As filed with the Securities and Exchange Commission on January 31, 1997
Registration Nos. __________________
__________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20546
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
THIRD AVENUE TRUST
(Exact name of registrant as specified in Charter)
767 Third Avenue, New York, New York 10017-2023
(Address of Principal Executive Offices including zip code)
Registrant's Telephone Number, including Area Code:
(800) 443-1021 (toll-free) (212) 888-6685
Please send copies of communications to:
David M. Barse Richard T. Prins Esq.
767 Third Avenue Skadden, Arps, Slate, Meagher & Flom LLP
New York, New York 10017-2023 919 Third Avenue, New York, NY 10022
(Name and Address of Agent for Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING
[X] As soon as practicable after this Registration Statement becomes effective
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended, registrant has elected to register an indefinite number of its
shares of beneficial interest. The Registrant filed a notice under such
Rule for its fiscal year ended October 31, 1996 on December 27, 1996.
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THIRD AVENUE TRUST
CROSS-REFERENCE SHEET
[as required by Rule 495]
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Form N-1A Location
PART A. PROSPECTUS
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Item 1. Cover Page........................ Cover Page
Item 2. Synopsis.......................... Overview; Expense and Fee Summary
Item 3. Condensed Financial Information... Financial Highlights
Item 4. General Description of Registrant. About The Funds
Item 5. Management of the Fund............ Management of the Funds;
Discussion of Fund Performance
Item 5a. Management's Discussion of Fund
Performance....................... *
Item 6. Capital Stock and Other
Securities...................... About the Funds; Shareholder
Services; Dividends, Capital
Gain
Distributions and Taxes
Item 7. Purchase of Securities Being
Offered......................... How to Purchase Shares, How to Exchange Shares
Item 8. Redemption or Repurchase.......... How to Redeem Shares
Item 9. Legal Proceedings................. *
PART B. STATEMENT OF ADDITIONAL INFORMATION
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Item 10. Cover Page........................ Cover Page
Item 11. Table of Contents................. Table of Contents
Item 12. General Information and History... General Information
Item 13. Investment Objectives and
Policies........................ Description of Securities;
Investment Restrictions
Item 14. Management of the Fund............ Management of the Funds; The
Investment Adviser
Item 15. Control Persons and Principal
Holders of Securities........... Management of the Funds; The
Investment Adviser
Item 16. Investment Advisory and Other
Services........................ The Investment Adviser; Investment
Advisory Agreement
Item 17. Brokerage Allocation.............. Portfolio Trading Practices
Item 18. Capital Stock and Other
Securities ..................... *
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered .... Redemption of Shares; (See
Prospectus)
Item 20. Tax Status........................ Dividends, Capital Gain
Distributions and Taxes
Item 21. Underwriters...................... Distributor
Item 22. Calculations of Performance Data.. Performance Information
Item 23. Financial Statements.............. Financial Statements
* Not Applicable
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PART C. OTHER INFORMATION
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Item 24. Financial Statements and
Exhibits ...................... Financial Statements and Exhibits
Item 25. Persons Controlled by or Under Persons Controlled by or Under
Common Control ................ Common Control with Registrant
Item 26. Number of Holders of Securities.. Number of Holders of Securities
Item 27. Indemnification.................. Indemnification
Item 28. Business and Other Connections Business and Other Connections
of Investment Adviser ......... of Investment Adviser
Item 29. Principal Underwriters........... Principal Underwriter
Item 30. Location of Accounts and
Records ....................... Location of Accounts and Records
Item 31. Management Services.............. Management Services
Item 32. Undertakings..................... Undertakings
/TABLE
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(Third Avenue Trust Logo)
Prospectus
March 10, 1997<PAGE>
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Contents
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FUND EXPENSES PERFORMANCE INFORMATION
FINANCIAL HIGHLIGHTS Performance Illustration
ABOUT THE FUNDS DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
Investment Objectives Distribution Options
INVESTMENT PHILOSOPHY AND APPROACH Withholding
Value Discipline HOW TO PURCHASE SHARES
Intensive Research Business Hours
Diversification Determining Net Asset Value
Buy and Hold Share Certificates
Investment in Equity Securities Through an Authorized Broker-Dealer or Investment Adviser
Investment in Debt Securities New Accounts
Mortgage-Backed Securities Initial Investment
Asset-Backed Securities By Mail
Floating Rate, Inverse Floating Rate and Index Obligations By Wire
Investment in High Yield Debt Securities Additional Investments By Mail
Loans and Other Direct Debt Instruments Additional Investments Through the Automatic Investment Plan
Trade Claims Individual Retirement Accounts
Portfolio Practices Other Retirement Plans
Foreign Securities HOW TO REDEEM SHARES
Restricted and Illiquid Securities By Mail
Investment in Relatively New Issues Telephone Redemption Service
Temporary Defensive Investments Fees
Borrowing Redemption Without Notice
Investment in Other Investment Companies Account Minimum
Simultaneous Investments Payment of Redemption Proceeds
Restrictions on Investments Wired Proceeds
Portfolio Turnover Signature Guarantees/Other Documents
MANAGEMENT OF THE FUNDS Systematic Withdrawal Plan
The Investment Adviser HOW TO EXCHANGE SHARES
Advisory Fees Inter-Fund Exchange Privilege
Administrator Money Market Exchange Privilege
Distributor SHAREHOLDER SERVICES
Custodian and Transfer Agent Telephone Information
Portfolio Trading Practices Transfer of Ownership
/TABLE
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Third Avenue Trust (the "Trust") is an open-end management investment
company organized as a Delaware business trust. The Trust currently
consists of two separate investment series; Third Avenue Value Fund and
Third Avenue Small-Cap Value Fund (each a "Fund and, collectively, the Funds").
Each Fund seeks to achieve its investment objective of long-term capital
appreciation by adhering to a strict value discipline when selecting
securities. While both Funds pursue a capital appreciation objective, each
Fund has a distinct investment approach.
Third Avenue Value Fund seeks to achieve its objective by investing in a
portfolio of equity securities of well-financed companies believed to be
priced below their private market values and debt securities providing
strong, protective covenants and high, effective yields.
Third Avenue Small-Cap Value Fund seeks to achieve its objective by
investing at least 65% of its assets in a portfolio of equity securities of
well-financed companies having market capitalization of below $1 billion at
the time of investment and believed to be priced below their private market
values.
Some of the securities in which the Funds may invest are regarded as
speculative. As with all mutual funds, there is no assurance the Funds
will achieve their objectives. The Funds are not intended to be a complete
investment program.
Each Fund's objective is suitable for investors who are willing to hold
their shares through periods of market fluctuations and the accompanying
changes in share prices. The Funds are not intended for investors seeking
short-term price appreciation or for "market timers."
Shares of each Fund are sold and redeemed at net asset value. See "How to
Purchase Shares" and "How to Redeem Shares."
This Prospectus contains important information about the Funds that a
prospective investor should know before investing. It should be read and
retained for future reference. A Statement of Additional Information
("SAI"), dated March 10, 1997, about the Funds has been filed with the
Securities and Exchange Commission and is incorporated by reference into
this Prospectus. You can obtain the SAI without charge by writing or
calling the Funds at 767 Third Avenue, New York, NY 10017-2023, (800)
443-1021 or (212) 888-6685.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person is authorized by the Funds to give any information or make any
representation other than those contained herein or in other printed or
written material issued by the Funds, and no person is entitled to rely
upon any other information or representation.<PAGE>
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FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder of
the Funds will incur.
Third Avenue Third Avenue
Value Fund Small-Cap Value Fund
Shareholder Transaction Expenses:
Sales Load Imposed on Purchases None None
Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fee None None
Annual Fund Operating Expenses:
(as a percentage of net assets)
Management Fees .90% .90%
12b-1 Fees None None
Other Expenses .31% 1.00%(after fee
------ ----- waivers)
Total Fund Operating Expenses 1.21% 1.90%(after fee
waivers)
Example
The following example illustrates the expenses that a shareholder would pay
on a $1,000 investment, assuming a 5% annual rate of return and redemption
at the end of each time period.
1 Year 3 Years 5 Years 10 Years
Third Avenue Value Fund $12 $39 $67 $147
Third Avenue Small-Cap
Value Fund $19 $60 ---- ----
The purpose of this table is to assist investors in understanding the
various costs and expenses that investors will bear directly or indirectly.
The expenses of Third Avenue Value Fund are based on actual expenses of its
predecessor Fund, Third Avenue Value Fund, Inc., for the year ended October
31, 1996. Third Avenue Small-Cap Value Fund commenced investment
operations on or about March 10, 1997. Because Third Avenue Small-Cap
Value Fund has no operating history, "Other Expenses" is based on estimated
amounts for the current fiscal year. From time to time, the Adviser may
voluntarily waive receipt of its fees and/or assume certain expenses of the
Funds which would have the effect of lowering the expense ratio but
increasing the yield to investors. The expenses noted above for Third
Avenue Small-Cap Value Fund, without reimbursement, would be: "Management
Fees" .90%, "Other Expenses" 1.64% and "Total Fund Operating Expenses"
2.54%. In addition, shareholders of each Fund pay a $9 charge for
redemptions by wire. For a further description of the various costs and
expenses incurred in the Funds' operations, as well as any reimbursements
or waiver arrangements, see "Management of the Funds." THIS EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
PERFORMANCE. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. <PAGE>
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FINANCIAL HIGHLIGHTS
Third Avenue Trust
The following sets forth information for Third Avenue Value Fund regarding
per share income and capital changes for each of the six years in the
period ended October 31, 1996, which have been audited by Price Waterhouse
LLP, independent accountants, whose unqualified report on the October 31,
1996 financial statements appears in the Fund's Annual Report to
Shareholders. Third Avenue Value Fund is the successor by merger on March
10, 1997 to Third Avenue Value Fund, Inc., a Maryland corporation. This
information should be read in conjunction with the financial statements and
accompanying notes appearing in the 1996 Annual Report to Shareholders
which are incorporated by reference into the Statement of Additional
Information.
Because the Trust's new Fund, Third Avenue Small-Cap Value Fund, commenced
investment operations on or about March 10, 1997, no financial highlights
are available.
Third Avenue Value Fund: Selected Data and Ratios (Years Ended October 31,)
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1996 1995 1994 1993 1992 1991
Net Asset Value, Beginning of Year $21.53 $18.01 $17.92 $13.57 $12.80 $10.00
Income from Investment Operations:
Net investment income .53 .38 .29 .18 .19 .15
Net gain on securities
(both realized and unrealized) 2.76 3.53 .16 4.77 .64 4.65
Total from Investment Operations 3.29 3.91 .45 4.95 .83 4.80
Less Distributions:
Dividends from net investment income (.41) (.25) (.22) (.24) (.02) (.15)
Distributions from net realized gains (.15) (.14) (.14) (.36) (.04) (1.85)
Total Distributions (.56) (.39) (.36) (.60) (.06) (2.00)
Net Asset Value, End of Year $24.26 $21.53 $18.01 $17.92 $13.57 $12.80
Total Return
(not including sales load) 15.55% 22.31% 2.56% 37.36% 6.50% 49.16%
Ratios/Supplemental Data:
Net Assets, End of Year
(in thousands) $566,847 $312,722 $187,192$118,958 $31,387 $17,641
Ratio of Expenses to Average
Net Assets 1.21% 1.25% 1.16% 1.42% 2.32% 2.50%
Ratio of Net Income to Average
Net Assets 2.67% 2.24% 1.85% 1.45% 1.71% 1.71%
Portfolio Turnover Rate 14% 15% 5% 17% 31% 67%
Average Commission Rate $0.0318 ----- ------ ------ ------ ------
/TABLE
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ABOUT THE FUNDS
Third Avenue Trust (the "Trust") was organized as a business trust under
the laws of the state of Delaware pursuant to a Trust Instrument dated
October 31, 1996. On March 10, 1997, shareholders of Third Avenue Value
Fund, Inc. ("Third Avenue Maryland"), a Maryland corporation which was
incorporated on November 27, 1989, and began operations on October 9, 1990,
became shareholders of Third Avenue Value Fund, a series of the Trust,
pursuant to a merger agreement which was approved by a majority of Third
Avenue Maryland's shareholders on December 13, 1996. Upon this merger, all
assets, privileges, powers, franchises, liabilities and obligations of
Third Avenue Maryland were assumed by the Trust. Except as noted herein,
all information about Third Avenue Value Fund includes information about
its predecessor, Third Avenue Maryland.
Investment Objectives
The investment objective of each Fund is primarily long-term capital
appreciation. Each investment objective is a fundamental policy and may
not be changed without the affirmative vote of a majority of that Fund's
outstanding voting securities. In pursuit of the Funds' investment
objectives, the research efforts of the Funds' Adviser, EQSF Advisers,
Inc., emphasize analysis of documents, especially stockholder mailings and
Securities and Exchange Commission ("SEC") filings by issuers. The
Adviser's intensive research process, combined with the Adviser's
investment philosophy, may mean that either or both Funds may be
constructed using a relatively limited number of securities.
Third Avenue Value Fund seeks to achieve its objective by following a value
investing philosophy to acquire common stocks of well financed companies at
a substantial discount to the Adviser's estimate of the issuing company's
private market value (i.e. take-over value). The Fund also seeks to
acquire senior securities, such as preferred stocks and debt instruments,
that have strong covenant protections and above-average current yields,
yields to events, or yields to maturity. See "Investment in Equity
Securities" and "Investment in Debt Securities."
Third Avenue Small-Cap Value Fund seeks to achieve its objective by
following a value investing philosophy that seeks to acquire common stocks
of well financed companies at a substantial discount to the Adviser's
estimate of the issuing company's private market value (i.e. take-over
value). The Fund intends to invest at least 65% of its net assets in the
equity securities of companies whose aggregate shares outstanding have a
market value of less than $1 billion at the time of investment. See
"Investment in Equity Securities."
The Adviser may seek investments in the securities of companies in
industries that are temporarily depressed. The Adviser also seeks
investments in equity securities of companies where debt service/1/ consumes
a small part of such companies' cash flow.
1 "Debt Service" means the current annual required payment of interest and
principal to creditors.
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INVESTMENT PHILOSOPHY AND APPROACH
Value Discipline
The Adviser adheres to a strict value discipline when selecting securities
for the Funds. Contrary to conventional wisdom, which says that you have
to take greater risks to reap greater rewards, the Adviser seeks to invest
in a portfolio of securities where the prices at the time of acquisition
are low enough so that the Adviser can conclude that both the risk is
lowered and appreciation potential is enhanced.
Intensive Research
The Adviser believes that value is created more by past corporate
prosperity than by bear markets. For this reason, the Adviser conducts
intensive bottom-up research to identify investment opportunities, and
ignores the general stock market and other macro factors.
Diversification
The Adviser believes that knowledge gained through intensive research lends
more toward reducing investment risk than does diversification. However,
the Funds will remain diversified in general, although probably less
diversified than other mutual funds of comparable size.
Buy and Hold
The Adviser follows a strategy of "buy and hold." This approach to
achieving growth over the long term means that the Funds should experience
low turnover, minimizing transaction costs and tax consequences.
Investment in Equity Securities
In selecting equity securities, the Adviser requires that issuing companies
exhibit the following characteristics:
(1) A strong financial position, as measured not only by balance sheet
data but also by off-balance sheet assets, liabilities and
contingencies (as disclosed in footnotes to financial statements and
as determined through research of public information).
(2) Responsible management and control groups, as gauged by managerial
competence as operators and investors as well as by an apparent
absence of intent to profit at the expense of stockholders.
(3) Availability of comprehensive and meaningful financial and related
information. A key disclosure is audited financial statements and
information which the Adviser believes are reliable benchmarks to aid
in understanding the business, its values and its dynamics.
(4) Availability of the security at a market price which the Adviser
believes is at a substantial discount to the Adviser's estimate of
what the issuer is worth as a private company or as a takeover or
merger and acquisition candidate.<PAGE>
<PAGE>
Investment in Debt Securities
Third Avenue Value Fund intends its investment in debt securities to be,
for the most part, in securities which the Adviser believes will provide
above-average current yields, yields to events, or yields to maturity. In
selecting debt instruments, the Adviser requires the following
characteristics:
1) Strong covenant protection, and
2) Yield to maturity at least 500 basis points above that of a comparable
credit.
In acquiring debt securities, the Adviser generally will look for covenants
which protect holders of the debt issue from possible adverse future events
such as, for example, the addition of new debt senior to the issue under
consideration. Also, the Adviser will seek to analyze the potential
impacts of possible extraordinary events such as corporate restructurings,
refinancings, or acquisitions. The Adviser will also use its best judgment
as to the most favorable range of maturities. In general, the Fund will
acquire debt issues which have a senior position in an issuer's
capitalization and will avoid "mezzanine" issues such as non-convertible
subordinated debentures.
Mortgage-Backed Securities
Third Avenue Value Fund intends to invest in mortgage-backed securities and
derivative mortgage-backed securities, including "principal only" but not
"interest only" components. Mortgage-backed securities are securities that
directly or indirectly represent a participation in, or are secured by and
payable from, mortgage loans on real property. The Fund intends to invest
in these securities only when it believes, after analysis, that there is
unlikely to ever be permanent impairment of capital as measured by whether
there will be a money default by either the issuer or the guarantor of
these securities. These securities do, nonetheless, entail considerable
market risk, i.e., fluctuations in quoted prices for the instruments,
interest rate risk, prepayment risk and inflation risk.
The Fund will not invest in non-investment grade subordinated classes of
residential mortgages and does not intend to invest in commercial
mortgage-backed securities. Prepayments of principal generally may be made
at any time without penalty on residential mortgages and these prepayments
are passed through to holders of one or more of the classes of
mortgage-backed securities. Prepayment rates may change rapidly and
greatly, thereby also affecting yield to maturity, reinvestment risk and
market value of the mortgage-backed securities. As a result, the high
credit quality of many of these securities may provide little or no
protection against loss in market value, and there have been periods during
which many mortgage-backed securities have experienced substantial losses
in market value. The Adviser believes that, under certain circumstances,
many of these securities may trade at prices below their inherent value on
a risk-adjusted basis and believes that selective purchases by the Fund may
provide high yield and total return in comparison to risk levels.
Asset-Backed Securities
Third Avenue Value Fund also intends to invest in asset-backed securities
that, through the use of trusts and special purpose vehicles, are securitized
with various types of assets, such as automobile receivables, credit
card receivables and home-equity loans, in pass-through structures
similar to the mortgage-related securities described above. In general,
the collateral supporting asset-backed securities is of shorter maturity
than mortgage loans and is less likely to experience substantial
prepayments. However, asset-backed securities are not backed by any
governmental agency.
Floating Rate, Inverse Floating Rate and Index Obligations
Third Avenue Value Fund may invest in debt securities with interest
payments or maturity values that are not fixed, but float in conjunction
with (or inversely to) an underlying index or price. These securities may
be backed by U.S. Government or corporate issuers, or by collateral such as
mortgages. The indices and prices upon which such securities can be based<PAGE>
<PAGE>
include interest rates, currency rates and commodities prices. However,
the Fund will not invest in any instrument whose value is computed based on
a multiple of the change in price or value of an asset or an index of or
relating to assets in which the Fund cannot or will not invest.
