<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 27, 1998
REGISTRATION NO. 033-10675 AND 811-04935
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 16 [x]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
AMENDMENT NO. 19 [x]
------------------------
FIRST EAGLE TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
------------------------
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(212) 698-3000
------------------------
ROBERT BRUNO
ARNHOLD AND S. BLEICHROEDER, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------
COPY TO:
PAUL S. SCHREIBER, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
------------------------
It is proposed that this filing will become effective (check appropriate
box):
[ ] immediately upon filing pursuant to paragraph (b);
[x] on March 2, 1998 pursuant to paragraph (b);
[ ] 60 days after filing pursuant to paragraph (a)(i);
[ ] on (date) pursuant to paragraph (a)(i);
[ ] 75 days after filing pursuant to paragraph (a)(ii);
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
------------------------
PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT
HAS PREVIOUSLY REGISTERED AN INDEFINITE NUMBER OF SHARES OF ITS COMMON STOCK,
PAR VALUE $.01 PER SHARE. THE REGISTRANT LAST FILED A RULE 24f-2 NOTICE ON
DECEMBER 30, 1997.
________________________________________________________________________________
<PAGE>
<PAGE>
This Post-Effective Amendment No. 16 to the Registration Statement of the
First Eagle Fund of America, Inc. is being filed pursuant to Rule 414(d) and
Rule 485(b) under the Securities Act of 1933 as amended for the purpose of
adopting in its entirety Post-Effective Amendment No. 16 under the Securities
Act of 1933 and Amendment No. 19 under the Investment Company Act of 1940 as the
Registration Statement of the First Eagle Trust.
This Post-Effective Amendment will become effective at the start of
business on March 2, 1998, which is the first business date after the Agreement
and Plan of Conversion and Termination will be effective, and the First Eagle
Fund of America, Inc. and the First Eagle International Fund, Inc. will each be
reorganized as a separate series of the First Eagle Trust.
The First Eagle Trust hereby affirmatively adopts in its entirety the
Registration Statement (File Nos. 033-10675 and 811-0935) of the First Eagle
Fund of America, Inc.
<PAGE>
<PAGE>
PROSPECTUS
March 2, 1998
FIRST EAGLE TRUST
FIRST EAGLE TRUST (the 'Trust') is a registered investment company, a
'mutual fund,' that offers investors two investment alternatives, First Eagle
Fund of America and First Eagle International Fund, each a separate series or
portfolio of the Trust.
FIRST EAGLE FUND OF AMERICA is an open-end, non-diversified mutual fund
whose investment objective is to achieve capital appreciation. First Eagle Fund
of America will seek to achieve its objective by investing primarily in domestic
stocks and to a lesser extent in debt and foreign equity securities.
FIRST EAGLE INTERNATIONAL FUND is an open-end, non-diversified mutual fund
whose investment objective is to achieve capital appreciation. First Eagle
International Fund will seek to achieve its objective by investing primarily in
foreign stocks and to a lesser extent in debt and domestic equity securities.
First Eagle Fund of America and First Eagle International Fund (the
'Funds') invest in securities of companies that appear to be undervalued
relative to their overall financial and managerial strength. There can be no
assurance that the Funds' objectives will be achieved.
This Prospectus provides information about the Funds that a prospective
investor should know before investing. Additional information has been filed
with the Securities and Exchange Commission in a Statement of Additional
Information, dated March 1, 1998, which information is incorporated herein by
reference and may be obtained without charge by writing to the Funds' Transfer
Agent, BISYS Fund Services, Inc., P.O. Box 182497, Columbus, Ohio 43218-2497, or
by calling (800) 451-3623.
------------------------
Investors are urged to read this Prospectus and retain it
for future reference.
------------------------
ARNOLD AND S. BLEICHROEDER ADVISERS, INC.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<PAGE>
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Highlights....................................................... 3
Summary of Expenses.............................................. 6
Financial Highlights............................................. 7
Investment Objectives and Policies and Risk Factors.............. 9
Management of the Funds.......................................... 14
Portfolio Transactions and Brokerage............................. 16
Net Asset Value.................................................. 17
How to Purchase Shares........................................... 18
How to Redeem Shares............................................. 20
Distributions and Taxes.......................................... 22
Organization and Description of Stock............................ 25
How the Funds Calculate Performance.............................. 25
Reports to Shareholders.......................................... 26
Custodian and Transfer and Dividend Disbursing Agent............. 26
</TABLE>
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRUST, THE ADVISER OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE TRUST, BY ITS ADVISER OR BY ITS
DISTRIBUTOR TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
2
<PAGE>
<PAGE>
HIGHLIGHTS
INVESTMENT OBJECTIVES
First Eagle Fund of America is an open-end, non-diversified mutual fund
whose investment objective is to achieve capital appreciation. It seeks to
achieve its objective by investing primarily in domestic stocks and to a lesser
extent in debt and foreign equity securities. Under normal circumstances, at
least 65% of First Eagle Fund of America's assets will be invested in domestic
securities.
First Eagle International Fund is an open-end, non-diversified mutual fund
whose investment objective is to achieve capital appreciation. It seeks to
achieve its objective by investing primarily in foreign stocks and to a lesser
extent in debt and domestic equity securities. Under normal circumstances, at
least 65% of First Eagle International Fund's assets will be invested in foreign
securities.
Arnhold and S. Bleichroeder Advisers, Inc. (the 'Adviser') invests the
assets of the Funds in securities of companies that appear to be undervalued
relative to their overall financial and managerial strength. The Adviser follows
the investment strategy of investing in securities with 'intrinsic values' which
are not generally recognized by the market. There can be no assurance that the
Funds' objectives will be achieved. See 'Investment Objectives and Policies and
Risk Factors.'
RISK FACTORS
First Eagle International Fund invests in securities of foreign companies
and governments which involve certain risks including the possibility of
currency exchange rate fluctuations, revaluation of currencies, less publicly
available information about foreign companies, different accounting, auditing
and financial reporting standards, less stringent securities regulation,
non-negotiable brokerage commissions, different tax provisions, political or
social instability and war or expropriation. Moreover, foreign stock and bond
markets generally are not as developed or efficient as those in the United
States, and securities trading volume and liquidity can be less and price
volatility greater than in U.S. markets. Settlement of securities trades on
foreign markets often takes longer than in U.S. markets. These risks generally
are of greater concern in developing countries.
First Eagle Fund of America and First Eagle International Fund may purchase
or sell put and call options and may use financial and
3
<PAGE>
<PAGE>
currency futures contracts and other types of derivative transactions for
hedging purposes. The Funds may invest in securities on a when-issued basis,
lend their portfolio securities, enter into repurchase agreements, and engage in
short sales and arbitrage transactions. All these investment techniques and
instruments involve risks associated with such investments. The Funds may borrow
for securities purchases and for temporary or emergency purposes. Borrowing for
securities purchases is called leveraging.
As non-diversified mutual funds, the Funds may have a greater investment
concentration in some securities than a diversified mutual fund. See 'Investment
Objective and Policies and Risk Factors' in the Prospectus and 'Additional
Investment Information' in the Statement of Additional Information.
MANAGEMENT
The Adviser serves as the Funds' investment adviser and is compensated for
its services. First Eagle Fund of America pays the Adviser a monthly fee at the
annual rate of 1.00% of its average daily net assets for its services. First
Eagle International Fund pays the Adviser a monthly fee at the annual rate of
1.00% of its average daily net assets for its services. Arnhold and S.
Bleichroeder, Inc. provides shareholder liaison services to shareholders of both
Funds, which includes assistance with subscriptions, redemptions and other
shareholder questions and other services for which it receives an annual fee of
.25% of each Fund's average daily net assets, payable monthly. Arnhold and S.
Bleichroeder, Inc. serves as the Funds' Distributor. See 'Management of the
Funds.'
PURCHASE OF SHARES
Shares of the Funds may be purchased at their net asset value next
determined after receipt of an order in proper form with complete information.
Each of the Funds provides investors with the option of purchasing either Class
Y or Class C shares. Until March 2, 1998, the Funds issued only one class of
common stock, which is now called Class Y shares.
CLASS Y shares may be purchased at net asset value. There is no sales
charge on purchases of Class Y shares.
CLASS C shares may be purchased at net asset value and are subject to an
annual 0.75% Rule 12b-1 distribution fee and a one year contingent deferred
sales charge of 1.25%.
4
<PAGE>
<PAGE>
The current initial minimum investment is $2,500, except the initial
minimum investment for retirement plans and for employees of the Adviser and its
affiliates is $500. Existing shareholders may establish or may direct new
accounts with a minimum initial investment of $1,000.
All minimum investment amounts may be changed or waived by the Trust.
Shares of the Funds may be purchased by submitting a completed Account
Application and a check or money order payable to First Eagle Fund of America or
First Eagle International Fund to: First Eagle Trust, P.O. Box 182497, Columbus,
OH 43218-2497. See 'How to Purchase Shares.'
LIQUIDITY
Shares of the Funds may be redeemed at the net asset value next determined
after receipt of a redemption request. See 'How to Redeem Shares.'
DIVIDENDS AND REINVESTMENT
The Funds plan to pay dividends and distribute any net capital gains
annually. All dividends and capital gains distributions will be reinvested in
Shares of the respective Fund at net asset value, unless the stockholder elects
to receive dividends and distributions in cash. See 'Distributions and Taxes.'
5
<PAGE>
<PAGE>
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
------------------------------------------------------
CLASS Y CLASS C
-------------------------- --------------------------
FIRST EAGLE FIRST EAGLE FIRST EAGLE FIRST EAGLE
FUND OF INTERNATIONAL FUND OF INTERNATIONAL
AMERICA FUND AMERICA FUND
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Management fees*................ 1.00% 1.00% 1.00% 1.00%
12b-1 fees...................... None None .75% .75%
Service fees.................... .25% .25% .25% .25%
Other operating expenses........ .17% 1.05% .17% 1.05%
----- ----- --- ---
Total annual operating
expenses...................... 1.42% 2.30% 2.17% 3.05%
----- ----- --- ---
----- ----- --- ---
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
------------------------------------------------------
CLASS Y CLASS C
-------------------------- --------------------------
FIRST EAGLE FIRST EAGLE FIRST EAGLE FIRST EAGLE
FUND OF INTERNATIONAL FUND OF INTERNATIONAL
AMERICA FUND AMERICA FUND
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Maximum sales load.............. None None None None
Maximum deferred sales load as
percent of assets redeemed
within first year of
purchase...................... None None 1.25% 1.25%
Redemption fee.................. None None None None
Exchange fee.................... None None None None
</TABLE>
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and a redemption at the end of each time period.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
First Eagle Fund of America -- Class Y......... $ 14 $45 $ 78 $170
First Eagle Fund of America -- Class C......... $ 35 $68 $ 116 $250
First Eagle International Fund -- Class Y...... $ 23 $72 $ 123 $264
First Eagle International Fund -- Class C...... $ 43 $94 $ 160 $336
</TABLE>
The purpose of these tables is to assist the investor in understanding the
various costs and expenses that an investor in the Funds will bear directly or
indirectly. The percentages are based on the Funds' actual expenses for the
fiscal period ended October 31, 1997 adjusted for the lower investment
management fees currently in effect. See 'Management of the Funds' below and
'Adviser' in the Statement of Additional Information. The example should not be
considered a representation of future expenses which may be more or less than
those shown.
- ------------
* The Funds' investment advisory fees were reduced to the annual rate of
1.00% of average daily net assets on the close of business on February
27, 1998.
6
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP,
independent auditors whose report thereon appears in the Funds' Annual Reports
dated October 31, 1997. This information should be read in conjunction with the
financial statements, the notes thereto and the independent auditors' report
which appears in the Statement of Additional Information. Through February 28,
1998, the Funds only issued one class of common stock which is now called Class
Y shares.
FIRST EAGLE INTERNATIONAL FUND
FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIODS INDICATED
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE YEAR ENDED
JANUARY 1, 1997 TO DECEMBER 31,
OCTOBER 31, ---------------------
1997 1996 1995
------------------ ---------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period.............................................. $15.04 $13.38 $ 12.37
INCOME FROM INVESTMENT OPERATIONS
Net investment loss........................................................... (0.12) (0.16) (0.13)
Net gains (losses) on securities (both realized and unrealized)............... 1.25 2.29 1.57
------ ---------- ---------
Total from investment operations.......................................... 1.13 2.13 1.44
------ ---------- ---------
LESS DISTRIBUTIONS
Dividends (from net investment income)........................................ -- -- --
Distributions (from capital gains)............................................ -- (0.47) (0.43)
------ ---------- ---------
Total distributions....................................................... -- (0.47) (0.43)
------ ---------- ---------
Net asset value, end of period.................................................... $16.17 $15.04 $ 13.38
------ ---------- ---------
------ ---------- ---------
Total return*..................................................................... 7.5%'D'D' 15.9% 11.6%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)........................................... $36,320 $32,105 $22,421
Ratio of expenses to average net assets(1)........................................ 2.25%'D' 2.90% 3.10%
Ratio of net investment loss to average net assets................................ (1.0)%'D' (1.1)% (1.1)%
Portfolio turnover rate........................................................... 54% 101% 166%
Average commission rate paid on portfolio security purchases and sales
transactions(2)................................................................. $0.04 $0.03 --
<CAPTION>
APRIL 4, 1994**
THROUGH
DECEMBER 31,
1994
---------------
<S> <C>
Net asset value, beginning of period.............................................. $ 12.50
INCOME FROM INVESTMENT OPERATIONS
Net investment loss........................................................... (0.02)
Net gains (losses) on securities (both realized and unrealized)............... (0.11)
------
Total from investment operations.......................................... (0.13)
------
LESS DISTRIBUTIONS
Dividends (from net investment income)........................................ --
Distributions (from capital gains)............................................ --
------
Total distributions....................................................... --
------
Net asset value, end of period.................................................... $ 12.37
------
------
Total return*..................................................................... (1.0)%'D'D'
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)........................................... $20,152
Ratio of expenses to average net assets(1)........................................ 2.00%'D'
Ratio of net investment loss to average net assets................................ (0.3)%'D'
Portfolio turnover rate........................................................... 170%
Average commission rate paid on portfolio security purchases and sales
transactions(2)................................................................. --
</TABLE>
* Past performance is not predictive of future performance.
** Commencement of investment operations.
'D' Annualized.
'D'D' Total return not annualized.
(1) The Adviser has waived part of its fees for the period from January 1, 1997
to October 31, 1997. If such fees were not waived, the net investment loss
and expense ratio would have been $(.18) and 2.80%'D', respectively. In
addition, during the period from January 1, 1997 to October 31, 1997 and for
the year ended December 31, 1996, the Fund earned credits from the custodian
which reduced service fees incurred. If the credits are taken into
consideration, the expense ratios are 2.25%'D' and 2.90%, respectively.
(2) For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose the average commission rate per share for trades on
which commissions are charged.
Further information regarding First Eagle International Fund's performance
is contained in the annual report, a copy of which may be obtained without
charge.
7
<PAGE>
<PAGE>
FIRST EAGLE FUND OF AMERICA
FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIODS INDICATED
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value per share,
beginning of year........... $17.97 $16.28 $15.45 $16.53 $13.36 $12.35 $10.35 $14.04 $11.65 $ 9.17
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(loss)...................... (0.06) (0.04) (0.04) (0.12) (0.22) (0.15) 0.09 0.16 0.16 (0.03)
Net gains (losses) on
securities (both realized
and unrealized)............. 5.31 4.08 2.87 0.66 4.56 1.98 2.20 (2.34) 2.57 2.58
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations.................. 5.25 4.04 2.83 0.54 4.34 1.83 2.29 (2.18) 2.73 2.55
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net investment
income)..................... -- -- -- -- -- (0.08) (0.29) (0.11) -- (0.07)
Distributions (from capital
gains)...................... (2.63) (2.35) (2.00) (1.62) (1.17) (0.74) -- (1.40) (0.34) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions........... (2.63) (2.35) (2.00) (1.62) (1.17) (0.82) (0.29) (1.51) (0.34) (0.07)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
year........................ $20.59 $17.97 $16.28 $15.45 $16.53 $13.36 $12.35 $10.35 $14.04 $11.65
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total return*................. 31.0% 27.1% 21.6% 3.8% 35.2% 16.0% 22.7% (17.7)% 24.2% 28.0%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted).................... $254,438 $163,403 $134,350 $120,516 $107,344 $76,599 $74,279 $66,730 $83,620 $54,271
Ratio of expenses to average
assets(1)................... 1.7% 1.8% 1.9% 1.9% 2.9% 3.0% 2.0% 1.1% 2.0% 3.3%
Ratio of net investment income
(loss) to average net
assets...................... (0.3)% (0.2)% (0.3)% (0.7)% (1.5)% (1.0)% 0.8% 1.3% 1.3% (0.2)%
Portfolio turnover rate....... 98% 93% 81% 125% 141% 145% 92% 72% 52% 55%
Average commission rate paid
on portfolio security
purchases and sales
transactions(2)............. $0.05 $0.04 -- -- -- -- -- -- -- --
</TABLE>
* Past performance is not predictive of future performance.
(1) During the years ended October 31, 1997 and October 31, 1996, the Fund
earned credits from the custodian which reduce service fees incurred. If the
credits are taken into consideration, the ratio of expenses to average net
assets would remain at 1.7% and 1.8%, respectively.
(2) For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose the average commission rate per share for trades on
which commissions are charged.
Further information regarding First Eagle Fund of America's performance is
contained in the annual report, a copy of which may be obtained without charge.
8
<PAGE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
AND RISK FACTORS
FIRST EAGLE FUND OF AMERICA
The investment objective of First Eagle Fund of America is to seek capital
appreciation. First Eagle Fund of America seeks to achieve its investment
objective by pursuing a flexible investment strategy emphasizing investment in
domestic stocks and to a lesser extent debt and foreign equity securities. First
Eagle Fund of America intends to invest in equity securities, including common
stocks, preferred stocks, convertible securities and warrants, and in debt
securities of any maturity. First Eagle Fund of America may acquire debt
securities when the Adviser believes that those securities present significant
appreciation possibilities, pending investment in equity securities, or when
market conditions warrant a defensive strategy. First Eagle Fund of America may
purchase call and put options and sell covered call and covered put options on
equity or debt securities and on stock indices, and, solely for bona fide
hedging purposes, acquire positions in futures contracts and related options
traded on a commodities exchange or board of trade. Under normal circumstances,
at least 65% of First Eagle Fund of America's total assets will be invested in
domestic securities.
FIRST EAGLE INTERNATIONAL FUND
The investment objective of First Eagle International Fund is to seek
capital appreciation. First Eagle International Fund seeks capital appreciation
from a professionally managed portfolio of foreign stocks and to a lesser extent
debt and domestic equity instruments. The amount of First Eagle International
Fund's assets invested in equity and debt securities will vary depending on the
Adviser's assessment of market conditions. First Eagle International Fund offers
investors access to a geographically diverse portfolio, professional research
and analysis of issuers and worldwide markets, and the ability to invest in
foreign securities without having to make individual arrangements for brokers,
safekeeping of securities and foreign currency dealings. First Eagle
International Fund invests globally wherever the greatest opportunities exist in
a variety of markets, including Europe, Latin America, the Pacific Basin and to
a lesser extent the United States. Under normal circumstances, at least 65% of
First Eagle International Fund's total assets will be invested in securities of
foreign issuers, in at least three different countries.
9
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<PAGE>
THE FUNDS
Each of the Funds seeks to achieve its investment objective by investing in
securities that are undervalued in their respective trading markets relative to
their 'intrinsic value' as determined by the Adviser. The Adviser believes each
Fund's exposure to loss may be limited by investing part or all of its assets in
undervalued securities. A guiding principle in the Adviser's selection of
investments for the Funds' portfolios is the consideration of common stocks as
units of ownership in a business. Debt securities are considered if they are
thought to be more attractive than equity alternatives. The Adviser's evaluation
of prospective equity and debt investments generally will involve an analysis of
the issuer's overall financial and managerial strength as indicated by factors
such as cash flow, assets, earnings, market share, growth potential, stability
and managerial personnel. In addition to its analysis of a company's growth
potential, the Adviser also considers such factors as prospects for relative
economic growth among geographic areas, expected levels of inflation and
government policies influencing business conditions. The Adviser will consider
both large, well established and small, unseasoned issuers. Investment income is
of secondary importance in the selection of investments for the portfolios of
the Funds but will be considered in relation to the total return expected
thereon. The Funds may under certain circumstances invest in securities issued
by other investment companies. If the Funds invest in such securities, investors
may be subject to duplicate investment management or distribution fees.
The Funds are non-diversified investment companies, and as such each Fund's
assets may be invested in a limited number of issues. An investment in either
Fund may therefore entail greater risks than an investment in a diversified
investment company. There is no assurance that either Fund's investment
objective will be achieved, and the investment objective may be changed by the
Board of Trustees without the vote of a majority of each Fund's outstanding
voting securities.
SPECIAL SITUATIONS
Many investments of the Funds may be characterized as 'special situations.'
A special situation occurs when it appears that the market price of a particular
security has the potential to appreciate significantly because of a development
uniquely applicable to the issuer of that security, irrespective of general
business conditions or market movements. Special situations may arise from
liquidations, reorganizations, mergers, material litigation, technological
breakthroughs, new
10
<PAGE>
<PAGE>
management, policy changes or other developments. Special situations may involve
the risk that the anticipated development may occur later than expected or not
at all, and may not have the desired effect on the market price of the security.
DEBT SECURITIES
The Funds may invest in foreign and domestic money market instruments,
including commercial paper, certificates of deposit, bankers' acceptances and
other short-term debt obligations of foreign and domestic banks, provided those
obligations are of 'high quality,' as determined by an unaffiliated nationally
recognized statistical rating service, or are of comparable quality. The Funds
also may invest in corporate bonds of foreign and domestic issuers and
obligations issued or guaranteed by the U.S. Government, its instrumentalities,
or its agencies, or the government of any other nation ('fixed-income
securities'). Various factors affect the price of fixed-income securities,
including the rating associated with a particular issue, the level of risk
involved in various rated fixed-income securities, and the general level of
interest rates. The price of fixed-income securities generally fluctuates
inversely with interest rate movements.
The risk of loss because of default by issuers of high yield bonds is
significantly greater than other fixed-income securities because high yield
bonds are generally unsecured and often are subordinated to other creditors of
the issuer. Each Fund has no current intention of investing more than 5% of its
net assets in high yield bonds. An economic downturn or a sustained period of
rising interest rates could affect the ability of certain highly leveraged, high
risk issuers to service their debt obligations or to repay their obligations
upon maturity.
INVESTMENT IN FOREIGN SECURITIES
Investing in foreign equity and debt securities presents certain risks in
addition to those arising when investing in domestic securities. These risks
include the possibility of currency exchange rate fluctuations, revaluation of
currencies, less publicly available information about issuers, different
accounting, auditing and financial reporting standards, less stringent
securities regulation, non-negotiable brokerage commissions, different tax
provisions, political or social instability and war or expropriation. Moreover,
foreign stock and bond markets generally are not as developed and efficient as
those in the United States, and, therefore, the volume and liquidity in those
markets may be less, and the volatility of prices may be greater, than in U.S.
11
<PAGE>
<PAGE>
markets. Settlement of transactions on foreign markets may be delayed beyond
what is customary in U.S. markets. The Funds may invest in developing countries
considered to be emerging market countries by the World Bank. The risks
associated with investment in foreign securities are generally greater in
developing countries which may be subject to adverse political, social or
diplomatic developments. To attempt to limit the risks of investing in foreign
securities, the Funds may use hedging techniques.
CURRENCY FUTURES CONTRACTS/
FORWARD CURRENCY CONTRACTS
The value of foreign investments denominated in their local foreign
currencies will fluctuate in comparison to the U.S. dollar. As a way of managing
currency exchange rate risk, the Funds may enter into currency futures contracts
or forward currency contracts, which are agreements to purchase or sell foreign
currencies at a specified price and date. The Funds will usually enter into
these contracts to fix the U.S. dollar value of a security they have agreed to
buy or sell. The Funds may also use these contracts to hedge the U.S. dollar
value of a security they already own, particularly if they expect a decline in
the value of the currency in which the foreign security is denominated. The
success of such hedging strategies will depend on the Adviser's ability to
predict future exchange rate differences between foreign currencies and the U.S.
dollar.
DERIVATIVE TRANSACTIONS
The Funds may invest in options, futures and swaps and related products
which are often referred to as 'derivatives.' Derivatives may have a return that
is tied to a formula based upon an interest rate, index, price of a security or
other measurement. The Funds may use derivatives to augment their investment
returns or to limit their investment risks, such as to hedge against, among
other things, declines in the prices of portfolio securities. The use of
derivatives for non-hedging purposes is speculative. Derivative transactions
also subject a mutual fund to special considerations, such as the risk that a
mutual fund will not be able to cancel its derivative contract when it may be
opportune to do so and that the counterparty to the contract may not be able to
fulfill its obligation thereunder.
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WARRANTS
Each Fund may invest in warrants (in addition to those that have been
acquired in units or attached to other securities) but does not currently intend
to invest more than 5% of the value of its net assets (at the time of
investment) in such warrants. A warrant is an option to purchase a specified
quantity of equity or debt securities at a set price within a specific period of
time.
ILLIQUID SECURITIES
The Funds may invest up to 15% of their net assets (determined at the time
of investment) in securities for which market quotations are not readily
available, in repurchase agreements which have a maturity longer than seven days
and in securities subject to restrictions on resale for which no adequate
trading market exists.
OTHER INVESTMENT TECHNIQUES
The Funds may lend their portfolio securities, invest in restricted
securities, acquire securities on a when-issued basis, engage in short sales and
in arbitrage transactions, and may enter into repurchase agreements and reverse
repurchase agreements. The Funds may borrow for temporary or emergency purposes
or to purchase portfolio securities. Borrowing to purchase portfolio securities
increases both investment opportunity and investment risk. Each Fund is subject
to certain investment restrictions, which are included in the Statement of
Additional Information.
