SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
Third Avenue Trust
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(Name of Registrant as Specified In Its Charter)
(name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6 (i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
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(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
THIRD AVENUE FUNDS
767 THIRD AVENUE
NEW YORK, NEW YORK 10017-2023
Dear Fellow Shareholder,
I would like to notify you of a special meeting of shareholders of Third
Avenue Funds, which is described in the enclosed materials. A number of
important proposals will be voted on, and I urge you to vote your enclosed
proxy.
One proposal relates to changing the investment restrictions of the Third
Avenue Value Fund so they are identical to those of the Third Avenue Small-Cap
Value Fund and the Third Avenue Real Estate Value Fund. A second proposal
requests the election of the Board of Trustees, since some of the Trustees have
been elected by the Board to fill existing vacancies and have not been
previously elected by shareholders. We are also seeking to ratify the selection
of auditors for the Funds. The last proposal seeks approval of a new Investment
Advisory Agreement with the Funds' adviser, which contains terms that are
substantially the same as the existing contract, with a few additions. The
approval is being sought in connection with a technical change of control of the
adviser that would be caused by a proposed transfer of voting control of the
adviser back to my adult children who own a majority of the shares. No change in
the management or operations of the adviser or the Funds would occur as a result
of this transfer. I will continue to act as portfolio manager or co-portfolio
manager of the Funds and in fact will be entering into a five-year employment
contract with the Funds' adviser. Since this transfer requires shareholder
approval, we are taking this opportunity to simultaneously update the Investment
Advisory Agreement, by adding the new provisions as more fully described in the
Proxy Statement.
The proxy documents explain each proposal in detail, and I encourage you to
review them. As always, we are available to answer your questions at
1-800---------------. By mailing in your vote today, you can help Third Avenue
Funds avoid the cost of follow-up mailings and phone calls.
We appreciate your prompt attention to this matter. Thank you for being a
shareholder of Third Avenue Funds.
Sincerely,
Martin J. Whitman
Chairman of the Board and Chief Executive Officer
<PAGE>
THIRD AVENUE FUNDS
767 THIRD AVENUE
NEW YORK, NEW YORK 10017-2023
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders:
A Special Meeting (the "Meeting") of shareholders of funds (each a "Fund"
and, collectively, the "Funds") comprising Third Avenue Trust (the "Trust"), a
Delaware business trust, will be held at [Four Times Square, 37th Floor, New
York, New York 10036] on May 24, 2000 at [11:00 a.m.] New York time for the
following purposes:
1. To approve changing the fundamental investment restrictions of the Third
Avenue Value Fund in order to make them consistent with the fundamental
investment restrictions of the other Funds of the Trust.
2. To elect ten (10) Trustees to serve until the next meeting of shareholders,
if any, and until the election and qualification of their successors.
3. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Funds for the fiscal year ending October 31, 2000.
4. To approve a new Investment Advisory Agreement between Third Avenue Value
Fund and its current adviser, EQSF Advisers, Inc,. in connection with a proposed
change of control of EQSF Advisers, Inc.
5. To approve a new Investment Advisory Agreement between Third Avenue
Small-Cap Value Fund and its current adviser, EQSF Advisers, Inc. in connection
with a proposed change of control of EQSF Advisers, Inc.
6. To approve a new Investment Advisory Agreement between Third Avenue Real
Estate Value Fund and its current adviser, EQSF Advisers, Inc. in connection
with a proposed change of control of EQSF Advisers, Inc.
7. To transact such other business as may properly come before the meeting
and/or any adjournments thereof.
Shareholders of record at the close of business on April 10, 2000 are
entitled to notice of, and to vote at the meeting and/or any adjournments
thereof.
By Order of the Board of Trustees,
Ian M. Kirschner
SECRETARY
APRIL 15, 2000
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YOUR VOTE IS IMPORTANT
SHAREHOLDERS ARE URGED TO DESIGNATE THEIR CHOICES ON EACH OF THE MATTERS TO BE
ACTED UPON AND TO DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOUR PROMPT
RETURN OF THE PROXY WILL HELP ASSURE A QUORUM AT THE MEETING AND AVOID THE
ADDITIONAL FUND EXPENSE OF FURTHER SOLICITATION.
<PAGE>
QUESTIONS AND ANSWERS
Q: WHY IS THIS MATERIAL BEING SENT TO SHAREHOLDERS AND WHAT ARE THEY SUPPOSED
TO DO WITH IT?
A: THIS MATERIAL IS BEING SENT TO SHAREHOLDERS OF THE FUNDS TO ASK THEM TO
VOTE ON SOME IMPORTANT PROPOSALS. THESE PROPOSALS INCLUDE THE APPROVAL OF A
CHANGE IN THE INVESTMENT RESTRICTIONS OF THE THIRD AVENUE VALUE FUND, THE
ELECTION OF THE BOARD OF TRUSTEES, THE RATIFICATION OF THE AUDITORS OF THE
FINANCIAL STATEMENTS OF THE FUNDS COMPRISING THE TRUST AND THE APPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT WITH THE ADVISER OF EACH FUND COMPRISING THE
TRUST. THE TRUSTEES RECOMMEND THAT YOU FOR FOR ALL THE PROPOSALS.
Q: WHY IS IT NECESSARY TO VOTE ON A NEW INVESTMENT ADVISORY AGREEMENT WITH THE
FUNDS' INVESTMENT ADVISER IF THERE ARE NO MATERIAL CHANGES BETWEEN THAT CONTRACT
AND THE EXISTING ONE?
A: THE PRIMARY REASON IS THAT MARTIN J. WHITMAN, THE CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF THE FUNDS AND THE ADVISER, WISHES TO GIVE BACK TO HIS
CHILDREN THE VOTING RIGHTS TO THE SHARES THEY OWN. IF MR. WHITMAN GIVES BACK HIS
VOTING RIGHTS, THE PRESENT INVESTMENT ADVISORY AGREEMENTS WILL TERMINATE
AUTOMATICALLY UNDER THE LAW. CONSEQUENTLY, IT IS NECESSARY FOR SHAREHOLDERS TO
APPROVE A NEW AGREEMENT SO THAT THE ADVISER CAN CONTINUE, WITHOUT INTERRUPTION,
TO PROVIDE ITS SERVICES TO THE FUNDS COMPRISING THE TRUST. MR. WHITMAN PLANS TO
REMAIN WITH THE FUNDS AND THE ADVISER IN HIS CURRENT CAPACITIES FOR THE
INDEFINITE FUTURE AND WILL BE ENTERING INTO A FIVE-YEAR EMPLOYMENT AGREEMENT
WITH THE ADVISER. SINCE THE ADVISER IS REQUIRED TO PRESENT THE AGREEMENT TO
SHAREHOLDERS FOR THEIR APPROVAL, IT MAKES SENSE TO SIMULTANEOUSLY UPDATE THE
INVESTMENT ADVISORY AGREEMENTS TO INCLUDE LANGUAGE IT USES IN OTHER INVESTMENT
ADVISORY AGREEMENTS THAT IT IS A PARTY TO.
Q: DO SHAREHOLDERS OF ALL OF THE FUNDS HAVE TO VOTE ON CHANGING THE
FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE THIRD AVENUE VALUE FUND, OR JUST THE
SHAREHOLDERS OF THAT FUND?
A: JUST THE SHAREHOLDERS OF THE THIRD AVENUE VALUE FUND. THE REASON FOR THIS
PROPOSAL IS TO MAKE THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF ALL OF THE FUNDS
COMPRISING THE TRUST IDENTICAL TO ONE ANOTHER.
Q: WHY ARE SHAREHOLDERS ELECTING TRUSTEES TO THE BOARD WHEN THE TRUSTEES
ALREADY SERVE IN THAT CAPACITY?
A: SOME OF THE TRUSTEES WERE ELECTED BY THE BOARD, RATHER THAN THE
SHAREHOLDERS, TO FILL VACANCIES THAT HAVE OCCURRED OVER THE YEARS. MANAGEMENT
DESIRES THAT SHAREHOLDERS ELECT ALL PRESENT MEMBERS OF THE BOARD OF TRUSTEES.
THIS WILL MINIMIZE THE LIKELIHOOD THAT THE BOARD WOULD HAVE TO SPEND ADDITIONAL
SHAREHOLDER FUNDS TO HOLD A SPECIAL MEETING TO ELECT TRUSTEES, WHICH WOULD BE
REQUIRED AT ANY TIME LESS THAN 2/3 OF THE TRUSTEES HAVE BEEN ELECTED BY THE
SHAREHOLDERS.
Q: WHY IS THE SELECTION OF THE INDEPENDENT ACCOUNTANTS BEING RATIFIED?
A: THE TRUST IS REQUIRED TO PRESENT RATIFICATION OF THE INDEPENDENT
ACCOUNTANTS AT LEAST ONCE EACH YEAR IN WHICH IT HOLDS ANY SHAREHOLDER MEETING.
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IMPORTANT ADDITIONAL INFORMATION ABOUT THE PROPOSALS IS SET FORTH IN THE
ACCOMPANYING PROXY STATEMENT. PLEASE READ IT CAREFULLY.