Floating rate securities pay interest according to a coupon which is reset
periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral
pool. Inverse floating rate securities are similar to floating rate
securities except that their coupon payments vary inversely with an
underlying index by use of a formula. Inverse floating rate securities
tend to exhibit greater price volatility than other floating rate
securities. The Fund does not intend to invest more than 5% of its total
assets in inverse floating rate securities. Floating rate obligations
generally exhibit a low price volatility for a given stated maturity or
average life because their coupons adjust with changes in interest rates.
Interest rate risk and price volatility on inverse floating rate
obligations can be high, especially if leverage is used in the formula.
Index securities pay a fixed rate of interest, but have a maturity value
that varies by formula, so that when the obligation matures a gain or loss
may be realized. The risk of index obligations depends on the volatility
of the underlying index, the coupon payment and the maturity of the
obligation.
Investment in High Yield Debt Securities
Third Avenue Value Fund will not purchase or hold in excess of 35% of its
net assets in high yield debt securities, including those rated below Baa
by Moody's Investors Service, Inc. ("Moody's") and below BBB by Standard &
Poor's Ratings Group ("Standard & Poor's") and unrated debt securities.
See also "Investment in Debt Securities" and "Restricted and Illiquid
Securities." Such securities are predominantly speculative with respect to
the issuer's capacity to pay interest and repay principal in accordance
with the terms of the obligation, and may in fact be in default. The
ratings of Moody's and Standard & Poor's represent their opinions as to the
credit quality of the securities which they undertake to rate. It should
be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market price risk of these
securities. In seeking to achieve its primary investment objective, the
Fund depends on the Adviser's credit analysis to identify investment
opportunities. For the Fund, credit analysis is not a process of merely
measuring the probability of whether a money default will occur, but also
measuring how the creditor would fare in a reorganization or liquidation in
the event of a money default.
Before investing in any high yield debt instruments, the Adviser will
evaluate the issuer's ability to pay interest and principal, as well as the
seniority position of such debt in the issuer's capital structure vis-a-vis
any other outstanding debt or potential debts. There appears to be a
direct cause and effect relationship between the weak financial conditions
of issuers of high yield bonds and the market valuation and prices of their
credit instruments, as well as a direct relationship between the weak
financial conditions of such issuers and the prospects that principal or
interest may not be paid.
The market price and yield of bonds rated below Baa by Moody's and below
BBB by Standard & Poor's are more volatile than those of higher rated
bonds. In addition, the secondary market for these bonds is generally less
liquid than that for higher rated bonds.
The market values of certain of these higher yielding debt securities tend
to be more sensitive to economic conditions and individual corporate
developments than do higher rated securities. Companies that issue such
bonds often are highly leveraged and may not have available to them more
traditional methods of financing. Furthermore, high yield bonds structured
as zero coupon or pay-in-kind securities are affected to a greater extent
by interest rate changes and therefore tend to be more volatile than
securities which pay interest periodically and in cash.<PAGE>
<PAGE>
The Fund may also in the future purchase or retain debt obligations of
issuers not currently paying interest or in default. In addition, the Fund
may purchase securities of companies that have filed for protection under
Chapter 11 of the United States Bankruptcy Code. Defaulted securities will
be purchased or retained if, in the opinion of the Adviser, they may
present an opportunity for subsequent price recovery, the issuer may resume
payments, or other advantageous developments appear likely.
Loans and Other Direct Debt Instruments
Third Avenue Value Fund does not intend to, invest in loans and other
direct debt instruments owed by a borrower to another party. They represent
amounts owed to lenders or lending syndicates (loans and loan
participations) or to other parties. Direct debt instruments may involve a
risk of loss in case of default or insolvency of the borrower and may offer
less legal protection to the Fund in the event of fraud or
misrepresentation. In addition, loan participations involve a risk of
insolvency of the lending bank or other financial intermediary. The
markets in loans are not regulated by federal securities laws or the SEC.
Trade Claims
Third Avenue Value Fund may invest in trade claims. Trade claims are
interests in amounts owed to suppliers of goods or services and are
purchased from creditors of companies in financial difficulty. For
purchasers such as the Fund, trade claims offer the potential for profits
since they are often purchased at a significant discount from face value
and, consequently, may generate capital appreciation in the event that the
market value of the claim increases as the debtor's financial position
improves or the claim is paid.
An investment in trade claims is speculative and carries a high degree of
risk. Trade claims are illiquid securities which generally do not pay
interest and there can be no guarantee that the debtor will ever be able to
satisfy the obligation on the trade claim. The markets in trade claims are
not regulated by federal securities laws or the SEC. Because trade claims
are unsecured, holders of trade claims may have a lower priority in terms
of payment than certain other creditors in a bankruptcy proceeding.
Portfolio Practices
Foreign Securities
Both Third Avenue Value Fund and Third Avenue Small-Cap Value Fund may
invest in foreign securities. Each Fund's foreign securities investments
will have characteristics similar to those of domestic securities selected
for the Fund. Each Fund intends to limit its investments in foreign
securities to companies issuing U.S. dollar-denominated American Depository
Receipts or who otherwise comply with SEC disclosure requirements. By
limiting their investments in this manner, the Funds seek to avoid
investing in securities where there is no compliance with SEC requirements
to provide public financial information, or such information is unreliable
as a basis for analysis.
Foreign securities markets generally are not as developed or efficient as
those in the United States. Securities of some foreign issuers are less
liquid and more volatile than securities of comparable U.S. issuers. The
Funds will be subject to additional risks which include: possible adverse
political and economic developments, seizure or nationalization of foreign
deposits and adoption of governmental restrictions that may adversely
affect the payment of principal and interest on the foreign securities or
currency blockage that would restrict such payments from being brought back
to the United States. Because foreign securities often are purchased with
and payable in foreign currencies, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations.
Restricted and Illiquid Securities
Neither Third Avenue Value Fund nor Third Avenue Small-Cap Value Fund will
purchase or otherwise acquire any security if, as a result, more than 15%<PAGE>
<PAGE>
of its net assets (taken at current market value) would be invested in
securities that are illiquid. Generally speaking, an illiquid security is
any asset or investment which a Fund cannot sell in the ordinary course of
business within seven days at approximately the value at which the Fund has
valued the asset or investment, including securities that cannot be sold
publicly due to legal or contractual restrictions.
Over the past several years, strong institutional markets have developed
for various types of restricted securities, including repurchase
agreements, commercial paper, and some corporate bonds and notes. Although
these securities may be legally classified as "restricted," in recognition
of the increased size and liquidity of the institutional markets for
unregistered securities and the importance of institutional investors in
the capital formation process, the SEC has adopted a rule which allows for
a broader institutional trading market for securities otherwise subject to
restriction on resale to the general public. Pursuant to this rule, a Fund
may treat as liquid certain restricted securities which are determined,
pursuant to policies adopted by the Fund's Board of Trustees, to be liquid
even if they are legally "restricted" securities.
Investment In Relatively New Issues
Both Third Avenue Value Fund and Third Avenue Small-Cap Value Fund intend
to invest occasionally in the common stock of selected new issuers.
Investments in relatively new issuers, i.e., those having continuous
operating histories of less than three years, may carry special risks and
may be more speculative because such companies are relatively unseasoned.
Such companies may also lack sufficient resources, may be unable to
generate internally the funds necessary for growth and may find external
financing to be unavailable on favorable terms or even totally unavailable.
Those companies will often be involved in the development or marketing of a
new product with no established market, which could lead to significant
losses.
Temporary Defensive Investments
When, in the judgment of the Adviser, a defensive or conservative posture
is appropriate, a Fund may hold all or a portion of its assets in
short-term U.S. Government obligations, cash or cash equivalents. The
adoption of such defensive or conservative position does not constitute a
change in such Fund's investment objective.
Borrowing
Both Third Avenue Value Fund and Third Avenue Small-Cap Value Fund may also
make use of bank borrowing as a temporary measure for extraordinary or
emergency purposes, such as for liquidity necessitated by shareholder
redemptions, and may use securities as collateral for such borrowing. Such
temporary borrowing may not exceed 5% of the value of the applicable Fund's
total assets at the time of borrowing.
Investment In Other Investment Companies
Third Avenue Small-Cap Value Fund may invest in securities of other
investment companies, to the extent permitted under the Investment Company
Act of 1940, provided that after any purchase the Fund does not own more
than 3% of such investment company's outstanding stock. Third Avenue Value
Fund may invest up to 10% of its total assets in securities of other
investment companies; up to 5% of its total assets may be invested in any
one investment company, provided that after its purchase no more than 3% of
such investment company's outstanding stock is owned by the Fund. The
Adviser will charge an advisory fee on the portion of a Fund's assets that
are invested in securities of other investment companies. Thus,
shareholders will be paying a "double fee" on such assets, as the advisers
of such investment companies will also be charging fees on such assets.
Simultaneous Investments
Investment decisions for a Fund are made independently from those of the
other Funds advised by the Adviser. If, however, such other Funds wish to
invest in, or dispose of, the same securities as the Fund, available
investments will be allocated equitably to each Fund. This procedure may
adversely affect the size of the position obtained for or disposed of by
the Fund or the price paid or received by the Fund.<PAGE>
<PAGE>
Restrictions on Investments
The Funds have adopted numerous investment restrictions, some of which are
fundamental policies that cannot be changed without shareholder approval
and others of which are operating investment restrictions that may be
changed without shareholder approval. Certain restrictions not described
in this Prospectus are set forth in full in the Statement of Additional
Information. In the event either Fund changes an operating investment
restriction, the new restriction may not meet the investment needs of every
shareholder.
Portfolio Turnover
The Funds' investment policies and objectives, which emphasize long-term
holdings, would tend to keep the number of portfolio transactions
relatively low. Third Avenue Value Fund's portfolio turnover rate for the
years ended October 31, 1995 and 1996 was 15% and 14%, respectively.
It is currently estimated, that under normal market conditions, the annual
portfolio turnover rate for Third Avenue Small-Cap Value Fund will not
exceed 75%.<PAGE>
<PAGE>
MANAGEMENT OF THE FUNDS
The Investment Adviser
EQSF Advisers, Inc. (the "Adviser") manages each Fund's investments,
provides various administrative services and supervises the Funds' daily
business affairs, subject to the authority of the Trust's Board of
Trustees. The Adviser, a New York corporation organized in 1986, is
controlled by Martin J. Whitman and has its offices at 767 Third Avenue,
New York, New York 10017-2023.
Mr. Whitman, the Chairman, President and Chief Executive Officer of the
Trust and its Adviser, is responsible for the day-to-day management of the
Funds' portfolios. During the past five years, he has also served in
various executive capacities with M.J. Whitman, Inc., the Fund's
distributor and regular broker dealer and several affiliated
companies engaged in various investment and financial businesses; he has
served as a Distinguished Management Fellow at the Yale School of
Management; and has been a director of various public and private
companies, including Danielson Holding Corporation ("DHC"), an insurance
holding company, and Nabors Industries, Inc., an international oil drilling
contractor.
Curtis Jensen has served as co-manager of Third Avenue Small-Cap Value Fund
since inception. He has been employed by the Adviser since 1995 and also
serves as senior research analyst for Third Avenue Value Fund. Prior to
joining the Adviser, Mr. Jensen was a graduate business student at the Yale
School of Management from 1993 to 1995 where he studied under Mr. Whitman.
Prior to that, Mr. Jensen was a director of and managed the operations of a
specialty food manufacturer.
The portfolio managers and certain other persons related to the Adviser and
the Funds are subject to written policies and procedures designed to
prevent abusive personal securities trading and other activities.
Advisory Fees
Each Fund has agreed to pay the Advisor a flat rate of .90% of its average
daily net assets, and each Fund pays all costs of leased office space of or
allocable to such Fund. The Adviser's fee for the previous month is paid
at the beginning of the next month based upon the average daily net assets
during the previous month.
Each Fund pays all of its expenses other than those assumed by the Adviser.
Any expense which cannot be allocated to a specific Fund will be allocated
to each of the Funds based on their relative net asset value on the date
the expense is incurred. From time to time, the Adviser may waive receipt
of its fees and/or assume certain expenses of a Fund, which would have the
effect of lowering the expense ratio of the Fund and increasing yield to
investors. Accordingly, whenever in any fiscal year, a Fund's normal
operating expenses, including the investment advisory fee, but excluding
brokerage commissions and interest and taxes, exceeds 1.9% of the first
$100 million of average daily net assets of the Fund, and 1.5% of assets in
excess of $100 million, the Adviser is obligated to reimburse the Fund in
an amount equal to that excess. If a Fund's operating expenses fall below
the expense limitation, that Fund will begin repaying the Adviser for the
amount contributed on behalf of the Fund. This repayment will continue,
subject to the expense limitation, until the Adviser has been paid for the
entire amount contributed. For the fiscal years ended October 31, 1995 and
1996, no reimbursement was required to be paid for Third Avenue Value Fund,
Inc.
Administrator
FPS Services, Inc. ("FPS"), which has its principal business address at
3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903, serves
as administrator of the Funds pursuant to an Administrative Services
Agreement. The services that FPS provides to the Funds include:
coordinating and monitoring of any third parties furnishing services to the
Funds; providing the necessary office space, equipment and personnel to
perform administrative and clerical functions for the Funds; preparing,
filing and distributing proxy materials, periodic reports to shareholders,<PAGE>
<PAGE>
registration statements and other documents; and responding to shareholder
inquiries.
Distributor
M.J. Whitman, Inc.(together with its predecessors "MJW"), a registered
broker-dealer and member of the National Association of Securities Dealers
("NASD"), is the Distributor of the Funds' shares. MJW, whose business
address is 767 Third Avenue, New York, NY 10017-2023, is a wholly-owned
subsidiary of M.J. Whitman Holding Corp. ("MJWHC"). Martin J. Whitman,
David M. Barse, Michael Carney and Ian M. Kirschner are executive officers
of the Trust , MJW and MJWHC, as well as stockholders of MJWHC.
Custodian and Transfer Agent
The custodian acts as the depository for the Funds, is responsible for
safekeeping its portfolio securities, collects all income and other
payments with respect to portfolio securities, disburses monies at the
Funds' request and maintains records in connection with its duties. North
American Trust Company, 525 B Street San Diego, CA 92101-4492, serves as
each Fund's custodian (the "Custodian").
FPS serves as the Funds' Transfer Agent and also performs certain
accounting and pricing services for the Fund. FPS maintains shareholder
records, answers shareholder inquiries concerning their accounts, processes
purchases and redemptions of the Funds' shares, acts as dividend and
distribution disbursing agent and performs other shareholder services. All
shareholder inquiries should be directed to FPS. You may write to: FPS
Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA
19406-0903 or you may telephone toll free (800) 443-1021.
Portfolio Trading Practices
The Adviser is responsible on a day-to-day basis for executing the Funds'
portfolio transactions, and seeks to obtain the most favorable price and
best available execution of orders. In principal trades, it normally deals
with market makers and will not deal with any affiliated broker. In agency
trades, it seeks to obtain reasonable commissions and may have the Funds
pay a higher commission than the broker might otherwise charge if the Funds
determine that the commission is reasonable in relation to, among other
things, the value of brokerage or research services provided by the broker
to the Adviser. In agency trades, the Adviser generally uses the services
of its affiliated brokers, if in the judgment of the Adviser, such
affiliates are able to obtain a price and execution at least as favorable
as other qualified brokers. For a more detailed description of the Funds'
portfolio trading practices, see "Portfolio Trading Practices" in the SAI.
<PAGE>
<PAGE>
PERFORMANCE INFORMATION
Performance Illustration
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THIRD AVENUE VALUE
FUND AND THE STANDARD & POOR'S 500 INDEX (S&P 500)
Average Annual Total Return
Third Avenue Value Fund
YEAR VALUE OF
ENDED RETURN INVESTMENT INVESTMENT
10/31/90 $10,000.00 $10,000.00
Year 1 10/31/91 49.15% $14, 915.00
Year 2 10/31/92 6.50% $15,884.48
Year 3 10/31/93 37.36% $21,818.91
Year 4 10/31/94 2.56% $22,377.48
Year 5 10/31/95 22.31% $27,369.89
Year 6 10/31/96 15.55% $31,625.91
S&P Index
YEAR VALUE OF
ENDED RETURN INVESTMENT INVESTMENT
10/31/90 $10,000.00 $10,000.00
Year 1 10/31/91 33.50% $13,350.00
Year 2 10/31/92 9.96% $14,679.66
Year 3 10/31/93 14.94% $16,872.80
Year 4 10/31/94 3.87% $17,525.78
Year 5 10/31/95 26.44% $22,159.59
Year 6 10/31/96 24.09% $27,498.71
Third Avenue Value Fund Average Annual Return
1 Year 15.55%
2 Years 18.88%
3 Years 13.17%
4 Years 18.79%
5 Years 16.22%
6 Years 21.15%
<PAGE>
<PAGE>
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
Each Fund expects to declare and pay distributions annually, normally in
December. The Funds will notify shareholders of the tax status of
dividends and capital gain distributions.
Each Fund intends to qualify annually for treatment as a regulated
investment company under Subchapter M of the Internal Revenue Code, and
thus not be subject to Federal income tax on the portion of its net
investment income and net realized capital gains that it distributes to
shareholders. Each Fund intends to continue its qualification as a
regulated investment company in future years, unless it determines that
such tax treatment would not be advantageous to the Fund and its
shareholders. Each Fund intends to distribute substantially all of its net
investment income and net realized capital gain.
For the year ended October 31, 1996, Third Avenue Value Fund distributed
net investment income of approximately $6,118,869 and net realized capital
gains on investments of approximately $2,245,595. A distribution of $0.72,
consisting of $0.573 of income, $0.065 of short-term capital gain and $0.08
of long-term capital gain was distributed to shareholders of record on
December 30, 1996.
Distributions from net investment income and short-term capital gains are
taxable as ordinary income. A portion of these distributions may qualify
for the corporate dividends-received deduction available to corporate
shareholders.
Distributions of net long-term capital gain realized by the Funds from the
purchase and sale of securities held by them for more than one year will be
taxable to shareholders as a long-term capital gain (even if the
shareholder has held the shares for less than one year.) However, if a
shareholder who has received a capital gain distribution suffers a loss on
the sale of his shares not more than six months after purchase, the loss
will be treated as a long-term capital loss to the extent of the capital
gain distribution received.
Shareholders receiving distributions in the form of additional shares will
be treated for federal income tax purposes in the same manner as if they
had received cash distributions equal in value to the shares received, and
will have a cost basis for Federal income tax purposes in each share
received equal to the net asset value of a share of the applicable Fund on
the date of distribution.
Shareholders will generally recognize taxable gain or loss on a redemption
of shares in an amount equal to the difference between the redemption
proceeds and the shareholder's basis in the shares redeemed. This gain or
loss will generally be capital, assuming that the shareholder held the
shares as a capital asset, and will be long-term capital gain or loss if
the shares were held for longer than one year. A loss recognized on the
disposition of shares of a Fund will be disallowed if identical (or
substantially identical) shares are acquired in a 61-day period beginning
30 days before and ending 30 days after the date of disposition.
Depending on the residence of the shareholder for tax purposes,
distributions also may be subject to state and local taxes or withholding
taxes. Shareholders should consult their tax advisers as to the tax
consequences to them of ownership of shares of the Funds.
If a shareholder purchases shares shortly before the record date of a
dividend or capital gain distribution, such distribution will be taxable
even though it may represent in whole or in part a return of the purchase
price, and the value of the shares drops by the approximate amount of the
distribution.