PORTFOLIO TURNOVER
The portfolio turnover rate is, generally, the percentage computed by
dividing the lesser of portfolio purchases and sales (excluding all securities,
including options, whose maturities or expiration date at acquisition were one
year or less) by the monthly average value of the portfolio. The portfolio
turnover rates for First Eagle Fund of America were 98%, 93% and 81%,
respectively, in the fiscal years ended October 31, 1997, 1996 and 1995. The
portfolio turnover rates for First Eagle International Fund were 54%, 101% and
166%, respectively, in the fiscal period ended October 31, 1997, and the fiscal
years ended December 31, 1996 and 1995. Higher portfolio turnover rates are
likely to result in higher brokerage commissions and higher levels of realized
capital gains than lower portfolio turnover rates.
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MANAGEMENT OF THE FUNDS
BOARD OF TRUSTEES
The business and affairs of the Funds are managed under the direction of
the Trust's Board of Trustees. The Board of Trustees instructed the officers to
make inquiries of the Funds' Adviser, Distributor, Custodian, and Transfer and
Dividend Disbursing Agent regarding whether they expected to have their computer
systems adjusted for the year 2000 transition. The Funds were informed that all
these service providers expected that their systems would be compliant with the
year 2000 issue prior to that time.
ADVISER
The Adviser, Arnhold and S. Bleichroeder Advisers, Inc., is a wholly owned
subsidiary of Arnhold and S. Bleichroeder, Inc., which is a successor
corporation to two German banking houses -- Gebr. Arnhold (Arnhold Brothers),
founded in Dresden in 1864, and S. Bleichroeder, founded in Berlin in 1803.
Arnhold and S. Bleichroeder, Inc. moved its operations to New York City in 1937
and since then has used its experience and worldwide contacts to provide asset
management, global securities research and trading, and investment banking
services to institutional clients both in the United States and abroad.
The Adviser manages the Funds and is registered as an investment adviser
under the Investment Advisers Act of 1940. Incorporated in 1987 under the laws
of the State of Delaware, its corporate offices are located at 1345 Avenue of
the Americas, New York, New York 10105.
The Investment Advisory Agreement between the Trust and the Adviser
effective February 27, 1998 was approved by the shareholders of the Funds and
Board of Trustees of the Trust. Subject to the direction of the Trust's Board of
Trustees, the Adviser is responsible for the management of each Fund's
portfolio. The Adviser may consider analyses from various sources, including
broker-dealers and futures commission merchants with which the Adviser does
business. The portfolio managers are responsible for the day-to-day management
of the Funds' portfolios.
The Adviser is responsible for the continuous supervision of First Eagle
Fund of America's portfolio. The Adviser has employment agreements with Harold
J. Levy and David L. Cohen to serve as portfolio managers for Fund of America.
Messrs. Levy and Cohen are also the principal owners of Iridian Asset Management
LLC ('Iridian'). Arnhold and S. Bleichroeder, Inc. owns 27.5% of Iridian,
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and pursuant to an operating agreement with Iridian does not direct or control
the management, affairs or policies of Iridian. Harold J. Levy has been a
portfolio manager of First Eagle Fund of America since its inception, and David
L. Cohen has been a portfolio manager of First Eagle Fund of America since 1989.
The Adviser is responsible for the continuous supervision of First Eagle
International Fund's portfolio. Arthur F. Lerner is a Senior Vice President of
Arnhold and S. Bleichroeder, Inc., a portfolio manager of the Adviser and has
been portfolio manager of First Eagle International Fund since its inception.
Mr. Lerner has worked at Arnhold and S. Bleichroeder, Inc. since 1969 and
manages various institutional global and international portfolios and off-shore
funds, including a portion of Arnhold and S. Bleichroeder, Inc.'s profit sharing
plan and trust. He is supported by a team of investment professionals.
Pursuant to the Investment Advisory Agreement, First Eagle Fund of America
pays the Adviser a monthly investment advisory fee at the annual rate of 1.00%
of its average daily net assets. First Eagle International Fund pays the Adviser
a monthly investment advisory fee at the annual rate of 1.00% of its average
daily net assets.
DISTRIBUTOR
Arnhold and S. Bleichroeder, Inc., a registered broker-dealer, investment
adviser and a member of the New York Stock Exchange and the National Association
of Securities Dealers, Inc., serves as the distributor of the Funds' shares
pursuant to a Distribution and Services Agreement. Arnhold and S. Bleichroeder,
Inc. receives a fee at the annual rate of 0.25% of each Fund's average daily net
assets, payable monthly, pursuant to a Distribution and Services Agreement to
cover expenses incurred for providing shareholder liaison services, including
assistance with subscriptions, redemptions and other shareholder questions.
Arnhold and S. Bleichroeder, Inc. also has separate agreements by which this
services fee may be paid to other broker-dealers and qualified financial
intermediaries for shareholder liaison services. The expenses related to
distributing the Funds' Class Y shares are assumed by Arnhold and S.
Bleichroeder, Inc.
Arnhold and S. Bleichroeder, Inc. may make payments to dealers and other
persons which distribute shares of the Funds. Such payments may be calculated by
reference to the net asset value of shares sold by such persons or otherwise.
Arnhold and S. Bleichroeder, Inc. also serves as the distributor of the Funds'
Class C shares which are sold with a Rule 12b-1 distribution fee. For its
services under the
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Rule 12b-1 plan, each Fund pays a fee at the annual rate of 0.75% of its average
daily net assets. Arnhold and S. Bleichroeder, Inc. pays broker-dealers and
other financial services firms this distribution fee for sales of Class C share
at the annual rate of 0.75% of net assets attributable to Class C shares.
Arnhold and S. Bleichroeder, Inc., 1345 Avenue of the Americas, New York, New
York 10105, is engaged in the investment advisory and securities underwriting
and brokerage businesses.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is responsible for the selection of brokers, dealers and
futures commission merchants to effect the Funds' portfolio transactions and the
negotiation of brokerage commissions, if any. Orders may be directed to any
broker, dealer or futures commission merchant, including Arnhold and S.
Bleichroeder, Inc. to the extent and in the manner permitted by applicable law.
Commissions are generally negotiable in the case of U.S. securities exchange
transactions, but are generally fixed and higher than prevailing U.S. rates in
the case of foreign exchange transactions.
The Adviser, in placing orders for the purchase or sale of securities,
options and futures for the Funds' portfolios, is required to give primary
consideration to obtaining the most favorable price and efficient execution. The
Adviser, to the extent consistent with the foregoing, will consider the research
and investment services provided by brokers, dealers or futures commission
merchants who effect or are parties to portfolio transactions of the Funds, the
Adviser or the Adviser's other clients. Commission rates are established
pursuant to negotiations with the executing party based on the quantity and
quality of execution services provided in light of generally prevailing rates.
As permitted by rules of the Securities and Exchange Commission, the Adviser may
effect portfolio transactions for the Funds with Arnhold and S. Bleichroeder,
Inc., only if the commissions, fees or other remuneration are reasonable and
fair compared to the commissions, fees or other remuneration paid to other
brokers or dealers in connection with comparable transactions. The Board of
Trustees has adopted procedures which are reasonably designed to assure that any
commissions, fees or other remuneration received by Arnhold and S. Bleichroeder,
Inc. for effecting portfolio transactions on the Funds' behalf is consistent
with the foregoing standard. Portfolio securities may be purchased from any
underwriting or selling group in which Arnhold and S. Bleichroeder, Inc. is a
member, if the purchase is made in accordance with rules of the Securities and
Exchange Commission
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(the 'Commission'). The Board of Trustees has adopted procedures which are
reasonably designed to assure compliance with those rules.
NET ASSET VALUE
The net asset value per share is the net worth of each Fund (assets,
including securities at market value, minus liabilities) divided by the number
of shares outstanding. Each Fund shall compute the net asset value of its shares
as of 15 minutes after the close of trading on the floor of the New York Stock
Exchange, which is normally 4:00 p.m., New York time, on each day the New York
Stock Exchange is open for business. The net asset value will not be computed on
days on which no orders to purchase, sell or redeem a Fund's shares have been
received or on days on which changes in the value of a Fund's portfolio
securities do not affect net asset value.
The net asset value per share will be determined on each day the New York
Stock Exchange is open for business ('Business Day'). Currently, the New York
Stock Exchange observes the following holidays: New Year's Day, Martin Luther
King's Birthday, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
Any security for which the primary market is on a U.S. exchange is valued
at the last sale price on such exchange on the day of valuation or, if there was
no sale on such day, the mean between the last bid and asked prices quoted on
such day. Foreign securities are valued on the basis of quotations from the
primary market in which they are traded and translated from the local currency
into U.S. dollars using current exchange rates. NASDAQ National Market System
equity securities are valued at the last sale price or, if there was no sale on
such day, at the mean between the bid and asked prices. Corporate bonds (other
than convertible debt securities) and U.S. Government securities that are
actively traded in the over-the-counter market, including listed securities for
which the primary market is believed to be over-the-counter, are valued on the
basis of valuations provided by a pricing service which uses information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Pricing based on market transactions in
comparable securities and various relationships between securities is known as
'matrix' pricing. Other securities are valued at the mean between the bid and
asked prices. Short-term debt instruments which mature in less than 60 days are
valued at amortized cost, unless the Board of Trustees
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determines that such valuation does not represent fair value. Securities which
are otherwise not readily marketable or securities for which market quotations
are not readily available are valued in good faith at fair value in accordance
with procedures adopted by the Trust's Board of Trustees. The Board of Trustees
may use a pricing service to value the Funds' securities, if any.
HOW TO PURCHASE SHARES
Shares of each Fund may be purchased by submitting a signed and completed
Account Application and a check or money order payable to First Eagle Funds to:
First Eagle Funds, P.O. Box 182497, Columbus, OH 43218-2497. To purchase shares
with a Federal funds wire, fax a completed and signed application to the Trust
at (614) 470-8702 and telephone (800) 451-3623 for wire instructions. Shares of
the Funds also may be purchased through broker-dealers or financial services
intermediaries. Investors may purchase either Class Y or Class C shares. If no
designation is made, Class Y shares will be issued. The Trust does not issue
share certificates, share ownership is recorded with the Transfer Agent. Through
February 28, 1998, the Funds issued only one class of common stock, which is now
called Class Y shares.
The no-load Class Y shares of the Funds are offered without sales charges
or commissions. The shares are issued at a net asset value after receipt of an
order in the proper form with complete information. Transactions in Class Y
shares made through brokers and qualified financial intermediaries may be
subject to additional charges imposed by the brokers and financial
intermediaries.
Class C shares may be purchased from broker-dealers or other financial
intermediaries for those investors who seek professional guidance and
assistance. As compensation for the services they provide, intermediaries that
distribute Class C shares, which are also offered at net asset value, will
receive an annual Rule 12b-1 distribution fee of 0.75% of the average daily net
assets of the Class C accounts. A contingent deferred sales charge of 1.25%
applies if the shares are redeemed within the first year after purchase. Due to
different expense ratios, Class Y and Class C shares may have different net
asset values.
The current minimum initial investment is $2,500, except the minimum
initial investment for retirement plans and for employees of the Adviser or its
affiliates is $500. Existing shareholders may establish or direct new accounts
with a minimum initial investment of $1,000.
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Subsequent investments are subject to a $100 minimum, except retirement accounts
which have no minimum. The current minimum initial and
subsequent investment amounts may be changed by the Board of Trustees at any
time. Transactions in shares of the Funds made through brokers and qualified
financial intermediaries may be subject to service charges imposed by the
brokers and financial intermediaries. Investors should provide the information
required by an IRS Form W-9 to avoid backup withholding taxes.
Investments in the Funds may be made on each Business Day the New York
Stock Exchange is open. Shares are purchased at the net asset value per share
next determined after receipt of an order by or on behalf of the Funds with
complete information and meeting all the requirements discussed in this
Prospectus. The Funds may reject any purchase order for shares. Purchase orders
which are not received in good order or paid for in a timely manner will not be
accepted by the Funds and will be returned. The Trust reserves the right to
suspend the sale of shares of the Funds to the public at any time in response to
unusual or adverse conditions in the securities markets or otherwise.
Orders for the purchase of shares of a Fund will be confirmed at a price
based on the net asset value of that Fund next determined after receipt by the
distributor, Arnhold and S. Bleichroeder, Inc., of an order accompanied by
payment. However, orders received by dealers or other firms prior to the
determination of net asset value and received by the distributor prior to the
close of that day will be confirmed at a price based on the net asset value on
that day ('trade day'). Dealers and other financial services firms are obligated
to transmit orders promptly. When purchases are made by check, redemptions will
not be allowed until clearance of the purchase check, which may take up to ten
business days. Collection may take significantly longer for a check drawn on a
foreign bank than for a check drawn on a domestic bank. In the event a check
used to pay for shares of a Fund is not honored by a bank, the purchase order
will be cancelled and the shareholder will be liable for any losses or expenses
incurred by the Fund.
Purchases and sales of the Funds should be made for long-term investment
purposes. The Funds and the Distributor reserve the right to restrict purchases
(including exchanges) when a pattern of frequent purchases and sales are made in
response to short-term fluctuations in the share price of the Funds.
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AUTOMATIC INVESTMENT PLAN. With the required minimum initial investment,
regular investments of $100 or more per transaction may be made through an
Automatic Investment Plan by making deductions from bank savings or checking
accounts.
New shareholders electing to start automatic investment plans should
complete the appropriate section of the account application. Current
shareholders may begin an automatic investment plan by sending a signed letter
with a signature guarantee and a deposit slip or a voided check to First Eagle
Funds, P.O. Box 182497, Columbus, OH 43218-2497.
HOW TO REDEEM SHARES
REDEMPTION
Shares of the Funds can be redeemed for cash at the next determined net
asset value. Class C shares redeemed within the first year after purchase are
subject to a contingent deferred sales charge of 1.25%. If shares are held in
non-certificate form, a written request for redemption signed by the
stockholder(s) exactly as the account is registered is required unless the
telephone redemption privilege has been established. If certificates are held by
the stockholder(s), the certificates, signed in the name(s) shown on the face of
the certificates, must be returned to be redeemed. The certificates may be
signed either on their reverse side or on a separate stock power. If redemption
is requested by a corporation, partnership, trust or fiduciary, written evidence
of authority acceptable to the Funds' Transfer Agent must be submitted before
such request will be accepted.
The redemption price is the net asset value per share next determined after
the request for redemption is received in good order by the Funds' Transfer
Agent. Redemption proceeds for shares purchased by check or the Automatic
Investment Plan will be held until the purchase payment has cleared, which may
take up to ten Business Days. Signature(s) on redemption requests, certificates
or stock powers must be guaranteed by a commercial bank, trust company, credit
union, savings association or qualified broker or dealer. The Funds may change
the signature guarantee requirements from time to time.
Payment instructions may be given to the Funds either on the account
application form or in a letter to the Funds which is signature guaranteed for
all redemptions of $5,000 or more. If you do not
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provide payment instructions for the proceeds of a redemption, a check will be
sent to the address of record.
TELEPHONE REDEMPTION ORDERS. Shareholders may redeem shares of the Funds by
calling (800) 451-3623 on any Business Day. The redemption will be executed at
the net asset value per share next determined after receipt of instructions by
or on behalf of the Funds with complete information and meeting all the
requirements discussed in this prospectus. Stockholders will be required to
provide proper identification and verification of account information. For
redemptions over $100,000, it may be necessary for other pertinent information
to be verified to confirm the identity of the stockholder. Payment for redeemed
shares will normally be wired in Federal funds on the next Business Day in
accordance with pre-authorized banking instructions on the account application
or a check will be mailed to the address of record.
The Funds will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Neither the Funds nor the Transfer Agent
will be responsible for the authenticity of redemption instructions received by
telephone and believed to be genuine, and any loss therefrom will be borne by
the investor. Telephone calls may be recorded for your protection.
REDEMPTION PAYMENTS
Payment for shares presented for redemption will ordinarily be made by
check within seven days after receipt by the Transfer Agent of the certificate
and/or written request in proper order. Payment may be postponed or the right of
redemption suspended at times (a) when the New York Stock Exchange (the
'Exchange') is closed for other than customary weekends and holidays, (b) when
trading on the Exchange is restricted, (c) when an emergency exists as a result
of which disposal by either Fund of its securities is not reasonably practicable
or it is not reasonably practicable to determine the Funds' net asset value
or (d)
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during any other period when the Commission, by order, so permits, provided that
applicable rules and regulations of the Commission shall govern as to whether
the conditions prescribed in (b), (c) or (d) exist.
INVOLUNTARY REDEMPTION
In order to reduce expenses, the Funds may redeem all the shares of any
stockholder whose account due to redemptions has a net asset value of $500 or
less. The Fund will give shareholders whose shares are to be redeemed 60 days'
prior written notice so that the shareholder may purchase sufficient additional
shares to avoid such a redemption.
EXCHANGE PRIVILEGE
Shareholders of Class Y and Class C shares may exchange their shares for
the corresponding class of the other series of First Eagle Trust. Thus, Class Y
shares of First Eagle Fund of America and First Eagle International Fund may be
exchanged for each other at their relative net asset values, and Class C shares
of First Eagle Fund of America and First Eagle International Fund may be
exchanged for each other at relative net asset values without a contingent
deferred sales charge. However, Class C shares are still subject to a contingent
deferred sales for a one year period from the date of the original purchase. The
exchange privilege is limited to six exchanges within any twelve month period.
Shareholders may exchange their shares by calling (800) 451-3623.
DISTRIBUTIONS AND TAXES
Each Fund expects to declare an annual dividend of net investment income
and an annual distribution of capital gains, but each Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the 'Internal
Revenue Code'), and in all events in a manner consistent with the provisions of
the Investment Company Act of 1940. Dividends and distributions will be paid in
additional shares based on the net asset value at the close of business on the
record date, or such other date as the Board of Trustees may determine, unless
the stockholder elects in writing not less than five full business days prior to
the record date to receive such distributions in cash. The Funds will notify
stockholders annually as to both the dollar amount and the taxable status of
that year's dividends and distributions. Because Class C Shares have 12b-1 fees,
dividends on Class Y Shares will be higher than dividends on Class C Shares.
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Each Fund intends to qualify as a regulated investment company for federal
income tax purposes so long as, in management's view, such qualification is in
the shareholders' interest. Each Fund intends to distribute all of its net
investment income and net capital gains so as to be relieved of corporate
federal taxes. Distributions of net investment income and short-term capital
gains are taxed as dividends, subject to a maximum federal rate of 39.6% for
noncorporate taxpayers. All or a portion of dividends paid by First Eagle Fund
of America may qualify for the 70 percent dividends received deduction available
to certain corporate shareholders. For noncorporate taxpayers, distributions of
gains realized upon the sale of capital assets held more than 18 months are
subject to a maximum tax rate of 20% (10% for individuals in the 15% tax
bracket). Distributions of gains realized upon the sale of capital assets held
more than 12 months but not more than 18 months are subject to a maximum tax
rate of 28% (15% for individuals in the 15% tax bracket). Distributions are
taxable when paid, whether taken in cash or reinvested except that distributions
declared in November and December and paid in January are taxable as if paid on
December 31st. Any loss realized by a shareholder upon the disposition of Fund
shares held for six months or less will be treated as long-term capital loss to
the extent of any amounts treated as distributions of capital gain with respect
to assets held more than one year during such six-month period.
To the extent attributable to fluctuations in foreign currency exchange
rates, gains or losses arising from (i) acquiring or incurring debt denominated
in foreign currencies, (ii) accruing receivables or payables denominated in
foreign currency prior to receipt or payment, and (iii) disposing of certain
options, futures or forward contracts, will be treated as ordinary income or
loss rather than capital gain or loss.
Shareholders should receive by January 31 of each year, a statement showing
the tax status of your distributions for the prior year and the proceeds of your
redemptions (including exchanges), if any. When you sell your shares, their tax
basis is the total of your cash investments plus distributions that have been
reinvested, less any return of capital distributions. To assist you in
determining your tax basis, please keep your year-end account statements with
your other tax records.
The foregoing is a summary of certain federal income tax consequences. Be
sure to consult your own tax adviser to determine the precise effect of your
investment in the Fund on your particular tax situation, and any state and local
tax consequences.
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Federal tax rules require the Funds to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends, capital gain dividends and redemption
proceeds on the accounts of certain stockholders who fail to furnish their tax
identification numbers on IRS Form W-9 (or who fail to furnish IRS Form W-8 in
the case of certain foreign stockholders) with the required certifications
regarding the stockholder's status under the Internal Revenue Code.
Either Fund, particularly International Fund, may qualify for and may make
an election permitted under Section 853 of the Internal Revenue Code so that
shareholders may be eligible to claim a credit or deduction on their federal
income tax returns for, and will be required to treat as part of the amounts
distributed to them, their pro rata portion of qualified taxes paid or incurred
by either Fund to foreign countries (which taxes relate primarily to investment
income). A Fund may make an election under Section 853, provided that more than
50% of the value of such Fund's total assets at the close of the taxable year
consists of securities in foreign corporations, and such Fund satisfied the
applicable distribution provisions of the Internal Revenue Code for the taxable
year. The foreign tax credit available to shareholders is subject to certain
limitations imposed by the Internal Revenue Code.
If a Fund purchases the stock of 'passive foreign investment companies'
('PFICs'), such Fund will be subject to tax under one of three regimes. Under
the default regime, gain on the sale of PFIC stock and certain 'excess
distributions' are treated as ordinary income and subject to an interest charge.
If the PFIC provides certain information and such Fund makes an election, it may
elect to include its pro rata share of the PFIC's capital gains and ordinary
income currently even if not distributed. In taxable years beginning after
December 31, 1997, a Fund may mark to market its PFIC shares if it is eligible
to do so and elects to do so; any resulting gain will be ordinary income and
losses will be ordinary losses to the extent of any ordinary income previously
recognized on such PFICs by such Fund.
A shareholder who is a nonresident alien or foreign entity generally will
not be subject to federal income tax on capital gain dividends or on any capital
gain realized on a redemption of shares, provided that (i) such gains are not
effectively connected with the conduct by the shareholder of a trade or business
in the United States, (ii) in the case of an individual, the stockholder is not
physically present in the United States for 183 days or more during the taxable
year and (iii) the shareholder has furnished an IRS Form W-8 with the required
certifications regarding the shareholder's foreign status under the Internal
Revenue Code. Other distributions may be subject to U.S.
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tax. In particular, dividend distributions which are not effectively connected
with a trade or business in the United States will be subject to a 30% U.S.
withholding tax under the existing provisions of the Internal Revenue Code
applicable to foreign individuals and entities unless a reduced rate of
withholding exemption is provided under an applicable treaty. Non-U.S.
stockholders are urged to consult their own tax advisers concerning the
applicability of U.S. tax. See 'Taxes' in the Statement of Additional
Information.
The foregoing discussion is intended only as a brief discussion of the
federal income tax consequences of an investment in shares of a Fund.
Distributions may also be subject to state, local or foreign taxes. Stockholders
are urged to consult their own tax advisers regarding specific questions as to
federal, state, local or foreign taxes.
ORGANIZATION AND DESCRIPTION OF STOCK
First Eagle Fund of America was incorporated in Maryland on December 11,
1986. First Eagle International Fund was incorporated in Maryland on October 7,
1993. The Funds were reorganized as Series of the Trust on February 27, 1998.
The Trust is authorized to issue an unlimited number of shares in separate
Series and Classes. Shares of the Funds, when issued, are fully paid,
nonassessable, fully transferable and redeemable at the option of the
stockholder. Shares are also redeemable at the option of the Funds under certain
circumstances as described above under 'How to Redeem Shares.' There are no
conversion, preemptive or other subscription rights. In the event of
liquidation, each share of a Fund is entitled to its portion of that Fund's
assets after all debt and expenses have been paid. The shares of the Funds do
not have cumulative voting rights for the election of Trustees.
HOW THE FUNDS CALCULATE PERFORMANCE
From time to time, the Funds may advertise investment performance in terms
of total return. Each Fund may further compare its performance to various
published indices which are widely used as benchmarks. Each Fund may also
compare its performance to rankings prepared by Lipper Analytical Services, Inc.
or Morningstar, Inc., each a widely recognized independent service which
monitors and ranks the performance of mutual funds, and to rankings prepared by
other national financial publications. A Fund's total return shows how much an
investment in such Fund would have increased (or decreased) over a specified
period of time assuming the reinvestment of all distributions
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and dividends on the reinvestment dates during the period and deducting all
recurring fees. The aggregate total return reflects actual performance over a
stated period of time. A Fund's average annual total return demonstrates the
hypothetical rate of return of a hypothetical investment if performance had been
constant over the stated period of time. Total return information may be useful
in reviewing investment performance and for providing a basis for comparison
with other investment alternatives. Performance figures are based upon
historical results and are not intended to indicate future performance. Further
performance information is contained in the annual report to stockholders.
REPORTS TO SHAREHOLDERS
The Funds will send shareholders annual, semiannual and quarterly reports,
without charge. The Trust's annual reports will contain performance information
about each Fund, as well as financial statements audited by the Trust's
independent accountants.
The Transfer Agent will send each shareholder of record a statement showing
transactions in the shareholder's account, the total number of shares owned and
any dividends or distributions paid. These statements will normally be mailed
within five business days after a transaction occurs. The Transfer Agent will
also send each shareholder of record a quarterly statement of the shareholder's
account.
Shareholder inquiries should be addressed to First Eagle Funds, P.O. Box
182497, Columbus, OH 43218-2497, or by telephoning (800) 451-3623.
CUSTODIAN AND TRANSFER AND
DIVIDEND DISBURSING AGENT
The Bank of New York, 48 Wall Street, New York, NY 10286, serves as
Custodian for the Trust and each of the Funds. BISYS Fund Services, Inc., 3435
Stelzer Road, Columbus, OH 43219 serves as Transfer and Dividend Disbursing
Agent for the Trust. In those capacities, both The Bank of New York and BISYS
Fund Services, Inc. maintain certain books and records pursuant to agreements
with the Trust.
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FIRST EAGLE TRUST
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH 1, 1998
FIRST EAGLE TRUST (the 'Trust') is a registered investment company, a
'mutual fund,' that offers investors two investment alternatives, First Eagle
Fund of America and First Eagle International Fund.
The Trust's address is 1345 Avenue of the Americas, New York, New York
10105, and its telephone number is (212) 698-3000 or (888) 482-5667.
FIRST EAGLE FUND OF AMERICA is an open-end, non-diversified mutual fund
whose investment objective is to achieve capital appreciation. First Eagle Fund
of America will seek to achieve its objective by investing primarily in domestic
stocks and to a lesser extent in debt and foreign equity securities. Normally at
least 65% of First Eagle Fund of America's assets will be invested in domestic
securities.
