 361(c)(1)
A-7
of the Code as a result of the transfer of assets solely in exchange for
the shares of a corresponding Successor Series and the assumption by
such Successor Series of the liabilities of such Portfolio or on the
distribution of the shares of such Successor Series to the shareholders
of such Portfolio, as provided for in the Agreement;
(3) under Section 1032 of the Code, no gain or loss will be
recognized to each Successor Series on the receipt of the assets of a
corresponding Portfolio in exchange for the shares of such Successor
Series and the assumption by such Successor Series of the liabilities of
such Portfolio, as provided for in the Agreement;
(4) in accordance with Section 354(a)(1) of the Code, no gain or
loss will be recognized to the shareholders of each Portfolio on the
receipt of the shares of a corresponding Successor Series in exchange
for their shares of such Portfolio;
(5) in accordance with Section 362(b) of the Code, the tax basis of
each Successor Series in the assets of a corresponding Portfolio will be
the same as the tax basis of such assets in the hands of such Portfolio
immediately prior to the consummation of the transactions contemplated
by the Agreement;
(6) in accordance with Section 358 of the Code, immediately after
the consummation of the transactions contemplated by the Agreement, the
tax basis of the shares of a Successor Series received by the
shareholders of each Portfolio will be equal, in the aggregate, to the
tax basis of the shares of such Portfolio surrendered in exchange
therefor;
(7) in accordance with Section 1223 of the Code, the holding period
for the shares of a Successor Series received by the shareholders of
each Portfolio will be determined by including the period for which such
shareholder held the shares of such Portfolio exchanged therefor;
provided, that the shares of such Portfolio were held as capital assets
for federal income tax purposes;
(8) in accordance with Section 1223 of the Code, the holding period
of each Successor Series with respect to the assets of a corresponding
Portfolio acquired by it in accordance with the Agreement will include
the period for which such assets were held by such Portfolio; and
(9) pursuant to Section 381(a) of the Code and regulations
thereunder, each Successor Series will succeed to and take into account
certain tax attributes of a corresponding Portfolio, such as
A-8
earnings and profits, capital loss carryovers and method of accounting.
7. Amendment or Termination of Agreement. This Agreement and the
transactions contemplated hereby may be amended or terminated and abandoned
by resolution of the Board of Directors the Fund, or the Board of Trustees
of the Trust, at any time prior to the transfer of assets on the Exchange
Date (and notwithstanding any vote of the shareholders of the Fund) if
(i) there is a material breach by the other party of any representation,
warranty or agreement contained in this Agreement, (ii) it reasonably
appears that a party cannot meet a condition of this Agreement or (iii)
circumstances should develop that, in the opinion of the Board of Directors
of the Fund, or the Board of Trustees of the Trust, make proceeding with
this Agreement in its current form inadvisable.
In addition, prior to the transfer of assets on the Exchange Date, any
provision of this Agreement may be amended or modified by the Board of
Directors of the Fund and the Board of Trustees of the Trust if such
amendment or modification would not have a material adverse effect upon the
benefits intended under this Agreement and would be consistent with the best
interests of the shareholders.
If this Agreement is terminated and the exchange contemplated hereby is
abandoned pursuant to the provisions of this Section 7, this Agreement shall
become void and have no effect, without any liability on the part of any
party hereto or the trustees, officers or shareholders of the Trust or the
directors, officers or shareholders of the Fund, in respect of this
Agreement.
8. Waiver. At any time prior to the Exchange Date, any of the foregoing
conditions may be waived by the Board of Directors of the Fund or the Board
of Trustees of the Trust, if, in the judgment of the waiving party, such
waiver will not have a material adverse effect on the benefits intended
under this Agreement to the shareholders of the Fund or the shareholders of
the Trust, as the case may be.
9. No Survival of Representations. None of the representations and
warranties included or provided for herein shall survive consummation of the
transactions contemplated hereby.
10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware; provided,
however, that the due authorization, execution and delivery of this
Agreement, in the case of the Fund, shall be governed and construed in
accordance with the internal laws of the State of Maryland.
A-9
11. Counterparts. This Agreement may be executed in counterparts, each
of which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, the Fund and the Trust have caused this Agreement and
Plan of Reorganization and Termination to be duly executed as of the day and
year first above written.
FIRST EAGLE FUNDS, INC.
By: ...................................................
Title:
FIRST EAGLE FUNDS TRUST
By: ...................................................
Title: Initial Trustee
A-10
EXHIBIT B
AGREEMENT AND DECLARATION OF TRUST
OF
FIRST EAGLE FUNDS TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as of the
date set forth below by the Trustees named hereunder for the purpose of forming
a Delaware statutory trust in accordance with the provisions hereinafter set
forth,
NOW, THEREFORE, the Initial Trustees hereby direct that the Certificate of
Trust be filed with Office of the Secretary of State of the State of Delaware,
and the Initial Trustees do hereby declare that the Trustees will hold in trust
all cash, securities and other assets that the Trust now possesses or may
hereafter acquire from time to time in any manner and manage and dispose of the
same upon the following terms and conditions for the benefit of the holders of
Shares in the Trust.
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. This Trust shall be known as 'First Eagle Funds Trust' and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) 'By-Laws' shall mean the By-Laws of the Trust, as amended from time
to time, which By-Laws are expressly herein incorporated by reference as
part of the 'governing instrument' within the meaning of the Delaware Act;
(b) 'Certificate of Trust' means the certificate of trust, as amended or
restated from time to time, filed by the Trustees in the Office of the
Secretary of State of the State of Delaware in accordance with the Delaware
Act;
(c) 'Class' means a class of Shares of a Series of the Trust established
in accordance with the provisions of Article III hereof;
(d) 'Commission' means the Securities and Exchange Commission;
(e) 'Declaration of Trust' means this Agreement and Declaration of
Trust, as amended or restated from time to time;
B-1
(f) 'Delaware Act' means the Delaware Statutory Trust Act, 12 Del. C.
3801 et seq., as amended from time to time;
(g) 'Initial Trustees' means the person or persons who have signed this
Declaration of Trust;
(h) 'Manager' means a party furnishing services to the Trust pursuant to
an investment management or investment advisory agreement described in
Article IV, Section 8(a) hereof;
(i) '1940 Act' means the Investment Company Act of 1940 and the Rules
and Regulations thereunder, all as amended from time to time;
(j) 'Person' means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures, estates and other entities, whether or
not legal entities, and governments and agencies and political subdivisions
thereof, whether domestic or foreign;
(k) 'Principal Underwriter' shall have the meaning given to it in the
1940 Act;
(l) 'Series' means each Series of Shares established and designated
under or in accordance with the provisions of Article III hereof;
(m) 'Shareholder' means a beneficial owner of outstanding Shares;
(n) 'Shares' means the Shares of beneficial interest into which the
beneficial interest in the Trust shall be divided, from time to time, and
includes fractions of Shares as well as whole Shares;
(o) 'Trust' means the Delaware statutory trust established under the
Delaware Act by this Declaration of Trust and the filing of the Certificate
of Trust in the Office of the Secretary of State of the State of Delaware;
(p) 'Trust Property' means any and all property, real or personal,
tangible or intangible, that is from time to time owned or held by or for
the account of the Trust; and
(q) 'Trustees' means the Initial Trustees, and all other Persons who
may, from time to time, be duly elected or appointed to serve as Trustees in
accordance with the provisions hereof, in each case so long as such Person
shall continue in office in accordance with the terms of this Declaration of
Trust, and reference herein to a Trustee or the Trustees shall refer to such
Person or Persons in her or his or their capacity as Trustees hereunder.