<PAGE>
<PAGE>
Distribution Options
Shareholders should specify on their account application how they wish to
receive distributions. If no election is made on the account application,
all distributions will automatically be reinvested. Each Fund offers four
options:
(1) all income dividends and capital gain distributions paid in cash;
(2) income dividends paid in cash with capital gain distributions
reinvested;
(3) income dividends reinvested with capital gain distributions paid in
cash; or
(4) both distributions automatically reinvested in additional shares of
that Fund.
Any distribution payments returned by the post office as undeliverable will
be reinvested in additional shares of the applicable Fund at the net asset
value next determined.
Withholding
The Funds may be required to withhold Federal income tax at the rate of 31%
(backup withholding) from dividend, capital gain and redemption payments to
shareholders (a) who fail to furnish the Funds with and to certify the
payee's correct taxpayer identification number or social security number,
(b) when the Internal Revenue Service notifies the Funds that the payee has
failed to report properly certain interest and dividend income to the IRS
and to respond to notices to that effect or (c) when the payee fails to
certify that he is not subject to backup withholding. Investors should be
sure to provide this information when they complete the application.
Certain foreign accounts may be subject to U.S. Withholding Tax on ordinary
distributions. Investors should be sure to provide their place of
residence as well as citizenship status when completing the application.
HOW TO PURCHASE SHARES
The price paid for shares is the net asset value next determined following
receipt of the purchase order in proper form by the applicable Fund or its
authorized service agent or sub-agent. See "Determining Net Asset Value"
below. All purchase orders should be directed to the Funds' transfer
agent, FPS Services, Inc. 3200 Horizon Drive, P.O. Box 61503, King of
Prussia, PA 19406-0903. The Funds reserve the right to reject any purchase
order.
Business Hours
The Funds are open for business each day the New York Stock Exchange
("NYSE") is open. The NYSE and the Funds will be closed on the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Determining Net Asset Value
Net asset value per share is calculated as of the close of regular trading
on the NYSE, normally 4:00 p.m., Eastern time each day the NYSE is open for
trading. Net asset value of each Fund is determined by dividing the value
of all portfolio securities, cash, and other assets, including accrued
interest and dividends, owned by the Fund, less all liabilities, including
accrued expenses of the Fund, by the total number of shares of each Fund
outstanding.
Short-term securities with original or remaining maturities in excess of 60
days are valued at the mean of their quoted bid and asked prices.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to a Fund if acquired within 60 days of
maturity or, if already held by the Fund on the day, based on the value
determined on the day. This amortized cost method will be used unless the
Board of Trustees determines that such method does not represent fair
value.
Securities traded on any securities exchange or other market trading system
which reports actual transaction prices on a contemporaneous basis are
valued at the last quoted sales price or, in the absence of closing sales<PAGE>
<PAGE>
prices on that day, securities will be valued at the mean between the
closing bid and asked price. Other readily marketable securities are valued
at the mean between the closing bid and asked prices. A Fund may utilize
the services of one or more pricing services to assist it in valuing the
Fund's securities. Illiquid securities and other securities and assets for
which market quotations are not readily available are valued at "fair
value", as determined in good faith by or under the direction of the Board
of Trustees of the Fund holding such securities.
Share Certificates
Share certificates representing shares of a Fund will be delivered to
shareholders only upon written request.
Through an Authorized Broker-Dealer or Investment Adviser
Shares of the Funds may also be purchased through an investor's
broker-dealer or investment adviser. The broker-dealer must be a member in
good standing with the NASD and have entered into a selling agreement with
the Funds' distributor, MJW. Investment advisers must be registered under
federal securities laws. Transactions in Fund shares made through an
investor's broker-dealer or investment adviser may be subject to charges
imposed by the dealer or investment adviser and they may also impose higher
initial or additional amounts for investment than those established by the
Funds. In those situations, the investor's broker-dealer or investment
adviser is responsible for forwarding payment or arranging for payment
promptly. The Funds reserve the right to cancel any purchase order for
which payment has not been received by the third business day following
receipt of the purchase order. Telephone purchase orders will only be
accepted from financial institutions which have been approved previously by
the Funds or the Adviser.
New Accounts
An account application must be completed and signed for each new account
opened, regardless of the method chosen for making the initial investment.
Initial Investment
The minimum initial investment for each Fund is $1,000. Payment may be
made by check or money order payable to "Third Avenue Value Fund" or "Third
Avenue Small-Cap Value Fund."
By Mail
Third Avenue Value Fund or
Third Avenue Small-Cap Value Fund
c/o FPS Services, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903.
Checks will be accepted if drawn in U.S. currency on a domestic bank.
Checks drawn against a non-U.S. bank may be subject to collection delays
and will be accepted only upon actual receipt of the funds by the transfer
agent, FPS. The Funds will not accept a check endorsed over by a
third-party. A charge (minimum of $20) will be imposed if any check used
for the purchase of Fund shares is returned unpaid. Investors who purchase
Fund shares by check or money order may not receive redemption proceeds
until there is reasonable belief that the check has cleared, which may take
up to fifteen calendar days after payment has been received.
By Wire
Prior to sending wire instructions, notify FPS (800-443-1021, Option 2) to
insure proper credit to the shareholder's account. Direct shareholder's
bank to wire funds as follows:<PAGE>
<PAGE>
UMB Bank KC NA
Kansas City, MO
ABA #: 10-10-00695
For FPS #: 98-7037-071-9
For further credit to: Third Avenue Value Fund or Third Avenue Small-Cap
Value Fund (Shareholder's name, exact account title
and account number)
Heavy wire traffic over the Federal Reserve System may delay the arrival of
purchase orders made by wire.
Additional Investments By Mail
Subsequent investments should be accompanied by the "payment stub" attached
to the shareholder's account statement and may be made in minimum amounts
of $1,000 and mailed to:
Third Avenue Value Fund
or
Third Avenue Small-Cap Value Fund
c/o FPS Services, Inc.
P.O. Box 412797
Kansas City, MO 64141-2797
At the sole discretion of the Adviser, the initial and any additional
investment minimums may be waived in new accounts opened by existing
shareholders for additional family members and by officers, trustees or
employees of the Funds, MJW,
the Adviser or any affiliate of the Adviser (including their spouses and
children under age 21.)
Additional Investments Through the Automatic Investment Plan
This Plan provides shareholders with a convenient method by which they may
automatically make subsequent monthly purchases. A predetermined amount,
selected by the shareholder, will be deducted from the shareholder's
checking account. Subsequent investments under this Plan are subject to a
monthly minimum of $200. The Automatic Investment Plan option may be
elected on the application.
Individual Retirement Accounts
The Funds' Individual Retirement Account ("IRA") application and additional
forms required may be obtained by contacting FPS at (800)443-1021, Option
1. For IRA's, the initial minimum is $500 and the minimum subsequent
contribution is $200. The account will be maintained by the custodian,
Semper Trust Company, which currently charges an annual maintenance fee of
$12. Fees are subject to change by Semper Trust Company.
Other Retirement Plans
Investors who are self-employed may purchase shares of the Funds through
tax-deductible contributions to retirement plans for self-employed persons,
known as Keogh or H.R. 10 plans. However, the Funds do not currently act
as a sponsor or administrator for such plans. Fund shares may also be
purchased for other types of qualified pension or profit sharing plans
which are employer-sponsored, including deferred compensation or salary
reduction plans known as "401(k) Plans", which give participants the right
to defer portions of their compensation for investment on a tax-deferred
basis until distributions are made from the plan.
HOW TO REDEEM SHARES
Shareholders may redeem shares on any business day during which the NYSE is
open. All redemption requests should be directed to FPS. Fund shares will
be redeemed at the net asset value next calculated after such request is
received by FPS in proper form. Redemption requests that contain a
restriction as to the time, date or share price at which the redemption is
to be effective will not be honored.
<PAGE>
<PAGE>
By Mail
Send a written request, together with any share certificates that have been
issued, to:
FPS Services, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903.
Written redemption requests, stock powers and any share certificates issued
must be submitted and signed exactly as the account is registered. Such
requests generally require a signature guarantee and additional documents.
See "Signature Guarantees/Other Documents."
Telephone Redemption Service
Shareholders who wish to redeem shares by telephone may elect this service
on the application. Such shareholders may thereafter redeem unissued
shares valued at not less than $1,000 on any business day by calling FPS at
(800) 443-1021, Option 2, prior to 4:00 p.m. Eastern time.
The Funds and FPS will not be liable for following telephone instructions
reasonably believed to be genuine. In this regard, FPS will require
personal identification information before accepting a telephone redemption
order. If the transfer agent fails to use reasonable procedures, the Funds
or FPS might be liable for losses due to fraudulent instructions.
Shareholders who did not previously elect the Telephone Redemption Service
on their application, or who wish to change any information previously
provided, including the address of record or the bank to which redemption
proceeds are to be wired, must submit a signature guaranteed letter of
instructions. See "Signature Guarantees/Other Documents."
Fees
There is no charge for redemption of shares tendered directly to FPS. FPS
currently charges a wire fee of $9 for payment of redemption proceeds by
federal funds. FPS will automatically deduct the wire fee from the
redemption proceeds. Broker-dealers handling redemption transactions
generally will charge a service fee.
Redemption Without Notice
The Funds have the right, at any time and without prior notice to a
shareholder, to redeem shares held in any account registered in the name of
such shareholder at current net asset value, if and to the extent that such
redemption is necessary to reimburse the Funds for any loss sustained by
reason of the failure of such shareholder to make full payment for shares
of the Funds previously purchased or subscribed for by such shareholder.
Account Minimum
A shareholder selling a partial amount of shares must leave at least $500
worth of shares to keep the account open, or in the case of an IRA account,
at least $200. The Funds may also, upon 30 days prior written notice to a
shareholder, redeem shares in any account, other than an IRA account,
containing shares currently having an aggregate net asset value, not
attributed to market fluctuations, of less than $500.
Payment of Redemption Proceeds
A Fund will usually make payment for redemptions of Fund shares within one
business day, but not later than seven calendar days after receipt of such
redemption requests. However, if the Fund has not collected the purchase
price of the shares being redeemed, the redemption will not be processed
until such collection has been completed.
Redemption of recently purchased Fund shares that have been paid for by
check may be delayed until the Fund has a reasonable belief that the check
has cleared, which may take up to fifteen calendar days after payment of
the purchase. Investors who anticipate that they may wish to redeem their
shares before fifteen calendar days are advised to pay for their shares by
federal funds wire.
<PAGE>
<PAGE>
Wired Proceeds
In the case of redemption proceeds that are wired to a shareholder's bank,
payment will be transmitted only on days that commercial banks are open for
business and only to the bank and account previously authorized on the
application or shareholder's signature guaranteed letter of instructions.
Neither the Funds nor FPS will be responsible for any delays in wired
redemption proceeds due to heavy wire traffic over the Federal Reserve
System.
Signature Guarantees/Other Documents
Signatures on any (1) request for redemption, payable to the registered
shareholder involving $5,000 or more, (2) redemption proceeds payable to
and/or mailed to other than the registered shareholder, or (3) requests to
transfer shares, must be guaranteed by an "eligible guarantor institution"
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act
of 1934, which includes certain banks, brokers, dealers, credit unions,
securities exchanges and associations, clearing agencies and savings
associations. A notary public is not an acceptable guarantor. ADDITIONAL
DOCUMENTS MAY BE REQUIRED WHEN SHARES ARE REGISTERED IN THE NAME OF A
CORPORATION, PARTNERSHIP, ASSOCIATION, AGENT, FIDUCIARY, TRUST, ESTATE OR
OTHER ORGANIZATION. Additional tax documents may also be required in the
case of redemptions from IRA accounts. For further information, call FPS
toll free at (800) 443-1021, Option 2.
Systematic Withdrawal Plan
Shareholders owning or purchasing shares of the Funds having a current
value of at least $10,000 may participate in a Systematic Withdrawal Plan,
which provides for automatic redemption of at least $100 monthly,
quarterly, semi-annually, or annually. Shareholders may establish a
Systematic Withdrawal Plan by sending a letter to FPS. Notice of all
changes concerning the Systematic Withdrawal Plan must be received by FPS
at least two weeks prior to the next scheduled payment. Further
information regarding the Systematic Withdrawal Plan and its requirements
can be obtained by contacting FPS at (800) 443-1021, Option 2.
HOW TO EXCHANGE SHARES
Inter-Fund Exchange Privilege
Shareholders may exchange shares of one Fund of the Trust for shares of the
other Fund at net asset value without the payment of any fee or charge in
writing or by telephone. An exchange is considered a sale of shares and
may result in capital gain or loss for federal income tax purposes.
Shareholders who wish to use this exchange privilege may elect the service
on the account application.
If FPS receives exchange instructions in writing or by telephone at (800)
443-1021, in good order by the valuation time on any business day, the
exchange will be effected that day. For an exchange request to be in good
order, it must include the shareholder's name as it appears on the account,
the account number, the amount to be exchanged, the names of the Funds from
which and to which the exchange is to be made and a signature guarantee as
may be required. A written request for an exchange in excess of $5,000
must be accompanied by a signature guarantee as described under "Signature
Guarantees/Other Documents."
Money Market Exchange Privilege
Shareholders may redeem any or all shares of the Funds and automatically
invest the proceeds through the Third Avenue Money Market Fund account, in
the Cash Account Trust Money Market Portfolio, an unaffiliated, separately
managed, money market mutual fund. The exchange privilege with the money
market portfolio does not constitute an offering or recommendation of the
shares of the money market portfolio by the Funds or the Distributor. The
Adviser is compensated for administrative services it performs with respect
to the money market portfolio.
Shareholders who wish to use this exchange privilege may elect the service
on the account application. The Funds' shareholders should not order<PAGE>
<PAGE>
shares of the Money Market Fund without first receiving the current
prospectus for the Money Market Fund. By giving exchange instructions, a
shareholder will be deemed to have represented that he has received the
current prospectus for the Money Market Fund. Exchanges of Fund shares are
subject to the other requirements of the Money Market Fund into which the
exchange is made.
The Funds reserve the right to reject any exchange request or otherwise
modify, restrict or terminate the exchange privilege at any time upon at
least 60 days prior written notice.
Shareholders should be aware that an exchange is treated for federal income
tax purposes as a sale and a purchase of shares, which may result in
realization of a gain or loss.
SHAREHOLDER SERVICES
Each Fund provides you with helpful services and information about your
account.
* A statement after every transaction.
* Annual account statement reflecting all transactions for the year.
* Tax information will be mailed by January 31 of each year, a copy
of which will also be filed with the Internal Revenue Service.
* The financial statements of the Fund with a summary of portfolio
composition and performance will be mailed at least twice a year.
* The Funds intend to continue to mail to shareholders quarterly
reports containing the Chairman of the Board's letter and a summary
of portfolio changes, composition and performance.
The Funds pay for shareholder services but not for special services such as
requests for historical transcripts of accounts. The Funds' transfer
agent, FPS, currently charges $10 per year for duplication of historical
account activity records, with a maximum fee of $100.
Telephone Information
Your Account: Questions about your account, purchases, redemptions and
distributions can be answered by FPS Monday through
Friday, 9:00 AM to 7:00 PM (Eastern time). Call toll
free (800) 443-1021, Option 2 or (610) 834-3500.
The Funds: Questions about the Funds can be answered by the Funds'
telephone representatives Monday through Friday 9:00 AM
to 5:00 PM (Eastern time). Call toll free (800) 443-1021
or (212) 888-6685.
To Redeem Shares: To redeem shares by telephone, call FPS prior to 4:00
p.m. on the day you wish to redeem, toll free (800)
443-1021, Option 2, or (610) 834-3500.
Transfer of Ownership
A shareholder may transfer Fund shares or change the name or form in which
the shares are registered by writing to FPS. The letter of instruction
must clearly identify the account number, name(s) and number of shares to
be transferred, and provide a certified tax identification number by way of
a completed new account application or W-9 form, and include the
signature(s) of all registered owners, and any share certificates issued.
The signature(s) on the transfer instructions or any stock power must be
guaranteed as described under "Signature Guarantees/Other Documents."
<PAGE>
<PAGE>
Board of Trustees
Phyllis W. Beck
Tibor Fabian
Gerald Hellerman
Marvin Moser
Donald Rappaport
Myron M. Sheinfeld
Martin Shubik
Charles C. Walden
Martin J. Whitman
Officers
Martin J. Whitman
Chairman, Chief Executive Officer, President
David M. Barse
Chief Operating Officer, Executive Vice President
Michael Carney
Chief Financial Officer, Treasurer
Kerri Weltz, Assistant Treasurer
Ian M. Kirschner, General Counsel and Secretary
Investment Adviser
EQSF Advisers, Inc.
767 Third Avenue
New York, NY 10017-2023
Distributor
M.J. Whitman, Inc.
767 Third Avenue
New York, NY 10017-2023
Transfer Agent
FPS Services, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
(610) 239-4500
(800) 443-1021 (toll-free)
Custodian
North American Trust Company
525 B Street
San Diego, CA 92101-4492
[LOGO]
767 Third Avenue
New York, NY 10017-2023
Phone (212) 888-6685
Toll Free (800) 443-1021
www.mjwhitman.com<PAGE>
<PAGE> (LOGO)
STATEMENT OF ADDITIONAL INFORMATION
____________
March 10, 1997
<PAGE>
<PAGE> (LOGO)
STATEMENT OF ADDITIONAL INFORMATION
Dated March 10, 1997
THIRD AVENUE TRUST
THIRD AVENUE VALUE FUND
THIRD AVENUE SMALL-CAP VALUE FUND
This Statement of Additional Information is in addition to and serves to
expand and supplement the current Prospectus of Third Avenue Trust, (the
"Trust"), which currently consists of two separate investment series: Third
Avenue Value Fund and Third Avenue Small-Cap Value Fund (each a "Fund"
and collectively, the "Funds").
This Statement of Additional Information, dated March 10, 1997,
is not a Prospectus and should be read in conjunction with the Prospectus
dated March 10, 1997. A copy of the Prospectus may be obtained without charge
by contacting the Funds at 767 Third Avenue, New York, NY 10017-2023, (800)
443-1021 or (212) 888-6685.
Table of Contents
GENERAL INFORMATION
INVESTMENT POLICIES
Loans and Other Direct Debt Instruments
Short Sales
INVESTMENT RESTRICTIONS
MANAGEMENT OF THE TRUST
COMPENSATION TABLE
INVESTMENT ADVISER
INVESTMENT ADVISORY AGREEMENT
ADMINISTRATOR
DISTRIBUTOR
PORTFOLIO TRADING PRACTICES
PURCHASE ORDERS
REDEMPTION OF SHARES
Redemption in Kind
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
General
Distributions
Redemption of Shares
Backup Withholding
PERFORMANCE INFORMATION
FINANCIAL STATEMENTS
APPENDIX
DESCRIPTION OF CORPORATE BOND RATINGS
Standard & Poor's Ratings Group
Moody's Investors Service, Inc.<PAGE>
<PAGE> General Information
Third Avenue Trust (the "Trust") was organized as a business trust under the
laws of the state of Delaware pursuant to a Trust Instrument dated October
31, 1996. On March 10, 1997, shareholders of Third Avenue Value Fund, Inc.