FIRST EAGLE INTERNATIONAL FUND is an open-end, non-diversified mutual fund
whose investment objective is to achieve capital appreciation. First Eagle
International Fund will seek to achieve its objective by investing primarily in
foreign stocks and to a lesser extent in debt and domestic equity securities.
Normally at least 65% of First Eagle International Fund's assets will be
invested in foreign securities.
Arnhold and S. Bleichroeder Advisers, Inc. (the 'Adviser') invests the
assets of First Eagle Fund of America and First Eagle International Fund
(collectively, the 'Funds' and individually, a 'Fund') in securities of
companies that appear to be undervalued relative to their overall financial and
managerial strength. The Adviser's investment strategy is to invest in
securities with 'intrinsic values' which are not generally recognized by the
market. There can be no assurance that the Funds' objectives will be achieved.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Trust's Prospectus, dated March 1, 1998, a copy of
which may be obtained from the Trust's Transfer and Dividend Disbursing Agent,
BISYS Fund Services Inc., by writing to P.O. Box 182497, Columbus, OH
43218-2497, or by telephoning (800) 451-3623.
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CROSS REFERENCE TO
TABLE OF CONTENTS PAGE PAGE IN PROSPECTUS
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Organization and History...................................................... 2 25
Additional Investment Information............................................. 2 11
Investment Restrictions....................................................... 11 11
Trustees, Officers and Principal Stockholders................................. 12 14
Adviser....................................................................... 15 14
Distributor................................................................... 16 15
Portfolio Transactions and Brokerage.......................................... 16 16
Stockholder Investment Account................................................ 19 18
Redemptions in Kind........................................................... 19 20
Taxes......................................................................... 19 22
Performance Information....................................................... 23 25
Custodian, Transfer and Dividend Disbursing Agent and
Independent Auditors........................................................ 23 26
Fund of America Financial Statements.......................................... F-1
International Fund Financial Statements....................................... F-13
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ORGANIZATION AND HISTORY
First Eagle Fund of America was incorporated in Maryland on December 11,
1986. First Eagle International Fund was incorporated in Maryland on October 7,
1993. The Trust was organized as a business trust under the laws of the State of
Delaware on December 24, 1997. The Trust may have multiple series and classes of
shares. First Eagle Fund of America and First Eagle International Fund were
converted into separate Series of the Trust on February 27, 1998.
ADDITIONAL INVESTMENT INFORMATION
First Eagle Fund of America is an open-end, non-diversified mutual fund
whose investment objective is to achieve capital appreciation. It seeks to
achieve its objective by investing primarily in domestic stocks and to a lesser
extent in debt and foreign equity securities.
First Eagle International Fund is an open-end, non-diversified mutual fund
whose investment objective is to achieve capital appreciation. It seeks to
achieve its objective by investing primarily in foreign stocks and to a lesser
extent in debt and domestic equity securities.
The Adviser invests the assets of the Funds in securities of companies that
appear to be undervalued relative to their overall financial and managerial
strength. The Adviser's investment strategy is to invest in securities with
'intrinsic values' which are not generally recognized by the market. As
non-diversified mutual funds, the Funds may have a greater investment
concentration in some securities than a diversified mutual fund. There can be no
assurance that the Funds' objectives will be achieved.
FOREIGN SECURITIES
The Funds may invest in foreign securities issued by companies of any
nation regardless of its level of development. The risks involved in investing
in foreign securities include political or economic instability in the country
of issue, the difficulty of predicting international trade patterns, the
possibility of imposition of exchange controls and the risk of currency
fluctuations. Foreign securities may be subject to greater fluctuations in price
than securities issued by U.S. corporations or issued or guaranteed by the U.S.
Government, its instrumentalities or agencies. Additionally, there may be less
publicly available information about a foreign company than about a domestic
company. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards comparable to those applicable to
domestic companies. There is generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the United States. In
some foreign countries, there is a possibility of expropriation, confiscatory
taxation or diplomatic developments which could affect investment in those
countries. In the event of a default of any foreign debt obligation, it may be
more difficult to obtain or enforce a judgment against the issuers of those
securities. Foreign currency denominated securities may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and costs may be incurred in connection with conversions between currencies.
Foreign currency is also subject to similar risks. Foreign securities and
currencies will be held by the Funds' Custodian, an 'eligible foreign custodian'
or a 'qualified U.S. bank,' as those terms are defined in the Investment Company
Act of 1940 as amended (the 'Investment Company Act') and the rules and
regulations thereunder.
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HIGH YIELD SECURITIES
Changes in the economy and interest rates affect high yield securities.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers will likely experience financial stress which would
adversely affect their ability to service their principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing. If the issuer of a bond owned by a Fund defaults, such Fund may incur
additional expenses in seeking recovery of its investment. Additionally, periods
of economic uncertainty and changes can result in increased volatility of market
prices of high yield bonds. Furthermore, the market prices of high yield bonds
structured as zero coupon or pay-in-kind securities are affected to a greater
extent by interest rate changes and are more volatile than securities which pay
interest periodically and in cash. If the Funds invest in zero coupon or
pay-in-kind securities, they will be subject to special tax considerations
related to those securities. The Funds will have to report the interest on those
securities as income even though they receive no interest until the security's
maturity or payment date.
High yield bonds present risks based on payment expectations. For example,
high yield bonds may contain redemption or call provisions. If an issuer
exercises those provisions in a declining interest rate market and a Fund
replaces the security with a lower yielding security, that Fund's income will be
reduced.
At times, there will be thin trading markets for high yield bonds and it
may be difficult to value accurately the high yield bonds. Adverse publicity and
investor perceptions may decrease the values and ability to sell high yield
bonds, especially in a thinly traded market.
Certain risks are associated with using credit ratings as a method for
evaluating high yield bonds. As credit agencies may fail to timely change the
credit ratings to reflect subsequent events, the Adviser continuously monitors
the issuers of high yield bonds in each Fund's portfolio to determine if the
issuers, in the Adviser's opinion, will have sufficient cash flow and profits to
meet required principal and interest payments, and to attempt to assure the
bonds' liquidity so the Funds can meet redemption requests. Each Fund has no
current intention of investing more than 5% of its net assets in high yield
bonds.
OPTIONS TRANSACTIONS
The Adviser believes that certain transactions in options on securities and
on stock indices may be useful in limiting a Fund's investment risk and
augmenting its investment return. The Adviser expects, however, the amount of a
Fund's assets that will be involved in options transactions to be small relative
to that Fund's assets. Accordingly, it is expected that only a relatively small
portion of a Fund's investment return will be attributable to transactions in
options on securities and on stock indices. The Funds may invest in options
transactions involving options on securities and on stock indices that are
traded on U.S. and foreign exchanges or in the over-the-counter markets. The
following discussion sets forth the principal characteristics of, and risks
associated with, certain transactions involving options on securities and on
stock indices.
A call option is a contract pursuant to which the purchaser, in return for
a premium paid, has the right to buy the equity or debt security underlying the
option at a specified exercise price at any time during the term of the option.
With respect to a call option on a stock index, the purchaser is entitled to
receive cash if the underlying stock index rises sufficiently above its level at
the time the option was purchased. The writer of the call option, who receives
the premium, has the obligation, upon exercise of
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the option, to deliver the underlying equity or debt security against payment of
the exercise price. With respect to a call option on a stock index, the writer
has the obligation to deliver cash if the underlying index rises sufficiently
above its level when the option was purchased.
A put option gives the purchaser, in return for a premium, the right to
sell the underlying equity or debt security at a specified exercise price during
the term of the option. With respect to a put option on a stock index, the
purchaser is entitled to receive cash if the underlying index falls sufficiently
below its level at the time the option was purchased. The writer of the put, who
receives the premium, has the obligation to buy the underlying equity or debt
security upon exercise at the exercise price. With respect to a put option on a
stock index, the writer has the obligation to deliver cash if the underlying
index falls sufficiently below its level when the option was purchased. The
price of an option will reflect, among other things, the relationship of the
exercise price to the market price of the underlying financial instrument or
index, the price volatility of the underlying financial instrument or index, the
remaining term of the option, supply and demand of such options and interest
rates.
One purpose of purchasing call options is to hedge against an increase in
the price of securities that a Fund intends ultimately to buy. Hedge protection
is provided during the life of the call because that Fund, as the holder of the
call, is able to buy the underlying security at the exercise price, and, in the
case of a call on a stock index, is entitled to receive cash if the underlying
index rises sufficiently. However, if the value of a security underlying a call
option or the general market or a market sector does not rise sufficiently when
that Fund has purchased a call option on the underlying instrument, that option
may result in a loss.
Securities and options exchanges have established limitations on the
maximum number of options that an investor or group of investors acting in
concert may write. It is possible that a Fund and other clients of the Adviser
may be considered such a group. Position limits may restrict a Fund's ability to
purchase or sell options on particular securities and on stock indices.
COVERED OPTION WRITING
A Fund may write 'covered' call options on equity or debt securities and on
stock indices in seeking to enhance investment return or to hedge against
declines in the prices of portfolio securities or may write put options to hedge
against increases in the prices of securities which it intends to purchase. A
call option is covered if a Fund holds, on a share-for-share basis, a call on
the same security as the call written where the exercise price of the call held
is equal to or less than the exercise price of the call written, or greater than
the exercise price of the call written if the difference is maintained by that
Fund in cash, Treasury bills or other high grade short-term obligations in a
segregated account with its Custodian.
A put option is 'covered' if a Fund maintains cash, Treasury bills or other
high grade short-term obligations with a value equal to the exercise price in a
segregated account with its Custodian, or holds on a share-for-share basis a put
on the same equity or debt security as the put written where the exercise price
of the put held is equal to or greater than the exercise price of the put
written, or lower than the exercise price of the put written if the difference
is maintained in a segregated account with its Custodian.
One reason for writing options is to attempt to realize, through the
receipt of premiums, a greater return than would be realized on the securities
alone. In the case of a securities call, the writer receives the premium, but
has given up the opportunity for profit from a price increase in the underlying
security
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above the exercise price during the option period. In the case of a stock index
call, the writer receives the premium, but is obligated to deliver cash if the
underlying index rises sufficiently during the option period. Conversely, the
put option writer has, in the form of the premium, gained a profit as long as
the price of the underlying security or stock index remains above the exercise
price, but has assumed an obligation to purchase the underlying security at the
exercise price from or deliver cash to the buyer of the put option during the
option period.
Another reason for writing options is to hedge against a moderate decline
in the value of securities owned by a Fund in the case of a call option, or a
moderate increase in the value of securities a Fund intends to purchase in the
case of a put option. If a covered option written by a Fund expires unexercised,
that Fund will realize income equal to the amount of the premium it received for
the option.
If an increase occurs in the underlying security or stock index sufficient
to result in the exercise of a call written by a Fund, that Fund may be required
to deliver securities or cash and may thereby forego some or all of the gain
that otherwise may have been realized on the securities underlying the call
option. This 'opportunity cost' may be partially or wholly offset by the premium
received for the covered call written by that Fund.
OPTIONS ON STOCK INDICES
A Fund will write call options on broadly based stock market indices only
if at the time of writing it holds a portfolio of stocks. When a Fund writes a
call option on a broadly based stock market index, that Fund will segregate or
put into escrow with its Custodian any combination of cash, cash equivalents or
'qualified securities' with a market value at the time the option is written of
not less than 100% of the current index value times the multiplier times the
number of contracts. A 'qualified security' is an equity security which is
listed on an Exchange or on NASDAQ against which a Fund has not written a call
option and which has not been hedged by the sale of stock index futures.
Index prices may be distorted if trading in certain stocks included in the
index is interrupted. Trading in the index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
stocks included in the index. If this occurred, a Fund would not be able to
close out options which it had purchased or written and, if restrictions on
exercise were imposed, might be unable to exercise an option it held, which
could result in substantial losses to that Fund.
If a Fund is assigned an exercise notice on a call it has written, that
Fund would be required to liquidate portfolio securities in order to satisfy the
exercise, unless it has other liquid assets that are sufficient to satisfy the
exercise of the call. When a Fund has written a call, there is also a risk that
the market may decline between the time that Fund has a call exercised against
it, at a price which is fixed as of the closing level of the index on the date
of exercise, and the time it is able to sell securities in its portfolio. As
with stock options, a Fund will not learn that an index option has been
exercised until the day following the exercise date but, unlike a call on stock
where such Fund would be able to deliver the underlying securities in
settlement, such Fund may have to sell part of its securities portfolio in order
to make settlement in cash, and the price of such securities might decline
before they can be sold. For example, even if an index call which a Fund has
written is 'covered' by an index call held by such Fund with the same strike
price, such Fund will bear the risk that the level of the index may decline
between the close of trading on the date the exercise notice is filed with the
Clearing Corporation and the close of trading on the date such Fund exercises
the call it holds or the time it sells the call, which in either case would
occur no earlier than the day following the day the exercise notice was filed.
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FUTURES CONTRACTS
An interest rate futures contract is an agreement to purchase or sell an
agreed amount of debt securities at a set price for delivery on a future date.
Similarly, a currency futures contract calls for the purchase or sale of a fixed
amount of a specific currency at a set price for delivery on a future date.
Unlike interest rate and currency futures contracts, a stock index futures
contract does not contemplate the purchase or delivery of the underlying
financial instrument (interest rate and stock index futures contracts are
collectively herein referred to as 'financial futures contracts'). Instead, one
party agrees to deliver to the other an amount of cash equal to a specific
dollar amount times the difference between the value of a specific stock index
at the close of the last trading day of the contract.
A Fund is required initially to deposit in a special custody account or
with the futures commission merchant margin in an amount of cash or U.S.
Treasury bills equal to a percentage of the contract amount. Initial margin in
futures transactions is in the nature of a good faith deposit on the contract
which is returned to such Fund upon termination of the futures contract,
assuming all contractual obligations have been met. Subsequent payments, called
variation margin, to and from the futures commission merchant are made on a
daily basis as the market price of the futures contract fluctuates. This process
is known as 'marking to market.' At any time prior to expiration of the futures
contract, a Fund may elect to close a position by taking an offsetting position
which will terminate that Fund's position in the futures contract. Although
interest rate futures and currency futures contracts (other than those relating
to Eurodollar time deposits) generally provide for delivery and acceptance of
the underlying financial instrument, the Funds expect most financial or currency
futures contracts to be terminated by offsetting transactions.
An option on a financial or currency futures contract gives the purchaser
the right, but not the obligation, to assume a position in a financial or
currency futures contract (a long position if the option is a call and a short
position if the option is a put) at a specified exercise price at any time
during the option exercise period. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if the
option is a call and a long position if the option is a put).
HEDGING WITH FUTURES CONTRACTS AND RELATED OPTIONS
A Fund may acquire futures and related options for 'bona fide hedging'
within the meaning and intent of the Commodity Exchange Act and Regulations
promulgated thereunder by the Commodity Futures Trading Commission. A Fund may
also acquire futures and related options for other than bona fide hedging
purposes, provided that the aggregate initial margin and premiums required to
establish such positions are in an amount not exceeding 5% of the liquidation
value of that Fund's portfolio after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into. When options are
in-the-money at the time of purchase, the in-the-money amount will be excluded
from the computation of such 5% limitation.
A Fund may purchase an interest rate futures contract as a hedge against an
anticipated decline in interest rates and a resulting increase in the market
price of debt securities it intends to acquire. A Fund may sell an interest rate
futures contract as a hedge against an anticipated increase in interest rates
and a resulting decline in the market price of debt securities it owns. A Fund
may purchase a currency futures contract to hedge against anticipated increases
in the value of currency it intends to acquire for prospective securities
purchases relative to the value of currency it is holding. A Fund may also sell
a currency futures contract in anticipation of a decrease in the value of
currency it is holding or in anticipation of the sale of a portfolio security. A
Fund may purchase a stock index futures contract as a
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hedge against an anticipated general market or market sector advance which may
increase the market price of equity securities it intends to buy. A Fund may
sell stock index futures contracts in anticipation of or in a general market or
market sector decline that may adversely affect the market value of its
portfolio of equity securities.
A Fund may use options on financial and currency futures contracts in
connection with its hedging strategies in lieu of purchasing or selling
financial and currency futures contracts. To hedge against a possible decrease
in the value of equity or debt securities or currency held in its portfolio, a
Fund may purchase put options and write call options on stock index, interest
rate or currency futures contracts, respectively. Similarly, in anticipation of
an increase in the prices of equity or debt securities or currency it intends to
purchase, a Fund may purchase call options or write put options on stock index
or interest rate or currency futures contracts, respectively.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
While the Funds use financial and currency futures and related options as
hedging devices, there are risks that the gains or losses in hedging devices
will not be offset by losses or gains in the hedged securities. One risk arises
because of imperfect correlation in the movement of prices of financial and
currency futures contracts and related options and the securities or currency
subject to the hedge. In the case of stock index futures and related options,
the risk of imperfect correlation increases as the composition of a Fund's
portfolio of equity securities diverges from the securities included in the
applicable stock index. In the case of interest rate or currency futures
contracts and related options, the risk of imperfect correlation presents the
possibility that a correct forecast of interest or exchange rate trends by the
Adviser may still not result in a successful hedging transaction. If the price
of a financial or currency futures contract or related option moves more than
the price of the hedged financial instrument, a Fund may experience either a
loss or a gain on the contract which will not be completely offset by movements
in the price of the hedged instrument.
Successful use of financial futures contracts and related options is
subject to the Adviser's ability to predict correctly movements in the direction
of the market. Similarly, successful use of currency futures and related options
depends, in part, on the Adviser's ability to predict changes in exchange rates.
Commodities exchanges and boards of trade have established limitations on the
maximum number of options that an investor or group of investors acting in
concert may write. It is possible that a Fund and other clients of the Adviser
may be considered such a group. Position limits may restrict a Fund's ability to
purchase or sell options on futures contracts.
OVER-THE-COUNTER DERIVATIVE TRANSACTIONS
A Fund may invest in options, futures and swaps and related products which
are often referred to as 'derivatives.' Derivatives may have a return that is
tied to a formula based upon an interest rate, index or other measurement which
may differ from the return of a simple security of the same maturity. A formula
may have a cap or other limitation on the rate of interest to be paid.
Derivatives may have varying degrees of volatility at different times, or under
different market conditions.
A Fund may enter into interest rate, currency and index swaps and the
purchase or sale of related caps, floors and collars. A Fund may enter into
these transactions to preserve a return or spread on a particular investment or
portion of its portfolio, to protect against currency fluctuations or to protect
against any increase in the price of securities it anticipates purchasing at a
later date. Interest rate swaps
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involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest, such as an exchange of floating rate
payments for fixed rate payments with respect to a notional amount of principal.
A currency swap is an agreement to exchange cash flows on a notional amount of
two or more currencies based on the relative value differential between them and
an index swap is an agreement to swap cash flows on a notional amount based on
changes in values of the reference indices. Swaps may be used in conjunction
with other derivative instruments to offset interest rate, currency or other
underlying risks. For example, interest rate swaps may be offset with 'caps,'
'floors' or 'collars.' A 'cap' is essentially a call option which places a limit
on the amount of floating rate interest that must be paid on a certain principal
amount. A 'floor' is essentially a put option which places a limit on the
minimum amount that would be paid on a certain principal amount. A 'collar' is
essentially a combination of a long cap and a short floor where the limits are
set at different levels.
A Fund will usually enter into swaps on a net basis; that is, the two
payment streams will be netted out in a cash settlement on the payment date or
dates specified in the instrument, with that Fund receiving or paying, as the
case may be, only the net amount of the two payments. To the extent obligations
created thereby may be deemed to constitute senior securities under the
Investment Company Act, that Fund will maintain required collateral in a
segregated account consisting of U.S. Government securities or cash or cash
equivalents.
SPECIAL RISKS OF OVER-THE-COUNTER DERIVATIVE TRANSACTIONS
Over-the-Counter ('OTC') derivative transactions differ from
exchange-traded derivative transactions in several respects. OTC derivatives are
transacted directly with dealers and not with a clearing corporation. Without
the availability of a clearing corporation, OTC derivative pricing is normally
done by reference to information from market makers, which information is
carefully monitored by the Adviser and verified in appropriate cases.
As OTC derivatives are transacted directly with dealers, there is a risk of
nonperformance by the dealer as a result of the insolvency of such dealer or
otherwise. An OTC derivative may only be terminated voluntarily by entering into
a closing transaction with the dealer with whom the Fund originally dealt. Any
such cancellation may require the Fund to pay a premium to that dealer. In those
cases in which a Fund has entered into a covered derivative transaction and
cannot voluntarily terminate the derivative, that Fund will not be able to sell
the underlying security until the derivative expires or is exercised or
different cover is substituted. The Funds intend to enter into OTC derivative
transactions only with dealers which agree to, and which are expected to be
capable of, entering into derivative closing transactions with such Fund. There
is also no assurance that a Fund will be able to liquidate an OTC derivative at
any time prior to expiration.
BORROWING
A Fund may from time to time increase its ownership of securities above the
amounts otherwise possible by borrowing from banks (other than those affiliated
with the Trust or any of its affiliates) and investing the borrowed funds. A
Fund also may borrow from those banks to facilitate the meeting of redemption
requests or for temporary or emergency purposes and may pledge its assets to
secure those borrowings. Any borrowings by a Fund will be made only to the
extent that the value of its assets, less its liabilities other than borrowings,
is equal to at least 300% of all of its borrowings (including reverse repurchase
agreements) computed at the time a loan is made. If the value of that Fund's
assets at any time should fail to meet the 300% asset coverage described above,
that Fund, within three days, is
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required to reduce its aggregate borrowings (including reverse repurchase
agreements) to the extent necessary to meet such asset coverage and may have to
sell a portion of its investments at a time when independent investment judgment
would not indicate such action.
RESTRICTED SECURITIES
Each Fund may invest up to 15% of its net assets in securities which are
considered to be illiquid, such as those subject to legal or contractual
restrictions on resale ('Restricted Securities') including securities that
cannot be sold unless registered under the Securities Act of 1933, as amended
(the 'Securities Act'), and securities which are not readily marketable, such as
repurchase agreements maturing in more than seven days. Generally, Restricted
Securities cannot be sold without the expense and time required to register the
securities under the Securities Act. Certain Restricted Securities may be sold
to institutional investors without registration pursuant to rules under the
Securities Act. The institutional trading market is relatively new and provides
liquidity for some Restricted Securities. Restricted Securities for which no
adequate trading market exists may be deemed illiquid securities. The Funds
currently do not invest in real estate which is considered to be an illiquid
investment.
REPURCHASE AGREEMENTS
A Fund may purchase securities and concurrently enter into 'repurchase
agreements.' A repurchase agreement typically involves a purchase of an
investment contract from a selling financial institution such as a bank or
broker-dealer, which contract is fully secured by government obligations or
other debt securities. The agreement provides that the purchaser will sell the
underlying securities back to the institution at a specified price and at a
fixed time in the future, usually not more than seven days from the date of
purchase. The difference between the purchase price and the resale price
represents the interest earned by the purchase, which is unrelated to the coupon
rate or maturity of the purchased security. In the event of the bankruptcy or
insolvency of the financial institution, the purchaser may be delayed in selling
the collateral underlying the repurchase agreement. Further, the law is
unsettled regarding the rights of the purchaser if the financial institution
which is a party to the repurchase agreement petitions for bankruptcy or
otherwise becomes subject to the U.S. Bankruptcy Code. Each Fund intends to
invest no more than 5% of its net assets in repurchase agreements. Repurchase
agreements of greater than seven days' maturity may be deemed to be illiquid.
REVERSE REPURCHASE AGREEMENTS
A reverse repurchase agreement involves the sale of a debt security owned
by a Fund coupled with an agreement by that Fund to repurchase the instrument at
a stated price, date and interest payment. A Fund will use the proceeds of a
reverse repurchase agreement to purchase other debt securities or to enter into
repurchase agreements maturing not later than the expiration of the prior
reverse repurchase agreement. When a Fund enters into a reverse repurchase
agreement, it will have securities designated to repurchase its securities.
A Fund will enter into a reverse repurchase agreement only when the
interest income to be earned from the investment of the proceeds of the
transaction is greater than the interest expense of the transaction. Under the
Investment Company Act, reverse repurchase agreements will be considered to be
borrowings by a Fund and, therefore, may be subject to the same risks involved
in any borrowing. A Fund may not enter into a reverse repurchase agreement if as
a result its current obligations under such
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agreements would exceed one-third the value of its net assets computed at the
time the reverse repurchase agreement is entered into. Each Fund does not intend
to invest more than 5% of the value of its net assets in reverse repurchase
agreements.
LENDING OF SECURITIES
A Fund may lend its portfolio securities to brokers, dealers and financial
institutions, provided outstanding loans do not exceed in the aggregate
one-third the value of its net assets and provided that such loans are callable
at any time by that Fund and are at all times secured by cash or equivalent
collateral that is equal to at least the market value, determined daily, of the
loaned securities. A Fund, however, may not enter into portfolio lending
arrangements with the Adviser or any of its affiliates absent appropriate
regulatory relief from applicable prohibitions contained in the Investment
Company Act. Each Fund intends to invest no more than 5% of the value of its net
assets to portfolio loans. The advantage of portfolio lending is that a Fund
continues to receive payments in lieu of the interest and dividends of the
loaned securities, while at the same time earning interest either directly from
the borrower or on the collateral, which may be invested in short-term
obligations.
As voting or consent rights which accompany loaned securities pass to the
borrower, a Fund will follow the policy of calling the loan, in whole or in part
as may be appropriate, to permit the exercise of such rights if the matters
involved would have a material effect on its investment in the securities which
are subject to the loan. A Fund will pay reasonable finders', administrative and
custodial fees in connection with a loan of its securities or may share the
interest earned on collateral with the borrower.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
From time to time, in the ordinary course of business, a Fund may purchase
securities on a when-issued or delayed delivery basis -- i.e., delivery and
payment can take place a month or more after the date of the transaction. The
purchase price, or the interest rate payable on debt securities, is fixed on the
transaction date. The securities so purchased are subject to market fluctuation,
and no interest or dividend accrues to such Fund until delivery and payment take
place. At the time a Fund makes the commitment to purchase securities on a
when-issued or delayed delivery basis, it will record the transaction, designate
liquid securities for completing the transactions and thereafter reflect the
value of such securities in determining its net asset value each day. Each Fund
currently intends to invest no more than 5% of the value of its net assets in
such transactions.