B-2
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to conduct, operate and carry on the business of
a management investment company registered under the 1940 Act through one or
more Series investing primarily in securities, and to carry on such other
business as the Trustees may, from time to time, determine pursuant to their
authority under this Declaration of Trust.
ARTICLE III
SHARES
Section 1. Division of Beneficial Interests. The beneficial interests in the
Trust may be divided into one or more Series. Each Series may be divided into
one or more Classes. Subject to the further provisions of this Article III and
any applicable requirements of the 1940 Act, the Trustees shall have full power
and authority, in their sole discretion, and without obtaining any authorization
or vote of the Shareholders of any Series or Class thereof, (i) to divide the
beneficial interests in the Trust or in each Series or Class thereof into
Shares, with or without par value as the Trustees shall determine, (ii) to issue
Shares without limitation as to number (including fractional Shares) to such
Persons and for such amount and type of consideration, including cash or
securities, at such time or times and on such terms as the Trustees may deem
appropriate, (iii) to establish and designate and to change in any manner any
Series or Class thereof and to fix such preferences, voting powers, rights,
duties and privileges and business purpose of each Series or Class thereof as
the Trustees may, from time to time, determine, which preferences, voting
powers, rights, duties and privileges may be senior or subordinate to (or in the
case of business purpose, different from) any existing Series or Class thereof
and may be limited to specified property or obligations of the Trust or profits
and losses associated with specified property or obligations of the Trust,
(iv) to divide or combine the Shares of any Series or Class thereof into a
greater or lesser number, or issue dividends in Shares with respect to Shares of
any Series or Class, without thereby materially changing the proportionate
beneficial interest of the Shares of such Series or Class in the assets held
with respect to that Series or Class thereof, (v) to classify or reclassify any
issued Shares of any Series or Class thereof into Shares of one or more Series
or Classes thereof and (vi) to take such other action with respect to the Shares
as the Trustees may deem desirable.
Subject to the distinctions permitted among Classes or otherwise in Shares
of the same Series as established by the Trustees consistent with the
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requirements of the 1940 Act, each Share of a Series of the Trust shall
represent an equal beneficial interest in the net assets of such Series, and
each holder of Shares of a Series shall be entitled to receive such holder's pro
rata share of distributions of income and capital gains, if any, made with
respect to such Series. Upon redemption of the Shares of any Series or Class
thereof, the applicable Shareholder shall be entitled to be paid solely out of
the funds and property of such Series or Class thereof of the Trust.
All references to Shares in this Declaration of Trust shall be deemed to be
Shares of any or all Series or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust and each Class thereof, except as the context otherwise requires.
All Shares issued hereunder, including, without limitation, Shares issued in
connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and non-assessable. Except as otherwise provided by the
Trustees, Shareholders shall have no appraisal, preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded on
the books of the Trust or a transfer or similar agent for the Trust, which books
shall be maintained separately for the Shares of each Series (or Class). No
certificates certifying the ownership of Shares shall be issued except as the
Trustees may otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the issuance of Share certificates, the
transfer of Shares of each Series (or Class) and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to the identity of the Shareholders of each
Series (or Class) and as to the number of Shares of each Series (or Class) held,
from time to time, by each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by the Trustees,
Shares shall be transferable on the books of the Trust only by the record holder
thereof or by his duly authorized agent upon delivery to the Trustees or the
Trust's transfer agent of a duly executed instrument of transfer, together with
a Share certificate if one is outstanding, and such evidence of the genuineness
of the execution and authorization thereof as may be required by the Trustees
and of such other matters as may be required by the Trustees. Upon such
delivery, and subject to any further requirements specified by the Trustees or
contained in the By-Laws, the transfer shall be recorded on the books of the
Trust. Until a transfer is so recorded, the record holder of Shares shall be
deemed to be the holder of
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such Shares for all purposes hereunder and neither the Trustees nor the Trust,
nor any transfer agent, shareholder servicing agent or similar agent, any
officer, employee or agent of the Trust, shall be affected by any notice of a
proposed transfer.
Section 4. Investments in the Trust. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees, from time to time, may authorize.
Section 5. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder, by virtue of having become a Shareholder, shall
be held to have expressly assented and agreed to the terms hereof. The death,
incapacity, dissolution, termination or bankruptcy of a Shareholder during the
existence of the Trust shall not operate to dissolve the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of such Shareholder under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust Property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay. Except as specifically provided herein, no Shareholder shall be
personally liable for the debts, liabilities, obligations or expenses incurred
by, contracted for, or otherwise existing with respect to, the Trust or by or on
behalf of any Series or Class. Every note, bond, contract or other understanding
issued by or on behalf of the Trust or Trustees relating to the Trust or to a
Series or Class may include a recitation limiting the obligation represented
thereby to the Trust or to one or more Series or Class and its respective assets
(but the omission of such a recitation shall not operate to bind any Shareholder
or Trustee of the Trust).
Section 6. Establishment and Designation of Series (or Class). Without
obtaining any authorization or vote of the Shareholders of any Series or Class
thereof (except as otherwise required by the 1940 Act), the establishment and
designation of any Series (or Class) of Shares shall be effective upon the
adoption by a majority of the then Trustees of a resolution that sets forth such
establishment and designation and the relative rights and preferences of such
Series (or Class), whether directly in such resolution or by reference to
another document including, without
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limitation, any registration statement of the Trust, or as otherwise provided in
such resolution.
Shares of each Series (or Class) established pursuant to this Article III,
unless otherwise provided in the resolution establishing such Series, shall have
the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series (or Class). All
consideration received by the Trust for the issue or sale of Shares of a
particular Series or Class thereof, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably be held with
respect to that Series (or Class) for all purposes, subject only to the
rights of creditors of such Series (or Class thereof to the extent provided
below), and shall be so recorded upon the books of account of the Trust.