("Third Avenue Maryland"), a Maryland corporation which was incorporated on
November 27, 1989, and began operations on October 9, 1990, became
shareholders of Third Avenue Value Fund, a series of the Trust, pursuant to
a merger agreement which was approved by a majority of Third Avenue
Maryland's shareholders on December 13, 1996. Upon this merger, all assets,
privileges, powers, franchises, liabilities and obligations of Third Avenue
Maryland were assumed by the Trust. Except as noted herein, all information
about Third Avenue Value Fund or the Trust, as applicable, includes
information about its predecessor, Third Avenue Maryland.
Investment Policies
Loans and Other Direct Debt Instruments Third Avenue Small-Cap Value Fund
may, but currently does not intend to, invest in loans and other direct debt
instruments.
Short Sales Third Avenue Value Fund may, but currently does not intend to,
engage in short sales. In a short sale transaction, the Fund sells a
security it does not own in anticipations of a decline in the market value
of the security.
Investment Restrictions
For the benefit of shareholders, each Fund has adopted the following
restrictions, which are fundamental policies and cannot be changed without
the approval of a majority of such Fund's outstanding voting securities./1/
The following investment restrictions apply to both Third Avenue Value Fund
and Third Avenue Small-Cap Value Fund.
1. Borrow money or pledge, mortgage or hypothecate any of its assets
except that each Fund may borrow on a secured or unsecured basis as a
temporary measure for extraordinary or emergency purposes. Such
temporary borrowing may not exceed 5% of the value of such Fund's total
assets when the borrowing is made.
2. Act as underwriter of securities issued by other persons, except to the
extent that, in connection with the disposition of portfolio
securities, it may technically be deemed to be an underwriter under
certain securities laws.
3. Invest in interests in oil, gas, or other mineral exploration or
development programs, although it may invest in the marketable
securities of companies which invest in or sponsor such programs.
- -----------------
/1/ As used in this Statement of Additional Information as to any matter
requiring shareholder approval, the phrase "majority of the outstanding
securities" means the vote at a meeting of (i) 67% or more of the shares
present or represented, if the holders of more than 50% of the outstanding
voting securities are present in person or represented by proxy, or (ii)
more than 50% of the outstanding voting securities, whichever is less.<PAGE>
<PAGE>
4. Issue any senior security (as defined in the Investment Company Act of
1940, as amended) (the "1940 Act"). Borrowing permitted by Item 1
above are not senior securities.
5. Invest 25% or more of the value of its total assets in the securities
(other than Government Securities or the securities of other
regulated investment companies) of any one issuer, or of two or more
issuers which the Fund controls and which are determined to be
engaged in the same industry or similar trades or businesses or
related trades or businesses.
6. Invest 25% or more of the value of its total assets in any one
industry.
The following investment restrictions apply only to Third Avenue Value Fund
The Fund may not:
1. Make short sales of securities or maintain a short position.
2. Buy or sell commodities or commodity contracts, futures contracts or
real estate or interests in real estate, although it may purchase and
sell securities which are secured by real estate and securities of
companies which invest or deal in real estate.
3. Invest in securities of other investment companies if the Fund, after
such purchase or acquisition owns, in the aggregate, (i) more than 3%
of the total outstanding voting stock of the acquired company; (ii)
securities issued by the acquired company having an aggregate value in
excess of 5% of the value of the total assets of the Fund, or (iii)
securities issued by the acquired company and all other investment
companies (other than treasury stock of the Fund) having an aggregate
value in excess of 10% of the value of the total assets of the Fund.
4. Participate on a joint or joint and several basis in any trading
account in securities.
5. Make loans, except through (i) the purchase of bonds, debentures,
commercial paper, corporate notes, and similar evidences of
indebtedness of a type commonly sold to financial institutions, and
(ii) repurchase agreements . The purchase of a portion of an issue of
securities described under (i) above distributed publicly, whether or
not the purchase is made on the original issuance, is not considered
the making of a loan.
The following investment restrictions apply only to Third Avenue Small-Cap
Value Fund. The Fund may not:
1. Invest in Securities of other investment companies if the Fund,
after such purchase or acquisition owned in the aggregate more than
3% of the total outstanding voting stock of the acquired company.
Each Fund is required to comply with the above fundamental investment
restrictions applicable to it only at the time the relevant action is taken.
A Fund is not required to liquidate an existing position solely because a
change in the market value of an investment or a change in the value of the
Fund's net or total assets causes it not to comply with the restriction at a
future date.
<PAGE>
<PAGE>
Management of the Trust
Trustees and officers of the Funds, together with information as to their
principal business occupations during at least the last five years, are shown
below. Each trustee who is deemed to be an "interested person" of the Funds,
as defined in the 1940 Act, is indicated by an asterisk.
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Name & Address Age Position(s) Held Principal Occupation
with Registrant During Past 5 Years
PHYLLIS W. BECK* 70 Trustee An Associate Judge (1981 to
GSB Bldg. Present)of the Superior Court
Suite 800 of Pennsylvania; Trustee or
City Line & Belmont Ave. Director of the Trust or its
Bala Cynwyd, PA 19004-1611 predecessor since November, 1992.
TIBOR FABIAN 74 Trustee A Consultant (1984 to Present)
Box 7097 on financial and
Princeton, NJ 08543-7097 organizational matters; Director
(1984 to Present) of
Rex Stores, Inc.,a chain of
discount electronic stores,
formerly Audio/Video
Affiliates, Inc.;
Member, Board of
Trustees (1979 to
Present) of the
Hospital for Joint
Diseases Orthopedic
Institute, NY;
Trustee or Director
of the Trust or its
predecessor since its
inception.
GERALD HELLERMAN 59 Trustee Managing Director (8/93 to
10965 Eight Bells Lane Present)of Hellerman
Columbia, MD 21044 Associates, a
financial and
corporate consulting
firm; Chief Financial
Analyst (1976 to
7/93) of the
Antitrust Division of
U.S. Department of
Justice; Trustee or
Director of the Trust
or its predecessor
since September 1993.
<PAGE>
<PAGE>
MARVIN MOSER, M.D. 73 Trustee Trustee (1992 to Present) of
13 Murray Hill Road the Trudeau Institute, a
Scarsdale, NY 10583 medical research institute;
Clinical Professor of
Medicine (1984 to Present)
at Yale University School
of Medicine; Senior
Medical Consultant (1972 to
Present) for the National
High Blood Pressure
Education Program of the
National Heart, Lung and
Blood Institute; Emeritus
Chief of Cardiology,
Attending Physician in
Medicine and Cardiology
(1954 to 1995) of the White
Plains, NY Hospital Medical
Center; Chairman (1977) and
a member of the Committee
in 1980, 1984, 1988 and
1992 of the Joint National
Committee on Detection,
Evaluation and Treatment of
High Blood Pressure for the
National Heart, Lung and
Blood Institute; Trustee
or Director of the Trust or
its predecessor since
November, 1994.
DONALD RAPPAPORT 71 Trustee President & Chief Operating
3121 South Street, NW Officer (3/90 to 12/90)of
Washington, DC 20007 Third Avenue Value Fund,
Inc. and Equity Strategies
Fund, Inc. (1984 to 12/90);
Director (1987 to 4/94) of
Equity Strategies Fund,
Inc.; President (1989 to
12/90) of Whitman Advisors,
Ltd., an investment
adviser; Registered
Securities Representative
(1989 to 1991) of M.J.
Whitman & Co., Inc., a
former broker-dealer; a
private investor (1987 to
Present); Trustee or
Director of the Trust or
its predecessor since its
inception.
MYRON M. SHEINFELD 66 Trustee Attorney and Shareholder(1986
1001 Fannin St., Suite 3700 to Present) of Sheinfeld,
Houston, TX 77002 Maley & Kay P.C., a
law firm; Adjunct
Professor (1975 to
1991) of the
University of Texas
Law School; Director
(1984 to 1992) of
Equity Strategies
Fund, Inc.; Director
(1988 to Present) of
Nabors Industries,
Inc., an international oil
drilling contractor;<PAGE>
<PAGE>
MYRON M. SHEINFELD
(Continued) former Consultant
(11/90 to 4/95) to
Meyer Hendricks
Victor Osborn &
Maledon, a law firm
in Phoenix, Arizona;
Trustee or Director
of the Trust or its
predecessor since its
inception.
MARTIN SHUBIK 70 Trustee Seymour H. Knox Professor
Yale University (1975 to Present) of
Dept. of Economics Mathematical and Institutional
Box 2125, Yale Station Economics, Yale University;
New Haven, CT 06510 Director (1984 to 4/94) of
Equity Strategies Fund, Inc.;
Trustee or Director of the Trust
or its predecessor since its inception.
CHARLES C. WALDEN 52 Trustee Senior Vice-President--
Knights of Columbus Investments (1973
1 Columbus Plaza to present)
New Haven, CT 06510 (Chief Investment Officer)of
Knights of Columbus, a
fraternal benefit society
selling life insurance and
annuities; Chartered Financial
Analyst; Trustee or Director
of the Trust or its predecessor
since May, 1996.
MARTIN J. WHITMAN* 72 Chairman President (1/91 to
767 Third Avenue Chief Executive Present), Chairman and CEO
New York, NY 10017-2023 Officer and (3/90 to Present) of the
President Trust; Chairman, CEO
(1/1/95 to Present),
President (1/1/95 to
6/29/95) and Chief
Investment Officer (10/92
to Present) of M.J. Whitman
Advisers, Inc., a
subsidiary of M.J. Whitman
Holding Corp., (MJWHC), a
holding company managing
investment subsidiaries and
an investment adviser to
private and institutional
clients; Chairman, CEO
(1/1/95 to Present) and
President (1/1/95 to
6/29/95) of MJWHC and of
M.J. Whitman, Inc., a
subsidiary of MJWHC and the
successor broker-dealer of
M.J. Whitman, L.P. (MJWLP),
a Delaware limited
partnership which has been
dissolved; Distinguished
Management Fellow (1972 to
Present) and Member of the<PAGE>
<PAGE>
MARTIN J. WHITMAN
(Continued) Advisory Board (10/94 to
6/95) of the Yale School of
Management at Yale
University; Director and
Chairman (8/90 to Present),
President (8/90 to 12/90),
CEO (8/96 to Present) and
Chief Investment Officer
(12/90 to 8/96) of
Danielson Holding
Corporation, and a Director
of its subsidiaries;
Director (3/91 to Present)
of Nabors Industries, Inc.,
an international oil drilling
contractor; Chairman and
CEO (4/86 to Present) and
President (1/91 to Present)
of EQSF Advisers, Inc.,
investment adviser to the
Trust; President and CEO
(10/74 to Present) of Martin
J. Whitman & Co., Inc.,
(formerly M.J. Whitman & Co.,
Inc.), a private investment
company; Trustee or Director
of the Trust or its
predecessor since its
inception; Chartered Financial
Analyst
DAVID M. BARSE 34 Executive Vice President, Chief Operating
767 Third Avenue President and Officer and Director(7/96 to
New York, NY 10017-2023 Chief Operating Present) of
Officer Danielson Holding Corporation;
Director(8/96 to Present) of
National American Insurance
Company of California;
Executive Vice President
and Director (4/95 to
Present) of EQSF Advisers,
Inc.; President (6/95 to
Present), Director, Chief
Operating Officer (COO),
(1/95 to present)
Secretary (1/95 to 1/96)
and Executive Vice
President (1/95 to 6/95) of
M.J. Whitman Holding Corp.;
President (6/95 to
Present), Director and COO
(1/95 to present) and
Secretary (1/95 to
1/96), Executive Vice
President (1/95 to 6/95) of
M.J. Whitman, Inc.;
President (6/95 to
Present), Director and COO
(1/95 to Present),
Executive Vice President
(1/95 to 6/95) and
Corporate Counsel (10/92 to
12/95) of M.J. Whitman
Advisers, Inc.; Director
(7/94 to 12/94), Executive
Vice President and
Secretary (1/92 to 12/94)
of Whitman Securities<PAGE>
<PAGE>
DAVID M. BARSE
(Continued) Corp.; Vice President and
Corporate Counsel (5/94 to
1/95) of the Trust; Counsel
(1/94 to 10/94) of Carl
Marks Strategic
Investments, L.P.
MICHAEL CARNEY 43 Treasurer, Chief Director,(1/1/95 to Present)
767 Third Avenue Financial Officer Executive, Vice President
New York, NY 10017-2023 (COO) Chief Financial Officer
(6/29/95 to Present), of
M.J. Whitman Holding Corp.
and of M.J. Whitman, Inc.;
Treasurer, Director (1/1/95
to Present), Executive Vice
President (6/29/95 to
Present) and CFO (10/92 to
Present) of M.J. Whitman
Advisers, Inc.; Treasurer
(12/93 to 4/96) of
Longstreet Investment
Corp.; CFO (3/26/93 to
6/95) of Danielson Trust
Company; Limited Partner
(1/92 to 12/31/94) of M.J.
Whitman, L.P.; CFO of WHR Manage-
ment Corporation (8/91 to
Present), Danielson Holding
Corporation (8/90 to
Present) and Carl Marks
Strategic Investments,
L.P., an investment
partnership (1/90 to 4/94);
CFO (1/90 to 4/94) of Carl
Marks & Co., Inc. a
broker-dealer; CFO (8/89 to
12/90) of Whitman Advisors,
Ltd.; CFO and Treasurer
(5/89 to 4/94) of Equity
Strategies Fund, Inc.; CFO
and Treasurer (5/89 to
Present) of EQSF Advisers,
Inc.; CFO (5/89 to Present)
of Whitman Heffernan Rhein
& Co., Inc., Martin J.
Whitman & Co., Inc.,
(formerly M.J. Whitman &
Co., Inc.) and WHR
Management Company, L.P., a
firm managing investment
partnerships.
KERRI WELTZ 29 Assistant Treasurer Assistant Treasurer 5/96 to
767 Third Avenue Present),Controller (1/96 to present),
New York, NY 10017-2023 Assistant Controller
(1/93 to 12/95)and Staff
Accountant(1/92 to 12/92) for
the Trust; Controller
(1/96 to Present), Assistant
Controller(1/93 to 12/95),
and Staff Accountant (1/92
to 12/95 Equity Strategies,
Inc.; Controller(8/96 to<PAGE>
<PAGE>
KERRI WELTZ
(Continued) Present),of Danielson
Holding Corp.; Controller
(5/96 to Present) and
Assistant Controller(1/95
to 5/96) of Whitman
Heffernan & Rhein Workout
Fund II, L.P. and Whitman
Heffernan & Rhein Workout
Fund II-A, L.P.; Controller
(5/96 to present) of WHR
Management Corp.; Controller
(5/96 to present), Assistant
Controller (1/95 to 5/96)
and Staff Accountant(5/91
to 12/92), of Whitman Heffernan
Rhein & Co., Inc.; Controller
(5/96 to present) of Martin J
Whitman, Co., Inc.; Assistant
Controller (10/94 to 4/96) of
Longstreet Investment Corp and
Emerald Investment Partners, L.P.;
Assistant Controller (1/93 to
4/94) and Staff Accountant(1/92
to 12/92) of Equity Strategies
Fund, Inc,; Payroll Manager (5/91
to 12/93) of M.J. Whitman L.P.
IAN M. KIRSCHNER 41 General Counsel and General Counsel and Secretary
767 Third Avenue Secretary (8/96 to Present) of
New York, NY 10017-2023 Danielson Holding
Corporation; General
Counsel and Secretary (1/96
to Present) of M.J. Whitman
Holding Corp., M.J.
Whitman, Inc.; and M.J. Whitman
Advisers, Inc.; General Counsel
and Secretary (1/97 to Present) of
the Trust; General Counsel and
Secretary (1/97 to Present) of
EQSF Advisers, Inc.;
Vice-President,
General Counsel
and Secretary (2/93 to
6/95) of 2 I Inc.; Of
Counsel (10/90 to 10/92) to
Morgan, Lewis & Bockius.
</TABLE>
The Trust does not pay any fees to its officers for their services as such,
but does pay Trustees who are not affiliated with the Investment Adviser a
fee of $1,500 for each meeting of the Board of Trustees that they attend,
in addition to reimbursing all Trustees for travel and incidental expenses
incurred by them in connection with their attendance at Board meetings. The
Trust also pays the non-interested Trustees an annual stipend of $1,200 in
January of each year for the previous year's service. Third Avenue Value
Fund, Inc., the predecessor to the Third Avenue Value Fund Series of the
Trust paid Trustees in aggregate, $65,058 in such fees and expenses for
the year ended October 31, 1996. Trustees do not receive any pension or
retirement benefits.
For the fiscal year ended October 31, 1996 the aggregate amount of
compensation paid to each Trustee by Third Avenue Value Fund is listed
below. No compensation was paid to the Trustees with respect to Third
Avenue Small-Cap Value Fund because the Fund had not commenced operations
as of that date.<PAGE>
<PAGE>
Compensation Table
Aggregate Compensation Total Compensation From
From Fund for Fiscal Year Fund and Fund Complex Paid
Name and Position Held ended October 31, 1996* To Trustees
- ---------------------- ------------------------ --------------------------
Phyllis W. Beck, Trustee $ 0 $0
Tibor Fabian, Trustee $ 7,200 $ 7,200
Gerald Hellerman, Trustee $ 5,700 $ 5,700
Marvin Moser, M.D., Trustee $ 7,200 $ 7,200
Donald Rappaport, Trustee $ 7,200 $ 7,200
Myron M. Sheinfeld, Trustee $ 7,200 $ 7,200
Martin Shubik, Trustee $ 7,200 $ 7,200
Charles C. Walden, Trustee $ 3,000 $ 3,000
Jack Weprin, Trustee** $ 4,200 $ 4,200
Martin J. Whitman, Chairman/ $0 $0
Chief Executive Officer and
President
* Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $16,158 for all Trustees as a group.
** Mr. Weprin passed away on March 10, 1996.
The following persons beneficially own of record or are known to
beneficially own of record 5 percent or more of the outstanding common
stock of the predecessor fund of Third Avenue Value Fund as set forth below
as of January 15, 1997. Third Avenue Small-Cap Value Fund had not
commenced operations as of January 15, 1997.
<PAGE>
<PAGE>
Name and Address Percentage of
Third Avenue Value Fund Number of Shares
Charles Schwab & Co., Inc./2/ 38.51% 9,807,086
101 Montgomery Street
San Francisco, CA 94104
Donaldson Lufkin & Jenrette 12.78% 3,254,829
Securities Corporation /3/
Mutual Funds Dept. 5th Floor
P.O. Box 2052
Jersey City, NJ 07303
Bear Stearns Securities Corp./3/ 6.35% 1,616,922
One Metrotech Center North
Brooklyn, NY 11201-3859
Investment Adviser
The Investment Adviser to the Trust is EQSF Advisers, Inc. (the "Adviser").
Martin J. Whitman is a controlling person of the Adviser. His control is
based upon an irrevocable proxy signed by his children, who own in the
aggregate 75% of the outstanding common stock of the Adviser, pursuant to a
shareholders' agreement entered into by and among them. Mr. Whitman is
Chairman, Chief Executive Officer and President of the Adviser.