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<PAGE>
PRELIMINARY PROXY
THIRD AVENUE FUNDS
767 Third Avenue
New York, New York 10017-2023
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MAY 24, 2000
This Proxy Statement is furnished to the shareholders of Third Avenue Value
Fund, Third Avenue Small-Cap Value Fund and Third Avenue Real Estate Value Fund
(each a "Fund" and collectively the "Funds"), each a series of the Third Avenue
Trust (the "Trust"), in connection with the solicitation by the management of
the Trust of proxies to be used at the Special Meeting of Shareholders of the
Funds (the "Meeting"), to be held at [Four Times Square, 37th Floor, New York,
New York 10036], on May 24, 2000 at [11:00 a.m.] New York time, and/or at any
adjournments thereof. The purpose of the Meeting and the matters to be acted
upon are set forth in the accompanying Notice of Special Meeting of
Shareholders.
The cost of the solicitation of proxies will be borne directly by the Trust
and therefore, indirectly by its shareholders. The Trust has retained
Shareholder Communications Corporation as its solicitation agent. The cost of
solicitation is estimated to be approximately $_____________. Proxies may also
be solicited personally or by mail, telephone or electronic means by Trustees,
officers and regular employees of the Trust, its Investment Adviser, EQSF
Advisers, Inc. (the "Adviser") and PFPC Inc., the Fund's transfer agent.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the shares of beneficial interest of each Fund
represented thereby will be voted in accordance with the instructions marked on
the proxy.
The following table sets forth each of the proposals to be voted on at the
Meeting, and the shareholders of the Fund that are to vote on that proposal:
PROPOSAL FUND(S) VOTING ON PROPOSAL
1. To approve changing the fundamental investment Third Avenue Value Fund
restrictions of the Third Avenue Value Fund in order
to make them consistent with the fundamental
investment restrictions of the other Funds of the
Trust.
2. To elect ten (10) Trustees to serve until the All Funds
next meeting of shareholders, if any, and until the
election and qualification of their successors.
3. To ratify the selection of PricewaterhouseCoopers All Funds
LLP as independent accountants for the Funds for the
fiscal year ending October 31, 2000.
4. To approve a new Investment Advisory Agreement Third Avenue Value Fund
between Third Avenue Value Fund and the Adviser,
in connection with a proposed change of control of
the Adviser.
5. To approve a new Investment Advisory Agreement Third Avenue Small-Cap
between Third Avenue Small-Cap Value Fund and Value Fund
the Adviser, in connection with a proposed change
of control of the Adviser.
6. To approve a new Investment Advisory Agreement Third Avenue Real
between Third Avenue Real Estate Value Fund and Estate Value Fund
the Adviser, in connection with a proposed change
of control of the Adviser.
<PAGE>
To the extent instructions are not marked, executed proxies will be voted
FOR proposals 1, 2, 3, 4, 5 and 6 and in the discretion of the proxies on any
other matter. Any proxy may be revoked at any time prior to its exercise, either
by filing with the Fund a written notice of revocation, by delivering a duly
executed proxy bearing a later date, or by attending the Meeting and voting in
person.
At the close of business on April 10, 2000, the record date for determining
shareholders entitled to notice of, and to vote at, the Meeting, there were
outstanding ______________ shares of Third Avenue Value Fund, ____________
shares of Third Avenue Small-Cap Value Fund and _____________ shares of Third
Avenue Real Estate Value Fund entitled to vote. Each share represents a
transferable unit of beneficial interest in the applicable Fund and entitles the
holder thereof to one vote on all matters which come before the Meeting with
respect to that Fund. With respect to the election of Trustees and ratification
of the accountants, shares of all Funds will be voted together and entitle the
holder to one vote on those matters.
In the event that a quorum is not present or a quorum is present but
sufficient votes in favor of any of the proposals described in this proxy
statement are not received by the time scheduled for the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Meeting to be adjourned. The persons named as proxies will
vote in favor of such adjournment, all executed proxies that make no provision
to the contrary (such as by instructing the proxies to vote against the
proposal).
Some proposals require more votes than others to be approved. An
affirmative vote of a majority of each Fund's outstanding shares (defined as
either 67% of the shares present at the Meeting, if holders of more than 50% of
the outstanding shares are present in person or by proxy, or more than 50% of
the outstanding shares, whichever is less) is necessary to approve its new
Investment Advisory Agreement and, in the case of Third Avenue Value Fund, the
change in its fundamental investment restrictions. Election of Trustees requires
a plurality of the votes cast at the Meeting. Ratification of the appointment of
auditors requires the affirmative vote of a majority of the votes of the
applicable Fund cast at the Meeting. Broker non-votes are shares held in street
name for which the broker indicates that instructions have not been received
from the beneficial owners or other persons entitled to vote and for which the
broker does not have discretionary authority. Abstentions and broker non-votes
will be counted as shares present for purposes of determining whether a quorum
is present but will not be voted for or against any adjournment or proposal.
Accordingly, abstentions and broker non-votes effectively will be a vote against
adjournment or against any proposal where the required vote is a percentage of
the shares present or outstanding.
This Proxy Statement and the accompanying Form of Proxy will initially be
mailed to shareholders on or about April 15, 2000.
Shareholders may request copies of the Annual Report of the Funds for the
fiscal year ended October 31, 1999, without charge, by writing to Third Avenue
Funds, 767 Third Avenue, New York, NY 10017, Attention: Marketing Department, or
by calling toll-free (800) 443-1021.
PROPOSAL NO. 1
AMENDMENT TO CERTAIN FUNDAMENTAL POLICIES
AND INVESTMENT RESTRICTIONS OF THIRD AVENUE VALUE FUND
Each Fund in the Trust has adopted fundamental investment policies that
govern generally the investment operations of the Fund and which may not be
changed without shareholder approval. Some of the Third Avenue Value Fund's
fundamental restrictions reflect past regulatory, business or industry
conditions, practices or requirements that are no longer in effect or prevalent
in the mutual fund industry. The Trust's Board, including a majority of
Independent Trustees, has approved and directed that the
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<PAGE>
following changes to the fundamental policies of the Third Avenue Value Fund be
submitted to shareholders for approval, in order to make them consistent with
the investment restrictions applying to the other Funds in the Trust.
Presently, in addition to the investment restrictions applicable to all of
the Funds, the Third Avenue Value 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 interest 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.
It is proposed that these investment restrictions be eliminated. If
shareholders of the Third Avenue Value Fund approve the change in investment
restrictions, the investment restrictions of that Fund will read as follows: The
Fund may not:
1. Borrow money or pledge, mortgage or hypothecate any of its assets
except that the 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.
4. Issue any senior security (as defined in the Investment Company Act of
1940, as amended) (the "1940 Act"). Borrowings 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.
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<PAGE>
WHY MAKE THE CHANGES?
In general, the Board believes that eliminating the disparities between the
Third Avenue Value Fund and the other Funds of the Trust will enhance
management's ability to manage Third Avenue Value Funds' assets efficiently and
effectively and permit Trustees to review and monitor investment policies more
easily. Although the proposed changes in fundamental restrictions will allow the
Third Avenue Value Fund greater investment flexibility to respond to future
investment opportunities, the Board does not anticipate that the changes,
individually or in the aggregate, will result at this time in a material change
in the level of investment risk associated with an investment in Third Avenue
Value Fund.
Aside from making the investment restrictions of each of the Funds in the
Trust similar, there are other reasons for changing the present restrictions.
For instance, the Third Avenue Value Fund would like to have the ability to
engage in short sales to the extent permitted by the 1940 Act, even though it
does not intend to engage in short sales at the present time. In a short sale
transaction, the Fund would sell a security it may or may not own in
anticipation of a decline in the market value of the security.
Similarly, the change would permit the Fund to invest to the extent
permitted by the 1940 Act in commodities or commodity contracts and futures
contracts should it desire to do so. Given the rapid and continuing development
of derivative products and the possibility of changes in the definition of
"commodities", it is important for the Fund's policies to be flexible enough to
allow it to enter into hedging and other transactions using these products when
doing so is deemed appropriate by the Fund and is within its investment
parameters.
The change in the restriction dealing with investment in other mutual funds
is simply a modification to bring the Fund's policy in line with present
regulatory rules.
The purpose of eliminating the restriction dealing with joint or joint and
several trading transactions is to differentiate simultaneous investments by any
Fund(s) or with another party with the way the term "joint and several
transactions" is sometimes interpreted. Investment decisions for a Fund are made
independently from those of other accounts advised by the Adviser and its
affiliates. If, however, such other accounts wish to invest in, or dispose of,
the same securities as one of the Funds, available investments will be allocated
equitably to each Fund and other account(s). This procedure may adversely affect
the size of the position obtained for or disposed of by a Fund or the price paid
or received by a Fund.