SHORT SALES
The Funds may make short sales and short sales against-the-box. Each Fund
currently intends to invest no more than 5% of the value of its net assets in
such transactions. A 'short sale' is a transaction in which a Fund sells a
security it does not own in anticipation of a decline in market price. In order
to deliver the security to the buyer, that Fund must arrange through a broker to
borrow the security. That borrowing arrangement, which may subject that Fund to
payment of a premium, obligates it to replace the borrowed security at its
market price. A Fund may incur a loss with respect to a short sale transaction,
if the market price of the security increases between the date of the short sale
and the date on which it replaces the borrowed security. A 'short sale
against-the-box' is a short sale where, at the time of the short sale, a Fund
owns or has the immediate and unconditional right to obtain securities identical
to those subject to the short sale.
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A Fund may make a short sale only if, at the time the short sale is made
and after giving effect thereto, the market value of all securities sold short
is one-third or less of the value of its net assets and the market value of
securities sold short which are not listed on a national securities exchange
does not exceed 10% of its net assets. A Fund's obligation to replace the
security borrowed in connection with a short sale will be secured by collateral
consisting of cash or U.S. Government securities or liquid securities that are
marked-to-market on a daily basis.
ARBITRAGE TRANSACTIONS
A Fund also may engage in arbitrage transactions involving near
contemporaneous purchase of securities on one market and sale of those
securities on another market to take advantage of pricing differences between
markets. A Fund will incur a gain to the extent that proceeds exceed costs and a
loss to the extent that costs exceed proceeds. The risk of an arbitrage
transaction, therefore, is that such Fund may not be able to sell securities
subject to an arbitrage at prices exceeding the costs of purchasing those
securities. A Fund will attempt to limit that risk by effecting arbitrage
transactions only when the prices of the securities are confirmed in advance of
the trade. Each Fund currently intends to invest no more than 5% of the value of
its net assets in such transactions.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies. Fundamental
policies are those which cannot be changed without the approval of the holders
of a majority of a Fund's outstanding voting securities. A 'majority of a Fund's
outstanding voting securities,' when used in this Statement of Additional
Information, means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are present in person or
represented by a proxy or (ii) more than 50% of the outstanding shares.
Neither First Eagle Fund of America nor First Eagle International Fund may:
1. Change its sub-classification under the Investment Company Act of
1940 from non-diversified to diversified.
2. Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow money from a bank (and may pledge its assets to
secure such borrowings) directly or through reverse repurchase agreements
for securities purchases, or temporarily to facilitate meeting redemption
requests or for emergency purposes, and by engaging in reverse repurchase
agreements with broker-dealers. The Fund may not, however, borrow money in
an aggregate amount exceeding 33 1/3% of the Fund's net assets. The
purchase or sale of securities on a when-issued or delayed delivery basis
and collateral arrangements with respect to futures contracts are not
deemed to be a pledge of assets; and neither such arrangements nor
investment in over-the-counter derivative transactions or the purchase or
sale of options on futures contracts on an exchange are deemed to be the
issuance of a senior security.
3. Act as underwriter except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
11
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4. Make loans, except through (i) repurchase agreements (repurchase
agreements with a maturity of longer than 7 days together with illiquid
assets being limited to 15% of the Fund's net assets) and (ii) loans of
portfolio securities.
5. Buy or sell real estate or interests in real estate, except that
the Fund may purchase and sell securities which are secured by real estate,
securities of companies which invest or deal in real estate and publicly
traded securities or real estate investment trusts.
6. Invest more than 25% of its assets in the securities of issuers
engaged in specific industries or industry groups.
7. Buy or sell commodities or commodity contracts except that the Fund
may purchase and sell commodity futures contracts to establish bona fide
hedge transactions.
The following investment restrictions are non-fundamental policies, which
may be changed at the discretion of the Board of Trustees after giving the
Shareholders at least 30 days' prior notice of the change.
Neither First Eagle Fund of America nor First Eagle International Fund may:
8. With respect to 50% of the value of its total assets, invest more
than 25% of the value of its total assets in the securities of one issuer,
and with respect to the other 50% of the value of its total assets, invest
more than 5% of the value of its total assets in the securities of one
issuer or acquire more than 10% of the outstanding voting securities of a
single issuer. This restriction shall not apply to U.S. Government
securities.
9. Purchase securities of any other investment companies, except (i)
by purchase in the open market involving only customary brokers'
commissions, (ii) in connection with a merger, consolidation,
reorganization or acquisition of assets or (iii) as otherwise permitted by
applicable law.
10. Pledge, mortgage or hypothecate its assets in an amount exceeding
33 1/3% of its total assets.
11. Invest in securities of any issuer if, to the knowledge of the
Fund, any officer, director or trustee of the Fund or the Fund's investment
adviser owns more than 1/2 of 1% of the outstanding securities of such
issuer, and such officers, directors or trustees who own more than 1/2 of
1% of such issuer's securities own in the aggregate more than 5% of the
outstanding securities of such issuer.
12. Purchase securities of any issuer if, as to 75% of the assets of
the Fund at the time of purchase, more than 10% of the voting securities of
such issuer would be held by the Fund.
TRUSTEES, OFFICERS AND PRINCIPAL STOCKHOLDERS
Pertinent information concerning the trustees and officers of the Trust is
set forth below. Some of the Trust's trustees and officers are employees of the
Adviser and its affiliates. At least a majority of the Trust's Board of Trustees
are not 'interested persons' of the Trust as that term is defined in the
Investment Company Act.
12
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<PAGE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS(1) THE TRUST DURING PAST 5 YEARS
- ------------------------------------- ----------------------- --------------------------------------------------
<S> <C> <C>
*John P. Arnhold..................... Trustee and Co-President and Director, Arnhold and S.
Co-President Bleichroeder, Inc.; President and Director,
Arnhold and S. Bleichroeder Advisers, Inc.;
Director, Aquila International Fund Ltd., The
Global Beverage Fund Ltd.; President, Worldvest,
Inc.
Candace K. Beinecke ................. Trustee Partner, Hughes Hubbard & Reed; Director, Jacob's
One Battery Park Plaza Pillow Dance Festival, Inc., Historic Preservation
New York, NY 10004 Projects, Inc. and Merce Cunningham Dance
Foundation, Inc.
Edwin J. Ehrlich .................... Trustee President, Ehrlich Capital Management; Director,
2976 Lonni Lane Pension Fund Trusts -- ITT Corp.; Advisory Board
Merrick, NY 11566 Member, Emerging World Investors Limited
K. Georg Gabriel .................... Trustee Senior Advisor, Strategic Investment Partners,
2401 Tracy Place, N.W. Inc.; Member, Investment Committee, Eugene and
Washington, D.C. 20008 Agnes Meyer Foundation
Robert J. Gellert ................... Trustee Manager, United Continental Corporation; General
122 East 42nd Street Partner, Windcrest Partners
New York, NY 10168
*Michael M. Kellen................... Trustee and Vice Director and Senior Vice President, Arnhold and S.
Chairman of the Board Bleichroeder, Inc.
William M. Kelly .................... Trustee Manager, Lingold Associates; Independent General
40 Wall Street Partner, ML Venture Partners II, L.P.; Trustee,
Suite 4201 New York Foundation; Treasurer and Trustee, Black
New York, NY 10005 Rock Forest Consortium
*Stanford S. Warshawsky.............. Trustee and Chairman of Co-President since 1994, Director and Secretary,
the Board previously Vice Chairman of the Board, Arnhold and
S. Bleichroeder, Inc.; Director, German-American
Chamber of Commerce
Harold J. Levy....................... Co-President Portfolio Manager, Arnhold and S. Bleichroeder
Advisers, Inc.; Principal, Iridian Asset
Management L.L.C.; Senior Vice President until
1996, Arnhold and S. Bleichroeder, Inc.; Director
since 1993, American Buildings Company
(table continued on next page)
</TABLE>
13
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<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS(1) THE TRUST DURING PAST 5 YEARS
- ------------------------------------- ----------------------- --------------------------------------------------
<S> <C> <C>
David L. Cohen....................... Senior Vice Portfolio Manager, Arnhold and S. Bleichroeder
President Advisers, Inc.; Principal, Iridian Asset
Management L.L.C.; Senior Vice President until
1996, Arnhold and S. Bleichroeder, Inc.
Arthur F. Lerner..................... Senior Vice Portfolio Manager, Arnhold and S. Bleichroeder
President Advisers, Inc.; Senior Vice President, Arnhold and
S. Bleichroeder, Inc.
Robert Miller........................ Treasurer Senior Vice President, Arnhold and S.
Bleichroeder, Inc.; Vice President, Arnhold and S.
Bleichroeder Advisers, Inc.
Robert Bruno......................... Vice President and Vice President, Arnhold and S. Bleichroeder, Inc.;
Secretary prior to 1997, President and Chief Operating
Officer, Coelho Associates LLC; and Senior Vice
President and Chief Admin. Officer, Schroeder
Wertheim Investment Services, Inc.
Martha B. Pierce..................... Vice President Vice President since 1997, previously Assistant
Vice President and Fund Administrator, Arnhold and
S. Bleichroeder, Inc.
Tracy LaPointe Saltwick.............. Vice President Senior Vice President since 1997 and prior thereto
Vice President, Arnhold and S. Bleichroeder, Inc.
Cari Levine.......................... Assistant Treasurer Fund Administrator, Arnhold and S. Bleichroeder,
Inc.
Suzan J. Afifi....................... Assistant Secretary Fund Administrator, Arnhold and S. Bleichroeder,
Inc. since 1997; prior thereto, Managing Director,
Effectinvest Bank, Vienna, Austria
</TABLE>
- ------------
* 'Interested' trustee, as defined in the Investment Company Act, by reason of
his affiliation with Arnhold and S. Bleichroeder, Inc. and Arnhold and S.
Bleichroeder Advisers, Inc.
(1) Unless otherwise stated, the address is: Arnhold and S. Bleichroeder, Inc.,
1345 Avenue of the Americas, New York, NY 10105.
The officers conduct and supervise the daily business operations of the
Trust, while the Trustees review such actions and decide on general policy.
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<PAGE>
Each Fund paid each of its Trustees who are not interested persons annual
compensation of $5,000 plus $500 per meeting of the Board and certain
out-of-pocket expenses. The following table sets out the compensation received
by each of the Trustees from First Eagle Fund of America for its most recently
completed fiscal year ended October 31, 1997 and from First Eagle International
Fund for its most recent ten-month fiscal period ended October 31, 1997.
<TABLE>
<CAPTION>
COMPENSATION
--------------------------------------------
FIRST EAGLE FIRST EAGLE
FUND OF INTERNATIONAL
NOMINEE AMERICA FUND TOTAL
- ----------------------------------------------------------- ----------- -------------- -------
<S> <C> <C> <C>
John P. Arnhold*........................................... 0 0 0
Candace K. Beinecke........................................ $ 8,750 0 $ 8,750
Edwin J. Ehrlich........................................... 0 $5,250 $ 5,250
K. Georg Gabriel........................................... $ 8,750 $5,250 $14,000
Robert J. Gellert.......................................... 0 $5,250 $ 5,250
Michael M. Kellen*......................................... 0 0 0
William M. Kelly........................................... 0 $5,250 $ 5,250
Stanford S. Warshawsky*.................................... 0 0 0
</TABLE>
On February 20, 1998, the Board of Trustees of the Trust approved an annual
retainer for each Trustee of $6,500 plus meeting fees of $750 per meeting. This
fee schedule is effective March 1, 1998. The Trust does not pay any compensation
to interested Trustees (indicated above by *) nor does it provide any retirement
or pension benefits for the Trustees.
As of December 29, 1997, the directors and officers of First Eagle Fund of
America, as a group, owned beneficially approximately 1,527,618 shares or 11.0%
of the outstanding common stock of First Eagle Fund of America. The directors
and officers of First Eagle International Fund, as a group, owned approximately
645,055 shares or 26.7% of the outstanding common stock of First Eagle
International Fund.
As of December 29, 1997, Arnhold and S. Bleichroeder, Inc. Profit Sharing
Plan, 1345 Avenue of the Americas, New York, NY 10105, owned beneficially and of
record approximately 14.7% of First Eagle International Fund's outstanding
shares.
Trustees and employees of the Trust, Arnhold and S. Bleichroeder, Inc. and
the Adviser are permitted to engage in personal securities transactions subject
to the restrictions and procedures contained in the Trust's Code of Ethics,
which was approved by the Board of Trustees of the Trust and by the Board of
Directors of the Adviser.
ADVISER
The Adviser, Arnhold and S. Bleichroeder Advisers, Inc., provides
investment advisory services as the investment adviser of First Eagle Fund of
America and First Eagle International Fund. For its services, the Adviser
receives, pursuant to an Investment Advisory Agreement between the Trust and the
Adviser (the 'Advisory Agreement'), an annual advisory fee of 1.0% of the
average daily net assets of each Fund. These fees, described in the Prospectus
under 'Adviser -- Advisory Fees,' are accrued daily and paid monthly. Prior to
February 28, 1998, Fund of America paid the Adviser a fee at the annual rate of
1.25% of average daily net assets. For the fiscal years ended October 31, 1995,
1996 and 1997, First Eagle Fund of America paid the Adviser an advisory fee of
$1,868,672, $1,838,840 and $2,672,362, respectively. Prior to February 28, 1998,
First Eagle International Fund paid the Adviser a fee at the annual rate of
1.50% of average daily net assets. For the years ended December 31, 1995 and
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1996 and for the fiscal period ended October 31, 1997, First Eagle International
Fund paid the Adviser an advisory fee of $338,062, $446,932 and $452,626,
respectively.
On February 19, 1998, the shareholders and on February 20, 1998, the Board
of Trustees of the Trust approved an Advisory Agreement between the Trust and
the Adviser effective February 27, 1998. The Advisory Agreement is substantially
the same as the prior investment advisory agreements between First Eagle Fund of
America, Inc. and the Adviser and between First Eagle International Fund, Inc.
and the Adviser except the new Advisory Agreement provides for monthly advisory
fee payments and reduces the rate of the advisory fees.
The Advisory Agreement will continue in effect for a period of more than
two years from the date of execution only so long as such continuance is
specifically approved at least annually in conformity with the Investment
Company Act. The Advisory Agreement provides that the Adviser will not be liable
for any error of judgment or for any loss suffered by the Funds in connection
with the matters to which the Advisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard of duty. The Advisory Agreement provides that it will terminate
automatically if assigned, within the meaning of the Investment Company Act, and
that it may be terminated without penalty by either party upon not more than 60
days' nor less than 30 days' written notice.
DISTRIBUTOR
Arnhold and S. Bleichroeder, Inc. (the 'Distributor'), a registered
broker-dealer, investment adviser and a member of the New York Stock Exchange
and the National Association of Securities Dealers ('NASD'), serves as the
distributor of the Funds' Class Y and Class C shares. The Distributor is engaged
in the investment advisory, securities brokerage and underwriting businesses.
The Funds' shares will be continuously offered on an agency basis on behalf of
the Funds, at the net asset value next determined after receipt of payment by
the Distributor, pursuant to a Distribution and Services Agreement with the
Trust (the 'Distribution Agreement'). The Distributor assumes the expenses
related to distributing the Funds' shares. Sales of the Funds' shares are not
subject to an initial sales charge.
The Distributor receives a fee at the annual rate of 0.25% of each Fund's
average daily net assets payable monthly, to cover expenses incurred by Arnhold
and S. Bleichroeder, Inc. for providing shareholder liaison services, including
assistance with subscriptions, redemptions and other shareholder questions. The
Funds' pay the Distributor a Rule 12b-1 fee on Class C shares at the annual rate
of 0.75% of the average net assets of each Fund's outstanding Class C shares.
Pursuant to the Distribution and Services Agreement, the Funds agreed to
indemnify the Distributor against certain liabilities under the Securities Act
of 1933, as amended (the 'Securities Act').
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities,
futures and options on securities, on indices and on futures for the Fund, the
selection of brokers, dealers and futures commission merchants to effect those
transactions and the negotiation of brokerage commissions, if any. Broker-
dealers and futures commission merchants may receive brokerage commissions on
Fund portfolio transactions, including options and the purchase and sale of
underlying securities or futures positions
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<PAGE>
upon the exercise of options. Orders may be directed to any broker or futures
commission merchant including, to the extent and in the manner permitted by
applicable law, the Adviser.
The Adviser has employment agreements with Harold J. Levy and David L.
Cohen to serve as portfolio managers for First Eagle Fund of America. Messrs.
Levy and Cohen are also the principal owners of Iridian Asset Management LLC
('Iridian'). The Distributor owns 27.5% of Iridian and pursuant to an operating
agreement with Iridian does not direct or control the management, affairs or
policies of Iridian. Harold J. Levy has been a portfolio manager of First Eagle
Fund of America since its inception, and David L. Cohen has been a portfolio
manager of First Eagle Fund of America since 1989. Portfolio trades for First
Eagle Fund of America are placed at Iridian and may be executed with similar
trades for other clients.
Equity securities traded in the over-the-counter market and bonds,
including convertible bonds, are generally traded on a 'net' basis with dealers
acting as principal for their own accounts without a stated commission, although
the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which includes
an amount of compensation to the underwriters, generally referred to as the
underwriter's concession or discount. On occasion, certain money market
instruments and U.S. Government agency securities may be purchased directly from
the issuer, in which case no commissions or discounts are paid. Each Fund will
not deal with the Distributor in any transaction in which the Distributor acts
as principal. Thus, it will not deal with the Distributor acting as market
maker, and it will not execute a negotiated trade with Distributor if execution
involves the Distributor acting as principal with respect to any part of a
Fund's order.
Portfolio securities may not be purchased from any underwriting or selling
group of which the Distributor, during the existence of the group, is a member,
except in accordance with rules of the Securities and Exchange Commission. This
limitation, in the opinion of the Trust, will not significantly affect a Fund's
ability to pursue its present investment objective.
In placing orders for portfolio securities or futures, the Adviser is
required to give primary consideration to obtaining the most favorable price and
efficient execution. Within the framework of this policy, the Adviser will
consider the research and investment services provided by brokers, dealers or
futures commission merchants who effect or are parties to portfolio transactions
of a Fund, the Adviser or the Adviser's other clients. Such research and
investment services are those which brokerage houses customarily provide to
institutional investors and include statistical and economic data and research
reports on particular companies and industries. Such services are used by the
Adviser in connection with all of its investment activities, and some of such
services obtained in connection with the execution of transactions for a Fund
may be used in managing other investment accounts. Conversely, brokers, dealers
or futures commission merchants furnishing such services may be selected for the
execution of transactions of such other accounts, whose aggregate assets are far
larger than either Fund, and the services furnished by such brokers, dealers or
futures commission merchants may be used by the Adviser in providing investment
management for a Fund. Commission rates are established pursuant to negotiations
with the broker, dealer or futures commission merchant based on the quality and
quantity of execution services provided by the executing party in the light of
generally prevailing rates. In addition, the Adviser is authorized to pay higher
commissions on brokerage transactions for the Fund to brokers other than the
Distributor in order to secure the research and investment services described
above, subject to review by the Board of Trustees from time to time as to
the extent and continuation of this practice. The allocation of orders among
brokers and the commission rates paid are reviewed periodically by the Board of
Trustees.
17
<PAGE>
<PAGE>
Subject to the above considerations, the Distributor may act as a
securities broker for a Fund. In order for the Distributor to effect any
portfolio transactions for a Fund, the commissions, fees or other remuneration
received by the Distributor must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
an Exchange during a comparable period of time. This standard would allow the
Distributor to receive no more than the remuneration which would be expected to
be received by an unaffiliated broker in a commensurate arm's-length
transaction. Furthermore, the Board of Trustees, including a majority of the
Trustees who are not 'interested' directors, has adopted procedures which are
reasonably designed to provide that any commissions, fees or other remuneration
paid to the Distributor is consistent with the foregoing standard. Brokerage
transactions with the Distributor also are subject to such fiduciary standards
as may be imposed by applicable law. From time to time a Fund may engage in
agency cross transactions with respect to securities that meet its investment
objective and policies. An agency cross transaction occurs when a broker sells
securities from one client's account to another client's account. Cross
transactions are executed with written permission from a Fund. This
authorization permits cross transactions only between a Fund on one side and
clients for which the Distributor acts as broker, but does not act as investment
adviser, on the other side. The authorization can be terminated at any time by
written notice to the Distributor. The Fund will not engage in cross
transactions with investment advisory clients of the Adviser or the Distributor.
A Fund may from time to time sell or purchase securities to or from
companies or persons who are considered to be affiliated with that Fund solely
because they are investment advisory clients of the Distributor, the Adviser or
Iridian. No consideration other than cash payment against prompt delivery at the
then current market price of the securities will be paid to any person involved
in those transactions. Additionally, all such transactions will be consistent
with procedures adopted by the Board of Trustees.
In accordance with Section 11(a) under the Securities Exchange Act of 1934,
the Distributor may not retain compensation for effecting transactions on a
national securities exchange for a Fund unless that Fund has expressly
authorized the retention of such compensation in a written agreement executed by
a Fund and the Distributor. Each Fund has provided the Distributor with such
authorization. Section 11(a) provides that the Distributor must furnish to each
Fund at least annually a statement disclosing the aggregate compensation
received by the exchange member in effecting such transactions.
For the years ended October 31, 1995, 1996 and 1997, First Eagle Fund of
America paid total brokerage commissions of $300,859, $438,434 and $453,073,
respectively, of which $81,744, $77,996 and $26,580, respectively, were paid to
the Distributor. For the year ended October 31, 1997, brokerage commissions paid
to the Distributor constituted 6% of the total brokerage commissions paid by
First Eagle Fund of America. For the year ended October 31, 1997, First Eagle
Fund of America effected 6% of the aggregate dollar amount of its portfolio
transactions involving the payment of commissions through the Distributor. Of
the total brokerage commissions paid during the fiscal year ended October 31,
1997, $395,217 (or 87%) were paid to firms which provided research, statistical
or other services. The Distributor has not separately identified a portion of
such brokerage commissions as applicable to the provision of such research,
statistical or other services.
For the years ended December 31, 1995 and 1996 and the fiscal period ended
October 31, 1997, First Eagle International Fund paid total brokerage
commissions of $136,574, $88,098 and $53,846, respectively, of which $38,565,
$31,964 and $7,709, respectively, were paid to the Distributor. For the
18
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<PAGE>
fiscal period ended October 31, 1997, brokerage commissions paid to the
Distributor constituted 14% of the total brokerage commissions paid by First
Eagle International Fund. For the fiscal period ended October 31, 1997, First
Eagle International Fund effected 26% of the aggregate dollar amount of its
portfolio transactions involving the payment of commissions through the
Distributor. Of the total brokerage commissions paid during the fiscal period
ended October 31, 1997, $46,137 (or 86%) were paid to firms which provided
research, statistical or other services. The Distributor has not separately
identified a portion of such brokerage commissions as applicable to the
provision of such research, statistical or other services.
STOCKHOLDER INVESTMENT ACCOUNT
Upon the initial purchase of shares of a Fund, an account is established
for each investor of record and maintained by the Transfer Agent. If a stock
certificate is desired, it must be requested in writing for each transaction.
Certificates are issued only for full shares and may be redeposited in the
stockholder's account at any time. There is no charge to the investor for
issuance of a certificate. Whenever a transaction takes place in the account,
the stockholder will be mailed a statement showing the transaction and the
status of the account. Additionally, the Transfer Agent will mail each
stockholder of record a quarterly statement of the stockholder's account.
Certain financial institutions maintain omnibus Accounts with the Transfer
Agent, and, in such cases, the investor's records are maintained by that
financial institution.
For the convenience of investors, all dividends and distributions of each
Fund are automatically reinvested in full and fractional shares of that Fund at
the net asset value per share at the close of business on the record date. An
investor may direct the Transfer Agent in writing not less than ten full
business days prior to the record date to have subsequent dividends and/or
distributions sent in cash rather than reinvested. In the case of recently
purchased shares for which registration instructions have not been received on
the record date, cash payment will be automatically reinvested. Any stockholder
who receives a cash payment representing a dividend or distribution may reinvest
such dividend or distribution by returning the check or the proceeds to the
Transfer Agent. Such investment will be made at the net asset value per share
next determined after receipt of the check or proceeds by the Transfer Agent.
REDEMPTIONS IN KIND
The Trust reserves the right, if conditions exist which make cash payments
undesirable, to make distribution payments in whole or part in readily
marketable securities. Each Fund has elected to be governed by Rule 18f-1
under the Investment Company Act and will redeem shares of a Fund solely in
cash up to the lesser of $250,000 or 1% of the net asset value of such Fund
during any 90-day period for any one shareholder. Securities given in a
redemption-in-kind distribution would be valued at the same
amount as assigned to them in calculating the net asset value for the
shares being sold. If a shareholder received a distribution in-kind, the
shareholder could incur brokerage or transaction charges when
converting the securities to cash.
TAXES
Each of the Funds will be treated as a separate corporation for purposes of
the Internal Revenue Code of 1986, as amended (the 'Code') (except for purposes
of the definitional requirements for regulated investment companies under Code
Section 851(a). By paying dividends representing its investment company taxable
income within the time periods specified in the Code and by meeting
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certain other requirements, the Funds intend to qualify as regulated investment
companies under the Code. Since each Fund will distribute annually its
investment company taxable income, net capital gains, and capital gain net
income, it will not be subject to income or excise taxes otherwise applicable to
undistributed income of a regulated investment company. If a Fund were to fail
to distribute all its income and gains, it would be subject to income tax and,
in certain circumstances, a 4% excise tax.
Qualification as a regulated investment company requires, among other
things, that (a) at least 90% of the Fund's annual gross income, without offset
for losses from the sale or other disposition of securities, consist of certain
types of qualifying income (the '90% test'); and (b) the Fund diversify its
holdings so that, at the end of each quarter of the taxable year, (i) at least
50% of the market value of the Fund's assets is represented by cash, cash items,
government securities, securities of other regulated investment companies and
other securities limited in respect of any one issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its assets is invested
in the securities of any one issuer (other than government securities and
securities of other regulated investment companies). Qualifying income for
purposes of the 90% test consists of income derived from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of securities, gains on the sale or exchange of foreign currencies
and other income (including gains from options, futures, or forward contracts)
derived from the business of investing in securities or currencies.