The following individuals are affiliated persons of the Trust and Adviser:
Capacity With Funds Capacity With Adviser
Martin J. Whitman Chairman, Chief Executive Chairman, Chief Executive
Officer and President Officer and President
David M. Barse Chief Operating Officer, Chief Operating Officer,
Executive Vice President Executive Vice President
Michael Carney Treasurer, Chief Treasurer, Chief
Financial Officer Financial Officer
Ian M. Kirschner General Counsel and General Counsel and
Secretary Secretary
Kerri Weltz Assistant Treasurer Assistant Treasurer
Investment Advisory Agreement
The investment advisory services of the Adviser are furnished to each Fund
pursuant to an Investment Advisory Agreement (the "Investment Advisory
Agreement") dated , 1997 for Third Avenue Value
Fund and , 1997 for Third Avenue Small-Cap Value Fund,
each providing for an initial term of two years. The Investment Advisory
Agreement for Third Avenue Value Fund was initially approved on December
13, 1996 by the Board of Trustees of the Trust, including a majority of the
Trustees who are not "interested persons" as defined in the 1940 Act, and
by the sole shareholder of the Trust on , 1997.
The Adviser has provided investment advisory services to the Funds since
their inception.
- -----------------------------------------------------------------------------
/2/ Charles Schwab & Co., Inc. is a discount broker-dealer acting as a
nominee for registered investment advisers whose clients have purchased
shares of the Fund, and also holds shares for the benefit of its
clients.
/3/ Donaldson Lufkin & Jenrette Securities Corporation and Bear Stearns
Securities Corp. are broker-dealers holding shares for the benefit of
their respective clients.
<PAGE>
<PAGE>
After the initial two-year term, each Investment Advisory Agreement will
continue from year to year if approved annually by the Board of Trustees of
the Trust or a majority of the outstanding voting securities of the Trust,
and by vote of a majority of the Trustees who are not parties to the
Investment Advisory Agreements or "interested persons" (as defined in the
1940 Act) of such parties, cast in person at a meeting called for the
purpose of voting on such approval. The Investment Advisory Agreements may
be terminated at any time without penalty, upon 60 days written notice by
either party to the other, and will automatically be terminated upon any
assignment thereof.
Under the Investment Advisory Agreements, the Adviser supervises and
assists in the management of the Trust, provides investment research and
research evaluation and makes and executes recommendations for the purchase
and sale of securities. The Adviser furnishes at its expense all necessary
office equipment and personnel necessary for performance of the obligations
of the Adviser and pays the compensation of officers of the Trust.
However, in the event that any person serving as an officer of the Trust
has both executive duties attendant to such offices and administrative
duties to the Trust apart from such office, the Adviser does not pay any
amount relating to the performance of such administrative duties.
All other expenses incurred in the operation of the Funds and the
continuous offering of its shares, including taxes, fees and commissions,
bookkeeping expenses, fund employees, expenses of redemption of shares,
charges of administrators, custodians and transfer agents, auditing and
legal expenses, fees of outside Trustees and rent are borne by the Funds.
For the investment advisory services provided by the Adviser, each Fund
pays the Adviser a monthly fee of 1/12 of .90% (an annual rate of .90%) on
the average daily net assets in the Fund during the prior month. During
the fiscal years ended October 31, 1996, 1995 and 1994, Third Avenue Value
Fund paid investment advisory fees to the Adviser of $3,976,741, $1,926,686
and $1,080,459, respectively.
Administrator
The Funds have entered into an Administration Services Agreement (the
"Administration Agreement") with FPS Services, Inc. ("FPS"). The
Administration Agreement provides that FPS shall provide all administrative
services to each Fund other than those relating to the investment portfolio
of the Funds, the distribution of the Funds and the maintenance of each
Fund's financial records. The Administration Agreement has an initial two
year term and may be terminated at any time (effective after such initial term)
without penalty, upon 180 days written notice by either party to the other, and
will automatically be terminated upon any assignment thereof.
Distributor
The distribution services of the Distributor are furnished to each Fund
pursuant to a Distribution Agreement (the "Distribution Agreement") dated
, 1997 for Third Avenue Value Fund and
, 1997 for Third Avenue Small-Cap Value Fund, each providing
for an initial term of years. Under such agreements, the
Distributor shall (1) assist in the sale and distribution of each Fund's
shares; and (2) qualify and maintain the qualification as a broker-dealer
in such states where shares of the Funds are registered for sale.
The Distribution Agreements will remain in effect provided that it is
approved at least annually by the Board of Trustees or by a majority of the
Fund's outstanding shares, and in either case, by a majority of the
Trustees who are not parties to the Distribution Agreements or interested
persons of any such party. The Distribution Agreements terminate
automatically if it is assigned and may be terminated without penalty by
either party on not less than 60 days written notice.
Custodian
North American Trust Company ("North American"), 525 B Street, San Diego,
CA 92101-4492 serves as the custodian of the Funds' assets pursuant to
custodian agreements. Under such agreements, North American (1) maintains
a separate account or accounts in the name of each Fund; (2) holds and
transfers portfolio securities on accounts of the Funds; (3) accepts
receipts and makes disbursements of money on behalf of the Funds; (4)
collects and receives all income and other payments and distributions on
account of each Fund's securities; and (5) makes periodic reports to the
Board of Trustees concerning the Funds' operations.
<PAGE>
<PAGE>
Portfolio Trading Practices
Under the Investment Advisory Agreement between the Trust and the Adviser,
the Adviser has the responsibility of selecting brokers and dealers. The
Adviser must place portfolio transactions with brokers and dealers who
render satisfactory service in the execution of orders at the most
favorable prices and at reasonable commission rates, but has discretion to
pay a greater amount if it, in good faith, determines that such commission
was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, either in terms of that
particular transaction or in fulfilling the overall responsibilities of the
Adviser to the Funds. Where transactions are executed in the
over-the-counter market, or in the "third market" (the over-the-counter
market in listed securities), the Fund will normally first seek to deal
with the primary market makers. However, when the Funds consider it
advantageous to do so, they will utilize the services of brokers, but will,
in all cases, attempt to negotiate the best price and execution. The
determination of what may constitute the most favorable price and execution
in a securities transaction by a broker involves a number of
considerations, including, without limitation, the overall direct net
economic result to the Funds (involving both price paid or received and any
commissions or other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all if selling large
blocks is involved, the availability of the broker to stand ready to
execute possibly difficult transactions in the future and the financial
strength and stability of the broker. Such considerations are judgmental
and are weighed by management in determining the overall reasonableness of
brokerage commissions paid. In allocating any such portfolio brokerage on
a national securities exchange, the Funds may consider the research,
statistical and other factual information and services provided by brokers
from time to time to the Adviser. Such services and information are
available to the Adviser for the benefit of all clients of the Adviser and
its affiliates and it is not practical for the Adviser to assign a
particular value to any such service.
The Adviser intends to use brokers affiliated with the Adviser as brokers
for the Funds where, in its judgment, such firms will be able to obtain a
price and execution at least as favorable as other qualified brokers.
Martin J. Whitman, David M. Barse, Michael Carney and Ian M. Kirschner, who
are executive officers of the Trust and the Adviser, are also executive
officers of MJW and M.J. Whitman Senior Debt Corp. ("Senior Debt Corp"), a
broker of private debt instruments under common control with MJW.
In determining the commissions to be paid to MJW and Senior Debt Corp., it
is the policy of the Funds that such commissions will, in the judgment of
the Adviser, be (i) at least as favorable as those which would be charged
by other qualified brokers having comparable execution capability and (ii)
at least as favorable as commissions contemporaneously charged by MJW or
Senior Debt Corp., as the case may be, on comparable transactions for its
most favored unaffiliated customers, except for any customers of MJW or
Senior Debt Corp., as the case may be, considered by a majority of the
disinterested Trustees not to be comparable to the Funds. The Funds do not
deem it practicable and in their best interests to solicit competitive bids
for commission rates on each transaction. However, consideration is
regularly given to information concerning the prevailing level of
commissions charged on comparable transactions by other qualified brokers.
The Trustees from time to time, at least on a quarterly basis, will review,
among other things, all the Funds' portfolio transactions including
information relating to the commissions charged by MJW and Senior Debt
Corp. to the Funds and to their other customers, and information concerning
the prevailing level of commissions charged by other qualified brokers. In
addition, the procedures pursuant to which MJW and Senior Debt Corp.
effects brokerage transactions for the Funds must be reviewed and approved
no less often than annually by a majority of the disinterested Trustees.
The Adviser expects that it will execute a portion of the Funds'
transactions through qualified brokers other than MJW and Senior Debt Corp.
In selecting such brokers, the Adviser will consider the quality and
reliability of the brokerage services, including execution capability and
performance, financial responsibility, and investment information and other
research provided by such brokers. Accordingly, the commissions charged by
any such broker may be greater than the amount another firm might charge if
management of the Trust determines in good faith that the amount of such
commissions is reasonable in relation to the value of the brokerage
services and research information provided by such broker to the Funds.
Management of the Trust believes that the research information received in
this manner provides the Funds with benefits by supplementing the research
otherwise available to the Funds. Over-the-counter purchases and sales will
be transacted directly with principal market makers, except in those
circumstances where the Funds can, in the judgment of their management,
otherwise obtain better prices and execution of orders. During the fiscal
year ended October 31, 1996, the amount of brokerage transactions and
related commissions that Third Avenue Value Fund directed to brokers due to
research services provided were $26,766,137 and $15,500, respectively.
<PAGE>
<PAGE>
To the knowledge of the Funds, no affiliated person of the Funds receives
give-ups or reciprocal business in connection with security transactions of
the Funds. The Funds do not effect securities transactions through brokers
in accordance with any formula, nor will they take the sale of Fund shares
into account in the selection of brokers to execute security transactions.
However, brokers who execute brokerage transactions for the Funds,
including MJW and Senior Debt Corp., from time to time may effect purchases
of Fund shares for their customers.
For the fiscal year ended October 31, 1996, Third Avenue Value Fund
incurred total brokerage commissions of $447,855 of which approximately
$329,168 (or 73%) was paid to MJW and $70,250 (or 16%) was paid to Senior
Debt Corp. For the year ended October 31, 1995, the Fund incurred total
brokerage commissions of $320,517, of which approximately $269,152 (or 84%)
was paid to MJW and $22,689 (or 7%) was paid to Senior Debt Corp. For the
year ended October 31, 1994, the Fund incurred total brokerage commissions
of $250,901, of which approximately $184,209 (or 73%) was paid to MJW and
$32,007 (or 13%) was paid to Senior Debt Corp. These amounts include fees
paid by MJW to its clearing agents. Commissions paid by the Fund to MJW
are paid at an average discount of at least 20% to the normal fees charged
by MJW.
For the fiscal year ended October 31, 1996, Third Avenue Value Fund
effected 58% and 0.3% of its total transactions for which commissions were
paid through MJW and Senior Debt Corp., respectively.
At October 31, 1996, Third Avenue Value Fund held securities of the
following of the Fund's regular broker-dealers or their parents: Legg Mason
Inc. (the market value of which was $10,803,750 as of October 31, 1996) and
Alex Brown Inc. (the market value of which was $6,702,175 as of October 31,
1996).
Purchase Orders
Each Fund reserves the right, in its sole discretion, to refuse purchase
orders. Without limiting the foregoing, a Fund will consider exercising
such refusal right when it determines that it cannot effectively invest the
available funds on hand in accordance with the Fund's investment policies.
Redemption of Shares
The procedure for redemption of Fund shares under ordinary circumstances is
set forth in the Prospectus. In unusual circumstances, such as in the case
of a suspension of the determination of net asset value, the right of
redemption is also suspended and, unless redeeming shareholders withdraw
their certificates from deposit, they will receive payment of the net asset
value next determined after termination of the suspension. The right of
redemption may be suspended or payment upon redemption deferred for more
than seven days: (a) when trading on the New York Stock Exchange (the
"NYSE") is restricted; (b) when the NYSE is closed for other than weekends
and holidays; (c) when the Securities and Exchange Commission (the "SEC")
has by order permitted such suspension; or (d) when an emergency exists
making disposal of portfolio securities or valuation of net assets of a
Fund not reasonably practicable; provided that applicable rules and
regulations of the SEC shall govern as to whether the conditions prescribed
in (a), (c) or (d) exist.
Redemption In Kind Each Fund has elected to be governed by Rule 18f-1 under
the Investment Company Act of 1940 pursuant to which such Fund is obligated
during any 90 day period to redeem shares for any one shareholder of record
solely in cash up to the lesser of $250,000 or 1% of the net asset value of
such Fund at the beginning of such period. Should a redemption exceed such
limitation, a Fund may deliver, in lieu of cash, readily marketable
securities from its portfolio. The securities delivered will be selected
at the sole discretion of such Fund, will not necessarily be representative
of the entire portfolio and may be securities which the Fund would
otherwise sell. The redeeming shareholder will usually incur brokerage
costs in converting the securities to cash.
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<PAGE>
The method of valuing securities used to make the redemptions in kind will
be the same as the method of valuing portfolio securities and such
valuation will be made as of the same time the redemption price is
determined. See "Calculation of Net Asset Value."
Dividends, Capital Gain Distributions and Taxes
General Each Fund has qualified and intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). If they so qualify, the Funds will
not be subject to Federal income tax on their net investment income and net
short-term capital gain, if any, realized during any fiscal year to the
extent that they distribute such income and gain to their shareholders.
Each Fund will either distribute or retain for reinvestment all or part of
any net long-term capital gain. If any such net capital gain is retained,
the Fund will be subject to a tax of 35% of such amount. In that event,
the Fund expects to designate the retained amount as undistributed capital
gains in a notice to its shareholders, each of whom (1) will be required
to include in income for tax purposes, as long-term capital gains, its
share of such undistributed amount, (2) will be entitled to credit its
proportionate share of the tax paid by the Fund against its Federal income
tax liability and to claim refunds to the extent the credit exceeds such
liability, and (3) will increase its basis in its shares of such Fund by an
amount equal to 65% of the amount of the undistributed capital gains
included in such shareholder's gross income.
A distribution by a Fund will be treated as paid during any calendar year
if it is declared by the Fund in October, November or December of that
year, payable to shareholders of record on a date during such month and
paid by the Fund during January of the following year. Any such
distribution paid during January of the following year will be deemed to be
received on December 31 of the year the distribution is declared, rather
than when the distribution is received.
Under the Code, amounts not distributed on a timely basis in accordance
with a calendar year distribution requirement are subject to a 4% excise
tax. To avoid the tax, each Fund must distribute during each calendar
year, an amount equal to at least the sum of (1) 98% of its ordinary income
(not taking into account any capital gains or losses) for the calendar
year, (2) 98% of its capital gains in excess of its capital losses for the
twelve-month period ending on October 31 of the calendar year, (unless an
election is made by a Fund with a November or December year end to use the
Fund's fiscal year) and (3) all ordinary income and net capital gains for
previous years that were not previously distributed.
Gains or losses on the sales of securities by a Fund will be treated as
long-term capital gains or losses if the securities have been held by such
Fund for more than twelve months. Gains or losses on the sale of
securities held for twelve months or less will be short-term capital gains
or losses.
Distributions Distributions of investment company taxable income (which
includes taxable interest income and the excess of net short-term capital
gain over net long-term capital loss) are taxable to a U.S. shareholder as
ordinary income, whether paid in cash or in additional Fund shares.
Dividends paid by a Fund will qualify for the 70% deduction for dividends
received by corporations to the extent the Fund's income consists of
qualified dividends received from U.S. corporations. Distributions of net
capital gain (which consists of the excess of net long-term capital gain
over net short-term capital loss), if any, are taxable as long-term capital
gain, whether paid in cash or in shares, regardless of how long the
shareholder has held the applicable Fund's shares, and are not eligible for
the dividends received deduction. Shareholders receiving distributions in
the form of newly issued shares will have a basis in such shares equal to
the fair market value of such shares on the distribution date. If the net
asset value of shares is reduced below a shareholder's cost as a result of
a distribution by a Fund, such distribution may be taxable even though it
represents a return of invested capital. The price of shares purchased at
any time may reflect the amount of a forthcoming distribution. Those
purchasing shares just prior to distribution will receive a distribution
which will be taxable to them, even though the distribution represents in
part a return of their invested capital.
<PAGE>
<PAGE>
Redemption of Shares Upon a redemption of shares, a shareholder will
realize a taxable gain or loss equal to the difference between the
redemption proceeds and the basis in the shares redeemed. Shareholders
should consult their tax advisors regarding the determination of the basis
in any shares redeemed. Such gain or loss will generally be treated as
long-term capital gain or loss if the shares have been held for more than
one year. Any loss realized on a sale will be disallowed to the extent the
shares disposed of are replaced within a 61-day period beginning 30 days
before and ending 30 days after the date the shares are disposed of. In
such case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
Any loss realized by a shareholder on the sale of a Fund's shares held by
the shareholder for six months or less will be treated for tax purposes as
a long-term capital loss to the extent of any distributions of net capital
gain received by the shareholder with respect to such shares.
Backup Withholding The Funds may be required to withhold Federal income
tax at a rate of 31% on all taxable distributions payable to shareholders
who fail to provide the Funds with their correct taxpayer identification
number or to make required certifications, or who have been notified by the
Internal Revenue Service that they are subject to backup withholding.
Backup withholding is not an additional tax; any amounts withheld may be
credited against the shareholder's Federal income tax liability.
Performance Information
Performance information for the Funds may appear in advertisements, sales
literature, or reports to shareholders or prospective shareholders.
Performance information in advertisements and sales literature may be
expressed as "average annual return" and "total return."
Each Fund's average annual return quotation is computed in accordance with
a standardized method prescribed by rules of the SEC. The average annual
return for a specific period is found by first taking a hypothetical $1,000
investment ("initial investment") in the Fund's shares on the first day of
the period and computing the redeemable value of that investment at the end
of the period. The redeemable value is then divided by the initial
investment, and this quotient is taken to the Nth root (N representing the
number of years in the period) and is subtracted by the result, which is
then expressed as a percentage. The calculation assumes that all income
and capital gains dividends paid by the Fund have been reinvested at net
asset value on the reinvestment dates during the period.
Calculation of a Fund's total return is not subject to a standardized
formula. Total return performance for a specific period is calculated by
taking an initial investment in the Fund's shares on the first day of the
period and computing the redeemable value of that investment at the end of
the period. The total return percentage is then determined by subtracting
the initial investment from the redeemable value and dividing the remainder
by the initial investment and expressing the result as a percentage. The
calculation assumes that all income and capital gains dividends by the Fund
have been reinvested at net asset value on the reinvestment dates during
the period. Total return may also be shown as the increased dollar value
of the hypothetical investment over the period.
Third Avenue Value Fund's total return from inception (October, 1990),
through fiscal year ended October 31, 1996, was 216.25%. Third Avenue
Value Fund's average annual return from inception through fiscal year ended
October 31, 1996, was 21.15%.
Financial Statements
Third Avenue Value Fund, Inc. (the predecessor of Third Avenue Value Fund)
1996 financial statements and notes thereto appearing in its Annual Report
to Shareholders and report thereon of Price Waterhouse LLP, independent
accountants, appearing therein, are incorporated by reference in this
Statement of Additional Information. The Funds will issue unaudited
semi-annual and audited annual financial statements.<PAGE>
<PAGE>
APPENDIX
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS GROUP
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform any audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in,
or unavailability of, such information or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default-capacity and willingness of the obliger as to the
timely payment of interest and repayment of principal in accordance with
the terms of the obligation.