Finally, Third Avenue Value Fund would like to have the ability, like the
other Funds in the Trust, to make loans and to lend its portfolio securities to
qualified institutions. While the Fund is permitted to purchase notes and
debentures and other securities that are the equivalent of loans, it is
prohibited from making direct loans to a proposed borrower. The Fund is
occasionally presented with opportunities to make such loans and the Board
believes that the Fund should have the flexibility to do so when appropriate. By
lending its portfolio securities, a fund attempts to increase its income through
the receipt of interest on the loan. Any gain or loss in the market price of the
securities loan that may occur during the term of the loan will be for the
account of the fund. A fund may lend its portfolio securities so long as the
terms and structure of such loans are not inconsistent with the requirements of
the 1940 Act, which currently provide that (a) the borrower pledge and maintain
with the fund collateral consisting of cash, a letter of credit issued by a
domestic U.S. bank, or securities issued or guaranteed by the U.S. government
having a value at all times not less than 100% of the value of the securities
loaned, (b) the borrower adds to such collateral whenever the price of the
securities loan rises (i.e., the value of the loan is "marked to the market" on
a daily basis), (c) the loan be made subject to termination by the fund at any
time and the loaned securities be subject to recall within the normal and
customary settlement time for securities transactions and (d) the fund receive
reasonable interest on the loan (which may include the fund's investing any cash
collateral in interest bearing short-term investments), any distributions on the
loaned securities and any increase in their market value. If the borrower fails
to maintain the requisite amount of collateral, the loan automatically
terminates and the fund could use the collateral to replace the securities while
holding the borrower liable for any excess of replacement cost over the value of
the collateral. As with any extension of credit, there are risks of delay in
recovery and in some cases even loss of rights in collateral should the borrower
of the securities fail financially.
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<PAGE>
The Fund will not lend portfolio securities if, as a result, the aggregate
of such loans exceeds 33 1/3% of the value of its total assets (including such
loans). Loan arrangements made by the Fund will comply with all other applicable
regulatory requirements. All relevant facts and circumstances, including the
creditworthiness of the qualified institution, will be monitored by the Adviser,
and will be considered in making decisions with respect to lending of
securities, subject to review by the Fund's Board of Trustees.
A fund may pay reasonable negotiated fees in connection with loaned
securities, so long as such fees are set forth in a written contract and
approved by its Board of Trustees. In addition, the Fund shall, through the
ability to recall securities prior to any required vote, retain voting rights
over the loaned securities.
The Trust, on behalf of Third Avenue Small-Cap Value Fund and Third Avenue
Real Estate Value Fund, has entered into a master lending arrangement with Bear,
Stearns Securities Corp. in compliance with the foregoing requirements. If
Shareholders of the Fund approve the proposed change in investment restrictions,
it is contemplated that the Trust will enter into a similar agreement with Bear,
Stearns Securities Corp. on behalf of Third Avenue Value Fund.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF THE THIRD AVENUE VALUE
FUND VOTE "FOR" APPROVAL OF THE AMENDMENTS TO THE FUND'S FUNDAMENTAL POLICIES.
PROPOSAL NO. 2
ELECTION OF TRUSTEES
Pursuant to the By-Laws of the Trust, the Board of Trustees has fixed the
number of trustees comprising the entire Board at not more than fifteen (15) and
has designated the ten (10) incumbent Trustees listed below as nominees for
election as Trustees of the Trust to hold office until the next Meeting of
Shareholders and until their successors are elected and qualified.
A shareholder using the enclosed proxy card can vote for all or any of the
nominees of the Board of Trustees or withhold his or her vote from all or any of
such nominees. Unless otherwise specified in the accompanying proxy, the shares
voted pursuant thereto will be voted FOR the election as Trustees of the Trust
of each of the persons named below. If for any reason any of the nominees named
below should be unable to stand for election or serve if elected, it is intended
that such proxy will be voted for the election of such other person(s) as
management may recommend. Each of the nominees is a member of the current Board
of Trustees and has consented to his or her nomination and has agreed to serve
if elected. Management has no reason to believe that any nominee will be unable
to serve as a Trustee.
The following table sets forth the names of management's nominees for
election as Trustees, their principal occupation or employment during the past
five years including the periods during which each of them has served as a
Trustee, their age and the approximate number of shares of the Trust
beneficially owned, directly or indirectly, by each of them as of March 31,
2000.
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<PAGE>
<TABLE>
<CAPTION>
SHARES
POSITION(S) OWNED
HELD WITH PRINCIPAL OCCUPATION BENEFI-
NAME & ADDRESS AGE REGISTRANT DURING PAST 5 YEARS CIALLY
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<S> <C> <C> <C> <C>
PHYLLIS W. BECK* 73 Trustee An Associate Judge of the 19,893
GSB Bldg. Suite 800 Superior Court of Pennsylvania;
City Line & Trustee of Third Avenue Variable
Belmont Ave. Series Trust (1999-Present);
Bala Cynwald, PA Trustee or Director of the Trust
19004-1611 or its predecessor since Nov.
1992.
LUCINDA FRANKS 53 Trustee Journalist (1969-Present); 0
64 EAST 86TH Street Author; Winner of the 1971
NEW YORK, NY 10028 Pulitzer Prize for Journalism;
Trustee of Third Avenue Variable
Series Trust (1999-Present);
Trustee of the Trust since Feb.
1998.
GERALD HELLERMAN 62 Trustee Managing Director of Hellerman 4,607
10965 Eight Bells Lane Associates, a financial and
Columbia, MD 21044 corporate consulting firm.
Trustee of Third Avenue Variable
Series Trust (1999-Present);
Trustee or Director of the Trust
or its predecessor since Sept.
1993.
MARVIN MOSER, M.D. 76 Trustee Trustee of Trudeau Institute, a 16,732
13 Murray Hill Road medical research institute;
Scarsdale, NY 10583 Clinical Professor of Medicine
at Yale University School of
Medicine and Senior Medical
Advisor, National High Blood
Pressure Education Program,
National Heart Lung and Blood
Institute. Director of AMBI
Corp; Trustee of Third Avenue
Variable Series Trust
(1999-Present); Trustee or
Director of the Trust or its
predecessor since Nov. 1994.
DONALD RAPPAPORT 73 Trustee Private investor and consultant 5,086
1619 31ST Street, N.W., (1987-May 1997 and May
Washington, D.C. 20007 1999-Present); Chief Financial
and Chief Information Officer
for the U.S. Department of
Education (May 1997 to May
1999); Trustee of Third Avenue
Variable Series Trust
(1999-Present); Trustee or
Director of the Trust or its
predecessor from November,
1991-May 1997 and since June
1999.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SHARES
POSITION(S) OWNED
HELD WITH PRINCIPAL OCCUPATION BENEFI-
NAME & ADDRESS AGE REGISTRANT DURING PAST 5 YEARS CIALLY
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<S> <C> <C> <C> <C>
MYRON M. SHEINFELD 70 Trustee Counsel (12/96-Present) to and 40,357
1001 Fannin St., Attorney and Shareholder
Suite 3700 (1968-12/96) of Sheinfeld, Maley
Houston, TX 77002 & Kay P.C., a law firm; Director
(1988-Present) of Nabors
Industries, Inc., an
international oil drilling
contractor; Director
(11/98-Present) Anchor Glass
Container Corporation; Director
(7/99-Present) of Repap
Enterprises, Inc.; Author of
texts on Bankruptcy and
Bankruptcy Taxation; Former
adjunct professor of law
University of Texas School of
Law (1974-1991); Trustee of
Third Avenue Variable Series
Trust (1999-Present); Trustee or
Director of the Trust or its
predecessor since its inception.
MARTIN SHUBIK 73 Trustee Seymour H. Knox Professor 12,990
Yale University (1975-Present) of Mathematical
Dept. of Economics and Institutional Economics,
Box 2125, Yale Station Yale University; Trustee of
New Haven, CT 06520 Third Avenue Variable Series
Trust (1999-Present); Trustee or
Director of the Trust or its
predecessor since its inception.
CHARLES C. WALDEN 55 Trustee Executive Vice President- 6,953
11 Williamsburg Circle Investments (1973-Present)
Madison, CT 06443 (Chief Investment Officer) of
Knights of Columbus, a fraternal
benefit society selling life
insurance and annuities;
Chartered Financial Analyst;
Trustee of Third Avenue Variable
Series Trust (1999-Present);
Trustee or Director of the Trust
or its predecessor since May
1996.
BARBARA WHITMAN* 41 Trustee Registered Securities Repre- 40,271
767 Third Avenue sentative (11/96-Present) of
New York, NY 10017-2023 M.J. Whitman, Inc., a broker-
dealer and the Funds' under-
writer; Director (4/95-Present)
of EQSF Advisers, Inc., the
Funds' investment adviser;
Director (4/99-Present) of M.J.
Whitman Holding Corp. (MJWHC), a
holding company managing
investment subsidiaries and an
investment adviser to private
and institutional clients;
Director (12/99-Present) of The
Beck Institute; Director
(8/97-6/98) of Riverside Stage
Company; Trustee of Third Avenue
Variable Series Trust (1999-
Present; Trustee of the Trust
since September 1997.