Such consideration, assets, income, earnings, profits and proceeds thereof,
from whatever source derived, including, without limitation, any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds, in whatever form
the same may be, are herein referred to as assets held with respect to that
Series (or Class thereof). In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments that are not
readily identifiable as assets held with respect to any particular Series
(and the Classes thereof) (collectively 'General Assets'), the Trustees
shall allocate such General Assets to, between or among any one or more of
the Series (and the Classes thereof) in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any General
Assets so allocated to a particular Series (and the Classes thereof) shall
be assets held with respect to that Series and such Classes. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series and Classes for all purposes. Separate and
distinct records shall be maintained for each Series (and the Classes
thereof) and the assets held with respect to each Series (and the Classes
thereof) shall be held and accounted for separately from the assets held
with respect to all other Series (and the Classes thereof) and the General
Assets of the Trust not allocated to such Series or Classes.
(b) Liabilities Attributable to a Particular Series (or Class). The
assets of the Trust held with respect to each particular Series (or Class
thereof) shall be charged exclusively with the liabilities of the Trust
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attributable to that Series or Class and all expenses, costs, charges and
reserves attributable to that Series or Class. Any general liabilities of
the Trust that are not readily identifiable as being attributable to any
particular Series (and the Classes thereof) shall be allocated and charged
by the Trustees to and among any one or more of the Series (and the Classes
thereof) in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. All liabilities, expenses, costs,
charges, and reserves so charged to a Series (and the Classes thereof) are
herein referred to as 'liabilities attributable to' that Series (or Class
thereof). Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Series and Classes for all purposes. All liabilities
attributable to a particular Series shall be enforceable against the assets
held with respect to such Series only and not against the assets of the
Trust generally or against the assets held with respect to any other Series.
Notice of this limitation on the liability of each Series shall be set forth
in the Certificate of Trust or in an amendment thereto prior to the issuance
of any Shares of a Series. To the extent that the Trustees, pursuant to
Section 2 of Article VII hereof, include a Class limitation on liability in
any note, bond, contract, instrument, certificate or undertaking made with
respect to any Class, the parties to such note, bond, contract, instrument,
certificate or undertaking shall look only to the assets of such Class in
satisfaction of the liabilities arising thereunder and not to the assets of
any other Class of the applicable Series.
(c) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provision of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution, including,
without limitation, any distribution paid upon dissolution of the Trust or
of any Series (or Class) thereof with respect to, nor any redemption or
repurchase of, the Shares of any Series (or Class thereof) shall be effected
by the Trust other than from the assets held with respect to such Series (or
Class thereof), nor shall any Shareholder of any particular Series (or Class
thereof) otherwise have any right or claim against the assets held with
respect to any other Series or Class except to the extent that such
Shareholder has such a right or claim hereunder as a Shareholder of such
other Series or Class. The Trustees shall have full discretion, to the
extent not inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such determination
and allocation shall be conclusive and binding upon the Shareholders.
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(d) Equality. All the Shares of each particular Series (or Class
thereof) shall represent an equal proportionate interest in the assets held
with respect to that Series (or Class thereof), and each Share of any
particular Series shall be equal to each other Share of that Series (subject
to the liabilities attributable to that Series and such rights and
preferences as may have been established and designated with respect to
Classes, or otherwise, of Shares within such Series).
(e) Fractions. Any fractional Share of a Series (or Class thereof) shall
carry proportionately all the rights and obligations of a whole Share of
that Series or Class, including rights with respect to voting, receipt of
dividends and distributions, redemption of Shares and dissolution of the
Trust.
(f) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series (or Class thereof),
unless otherwise required by applicable law, to combine the assets and
liabilities attributable to any two or more Series (or Classes) into assets
and liabilities attributable to a single Series or Class.
(g) Elimination of Series. At any time that there are no Shares
outstanding of any particular Series (or Class) previously established and
designated, the Trustees may by resolution of a majority of the Trustees
abolish that Series (or Class) and rescind the establishment and designation
thereof and may thereafter establish a new Series (or Class) with such
designation and otherwise as herein provided.
Section 7. Indemnification of Shareholders. If any Shareholder or former
Shareholder shall be exposed to liability by reason of a claim or demand
relating to such Person being or having been a Shareholder, and not because of
such Person's acts or omissions, the Shareholder or former Shareholder (or such
Person's heirs, executors, administrators, or other legal representatives or in
the case of a corporation or other entity, its corporate or other general
successor) shall be entitled to be held harmless from and indemnified out of the
assets of the Trust against all cost and expense reasonably incurred in
connection with such claim or demand, but only out of the assets held with
respect to the particular Series (or Class thereof) of Shares of which such
Person is or was a Shareholder and from or in relation to which such liability
arose. The Series (or Class thereof) may, at its option, and shall, upon request
by the Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of such Series and satisfy any judgment thereon.
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ARTICLE IV
TRUSTEES
Section 1. Election of Trustees. Upon the issuance of beneficial interests
of the Trust, First Eagle Funds, Inc., a Maryland corporation, as initial
shareholder of the Trust, shall elect the Trustees of the Trust; to the extent
that persons so elected are different from the Initial Trustee, such persons
shall replace the Initial Trustee as Trustees of the Trust.
Section 2. Number, Election and Tenure. The Initial Trustee shall be James
Jordan. After the initial election of Trustees, the number of Trustees shall be
eight or such other number as shall, from time to time, be determined by the
Trustees pursuant to Section 4 of this Article IV. Except as described above
with respect to the Initial Trustee, each Trustee shall serve during the
continued term of the Trust until she or he dies, resigns, is declared bankrupt
or incompetent by a court of appropriate jurisdiction, or is removed, or, if
sooner, until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of her or his
successor. In the event that less than the majority of the Trustees holding
office have been elected by the Shareholders, to the extent required by the 1940
Act, the Trustees then in office shall call a Shareholders meeting for the
election of Trustees. Any Trustee may resign at any time by written instrument
signed by her or him and delivered to any officer of the Trust or to the
secretary of any meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust, no Trustee
resigning and no Trustee removed shall have any right to any compensation for
any period following her or his resignation or removal, or any right to damages
on account of such removal. The Shareholders may elect Trustees at any meeting
of Shareholders called by the Trustees for that purpose. Any Trustee may be
removed at any meeting of Shareholders by a majority vote of the outstanding
Shares of the Trust, as defined in the 1940 Act.
Section 3. Effect of Death, Resignation or Removal of a Trustee. The death,
declination to serve, resignation, retirement, removal, or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Whenever there shall be fewer than the designated number of Trustees, until
additional Trustees are elected or appointed as provided herein to bring the
total number of Trustees equal to the designated number, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust. As
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conclusive evidence of such vacancy, a written instrument certifying the
existence of such vacancy may be executed by an officer of the Trust or by a
majority of the Trustees then in office. In the event of the death, declination,
resignation, retirement, removal, or incapacity of all the then Trustees within
a short period of time and without the opportunity for at least one Trustee
being able to appoint additional Trustees to replace those no longer serving,
the Trust's Manager is empowered to appoint new Trustees subject to the
applicable provisions of the 1940 Act.
