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:
[ ] Preliminary Proxy Statement
[_] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
Third Avenue Variable Series 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 Shareholder,
I would like to notify you of a special meeting of shareholders of the
Third Avenue Value Portfolio of the Third Avenue Variable Series Trust, 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 the election of the Board of Trustees, since the
Trustees were elected by the sole shareholder at the time of the creation of the
Trust and have not been previously elected by shareholders. We are also seeking
to ratify the selection of auditors for the Fund. The last proposal seeks
approval of an "assignment" of the Investment Advisory Agreement with the Fund's
adviser 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 and the Investment Advisory Agreement will remain exactly the same as
the current Investment Advisory Agreement. I will continue to act as portfolio
manager of the Fund and in fact will be entering into a five-year employment
contract with the Fund's adviser.
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
1-800-443-1021. 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,
/s/ MARTIN J. WHITMAN
- ---------------------
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 the Third Avenue Value
Portfolio (the "Fund") of Third Avenue Variable Series Trust (the "Trust"), a
Delaware business trust, will be held at Four Times Square, 38th Floor, New
York, New York 10036 on May 24, 2000 at 11:00 a.m. New York time for the
following purposes:
1. To elect ten (10) Trustees to serve until the next meeting of shareholders,
if any, and until the election and qualification of their successors.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund for the fiscal year ending December 31, 2000.
3. To approve a new Investment Advisory Agreement between the Fund and its
current adviser, EQSF Advisers, Inc., in connection with a proposed change
of control of EQSF Advisers, Inc.
4. 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,
David M. Barse
PRESIDENT
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 Fund to ask them to vote
on some important proposals. These proposals include the election of the
Board of Trustees, the ratification of the auditors of the financial
statements of the Fund and the approval of a new Investment Advisory
Agreement with the adviser of the Fund on the same terms as the existing
agreement. 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 changes between that contract and
the existing one?
A: The 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 Agreement 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 Fund. Mr. Whitman plans to
remain with the Fund and the Adviser in his current capacities for the
indefinite future and will be entering into a five-year employment agreement
with the Adviser.
Q: Why are shareholders electing Trustees to the Board when the Trustees already
serve in that capacity?
A: The Trustees were elected by the sole shareholder at the time of the
formation of the Trust. Management desires that current shareholders elect
all present members of the Board of Trustees.
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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2
<PAGE>
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 the Third Avenue
Value Portfolio (the "Fund") of the Third Avenue Variable Series 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 Fund (the
"Meeting"), to be held at Four Times Square, 38th 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. Proxies may 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 the Fund
represented thereby will be voted in accordance with the instructions marked on
the proxy. To the extent instructions are not marked, executed proxies will be
voted FOR proposals 1, 2 and 3 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 772,628 shares of the Fund entitled to vote. Each share represents a
transferable unit of beneficial interest in the Fund and entitles the holder
thereof to one vote on all matters which come before the Meeting.
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 the
Investment Advisory Agreement. 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 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.
3
<PAGE>
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 Fund for the
fiscal year ended December 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
ELECTION OF TRUSTEES
Pursuant to the Agreement and Declaration of Trust 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.
<TABLE>
<CAPTION>
POSITION(S) SHARES
HELD WITH PRINCIPAL OCCUPATION OWNED
NAME & ADDRESS AGE REGISTRANT DURING PAST 5 YEARS BENEFICIALLY
---------------------- ----- --------------- ----------------------------------- ------------
<S> <C> <C> <C> <C>
Phyllis W. Beck 73 Trustee An Associate Judge of the Superior 0
GSB Bldg. Suite 800 Court of Pennsylvania; Trustee or
City Line & Belmont Ave Director of the Third Avenue
Bala Cynwald, PA Trust or its predecessor (Nov.
19004-1611 1992-Present); Trustee of Trust
since inception.
Lucinda Franks 53 Trustee Journalist (1969-Present); Author; 0
64 East 86th Street Winner of the 1971 Pulitzer Prize for
New York, NY 10028 Journalism; Trustee of the Third
Avenue Trust (Feb. 1998--Present);
Trustee of Trust since inception.
Gerald Hellerman 62 Trustee Managing Director of Hellerman 0
10965 Eight Bells Lane Associates, a financial and
Columbia, MD 21044 corporate consulting firm.
Trustee or Director of the Third
Avenue Trust or its predecessor
(Sept. 1993-Present): Trustee of Trust
since inception.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) SHARES
HELD WITH PRINCIPAL OCCUPATION OWNED
NAME & ADDRESS AGE REGISTRANT DURING PAST 5 YEARS BENEFICIALLY
---------------------- ----- --------------- ----------------------------------- ------------
<S> <C> <C> <C> <C>
Marvin Moser, M.D. 76 Trustee Trustee of Trudeau Institute, a 0
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 or Director of the Trust
or its predecessor (Nov. 1994-Present):
Trustee of Trust since inception.