MARTIN J. WHITMAN* 75 Trustee Chairman and CEO (3/90-Present), 1,015,132
767 Third Avenue President (1/91-5/98), of the
New York, NY 10017-2023 Trust; Chairman and CEO
(3/90-Present), President
(1/91-2/98), of EQSF Advisers,
Inc.; Chairman, CEO
(1/1/95-Present),
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
SHARES
POSITION(S) OWNED
HELD WITH PRINCIPAL OCCUPATION BENEFI-
NAME & ADDRESS AGE REGISTRANT DURING PAST 5 YEARS CIALLY
- -------------- --- ---------- ------------------------------- ------
<S> <C> <C> <C> <C>
President (1/1/95-6/29/95) and
Chief Investment Officer
(10/92-Present) of M.J. Whitman
Advisers. Inc., a subsidiary of
MJWHC; Chairman, CEO
(1/1/95-Present) and President
(1/1/95) 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
-Present) and Member of the
Advisory Board (10/94-6/95) of
the Yale School of Management at
Yale University; Director and
Chairman (8/90-Present),
President (8/90-12/90), CEO
(8/96-Present) and Chief
Investment Officer (12/90-8/96)
of Danielson Holding
Corporation, and a Director of
its subsidiaries; Director
(3/91-Present) of Nabors
Industries, Inc., an
international oil drilling
contractor; Director
(8/97-Present) of Tejon Ranch
Co.; Director (3/93-2/96) of
Herman's Sporting Goods, Inc.,
which filed a voluntary petition
under Chapter 11 of the United
States Bankruptcy Code on April
26, 1996; President and CEO
(10/74-Present) of Martin J.
Whitman & Co., Inc. (formerly
M.J. Whitman & Co., Inc.), a
private investment company;
Chairman of the Board and
Trustee of Third Avenue Variable
Series Trust (1999-Present);
Chairman and CEO of the Trust or
its predecessor since its
inception; Chartered Financial
Analyst.
</TABLE>
* An asterisk denotes those trustees who are deemed "interested
persons" of the Funds. Mrs. Beck is the sister of Mr. Whitman and
the aunt of Ms. Whitman. Barbara Whitman is Mr. Whitman's daughter.
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 per Fund for each meeting of the Board of
Trustees that they attend, in addition to reimbursing Trustees for travel
and incidental expenses incurred by them in connection with their
attendance at Board meetings. The Trust also pays the non-affiliated
Trustees an annual stipend of $2,000 per Fund in January of each year for
the previous year's service. The Trust paid Trustees, in the aggregate,
$229,735 in such fees and expenses for the year ended October 31, 1999.
Trustees do not receive any pension or retirement benefits from the
Trust. The Board of Trustees held four meetings during the fiscal year
ended October 31, 1999. Each Trustee attended at least 75% of the total
number of meetings of the Board of Trustee held during the last fiscal
year.
For the fiscal year ended October 31, 1999, the aggregate amount of
compensation paid to each Trustee by the Trust is listed below.
-8-
<PAGE>
COMPENSATION TABLE
AGGREGATE COMPENSATION TOTAL COMPENSATION
FROM REGISTRANT FOR FROM REGISTRANT AND
FISCAL YEAR ENDED FUND COMPLEX PAID
NAME AND POSITION HELD OCTOBER 31, 1999* TO TRUSTEES*
- ---------------------- ---------------------- ------------------
Phyllis W. Beck, Trustee $ 0 $ 0
Lucinda Franks, Trustee $ 31,499 $ 31,499
Gerald Hellerman, Trustee $ 31,833 $ 33,333
Marvin Moser, M.D., Trustee $ 31,833 $ 33,333
Donald Rappaport, Trustee $ 12,000 $ 13,500
Myron M. Sheinfeld, Trustee $ 30,333 $ 31,833
Martin Shubik, Trustee $ 31,833 $ 33,333
Charles C. Walden, Trustee $ 31,833 $ 33,333
Barbara Whitman, Trustee $ 0 $ 0
Martin J. Whitman, Chairman $ 0 $ 0
and Chief Executive Officer
* Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $10,234 for all Trustees as a group. Amount includes fees with
respect to the Third Avenue High Yield Fund, which was subsequently terminated
in connection with the transfer of all of its assets to Pioneer High Yield Fund
on February 25, 2000.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF
THE ABOVE NOMINEES TO THE BOARD OF TRUSTEES.
ADMINISTRATOR, TRANSFER AGENT, AND DISTRIBUTOR OF THE FUNDS
The Funds have also entered into a Services Agreement with PFPC Inc.,
located at 211 South Gulph Road, P.O. Box 61503, King of Prussia, PA 19406. PFPC
Inc. provides certain accounting, transfer agency and shareholder 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. In addition to EQSF Advisers, Inc. acting as the Funds' Investment
Adviser, it also acts as the Funds' Administrator and provides all other
administrative services to the Funds other than those relating to the investment
portfolio of the Funds, the distribution of the Funds and the maintenance of the
Funds' financial records and those performed by PFPC Inc. under the Services
Agreement. The Adviser has entered into a Sub-Administration Agreement with PFPC
Inc. pursuant to which PFPC Inc. performs certain of those services on behalf of
the Adviser. During the fiscal year ended October 31, 1999 (the first year
during which the administration agreement with the Adviser was in effect), the
Funds paid fees to the Adviser for these services in the following amounts:
Third Avenue Value Fund $2,164, Third Avenue Small-Cap Value Fund $201, and
Third Avenue Real Estate Value Fund $13. M. J. Whitman, Inc. ("MJW"), 767 Third
Avenue, New York, NY 10017, an affiliate of the Adviser, acts as the principal
underwriter and distributor of the Funds' shares. MJW also acts as a
broker-dealer for the Funds. In the fiscal year ended October 31, 1999, Third
Avenue Value Fund paid approximately $672,971 in brokerage commissions to MJW
(constituting 63% of all commissions paid by the Fund), Third Avenue Small-Cap
Value Fund paid approximately $61,498 in brokerage commissions to MJW
(constituting 78% of all commissions paid by the Fund), and Third Avenue Real
Estate Value Fund paid $1,470 in brokerage commissions to MJW (constituting 89%
of all commissions paid by the Fund).
-9-
<PAGE>
EXECUTIVE OFFICERS
In addition to Mr. Whitman, the other officers of the Trust are listed
below, along with their age, position(s) held with the Trust and affiliates, and
their principal occupation during the past five years.
DAVID M. BARSE 37 President President (5/98 to Present), and
767 Third Avenue and Chief Executive Vice President (4/95 to 5/98)
New York, NY 10017-2023 Operating of the Trust; President, Chief Operating
Officer Officer and Director (7/96 to Present)
(COO) of Danielson Holding Corporation;
Director (8/96 to Present) of National
American Insurance Company of
California; President (2/98 to Present),
Executive Vice President (4/95 to 2/98),
and Director (4/95 to Present) of EQSF
Advisers, Inc.; President (6/95 to
Present), Chief Executive Officer (7/99
to Present), Director, Chief Operating
Officer (1/95 to Present), Secretary
(1/95 to 1/96) and Executive Vice
President (1/95 to 6/95) of MJWHC;
President (6/95 to Present), Chief
Executive Officer (7/99 to Present),
Director and COO (1/95 to Present),
Secretary (1/95 to 1/96), Executive Vice
President (1/95 to 6/95) of M.J.
Whitman, Inc.; President (6/95 to
Present), Chief Executive Officer (7/99
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.; President (6/99 to
Present) of Third Avenue Variable
Series Trust; Director (6/97 to
Present) of CGA Group, Ltd.
MICHAEL CARNEY 46 Treasurer, Treasurer and CFO of the Trust (3/90 to
767 Third Avenue Chief Present); Treasurer and CFO (6/99 to
New York, NY 10017-2023 Financial Present) of Third Avenue Variable Series
Officer Trust; Director (1/1/95 to Present),
(CFO) Executive Vice President, Chief
Financial Officer (6/29/95 to Present)
of MJWHC 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; CFO of WHR
Management Corporation (8/91 to
Present), and Danielson Holding
Corporation (8/90 to Present); 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.
-10-
<PAGE>
KERRI WELTZ 32 Assistant Assistant Treasurer (5/96 to Present),
767 Third Avenue Treasurer Controller (1/96 to Present), Assistant
New York, NY 10017-2023 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 12/92) of
EQSF Advisers, Inc.; Assistant
Treasurer (6/99 to Present) of Third
Avenue Variable Series Trust;
Controller (8/96 to 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 (1/93 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.
IAN M. KIRSCHNER 44 General General Counsel and Secretary (8/96 to
767 Third Avenue Counsel Present) of Danielson Holding
New York, NY 10017-2023 and Corporation; General Counsel and
Secretary Secretary (1/96 to Present) of MJWHC,
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.; General Counsel and Secretary
(6/99 to Present) of Third Avenue
Variable Series Trust; 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.