Section 4. Powers. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Trustees; the Trustees shall
have full power and authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust, including the power
to engage in securities transactions of all kinds on behalf of the Trust.
Without limiting the foregoing, the Trustees may: adopt By-Laws not inconsistent
with this Declaration of Trust providing for the regulation and management of
the affairs of the Trust and may amend and repeal them to the extent that such
By-Laws do not reserve that right to the Shareholders; enlarge or reduce their
number; remove any Trustee with or without cause at any time by written
instrument signed by at least two-thirds of the number of Trustees prior to such
removal, specifying the date when such removal shall become effective and fill
vacancies caused by enlargement of their number or by the death, resignation or
removal of a Trustee; elect and remove, with or without cause, such officers and
appoint and terminate such agents as they consider appropriate; appoint from
their own number and establish and terminate one or more committees consisting
of two or more Trustees which may exercise the powers and authority of the Board
of Trustees to the extent that the Board of Trustees determine; deposit all or
any part of such assets in a system or systems for the central handling of
securities or with a Federal Reserve Bank; provide for the issuance and
distribution of Shares by the Trust directly or through one or more Principal
Underwriters or otherwise; redeem, repurchase and transfer Shares pursuant to
applicable law; declare and pay dividends and distributions to Shareholders from
the assets available therefor; and in general exercise, or delegate to any
officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian, transfer or Shareholder
servicing agent, or Principal Underwriter, such authority as they consider
desirable. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration of Trust, the presumption shall be in favor of a grant of power
to the Trustees. Unless otherwise specified herein or in the By-Laws or required
by law, any action by the Trustees shall be
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deemed effective if approved or taken by a majority of the Trustees present at a
meeting of Trustees at which a quorum of Trustees is present, within or without
the State of Delaware.
Without limiting the foregoing, the Trustees shall have the power and
authority to cause the Trust (or to act on behalf of the Trust):
(a) To operate as and carry out the business of an investment company,
and exercise all the powers necessary or appropriate to the conduct of such
operations;
(b) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire, own,
hold, pledge, sell, assign, transfer, exchange, distribute, purchase or
write options on, lend, enter into contracts for the future acquisition or
delivery of, or otherwise deal in or dispose of, securities, indices,
currencies, commodities or other property of every nature and kind,
including, without limitation, all types of bonds, debentures, stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers acceptances, and other securities,
commodities or contracts of any kind, issued, created, guaranteed, or
sponsored by any and all Persons, including, without limitation, states,
territories, and possessions of the United States and the District of
Columbia and any political subdivision, agency, or instrumentality thereof,
the U.S. Government or any foreign government or any political subdivision
of the U.S. Government or any foreign government, or any domestic or
international instrumentality, or by any bank or savings institution, or by
any corporation or organization organized under the laws of the United
States or of any state, territory, or possession thereof, or by any
corporation or organization organized under any foreign law, or in 'when
issued' contracts for any such securities; to change the investments of the
assets of the Trust; and to exercise any and all rights, powers, and
privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without limitation,
the right to consent and otherwise act with respect thereto, with power to
designate one or more Persons to exercise any of said rights, powers, and
privileges in respect of any of said instruments;
(c) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options (including options on futures contracts) with respect to or
otherwise deal in any property rights relating to any or all of the assets
of the Trust or any Series or Class thereof;
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(d) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such Person or Persons as the Trustees
shall deem proper, granting to such Person or Persons such power and
discretion with relation to securities or property as the Trustees shall
deem proper;
(e) To set record dates for the determination of Shareholders with
respect to various matters, which, for purposes of determining the
Shareholders of any Series (or Class) who are entitled to receive payment of
any dividend or of any other distribution shall be on or before the date for
the payment of such dividend or such other payment, as the record date for
determining the Shareholders of such Series (or Class) having the right to
receive such dividend or distribution; without fixing a record date, the
Trustees may for distribution purposes close the register or transfer books
for one or more Series (or Classes) at any time prior to the payment of a
distribution; nothing in this subsection shall be construed as precluding
the Trustees from setting different record dates for different Series (or
Classes);
(f) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities or other property;
(g) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in its own name
or in the name of a custodian or a nominee or nominees or otherwise;
(h) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security or
property which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer; and to
pay calls or subscriptions with respect to any security or property held in
the Trust;
(i) To join with other security or property holders in acting through a
committee, depository, voting trustee or otherwise, and in that connection
to deposit any security or property with, or transfer any security or
property to, any such committee, depositary or trustee, and to delegate to
them such power and authority with relation to any security or property
(whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall
deem proper;
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(j) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including, but not limited
to, claims for taxes;
(k) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(l) To borrow funds or other property in the name of the Trust or any
Series thereof exclusively for Trust or the relevant Series purposes and in
connection therewith issue notes or other evidences of indebtedness; and to
mortgage and pledge the Trust Property or any part thereof to secure any or
all of such indebtedness;
(m) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust Property or any part thereof to secure any of or all of such
obligations;
(n) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary or appropriate for the conduct
of the business, including, without limitation, insurance policies insuring
the assets of the Trust or payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, principal
underwriters, or independent contractors of the Trust, individually against
all claims and liabilities of every nature arising by reason of holding
Shares, holding, being in or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
Person as Trustee, officer, employee, agent, investment adviser, principal
underwriter, or independent contractor, including any action taken or
omitted that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such Person against liability;
(o) To adopt, establish and carry out pension, profit-sharing, Share
bonus, Share purchase, savings, thrift and other retirement, incentive and
benefit plans and trusts, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of
the Trust;
(p) To enter into contracts of any kind and description;
(q) To interpret the investment policies, practices or limitations of
any Series or Class;
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(r) To establish a registered office and have a registered agent in the
State of Delaware;
(s) To invest part or all of the Trust Property (or part or all of the
assets of any Series), or to dispose of part or all of the Trust Property
(or part or all of the assets of any Series) and invest the proceeds of such
disposition, in securities issued by one or more other investment companies
registered under the 1940 Act (including investment by means of transfer or
part of all of the Trust Property in exchange for an interest or interests
in such one or more investment companies) all without any requirement of
approval by Shareholders unless required by the 1940 Act. Any such other
investment company may (but need not) be a trust (formed under the laws of
the State of Delaware or of any other state) which is classified as a
partnership for federal income tax purposes;
(t) Subject to the 1940 Act, to engage in any other lawful act or
activity in which a statutory trust organized under the Delaware Act may
engage; and
(u) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment
of any object or the furtherance of any power hereinbefore set forth, either
alone or in association with others, and to do every other act or thing
incidental or appurtenant to or growing out of or connected with the
aforesaid business or purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general power of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trust shall not be limited to investing in obligations maturing before
the possible dissolution of the Trust or one or more of its Series or Classes
thereof. The Trust shall not in any way be bound or limited by any present or
future law or custom in regard to investment by fiduciaries. The Trust shall not
be required to obtain any court order to deal with any assets of the Trust or
take any other action hereunder.