TAXATION OF SHAREHOLDERS
Dividends from net investment income and distributions from net short-term
capital gains are taxable to shareholders as ordinary income. For noncorporate
taxpayers, regardless of how long they have held a Fund's shares, distributions
of gains realized upon the sale of capital assets held more than 18 months are
subject to a maximum tax rate of 20% (10% for individuals in the 15% tax
bracket). Distributions of gains realized upon the sale of capital assets held
more than 12 months but not more than 18 months are subject to a maximum tax
rate of 28% (15% for individuals in the 15% tax bracket). Any loss realized by a
shareholder upon the disposition of Fund shares held for six months or less will
be treated as long-term capital loss to the extent of any amounts treated as
distributions of long-term capital gain held for more than one year during such
six-month period.
Depending on the composition of the Fund's income, all or a portion of the
dividends paid by First Eagle Fund of America from net investment income may
qualify for the dividends received deduction allowable to certain U.S. corporate
shareholders (the 'dividends received deduction'). In general, dividend income
distributed by First Eagle Fund of America to qualifying corporate shareholders
will be eligible for the dividends received deduction only to the extent that
(1) First Eagle Fund of America's income consists of dividends paid by U.S.
corporations; and (2) First Eagle Fund of America would have been entitled to
the dividends received deduction with respect to such dividend income if First
Eagle Fund of America was not a regulated investment company. The dividends
received deduction may be further reduced if First Eagle Fund of America shares
held by qualifying corporate shareholders with respect to such dividends
received are treated as debt financed or are deemed to have been held for less
than 46 days within a period beginning 45 days before and ending 45 days after
the ex-dividend date on common stock. A dividends received deduction for
dividends on preferred stock will be disallowed if the stock is held by First
Eagle Fund of America less than 91 days within a period beginning 90 days before
and ending 90 days after the ex-dividend date on the preferred stock. In
addition, the Code provides other limitations with respect to the ability of a
qualifying corporate
20
<PAGE>
<PAGE>
shareholder to claim the dividends received deduction in connection with holding
First Eagle Fund of America shares.
Investors who purchase shares shortly before the record date for a
distribution will pay a share price that includes the value of the anticipated
distribution and will be subject to tax on the distribution when it is received
even though with respect to them the distribution represents in effect a return
of a portion of their purchase price. Any loss realized on a sale or exchange of
shares will be disallowed if the shares disposed of are replaced within a period
of 61 days beginning 30 days before the shares are sold or exchanged. If
disallowed, the loss will be reflected in a adjustment to the basis of the share
acquired.
Individuals and certain other non-exempt payees will be subject to a 31%
backup Federal withholding tax on taxable distributions from a Fund, as well as
on the proceeds of redemptions of a Fund, if such Fund is not provided with the
shareholder's correct taxpayer identification number and certification that the
shareholder is not subject to such backup withholding, or if the Internal
Revenue Service notifies a Fund that the shareholder has failed to report proper
interest or dividends. For most individuals, the taxpayer identification number
is the taxpayer's social security number.
TAX TREATMENT CERTAIN TRANSACTIONS
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gain or loss. However, all or a portion of the gain or loss
from the disposition of non-U.S. dollar denominated securities (including debt
instruments, certain financial forward, futures and option contracts, and
certain preferred stock) may be treated as ordinary income or loss under Section
988 of the Internal Revenue Code. In addition and absent any election by the
Fund to accrue market discount daily, all or a portion of the gain realized from
the disposition of market discount bonds will be treated as ordinary income
under Section 1276 of the Internal Revenue Code. Finally, all or a portion of
the gain realized from engaging in 'conversion transactions' may be treated as
ordinary income under Section 1258 of the Internal Revenue Code. 'Conversion
transactions' are defined to include certain forward, futures, option and
straddle transactions, transactions marketed or sold to produce capital gains,
or transactions described in Treasury regulations to be issued in the future,
where substantially all of the expected return is attributable to the time value
of the investment. In addition, a 'short against the box' and other constructive
sales of appreciated financial positions will give rise to gain as if there were
an actual sale.
If a Fund enters into combinations of investment positions by virtue of
which its risk of loss from holding an investment position is reduced on account
of one (or more) other positions (i) losses realized on one position may be
deferred to the extent of any unrecognized gain on another position and (ii)
long-term capital gains or short-term capital losses may be recharacterized,
respectively, as short-term gains and long-term losses. The Federal income tax
treatment of gains and losses realized from transactions involving options on
stock or securities entered into a Fund will be as follows: Gain or loss from a
closing transaction with respect to options written by such Fund, or gain from
the lapse of any such option, will be treated as short-term capital gain or
loss. Gain or loss from the sale of put and call options that a Fund purchases,
and loss attributable to the lapse of such options, will be treated as capital
gain or loss. Whether, in the case of individual shareholders, distributions of
such gain or loss is subject to the 20% rate (10% for individuals in the 15% tax
bracket), 28% rate, or 39.6% rate depends upon whether the affected option has
been held for more than 18 months, more than 12 months but not more than 18
months, or not more than 12 months, respectively. For this purpose, an
unexercised option
21
<PAGE>
<PAGE>
will be deemed to have been sold on the date it expired. It should be noted,
however, that if a put is acquired at a time when the underlying stock or
security are acquired while such put is held, any gain on the subsequent
exercise, sale or expiration of the put will generally be short-term gain.
Any regulated futures contract or listed non-equity option held by a Fund
at the close of its taxable year will be treated as sold for its fair market
value on the last business day of such taxable year. Sixty percent of any gain
or loss with respect to such deemed sales, as well as the gain or loss from the
termination during the taxable year of such Fund's obligation (or rights) with
respect to such contracts by offsetting, by taking or making delivery, by
exercise or being exercised, by assignment or being assigned, by lapse, or
otherwise, will be treated as long-term capital gain or loss and the remaining
forty percent will be treated as short term capital gain or loss. A Fund may
make certain elections that modify the above tax treatment with respect to
regulated futures contracts or listed non-equity options that are part of a
mixed straddle, as defined by the Code.
A Fund may invest in certain investments that may cause it to realize
income prior to the receipt of cash distributions, including securities bearing
original issue discount. The level of such investments is not expected to affect
the Fund's ability to distribute adequate income to qualify as a regulated
investment company.
Treasury Regulations pursuant to Section 1092 provide for the coordination
of the wash sale rules and the short sale rules with the straddle rules.
Generally, the wash sale rules prevent the recognition of loss where a position
is sold at a loss and a substantially identical position is acquired within a
prescribed period. The short sale rules generally prevent the use of short sales
to convert short-term capital gain to long-term capital gain and long-term
capital loss to short-term capital loss.
In addition to the Federal income tax consequences described above relating
to an investment in a Fund, there may be other Federal, state, local or foreign
tax considerations that depend upon the circumstances of each particular
investor. Prospective shareholders are therefore urged to consult their tax
advisers with respect to the effects of this investment of their specific
situations.
Dividends and interest received by the Fund on foreign securities as well
as capital gains realized upon the sale of such securities, may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the U.S. may reduce or eliminate taxes. Foreign
taxes paid by the Fund will reduce its dividends. If more than 50% of the value
of a Fund's total assets at the end of each quarter of any fiscal year consists
of stock or other securities of foreign corporations, such Fund may elect to
treat certain foreign taxes paid by it, including withholding taxes, as paid by
its shareholders. If a Fund makes this election, the amount of foreign taxes
paid by such Fund will be included in its shareholders' pro rata share of such
Fund's income (in addition to taxable distributions actually received by them),
and the shareholders would be entitled (a) to credit their share of such taxes
against their U.S. federal income taxes (subject to generally applicable
limitations), or (b) if they itemize their deductions, to deduct their share of
such taxes from their gross income.
If a Fund purchases the stock of 'passive foreign investment companies'
('PFICs'), such Fund will be subject to tax under one of three regimes. Under
the default regime, gain on the sale of PFIC stock and certain 'excess
distributions' are treated as ordinary income and subject to an interest charge.
If the PFIC provides certain information and such Fund makes an election, it may
elect to include its pro rata share of the PFIC's capital gains and ordinary
income currently even if not distributed. In taxable years beginning after
December 31, 1997, a Fund may mark to market its PFIC shares if it is eligible
to do so and elects to do so; any resulting gain will be ordinary income and
losses will be ordinary losses to the extent or prior ordinary income.
22
<PAGE>
<PAGE>
PERFORMANCE INFORMATION
Each Fund may advertise its performance in terms of average annual total
return for 1, 5 and 10 year periods, or for such lesser periods as such Fund has
been in existence. Average annual total return is computed by finding the
average annual compounded rates of return over the 1, 5 and 10 year periods that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1 + T)'pp'n = ERV
<TABLE>
<S> <C> <C>
Where: P = A hypothetical initial payment of $1,000
T = Average annual total return
n = Number of years
ERV = Ending redeemable value of hypothetical $1,000 payment made at the beginning of
the 1, 5 or 10 year periods at the end of the 1, 5 or 10 year periods (or
fractional portion thereof)
</TABLE>
The calculation (i) assumes all dividends and distributions by the Fund are
reinvested at the price stated in the Prospectus on the reinvestment dates
during the period, (ii) includes all recurring fees that are charged to all
shareholder accounts, (iii) assumes complete redemption at the end of the 1, 5
or 10 year periods to determine the ending redeemable value and (iv) does not
take into account any federal or state income taxes that may be payable upon
redemption.
Each Fund may also advertise aggregate total return, which represents the
cumulative change in the value of a hypothetical initial investment of $1,000 in
such Fund assuming a constant rate of performance over a stated period of time.
Aggregate total return is computed according to the following formula:
ERV-P
-------
P
<TABLE>
<S> <C> <C>
Where: P = A hypothetical initial payment of $1,000
ERV = Ending redeemable value of hypothetical $1,000 payment made at the beginning of
the 1, 5 or 10 year periods at the end of the 1, 5 or 10 year periods (or
fractional portion thereof)
</TABLE>
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
AND INDEPENDENT AUDITORS
The Bank of New York serves as Custodian for the Funds' assets. BISYS Fund
Services, Inc. serves as Transfer and Dividend Disbursing Agent. In those
capacities, both The Bank of New York and BISYS Fund Services, Inc. maintain
certain financial and accounting books and records pursuant to agreements with
the Trust.
KPMG Peat Marwick LLP, 757 Third Avenue, New York, NY 10017 serves as the
Trust's independent auditors and in that capacity audits and reports on the
Trust's annual financial statements and financial highlights.
23
<PAGE>
<PAGE>
FIRST EAGLE FUND OF AMERICA, INC.
SCHEDULE OF INVESTMENTS
October 31,1997
<TABLE>
<CAPTION>
Shares COMMON STOCK (92.61%) Value
<S> <C> <C>
Aerospace/Defense (10.37%)
54,700 Alliant Techsystems Inc.* $ 3,254,650
103,700 General Dynamics Corp. 8,419,144
32,000 Litton Industries Inc.* 1,624,000
71,100 Lockheed Martin Corp. 6,758,944
301,600 Loral Space & Communications Ltd.* 6,333,600
------------
26,390,338
Banking/Financial (17.83%)
126,340 BankBoston Corp. 10,241,436
121,100 Block H&R Inc. 4,480,700
184,700 Dun & Bradstreet Corp. 5,275,494
182,600 Finova Group Inc. 8,022,987
31,000 Greenpoint Financial Corp. 1,995,625
82,300 Mellon Bank Corp. 4,243,594
66,946 NationsBank Corp. 4,008,392
8,100 PNC Bank Corp. 384,750
20,600 SLM Holdings Corp. 2,891,725
89,700 Summit Bancorp 3,829,069
------------
45,373,772
Consumer Products (4.13%)
59,500 Black & Decker Corp. 2,264,719
119,100 Coca-Cola Enterprises Inc. 3,349,687
147,600 Fortune Brands Inc. 4,880,025
------------
10,494,431
Energy (1.22%)
51,878 Tejas Gas Corp.* 3,109,438
Gaming (3.78%)
46,900 G Tech Holdings Corp.* 1,512,525
168,100 International Game Technology 4,297,056
152,000 Mirage Resorts Inc. 3,800,000
------------
9,609,581
Industrial Products (12.86%)
106,200 Cooper Industries Inc. 5,535,675
72,700 Dana Corp. 3,403,269
146,800 General Signal Corp. 5,890,350
81,200 Meritor Automotive Inc. 1,811,775
146,900 Millenium Chemicals Inc. 3,452,150
8,000 Triacq Corp.'D' 10,000
61,100 UCAR International Inc. 2,291,250
111,300 USG Corp. 5,251,969
58,200 U.S. Industries Inc. 1,564,125
59,900 Varian Associates Inc. 3,504,150
------------
32,714,713
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-1
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Shares COMMON STOCK (CONTINUED) Value
<S> <C> <C>
Insurance (5.35%)
74,500 Allstate Corp. $ 6,178,844
83,450 Aon Corp. 4,501,084
86,800 TIG Holdings Inc. 2,940,350
------------
13,620,278
Medical (11.40%)
180,740 Allegiance Corp. 5,015,535
100,900 Amgen Inc. 4,969,325
176,800 Biogen Inc. 5,922,800
225,300 St. Jude Medical Inc.* 7,041,594
225,300 U.S. Surgical Corp. 6,069,019
------------
29,018,273
Paper Products (1.04%)
63,500 Bowater Inc. 2,655,094
Technology (23.01%)
350,031 Aavid Thermal Technologies Inc.* 10,413,422
77,600 AMP Inc. 3,492,000
187,900 Ceridian Corp. 7,339,844
132,200 Cognizant Corp. 5,180,587
254,600 Comcast Corp Special Cl. A 7,001,500
74,500 Data General Corp. 1,434,125
47,100 International Business Machines Corp. 4,618,744
43,100 Quantum Corp. 1,363,037
122,700 Storage Technology Corp.* 7,200,956
270,800 Telecommunications Cl. A 6,211,475
149,100 Wang Laboratories Inc.* 3,447,937
28,200 Western Digital Corp. 844,237
------------
58,547,864
Transportation (1.62%)
16,600 CSX Corp. 907,813
90,000 Illinois Central Corp. 3,206,250
------------
4,114,063
------------
Total Common Stock (cost $192,275,508) 235,647,845
PREFERRED STOCK (1.58%)
698 Assistive Technology Project Inc. Ser. A'D' 500,000
250 Assistive Technology Project Inc. Ser. C'D' 250,000
232,140 PAS Research Inc. Ser. B'D' 669,492
59,040 Shape Technology Inc. Ser. A Conv.'D' 300,000
1,200 Tidewater Holdings Inc. Ser. A Conv.'D' 1,200,000
10,900 Triacq Corp. Ser. A 10% Cum.'D' 1,090,000
------------
4,009,492
Total Preferred Stock (cost $4,709,492)
Units OTHER INVESTMENTS (.43%)
16.16162 Euro Outlet Malls, L.P.'D' (cost $1,100,000) 1,100,000
Contracts CALL OPTIONS (3.16%)
1,500 IBM Call @ 45 Exp. Jan. 1998 (cost $2,487,063) 8,025,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal NOTES (.02%) Value
<S> <C> <C>
$ 50,000 Assistive Technology Project Inc. @ 8% due 9/1/99'D'
(cost $50,000) $ 50,000
SHORT TERM INVESTMENTS (1.34%)
650,000 United States Treasury Bill due 11/28/97 647,628
2,800,000 United States Treasury Bill due 1/15/98 2,771,384
------------
Total Short Term Investments ($3,418,905) 3,419,012
------------
Total Investments** (cost $204,040,968) 252,251,349
OTHER ASSETS IN EXCESS OF OTHER LIABILITIES (.86%) 2,186,976
------------
NET ASSETS (100.00%) $254,438,325
------------
------------
</TABLE>
<TABLE>
<S> <C>
* Non-income producing security.
** Aggregate cost for federal income tax purposes is substantially the same.
'D' Restricted security priced at fair value by the Board of Directors. Represents
ownership interest in a security which has not been registered with the Securities and
Exchange Commission under the Securities Act of 1933. Information concerning each
restricted security holding on October 31, 1997 is shown below:
</TABLE>
<TABLE>
<CAPTION>
Security Acquisition Date Cost
-------------------------------------------------------------------------- ----------
<S> <C> <C> <C>
Assistive Technology Project Inc. Ser. A Pfd. Stock 10/3/95 $ 500,000
Assistive Technology Project Inc. Ser. C Pfd. Stock 12/19/96 $ 250,000
Assistive Technology Project Inc. Note @ 8% due 9/1/99 7/9/97 $ 50,000
Euro Outlet Malls, L.P. 12/30/94 $1,100,000
PAS Research Inc. Ser B Pfd. Stock 4/10/96 $ 669,492
Shape Technology Inc. Ser. A Conv. Pfd. Stock 11/29/94 $1,000,000
Tidewater Holdings Inc. Ser. A Conv. Pfd. Stock 7/9/96 $1,200,000
Triacq Corp. Common Stock 7/27/95 $ 10,000
Triacq Corp. Ser. A 10% Cum. Pfd. Stock 7/27/95 $1,090,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<PAGE>
FIRST EAGLE FUND OF AMERICA, INC.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (cost $204,040,968) $252,251,349
Cash 353,772
Dividends and interest receivable 210,276
Receivable for fund shares sold 6,995
Receivable for investments sold 3,556,064
------------
TOTAL ASSETS 256,378,456
------------
LIABILITIES:
Payable for investments purchased 879,735
Payable for fund shares redeemed 20,281
Management fee payable 807,918
Services fee payable 158,217
Accrued operating expenses 73,980
------------
TOTAL LIABILITIES 1,940,131
------------
NET ASSETS: $254,438,325
------------
------------
Net Assets were comprised of:
Common stock (par $0.01) authorized 1,000,000,000 shares,
outstanding 12,356,370 shares (Note 6) $ 123,564
Paid-in-surplus 173,892,448
------------
174,016,012
Net unrealized appreciation on investments 48,210,381
Accumulated net realized gain on investments 32,207,528
Undistributed net investment income 4,404
------------
NET ASSETS, October 31, 1997 $254,438,325
------------
------------
Net Asset Value per share:
($254,438,325[div]12,356,370 shares of common stock issued and outstanding) $20.59
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<PAGE>
FIRST EAGLE FUND OF AMERICA, INC.
STATEMENT OF OPERATIONS
October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income $ 2,542,127
Interest income 386,996
-----------
TOTAL INCOME 2,929,123
-----------
EXPENSES:
Management fee (note 2) 2,672,362
Services fee (note 2) 534,472
Transfer agent fees 81,319
Legal fees 63,203
Custodian fees 61,197
Registration expenses 44,536
Audit fees 43,250
Accounting fees 42,000
Directors' fees 41,750
Printing expenses 20,845
Miscellaneous expenses 14,130
-----------
TOTAL EXPENSES 3,619,064
Less: Custody earnings credits (note 3) (29,758)
-----------
NET EXPENSES 3,589,306
-----------
NET INVESTMENT LOSS (660,183)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 49,926,578
Change in unrealized appreciation on investments 5,949,601
-----------
NET GAIN ON INVESTMENTS 55,876,179
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $55,215,996
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<PAGE>
FIRST EAGLE FUND OF AMERICA, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the year For the year
ended ended
October 31, October 31,
1997 1996
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss $ (660,183) $ (342,449)
Net realized gain on investments 49,926,578 26,760,910
Net change in unrealized appreciation on investments 5,949,601 8,542,201
------------ ------------
Net increase in net assets resulting from operations 55,215,996 34,960,662
Dividends and distributions to shareholders:
Dividends from net investment income -- --
Distributions from net realized gains (27,243,648) (19,111,177)
Transactions in fund shares-net 63,063,130 13,203,182
------------ ------------
Total increase 91,035,478 29,052,667
NET ASSETS:
Beginning of year 163,402,847 134,350,180
------------ ------------
End of year $254,438,325 $163,402,847
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each period:
<TABLE>
<CAPTION>
For the year ended
October 31,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $17.97 $16.28 $15.45 $16.53 $13.36 $12.35
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss) (0.06) (0.04) (0.04) (0.12) (0.22) (0.15)
Net gains (losses) on
securities (both realized
and unrealized) 5.31 4.08 2.87 0.66 4.56 1.98
------ ------ ------ ------ ------ ------
Total from investment
operations 5.25 4.04 2.83 0.54 4.34 1.83
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) -- -- -- -- -- (0.08)
Distributions (from capital
gains) (2.63) (2.35) (2.00) (1.62) (1.17) (0.74)
------ ------ ------ ------ ------ ------
Total distributions (2.63) (2.35) (2.00) (1.62) (1.17) (0.82)
------ ------ ------ ------ ------ ------
Net asset value, end of year $20.59 $17.97 $16.28 $15.45 $16.53 $13.36
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Total Return* 31.0% 27.1% 21.6% 3.8% 35.2% 16.0%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $254,438,325 $163,402,847 $134,350,180 $120,515,968 $107,344,171 $76,599,310
Ratio of expenses to average
net assets(1) 1.7% 1.8% 1.9% 1.9% 2.9% 3.0%
Ratio of net investment income
(loss) to average net assets (0.3)% (0.2)% (0.3)% (0.7)% (1.5)% (1.0)%
Portfolio turnover rate 98% 93% 81% 125% 141% 145%
Average commission rate paid
on portfolio security
purchases and sales
transactions(2) $0.05 $0.04 -- -- -- --
<CAPTION>
April 10,
1987**
For the year ended through
October 31, October 31,
---------------------------------------------------------- ------------
1991 1990 1989 1988 1987
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $10.35 $14.04 $11.65 $9.17 $10.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss) 0.09 0.16 0.16 (0.03) 0.07
Net gains (losses) on
securities (both realized
and unrealized) 2.20 (2.34) 2.57 2.58 (0.90)
------ ------ ------ ------ ------
Total from investment
operations 2.29 (2.18) 2.73 2.55 (0.83)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.29) (0.11) -- (0.07) --
Distributions (from capital
gains) -- (1.40) (0.34) -- --
------ ------ ------ ------ -----
Total distributions (0.29) (1.51) (0.34) (0.07) --
------ ------ ------ ------ -----
Net asset value, end of year $12.35 $10.35 $14.04 $11.65 $9.17
------ ------ ------ ------ -----
------ ------ ------ ------ -----
Total Return* 22.7% (17.7)% 24.2% 28.0% (8.3)%'D''D'
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $74,279,164 $66,729,536 $83,619,552 $54,271,271 $27,194,056
Ratio of expenses to average
net assets(1) 2.0% 1.1% 2.0% 3.3% 2.5%'D'
Ratio of net investment income
(loss) to average net assets 0.8% 1.3% 1.3% (0.2)% 1.2%'D'
Portfolio turnover rate 92% 72% 52% 55% 84%
Average commission rate paid
on portfolio security
purchases and sales
transactions(2) -- -- -- -- --
</TABLE>
* Past performance is not predictive of future performance.
** Commencement of investment operations.
'D' Annualized.
'D''D' Total return not annualized.
(1) During the years ended October 31, 1997 and October 31, 1996, the Fund
has earned credits from the custodian which reduce service fees incurred.
If the credits are taken into consideration, the ratio of expenses to
average net assets would be 1.7% and 1.8% respectively.
(2) For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose the average commission rate per share for trades on
which commissions are charged.
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
<PAGE>
FIRST EAGLE FUND OF AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES -- First Eagle Fund of America,
Inc. (the 'Fund') is registered under the Investment Company Act of 1940, as
amended (the 'Act') as a non-diversified, open-end management investment company
and was incorporated in Maryland on December 11, 1986. The Fund had no
operations until the sale to Arnhold and S. Bleichroeder, Inc. ('ASB') of 10,000
shares of its common stock for $100,000 on February 12, 1987. Investment
operations commenced April 10, 1987.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Any security for which the primary market is on
an exchange is valued at the last sale price on such exchange on the day of
valuation or, if there was no sale on such day, the mean between the last bid
and asked prices quoted on such day. Equity securities listed on the NASDAQ
National Market System are valued at the last sale price or, if there was no
sale on such day, at the mean between the most recently quoted bid and asked
prices. Corporate bonds (other than convertible debt securities) and U.S.
Government Securities that are actively traded in the over-the-counter market,
including listed securities for which the primary market is believed to be
over-the-counter, are valued on the basis of valuations provided by a pricing
service which uses information with respect to transactions in bonds, quotations
from bond dealers, market transactions in comparable securities and various
relationships between securities in determining value. Other securities are
valued at the mean between the most recently quoted bid and asked prices.
Short-term debt instruments which mature in less than 60 days are valued at
amortized cost, unless the Board of Directors determines that such valuation
does not represent fair value. Securities which are otherwise not readily
marketable or securities for which market quotations are not readily available
are valued in good faith at fair value in accordance with procedures adopted by
the Fund's Board of Directors. A Valuation Committee of the Board of Directors
has been established to determine the value of such securities after
consultation with the Fund's investment adviser.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains or losses
on security transactions are determined based on the first-in, first-out method.
Discounts and premiums on purchases of investments are accreted and amortized,
respectively, as adjustments to interest income and cost of securities. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
OPTIONS: In order to produce incremental earnings or protect against changes in
the value of portfolio securities, the Fund may buy and sell put and call
options, write covered call options on portfolio securities and write
cash-secured put options.
The Fund generally purchases put options or writes covered call options to hedge
against adverse movements in the value of portfolio holdings. The Fund may also
use options for speculative purposes, although it does not employ options for
this purpose at the present time. The Fund will segregate assets to cover its
obligations under option contracts.
F-8
<PAGE>
<PAGE>
Options contracts are valued daily based upon the last sale price on the
principal exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on the sales of a written call option, the purchase cost of a
written put option, or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or paid.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
of buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist. The Fund may
also write over-the-counter options where the completion of the obligation is
dependent upon the credit standing of the counterparty.
SHORT SALES: The Fund may make short sales of securities. A short sale is a
transaction in which the Fund sells a security it does not own in anticipation
of a decline in market price. When the Fund makes a short sale, the proceeds it
receives are retained by the broker until the Fund replaces the borrowed
security. If the price of the security sold short increases between the time of
the short sale and the time the Fund replaces the borrowed security, the Fund
will incur a loss, and if the price declines during this period, the Fund will
realize a gain. Any gain will be decreased, and any incurred loss increased by
the amount of transaction costs and any dividends or interest which the Fund may
have to pay in connection with such short sale are recorded as expenses.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment
income, if any, and distribution of net realized gain from investment
transactions, if any, will be made annually. The Fund records dividends and
distributions to its shareholders on the record date.