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Trustees, including a majority of the Independent Trustees of
the Fund, selected, at a meeting of the Board of Trustees held on November 17,
1999, PricewaterhouseCoopers, LLP, 1177 Avenue of the Americas, New York, NY
10036 as independent accountants to examine the financial statements of the
Funds. PricewaterhouseCoopers has served as the Funds' independent accountants
since the Funds' inception. The Funds have been informed that neither
PricewaterhouseCoopers nor any of its partners has any direct financial interest
or any material indirect financial interest in the Funds, nor has had any
connection with the Funds during the past three years in the capacity of
promoter, underwriter, voting trustee, director, officer or employee. Although
the Trust does not have an audit committee which meets with the independent
accountants for the Funds, all of the Trustees are provided with updated
financial and portfolio information statements each quarter, as well as audited
year-end financial statements. The Board of Trustees meets with
PricewaterhouseCoopers at a regular meeting of the Board of Trustees on an
-11-
<PAGE>
annual basis. It is not expected that a representative of PricewaterhouseCoopers
will be present at the Special Meeting of the Shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION
OF PRICEWATERHOUSECOOPERS, LLP AS THE FUNDS' INDEPENDENT ACCOUNTANTS.
PROPOSAL NO. 4
TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT WITH THIRD AVENUE VALUE
FUND IN CONNECTION WITH A CHANGE OF CONTROL OF ADVISER
PROPOSAL NO. 5
TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT WITH THIRD AVENUE
SMALL-CAP VALUE FUND IN CONNECTION WITH A CHANGE OF CONTROL OF ADVISER
PROPOSAL NO. 6
TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT WITH THIRD AVENUE REAL ESTATE
VALUE FUND IN CONNECTION WITH A CHANGE OF CONTROL OF ADVISER
EQSF Advisers, Inc., 767 Third Avenue, New York, NY 10017-2023 (the
"Adviser"), serves as the investment adviser of each Fund pursuant to Investment
Advisory Agreements dated February 28, 1997 for the Third Avenue Value Fund and
Third Avenue Small-Cap Value Fund, and September 16, 1998 for the Third Avenue
Real Estate Value Fund (the "Present Advisory Agreements"). The Present Advisory
Agreements were initially approved on the dates listed above by the sole
shareholders of the Funds. They had previously been approved by the Board of
Trustees of the Trust (the "Board"), including a majority of the Trustees who
are not "interested persons" as defined in the 1940 Act (the "Independent
Trustees"). After an initial two-year term, the Present Advisory Agreements
continue from year to year if approved annually by the Board of Trustees,
including a majority of the Independent Trustees, cast in person at a meeting
called for the purpose of voting on such approval or a majority of the
outstanding voting securities of the Fund. The Board of Trustees, including a
majority of the Independent Trustees, have each year approved the terms of the
Present Advisory Agreements and their continuance (with the most recent approval
for the Third Avenue Value Fund and Third Avenue Small-Cap Value Fund coming at
the Board's meeting on February 9, 2000). These contracts 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 each of the Present Advisory Agreements, the Adviser supervises and
assists in the management of the Fund, 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 pays the compensation of officers of the Trust for their services
as such.
All other non-advisory expenses incurred in the operation of the Trust and
the continuous offering of its shares, including taxes, fees and commissions,
bookkeeping expenses, salaries of non-officer fund employees and officers of the
Trust providing administrative services, the cost of leased office space
incurred in operation of the Trust, expenses of redemption of shares, charges of
custodians and transfer agents, auditing and legal expenses and fees of outside
Trustees, are borne by the Trust. Any expense which cannot be allocated to a
specific Fund of the Trust will be allocated to each of the Funds based on their
relative net asset values on the date the expense is incurred.
Under the Present Advisory Agreements, each Fund pay the Adviser a monthly
fee of 1/12 of .90% (an annual fee of .90%) on the average daily net assets in
each portfolio during the prior month. During the fiscal year ended on October
31, 1999, Third Avenue Value Fund paid investment advisory fees to the Adviser
of $12,805,667, Third Avenue Small-Cap Value Fund paid investment advisory fees
to
-12-
<PAGE>
the Adviser of $1,247,500, and Third Avenue Real Estate Value Fund paid
investment advisory fees to the Adviser of $47,874.
Under current arrangements, whenever in any fiscal year the normal
operating expenses, including the investment advisory fee, but excluding
brokerage commissions and interest and taxes of Third Avenue Value Fund or Third
Avenue Small-Cap Value Fund exceeds 1.9% of the first $100 million of average
daily net assets of these Funds, and 1.5% of assets in excess of $100 million,
the Adviser is obligated to reimburse the Fund(s) in an amount equal to that
excess. Under current arrangements, whenever in any fiscal year, the normal
operating expenses, including the investment advisory fee, but excluding
brokerage commissions and interest and taxes, of Third Avenue Real Estate Value
Fund exceeds 1.5% of the average daily net assets of the Fund, 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 for up to three years after the end of the fiscal year
in which an expense is reimbursed by the Adviser, subject to the expense
limitation, until the Adviser has been paid for the entire amount contributed or
such three year period expires. This arrangement may be terminated by either the
Fund or the Adviser at any time without the consent of the other.
For the fiscal year ended October 31, 1999, no fees were reimbursed to the
Adviser by the Funds. The Adviser waived fees of $47,874, and reimbursed
$138,938 for Third Avenue Real Estate Value Fund, for the fiscal year ended
October 31, 1999.
The following are the executive officers and directors of the Adviser, all
of whom are affiliated persons of the Trust and Adviser:
CAPACITY WITH FUNDS CAPACITY WITH ADVISER
------------------- ---------------------
Martin J. Whitman Chairman and Chief Chairman and Chief
Executive Officer Executive Officer
David M. Barse President, Chief President, Chief
Operating Officer Operating Officer,
Director
Michael Carney Treasurer, Chief Treasurer, Chief
Financial Officer Financial Officer
Ian M. Kirschner General Counsel General Counsel
and Secretary and Secretary
Kerri Weltz Assistant Treasurer Assistant Treasurer
Barbara Whitman Trustee Director
The Investment Company Act of 1940, ("the Act") provides that in the event
of a transfer of a controlling block of stock of the adviser of a registered
investment company or series thereof, the Investment Advisory Contract with that
fund is automatically terminated. A 25% block of the outstanding shares of the
Adviser would normally be considered a controlling block as that term is used in
the Act.
Martin J. Whitman is a controlling person of the Adviser. His control is
based upon his position as Chairman of the Board and Chief Executive Officer and
an irrevocable proxy signed by his children, who own in the aggregate
approximately 74% of the outstanding common stock of the Adviser (the balance of
the shares being owned by Mr. Whitman and other employees of the Adviser and its
affiliates). Mr. Whitman's children are Barbara Whitman whose address is the
same as the Fund; James Q. Whitman, Yale Law School, 127 Wall Street, New Haven,
CT 16520-8215, and Thomas I. Whitman, Swarthmore College, 500 College Avenue,
Swarthmore, PA 19081. When Mr. Whitman formed the Adviser, his children
purchased 75% of the outstanding shares. Each of Mr. Whitman's children
currently own 24.33% of the common stock of the Adviser. As part of the initial
formation of the Adviser, Mr. Whitman's children gave the right to vote their
shares to him by signing an irrevocable proxy.
-13-
<PAGE>
Mr. Whitman now desires to revoke the proxy (which is permissible under the
terms of the proxy) and return the voting rights of the shares to his children,
as they are mature adults. While no change in ownership of the shares would be
involved in any such revocation, management believes that transfer of the right
to vote these shares constitutes an assignment under the Act. Thus, shareholders
of each Fund in the Trust are being asked to approve new Investment Advisory
Agreements with the Adviser to take effect upon such revocation. Mr. Whitman
intends to revoke the proxy promptly after the shareholders approve the
proposals and all other necessary approvals are obtained from other parties with
whom the Adviser has contractual relationships, but in any event not later than
March 31, 2001.
Mr. Whitman has assured the Board that his revocation of the proxy will in
no way affect his performance as Chairman and Chief Executive Officer and a
Trustee of the Trust and Chairman and Chief Executive Officer and a director of
the Adviser and its affiliates. He has every intention of continuing to serve
the Trust and the other entities in his present capacities, and has agreed to
enter into a five-year employment contract with the Adviser. Since the deemed
assignment of the Present Advisory Agreements requires the approval of
shareholders, the Adviser and the Trust determined to take this opportunity to
revise and update the agreements to reflect current practices in the industry.
No changes are proposed in the economic terms of the Investment Advisory
Agreements.
On March 27, 2000 the Board of Trustees, including the Independent
Trustees, unanimously approved proposed Investment Advisory Agreements (the
"Proposed Advisory Agreements"), the form of which is attached hereto as
Appendix A and directed that they be submitted to the shareholders for approval
at a Special Meeting of Shareholders called for that purpose. The following
discussion is not complete and is subject in its entirety to the terms of the
Proposed Advisory Agreements. The Proposed Advisory Agreements are identical in
substance to the Present Advisory Agreements except for the date of the
Agreement, and the inclusion of liability, indemnification and notice
provisions. The following paragraphs summarize these provisions.
Paragraph 2 (d) of each Proposed Advisory Agreement states that the Adviser
will give the benefit of its best judgement and effort in rendering the services
described in the contract and shall not be liable for acts, omissions, or
losses, except losses resulting from willful misfeasance, bad faith or gross
negligence in the performance of its duties.