II. Nature and provisions of the obligation.
III. Protection afforded by, and relative position of the obligation in
the event of bankruptcy, reorganization or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC", and "C" is
regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the
terms of the obligation. "BB" indicates the lowest degree of
speculation and "C" the highest degree of speculation. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.
BB - Debt rate "BB" has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties
or exposure to adverse business, financial or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments. The "BB" rating category is also used for debt subordinated
to senior debt that is assigned an actual or implied "BBB" rating.
B - Debt rated "B" has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The "B"
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied "BB" or "BB-" rating.
<PAGE>
<PAGE>
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and
economic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The "CCC" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied "B" or
"B-" rating.
CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has
been filed, but debt service payments are continued.
C1 - The rating "C1" is reserved for income bonds on which no interest
is being paid.
D - Debt rated "D" is in payment default. The "D" rating category is
used when interest payments or principal payments are not made on the
date due even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during such
grace period. The "D" rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the
major categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risk appear
somewhat greater than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa - Bonds which are rated Baa are considered as medium-grade
obligations (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements:
their future cannot be considered as well-assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing. Moody's applies numerical
modifiers: 1, 2 and 3 in each generic rating classification from Aa
through B in its corporate bond rating system. The modifier 1 indicates
that the security ranks in the higher end of its generic rating
category, the modifier 2 indicates a mid-range ranking, and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.<PAGE>
<PAGE>
Board of Trustees
Phyllis W. Beck
Tibor Fabian
Gerald Hellerman
Marvin Moser
Donald Rappaport
Myron M. Sheinfeld
Martin Shubik
Charles C. Walden
Martin J. Whitman
Officers
Martin J. Whitman
Chairman, Chief Executive Officer, President
David M. Barse
Chief Operating Officer, Executive Vice President
Michael Carney
Chief Financial Officer, Treasurer
Kerri Weltz, Assistant Treasurer
Ian M. Kirschner, General Counsel and Secretary
Investment Adviser
EQSF Advisers, Inc.
767 Third Avenue
New York, NY 10017-2023
Distributor
M.J. Whitman, Inc.
767 Third Avenue
New York, NY 10017-2023
Transfer Agent
FPS Services, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
(610) 239-4500
(800) 443-1021 (toll-free)
Custodian
North American Trust Company
525 B Street
San Diego, CA 92101-4492
[LOGO]
767 Third Avenue
New York, NY 10017
Phone (212) 888-6685
Toll Free (800) 443-1021
www.mjwhitman.com<PAGE>
<PAGE>
PART C - OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Included in Part A:
Financial Highlights for each of the five years in the
period ended October 31, 1996.
Included in Part B of the Registration Statement: Portfolio
of Investments at October 31, 1996, Statement of Assets and
Liabilities at October 31, 1996, Statements of Operations
for the year ended October 31, 1996, Statement of Changes
in Net Assets for the year ended October 31, 1996,
Statement of Changes in Net Assets for the years ended
October 31, 1996 and 1995, Financial Highlights for the
years ended October 31, 1996, 1995, 1994, 1993 and 1992 and
Notes to Financial Statements for the year ended October
31, 1996. Reports of Independent Accountants.
Incorporated by reference to the Statement of Additional
Information.
(b) Exhibits:
Exhibits filed pursuant to Form N-1A:
(1) Trust Instrument and Certificate of Trust.
(2) By-Laws.
(5) Investment Advisory Contracts -- (To be filed by
Amendment.)
(6) Distribution Agreement -- (To be filed by Amendment.)
(8) Custodian Agreements -- (To be filed by Amendment.)
(9) (a) Transfer Agent Services Agreement -- (To be filed
by Amendment.)
(b) Administration Agreement -- (To be filed by
Amendment.)
(c) Accounting Services Agreement -- (To be filed by
Amendment.)
(10) (a) Opinion and Consent of Counsel regarding the
legality of the securities being issued -- (To be
filed by Amendment.)
(11) Consent of Independent Auditors.
(14) Individual Retirement Account Disclosure Statement and
Custodial Account Agreement -- (To be filed by Amendment.)
(17) Financial Data Schedule.
(19) Trustees' Powers of Attorney.
Item 25. Persons Controlled By or Under Common Control with Registrant.
Not Applicable.
<PAGE>
<PAGE>
Item 26. Number of holders of securities.
Number of Record Holders
Title of Class As of January 8, 1997
Common Stock 7,745
(Par Value $.001)
Item 27. Indemnification.
Reference is made to Article X of the Registrant's Trust
Instrument (filed herewith).
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant
to the Trust's Trust Instrument, its By-Laws or otherwise, the
Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by trustees, officers or controlling persons of
the Registrant in connection with the successful defense of any
act, suit or proceeding) is asserted by such trustees, officers
or controlling persons in connection with shares being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issues.
Item 28. Business and other connections of investment adviser.
EQSF Advisers, Inc., 767 Third Avenue, New York, New York 10017-2023
provides investment advisory services to investment
companies and as of January 8, 1997 had approximately $658
million in assets under management.
For information as to any other business, vocation or employment
of a substantial nature in which each Trustee or officer of the
Registrant's investment adviser has been engaged for his own
account or in the capacity of Trustee, officer, employee, partner
or trustee, reference is made to Form ADV (File #801-27792) filed
by it under the Investment Advisers Act of 1940.
Item 29. Principal underwriters.
(a) Not Applicable.
(b) Not Applicable.
(c) Not Applicable.
Item 30. Location of accounts and records.
All records described in Section 31 (a) of the Investment Company Act of
1940, as amended and Rules 17 CFR 270.31a-1 to 31a-31 promulgated
thereunder, are maintained by the Trust's Investment Adviser, EQSF
Advisers, Inc. 767 Third Avenue, NY, NY 10017-2023, except for those
records maintained by the Trust's Custodian, North American Trust Company,
525 B Street, San Diego, CA 92101-4492, and the Trust's Shareholder
Service and Fund Accounting and Pricing Agent, FPS Services, Inc.,
3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903.
Item 31. Management services.
None.
Item 32. Undertakings.
None.<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York on the 29th day
of January, 1997.
THIRD AVENUE TRUST
Registrant
/s/ MARTIN J. WHITMAN
Martin J. Whitman, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement of Third Avenue Trust has been signed below by the following
persons in the capacities and on the date indicated.
Signature Capacity Date
/s/ MARTIN J. WHITMAN
Martin J. Whitman Trustee January 29,1997
/s/ DONALD RAPPAPORT
Donald Rappaport Trustee January 29, 1997
/s/ PHYLLIS W. BECK
Phyllis W. Beck Trustee January 29, 1997
/s/ MARTIN SHUBIK
Martin Shubik Trustee January 29, 1997
/s/ TIBOR FABIAN
Tibor Fabian Trustee January 29,1997
/s/ MYRON M. SHEINFELD
Myron M. Sheinfeld Trustee January 29,1997
/s/ GERALD HELLERMAN
Gerald Hellerman Trustee January 29, 1997
/s/ CHARLES C. WALDEN
Charles C. Walden Trustee January 29, 1997
/s/ MARVIN MOSER
Marvin Moser Trustee January 29,1997<PAGE>
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SCHEDULE OF EXHIBITS TO FORM N-1A
Exhibit Page
Number Exhibit Number
1. Trust Instrument and Certificate of Trust
2. By-Laws of the Trust
11. Consent of Auditors
17. Financial Data Schedules
Other Powers-of-Attorney
Third Avenue Trust
Trust Instrument Dated: October 31 , 1996
Principal Place of Business:
767 Third Avenue
New York, New York 10017-2023
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Table of Contents
Page
Article I - Name and Definitions 1
Section 1.1 Name 1
Section 1.2 Definitions 1
ARTICLE II - Beneficial Interest 2
Section 2.1 Shares of Beneficial Interest 2
Section 2.2 Issuance of Shares 2
Section 2.3 Register of Shares and Share Certificates 2
Section 2.4 Transfer of Shares 2
Section 2.5 Treasury Shares 2
Section 2.6 Establishment of Series 2
Section 2.7 Investment in the Trust 3
Section 2.8 Assets and Liabilities of Series 3
Section 2.9 No Preemptive Rights 4
Section 2.10 Personal Liability of Shareholders 4
Section 2.11 Assent to Trust Instrument 4
ARTICLE III - the Trustees 4
Section 3.1 Management of the Trust 4
Section 3.2 Initial Trustee 4
Section 3.3 Term of Office of Trustees 4
Section 3.4 Vacancies and Appointment of Trustees 5
Section 3.5 Temporary Absence of Trustee 5
Section 3.6 Number of Trustees 5
Section 3.7 Effect of Death, Resignation, Etc. of a Trustee 5
Section 3.8 Ownership of Assets of the Trust 5
ARTICLE IV - Powers of the Trustees 5
Section 4.1 Powers 5
Section 4.2 Issuance and Repurchase of Shares 7
Section 4.3 Trustees and Officers as Shareholders 7
Section 4.4 Action by the Trustees and Committees 8
Section 4.5 Chairman of the Trustees 8
Section 4.6 Principal Transactions 8
ARTICLE V - Expenses of the Trust 8
Section 5.1 General 8
Section 5.2 Expenses of Series 8
Section 5.3 Trustee Reimbursement 8
ARTICLE VI - Investment Adviser, Principal Underwriter,
Administrator and Transfer Agent 9
Section 6.1 Investment Adviser 9
Section 6.2 Principal Underwriter 9
Section 6.3 Administrator 9
Section 6.4 Transfer Agent 9
Section 6.5 Parties to Contract 9
ARTICLE VII - Shareholders' Voting Powers and Meetings 10
Section 7.1 Voting Powers 10
Section 7.2 Meetings 10
Section 7.3 Quorum and Required Vote 10
Section 7.4 Action by Written Consent 11
ARTICLE VIII - Custodian 11
Section 8.1 Appointment and Duties 11
Section 8.2 Central Certificate System 11<PAGE>
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ARTICLE IX - Distributions and Redemptions 11
Section 9.1 Distributions 11
Section 9.2 Redemptions 12
Section 9.3 Determination of Net Asset Value and
Valuation of Portfolio Assets 12
Section 9.4 Suspension of the Right of Redemption 12
Section 9.5 Redemption of Shares in Order to Qualify as
Regulated Investment Company 13
ARTICLE X - Limitation of Liability and Indemnification 13
Section 10.1 Limitation of Liability 13
Section 10.2 Indemnification 13
Section 10.3 Shareholders 13
ARTICLE XI - Miscellaneous 14
Section 11.1 Trust Not a Partnership 14
Section 11.2 Trustees' Good Faith Action, Expert Advice,
No Bond or Surety 14
Section 11.3 Establishment of Record Dates 14
Section 11.4 Termination of Trust or Series 14
Section 11.5 Reorganization 15
Section 11.6 Filing of Copies, References, Headings 15
Section 11.7 Applicable Law 15
Section 11.8 Amendments 16
Section 11.9 Fiscal Year 16
Section 11.1 Use of Name "Third Avenue Trust" 16
Section 11.11 Provisions in Conflict with Law 16
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Third Avenue Trust
TRUST INSTRUMENT, made this day of October, 1996 by David
M. Barse ("Trustee").
WHEREAS, the Trustee desires to establish a business trust under the
Delaware Business Trust Act for the investment and reinvestment of funds
contributed thereto;
NOW, THEREFORE, the Trustee declares that all money and property
contributed to the trust hereunder shall be held and managed in trust under
this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. The name of the trust created hereby is the "Third
Avenue Trust".
Section 1.2 Definitions. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) "By-laws" means the by-laws referred to in Article IV, Section
4.1(e) hereof, as from time to time amended;
(b) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time.
(c) The "Trust" refers to Third Avenue Trust and reference to the
Trust, when applicable to one or more Series of the Trust, shall refer to any
such Series;
(d) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person" and "Principal Underwriter" shall have the meanings given
them in the 1940 Act. "Majority Shareholder Vote" shall have the same meaning as
the term "vote of a majority of the outstanding voting securities" is given in
the 1940 Act;
(e) "Net Asset Value" means the net asset value of each Series of
the Trust determined in the manner provided in Article IX, Section 9.3
hereof;
(f) "Outstanding Shares" means those Shares recorded from time to
time in the books of the Trust or its Transfer Agent as then issued and
outstanding, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the treasury of the
Trust;
(g) "Series" or "Class" mean a separate series or class of Shares of
the Trust established in accordance with the provisions of Article II, Section
2.6 hereof;
(h) "Shareholder" means a record owner of Outstanding Shares of the<PAGE>
<PAGE>
Trust;
(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or Class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(j) The "Trustee" or "Trustees" means the person or persons who has
or have signed this Trust Instrument, so long as such person or persons shall
continue in office in accordance with the terms hereof, and all other persons
who may from time to time be duly qualified and serving as Trustees in
accordance with the provisions of Article III hereof, and reference herein to a
Trustee or to the Trustees shall refer to the individual Trustees in their
capacity as Trustees hereunder;
(k) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1 Shares of Beneficial Interest. The beneficial interest in the
Trust shall be divided into such transferable Shares of one or more separate and
distinct Series or Classes of a Series as the Trustees shall from time to time
create and establish. The number of Shares of each Series, and Class thereof,
authorized hereunder is unlimited. Each Share shall have no par value. 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 nonassessable.
Section 2.2 Issuance of Shares. The Trustees in their discretion may, from
time to time, without vote of the Shareholders, issue Shares to such party or
parties and for such amount and type of consideration, subject to applicable
law, including cash or securities (including Shares of a different Series),at
such time or times and on such terms as the Trustees may deem appropriate, and
may in such manner acquire other assets (including the acquisition of assets
subject to, and in connection with, the assumption of liabilities). In
connection with any issuance of Shares, the Trustees may issue fractional Shares
and Shares held in the treasury. The Trustees may from time to time divide or
combine the Shares of any Series or Class into a greater or lesser number
without thereby changing the proportionate beneficial interests in the
Trust.
Section 2.3 Register of Shares and Share Certificates. A register shall be
kept at the principal office of the Trust or an office of the Trust's transfer
agent which shall contain the names and addresses of the Shareholders of each
Series, the number of Shares of that Series (or any Class or Classes thereof)
held by them respectively and a record of all transfers thereof. As to Shares
for which no certificate has been issued, such register shall be conclusive as
to who are the holders of the Shares and who shall be entitled to receive
dividends or other distributions or otherwise to exercise or enjoy the rights of
Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or other distribution, nor to have notice given to him as herein or in
the By-laws provided, until he has given his address to the transfer agent or
such other officer or agent of the Trustees as shall keep the said register for
entry thereon. The Trustees, in their discretion, may authorize the issuance of
share certificates and promulgate appropriate rules and regulations as to their
use. In the event that one or more certificates are issued, whether in the name
of a shareholder or a nominee, such certificate or certificates shall constitute
evidence of ownership of Shares for all purposes, including transfer, assignment
or sale of such Shares, subject to such limitations as the Trustees may, in
their discretion, prescribe.
Section 2.4 Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, 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 each such execution and
authorization and of such other matters as may be required by the Trustees. Upon
such delivery the transfer shall be recorded on the register of the Trust. Until
such record is made, the Shareholder of record shall be deemed to be the holder
of such Shares for all purposes hereunder and neither the Trustees nor the
Trust, nor any transfer agent or registrar nor any officer, employee or agent of
the Trust shall be affected by any notice of the proposed transfer.
Section 2.5 Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 2.2 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 2.6 Establishment of Series and Classes. The Trust created hereby
shall consist of one or more Series and, within each Series, one or more Classes
of shares. All references herein to Series shall be deemed to apply to Classes
as appropriate if more than one Class is established for any Series. Separate
and distinct records shall be maintained by the Trust for each Series and the
assets associated with any such Series shall be held and accounted for
separately from the assets of the Trust or any other Series. The Trustees shall
have full power and authority, in their sole discretion, and without obtaining
any prior authorization or vote of the Shareholders of any Series of the Trust,
to establish and designate and to change in any manner any such Series of Shares
or any Classes of initial or additional Series and to fix such preferences,
voting powers, rights and privileges of such Series or Classes thereof as the
Trustees may from time to time determine, to divide or combine the Shares or any
Series or Classes thereof into a greater or lesser number, to classify or
reclassify any issued Shares or any Series or Classes thereof into one or more
Series or Classes of Shares, and to take such other action with respect to the
Shares as the Trustees may deem desirable. The establishment and designation of
any Series shall be effective upon the adoption of a resolution by the Trustees
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series. A Series may issue any number of
Shares and need not issue shares.
All references to Shares in this Trust Instrument 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.
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive distributions of income and capital gains, if any,
which are made with respect to such Series and which are attributable to such
Shares. Upon redemption of Shares, such Shareholder shall be paid solely out of
the funds and property of such Series of the Trust.
Section 2.7 Investment in the Trust. The Trustees shall accept investments
in any Series of the Trust from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which the
affected Series is authorized to invest, valued as provided in Article IX,
Section 9.3 hereof. Investments in a Series shall be credited to each
Shareholder's account in the form of full or fractional Shares at the Net Asset
Value per Share next determined after the investment is received; provided,
however, that the Trustees may, in their sole discretion, (a) fix the Net Asset
Value per Share of the initial capital contribution, or (b) impose sales or
other charges upon investments in the Trust.
Section 2.8 Assets and Liabilities of Series. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including 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 be held and accounted for separately from the other assets of the Trust
and of every other Series and may be referred to herein as "assets belonging to"
that Series. The assets belonging to a particular Series shall belong to that
Series for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings, profits or
funds, or payments and proceeds with respect thereto, which are not readily
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes. Without limitation of the foregoing provisions of
this Section 2.8, but subject to the right of the Trustees in their discretion
to allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally. Notice of this contractual limitation on inter-Series
liabilities shall be set forth in the certificate of trust of the Trust (whether
originally or by amendment) as filed or to be filed in the Office of the
Secretary of State of the State of Delaware pursuant to the Delaware Business
Trust Act (the "Act"), and upon the giving of such notice in the certificate of
trust, the statutory provisions of the Act relating to limitations on
inter-Series liabilities (and the statutory effect under the Act of setting
forth such notice in the certificate of trust) shall become applicable to the
Trust and each Series. Any person extending credit to, contracting with or
having any claim against any Series may satisfy or enforce any debt, liability,
obligation or expense incurred, contracted for or otherwise existing with
respect to that Series from the assets of that Series only. No Shareholder or
former Shareholder of any Series shall have a claim on or any right to any
assets allocated or belonging to any other Series.
Section 2.9 No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or the Trustees, whether of the same or other Series.
Section 2.10 Personal Liability of Shareholders. Each Shareholder of the
Trust and of each Series shall not be personally liable for the debts,
liabilities, obligations and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or 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 by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).
Section 2.11 Assent to Trust Instrument. Every Shareholder, by virtue of
having purchased or otherwise acquired a Share, shall become a Shareholder and
shall be held to have expressly assented and agreed to be bound by the terms
hereof.
ARTICLE III
THE TRUSTEES
Section 3.1 Management of the Trust. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. 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 Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall not
be construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.
Except for the Trustee named herein or Trustees appointed to fill
vacancies pursuant to Section 3.4 of this Article III, the Trustees shall be
elected by the Shareholders owning of record a plurality of the Shares voting at
a meeting of Shareholders.
Section 3.2 Initial Trustee. The initial Trustee shall be the person named
herein.