Donald Rappaport 73 Trustee Private investor and consultant 0
1619 31st Street, N.W., (1987-May 1997 and May
Washington, D.C. 20007 1999-Present); Avenue Trust Financial
and Chief Information Officer for
the U.S. Department of Education\
(May 1997 to May 1999); Trustee or
Director of the Third Avenue Trust or
its predecessor (November 1991- May 1997
and June 1999-Present); Trustee of Trust
since inception.
Myron M. Sheinfeld 70 Trustee Counsel (12/96-Present) to and 0
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 or Director of the
Third Avenue Trust or its predecessor
(Nov. 1990-Present); Trustee of Trust
since its inception.
Martin Shubik 73 Trustee Seymour H. Knox Professor (1975-Present) 0
Yale University of Mathematical and Institutional
Dept. of Economics Economics, Yale University; Trustee or
Box 2125, Yale Station Director of the Third Avenue Trust
New Haven, CT 06520 or its predecessor (Nov. 1990-Present);
Trustee of Trust since its inception.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) SHARES
HELD WITH PRINCIPAL OCCUPATION OWNED
NAME & ADDRESS AGE REGISTRANT DURING PAST 5 YEARS BENEFICIALLY
---------------------- ----- --------------- ------------------------------------------------------
<S> <C> <C> <C> <C>
Charles C. Walden 55 Trustee Executive Vice President- 0
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 or Director of the
Third Avenue Trust or its predecessor
(May 1996-Present); Trustee of Trust
since inception.
Barbara Whitman* 41 Trustee Registered Securities Repre- 0
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 the Third Trust
(September 1997-Present); Trustee of
Trust since inception.
Martin J. Whitman* 75 Trustee Chairman and CEO (3/90-Present), 0
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), 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
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) SHARES
HELD WITH PRINCIPAL OCCUPATION OWNED
NAME & ADDRESS AGE REGISTRANT DURING PAST 5 YEARS BENEFICIALLY
---------------------- ----- --------------- ---------------------------------- ---------------
<S> <C> <C> <C> <C>
University; Director (8/90-Present),
Chairman (8/90-7/99), 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 and CEO of the Third Avenue
Trust or its predecessor (Nov.
1990-Present); Chartered Financial
Analyst.Chairman of the Board and
Trustee of the Trust since 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, $17,437 in such fees and expenses for the year ended December 31,
1999. Trustees do not receive any pension or retirement benefits from the Trust.
The Board of Trustees held two meetings during the year ended December 31, 1999.
For the year ended December 31, 1999, the aggregate amount of compensation
paid to each Trustee by the Trust is listed below.
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION TOTAL COMPENSATION
FROM REGISTRANT FOR FROM REGISTRANT AND
YEAR ENDED FUND COMPLEX PAID
NAME AND POSITION HELD DECEMBER 31, 1999* TO TRUSTEES*
----------------------- ------------------------ --------------------
<S> <C> <C>
Phyllis W. Beck, Trustee $ 0 $ 0
Lucinda Franks, Trustee $ 1,500 $ 34,499
Gerald Hellerman, Trustee $ 1,500 $ 33,333
Marvin Moser, M.D., Trustee $ 3,000 $ 36,333
Donald Rappaport, Trustee $ 1,500 $ 13,500
Myron M. Sheinfeld, Trustee $ 3,000 $ 34,833
Martin Shubik, Trustee $ 3,000 $ 36,333
Charles C. Walden, Trustee $ 3,000 $ 36,333
Barbara Whitman, Trustee $ 0 $ 0
Martin J. Whitman, Chairman $ 0 $ 0
and Chief Executive Officer
</TABLE>
7
<PAGE>
* Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $937 from Registrant and $13,167 from Fund Complex for all
Trustees as a group. Amount for Fund Complex 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 Fund has 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 Fund, the
distribution of the Fund and the maintenance of the Fund's financial records. In
addition to EQSF Advisers, Inc. acting as the Fund's Investment Adviser, it also
acts as the Fund's Administrator and provides all other administrative services
to the Fund other than those relating to the investment portfolio of the Fund,
the distribution of the Fund and the maintenance of the Fund's 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 Fund paid $8,800
in fees to the Adviser for these services. 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, the Fund
paid approximately $9,062 in brokerage commissions to MJW (constituting 79.46%
of all commissions paid by the Fund).
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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),
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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.