Income and capital gain distributions are determined in accordance with federal
income tax regulations which may differ from generally accepted accounting
principles primarily due to the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for federal income tax purposes and net
investment losses which for federal income tax purposes cannot be used to offset
future net investment income. Accordingly, a permanent book and tax basis
difference of $38,746 was reclassified by the Fund to paid in surplus.
E. ESTIMATES AND ASSUMPTIONS -- Estimates and assumptions are required to be
made regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in economic
environment, financial markets and any other parameters used in determining
these estimates could cause results to differ from these amounts.
F-9
<PAGE>
<PAGE>
NOTE 2. INVESTMENT ADVISORY AGREEMENT AND SERVICES AGREEMENT -- Arnhold and S.
Bleichroeder Advisers, Inc. (the 'Adviser'), a wholly owned subsidiary of ASB,
manages the Fund. The Investment Advisory Agreement provides that, subject to
the direction of the Fund's Board of Directors, the Adviser is responsible for
the management of the Fund's portfolio. Accordingly, the Adviser will furnish
advice and recommendations with respect to the Fund's portfolio of investments.
The Adviser is responsible for the continuous supervision of the Fund's
portfolio. Harold J. Levy, a Portfolio Manager of the Adviser, has been a
portfolio manager of the Fund since its inception and David L. Cohen, also a
Portfolio Manager of the Adviser, has been a portfolio manager of the Fund since
1989. Together, they are responsible for the day-to-day management of the Fund's
portfolio.
For the advisory services provided by the Adviser, the fee arrangement requires
the Fund to pay an annual management fee of 1.25% of the Fund's average daily
net assets payable quarterly. The annual advisory fee may be higher than that
paid by most other registered investment companies.
ASB receives an annual services fee of up to 0.25% of the Fund's average daily
net assets payable quarterly, pursuant to a separate services agreement which
was approved by the Board of Directors, to cover expenses incurred by ASB for
providing administrative and fund accounting support services and shareholder
liaison services, including assistance with subscriptions, redemptions and other
shareholder questions. ASB determined that the volume and demand for shareholder
liaison services required staffing in addition to the personnel responsible for
investment advisory services.
NOTE 3. CUSTODIAN FEES -- The Fund has entered into an expense offset agreement
with its custodian wherein it receives credit toward the reduction of custodian
fees whenever there are uninvested cash balances. As of October 31, 1997 the
Fund's custodian fees and related offset were $61,197 and $29,758, respectively.
NOTE 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities for the year ended
October 31, 1997 excluding short-term investments, were $234,902,341 and
$202,248,713, respectively.
Transactions in options written for the year ended October 31, 1997 were as
follows:
<TABLE>
<CAPTION>
Number of Contracts Premiums
------------------- --------
<S> <C> <C>
Options outstanding at October 31, 1996............................. 0 $ 0
Options written..................................................... 3,000 740,975
Options exercised................................................... 0 0
Options expired/closed.............................................. 3,000 740,975
------ --------
Options outstanding at October 31, 1997............................. 0 $ 0
------ --------
------ --------
</TABLE>
For the year ended October 31, 1997, the Fund paid brokerage commissions on
securities transactions of $453,073 of which $26,580 was paid to ASB.
F-10
<PAGE>
<PAGE>
NOTE 5. FEDERAL INCOME TAXES -- The United States federal income tax basis of
the Fund's investments at October 31, 1997 was substantially the same as the
basis for financial reporting purposes and accordingly, the aggregage gross
unrealized appreciation on investments was $55,633,165 and the aggregate
unrealized gross depreciation was $7,422,784, resulting in net unrealized
appreciation for United States federal income tax purposes of $48,210,381.
NOTE 6. COMMON STOCK -- Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
For the year For the year
ended October 31, 1997 ended October 31, 1996
-------------------------- --------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Beginning of year......................... 9,094,649 $110,991,628 8,252,291 $ 97,782,887
---------- ------------ ---------- ------------
Shares sold............................... 3,081,544 59,873,730 1,051,596 18,615,595
Shares redeemed........................... (1,095,568) (21,261,845) (1,210,439) (21,223,575)
Reinvested distributions.................. 1,275,745 24,451,245 1,001,201 15,811,162
---------- ------------ ---------- ------------
Net increase.............................. 3,261,721 63,063,130 842,358 13,203,182
---------- ------------ ---------- ------------
Adjustment representing
other-than-temporary book-tax
differences............................. -- (38,746) -- 5,559
---------- ------------ ---------- ------------
End of year............................... 12,356,370 $174,016,012 9,094,649 $110,991,628
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
Of the 12,356,370 shares of common stock outstanding at October 31, 1997, ASB
owned 23,542 shares and the ASB Profit Sharing Plan owned 464,909 shares. The
directors and officers of the Fund, as a group, owned approximately 403,065
shares at October 31, 1997.
F-11
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and
Board of Directors
First Eagle Fund of America, Inc.
We have audited the accompanying statement of assets and liabilities and
the schedule of investments of First Eagle Fund of America, Inc. as of October
31, 1997, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the years in the two-year period
then ended, and the financial highlights for each of the years in the five-year
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by the custodian. As to securities purchased
and sold but not received or delivered, we performed other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
First Eagle Fund of America as of October 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and financial highlights for the
five-year period then ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
December 8, 1997
F-12
<PAGE>
<PAGE>
FIRST EAGLE INTERNATIONAL FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
Shares STOCK (83.66%) Value
<S> <C> <C>
Finland (3.01%)
29,000 KCI Konecranes International (building cranes) US$ 1,094,388
France (8.25%)
7,700 Atos SA* (information technology) 866,846
12,000 AXA-UAP (insurance) 823,483
5,500 Elf Aquitaine SA (oil exploration and production) 682,240
1,792 Lambert Dodard Chancereul (food processing) 289,533
6,500 Michelin (tires) 334,145
-------------
2,996,247
Germany (21.60%)
9,000 Adidas AG (sporting goods) 1,304,649
10,000 Boewe Systec AG (electronics) 296,313
7,000 Deutsch Pfandbrief AG (mortgage bank) 395,723
13,000 Deutsche Lufthansa AG (airlines) 227,348
11,000 Fresenius Medical Care AG (dialysis centers) 776,515
5,078 Hannover Rueckversicherungs AG (insurance) 379,710
22,400 Leica Camera AG (cameras) 520,582
15,600 Metro AG (retail department stores) 687,028
5,000 Siemens AG (conglomerate) 308,224
35,000 SKW Trostberg AG (specialty chemicals) 1,203,845
2,950 Volkswagen AG (automobiles) 1,746,534
-------------
7,846,471
Italy (5.94%)
50,000 Aeroporti Di Roma SpA (Rome airport) 454,250
250,000 Credito Italiano (insurance) 667,840
46,200 Industrie Natuzzi SpA ADR (leather furniture) 1,033,725
-------------
2,155,815
Japan (1.73%)
50,000 Kirin Brewing Ltd. (brewery) 419,889
58,000 Nikko Securities Company (financial) 209,778
-------------
629,667
Mexico (1.72%)
14,400 Telefonos de Mexico ADR (telecommunications) 622,800
Netherlands (20.24%)
33,500 Aalberts Industries NV (specialty valves) 878,616
36,000 Ahrend NV (office furniture) 1,200,171
32,000 Hunter Douglas NV (window treatments) 1,319,096
23,000 IHC Caland NV (dredging & offshore equipment) 1,415,040
10,000 Nedcon Group NV (warehouse infrastructures) 561,646
15,000 Samas-Group NV (office supplies) 684,023
10,521 Wolters Kluwer NV (publishing) 1,292,408
-------------
7,351,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Shares STOCK (CONTINUED) Value
<S> <C> <C>
Russia (0.71%)
7,500 Lukoil Holdings Pfd. ADR (oil) US$ 256,409
Spain (1.21%)
4,000 Azkoyen SA (vending machines) 440,561
Sweden (0.72%)
10,000 Volvo AB 'B' (automobiles) 261,884
Switzerland (4.25%)
625 Novartis AG Basel (pharmacuticals) 981,552
4,000 Selecta Group AG* (vending machines) 561,449
-------------
1,543,001
United Kingdom (7.40%)
205,000 American Port Services (seaport services) 654,872
41,237 J.D. Wetherspoon Plc. (pubs) 1,116,779
200,000 WPP Group (advertising) 915,588
-------------
2,687,239
United States (6.88%)
35,000 Hirsch International Corp. (embroidery machines) 660,625
39,000 Nautica Enterprises Inc.* (retail sportswear) 1,038,375
40,000 Walter Industries Inc.* (housing) 800,000
-------------
2,499,000
-------------
Total Stock (cost $24,889,559) 30,384,482
WARRANTS (4.98%)
Germany (4.59%)
9,000 Allianz Exp. 2/23/98 (insurance) 977,833
30,000 Robert Fleming Commerzbank Exp. 12/1/98 (banking) 404,380
25,000 Deutsche Bank Exp. 6/25/98 (banking) 283,241
-------------
1,665,454
Italy (0.39%)
1,700,000 ENI SpA Exp. 1/4/99 (energy) 143,431
-------------
Total Warrants (cost $1,297,015) 1,808,885
<CAPTION>
Principal SHORT TERM INVESTMENTS (12.28%)
<S> <C> <C>
US$ 500,000 US Treasury Bill due 12/11/97 497,428
4,000,000 US Treasury Bill due 1/8/98 3,963,040
-------------
Total Short Term Investments (cost $4,460,044) 4,460,468
-------------
Total Investments (cost $30,646,618) 36,653,835
-------------
OTHER LIABILITIES IN EXCESS OF OTHER ASSETS (-0.92%) (333,625)
-------------
NET ASSETS (100.00%) $36,320,210
-------------
-------------
</TABLE>
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
<PAGE>
FIRST EAGLE INTERNATIONAL FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (cost $30,646,618) $36,653,835
Cash 764,301
Receivable for fund shares sold 1,402
Dividends and interest receivable 45,095
Receivable from Adviser (note 2) 134,696
Deferred organization expenses 41,440
-----------
TOTAL ASSETS $37,640,769
-----------
LIABILITIES:
Payable for fund shares redeemed 1,878
Payable for open forward foreign
currency contracts (note 7) 1,150,366
Payable for closed forward foreign
currency contracts 31,781
Management fee payable 49,276
Accrued operating expenses 87,258
-----------
TOTAL LIABILITIES 1,320,559
-----------
NET ASSETS $36,320,210
-----------
-----------
Net Assets were comprised of:
Common stock (par $0.01) authorized 1,000,000,000 shares,
outstanding 2,246,039 shares (note 6) $ 22,460
Paid-in-surplus (note 6) 28,510,248
-----------
28,532,708
Net unrealized appreciation (depreciation) on:
Investments and translation of assets and liabilities in
foreign currencies 6,007,966
Forward foreign currency contracts (1,150,366)
Accumulated net realized gain on investments 2,929,902
-----------
NET ASSETS, October 31, 1997 $36,320,210
-----------
-----------
Net Asset Value per share:
($36,320,210 [div] 2,246,039 shares of common stock issued and outstanding) $16.17
------
------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-15
<PAGE>
<PAGE>
FIRST EAGLE INTERNATIONAL FUND, INC.
STATEMENT OF OPERATIONS
For the period from January 1, 1997 to October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of $62,858 foreign taxes withheld) $ 317,488
Interest income 101,045
-----------
TOTAL INCOME 418,533
-----------
EXPENSES:
Management fee (note 2) 452,626
Services fee (note 2) 75,438
Accounting fees 55,000
Audit fees 43,125
Legal fees 38,000
Transfer agent fees 37,168
Custodian fees 32,693
Directors' fees 26,250
Organizational expense amortization 24,320
Printing expenses 20,172
Registration expenses 18,914
Miscellaneous expenses 3,668
-----------
TOTAL EXPENSES 827,374
-----------
Less: Custody earnings credits (note 3) (13,739)
Management fee waiver (note 2) (134,696)
-----------
NET EXPENSES 678,939
-----------
NET INVESTMENT LOSS (260,406)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain:
Investments 2,017,726
Forward foreign currency contracts 1,143,707
-----------
Net realized gain on investments 3,161,433
Change in unrealized appreciation (depreciation) on:
Investments and translation of assets and liabilities in foreign currencies 660,681
Forward foreign currency contracts (1,150,366)
-----------
Net change in unrealized appreciation (depreciation) on investments (489,685)
NET GAIN ON INVESTMENTS 2,671,748
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,411,342
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-16
<PAGE>
<PAGE>
FIRST EAGLE INTERNATIONAL FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the period from For the year
January 1, 1997 to ended
October 31, 1997 December 31, 1996
------------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss $ (260,406) $ (330,345)
Net realized gain on investments 3,161,433 1,310,638
Net change in unrealized appreciation (depreciation) on
investments (489,685) 3,224,827
------------------- -----------------
Net increase in net assets resulting from operations 2,411,342 4,205,120
Dividends and distributions to shareholders:
Distributions from net realized gains -- (1,003,040)
Transactions in fund shares-net 1,803,588 6,482,311
------------------- -----------------
Total increase 4,214,930 9,684,391
NET ASSETS:
Beginning of period 32,105,280 22,420,889
------------------- -----------------
End of period $36,320,210 $32,105,280
------------------- -----------------
------------------- -----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-17
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each period:
<TABLE>
<CAPTION>
For the year ended
For the period from December 31, April 4, 1994**
January 1, 1997 --------------------- through
October 31, 1997 1996 1995 December 31, 1994
------------------- ------ ------ -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 15.04 $13.38 $12.37 $ 12.50
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.12) (0.16) (0.13) (0.02)
Net gains (losses) on securities
(both realized and unrealized) 1.25 2.29 1.57 (0.11)
------- ------ ------ -------
Total from investment
operations 1.13 2.13 1.44 (0.13)
------- ------ ------ -------
LESS DISTRIBUTIONS
Dividends (from net investment
income) -- -- -- --
Distributions (from capital
gains) -- (0.47) (0.43) --
------- ------ ------ -------
Total distributions -- (0.47) (0.43) --
------- ------ ------ -------
Net asset value, end of period $ 16.17 $15.04 $13.38 $ 12.37
------- ------ ------ -------
------- ------ ------ -------
Total Return* 7.5%'D''D' 15.9% 11.6% (1.0)%'D''D'
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $36,320,210 $32,105,280 $22,420,889 $20,152,024
Ratio of expenses to average net
assets(1) 2.25%'D' 2.90% 3.10% 2.00%'D'
Ratio of net investment loss to
average net assets (1.0)%'D' (1.1)% (1.1)% (0.3)%'D'
Portfolio turnover rate 54% 101% 166% 170%
Average commission rate paid on
portfolio security purchases and
sales transactions(2) $ 0.04 $ 0.03 -- --
</TABLE>
* Past performance is not predictive of future performance.
** Commencement of investment operations
'D' Annualized
'D''D' Total return not annualized
(1) The Adviser has waived part of its fee for the period from January 1, 1997
to October 31, 1997. If such fees were not waived, the net investment loss
and expense ratio would have been $(.18) and 2.80%'D', respectively.
In addition, during the period from January 1, 1997 to October 31, 1997 and
for the year ended December 31, 1996, the Fund earned credits from the
custodian which reduce service fees incurred. If the credits are taken into
consideration, the expense ratios are 2.25%'D' and 2.90%, respectively.
(2) For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose the average commission rate per share for trades on
which commissions are charged.
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
<PAGE>
FIRST EAGLE INTERNATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES -- First Eagle International Fund,
Inc. (the 'Fund') is registered under the Investment Company Act of 1940, as
amended (the 'Act'), as a non-diversified, open-end management investment
company and was incorporated in Maryland on October 7, 1993. The Fund had no
operations other than the sale to Arnhold and S. Bleichroeder, Inc. ('ASB') of
8,000 shares of its common stock for $100,000 on March 3, 1994. Investment
operations commenced April 4, 1994. Effective October 2, 1997, the Fund's fiscal
year has been changed and will end on October 31 of each year instead of
December 31.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Any security for which the primary market is on
an exchange is valued at the last sale price on such exchange on the day of
valuation or, if there was no sale on such day, the mean between the last bid
and asked prices quoted on such day. Equity securities listed on the NASDAQ
National Market System are valued at the last sale price or, if there was no
sale on such day, at the mean between the most recently quoted bid and asked
prices. Corporate bonds (other than convertible debt securities) and U.S.
Government Securities that are actively traded in the over-the-counter market,
including listed securities for which the primary market is believed to be
over-the-counter, are valued on the basis of valuations provided by a pricing
service which uses information with respect to transactions in bonds, quotations
from bond dealers, market transactions in comparable securities and various
relationships between securities in determining value. Other securities are
valued at the mean between the most recently quoted bid and asked prices.
Short-term debt instruments which mature in less than 60 days are valued at
amortized cost, unless the Board of Directors determines that such valuation
does not represent fair value. Securities which are otherwise not readily
marketable or securities for which market quotations are not readily available
are valued in good faith at fair value in accordance with procedures adopted by
the Fund's Board of Directors.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains or losses
on security transactions are determined based on the first-in, first-out basis.
Discounts and premiums on purchases of investments are accreted and amortized,
respectively, as adjustments to interest income and cost of securities on a
level yield basis. Dividend income is recorded on the ex-dividend date. Interest
income is recorded on an accrual basis.
SHORT SALES: The Fund may make short sales of securities. A short sale is a
transaction in which the Fund sells a security it does not own in anticipation
of a decline in market price. To enter a short sale, the Fund needs to borrow
the security for delivery to the buyer. The proceeds received are retained by
the executing broker until the Fund replaces the borrowed security. If the price
of the security sold short increases between the time of the short sale and the
time the Fund replaces the borrowed security, the Fund will incur a loss, and if
the price declines during this period, the Fund will realize a gain. Any gain
will be decreased, and any incurred loss increased by the amount of transaction
costs and any dividends or
F-19
<PAGE>
<PAGE>
interest which the Fund may have to pay in connection with such short sale are
recorded as expenses.
FORWARD CURRENCY CONTRACTS: In connection with purchases and sales of securities
denominated in foreign currencies, the Fund may enter into forward currency
contracts. Additionally, the Fund may enter into such contracts to hedge certain
other foreign currency denominated investments. These contracts are recorded at
market value, and the related realized and unrealized foreign exchange gains and
losses are included in the statement of operations. The Fund will realize a gain
or loss upon the closing or settlement of the forward transaction. Such realized
gains or losses are included in the statement of operations. In the event that
counterparties fail to settle these currency contracts or the related foreign
security trades, the Fund could be exposed to foreign currency fluctuations.
C. FOREIGN CURRENCY TRANSLATION -- The market values of securities which are not
traded in United States currency are recorded in the financial statements after
translation to U.S. dollars based on the applicable exchange rates at the end of
the period. The costs of such securities are translated at exchange rates
prevailing when acquired. Related dividends, interest and withholding taxes are
accrued at the rates of exchange prevailing on the respective dates of such
transactions.
The net assets of the Fund are presented at the foreign exchange rates and
market values at the close of the period. The Fund does not isolate that portion
of gains and losses on investments which is due to change in foreign exchange
rates from that which is due to changes in market prices of the equity
securities.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment
income, if any, and distribution of net realized gain from investment
transactions, if any, will be made annually. The Fund records dividends and
distributions to its shareholders on the record date.
Income and capital gain distributions are determined in accordance with federal
income tax regulations which may differ from generally accepted accounting
principles primarily due to the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for federal income tax purposes and net
investment losses which for federal income tax purposes cannot be used to offset
future net investment income. Accordingly, a permanent book and tax basis
difference of $23,464 was reclassified by the Fund to paid in surplus.
F. DEFERRED ORGANIZATION EXPENSES -- A total of $146,000 was incurred in
connection with the organization of the Fund. The costs have been deferred and
are being amortized by the Fund over the period of benefit not to exceed 60
months from the date the Fund commenced operations. The Adviser has agreed that
if any of the initial shares purchased by the Adviser are redeemed during the
amortization period, the redemption proceeds will be reduced by any unamortized
organizational expenses in the same proportion as the number of initial shares
being redeemed bears to the number of shares outstanding at the time of
redemption.
F-20
<PAGE>
<PAGE>
G. ESTIMATES AND ASSUMPTIONS -- Estimates and assumptions are required to be
made regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in economic
environment, financial markets and any other parameters used in determining
these estimates could cause results to differ from these amounts.
NOTE 2. INVESTMENT ADVISORY AGREEMENT AND SERVICES AGREEMENT -- Arnhold and S.
Bleichroeder Advisers, Inc. (the 'Adviser'), a wholly owned subsidiary of ASB,
manages the Fund. The Investment Advisory Agreement provides that, subject to
the direction of the Fund's Board of Directors, the Adviser is responsible for
the management of the Fund's portfolio. Accordingly, the Adviser will furnish
advice and recommendations with respect to the Fund's portfolio of investments.
For the advisory services provided by the Adviser, the fee arrangement requires
the Fund to pay an annual management fee of 1.50% of the Fund's average daily
net assets payable quarterly. The annual advisory fee may be higher than that
paid by most other registered investment companies. For the fiscal year
beginning January 1, 1997, the Fund's Adviser has agreed to waive its advisory
fee for, and to reimburse expenses of, the Fund in an amount that operates to
limit annual operating expenses of the Fund to not more than 2.25% of daily net
assets.
ASB receives an annual services fee of up to 0.25% of the Fund's average daily
net assets payable quarterly, pursuant to a separate services agreement which
was approved by the Board of Directors, to cover expenses incurred by ASB for
providing administrative and fund accounting support services and shareholder
liaison services, including assistance with subscriptions, redemptions and other
shareholder questions. ASB determined that the volume and demand for shareholder
liaison services required staffing in addition to the personnel responsible for
investment advisory services.
NOTE 3. CUSTODIAN FEES -- The Fund has entered into an expense offset agreement
with its custodian wherein it receives credit toward the reduction of custodian
fees whenever there are uninvested cash balances. As of October 31, 1997 the
Fund's custodian fees and related offset were $32,693 and $13,739, respectively.
NOTE 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities for the period from
January 1, 1997 to October 31, 1997, excluding short-term investments, were
$17,797,136 and $18,143,833, respectively.
For the period from January 1, 1997 to October 31, 1997, the Fund paid brokerage
commissions on securities transactions of $53,846 of which $7,709 was paid to
ASB.
NOTE 5. FEDERAL INCOME TAXES -- The United States federal income tax basis of
the Fund's investments at October 31, 1997 was substantially the same as the
basis for financial reporting purposes and accordingly, the aggregate gross
unrealized appreciation on investments was $7,418,105 and the aggregate gross
unrealized depreciation was $1,410,888, resulting in net unrealized appreciation
for United States federal income tax purposes of $6,007,217.
F-21
<PAGE>
<PAGE>
NOTE 6. COMMON STOCK -- Transactions in Fund shares were as follows:
Of the 2,246,039 shares outstanding at October 31, 1997, ASB owned 8,514 shares
and the ASB Profit Sharing Plan owned 335,054 shares. The directors and officers
of the Fund, as a group, owned approximately 104,174 shares at October 31, 1997.
<TABLE>
<CAPTION>
For the period from January 1, For the year ended
1997 to October 31,1997 December 31, 1996
-------------------------------------------- ------------------------
Shares Amount Shares Amount
-------------------- -------------------- --------- -----------
<S> <C> <C> <C> <C>
Beginning of period...................... 2,134,166 $ 26,752,584 1,675,613 $20,298,430
-------------------- -------------------- --------- -----------
Shares sold.............................. 254,815 4,235,374 429,455 6,119,768
Shares redeemed.......................... (197,199) (3,247,813) (23,211) (337,352)
Reinvested distributions................. 54,257 816,027 52,309 699,895
-------------------- -------------------- --------- -----------
Net increase............................. 111,873 1,803,588 458,553 6,482,311
-------------------- -------------------- --------- -----------
Adjustment representing other-than
temporary book-tax difference.......... -- (23,464) -- (28,157)
-------------------- -------------------- --------- -----------
End of year.............................. 2,246,039 $ 28,532,708 2,134,166 $26,752,584
-------------------- -------------------- --------- -----------
-------------------- -------------------- --------- -----------
</TABLE>
NOTE 7. FORWARDS -- At October 31, 1997, the Fund had the following open forward
foreign currency contracts. The Fund bears the market risk that arises from
changes in the foreign currency exchange rates. The unrealized gain on the
contracts reflected in the accompanying financial statements was as follows:
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Gain (Loss)
- ------------------------------------------ ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
British Pound............................. 1,200,000 $ 2,007,807 12/22/97 $ (101,877)
Finnish Marka............................. 4,800,000 931,965 12/22/97 (45,866)
French Franc.............................. 14,700,000 2,562,045 12/22/97 (129,141)
German Mark............................... 14,760,000 8,602,102 12/22/97 (429,345)
Italian Lira.............................. 1,800,000,000 1,063,357 12/22/97 (44,725)
Netherlands Guilder....................... 11,600,000 5,996,200 12/22/97 (298,754)
Spanish Peseta............................ 55,000,000 378,685 12/22/97 (19,208)
Swiss Franc............................... 1,800,000 1,296,353 12/22/97 (81,450)
----------- -----------
$22,838,514 $(1,150,366)
----------- -----------
----------- -----------
</TABLE>
F-22
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and
Board of Directors
First Eagle International Fund, Inc.