Paragraph 5 requires the Fund to indemnify the Adviser, its directors,
officers, employees, and agents against liability arising out of the Adviser
performing duties described in the Proposed Advisory Agreements, except where
willful misfeasance, bad faith, gross negligence, or reckless disregard of
duties is involved in the conduct of those duties. This provision is consistent
with the Securities and Exchange Commission policy of indemnification provisions
of mutual funds.
Paragraph 6 makes clear that the name "Third Avenue" and any associated
logo and mask are the property of the Adviser, but may continue to be used by
the Fund as long as it is managed by the Adviser or receives the Adviser's
consent to such use if it is no longer managed by the Adviser.
Finally, the notice provision in Paragraph 7 simply states that the parties
to the agreement must notify one another in writing at the addresses that each
of them designates in writing and any such notice will be deemed to have been
received on the earlier of the date it actually was received or on the fourth
day after the postmark if it was mailed by first class mail.
In evaluating the Proposed Advisory Agreements, the Board relied in part
upon its experience in overseeing, on an ongoing basis, the nature, quality and
extent of the Adviser's services to each Fund. The Board noted that the deemed
assignment of the Present Advisory Agreements was occurring by reason of
applicable definitions in the Act and that no actual changes in the management
or operations of the Adviser would occur. The Board also noted Mr. Whitman's
assurances as to his continued performance for the Funds, including his entrance
into a five-year employment agreement with the Adviser, described above.
With respect to the approval of the Proposed Advisory Agreements, the Board
was provided with additional information prepared specially to assist it in its
consideration of this issue. The Adviser had
-14-
<PAGE>
previously prepared a report evaluating the Adviser's fee and the Funds'
expenses based on publicly available industry data as an aid to the Board in its
deliberations. The Adviser presented its proposal to the Board of Trustees,
which included the report and updated data on the funds described in it.
The report compared the Funds' current expenses, advisory fee, performance and
other indicators to comparable funds having similar investment approaches and
objectives to the Funds.
The Board reviewed the information and documentation provided and
considered such factors as they deemed reasonably necessary. These factors
included, among others, (1) the nature and quality of the advisory and
non-advisory services rendered and the results achieved by the Adviser in the
management of each Fund's portfolio, both on a stand-alone basis and in
comparison to comparable funds; (2) the relationship of the advisory fee
schedule to the fee schedules of comparable mutual funds, the impact of the
advisory fees on the Fund's expense ratio and the relationship of the Funds' pro
forma expense ratios to the expense ratios of comparable mutual funds; (3) the
costs borne by the Adviser in providing investment advisory and management
services to the Funds; (4) the historical and anticipated profits of the Adviser
in providing services to the Funds; and (5) the benefits the Adviser may have
indirectly received from its relationship with the Funds, including execution of
portfolio transactions for the Funds.
In reaching its decision to approve the Proposed Advisory Agreements, the
Independent Trustees noted that the Funds' historical performance under the
Adviser's direction has been highly satisfactory and that the Third Avenue Value
Fund's and Third Avenue Small-Cap Value Fund's historical total expense ratios
had been below average. With respect to Third Avenue Real Estate Value Fund, the
Independent Trustees noted that the Fund was relatively new and had not yet
raised large assets, but that the Adviser's fee waivers and expense
reimbursements had kept the Fund's expense ratio in line with other similar
funds.
In the event that shareholders do not approve the change of control and the
Proposed Advisory Agreements, Mr. Whitman will not revoke his proxy and the
Present Advisory Agreements will remain in effect.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF EACH FUND VOTE "FOR"
APPROVAL OF THE PROPOSED ADVISORY AGREEMENTS AND THE CHANGE OF CONTROL OF THE
ADVISER.
PRINCIPAL SHAREHOLDERS
On March 27, 2000, to the knowledge of the management of the Funds, only
the following persons beneficially owned more than 5% of the outstanding shares
of the Funds designated below:
THIRD AVENUE VALUE FUND
PERCENTAGE OF NUMBER
NAME AND ADDRESS THIRD AVENUE VALUE FUND OF SHARES
- ---------------- ----------------------- ---------
Charles Schwab & Co. Inc.(2)
101 Montgomery Street
San Francisco, CA 94104 41.52% 16,065,500
National Financial
Securities Corp.(3)
P.O. Box 3908
Church Street Station
New York, NY 10008-3908 10.67% 4,129,064
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<PAGE>
Donaldson Lufkin & Jenrette
Securitites Corporation(3)
Mutual Fund Dept. 5th Floor
P.O. Box 2052
Jersey City, NJ 07303 8.99% 3,482,042
Bear Stearns Securities Corp(4)
One Metrotech Center North
Brooklyn, NY 11201-3859 6.29% 2,436,138
THIRD AVENUE SMALL-CAP VALUE FUND
PERCENTAGE OF
THIRD AVENUE SMALL-CAP NUMBER OF
NAME AND ADDRESS VALUE FUND SHARES
- ---------------- ---------------------- ---------
Charles Schwab & Co. Inc.(2)
101 Montgomery Street
San Francisco, CA 94104 33.60% 3,316,153
National Financial
Securities Corp.(3)
P.O. Box 3908
Church Street Station
New York, NY 10008-3908 18.20% 1,795,509
Bear Stearns Securities Corp(4)
One Metrotech Center North
Brooklyn, NY 11201-3859 8.25% 812,718
Donaldson Lufkin & Jenrette
Securitites Corporation(3)
Mutual Fund Dept. 5th Floor
P.O. Box 2052
Jersey City, NJ 07303 5.34% 526,184
THIRD AVENUE REAL ESTATE VALUE FUND
PERCENTAGE OF
THIRD AVENUE REAL ESTATE NUMBER OF
NAME AND ADDRESS VALUE FUND SHARES
- ---------------- ---------------------- ---------
Bear Stearns Securities Corp(4)
One Metrotech Center North
Brooklyn, NY 11201-3859 26.24% 304,997
Charles Schwab & Co. Inc.(2)
101 Montgomery Street
San Francisco, CA 94104 19.69% 227,642
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<PAGE>
First Union National Bank
FBO Bernard Rotko
1525 W. WT Harris Blvd # 1151
Charlotte, NC 28262-8522 11.52% 133,258
National Financial Securities Corp.(3)
P.O. Box 3908
Church Street Station
New York, NY 10008-3908 10.93% 126,356
(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 National Financial
Services Corp. are broker-dealers holding shares for the benefit of their
respective clients.
(4) Bear Stearns Securities Corp. is a broker-dealer holding shares for the
benefit of its clients, including, at such time, clients of MJW, the Funds'
affiliated broker-dealer, principal underwriter and distributor.
The officers and Trustees of the Funds own in the aggregate 2.50% of Third
Avenue Value Fund, 1.10% of Third Avenue Small-Cap Value Fund, and 9.09% of
Third Avenue Real Estate Value Fund.
Management knows of no other matters which may be brought before the
Meeting. However, if any other matters come before the meeting, it is intended
that the persons named in the enclosed proxy, or their substitutes, will vote
the proxy in accordance with their judgement on such matters.
SHAREHOLDERS PROPOSALS FOR FUTURE MEETINGS OF SHAREHOLDERS
Since there are no annual or further special meetings of shareholders of
the Trust unless required by applicable law or called by the Trustees in their
discretion, shareholders wishing to submit proposals that are intended to be
presented at any such future shareholder meeting, should submit the proposal(s)
in writing to the Secretary of the Trust, Third Avenue Funds, 767 Third Avenue,
New York, NY 10017-2023. Shareholder proposals should be received in a
reasonable time before the solicitation is made.
Submission of proposals by shareholders does not guarantee its inclusion in
a proxy statement since applicable state or federal rules apply. The Trust is
not obligated to call a shareholder meeting to consider any proposal which is
substantially the same as a matter voted upon by the shareholders during the
preceding twelve months, unless requested by holders of a majority of all shares
entitled to be voted at such meeting.
By Order of the Board of Trustees,
Ian M. Kirschner
Secretary
Dated: April 15, 2000
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<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT dated as of _________2000, between Third
Avenue Trust (the "Trust"), a Delaware business trust, on behalf of its series,
[Name of Fund] (the "Fund"), and EQSF Advisers, Inc. (the "Adviser"), a New York
corporation.
In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed by and between the parties hereto as follows:
1. IN GENERAL
The Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Fund with respect to the investment of the assets of
the Fund and to supervise and arrange the purchase and sale of assets held in
the investment portfolio of the Trust. The Adviser may delegate any or all of
its responsibilities to one or more sub-advisers or administrators, subject to
the approval of the Board of Trustees of the Trust. Such delegation shall not
relieve the Adviser of its duties and responsibilities hereunder.