Section 5. Payment of Expenses by the Trust. The Trustees are authorized to
pay or cause to be paid out of the principal or income of the Trust, or partly
out of the principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in
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connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees compensation and such expenses and
charges for the services of the Trust's officers, employees, investment adviser
or manager, Principal Underwriter, auditors, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur, which expenses, fees, charges, taxes and liabilities shall be
allocated in accordance with Article III, Section 6 hereof.
Section 6. Payment of Expenses by Shareholders. The Trustees shall have the
power to cause each Shareholder, or each Shareholder of any particular Series or
Class, to pay directly, at such intervals as the Trustees may determine, in
advance or arrears, for charges of the Trust's transfer agent, Shareholder
servicing or similar agent, an amount fixed, from time to time, by the Trustees,
by setting off such charges due from such Shareholder from declared but unpaid
dividends owed such Shareholder and/or by reducing the number of Shares in the
account of such Shareholder by that number of full and/or fractional Shares
which represents the outstanding amount of such charges due from such
Shareholder.
Section 7. Ownership of Assets of the Trust. The assets of the Trust shall
be held separate and apart from any assets now or hereafter held in any capacity
other than as Trustee hereunder by the Trustees. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trust, except that
the Trustees shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the name of any
other Person as nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee, she or he shall automatically cease
to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
Section 8. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth under
applicable federal or state law and in the By-Laws, including, without
limitation, on the date hereof the requirements of Section 15 of the 1940 Act,
or any successor provision, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive investment advisory, management or
administrative services for the Trust or for any
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Series (or Class thereof) with any corporation, trust, association or other
organization; and any such contract may contain such other terms as the Trustees
may determine, including, without limitation, authority for the Manager or
administrator to delegate certain or all of its duties under such contracts to
qualified investment advisers or administrators and to determine from time to
time, without prior consultation with the Trustees, what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the Trust's
investments, or such other activities as may specifically be delegated to such
party.
(b) The Trustees may also, at any time and from time to time, contract with
any corporation, trust, association or other organization, appointing it
exclusive or nonexclusive distributor or Principal Underwriter for the Shares of
one or more of the Series (or Classes) or other securities to be issued by the
Trust. Every such contract shall comply with such requirements and restrictions
as may be set forth under applicable federal or state law and in the By-Laws,
including, without limitation, at the date hereof the requirements of Section 15
of the 1940 Act, or any successor provision; and any such contract may contain
such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to time, to
contract with any corporations, trusts, associations or other organizations,
appointing it or them the custodian, transfer agent or Shareholder servicing
agent for the Trust or one or more of its Series (or Classes). Every such
contract shall comply with such requirements and restrictions as may be set
forth under applicable federal or state law and in the By-Laws or stipulated by
resolution of the Trustees. The Trustees are empowered, at any time and from
time to time, to retain sub-agents (foreign or domestic) in connection with any
service provider to the Trust or one or more of its Series (or Classes).
(d) Subject to applicable law, the Trustees are further empowered, at any
time and from time to time, to contract with any entity to provide such other
services, including, without limitation, accounting and pricing services, to the
Trust or one or more of the Series (or Classes thereof), as the Trustees
determine to be in the best interests of the Trust and the applicable Series (or
Class).
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter, distributor, or affiliate or agent of or for
any corporation, trust, association, or other organization, or for any
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parent or affiliate of any organization, with which an advisory, management
or administration contract, or Principal Underwriter's or distributor's
contract, or transfer, shareholder servicing or other type of service
contract may have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a Shareholder or has an
interest in the Trust, or that
(ii) any corporation, trust, association or other organization with
which an advisory, management or administration contract or Principal
Underwriter's or distributor's contract, or transfer, shareholder servicing
or other type of service contract may have been or may hereafter be made
with the Trust or any Series of the Trust also has an advisory, management
or administration contract, or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other service contract with
one or more other corporations, trusts, associations, or other
organizations, or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
requirements of the 1940 Act.
Section 9. Trustees and Officers as Shareholders. Any Trustee, officer or
agent of the Trust may acquire, own and dispose of Shares to the same extent as
if he or she were not a Trustee, officer or agent; and the Trustees may issue
and sell and cause to be issued and sold Shares to, and redeem such Shares from,
any such Person or any firm or company in which such Person is interested,
subject only to the general limitations contained herein or in the By-Laws
relating to the sale and redemption of such Shares.
ARTICLE V
SHAREHOLDERS VOTING POWERS AND MEETINGS
Section 1. Voting Powers, Meetings, Notice and Record Dates. The
Shareholders shall have power to vote only (i) for the election or removal of
Trustees to the extent and as provided in Article IV, Section 2, and (ii) with
respect to such additional matters relating to the Trust as may be required by
applicable law, this Declaration of Trust, the By-Laws or any registration of
the Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each Shareholder shall be entitled
to one vote for each dollar of net asset value (determined as of the applicable
record date) of each Share owned by such
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Shareholder (number of Shares owned times net asset value per Share) on any
matter on which such Shareholder is entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote. Notwithstanding any
other provision of this Declaration of Trust, on any matter submitted to a vote
of the Shareholders, all Shares of the Trust then entitled to vote shall be
voted in aggregate, except (i) when required by the 1940 Act, Shares shall be
voted by individual Series or Class; and (ii) when the matter involves the
termination of a Series or Class or any other action that the Trustees have
determined will affect only the interests of one or more Series or Classes, then
only Shareholders of such Series or Classes shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. A proxy may be given in writing. The By-Laws may
provide that proxies may also, or may instead, be given by any electronic or
telecommunications device or in any other manner. Notwithstanding anything else
contained herein or in the By-Laws, in the event a proposal by anyone other than
the officers or Trustees of the Trust is submitted to a vote of the Shareholders
of one or more Series or Classes thereof or of the Trust, or in the event of any
proxy contest or proxy solicitation or proposal in opposition to any proposal by
the officers or Trustees of the Trust, Shares may be voted only in person or by
written proxy at a meeting. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by the Shareholders. Meetings of
the Shareholders shall be called and notice thereof and record dates therefor
shall be given and set as provided in the By-Laws.