We have audited the accompanying statement of assets and liabilities and
the schedule of investments of First Eagle International Fund, Inc. as of
October 31, 1997, the related statement of operations for the period from
January 1, 1997 to October 31, 1997, the statement of changes in net assets for
the period from January 1, 1997 to October 31, 1997 and the year ended December
31, 1996, and the financial highlights for the period from January 1, 1997 to
October 31, 1997, the years ended December 31, 1996 and December 31, 1995, and
for the period from April 4, 1994 (commencement of operations) to December 31,
1994. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by the custodian. As to securities purchased
and sold but not received or delivered, we performed other appropriate auditing
procedures. An audit also included assessing the accounting principles used and
significants estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
First Eagle International Fund, Inc. as of October 31, 1997, the results of its
operations for the period from January 1, 1997 to October 31, 1997, the changes
in its net assets for the period from January 1, 1997 to October 31, 1997 and
the year ended December 31, 1996, and the financial highlights for the period
from January 1, 1997 to October 31, 1997, the years ended December 31, 1996 and
December 31, 1995, and for the period from April 4, 1994 (commencement of
operations) to December 31, 1994, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
New York, New York
December 8, 1997
F-23
<PAGE>
<PAGE>
FIRST EAGLE TRUST
PART C
OTHER INFORMATION
DECEMBER 30, 1997
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements
<TABLE>
<S> <C> <C>
For First Eagle Fund of America, Inc.:
1. Schedule of Investments dated October 31, 1997.
2. Statement of Assets and Liabilities dated October 31, 1997.
3. Statement of Operations for the year ended October 31, 1997.
4. Statement of Changes in Net Assets for the years ended October 31, 1997 and 1996.
5. Financial highlights.
6. Notes to Financial Statements.
7. Independent Auditors' Report -- KPMG Peat Marwick LLP dated December 8, 1997.
For First Eagle International Fund, Inc.:
1. Schedule of Investments dated October 31, 1997.
2. Statement of Assets and Liabilities dated October 31, 1997.
3. Statement of Operations for the period ended October 31, 1997.
4. Statement of Changes in Net Assets for the period ended October 31, 1997 and the year ended
December 31, 1996.
5. Financial highlights.
6. Notes to Financial Statements.
7. Independent Auditors' Report -- KPMG Peat Marwick LLP dated December 8, 1997.
B. Exhibits
1. Agreement and Declaration of Trust of the Registrant.
2. By-laws of the Registrant.
4. Account Application Form, also see Exhibits 1 and 2.
5. Investment Advisory Agreement between the Registrant and Arnhold and S. Bleichroeder Advisers,
Inc.
6.(a) Distribution and Services Agreement between the Registrant and Arnhold and
S. Bleichroeder, Inc.
(b) Selling Group Agreement.
8.(a) Custody Agreement between the Registrant and The Bank of New York.
(b) Fund Accounting Agreement.
(c) Foreign Custody Manager Agreement between Registrant and The Bank of New York.
(d) Special Custody Agreement between Registrant, The Bank of New York and Arnhold and S.
Bleichroeder, Inc.*
9. Transfer Agency Agreement.
10. Opinion of Counsel.
11. Consent of Independent Auditors.
13. Subscription Agreement.*
17. Financial Data Schedule.
18. Rule 18f-3 Plan.
19. Power of Attorney.
</TABLE>
- ------------
* Previously filed and incorporated by reference.
C-1
<PAGE>
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
No persons are controlled by or under common control with the Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
- ---------------------------------------------- ----------------------------------------------
<S> <C>
Common Stock
First Eagle Fund of America, Inc. 2,313 (as of January 31, 1998)
First Eagle International Fund, Inc. 473 (as of January 31, 1998)
</TABLE>
ITEM 27. INDEMNIFICATION
The Registrant shall indemnify directors, officers, employees and agents of
the Registrant against judgments, fines, penalties, settlements and expenses to
the fullest extent authorized, and in the manner permitted, by applicable
federal and state law.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Arnhold and S. Bleichroeder Advisers, Inc. (the 'Adviser') is a wholly
owned subsidiary of Arnhold and S. Bleichroeder, Inc. which has a substantial
quantity of assets under management in the form of individual and fund accounts.
Arnhold and S. Bleichroeder, Inc. is a registered broker-dealer and maintains a
substantial involvement in the securities brokerage and underwriting businesses.
The business and other connections of the Adviser's directors and officers are
as follows:
<TABLE>
<CAPTION>
POSITION WITH THE
NAME ADVISER BUSINESS AND OTHER CONNECTIONS
- ------------------------------- ---------------------- ------------------------------------------------------
<S> <C> <C>
Henry H. Arnhold............... Director Co-Chairman of the Board of Arnhold and S.
Bleichroeder, Inc.; Director, Aquila International
Fund Limited; Trustee, The New School for Social
Research; Director, Conservation International
John P. Arnhold................ President, Chief Co-President and Director, Arnhold and S.
Executive Officer Bleichroeder, Inc.; Director, Aquila International
and Director Fund Limited and The Global Beverage Fund Limited;
President, WorldVest, Inc.; President, Arnhold and
S. Bleichroeder, UK Ltd.; Co-President and Trustee,
First Eagle Trust
Stanford S. Warshawsky......... Director Co-President, Director and Secretary, Arnhold and S.
Bleichroeder, Inc.; Director, German-American
Chamber of Commerce; Chairman of the Board, Arnhold
and S. Bleichroeder, UK Ltd.; Chairman of the Board
and Trustee, First Eagle Trust
Stephen M. Kellen.............. Director Co-Chairman of the Board of Arnhold and S.
Bleichroeder Inc.; Trustee, The Carnegie Hall
Society and WNET/Thirteen; Trustees Council of The
National Gallery of Art
Robert Miller.................. Vice President, Senior Vice President, Arnhold and S. Bleichroeder,
Secretary and Inc.; Director, Arnhold and S. Bleichroeder, UK
Treasurer Ltd.; Treasurer, First Eagle Trust
Gary Lee Fuhrman............... Director Senior Vice President and Director, Arnhold and S.
Bleichroeder, Inc.; Director, Medical Resources,
Inc.
</TABLE>
C-2
<PAGE>
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITER
(a) Arnhold and S. Bleichroeder, Inc. acts as an investment adviser to
First Eagle Fund, N.V., Aquila International Fund Limited, Aetos Corporation,
DEF Associates, N.V., Eagle Select Fund Limited, Eagle World Growth Fund Limited
and The Global Beverage Fund Limited.
(b) The positions and offices of the Distributor's directors and officers
who serve the Registrant are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
POSITIONS AND OFFICES
BUSINESS* ADDRESS POSITION AND OFFICES WITH UNDERWRITER POSITION AND OFFICES WITH REGISTRANT
- ---------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Stanford S. Warshawsky............ Co-President, Director and Secretary Chairman of the Board and Trustee
John P. Arnhold................... Co-President and Director Co-President and Trustee
Michael M. Kellen................. Senior Vice President and Director Vice Chairman of the Board and Trustee
Arthur F. Lerner.................. Senior Vice President Senior Vice President
Tracy L. LaPointe................. Senior Vice President Vice President
Robert Miller..................... Senior Vice President Treasurer
Robert Bruno...................... Vice President Vice President and Secretary
Martha B. Pierce.................. Vice President Vice President
</TABLE>
- ------------
* The address of each person named above is 1345 Avenue of the Americas, New
York, New York 10105.
(c) The Registrant has no principal underwriter which is not an affiliated
person of the Registrant.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The Registrant's accounts and records will be maintained at The Bank of New
York, 48 Wall Street, New York, New York 10286. Records of shareholders'
accounts will be maintained at BISYS Fund Services, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219.
ITEM 31. MANAGEMENT SERVICES
The Registrant is not a party to any management-related service contract
not discussed in the Prospectus or Statement of Additional Information of this
Registration Statement.
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes to provide each person to whom a copy of
the Prospectus is given with a copy of the Fund's annual report, which contains
the information required by item 5A of Form N-1A, upon request by such person
and free of charge.
The Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a director, if requested to do
so by the holders of at least 10% of the Fund's outstanding shares, and that it
will assist in communication with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
C-3
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 (the 'Securities
Act') and the Investment Company Act of 1940 (the 'Investment Company Act'), the
Registrant has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York, as of the 20th day of
February 1998.
FIRST EAGLE TRUST
By: /s/ JOHN P. ARNHOLD
---------------------------------
JOHN P. ARNHOLD,
CO-PRESIDENT
By: /s/ HAROLD J. LEVY
---------------------------------
HAROLD J. LEVY,
CO-PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------------ ---------------------------------------------- ------------------
<S> <C> <C>
/S/ JOHN P. ARNHOLD Trustee February 20, 1998
.........................................
JOHN P. ARNHOLD
/S/ CANDACE K. BEINECKE Trustee February 20, 1998
.........................................
CANDACE K. BEINECKE
/S/ EDWIN J. EHRLICH Trustee February 20, 1998
.........................................
EDWIN J. EHRLICH
/S/ K. GEORG GABRIEL Trustee February 20, 1998
.........................................
K. GEORG GABRIEL
/S/ ROBERT J. GELLERT Trustee February 20, 1998
.........................................
ROBERT J. GELLERT
Trustee February 20, 1998
.........................................
MICHAEL M. KELLEN
/S/ WILLIAM M. KELLY Trustee February 20, 1998
.........................................
WILLIAM M. KELLY
/S/ STANFORD S. WARSHAWSKY Trustee February 20, 1998
.........................................
STANFORD S. WARSHAWSKY
/S/ ROBERT MILLER Treasurer (Principal Financial and Accounting February 20, 1998
......................................... Officer)
ROBERT MILLER
</TABLE>
<PAGE>
<PAGE>
EXHIBIT INDEX
B. Exhibits
<TABLE>
<S> <C>
1. Agreement and Declaration of Trust of the Registrant. .....................................................
2. By-laws of the Registrant. ................................................................................
4. Account Application Form, also see Exhibits 1 and 2........................................................
5. Investment Advisory Agreement between the Registrant and Arnhold and S. Bleichroeder Advisers, Inc. .......
6.(a) Distribution and Services Agreement between the Registrant and Arnhold and S. Bleichroeder, Inc. ..........
(b) Selling Group Agreement....................................................................................
8.(a) Custody Agreement between the Registrant and The Bank of New York. ........................................
(b) Fund Accounting Agreement. ................................................................................
(c) Foreign Custody Manager Agreement between Registrant and Bank of New York. ................................
(d) Special Custody Agreement among Registrant, The Bank of New York and Arnhold and S. Bleichroeder, Inc.* ...
9. Transfer Agency Agreement. ................................................................................
10. Opinion of Counsel. .......................................................................................
11. Consent of Independent Auditors. ..........................................................................
13. Subscription Agreement.*...................................................................................
17. Financial Data Schedule. ..................................................................................
18. Rule 18f-3 Plan. ..........................................................................................
19. Power of Attorney. ........................................................................................
</TABLE>
- ------------
* Previously filed and incorporated by reference.
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as................................... 'D'
The division symbol shall be expressed as................................. [div]
Characters normally expressed as superscript shall be preceded by......... 'pp'
The section symbol shall be expressed as.................................. 'SS'
<PAGE>
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
FIRST EAGLE TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered
into as of the date set forth below by the Trustees named hereunder for the
purpose of forming a Delaware business trust in accordance with the provisions
hereinafter set forth,
NOW, THEREFORE, the Initial Trustees hereby direct that the
Certificate of Trust be filed with Office of the Secretary of State of the State
of Delaware, and the Initial Trustees do hereby declare that the Trustees will
hold in trust all cash, securities and other assets that the Trust now possesses
or may hereafter acquire from time to time in any manner and manage and dispose
of the same upon the following terms and conditions for the benefit of the
holders of Shares in the Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as "First Eagle
Trust" and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust, as amended
from time to time, which By-Laws are expressly herein incorporated by reference
as part of the "governing instrument" within the meaning of the Delaware Act;
(b) "Certificate of Trust" means the certificate of trust, as
amended or restated from time to time, filed by the Trustees in the Office of
the Secretary of State of the State of Delaware in accordance with the Delaware
Act;
(c) "Class" means a class of Shares of a Series of the Trust
established in accordance with the provisions of Article III hereof;
(d) "Commission" means the Securities and Exchange Commission;
(e) "Declaration of Trust" means this Agreement and
Declaration of Trust, as amended or restated from time to time;
(f) "Delaware Act" means the Delaware Business Trust Act, 12
Del. C. 'SS''SS' 3801 et seq., as amended from time to time;
<PAGE>
<PAGE>
2
(g) "Initial Trustees" means the person or persons who have
signed this Declaration of Trust;
(h) "Manager" means a party furnishing services to the Trust
pursuant to an investment management or investment advisory agreement described
in Article IV, Section 8(a) hereof;
(i) "1940 Act" means the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(j) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof, whether domestic or foreign;
(k) "Principal Underwriter" shall have the meaning given to it
in the 1940 Act;
(l) "Series" means each Series of Shares established and
designated under or in accordance with the provisions of Article III hereof;
(m) "Shareholder" means a beneficial owner of outstanding
Shares;
(n) "Shares" means the Shares of beneficial interest into
which the beneficial interest in the Trust shall be divided, from time to time,
and includes fractions of Shares as well as whole Shares;
(o) "Trust" means the Delaware business trust established
under the Delaware Act by this Declaration of Trust and the filing of the
Certificate of Trust in the Office of the Secretary of State of the State of
Delaware;
(p) "Trust Property" means any and all property, real or
personal, tangible or intangible, that is from time to time owned or held by or
for the account of the Trust; and
(q) "Trustees" means the Initial Trustees, and all other
Persons who may, from time to time, be duly elected or appointed to serve as
Trustees in accordance with the provisions hereof, in each case so long as such
Person shall continue in office in accordance with the terms of this Declaration
of Trust, and reference herein to a Trustee or the Trustees shall refer to such
Person or Persons in her or his or their capacity as Trustees hereunder.
<PAGE>
<PAGE>
3
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on
the business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities, and to carry on
such other business as the Trustees may, from time to time, determine pursuant
to their authority under this Declaration of Trust.
ARTICLE III
Shares
Section 1. Division of Beneficial Interests. The beneficial
interests in the Trust may be divided into one or more Series. Each Series may
be divided into one or more Classes. Subject to the further provisions of this
Article III and any applicable requirements of the 1940 Act, the Trustees shall
have full power and authority, in their sole discretion, and without obtaining
any authorization or vote of the Shareholders of any Series or Class thereof,
(i) to divide the beneficial interests in the Trust or in each Series or Class
thereof into Shares, with or without par value as the Trustees shall determine,
(ii) to issue Shares without limitation as to number (including fractional
Shares) to such Persons and for such amount and type of consideration, including
cash or securities, at such time or times and on such terms as the Trustees may
deem appropriate, (iii) to establish and designate and to change in any manner
any Series or Class thereof and to fix such preferences, voting powers, rights,
duties and privileges and business purpose of each Series or Class thereof as
the Trustees may, from time to time, determine, which preferences, voting
powers, rights, duties and privileges may be senior or subordinate to (or in the
case of business purpose, different from) any existing Series or Class thereof
and may be limited to specified property or obligations of the Trust or profits
and losses associated with specified property or obligations of the Trust, (iv)
to divide or combine the Shares of any Series or Class thereof into a greater or
lesser number, or issue dividends in Shares with respect to Shares of any Series
or Class, without thereby materially changing the proportionate beneficial
interest of the Shares of such Series or Class in the assets held with respect
to that Series or Class thereof, (v) to classify or reclassify any issued Shares
of any Series or Class thereof into Shares of one or more Series or Classes
thereof and (vi) to take such other action with respect to the Shares as the
Trustees may deem desirable.
Subject to the distinctions permitted among Classes or
otherwise in Shares of the same Series as established by the Trustees consistent
with the requirements of the 1940 Act, each Share of a Series of the Trust shall
represent an equal beneficial interest in the net assets of such Series, and
each holder of Shares of a Series shall be entitled to receive such holder's pro
rata share of distributions of income and capital gains, if any, made with
respect to such Series. Upon redemption of the Shares of any Series or Class
thereof, the applicable
<PAGE>
<PAGE>
4
Shareholder shall be entitled to be paid solely out of the funds and property of
such Series or Class thereof of the Trust.
All references to Shares in this Declaration of Trust shall be
deemed to be Shares of any or all Series or Classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally to each
Series of the Trust and each Class thereof, except as the context otherwise
requires.
All Shares issued hereunder, including, without limitation,
Shares issued in connection with a dividend in Shares or a split or reverse
split of Shares, shall be fully paid and non-assessable. Except as otherwise
provided by the Trustees, Shareholders shall have no appraisal, preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
Section 2. Ownership of Shares. The ownership of Shares shall
be recorded on the books of the Trust or a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
(or Class). No certificates certifying the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time. The Trustees
may make such rules as they consider appropriate for the issuance of Share
certificates, the transfer of Shares of each Series (or Class) and similar
matters. The record books of the Trust as kept by the Trust or any transfer or
similar agent, as the case may be, shall be conclusive as to the identity of the
Shareholders of each Series (or Class) and as to the number of Shares of each
Series (or Class) held, from time to time, by each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by
the Trustees, Shares shall be transferable on the books of the Trust only by the
record holder thereof or by his duly authorized agent upon delivery to the
Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of the execution and authorization thereof as may be
required by the Trustees and of such other matters as may be required by the
Trustees. Upon such delivery, and subject to any further requirements specified
by the Trustees or contained in the By-Laws, the transfer shall be recorded on
the books of the Trust. Until a transfer is so recorded, the record holder of
Shares shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor the Trust, nor any transfer agent,
shareholder servicing agent or similar agent, any officer, employee or agent of
the Trust, shall be affected by any notice of a proposed transfer.
Section 4. Investments in the Trust. Investments may be
accepted by the Trust from such Persons, at such times, on such terms, and for
such consideration as the Trustees, from time to time, may authorize.
Section 5. Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every
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5
Shareholder, by virtue of having become a Shareholder, shall be held to have
expressly assented and agreed to the terms hereof. The death, incapacity,
dissolution, termination or bankruptcy of a Shareholder during the existence of
the Trust shall not operate to dissolve the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of such Shareholder under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust Property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay. Except as specifically provided herein, no Shareholder shall be
personally liable for the debts, liabilities, obligations or expenses incurred
by, contracted for, or otherwise existing with respect to, the Trust or by or on
behalf of any Series or Class. Every note, bond, contract or other understanding
issued by or on behalf of the Trust or Trustees relating to the Trust or to a
Series or Class may include a recitation limiting the obligation represented
thereby to the Trust or to one or more Series or Class and its respective assets
(but the omission of such a recitation shall not operate to bind any Shareholder
or Trustee of the Trust).
Section 6. Establishment and Designation of Series (or Class).
Without obtaining any authorization or vote of the Shareholders of any Series or
Class thereof (except as otherwise required by the 1940 Act), the establishment
and designation of any Series (or Class) of Shares shall be effective upon the
adoption by a majority of the then Trustees of a resolution that sets forth such
establishment and designation and the relative rights and preferences of such
Series (or Class), whether directly in such resolution or by reference to
another document including, without limitation, any registration statement of
the Trust, or as otherwise provided in such resolution.
Shares of each Series (or Class) established pursuant to this
Article III, unless otherwise provided in the resolution establishing such
Series, shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series (or
Class). All consideration received by the Trust for the issue or sale of Shares
of a particular Series or Class thereof, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably be held with respect to that Series (or
Class) for all purposes, subject only to the rights of creditors of such Series
(or Class thereof to the extent provided below), and shall be so recorded upon
the books of account of the Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, from
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6
whatever source derived, including, without limitation, any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same may
be, are herein referred to as "assets held with respect to" that Series (or
Class thereof). In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments that are not readily
identifiable as assets held with respect to any particular Series (and the
Classes thereof) (collectively "General Assets"), the Trustees shall allocate
such General Assets to, between or among any one or more of the Series (and the
Classes thereof) in such manner and on such basis as the Trustees, in their sole
discretion, deem fair and equitable, and any General Assets so allocated to a
particular Series (and the Classes thereof) shall be assets held with respect to
that Series and such Classes. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series and Classes for all
purposes. Separate and distinct records shall be maintained for each Series (and
the Classes thereof) and the assets held with respect to each Series (and the
Classes thereof) shall be held and accounted for separately from the assets held
with respect to all other Series (and the Classes thereof) and the General
Assets of the Trust not allocated to such Series or Classes.
(b) Liabilities Attributable to a Particular Series (or
Class). The assets of the Trust held with respect to each particular Series (or
Class thereof) shall be charged exclusively with the liabilities of the Trust
attributable to that Series or Class and all expenses, costs, charges and
reserves attributable to that Series or Class. Any general liabilities of the
Trust that are not readily identifiable as being attributable to any particular
Series (and the Classes thereof) shall be allocated and charged by the Trustees
to and among any one or more of the Series (and the Classes thereof) in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. All liabilities, expenses, costs, charges, and reserves so charged to
a Series (and the Classes thereof) are herein referred to as "liabilities
attributable to" that Series (or Class thereof). Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive and
binding upon the Shareholders of all Series and Classes for all purposes. All
liabilities attributable to a particular Series shall be enforceable against the
assets held with respect to such Series only and not against the assets of the
Trust generally or against the assets held with respect to any other Series.
Notice of this limitation on the liability of each Series shall be set forth in
the Certificate of Trust or in an amendment thereto prior to the issuance of any
Shares of a Series. To the extent that the Trustees, pursuant to Section 2 of
Article VII hereof, include a Class limitation on liability in any note, bond,
contract, instrument, certificate or undertaking made with respect to any Class,
the parties to such note, bond, contract, instrument, certificate or undertaking
shall look only to the assets of such Class in satisfaction of the liabilities
arising thereunder and not to the assets of any other Class of the applicable
Series.
(c) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provision of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution, including, without
limitation, any distribution paid upon dissolution of the Trust or of any Series
(or Class) thereof with respect to, nor any redemption or repurchase of, the
Shares of any Series (or Class thereof) shall be
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7
effected by the Trust other than from the assets held with respect to such
Series (or Class thereof), nor shall any Shareholder of any particular Series
(or Class thereof) otherwise have any right or claim against the assets held
with respect to any other Series or Class except to the extent that such
Shareholder has such a right or claim hereunder as a Shareholder of such other
Series or Class. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders.
(d) Equality. All the Shares of each particular Series (or
Class thereof) shall represent an equal proportionate interest in the assets
held with respect to that Series (or Class thereof), and each Share of any
particular Series shall be equal to each other Share of that Series (subject to
the liabilities attributable to that Series and such rights and preferences as
may have been established and designated with respect to Classes, or otherwise,
of Shares within such Series).
(e) Fractions. Any fractional Share of a Series (or Class
thereof) shall carry proportionately all the rights and obligations of a whole
Share of that Series or Class, including rights with respect to voting, receipt
of dividends and distributions, redemption of Shares and dissolution of the
Trust.
(f) Combination of Series. The Trustees shall have the
authority, without the approval of the Shareholders of any Series (or Class
thereof), unless otherwise required by applicable law, to combine the assets and
liabilities attributable to any two or more Series (or Classes) into assets and
liabilities attributable to a single Series or Class.
(g) Elimination of Series. At any time that there are no
Shares outstanding of any particular Series (or Class) previously established
and designated, the Trustees may by resolution of a majority of the Trustees
abolish that Series (or Class) and rescind the establishment and designation
thereof and may thereafter establish a new Series (or Class) with such
designation and otherwise as herein provided.
Section 7. Indemnification of Shareholders. If any Shareholder
or former Shareholder shall be exposed to liability by reason of a claim or
demand relating to such Person being or having been a Shareholder, and not
because of such Person's acts or omissions, the Shareholder or former
Shareholder (or such Person's heirs, executors, administrators, or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled to be held harmless from and
indemnified out of the assets of the Trust against all cost and expense
reasonably incurred in connection with such claim or demand, but only out of the
assets held with respect to the particular Series (or Class thereof) of Shares
of which such Person is or was a Shareholder and from or in relation to which
such liability arose. The Series (or Class thereof) may, at its option, and
shall, upon request by the Shareholder, assume the defense of any claim made
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8
against the Shareholder for any act or obligation of such Series and satisfy any
judgment thereon.
ARTICLE IV
Trustees
Section 1. Election of Trustees. Upon the issuance of
beneficial interests of the Trust, First Eagle Fund of America, Inc., a Maryland
corporation, and First Eagle International Fund, Inc., a Maryland corporation,
as initial shareholders of the Trust, shall each elect the Trustees of the
Trust; to the extent that persons so elected are different from the Initial
Trustee, such persons shall replace the Initial Trustee as Trustees of the
Trust.
Section 2. Number, Election and Tenure. The Initial Trustee
shall be Robert Bruno. After the initial election of Trustees, the number of
Trustees shall be eight or such other number as shall, from time to time, be
determined by the Trustees pursuant to Section 4 of this Article IV. Except as
described above with respect to the Initial Trustee, each Trustee shall serve
during the continued term of the Trust until she or he dies, resigns, is
declared bankrupt or incompetent by a court of appropriate jurisdiction, or is
removed, or, if sooner, until the next meeting of Shareholders called for the
purpose of electing Trustees and until the election and qualification of her or
his successor. In the event that less than the majority of the Trustees holding
office have been elected by the Shareholders, to the extent required by the 1940
Act, the Trustees then in office shall call a Shareholders' meeting for the
election of Trustees. Any Trustee may resign at any time by written instrument
signed by her or him and delivered to any officer of the Trust or to the
secretary of any meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust, no Trustee
resigning and no Trustee removed shall have any right to any compensation for
any period following her or his resignation or removal, or any right to damages
on account of such removal. The Shareholders may elect Trustees at any meeting
of Shareholders called by the Trustees for that purpose. Any Trustee may be
removed at any meeting of Shareholders by a majority vote of the outstanding
Shares of the Trust, as defined in the 1940 Act.
Section 3. Effect of Death, Resignation or Removal of a
Trustee. The death, declination to serve, resignation, retirement, removal, or
incapacity of one or more Trustees, or all of them, shall not operate to annul
the Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust. Whenever there shall be fewer than the designated number
of Trustees, until additional Trustees are elected or appointed as provided
herein to bring the total number of Trustees equal to the designated number, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by this Declaration of Trust. As conclusive evidence of such vacancy, a
written instrument certifying the existence of such
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9
vacancy may be executed by an officer of the Trust or by a majority of the
Trustees then in office. In the event of the death, declination, resignation,
retirement, removal, or incapacity of all the then Trustees within a short
period of time and without the opportunity for at least one Trustee being able
to appoint additional Trustees to replace those no longer serving, the Trust's
Manager is empowered to appoint new Trustees subject to the applicable
provisions of the 1940 Act.