2. DUTIES AND OBLIGATIONS OF THE ADVISER WITH RESPECT TO INVESTMENTS OF
ASSETS OF THE FUND
(a) Subject to the succeeding provisions of this paragraph and subject to
the direction and control of the Trust's Board of Trustees, the Adviser shall
(i) act as investment adviser for and supervise and manage the investment and
reinvestment of the Fund's assets and in connection therewith have complete
discretion in purchasing and selling securities and other assets for the Fund
and in voting, exercising consents and exercising all other rights appertaining
to such securities and other assets on behalf of the Fund; and (ii) arrange for
the purchase and sale of securities and other assets held in the investment
portfolio of the Fund. Nothing contained herein shall be construed to restrict
the Fund's right to hire its own employees or to contract separately with EQSF
Advisers, Inc. or others to provide administrative services to the Fund,
including but not limited to, the calculation of net asset value of the Fund's
shares.
(b) In the performance of its duties under this Agreement, the Adviser
shall at all times use all reasonable efforts to conform to, and act in
accordance with, any requirements imposed by (i) the provisions of the
Investment Company Act of 1940, as amended (the "Act"), and of any rules or
regulations in force thereunder; (ii) any other applicable provisions of law;
(iii) the provisions of the Trust Instrument and By-Laws of the Trust, as such
documents are amended from time to time; (iv) the investment objective, policies
and restrictions applicable to the Fund as set forth in the Fund's Prospectus
(including its Statement of Additional Information) and (v) any policies and
determinations of the Board of Trustees of the Trust.
(c) The Adviser will seek to provide qualified personnel to fulfill its
duties hereunder and will bear all costs and expenses (including any overhead
and personnel costs) incurred in connection with its duties hereunder and shall
bear the costs of any salaries or trustees fees of any officers or trustees of
the Trust who are affiliated persons (as defined in the Act) of the Adviser.
Subject to the foregoing, the Fund shall be responsible for the payment of all
the Fund's other expenses, including (i) payment of the fees payable to the
Adviser under paragraph 4 hereof; (ii) organizational expenses; (iii) brokerage
fees and commissions; (iv) taxes; (v) interest charges on borrowing; (vi) the
cost of liability insurance or fidelity bond coverage for the Fund's officers
and employees, and trustees' and officers' errors and omissions insurance
coverage; (vii) legal, auditing, and accounting fees and expenses; (viii)
charges of the Fund's administrator, custodian, transfer agent and other service
providers; (ix) the Fund's pro rata portion of dues, fees and charges of any
trade association of which the Fund is a member; (x) the expenses of printing,
preparing and mailing proxies, stock certificates and reports, including the
Fund's prospectus and statements of additional information, and notices to
shareholders; (xi) filing fees for the registration or qualification of the Fund
and its shares under federal or state securities laws; (xii) the fees and
expenses involved in registering and maintaining registration of the Fund's
shares with the Securities and Exchange
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<PAGE>
Commission; (xiii) the expenses of holding shareholder meetings; (xiv) the
compensation, including fees, of any of the Trust's trustees, officers or
employees who are not affiliated persons of the Adviser; (xv) all expenses of
computing the Fund's net asset value per share, including any equipment or
services obtained solely for the purpose of pricing shares or valuing the Fund's
investment portfolio; (xvi) expenses of personnel performing shareholder
servicing functions and all other distribution expenses payable by the Fund;
(xvii) expenses of redemption of shares and (xviii) litigation and other
extraordinary or non-recurring expenses and other expenses properly payable by
the Fund.
(d) The Adviser shall give the Fund the benefit of its best judgment and
effort in rendering services hereunder, but neither the Adviser nor any of its
officers, directors, employees, agents or controlling persons shall be liable
for any act or omission or for any loss sustained by the Fund in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this agreement, provided, however, that the foregoing shall not constitute
a waiver of any rights which the Fund may have which may not be waived under
applicable law.
(e) Nothing in this Agreement shall prevent the Adviser or any director,
officer, employee or other affiliate thereof from acting as investment adviser
for any other person, firm or corporation, or from engaging in any other lawful
activity, and shall not in any way limit or restrict the Adviser or any of its
directors, employees or agents from buying, selling or trading any securities
for its or their own accounts or for the accounts of others for whom it or they
may be acting.
3. PORTFOLIO TRANSACTIONS
In the course of the Adviser's execution of portfolio transactions for the
Fund, it is agreed that the Adviser shall employ securities brokers and dealers
which, in its judgment, will be able to satisfy the policy of the Fund to seek
the best execution of its portfolio transactions at reasonable expenses. For
purposes of this Agreement, "best execution" shall mean prompt, efficient and
reliable execution at the most favorable price obtainable. Under such conditions
as may be specified by the Trust's Board of Trustees in the interest of its
shareholders and to ensure compliance with applicable law and regulations, the
Adviser may (a) place orders for the purchase or sale of the Fund's portfolio
securities with its affiliates, M.J. Whitman, Inc. and M.J. Whitman Senior Debt
Corp.; (b) pay commissions to brokers other than its affiliates which are higher
than might be charged by another qualified broker or obtain brokerage and/or
research services considered by the Adviser to be useful or desirable in the
performance of its duties hereunder and for the investment management of other
advisory accounts over which it or its affiliates exercise investment
discretion; and (c) consider sales by brokers (other than its affiliated
distributor) of shares of the Fund and any other mutual fund for which it or its
affiliates act as investment adviser, as a factor in its selection of brokers
and dealers for the Fund's portfolio transactions.
4. COMPENSATION OF THE ADVISER
(a) The Fund agrees to pay to the Adviser out of the Fund's assets and the
Adviser agrees to accept as full compensation for all services rendered by or
through the Adviser a fee computed daily and payable monthly in arrears an
amount equal to 1/12 of .90% of the Fund's daily average net assets for such
month. For any period less than a month during which this Agreement is in
effect, the fee shall be prorated according to the proportion which such period
bears to a full month of 28, 29, 30 or 31 days, as the case may be.
(b) For purposes of this Agreement, the net assets of the Fund shall be
calculated pursuant to the procedures adopted by resolutions of the Trustees of
the Trust for calculating the net asset value of the Fund's shares.
5. INDEMNITY
(a) The Fund hereby agrees to indemnify the Adviser and each of the
Adviser's directors, officers, employees, and agents (including any individual
who serves at the Adviser's request as director,
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<PAGE>
officer, partner, trustee or the like of another corporation) and controlling
persons (each such person being an "indemnitee") against any liabilities and
expenses, including amounts paid in satisfaction of judgements, in compromise or
as fines and penalties, and counsel fees (all as provided in accordance with
applicable corporate law) reasonably incurred by such indemnitee in connection
with the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or investigative body
which he may be or may have been involved as a party or otherwise or with which
he may have been threatened, while acting in any capacity set forth above in
this paragraph or thereafter by reason of his having acted in any such capacity,
except with respect to any matter as to which he shall have been adjudicated not
to have acted in good faith in the reasonable belief that his action was in the
best interest of the Fund and furthermore, in the case of any criminal
proceeding, so long as he had no reasonable cause to believe that the conduct
was unlawful, provided, however, that (1) no indemnitee shall be indemnified
hereunder against any liability to the Fund or its shareholders or any expense
of such indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith,
(iii) gross negligence (iv) reckless disregard of the duties involved in the
conduct of his position (the conduct referred to in such clauses (i) through
(iv) being sometimes referred to herein as "disabling conduct"), (2) as to any
matter disposed of by settlement or a compromise payment by such indemnitee,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless there has been a
determination that such settlement or compromise is in the best interests of the
Fund and that such indemnitee appears to have acted in good faith in the
reasonable belief that his action was in the best interest of the Fund and did
not involve disabling conduct by such indemnitee and (3) with respect to any
action, suit or other proceeding voluntarily prosecuted by any indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such indemnitee was authorized by a majority
of the full Board of the Trust. Notwithstanding the foregoing, the Fund shall
not be obligated to provide such indemnification (i) to the extent such
provision would waive any right which the Fund cannot lawfully waive or (ii)
with respect to any obligation, liability or expense of any other series of
shares of the Trust.
(b) The Fund shall make advance payments in connection with the expenses
of defending any action with respect to which indemnification might be sought
hereunder if the Fund receives a written affirmation of the indemnitee's good
faith belief that the standard of conduct necessary for indemnification has been
met and a written undertaking to reimburse the Fund unless it is subsequently
determined that he is entitled to such indemnification and if the trustees of
the Trust determine that the facts then known to them would not preclude
indemnification. In addition, at least one of the following conditions must be
met: (A) the indemnitee shall provide a security for his undertaking, (B) the
Fund shall be insured against losses arising by reason of any lawful advances,
or (C) a majority of a quorum of trustees of the Trust who are neither
"interested persons" of the Trust (as defined in Section 2(a)(19) of the Act)
nor parties to the proceeding ("Disinterested Non-Party Trustees") or an
independent legal counsel in a written opinion, shall determine based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
(c) All determinations with respect to indemnification hereunder shall be
made (1) by a final decision on the merits by a court or other body before whom
the proceeding was brought that such indemnitee is not liable by reason of
disabling conduct or, (2) in the absence of such a decision, by (i) a majority
vote of a quorum of the Disinterested Non-Party Trustees of the Trust, or (ii)
if such a quorum is not obtainable or even, if obtainable, if a majority vote of
such quorum so directs, independent legal counsel in a written opinion.