Section 3.3 Term of Office of Trustees. The Trustees shall hold office
during the existence of this Trust, and until its termination as herein
provided; except (a) that any Trustee may resign his trust by written instrument
signed by him and delivered to the Chairman, President, Secretary, or other
Trustees of the Trust, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed 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; (c) that any Trustee who requests in writing to be retired or
who has died, become physically or mentally incapacitated by reason of disease
or otherwise, or is otherwise unable to serve, may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) that a Trustee may be removed at any meeting of the
Shareholders of the Trust by a vote of Shareholders owning at least two-thirds
of the outstanding Shares.
Section 3.4 Vacancies and Appointment of Trustees. In case of the
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of disease or otherwise of a Trustee, or a Trustee
is otherwise unable to serve, or an increase in the number of Trustees, a
vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy shall be
conclusive. In the case of an existing vacancy, the remaining Trustees shall
fill such vacancy by appointing such other person as they in their discretion
shall see fit consistent with the limitations under the 1940 Act.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.4 shall have accepted this trust,
he shall be deemed a Trustee hereunder.
Section 3.5 Temporary Absence of Trustee. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.6 Number of Trustees. The number of Trustees shall be one, or
such other number as shall be fixed from time to time by the Trustees.
Section 3.7 Effect of Death, Resignation, Etc. of a Trustee. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall not operate to terminate
the Trust or to revoke any existing agency created pursuant to the terms of this
Trust Instrument.
Section 3.8 Ownership of Assets of the Trust. Legal title in and
beneficial ownership of all of the assets of the Trust shall at all times be
considered as vested in the Trust, except that the Trustees may cause legal
title in and beneficial ownership of any Trust Property to be held by, or in the
name of one or more of the Trustees acting for and on behalf of the Trust, or in
the name of any person as nominee acting for and on behalf of the Trust. No
Shareholder shall be deemed to have a severable ownership interest in any
individual asset of the Trust or of any Series or any right of partition or
possession thereof, but each Shareholder shall have, except as otherwise
provided for herein, a proportionate undivided beneficial interest in the Trust
or Series. The Shares shall be personal property giving only the rights
specifically set forth in this Trust Instrument. The Trust, or at the
determination of the Trustees one or more of the Trustees or a nominee acting
for and on behalf of the Trust, shall be deemed to hold legal title and
beneficial ownership of any income earned on securities of the Trust issued by
any business entities formed, organized, or existing under the laws of any
jurisdiction, including the laws of any foreign country.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1 Powers. The Trustees in all instances shall act as principals,
and are and shall be free from the control of the Shareholders. 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. The Trustees
shall have full authority and power to make any and all investments which they,
in their sole discretion, shall deem proper to accomplish the purpose of this
Trust. Subject to any applicable limitation in this Trust Instrument, the
Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested, and to sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the
Trust;
(b) To operate as and carry on the business of an investment
company, and exercise all the powers necessary and appropriate to the conduct of
such business;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an obligation or engagement of any other person and
to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a Principal Underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt By-laws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders,
which By-laws shall be deemed a part of this Trust Instrument and are
incorporated herein by reference;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To appoint custodians of any assets of the Trust, subject to the
1940 Act and to any conditions set forth in this Trust Instrument;
(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the
By-laws;
(j) To delegate such authority (which delegation may include the
power to subdelegate) as they consider desirable to any officers of the Trust
and to any investment adviser, manager, administrator, custodian, underwriter or
other agent or independent contractor;
(k) To purchase and pay for entirely out of Trust Property such
insurance as they may deem necessary or appropriate for the conduct of the
business of the Trust, including insurance policies insuring the Trust Property
and payment of distributions and principal on its investments, and insurance
policies insuring the Shareholders, Trustees, officers, representatives,
employees, agents, investment advisers, managers, administrators, custodians,
underwriters, or independent contractors of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being 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 in such capacity, 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 such
liability.
(l) To sell or exchange any or all of the assets of the Trust or
terminate and liquidate any Series of the Trust, subject to the provisions of
Article XI, Section 11.4(b) hereof;
(m) 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 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;
(n) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(o) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form; or
either in the name of the Trust or in the name of a custodian or a nominee or
nominees;
(p) To establish separate and distinct Series (and Classes), with
separately defined investment objectives and policies and distinct investment
purposes in accordance with the provisions of Article II hereof and to establish
Classes of such Series having relative rights, powers and duties as they may
provide consistent with applicable law;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) 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;
(s) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or Class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(u) To establish one or more committees composed of one or more of
the Trustees, and to delegate any of the powers of the Trustees to said
committees, subject to the provisions of the 1940 Act. Notwithstanding the
provisions of this Article IV, and in addition to such provisions or any other
provision of this Trust Instrument or of the Bylaws, the Trustees may by
resolution appoint a committee consisting of less than the whole number of
Trustees then in office, which committee may be empowered to act for and bind
the Trustees and the Trust, as if the acts of such committee were the acts of
all the Trustees then in office, with respect to the institution, prosecution,
dismissal, settlement, review or investigation of any action, suit or proceeding
which shall be pending or threatened to be brought before any court,
administrative agency or other adjudicative body;
(v) To interpret the investment policies, practices or limitations
of any Series;
(w) To establish a registered office and have a registered agent in
the state of Delaware; and
(x) 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 both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers 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.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
Section 4.2 Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, exchange, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
Section 4.3 Trustees and Officers as Shareholders. Any Trustee, officer or
other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if such person were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such Shares
from any such person or any firm or company in which such person is interested,
subject to the general limitations herein contained as to the sale and purchase
of such Shares.
Section 4.4 Action by the Trustees and Committees. The Trustees (and any
committee thereof) may act at a meeting held in person or in whole or in part by
conference telephone equipment or other communications technology. One-third,
but (except at such times as there is only one Trustee) no less than two, of the
Trustees shall constitute a quorum at any meeting. Except as the Trustees may
otherwise determine, one-third of the members of any committee shall constitute
a quorum at any meeting. The vote of a majority of the Trustees (or committee
members) present at a meeting at which a quorum is present shall be the act of
the Trustees (or any committee thereof). The Trustees (and any committee
thereof) may also act by written consent signed by a majority of the Trustees
(or committee members). Regular meetings of the Trustees may be held at such
places and at such times as the Trustees may from time to time determine.
Special meetings of the Trustees (and meetings of any committee thereof) may be
called orally or in writing by the Chairman of the Board of Trustees (or the
chairman of any committee thereof) or by any two other Trustees. Notice of the
time, date and place of all meetings of the Trustees (or any committee thereof)
shall be given by the party calling the meeting to each Trustee (or committee
member) by telephone, telefax, or telegram sent to the person's home or business
address at least twenty-four hours in advance of the meeting or by written
notice mailed to the person's home or business address at least seventy-two
hours in advance of the meeting. Notice of all proposed written consents of
Trustees (or committees thereof) shall be given to each Trustee (or committee
member) by telephone, telefax, telegram, or first Class mail sent to the
person's home or business address. Notice need not be given to any person who
attends a meeting without objecting to the lack of notice or who executes a
written consent or a written waiver of notice with respect to a meeting. Written
consents or waivers may be executed in one or more counterparts. Execution of a
written consent or waiver and delivery thereof may be accomplished by
telefax.
Section 4.5 Chairman of the Trustees. The Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall preside
at all meetings of the Trustees at which he is present and may be (but is not
required to be) the chief executive officer of the Trust.
Section 4.6 Principal Transactions. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, distributor or transfer agent for the Trust or with any Interested
Person of such person; and the Trust may employ any such person, or firm or
company in which such person is an Interested Person, as broker, legal counsel,
registrar, investment adviser, distributor, transfer agent, dividend disbursing
agent, custodian or in any other capacity upon customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Section 5.1 General. The Trustees shall have the power to incur and pay or
be reimbursed from the assets of the Trust or the assets of the appropriate
Series any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Trust or such Series, and to
pay reasonable compensation from the funds of the Trust to themselves as
Trustees. The Trustees shall fix the compensation of all officers, employees and
Trustees, and shall be reimbursed from the assets of the Trust or the assets of
the appropriate Series for expenses reasonably incurred by themselves on behalf
of the Trust.
Section 5.2 Expenses of Series. The Trustees shall have the power to
allocate and charge all expenses which are not readily identifiable as belonging
to any particular Series (or Class) between or among any one or more of the
Series (or Class) as set forth in Article II, Section 2.8 of this Trust
Instrument.
Section 5.3 Trustee Reimbursement. Subject to the provisions of Article
II, Section 2.8 hereof, the Trustees shall be reimbursed from the Trust estate
or the assets belonging to the appropriate Series (or Class) for their expenses
and disbursements, including, without limitation, fees and expenses of Trustees
who are not Interested Persons of the Trust, interest expense, taxes, fees and
commissions of every kind, expenses of pricing Trust portfolio securities,
expenses of issue, repurchase and redemption of shares, including expenses
attributable to a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and State laws
and regulations or under the laws of any foreign jurisdiction, charges of third
parties, including investment advisers, managers, custodians, transfer agents,
portfolio accounting and/or pricing agents, and registrars, expenses of
preparing and setting up in type prospectuses and statements of additional
information and other related Trust documents, expenses of printing and
distributing prospectuses sent to existing Shareholders, auditing and legal
expenses, reports to Shareholders, expenses of meetings of Shareholders and
proxy solicitations therefor, insurance expenses, association membership dues
and for such non-recurring items as may arise, including litigation to which the
Trust (or a Trustee acting as such) is a party, and for all losses and
liabilities incurred by them in administering the Trust, and for the payment of
such expenses, disbursements, losses and liabilities the Trustees shall have a
lien on the assets belonging to the appropriate Series, or in the case of and
expense allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Shareholders thereto. This section
shall not preclude the Trust from directly paying any of the aforementioned fees
and expenses.
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER, ADMINISTRATOR
AND TRANSFER AGENT
Section 6.1 Investment Adviser. The Trustees may in their discretion, from
time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Series whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trust with
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions, as the Trustees may in their discretion determine; provided,
however, that the initial approval and entering into of such contract or
contracts shall be subject to a Majority Shareholder Vote. Notwithstanding any
other provision of this Trust Instrument, the Trustees may authorize any
investment adviser (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales or exchanges of
portfolio securities, other investment instruments of the Trust, or other Trust
Property on behalf of the Trustees, or may authorize any officer, agent, or
Trustee to effect such purchases, sales or exchanges pursuant to recommendations
of the investment adviser (and all without further action by the Trustees). Any
such purchases, sales and exchanges shall be deemed to have been authorized by
the Trustees.
The Trustees may authorize, subject to applicable requirements of the 1940
Act, the investment adviser to employ, from time to time, one or more
sub-advisers to perform such of the acts and services of the investment adviser,
and upon such terms and conditions, as may be agreed upon between the investment
adviser and sub-adviser. Any reference in this Trust Instrument to the
investment adviser shall be deemed to include such sub-advisers, unless the
context otherwise requires.
Section 6.2 Principal Underwriter. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of Shares, whereby the Trust may either
agree to sell Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the contract may also
provide for the repurchase or sale of Shares by such other party as principal or
as agent of the Trust.
Section 6.3 Administrator. The Trustees may in their discretion from time
to time enter into one or more contracts whereby the other party or parties
shall undertake to furnish the Trust with administrative services. The contract
or contracts shall be on such terms and conditions as the Trustees may in their
discretion determine.
Section 6.4 Transfer Agent. The Trustees may in their discretion from time
to time enter into one or more transfer agency and Shareholder service contracts
whereby the other party or parties shall undertake to furnish the Trustees with
transfer agency and Shareholder services. The contract or contracts shall be on
such terms and conditions as the Trustees may in their discretion
determine.
Section 6.5 Parties to Contract. Any contract described in this Article VI
or any contract described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof. The
same person (including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to this Article VI or
pursuant to Article VIII hereof, and any individual may be financially
interested or otherwise affiliated with persons who are parties to any or all of
the contracts mentioned in this Section 6.5.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.1 Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Article III, Section 3.1 hereof,
(ii) for the removal of Trustees as provided in Article III, Section 3.3(d)
hereof, and (iii) with respect to such additional matters relating to the Trust
as may be required by law, by this Trust Instrument, or as the Trustees may
consider desirable. On any matter submitted to a vote of the Shareholders, all
Shares shall be voted separately by individual Series, except (i) when required
by the 1940 Act, Shares shall be voted in the aggregate and not by individual
Series; and (ii) when the Trustees have determined that the matter affects the
interests of more than one Series, then the Shareholders of all such Series
shall be entitled to vote thereon. The Trustees may also determine that a matter
affects only the interests of one or more Classes of a Series, in which case any
such matter shall be voted on by such Class or Classes. Each whole Share shall
be entitled to one vote as to any matter on which it is entitled to vote, and
each fractional Share shall be entitled to a proportionate fractional vote.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy or in any manner provided for in the By-laws. A
proxy may be given in writing, by telefax, or in any other manner provided for
in the By-laws. Anything in this Trust Instrument to the contrary
notwithstanding, 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 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.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
any of the By-laws of the Trust to be taken by Shareholders.
Section 7.2 Meetings. Meetings of Shareholders may be held within or
without the State of Delaware. Special meetings of the Shareholders of any
Series may be called by the Trustees and shall be called by the Trustees upon
the written request of Shareholders owning at least one-tenth of the Outstanding
Shares entitled to vote. Whenever ten or more Shareholders meeting the
qualifications set forth in Section 16(c) of the 1940 Act seek the opportunity
of furnishing materials to the other Shareholders with a view to obtaining
signatures on such a request for a meeting, the Trustees shall comply with the
provisions of said Section 16(c) with respect to providing such Shareholders
access to the list of the Shareholders of record of the Trust or the mailing of
such materials to such Shareholders of record, subject to any rights provided to
the Trust or any Trustees provided by said Section 16(c). Notice shall be sent,
by mail or such other means determined by the Trustees, at least 15 days prior
to any such meeting.
Section 7.3 Quorum and Required Vote. One-third of Shares entitled to vote
in person or by proxy shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a Class shall vote as a Class), then one-third of the
aggregate number of Shares of that Series (or that Class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that Class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held without the necessity of further
notice. Except when a larger vote is required by law or by any provision of this
Trust Instrument, a majority of the Shares voted in person or by proxy shall
decide any questions and a plurality shall elect a Trustee, provided that where
any provision of law or of this Trust Instrument permits or requires that the
holders of any Series shall vote as a Series (or that the holders of any Class
shall vote as a Class), then a majority of the Shares present in person or by
proxy of that Series or, if required by law, a Majority Shareholder Vote of that
Series (or Class), voted on the matter in person or by proxy shall decide that
matter insofar as that Series (or Class) is concerned.
Section 7.4 Action by Written Consent. Any action which may be taken by
the Shareholders of the Trust or of a Series may be taken without a meeting if
Shareholders holding more than a majority of the Shares entitled to vote, except
when a larger vote is required by law or by any provision of this Trust
Instrument, shall consent to the action in writing. If the consents of all
Shareholders entitled to vote have not been solicited in writing and if the
unanimous written consent of all such Shareholders shall not have been received,
the Secretary shall give prompt notice to all Shareholders of actions approved
by the Shareholders without a meeting.
ARTICLE VIII
CUSTODIAN
Section 8.1 Appointment and Duties. The Trustees shall at all times employ
a bank, a company that is a member of a national securities exchange, or a trust
company, each having capital, surplus and undivided profits of at least two
million dollars ($2,000,000) as custodian with authority as its agent:
(1) to hold the securities owned by the Trust and deliver the same upon
written order or oral order confirmed in writing;
(2) to receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may direct; and
(3) to disburse such funds upon orders or vouchers; and the Trust may also
employ such custodian as its agent:
(4) to keep the books and accounts of the Trust or of any Series or Class
and furnish clerical and accounting services; and
(5) to compute, if authorized to do so by the Trustees, the Net Asset
Value of any Series, or Class thereof, in accordance with the provisions
hereof;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
In accordance with the 1940 Act, the Trustees may also authorize the
custodian to employ one or more sub-custodians from time to time to perform such
of the acts and services of the custodian, and upon such terms and conditions,
as may be agreed upon between the custodian and such sub-custodian and approved
by the Trustees.
Section 8.2 Central Certificate System. Subject to the 1940 Act, the
Trustees may direct the custodian to deposit all or any part of the securities
owned by the Trust in a system for the central handling of securities
established by a national securities exchange or a national securities
association, pursuant to which system all securities of any particular Class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, sub-custodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
Section 9.1 Distributions.
(a) The Trustees may from time to time declare and pay dividends or
other distributions with respect to any Series, or Class thereof. The amount of
such dividends or distributions and the payment of them and whether they are in
cash or any other Trust property shall be wholly in the discretion of the
Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. All dividends and other distributions on Shares of a particular
Series shall be distributed pro rata to the Shareholders of that Series in
proportion to the number of Shares of that Series they held on the record date
established for such payment, except that such dividends and distributions shall
reflect expenses allocated to a particular Class of such Series. The Trustees
may adopt and offer to Shareholders such dividend reinvestment plans, cash
dividend payout plans or related plans as the Trustees shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary
notwithstanding, the Trustees may at any time declare and distribute a stock
dividend pro rata among the Shareholders of a particular Series, or Class
thereof, as of the record date of that Series fixed as provided in Section(b)
hereof.
Section 9.2 Redemptions. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.2; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or the Principal
Underwriter of the Series shall purchase his said Shares, but only at the Net
Asset Value thereof (as described in Section 9.3 of this Article IX). The Series
shall make payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series and payment for such Shares shall be
made by the Series or the Principal Underwriter of the Series to the Shareholder
of record within seven (7) days after the date upon which the request is
effective. Upon redemption, shares shall become Treasury shares and may be
re-issued from time to time.
Section 9.3 Determination of Net Asset Value and Valuation of Portfolio
Assets. The term "Net Asset Value" of any Series shall mean that amount of which
the assets of that Series exceeds its liabilities, all as determined by or under
the direction of the Trustees. Such value shall be determined separately for
each Series and shall be determined on such days and at such times as the
Trustees may determine. Such determination shall be made with respect to
securities for which market quotations are readily available, at the market
value of such securities; and with respect to other securities and assets, at
the fair value as determined in good faith by the Trustees; provided, however,
that the Trustees, without Shareholder approval, may alter the method of valuing
portfolio securities consistent with the 1940 Act. The Trustees may delegate any
of their powers and duties under this Section 9.3 with respect to valuation of
assets and liabilities. The resulting amount, which shall represent the total
Net Asset Value of the particular Series, shall be divided by the total number
of shares of that Series outstanding at the time and the quotient so obtained
shall be the Net Asset Value per Share of that Series. At any time the Trustees
may cause the Net Asset Value per Share last determined to be determined again
in similar manner and may fix the time when such redetermined value shall become
effective. If, for any reason, the net income of any Series, determined at any
time, is a negative amount, the Trustees shall have the power with respect to
that Series (i) to offset each Shareholder's pro rata share of such negative
amount from the accrued dividend account of such Shareholder, or (ii) to reduce
the number of Outstanding Shares of such Series by reducing the number of Shares
in the amount of each Shareholder by a pro rata portion of that number of full
and fractional Shares which represents the amount of such excess negative net
income, or (iii) to cause to be recorded on the books of such Series an asset
account in the amount of such negative net income (provided that the same shall
thereupon become the property of such Series and shall not be paid to any
Shareholder), which account may be reduced by the amount of dividends declared
thereafter upon the Outstanding Shares of such Series on the day such negative
net income is experienced, until such asset account is reduced to zero;(iv) to
combine the methods described in clauses (i) and (ii) and (iii) of this
sentence; or (v) to take any other action they deem appropriate, in order to
cause (or in order to assist in causing) the Net Asset Value per Share of such
Series to remain at a constant amount per Outstanding Share immediately after
each such determination and declaration. The Trustees shall also have the power
not to declare a dividend out of net income for the purpose of causing the Net
Asset Value per Share to be increased. The Trustees shall not be required to
adopt, but may at any time adopt, discontinue or amend the practice of maintain-
ing the Net Asset Value per Share of the Series at a constant amount.