Section 2. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
(i) thirty-three and one-third percent (33 1/3%) of the Shares entitled to vote
shall constitute a quorum at a Shareholders meeting and (ii) when any one or
more Series (or Classes) is to vote as a single class separate from any other
Shares, thirty-three and one-third percent (33 1/3%) of the Shares of each such
Series (or Class) entitled to vote shall constitute a quorum at a Shareholders
meeting of that Series (or Class). Except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law, when
a quorum is present at any meeting, a majority of the Shares voted shall decide
any questions and a plurality of the Shares voted shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust
requires that the holders of any Series shall vote as a Series (or that holders
of a Class shall vote as a Class), then a majority of the Shares of that Series
(or Class) voting on the matter (or a plurality with respect to the election of
a Trustee) shall decide that matter insofar as that Series (or Class) is
concerned.
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Section 3. Additional Provisions. The By-Laws may include further provisions
for Shareholders votes and meetings and related matters.
ARTICLE VI
NET ASSET VALUE, DISTRIBUTIONS AND REDEMPTIONS
Section 1. Determination of Net Asset Value, Net Income, and Distributions.
Subject to applicable law and Article III, Section 6 hereof, the Trustees, in
their absolute discretion, may prescribe and shall set forth in the Registration
Statement of the Trust as filed on Form N-1A or any successor form with the
Commission (the 'Registration Statement of the Trust') such bases and time or
times for determining the net asset value of the Shares of any Series or Class,
the net income attributable to the Shares of any Series or Class, or the
declaration and payment of dividends and distributions on the Shares of any
Series or Class, as they may deem necessary or desirable from time to time.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any record holder
of such Shares for redemption, upon the presentation of a proper instrument of
transfer together with a request directed to the Trust or a Person designated by
the Trust that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may, from time to time, authorize, and
the Trust will pay therefor the net asset value thereof as determined by the
Trustees (or on their behalf), in accordance with any applicable provisions of
the By-Laws and applicable law. Unless extraordinary circumstances exist,
payment for said Shares shall be made by the Trust to the Shareholder within
seven (7) days after the date on which the request is made in proper form. The
obligation set forth in this Section 2 is subject to the provisions regarding
the suspension of the right of redemption that are set forth in the Registration
Statement of the Trust, and as the Trustees, in their absolute discretion, may
prescribe. In the case of a suspension of the right of redemption as provided
herein, a record holder of such Shares may either withdraw the request for
redemption or receive payment based on the net asset value per Share next
determined after the termination of such suspension.
(b) The redemption price may, in any case or cases, be paid wholly or partly
in-kind if the Trustees determine that such payment is advisable and in the
interest of the remaining Shareholders of the Series or Class for which the
Shares are being redeemed. The fair value, selection and quantity of securities
or other property so paid or delivered as all or part of the redemption price
may be determined by or under authority of the
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Trustees. In no case shall the Trust be liable for any delay of any corporation
or other Person in transferring securities selected for delivery as all or part
of any payment in-kind.
(c) If the Trustees shall, at any time and in good faith, determine that
direct or indirect ownership of Shares of any Series or Class has or may become
concentrated in any Person to an extent that would disqualify any Series as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(or any successor statute thereto), then the Trustees shall have the power (but
not the obligation) by such means as they deem equitable (i) to involuntarily
redeem any number, or principal amount, of Shares of such Person sufficient to
maintain or bring the direct or indirect ownership of Shares into conformity
with the requirements for such qualification, and (ii) to refuse to transfer or
issue Shares to any Person whose acquisition of the Shares in question would
result in such disqualification. Any such redemption shall be effected at the
redemption price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the provisions of the Internal
Revenue Code of 1986, as amended (or any successor statute thereto), or to
comply with the requirements of any other taxing or regulatory authority.
(e) Subject to the requirements of the 1940 Act, the Board of Trustees may
cause the Trust to redeem, at the price and in the manner provided in this
Article VI, Shares of any Series or Class held by any Person (i) if such Person
is no longer qualified to hold such Shares in accordance with such
qualifications as may be established by the Trustees, (ii) if the net asset
value of such Shares is below the minimum investment amount which is set forth
in the Registration Statement of the Trust or (iii) if otherwise deemed by the
Trustees to be in the best interest of the Trust or that particular Series (or
Class) as a whole.
(f) Shares redeemed shall, upon redemption, be deemed to be retired and
restored to the status of unissued shares.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the
employ-
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ment of any Trustee for advisory, management, legal, accounting, investment
banking or other services and payment for the same by the Trust.
Section 2. Indemnification and Limitation of Liability. A Trustee, when
acting in such capacity, shall not be personally liable to any Person, other
than the Trust or a Shareholder to the extent provided in this Article VII, for
any act, omission or obligation of the Trust, of such Trustee or of any other
Trustee. The Trustees shall not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent, employee, Manager or Principal
Underwriter of the Trust. The Trust (i) may indemnify an agent of the Trust or
any Person who is serving or has served at the Trust's request as an agent of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise and (ii) shall indemnify each Person who is, or has been,
a Trustee, officer or employee of the Trust and any Person who is serving or has
served at the Trust's request as a director, officer, trustee, or employee of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise, in the case of (i) and (ii), to the fullest extent
consistent with the 1940 Act and in the manner provided in the By-Laws; provided
that such indemnification shall not be available to any of the foregoing Persons
in connection with a claim, suit or other proceeding by any such Person against
the Trust or a Series (or Class) thereof.
All persons extending credit to, contracting with or having any claim
against the Trust or the Trustees shall look only to the assets of the
appropriate Series (or Class thereof if the Trustees have included a Class
limitation on liability in the agreement with such person as provided below),
or, if the Trustees have yet to establish Series, of the Trust for payment under
such credit, contract or claim; and neither the Trustees nor the Shareholders,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
Every note, bond, contract, instrument, certificate or undertaking and every
other act or thing whatsoever executed or done by or on behalf of the Trust or
the Trustees by any of them in connection with the Trust shall conclusively be
deemed to have been executed or done only in or with respect to his or their
capacity as Trustee or Trustees, and such Trustee or Trustees shall not be
personally liable thereon. At the Trustees discretion, any note, bond, contract,
instrument, certificate or undertaking made or issued by the Trustees or by any
officer or officers may give notice that the Certificate of Trust is on file in
the Office of the Secretary of State of the State of Delaware and that a
statutory limitation on liability of Series exists and such note, bond,
contract, instrument, certificate or undertaking may, if the Trustees so
determine, recite that the same was executed or made on behalf of the Trust by a
Trustee or Trustees in such capacity and not
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individually or by an officer or officers in such capacity and not individually
and that the obligations of such instrument are not binding upon any of them or
the Shareholders individually but are binding only on the assets and property of
the Trust or a Series thereof, and may contain such further recital as such
Person or Persons may deem appropriate including, without limitation, a
requirement, in any note, bond, contract, instrument, certificate or undertaking
made with respect to one or more Classes of any Series that the parties thereto
look only to the assets of such Class or Classes in satisfaction of the
liabilities arising thereunder. The omission of any such notice or recital shall
in no way operate to bind any Trustees, officers or Shareholders individually.