Kerri Weltz 32 Assistant Assistant Treasurer (5/96 to Present),
767 Third Avenue Treasurer Controller (1/96 to Present) and Assistant
New York, NY 10017-2023 Controller (1/93 to 12/95) for the Trust;
Controller (1/96 to Present) and Assistant
Controller (1/93 to 12/95) of EQSF
Advisers, Inc.; Assistant Treasurer and
Controller (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) and
Assistant Controller (1/93 to 5/96) 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.
</TABLE>
9
<PAGE>
PROPOSAL NO. 2
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
Fund. PricewaterhouseCoopers has served as the Fund's independent accountants
since the Fund's inception. The Fund has been informed that neither
PricewaterhouseCoopers nor any of its partners has any direct financial interest
or any material indirect financial interest in the Fund, nor has had any
connection with the Fund 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 Fund, 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
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. 3
TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT 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 the Fund pursuant to Investment
Advisory Agreements dated as of September 1, 1999 (the "Advisory Agreement").
The Advisory Agreement was initially approved on the dates listed above by the
sole shareholder of the Fund. It 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 Advisory Agreement continues
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 Advisory Agreement 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 Advisory Agreement, 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.
Under the Advisory Agreement, the Funds pay the Adviser a monthly fee of
1/12 of .90% (an annual fee of .90%) on the average daily net assets in the Fund
during the prior month. During the fiscal year ended on December 31, 1999, the
Fund incurred investment advisory fees to the Adviser of $4,011.
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 the Fund exceeds 1.3% 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
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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 December 31, 1999, no fees were reimbursed to the
Adviser by the Fund. The Adviser waived fees of $4,011 and reimbursed $142,305
for the Fund, for the fiscal year ended December 31, 1999.
The following are the executive officers and directors of the Adviser, all
of whom are affiliated persons of the Trust and Adviser:
<TABLE>
<CAPTION>
CAPACITY WITH FUNDS CAPACITY WITH ADVISER
------------------- ---------------------
<S> <C> <C>
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
Kerri Weltz Assistant Treasurer Assistant Treasurer
Barbara Whitman Trustee Director
</TABLE>
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 approximately 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.
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 the Fund are being asked to approve a new Investment Advisory Agreement with
the Adviser to take effect upon such revocation.
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. No changes are
proposed in the terms of the Advisory Agreement.
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On March 27, 2000 the Board of Trustees, including the Independent
Trustees, unanimously approved the deemed transfer of the Advisory Agreement and
directed that it be submitted to the shareholders for approval at a Special
Meeting of Shareholders called for that purpose.
In evaluating the change of control and the Advisory Agreement, 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 the Fund and related
funds. The Board noted that the change of control 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 Fund, including his entrance
into a five-year employment agreement with the Adviser, described above.
With respect to the approval of the Advisory Agreement, the Board was
provided with additional information prepared specially to assist it in its
consideration of this issue. The Adviser had previously prepared a report
evaluating the Adviser's fee and the Fund's 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 Fund's current
expenses, advisory fee, performance and other indicators to comparable funds
having similar investment approaches and objectives to the Fund.
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 the 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 Fund's pro
forma expense ratio to the expense ratios of comparable mutual funds; (3) the
costs borne by the Adviser in providing investment advisory and management
services to the Fund; (4) the historical and anticipated profits of the Adviser
in providing services to the Fund; and (5) the benefits the Adviser may have
indirectly received from its relationship with the Fund.
In reaching its decision to approve the Advisory Agreement, the Independent
Trustees noted that the Fund was new, but that the historical performance of the
fund of which it is a clone under the Adviser's direction has been highly
satisfactory and that that fund's historical total expense ratios had been below
average.
In the event that shareholders do not approve the change of control and the
Advisory Agreements, Mr. Whitman will not revoke his proxy and the Advisory
Agreement 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 29, 2000, to the knowledge of the management of the Fund only IDS
Life Insurance Company 1SV, which beneficially owned 383,132 shares (53.98% of
the outstanding shares) and IDS Life Insurance Company 2SV, which beneficially
owned 314,366 shares (44.29% of the outstanding shares), in each case on behalf
of holders of variable annuity contracts, beneficially owned more than 5% of the
outstanding shares of the Fund.
The officers and Trustees of the Fund do not own any shares of the 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.
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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 President 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,
David M. Barse
President
Dated: April 15, 2000
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PROXY
THIRD AVENUE VALUE PORTFOLIO
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, 38th Floor, New York, NY 10036.
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 TRUSTEES. 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 meeting of shareholders,
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 nominee
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 LLP as independent
accountants for the Fund for the fiscal year ending December 31, 2000.
// FOR // AGAINST // ABSTAIN
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
<PAGE>
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.