The rights accruing to any indemnitee under these provisions shall not
exclude any other right to which he may be lawfully entitled.
6. DURATION AND TERMINATION
This Agreement shall become effective upon the date hereof and shall
continue in effect for a period of two years and thereafter from year to year,
but only so long as such continuation is specifically approved at least annually
in accordance with the requirements of the Act.
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<PAGE>
This Agreement may be terminated by the Adviser at any time without penalty
upon giving the Fund sixty days written notice (which may be waived by the Fund)
and may be terminated by the Fund at any time without penalty upon giving the
Adviser sixty days notice (which notice may be waived by the Adviser), provided
that such termination by the Fund shall be directed or approved by the vote of a
majority of the Trustees of the Trust in office at the time or by the vote of
the holders of a "majority of the voting securities" (as defined in the Act) of
the Fund at the time outstanding and entitled to vote. This Agreement shall
terminate automatically in the event of its assignment (as "assignment" is
defined in the Act and the rules thereunder).
It is understood and hereby agreed that the name "Third Avenue" and any
associated logo and mask are the property of the Adviser for copyright and other
purposes. The Fund further agrees that the name "Third Avenue" may freely be
used by the Adviser for other investment companies, entities or products. The
Fund further agrees that, in the event that the Adviser shall cease to act as
investment adviser to the Fund, the Fund shall promptly take all necessary and
appropriate action to change its name to names which do not include the words
"Third Avenue"; provided, however, that the Fund may continue to use the words
"Third Avenue" if the Adviser consents in writing to such use.
7. NOTICES
Any notice under this Agreement shall be in writing to the other party at
such address as the other party may designate from time to time for the receipt
of such notice and shall be deemed to be received on the earlier of the date
actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid.
8. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of New York for contracts to be performed entirely therein and in accordance
with the applicable provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers, all as of the day and the year
first above written.
[NAME OF FUND]
By
---------------------------
Name:
Title:
EQSF ADVISERS, INC.
By
---------------------------
Name:
Title:
<PAGE>
PRELIMINARY COPY
PROXY
THIRD AVENUE VALUE FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 24, 2000
The undersigned, revoking all proxies heretofore given, hereby appoints
Martin J. Whitman and David M. Barse and each of them, with power of
substitution, to represent the undersigned and to vote all of the Fund shares of
the undersigned at the Special Meeting of Shareholders to be held on May 24,
2000 at 11:00 a. m., at Four Times Square, 37th Floor, New York, NY.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE
FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3,
AND 4, INCLUDING A VOTE FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS.
IF NO SPECIFICATIONS ARE MADE, THE PROXY WILL BE VOTED FOR ITEMS 1, 2,
3, AND 4. THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
1. To approve changing the Third Avenue Value Fund's investment restrictions
so that they will be consistent with the investment restrictions of the
other two funds in the Trust.
| | FOR | | AGAINST | | ABSTAIN
2. To elect ten (10) Trustees to serve until the next special meeting of the
Trust, if any, and until the election and qualification of their
successors.
| | FOR all nominees listed below | | WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees
listed below)
(INSTRUCTION: To withhold authority to vote for any nominee strike a line
through the nominee's name in the list below)
Phyllis W. Beck Marvin Moser Martin Shubik
Lucinda Franks Donald Rappaport Charles C. Walden
Gerald Hellerman Myron M. Sheinfeld Barbara. Whitman
Martin J. Whitman
(BACK COVER OF PROXY)
<PAGE>
PRELIMINARY COPY
3. To ratify the selection of PricewaterhouseCoopers as independent
accountants for the Fund for the fiscal year ending October 31, 2000.
| | FOR | | AGAINST | | ABSTAIN
4. To transact such other business as may properly come before the meeting
and/or any adjournments thereof.
| | FOR | | AGAINST | | ABSTAIN
5. To approve a new Investment Advisory Agreement between the Fund and its
current adviser, EQSF Advisers, Inc.
| | FOR | | AGAINST | | ABSTAIN
NOTE: When shares are held by joint tenants, both must sign. Persons signing as
Executor, Administrator, Trustee, etc. should so indicate. Please sign exactly
as the name appears on this card. If signing on behalf of a corporation, please
sign the full corporate name and your name and indicate your title. If you are a
partner signing for a partnership, please sign the partnership name and your
name.
DATE:_____________________, 2000
--------------------------------
Signature
--------------------------------
Signature (if held jointly)
PLEASE VOTE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Back of Proxy
<PAGE>
PRELIMINARY COPY
PROXY
THIRD AVENUE SMALL-CAP VALUE FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 24, 2000
The undersigned, revoking all proxies heretofore given, hereby appoints
Martin J. Whitman and David M. Barse and each of them, with power of
substitution, to represent the undersigned and to vote all of the Fund shares of
the undersigned at the Special Meeting of Shareholders to be held on May 24,
2000 at 11:00 a. m., at the offices of the Fund, 767 Third Avenue, 5th Floor,
New York, NY 10017-2023.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE
FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3,
AND 4, INCLUDING A VOTE FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS.
IF NO SPECIFICATIONS ARE MADE, THE PROXY WILL BE VOTED FOR ITEMS 1, 2,
3, AND 4. THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
1. To elect ten (10) Trustees to serve until the next special meeting of the
Trust, if any, and until the election and qualification of their
successors.
| | FOR all nominees listed below | | WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees
listed below)
(INSTRUCTION: To withhold authority to vote for any nominee strike a line
through the nominee's name in the list below)
Phyllis W. Beck Marvin Moser Martin Shubik
Lucinda Franks Donald Rappaport Charles C. Walden
Gerald Hellerman Myron M. Sheinfeld Barbara. Whitman
Martin J. Whitman
2. To ratify the selection of PricewaterhouseCoopers as independent
accountants for the Fund for the fiscal year ending October 31, 2000.
| | FOR | | AGAINST | | ABSTAIN
(BACK COVER OF PROXY)
<PAGE>
PRELIMINARY COPY
3. To approve a new Investment Advisory Agreement between the Fund and its
current adviser, EQSF Advisers, Inc.
| | FOR | | AGAINST | | ABSTAIN
4. To transact such other business as may properly come before the meeting
and/or any adjournments thereof.
| | FOR | | AGAINST | | ABSTAIN
NOTE: When shares are held by joint tenants, both must sign. Persons signing as
Executor, Administrator, Trustee, etc. should so indicate. Please sign exactly
as the name appears on this card. If signing on behalf of a corporation, please
sign the full corporate name and your name and indicate your title. If you are a
partner signing for a partnership, please sign the partnership name and your
name.
DATE:_____________________, 2000
--------------------------------
Signature
--------------------------------
Signature (if held jointly)
PLEASE VOTE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Back of Proxy
<PAGE>
PRELIMINARY COPY
PROXY
THIRD AVENUE REAL ESTATE VALUE FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 24, 2000
The undersigned, revoking all proxies heretofore given, hereby appoints
Martin J. Whitman and David M. Barse and each of them, with power of
substitution, to represent the undersigned and to vote all of the Fund shares of
the undersigned at the Special Meeting of Shareholders to be held on May 24,
2000 at 11:00 a. m., at the offices of the Fund, 767 Third Avenue, 5th Floor,
New York, NY 10017-2023.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE
FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3,
and 4, INCLUDING A VOTE FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS.
IF NO SPECIFICATIONS ARE MADE, THE PROXY WILL BE VOTED FOR ITEMS 1, 2,
3, and 4. THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
1. To elect ten (10) Trustees to serve until the next special meeting of the
Trust, if any, and until the election and qualification of their
successors.
| | FOR all nominees listed below | | WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees
listed below)
(INSTRUCTION: To withhold authority to vote for any nominee strike a line
through the nominee's name in the list below)
Phyllis W. Beck Marvin Moser Martin Shubik
Lucinda Franks Donald Rappaport Charles C. Walden
Gerald Hellerman Myron M. Sheinfeld Barbara. Whitman
Martin J. Whitman
2. To ratify the selection of PricewaterhouseCoopers as independent
accountants for the Fund for the fiscal year ending October 31, 2000.
| | FOR | | AGAINST | | ABSTAIN
(BACK COVER OF PROXY)
<PAGE>
PRELIMINARY COPY
3. To approve a new Investment Advisory Agreement between the Fund and its
current adviser, EQSF Advisers, Inc.
| | FOR | | AGAINST | | ABSTAIN
4. To transact such other business as may properly come before the meeting
and/or any adjournments thereof.
| | FOR | | AGAINST | | ABSTAIN
NOTE: When shares are held by joint tenants, both must sign. Persons signing as
Executor, Administrator, Trustee, etc. should so indicate. Please sign exactly
as the name appears on this card. If signing on behalf of a corporation, please
sign the full corporate name and your name and indicate your title. If you are a
partner signing for a partnership, please sign the partnership name and your
name.
DATE:_____________________, 2000
--------------------------------
Signature
--------------------------------
Signature (if held jointly)
PLEASE VOTE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Back of Proxy