Section 3. Trustee's Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. A Trustee shall be liable to the Trust and to
any Shareholder solely for her or his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice, nor
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
Section 4. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee or agent of the Trust in connection with
any claim, action, suit or proceeding in which she or he becomes involved by
virtue of her or his capacity or former capacity with the Trust.
ARTICLE VIII
MISCELLANEOUS
Section 1. Liability of Third Persons Dealing with Trustees. No Person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 2. Termination of Trust or Series.
(a) Unless dissolved as provided herein, the Trust shall continue without
limitation of time. The Trust may be dissolved at any time by vote
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of a majority of the Shares of each Series entitled to vote, voting separately
by Series, or by the Trustees by written notice to the Shareholders. Any Series
of Shares (or Class thereof) may be dissolved at any time by vote of a majority
of the Shares of such Series or Class entitled to vote or by the Trustees by
written notice to the Shareholders of such Series or Class.
(b) Upon the requisite Shareholder vote or action by the Trustees to
dissolve the Trust or any one or more Series of Shares (or any Class thereof),
after paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated, of the Trust or of the
particular Series (or any Class thereof) as may be determined by the Trustees,
the Trust shall in accordance with such procedures as the Trustees consider
appropriate reduce the remaining assets of the Trust or of the affected Series
or Class to distributable form in cash or Shares (if any Series remain) or other
securities, or any combination thereof, and distribute the proceeds to the
Shareholders of the Series or Classes involved, ratably according to the number
of Shares of such Series or Class held by the several Shareholders of such
Series or Class on the date of distribution. Thereupon, the Trust or any
affected Series (or Class thereof) shall terminate and the Trustees and the
Trust shall be discharged of any and all further liabilities and duties relating
thereto or arising therefrom, and the right, title and interest of all parties
with respect to the Trust or such Series or Class shall be canceled and
discharged.
(c) Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
Certificate of Trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
Section 3. Reorganization.
(a) Notwithstanding anything else herein, the Trustees may, without any
Shareholder approval or vote unless such approval or vote is required by
applicable law, in order to change the form or jurisdiction of organization of
the Trust or for any other purpose (i) cause the Trust to merge or consolidate
with or into one or more trusts (or series thereof to the extent permitted by
law), partnerships, associations, corporations or other business entities
(including trusts, partnerships, associations, corporations or other business
entities created by the Trustees to accomplish such merger or consolidation),
(ii) cause the Shares to be exchanged under or pursuant to any state or federal
statute to the extent permitted by law or (iii) cause the Trust to reorganize
under the laws of any state or other political subdivision of the United States,
if such action is determined by the Trustees to be in the best interests of the
Trust. Any agreement of merger or consolidation or exchange or certificate of
merger may be signed
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by a majority of the Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
(b) Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in this
Declaration of Trust, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 3 of Article VIII may effect any
amendment to the governing instrument of the Trust or effect the adoption of a
new trust instrument of the Trust if the Trust is the surviving or resulting
trust in the merger or consolidation.
(c) The Trustees may, without any Shareholder approval or vote unless such
approval or vote is required by applicable law, create one or more statutory
trusts to which all or any part of the assets, liabilities, profits or losses of
the Trust or any Series or Class thereof may be transferred and may provide for
the conversion of Shares in the Trust or any Series or Class thereof into
beneficial interests in any such newly created trust or trusts or any series or
classes thereof.
(d) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval (unless required by the 1940 Act), invest all or a portion
of the Trust Property of any Series, or dispose of all or a portion of the Trust
Property of any Series, and invest the proceeds of such disposition in interests
issued by one or more other investment companies registered under the 1940 Act.
Any such other investment company may (but not need) be a trust (formed under
the laws of the State of Delaware or any other state or jurisdiction) (or series
thereof) which is classified as a partnership for federal income tax purposes.
Notwithstanding anything else herein, the Trustees may, without Shareholder
approval unless such approval is required by the 1940 Act, cause a Series that
is organized in the master/feeder fund structure to withdraw or redeem its Trust
Property from the master fund and cause such Series to invest its Trust Property
directly in securities and other financial instruments or in another master
fund.
Section 4. Amendments. Except as specifically provided in this Section 4 of
Article VIII, the Trustees may, without Shareholder vote, restate, amend or
otherwise supplement this Declaration of Trust. Shareholders shall have the
right to vote (i) on any amendment that would affect their right to vote granted
in Article V, Section 1 hereof, (ii) on any amendment to this Section 4 of
Article VIII, (iii) on any amendment that may be required to be approved by
Shareholders by applicable law or by the Trust's registration statement filed
with the Commission, and (iv) on any amendment submitted to them by the
Trustees. Any amendment required or permitted to be submitted to the
Shareholders that, as the Trustees determine, shall affect the Shareholders of
one or more Series (or
B-24
Classes thereof) shall be authorized by a vote of the Shareholders of each
Series or Class affected and no vote of Shareholders of a Series or Class not
affected shall be required. Notwithstanding anything else herein, no amendment
hereof shall limit the rights to insurance provided by Article VII, Section 4
with respect to any acts or omissions of Persons covered thereby prior to such
amendment nor shall any such amendment limit the rights to indemnification
referenced in Article VII, Section 2 hereof as provided in the By-Laws with
respect to any actions or omissions of Persons covered thereby prior to such
amendment. The Trustees may, without Shareholder vote, restate, amend, or
otherwise supplement the Certificate of Trust as they deem necessary or
desirable.
Section 5. Filing of Copies, References, Headings. The original or a copy of
this instrument and of each restatement and/or amendment hereto shall be kept at
the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendments,
references to this instrument, and all expressions such as 'herein,' 'hereof'
and 'hereunder,' shall be deemed to refer to this instrument as amended or
affected by any such restatements and/or amendments. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument.
Whenever the singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each other, as
applicable. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 6. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust is to be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware. The Trust shall be of the type commonly called a statutory
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
statutory trusts or actions that may be engaged in by statutory trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
(b) Notwithstanding the first sentence of Section 6(a) of this Article VIII,
there shall not be applicable to the Trust, the Trustees or this
B-25
Declaration of Trust (x) the provisions of section 3540 of Title 12 of the
Delaware Code or (y) any provisions of the laws (statutory or common) of the
State of Delaware (other than the Delaware Act) pertaining to trusts that relate
to or regulate: (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges, (ii) affirmative
requirements to post bonds for trustees, officers, agents or employees of a
trust, (iii) the necessity for obtaining a court or other governmental approval
concerning the acquisition, holding or disposition of real or personal property,
(iv) fees or other sums applicable to trustees, officers, agents or employees of
a trust, (v) the allocation of receipts and expenditures to income or principal,
(vi) restrictions or limitations on the permissible nature, amount or
concentration of trust investments or requirements relating to the titling,
storage or other manner of holding of trust assets, or (vii) the establishment
of fiduciary or other standards or responsibilities or limitations on the acts
or powers of trustees that are inconsistent with the limitations or liabilities
or authorities and powers of the Trustees set forth or referenced in this
Declaration of Trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code of 1986, as amended (or any successor
statute thereto), and the regulations thereunder, with the Delaware Act or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of the Declaration of Trust; provided, however,
that such determination shall not affect any of the remaining provisions of the
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of the Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration of Trust in any jurisdiction.