Section 9.4 Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension. In the event that any Series is divided into Classes, the
provisions of this Section 9.4, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such Class.
Section 9.5 Redemption of Shares in Order to Qualify as Regulated
Investment Company. If the Trustees shall be of the opinion that direct or
indirect ownership of Shares of any Series has or may become concentrated in any
Person to an extent which would disqualify any Series as a regulated investment
company under the Internal Revenue Code, then the Trustees shall have the power
(but not the obligation) by lot or other means deemed equitable by them (i) to
call for redemption by any such person of a number, or principal amount, of
Shares 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. The redemption shall be
effected at the redemption price and in the manner provided in this Article IX.
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, or to comply with the requirements of any other taxing authority.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.1 Limitation of Liability. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or a
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission in his capacity
as Trustee, or for any act or omission of any officer or employee of the Trust
or of any other person or party, provided that nothing contained herein or in
the Delaware Business Trust Act shall protect any Trustee against any liability
to the Trust or to Shareholders to which he would otherwise be subject by reason
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee hereunder.
Section 10.2 Indemnification. The Trust shall indemnify each of its
Trustees to the full extent permitted by law against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in settlement, as
fines and penalties, and as counsel fees) reasonably incurred by such Trustee in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which such Trustee may be involved or
with which such Trustee may be threatened, while as a Trustee or thereafter, by
reason of being or having been such a Trustee except with respect to any matter
as to which such Trustee shall have been adjudicated to have acted in bad faith,
or with willful misfeasance, gross negligence or reckless disregard of such
Trustee's duties. In the event of a settlement, no indemnification shall be
provided unless there has been a determination that such Trustee did not engage
in willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (i) by the court or other body
approving the settlement; (ii) by at least a majority of those Trustees who are
neither interested persons of the Trust nor are parties to the matter based upon
a review of readily available facts (as opposed to a full trial-type inquiry);
or (iii) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry). The rights
accruing to any person under these provisions shall not exclude any other right
to which such Trustee may be lawfully entitled, provided that no person may
satisfy any right of indemnity or reimbursement hereunder except out of the
property of the Trust. The Trustees may authorize advance payments in connection
with the indemnification under this Section 10.2, provided that the indemnified
person shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that such Trustee is not entitled to such
indemnification.
The Trust shall indemnify officers, and shall have the power to indemnify
representatives and employees of the Trust, to the same extent that Trustees are
entitled to indemnification pursuant to this Section 10.2.
Section 10.3 Shareholders. In case any Shareholder or former Shareholder
of any Series shall be held to be personally liable solely by reason of his
being or having been a Shareholder of such Series and not because of his acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his 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 out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising from
such liability. The Trust, on behalf of the affected Series, shall, upon request
by the Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Trust Not a Partnership. It is hereby expressly declared that
a trust and not a partnership is created hereby. No Trustee hereunder shall have
any power to bind personally either the Trust's officers or any Shareholder. All
persons extending credit to, contracting with or having any claim against the
Trust or the Trustees may satisfy or enforce any debt, liability, obligation or
expense incurred, contracted for or otherwise existing with respect to the Trust
from the assets of the Trust only; and neither the Shareholders nor the
Trustees, nor any of their agents, whether past, present or future, shall be
personally liable therefor.
Section 11.2 Trustees' Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
X hereof, the Trustees 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 Trust Instrument, and subject to
the provisions of Article X hereof, shall be under no liability for any act or
omission in accordance with such advice or 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 obtained.
Section 11.3 Establishment of Record Dates. The Trustees may close the
Share transfer books of the Trust for a period not exceeding ninety (90) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributors, or the date for the allotment of rights,
or the date when any change or conversion or exchange of Shares shall go into
effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding ninety (90) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.
Section 11.4 Termination of Trust or Series.
(a) This Trust shall continue without limitation of time but subject
to the provisions of subsection (b) of this Section 11.4.
(b) The Trustees may
(i) sell and convey all or substantially all of the assets of
the Trust or any Series to another trust, partnership, association or
corporation, or to a separate series of shares thereof, organized under the laws
of any state, for adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any Series, and which may include shares of beneficial interest,
stock or other ownership interests of such trust, partnership, association or
corporation or of a series thereof; or
(ii) at any time sell and convert into money all of the
assets of the Trust or any Series and provide for the termination and
liquidation of the Trust or any Series.
Upon making reasonable provision, in the determination of the Trustees,
for the payment of all such liabilities in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining proceeds or
assets (as the case may be) of each Series (or Class) ratably among the
holders of Shares of that Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in subsection (b), the Trust or any affected
Series shall terminate and the Trustees and the Trust shall be discharged of any
and all further liabilities and duties hereunder and the right, title and
interest of all parties with respect to the Trust or Series shall be canceled
and discharged.
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 Business Trust
Act, which certificate of cancellation may be signed by any one Trustee.
Section 11.5 Reorganization. Anything in this Trust Instrument to the
contrary notwithstanding, the Trustees, in order to change the form of
organization and/or domicile of the Trust, may, without prior Shareholder
approval, (i) cause the Trust to merge or consolidate with or into one or more
trusts, partnerships, associations or corporations which is formed, organized or
existing under the laws of a state, commonwealth possession or colony of the
United States or (ii) cause the Trust to incorporate under the laws of Delaware.
Any agreement of merger or consolidation or certificate of merger may be signed
by a majority of the Trustees. Pursuant to and in accordance with the provisions
of Section 3815(f) of the Delaware Business Trust Act, and notwithstanding
anything to the contrary contained in this Trust Instrument, an agreement of
merger or consolidation approved by the Trustees in accordance with this Section
11.5 may effect any amendment to the Trust Instrument or effect the adoption of
a new trust instrument of the Trust if it is the surviving or resulting trust in
the merger or consolidation. Any merger or consolidation of the Trust other than
as described in the foregoing provisions of this Section 11.5 shall, in addition
to the approval of the Trustees, require the approval of the holders of a
majority of the Outstanding Shares.
Section 11.6 Filing of Copies, References, Headings. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental 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 or Trustee of the Trust as to whether or not any such
amendments or supplements 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 or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his", "he" and "him", shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
Section 11.7 Applicable Law. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Business
Trust Act and the laws of said State; provided, however, that there shall not be
applicable to the Trust, the Trustees or this Trust Instrument (a) the
provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware(other
than the Delaware Business Trust Act) pertaining to trusts which 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 court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable 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, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this Trust
Instrument. The Trust shall be of the type commonly called a "business trust",
and without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Business Trust 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.
Section 11.8 Amendments. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(i) on any amendment which would affect their right to vote granted in Section
7.1 of Article VII hereof, (ii) on any amendment to this Section 11.8, (iii) on
any amendment as may be required by law and (iv) on any amendment submitted to
them by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series shall be authorized by vote of the Shareholders of each
Series affected and no vote of shareholders of a Series not affected shall be
required. Anything in this Trust Instrument to the contrary notwithstanding, any
amendment to Article X hereof shall not limit the rights to indemnification or
insurance provided therein with respect to action or omission of Covered Persons
prior to such amendment.
Section 11.9 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as determined from time to time by the Trustees.
Section 11.10 Use of the Name "Third Avenue Trust". The name "Third Avenue
Trust," and all rights to the use thereof belong to EQSF Advisers, Inc., the
investment adviser of the Trust. EQSF Advisers, Inc. has consented to the use by
the Trust of such name.
Section 11.11 Provisions in Conflict with Law. The provisions of this
Trust Instrument 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 or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument 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 provisions in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
IN WITNESS WHEREOF, the undersigned, being the initial Trustee of the
Trust, has executed this Trust Instrument this 31 st day of October, 1996.
/s/ David M Barse
___________________________
David M. Barse, Trustee
<PAGE>
Certificate of Trust
of
Third Avenue Trust
This Certificate of Trust executed on this the 29th day of October, 1996
for the purpose of organizing a business trust pursuant to the Delaware Business
Trust Act, 12 Del. C. ss3801 et seq. (the "Act").
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is: Third Avenue Trust (the
"Trust").
2. Registered Investment Company. The Trust is or will become a
registered investment company under the Investment Company Act of 1940, as
amended.
3. Registered Office and Registered Agent. The registered office of
the Trust in the State of Delaware is located at Corporation Trust Center, 1209
Orange Street, Wilmington, Delaware 19801. The name of the registered agent of
the Trust for service of process at such location is The Corporation Trust
Company.
4. Notice of Limitation of Liabilities of Series. Notice is hereby
given that the Trust is or may hereafter be constituted a series trust. The
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to any particular series shall be enforceable
against the assets of such series only, and not against the assets of the Trust
generally.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year first
above written.
/S/ David M. Barse
________________________________
David M. Barse, Trustee
Third Avenue Trust
By-Laws Dated: October 31, 1996
Principal Place of Business:
767 Third Avenue
New York, New York 10017-2023
<PAGE>
<PAGE>
THIRD AVENUE TRUST
BY-LAWS
These By-laws of Third Avenue Trust (the "Trust"), a Delaware
Business Trust, are subject to the Trust Instrument of the Trust dated October
__, 1996, as from time to time amended, supplemented or restated (the
"Trust Instrument"). Capitalized terms used herein which are defined in the
Trust Instrument are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in such location
as the Trustees may from time to time determine. The Trust may establish and
maintain such other offices and places of business as the Trustees may from time
to time determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
Section 2.1 Officers. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers as the Trustees may
from time to time elect. It shall not be necessary for any Trustee or other
officer to be a holder of Shares in the Trust.
Section 2.2 Election of Officers. Two or more offices may be held
by a single person. Subject to the provisions of Section 2.3 hereof, the
officers shall hold office until their successors are chosen and qualified and
serve at the pleasure of the Trustees.
Section 2.3 Resignations. Any officer of the Trust may resign by
filing a written resignation with the President, the Secretary or the Trustees,
which resignation shall take effect on being so filed or at such later time as
may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
Section 3.1 Chief Executive Officer. Unless the Trustees have
designated the Chairman as the chief executive officer of the Trust, the
President shall be the chief executive officer of the Trust. Subject to the
direction of the Trustees, the chief executive officer shall have general
administration of the business and policies of the Trust. Except as the
Trustees may otherwise order, the chief executive officer shall have the power
to grant, issue, execute or sign such powers of attorney, proxies,agreements or
other documents as may be deemed advisable or necessary in the furtherance of
the interests of the Trust or any Series thereof. He shall also have the power
to employ attorneys, accountants and other advisers and agents and counsel for<PAGE>
<PAGE>
the Trust. If the President is not the chief executive officer, he shall
perform such duties as the Trustees or the chief executive officer may from time
to time designate and, at the request or in the absence or disability of the
chief executive officer, may perform all the duties of the chief executive
officer and, when so acting, shall have all the powers of and be subject to all
the restrictions upon the chief executive officer.
Section 3.2 Treasurer. The Treasurer shall be the principal
financial and accounting officer of the Trust. He shall deliver all funds and
securities of the Trust which may come into his hands to such company as the
Trustees shall employ as Custodian in accordance with the Trust Instrument and
applicable provisions of law. He shall make annual reports regarding the
business and condition of the Trust, which reports shall be preserved in Trust
records, and he shall furnish such other reports regarding the business and
condition of the Trust as the Trustees may from time to time require. The
Treasurer shall perform such additional duties as the Trustees or the chief
executive officer may from time to time designate.
Section 3.3 Secretary. The Secretary shall record in books kept
for the purpose all votes and proceedings of the Trustees and the Shareholders
at their respective meetings. He shall have the custody of the seal of the
Trust. The Secretary shall perform such additional duties as the Trustees or
the chief executive officer may from time to time designate.
Section 3.4 Vice President. Any Vice President of the Trust shall
perform such duties as the Trustees or the chief executive officer may from time
to time designate. At the request or in the absence or disability of the
President, the most senior Vice President present and able to act may perform
all the duties of the President and, when so acting, shall have all the powers
of and be subject to all the restrictions upon the President.
Section 3.5 Assistant Treasurer. Any Assistant Treasurer of the
Trust shall perform such duties as the Trustees or the Treasurer may from time
to time designate, and, in the absence of the Treasurer, the most senior
Assistant Treasurer present and able to act may perform all the duties of the
Treasurer.
Section 3.6 Assistant Secretary. Any Assistant Secretary of the
Trust shall perform such duties as the Trustees or the Secretary may from time
to time designate, and, in the absence of the Secretary, the most senior
Assistant Secretary present and able to act may perform all the duties of the
Secretary.
Section 3.7 Subordinate Officers. The Trustees from time to time
may appoint such other officers or agents as they may deem advisable, each of
whom shall have such title, hold office for such period, have such authority and
perform such duties as the Trustees may determine.
Section 3.8 Surety Bonds. The Trustees may require any officer or
agent of the Trust to execute a bond (including, without limitation, any bond
required by the Investment Company Act of 1940 ("1940 Act") in such sum and with
such surety or sureties as the Trustees may determine, conditioned upon the
faithful performance of his duties to the Trust including responsibility for
negligence and for the accounting of any of the Trust's property, funds or
securities that may come into his hands.
Section 3.9 Removal. Any officer may be removed from office at any
time by the Trustees.
Section 3.10 Remuneration. The salaries or other compensation, if
any, of the officers of the Trust shall be fixed from time to time by resolution
of the Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 4.1 Notices. Notices of any meeting of the Shareholders
shall be given by the Secretary by delivering or mailing, postage prepaid, to
each Shareholder entitled to vote at said meeting, written or printed
notification of such meeting at least fifteen days before the meeting, to such
address as may be registered with the Trust by the Shareholder. Notice of any
Shareholder meeting need not be given to any Shareholder if a written waiver of
notice, executed before or after such meeting, is filed with the record of such
meeting, or to any Shareholder who shall attend such meeting in person or by
proxy. Notice of adjournment of a Shareholders' meeting to another time or
place need not be given, if such time and place are announced at the meeting or
reasonable notice is given to persons present at the meeting.
Section 4.2 Voting-Proxies. Subject to the provisions of the Trust
Instrument, Shareholders entitled to vote may vote either in person or by proxy,
provided that either (i) an instrument authorizing such proxy to act is executed
by the Shareholder in writing and dated not more than eleven months before the
meeting, unless the instrument specifically provides for a longer period or(ii)
the Trustees adopt by resolution an electronic, telephonic, computerized or
other alternative to execution of a written instrument authorizing the proxy to
act, which authorization is received not more than eleven months before the
meeting. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to Shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice to the contrary from any one of them. Unless
otherwise specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting. A proxy purporting to be<PAGE>
<PAGE>
exercised by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. At all meetings of the Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting. Except as otherwise provided
herein or in the Trust Instrument, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Trust were a Delaware corporation and the Shareholders were
shareholders of a Delaware corporation.
Section 4.5 Place of Meeting. All meetings of the Shareholders
shall be held at such places as the Trustees may designate.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1 Share Certificate. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
authorize. The Trustees may issue certificates to a Shareholder of any Series
or class thereof for any purpose and the issuance of a certificate to one or
more Shareholders shall not require the issuance of certificates generally. In
the event that the Trustees authorize the issuance of Share certificates, such
certificates shall be in the form prescribed from time to time by the Trustees
and shall be signed by the President or a Vice President and by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary. Such signatures may be
facsimiles if the certificate is signed by a transfer or shareholder services
agent or by a registrar, other than a Trustee, officer or employee of the Trust.
In case any officer who has signed or whose facsimile signature has been placed
on such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he or she were such officer at the time of its issue.
Section 5.2 Loss of Certificate. In case of the alleged loss or
destruction or the mutilation of a Share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.
Section 5.3 Discontinuance of Issuance of Certificates. The
Trustees may at any time discontinue the issuance of Share certificates and may,
by written notice to each Shareholder, require the surrender of Share
certificates to the Trust for cancellation. Such surrender and cancellation
shall not affect the ownership of Shares of the Trust.
<PAGE>
<PAGE>
ARTICLE VI
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and regulations
the accounts and books of the Trust or any of them shall be open to the
inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees.
ARTICLE VII
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"THIRD AVENUE TRUST -- 1996
THE STATE OF DELAWARE"
The form of the seal shall be subject to alteration by the Trustees
and the seal may be used by causing it or a facsimile to be impressed or affixed
or printed or otherwise reproduced.
Any officer or Trustee of the Trust shall have authority to affix
the seal of the Trust to any document, instrument or other paper executed and
delivered by or on behalf of the Trust; however, unless otherwise required by
the Trustees, the seal shall not be necessary to be placed on and its absence
shall not impair the validity of, any document, instrument, or other paper
executed by or on behalf of the Trust.
ARTICLE VIII
AMENDMENTS
These By-laws may be amended from time to time by the Trustees.
ARTICLE IX
HEADINGS
Headings are placed in these By-laws for convenience of reference
only and, in case of any conflict, the text of these By-laws rather than the
headings shall control.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Prospectus and
Statement of Additional Information of Third Avenue Trust constituting
parts of this initial registration statement on Form N-1A (the
"Registration Statement") of our report dated December 11, 1996, relating
to the financial statements and financial highlights appearing in the
October 31, 1996 Annual Report to Shareholders of Third Avenue Value Fund,
Inc., which is also incorporated by reference into the Registration
Statement. We also consent to the references to us under the heading
"Financial Highlights" in the Prospectus and under the heading "Financial
Statements" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 20, 1997
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned hereby
appoints Martin J. Whitman and David M. Barse, and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution
and resubstitution, for the undersigned, in the place and stead of the
undersigned, to sign the Registration Statement of Third Avenue Trust
under the Securities Act of 1933 and the Investment Company Act of 1940 and
any and all amendments (including post-effective amendments) to the
Registration Statement and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which shall together constitute
one instrument.
/s/ MARTIN J. WHITMAN /s/ DONALD RAPPAPORT
------------------- ------------------
Martin J. Whitman, Chairman of the Board Donald Rappaport, Trustee
/s/ PHYLLIS W. BECK /S/ MARTIN SHUBIK
------------------ ------------------
Phyllis W. Beck Martin Shubik
/s/ TIBOR FABIAN /S/ MYRON M. SHEINFELD
------------------- --------------------
Tibor Fabian Myron M. Sheinfeld
/s/ GERALD HELLERMAN /S/ CHARLES C. WALDEN
------------------- -------------------
Gerald Hellerman Charles C. Walden
/S/ MARVIN MOSER
-------------------
Marvin Moser
<TABLE> <S> <C>
<S> <C>
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<CIK> 0001031661
<NAME> THIRD AVENUE VALUE FUND, INC.
<S> <C>
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<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 474,496,337
<INVESTMENTS-AT-VALUE> 581,313,555
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