Section 8. Statutory Trust Only. It is the intention of the Trustees to
create a statutory trust pursuant to the Delaware Act. It is not the intention
of the Trustees to create a general partnership, limited partnership, joint
stock association, corporation, bailment, or any form of legal relationship
other than a statutory trust pursuant to the Delaware Act. Nothing in this
Declaration of Trust shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners or members of a joint stock
association.
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Section 9. Derivative Actions. In addition to the requirements set forth in
Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on
behalf of the Trust only if the following conditions are met:
(a) The Shareholder or Shareholders must make a pre-suit demand upon the
Trustees to bring the subject action unless an effort to cause the Trustees
to bring such an action is not likely to succeed. For purposes of this
Section 9(a), a demand on the Trustees shall only be deemed not likely to
succeed and therefore excused if a majority of the Board of Trustees, or a
majority of any committee established to consider the merits of such action,
has a personal financial interest in the transaction at issue, and a Trustee
shall not be deemed interested in a transaction or otherwise disqualified
from ruling on the merits of a Shareholder demand by virtue of the fact that
such Trustee receives remuneration for his service on the Board of Trustees
of the Trust or on the boards of one or more Trusts that are under common
management with or otherwise affiliated with the Trust.
(b) Unless a demand is not required under paragraph (a) of this Section
9, Shareholders eligible to bring such derivative action under the Delaware
Act who hold at least 10% of the outstanding Shares of the Trust, or 10% of
the outstanding Shares of the Series or Class to which such action relates,
shall join in the request for the Trustees to commence such action.
(c) Unless a demand is not required under paragraph (a) of this Section
9, the Trustees must be afforded a reasonable amount of time to consider
such shareholder request and to investigate the basis of such claim. The
Trustees shall be entitled to retain counsel or other advisors in
considering the merits of the request and shall require an undertaking by
the Shareholders making such request to reimburse the Trust for the expense
of any such advisors in the event that the Trustees determine not to bring
such action.
For purposes of this Section 9, the Board of Trustees may designate a
committee of one Trustee to consider a Shareholder demand if necessary to create
a committee with a majority of Trustees who do not have a personal financial
interest in the transaction at issue.
IN WITNESS WHEREOF, the Initial Trustee named below does hereby make and
enter into this Declaration of Trust as of March 31, 2004.
INITIAL TRUSTEE
/s/
..............................................
JAMES JORDAN, AS INITIAL TRUSTEE
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Appendix 1
3 EASY WAYS TO VOTE YOUR PROXY
Vote by Phone: Call toll-free 1-800-690-6903. Follow the recorded instructions.
Vote on the Internet: Log on to proxyweb.com. Follow the on-screen instructions.
Vote by Mail: Check the appropriate boxes on the reverse side of the proxy card,
sign and date the card and return in the envelope provided
FIRST EAGLE FUNDS
1345 Avenue of the Americas
New York, New York 10105
999 999 999 999 99
FUND NAME PRINTS HERE
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF FIRST EAGLE FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS - MARCH 31, 2004
The undersigned hereby appoints Robert Bruno and Suzan Afifi the proxies of the
undersigned, with full power of substitution, to vote all shares of First Eagle
Funds, Inc. that the undersigned is entitled to vote at the Special Meeting of
Stockholders of First Eagle Funds, Inc. to be held at the Warwick Hotel, 65 West
54th Street, New York, New York, on Wednesday, March 31, 2004 at 10:00 a.m., New
York time, and at any adjournment thereof.
DATE __________________, 2004
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE -
NO POSTAGE REQUIRED.
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Signature(s) if held jointly (Sign in the Box)
Please sign exactly as your name or names appear at left. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporation name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
FEF 2004 lp
Please fill in box(es) as shown using black or blue ink or number 2 pencil. X 0
PLEASE DO NOT USE FINE POINT PENS.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR all proposals. For Proposals 3A, 3B, 3C and Proposal 4, not all Shareholders
are being asked to vote; please review the instructions for those Proposals
carefully below.
1. To change the domicile of the Fund from Maryland to Delaware and reorganize
the portfolios as separate series of the new Trust.
FOR AGAINST ABSTAIN
0 0 0
2. To re-elect certain individuals to serve as Directors on the Board of
Directors of the Fund (if the reorganization in Proposal 1 is approved, these
individuals will also serve as Trustees on the Board of Trustees for the new
Delaware Trust).
(01) John P. Arnhold
(02) Candace K. Beinecke
(03) Jean D. Hamilton
(04) James E. Jordan
(05) William M. Kelly
(06) Paul J. Lawler
(07) Dominique Raillard
(08) Nathan Snyder
* (Instruction: To withhold authority to vote for any individual nominee(s),
write the number(s) of the nominee(s) on the line below.)
FOR WITHHOLD FOR ALL
all ALL EXCEPT*
nominees
listed
3A. To modify the fundamental restriction regarding making loans by First Eagle
Global Fund, First Eagle Overseas Fund, First Eagle U.S. Value Fund and First
Eagle Gold Fund so as to permit each of these portfolios to purchase or sell
loans and other direct debt instruments. (Applies to all portfolios except First
Eagle Fund of America.)
FOR AGAINST ABSTAIN
0 0 0
3B. To modify the fundamental investment restriction regarding investments in
commodities and commodity contracts by First Eagle Global Fund and First Eagle
U.S. Value Fund so as to permit each of these portfolios to purchase or sell
precious metals, such as gold or silver, and to purchase or sell precious metal
commodity contracts and options on such contracts. (Applies to First Eagle
Global Fund and First Eagle U.S. Value Fund only.)
FOR AGAINST ABSTAIN
0 0 0
3C. To reclassify the fundamental investment restriction regarding investments
in bank certificates of deposit and similar instruments by First Eagle Global
Fund and First Eagle U.S. Value Fund as a non-fundamental investment policy.
(Applies to First Eagle Global Fund and First Eagle U.S. Value Fund only.)
FOR AGAINST ABSTAIN
0 0 0
4. To reclassify the First Eagle Gold Fund as a non-diversified company.
(Applies to First Eagle Gold Fund only
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
FEF 2004 lp