Section 4. Powers. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees; the Trustees shall have full power and authority to do any and all
acts and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust, including the power to engage in securities transactions of all kinds on
behalf of the Trust. Without limiting the foregoing, the Trustees may: adopt
By-Laws not inconsistent with this Declaration of Trust providing for the
regulation and management of the affairs of the Trust and may amend and repeal
them to the extent that such By-Laws do not reserve that right to the
Shareholders; enlarge or reduce their number; remove any Trustee with or without
cause at any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective and fill vacancies caused by enlargement of their number
or by the death, resignation or removal of a Trustee; elect and remove, with or
without cause, such officers and appoint and terminate such agents as they
consider appropriate; appoint from their own number and establish and terminate
one or more committees consisting of two or more Trustees which may exercise the
powers and authority of the Board of Trustees to the extent that the Board of
Trustees determine; deposit all or any part of such assets in a system or
systems for the central handling of securities or with a Federal Reserve Bank;
provide for the issuance and distribution of Shares by the Trust directly or
through one or more Principal Underwriters or otherwise; redeem, repurchase and
transfer Shares pursuant to applicable law; declare and pay dividends and
distributions to Shareholders from the assets available therefor; and in general
exercise, or delegate to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such custodian,
transfer or Shareholder servicing agent, or Principal Underwriter, such
authority as they consider desirable. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration of Trust, the presumption shall
be in favor of a grant of power to the Trustees. Unless otherwise specified
herein or in the By-Laws or required by law, any action by the Trustees shall be
deemed effective if approved or taken by a majority of the Trustees present at a
meeting of Trustees at which a quorum of Trustees is present, within or without
the State of Delaware.
Without limiting the foregoing, the Trustees shall have the
power and authority to cause the Trust (or to act on behalf of the Trust):
(a) To operate as and carry out the business of an investment
company, and exercise all the powers necessary or appropriate to the conduct of
such operations;
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10
(b) To invest and reinvest cash, to hold cash uninvested, and
to subscribe for, invest in, reinvest in, purchase or otherwise acquire, own,
hold, pledge, sell, assign, transfer, exchange, distribute, purchase or write
options on, lend, enter into contracts for the future acquisition or delivery
of, or otherwise deal in or dispose of, securities, indices, currencies,
commodities or other property of every nature and kind, including, without
limitation, all types of bonds, debentures, stocks, negotiable or non-negotiable
instruments, obligations, evidences of indebtedness, certificates of deposit or
indebtedness, commercial paper, repurchase agreements, bankers' acceptances, and
other securities, commodities or contracts of any kind, issued, created,
guaranteed, or sponsored by any and all Persons, including, without limitation,
states, territories, and possessions of the United States and the District of
Columbia and any political subdivision, agency, or instrumentality thereof, the
U.S. Government or any foreign government or any political subdivision of the
U.S. Government or any foreign government, or any domestic or international
instrumentality, or by any bank or savings institution, or by any corporation or
organization organized under the laws of the United States or of any state,
territory, or possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for any such
securities; to change the investments of the assets of the Trust; and to
exercise any and all rights, powers, and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any of
said rights, powers, and privileges in respect of any of said instruments;
(c) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options (including options on futures contracts) with respect to
or otherwise deal in any property rights relating to any or all of the assets of
the Trust or any Series or Class thereof;
(d) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and to execute
and deliver proxies or powers of attorney to such Person or Persons as the
Trustees shall deem proper, granting to such Person or Persons such power and
discretion with relation to securities or property as the Trustees shall deem
proper;
(e) To set record dates for the determination of Shareholders
with respect to various matters, which, for purposes of determining the
Shareholders of any Series (or Class) who are entitled to receive payment of any
dividend or of any other distribution shall be on or before the date for the
payment of such dividend or such other payment, as the record date for
determining the Shareholders of such Series (or Class) having the right to
receive such dividend or distribution; without fixing a record date, the
Trustees may for distribution purposes close the register or transfer books for
one or more Series (or Classes) at any time prior to the payment of a
distribution; nothing in this subsection shall be construed as precluding the
Trustees from setting different record dates for different Series (or Classes);
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11
(f) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities or other property;
(g) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or in its
own name or in the name of a custodian or a nominee or nominees or otherwise;
(h) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer of any
security or property which is held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or issuer; and
to pay calls or subscriptions with respect to any security or property held in
the Trust;
(i) To join with other security or property holders in acting
through a committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security or property with, or transfer any security or
property to, any such committee, depositary or trustee, and to delegate to them
such power and authority with relation to any security or property (whether or
not so deposited or transferred) as the Trustees shall deem proper, and to agree
to pay, and to pay, such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem proper;
(j) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy, including, but not
limited to, claims for taxes;
(k) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(l) To borrow funds or other property in the name of the Trust
or any Series thereof exclusively for Trust or the relevant Series purposes and
in connection therewith issue notes or other evidences of indebtedness; and to
mortgage and pledge the Trust Property or any part thereof to secure any or all
of such indebtedness;
(m) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust Property or any part thereof to secure any of or all of such obligations;
(n) To purchase and pay for entirely out of Trust Property
such insurance as the Trustees may deem necessary or appropriate for the conduct
of the business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding Shares, holding, being
in or having
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12
held any such office or position, or by reason of any action alleged to have
been taken or omitted by any such Person as Trustee, officer, employee, agent,
investment adviser, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such Person against
liability;
(o) To adopt, establish and carry out pension, profit-sharing,
Share bonus, Share purchase, savings, thrift and other retirement, incentive and
benefit plans and trusts, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the Trust;
(p) To enter into contracts of any kind and description;
(q) To interpret the investment policies, practices or
limitations of any Series or Class;
(r) To establish a registered office and have a registered
agent in the State of Delaware;
(s) To invest part or all of the Trust Property (or part or
all of the assets of any Series), or to dispose of part or all of the Trust
Property (or part or all of the assets of any Series) and invest the proceeds of
such disposition, in securities issued by one or more other investment companies
registered under the 1940 Act (including investment by means of transfer or part
of all of the Trust Property in exchange for an interest or interests in such
one or more investment companies) all without any requirement of approval by
Shareholders unless required by the 1940 Act. Any such other investment company
may (but need not) be a trust (formed under the laws of the State of Delaware or
of any other state) which is classified as a partnership for federal income tax
purposes.
(t) Subject to the 1940 Act, to engage in any other lawful act
or activity in which a business trust organized under the Delaware Act may
engage; and
(u) In general to carry on any other business in connection
with or incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment of
any object or the furtherance of any power hereinbefore set forth, either alone
or in association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and
powers, and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general power of the Trustees. Any action by
one or more of the Trustees in their
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13
capacity as such hereunder shall be deemed an action on behalf of the Trust or
the applicable Series, and not an action in an individual capacity.
The Trust shall not be limited to investing in obligations
maturing before the possible dissolution of the Trust or one or more of its
Series or Classes thereof. The Trust shall not in any way be bound or limited by
any present or future law or custom in regard to investment by fiduciaries. The
Trust shall not be required to obtain any court order to deal with any assets of
the Trust or take any other action hereunder.
Section 5. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust, or partly out of the principal and partly out of income, as they deem
fair, all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees compensation and such expenses and
charges for the services of the Trust's officers, employees, investment adviser
or manager, Principal Underwriter, auditors, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur, which expenses, fees, charges, taxes and liabilities shall be
allocated in accordance with Article III, Section 6 hereof.
Section 6. Payment of Expenses by Shareholders. The Trustees
shall have the power to cause each Shareholder, or each Shareholder of any
particular Series or Class, to pay directly, at such intervals as the Trustees
may determine, in advance or arrears, for charges of the Trust's transfer agent,
Shareholder servicing or similar agent, an amount fixed, from time to time, by
the Trustees, by setting off such charges due from such Shareholder from
declared but unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that number of full
and/or fractional Shares which represents the outstanding amount of such charges
due from such Shareholder.
Section 7. Ownership of Assets of the Trust. The assets of the
Trust shall be held separate and apart from any assets now or hereafter held in
any capacity other than as Trustee hereunder by the Trustees. Title to all of
the assets of the Trust shall at all times be considered as vested in the Trust,
except that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees, or in the
name of any other Person as nominee, on such terms as the Trustees may
determine. The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each Person who may hereafter become a Trustee. Upon
the resignation, removal or death of a Trustee, she or he shall automatically
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
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Section 8. Service Contracts.
(a) Subject to such requirements and restrictions as may be
set forth under applicable federal or state law and in the By-Laws, including,
without limitation, on the date hereof the requirements of Section 15 of the
1940 Act, or any successor provision, the Trustees may, at any time and from
time to time, contract for exclusive or nonexclusive investment advisory,
management or administrative services for the Trust or for any Series (or Class
thereof) with any corporation, trust, association or other organization; and any
such contract may contain such other terms as the Trustees may determine,
including, without limitation, authority for the Manager or administrator to
delegate certain or all of its duties under such contracts to qualified
investment advisers or administrators and to determine from time to time,
without prior consultation with the Trustees, what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the Trust's
investments, or such other activities as may specifically be delegated to such
party.
(b) The Trustees may also, at any time and from time to time,
contract with any corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or Principal Underwriter for
the Shares of one or more of the Series (or Classes) or other securities to be
issued by the Trust. Every such contract shall comply with such requirements and
restrictions as may be set forth under applicable federal or state law and in
the By-Laws, including, without limitation, at the date hereof the requirements
of Section 15 of the 1940 Act, or any successor provision; and any such contract
may contain such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time
to time, to contract with any corporations, trusts, associations or other
organizations, appointing it or them the custodian, transfer agent or
Shareholder servicing agent for the Trust or one or more of its Series (or
Classes). Every such contract shall comply with such requirements and
restrictions as may be set forth under applicable federal or state law and in
the By-Laws or stipulated by resolution of the Trustees. The Trustees are
empowered, at any time and from time to time, to retain sub-agents (foreign or
domestic) in connection with any service provider to the Trust or one or more of
its Series (or Classes).
(d) Subject to applicable law, the Trustees are further
empowered, at any time and from time to time, to contract with any entity to
provide such other services, including, without limitation, accounting and
pricing services, to the Trust or one or more of the Series (or Classes
thereof), as the Trustees determine to be in the best interests of the Trust and
the applicable Series (or Class).
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(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of
the Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal underwriter,
distributor, or affiliate or agent of or for any corporation,
trust, association, or other organization, or for any parent
or affiliate of any organization, with which an advisory,
management or administration contract, or Principal
Underwriter's or distributor's contract, or transfer,
shareholder servicing or other type of service contract may
have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a
Shareholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or other
organization with which an advisory, management or
administration contract or Principal Underwriter's or
distributor's contract, or transfer, shareholder servicing or
other type of service contract may have been or may hereafter
be made with the Trust or any Series of the Trust also has an
advisory, management or administration contract, or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other service contract with one or
more other corporations, trusts, associations, or other
organizations, or has other business or interests, shall not
affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon
or executing the same, or create any liability or
accountability to the Trust or its Shareholders, provided
approval of each such contract is made pursuant to the
requirements of the 1940 Act.
Section 9. Trustees and Officers as Shareholders. Any Trustee,
officer or agent of the Trust may acquire, own and dispose of Shares to the same
extent as if he or she were not a Trustee, officer or agent; and the Trustees
may issue and sell and cause to be issued and sold Shares to, and redeem such
Shares from, any such Person or any firm or company in which such Person is
interested, subject only to the general limitations contained herein or in the
By-Laws relating to the sale and redemption of such Shares.
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ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers, Meetings, Notice and Record Dates.
The Shareholders shall have power to vote only (i) for the election or removal
of Trustees to the extent and as provided in Article IV, Section 2, and (ii)
with respect to such additional matters relating to the Trust as may be required
by applicable law, this Declaration of Trust, the By-Laws or any registration of
the Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each Shareholder shall be entitled
to one vote for each dollar of net asset value (determined as of the applicable
record date) of each Share owned by such Shareholder (number of Shares owned
times net asset value per Share) on any matter on which such Shareholder is
entitled to vote and each fractional dollar amount shall be entitled to a
proportionate fractional vote. Notwithstanding any other provision of this
Declaration of Trust, on any matter submitted to a vote of the Shareholders, all
Shares of the Trust then entitled to vote shall be voted in aggregate, except
(i) when required by the 1940 Act, Shares shall be voted by individual Series or
Class; and (ii) when the matter involves the termination of a Series or Class or
any other action that the Trustees have determined will affect only the
interests of one or more Series or Classes, then only Shareholders of such
Series or Classes shall be entitled to vote thereon. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. A proxy may be given in writing. The By-Laws may provide that proxies
may also, or may instead, be given by any electronic or telecommunications
device or in any other manner. Notwithstanding anything else contained herein or
in the By-Laws, in the event a proposal by anyone other than the officers or
Trustees of the Trust is submitted to a vote of the Shareholders of one or more
Series or Classes thereof or of the Trust, or in the event of any proxy contest
or proxy solicitation or proposal in opposition to any proposal by the officers
or Trustees of the Trust, Shares may be voted only in person or by written proxy
at a meeting. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by the Shareholders. Meetings of the Shareholders
shall be called and notice thereof and record dates therefor shall be given and
set as provided in the By-Laws.
Section 2. Quorum and Required Vote. Except when a larger
quorum is required by applicable law, by the By-Laws or by this Declaration of
Trust, (i) thirty-three and one-third percent (33-1/3%) of the Shares entitled
to vote shall constitute a quorum at a Shareholders' meeting and (ii) when any
one or more Series (or Classes) is to vote as a single class separate from any
other Shares, thirty-three and one-third percent (33-1/3%) of the Shares of each
such Series (or Class) entitled to vote shall constitute a quorum at a
Shareholders' meeting of that Series (or Class). Except when a larger vote is
required by any provision of this Declaration of Trust or the By-Laws or by
applicable law, when a quorum is present at any meeting, a majority of the
Shares voted shall decide any questions and a plurality of the Shares voted
shall elect a Trustee, provided that where any provision of law or of this
Declaration of Trust requires that the holders of any Series shall vote as a
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17
Series (or that holders of a Class shall vote as a Class), then a majority of
the Shares of that Series (or Class) voting on the matter (or a plurality with
respect to the election of a Trustee) shall decide that matter insofar as that
Series (or Class) is concerned.
Section 3. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to applicable law and Article III, Section 6 hereof, the
Trustees, in their absolute discretion, may prescribe and shall set forth in the
Registration Statement of the Trust as filed on Form N-1A or any successor form
with the Commission (the "Registration Statement of the Trust") such bases and
time or times for determining the net asset value of the Shares of any Series or
Class, the net income attributable to the Shares of any Series or Class, or the
declaration and payment of dividends and distributions on the Shares of any
Series or Class, as they may deem necessary or desirable from time to time.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any
record holder of such Shares for redemption, upon the presentation of a proper
instrument of transfer together with a request directed to the Trust or a Person
designated by the Trust that the Trust purchase such Shares or in accordance
with such other procedures for redemption as the Trustees may, from time to
time, authorize, and the Trust will pay therefor the net asset value thereof as
determined by the Trustees (or on their behalf), in accordance with any
applicable provisions of the By-Laws and applicable law. Unless extraordinary
circumstances exist, payment for said Shares shall be made by the Trust to the
Shareholder within seven (7) days after the date on which the request is made in
proper form. The obligation set forth in this Section 2 is subject to the
provisions regarding the suspension of the right of redemption that are set
forth in the Registration Statement of the Trust, and as the Trustees, in their
absolute discretion, may prescribe. In the case of a suspension of the right of
redemption as provided herein, a record holder of such Shares may either
withdraw the request for redemption or receive payment based on the net asset
value per Share next determined after the termination of such suspension.
(b) The redemption price may, in any case or cases, be paid
wholly or partly in-kind if the Trustees determine that such payment is
advisable and in the interest of the remaining Shareholders of the Series or
Class for which the Shares are being redeemed. The fair value, selection and
quantity of securities or other property so paid or delivered as all or part of
the redemption price may be determined by or under authority of the Trustees.
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In no case shall the Trust be liable for any delay of any corporation or other
Person in transferring securities selected for delivery as all or part of any
payment in-kind.
(c) If the Trustees shall, at any time and in good faith,
determine that direct or indirect ownership of Shares of any Series or Class has
or may become concentrated in any Person to an extent that would disqualify any
Series as a regulated investment company under the Internal Revenue Code of
1986, as amended (or any successor statute thereto), then the Trustees shall
have the power (but not the obligation) by such means as they deem equitable (i)
to involuntarily redeem any number, or principal amount, of Shares of such
Person sufficient to maintain or bring the direct or indirect ownership of
Shares into conformity with the requirements for such qualification, and (ii) to
refuse to transfer or issue Shares to any Person whose acquisition of the Shares
in question would result in such disqualification. Any such redemption shall be
effected at the redemption price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the
Trustees in writing such information with respect to direct and indirect
ownership of Shares as the Trustees deem necessary to comply with the provisions
of the Internal Revenue Code of 1986, as amended (or any successor statute
thereto), or to comply with the requirements of any other taxing or regulatory
authority.
(e) Subject to the requirements of the 1940 Act, the Board of
Trustees may cause the Trust to redeem, at the price and in the manner provided
in this Article VI, Shares of any Series or Class held by any Person (i) if such
Person is no longer qualified to hold such Shares in accordance with such
qualifications as may be established by the Trustees, (ii) if the net asset
value of such Shares is below the minimum investment amount which is set forth
in the Registration Statement of the Trust or (iii) if otherwise deemed by the
Trustees to be in the best interest of the Trust or that particular Series (or
Class) as a whole.
(f) Shares redeemed shall, upon redemption, be deemed to be retired and
restored to the status of unissued shares.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be
entitled to reasonable compensation from the Trust, and they may fix the amount
of such compensation. Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, legal, accounting, investment banking or
other services and payment for the same by the Trust.
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Section 2. Indemnification and Limitation of Liability. A
Trustee, when acting in such capacity, shall not be personally liable to any
Person, other than the Trust or a Shareholder to the extent provided in this
Article VII, for any act, omission or obligation of the Trust, of such Trustee
or of any other Trustee. The Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, Manager or
Principal Underwriter of the Trust. The Trust (i) may indemnify an agent of the
Trust or any Person who is serving or has served at the Trust's request as an
agent of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise and (ii) shall indemnify each Person who is,
or has been, a Trustee, officer or employee of the Trust and any Person who is
serving or has served at the Trust's request as a director, officer, trustee, or
employee of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise, in the case of (i) and (ii), to the fullest
extent consistent with the 1940 Act and in the manner provided in the By-Laws;
provided that such indemnification shall not be available to any of the
foregoing Persons in connection with a claim, suit or other proceeding by any
such Person against the Trust or a Series (or Class) thereof.
All persons extending credit to, contracting with or having
any claim against the Trust or the Trustees shall look only to the assets of the
appropriate Series (or Class thereof if the Trustees have included a Class
limitation on liability in the agreement with such person as provided below),
or, if the Trustees have yet to establish Series, of the Trust for payment under
such credit, contract or claim; and neither the Trustees nor the Shareholders,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees by any of them in connection with the Trust
shall conclusively be deemed to have been executed or done only in or with
respect to his or their capacity as Trustee or Trustees, and such Trustee or
Trustees shall not be personally liable thereon. At the Trustees' discretion,
any note, bond, contract, instrument, certificate or undertaking made or issued
by the Trustees or by any officer or officers may give notice that the
Certificate of Trust is on file in the Office of the Secretary of State of the
State of Delaware and that a statutory limitation on liability of Series exists
and such note, bond, contract, instrument, certificate or undertaking may, if
the Trustees so determine, recite that the same was executed or made on behalf
of the Trust by a Trustee or Trustees in such capacity and not individually or
by an officer or officers in such capacity and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only on the assets and property of the
Trust or a Series thereof, and may contain such further recital as such Person
or Persons may deem appropriate including, without limitation, a requirement, in
any note, bond, contract, instrument, certificate or undertaking made with
respect to one or more Classes of any Series that the parties thereto look only
to the assets of such Class or Classes in satisfaction of the liabilities
arising thereunder. The omission of
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20
any such notice or recital shall in no way operate to bind any Trustees,
officers or Shareholders individually.
Section 3. Trustee's Good Faith Action; Expert Advice; No Bond
or Surety. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
to the Trust and to any Shareholder solely for her or his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and shall be under no liability for any act or omission in
accordance with such advice nor for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.
Section 4. Insurance. The Trustees shall be entitled and
empowered to the fullest extent permitted by law to purchase with Trust assets
insurance for liability and for all expenses reasonably incurred or paid or
expected to be paid by a Trustee, officer, employee or agent of the Trust in
connection with any claim, action, suit or proceeding in which she or he becomes
involved by virtue of her or his capacity or former capacity with the Trust.
ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees.
No Person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the Trustees or
to see to the application of any payments made or property transferred to the
Trust or upon its order.
Section 2. Termination of Trust or Series.
(a) Unless dissolved as provided herein, the Trust shall
continue without limitation of time. The Trust may be dissolved at any time by
vote of a majority of the Shares of each Series entitled to vote, voting
separately by Series, or by the Trustees by written notice to the Shareholders.
Any Series of Shares (or Class thereof) may be dissolved at any time by vote of
a majority of the Shares of such Series or Class entitled to vote or by the
Trustees by written notice to the Shareholders of such Series or Class.
(b) Upon the requisite Shareholder vote or action by the
Trustees to dissolve the Trust or any one or more Series of Shares (or any Class
thereof), after paying or otherwise providing for all charges, taxes, expenses
and liabilities, whether due or accrued or anticipated, of the Trust or of the
particular Series (or any Class thereof) as may be determined by the Trustees,
the Trust shall in accordance with such procedures as the
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21
Trustees consider appropriate reduce the remaining assets of the Trust or of the
affected Series or Class to distributable form in cash or Shares (if any Series
remain) or other securities, or any combination thereof, and distribute the
proceeds to the Shareholders of the Series or Classes involved, ratably
according to the number of Shares of such Series or Class held by the several
Shareholders of such Series or Class on the date of distribution. Thereupon, the
Trust or any affected Series (or Class thereof) shall terminate and the Trustees
and the Trust shall be discharged of any and all further liabilities and duties
relating thereto or arising therefrom, and the right, title and interest of all
parties with respect to the Trust or such Series or Class shall be canceled and
discharged.
(c) Upon termination of the Trust, following completion of
winding up of its business, the Trustees shall cause a certificate of
cancellation of the Trust's Certificate of Trust to be filed in accordance with
the Delaware Act, which certificate of cancellation may be signed by any one
Trustee.
Section 3. Reorganization and Master/Feeder.
(a) Notwithstanding anything else herein, the Trustees may,
without any Shareholder approval or vote unless such approval or vote is
required by applicable law, in order to change the form or jurisdiction of
organization of the Trust or for any other purpose (i) cause the Trust to merge
or consolidate with or into one or more trusts (or series thereof to the extent
permitted by law), partnerships, associations, corporations or other business
entities (including trusts, partnerships, associations, corporations or other
business entities created by the Trustees to accomplish such merger or
consolidation), (ii) cause the Shares to be exchanged under or pursuant to any
state or federal statute to the extent permitted by law or (iii) cause the Trust
to reorganize under the laws of any state or other political subdivision of the
United States, if such action is determined by the Trustees to be in the best
interests of the Trust. Any agreement of merger or consolidation or exchange or
certificate of merger may be signed by a majority of the Trustees and facsimile
signatures conveyed by electronic or telecommunication means shall be valid.
(b) Pursuant to and in accordance with the provisions of
Section 3815(f) of the Delaware Act, and notwithstanding anything to the
contrary contained in this Declaration of Trust, an agreement of merger or
consolidation approved by the Trustees in accordance with this Section 3 of
Article VIII may effect any amendment to the governing instrument of the Trust
or effect the adoption of a new trust instrument of the Trust if the Trust is
the surviving or resulting trust in the merger or consolidation.
(c) The Trustees may, without any Shareholder approval or vote
unless such approval or vote is required by applicable law, create one or more
business trusts to which all or any part of the assets, liabilities, profits or
losses of the Trust or any Series or Class thereof may be transferred and may
provide for the conversion of Shares in the Trust or any Series or Class thereof
into beneficial interests in any such newly created trust or trusts or any
series or classes thereof.
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(d) Notwithstanding anything else herein, the Trustees may,
without Shareholder approval (unless required by the 1940 Act), invest all or a
portion of the Trust Property of any Series, or dispose of all or a portion of
the Trust Property of any Series, and invest the proceeds of such disposition in
interests issued by one or more other investment companies registered under the
1940 Act. Any such other investment company may (but not need) be a trust
(formed under the laws of the State of Delaware or any other state or
jurisdiction) (or series thereof) which is classified as a partnership for
federal income tax purposes. Notwithstanding anything else herein, the Trustees
may, without Shareholder approval unless such approval is required by the 1940
Act, cause a Series that is organized in the master/feeder fund structure to
withdraw or redeem its Trust Property from the master fund and cause such Series
to invest its Trust Property directly in securities and other financial
instruments or in another master fund.
Section 4. Amendments. Except as specifically provided in this
Section 4 of Article VIII, the Trustees may, without Shareholder vote, restate,
amend or otherwise supplement this Declaration of Trust. Shareholders shall have
the right to vote (i) on any amendment that would affect their right to vote
granted in Article V, Section 1 hereof, (ii) on any amendment to this Section 4
of Article VIII, (iii) on any amendment that may be required to be approved by
Shareholders by applicable law or by the Trust's registration statement filed
with the Commission, and (iv) on any amendment submitted to them by the
Trustees. Any amendment required or permitted to be submitted to the
Shareholders that, as the Trustees determine, shall affect the Shareholders of
one or more Series (or Classes thereof) shall be authorized by a vote of the
Shareholders of each Series or Class affected and no vote of Shareholders of a
Series or Class not affected shall be required. Notwithstanding anything else
herein, no amendment hereof shall limit the rights to insurance provided by
Article VII, Section 4 with respect to any acts or omissions of Persons covered
thereby prior to such amendment nor shall any such amendment limit the rights to
indemnification referenced in Article VII, Section 2 hereof as provided in the
By-Laws with respect to any actions or omissions of Persons covered thereby
prior to such amendment. The Trustees may, without Shareholder vote, restate,
amend, or otherwise supplement the Certificate of Trust as they deem necessary
or desirable.
Section 5. Filing of Copies, References, Headings. The
original or a copy of this instrument and of each restatement and/or amendment
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such restatements and/or
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such restatements and/or amendments. In this instrument and in any such
restatements and/or amendments, references to this instrument, and all
expressions such as "herein," "hereof" and "hereunder," shall be deemed to refer
to this instrument as amended or affected by any such restatements and/or
amendments. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
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23
construction or effect of this instrument. Whenever the singular number is used
herein, the same shall include the plural; and the neuter, masculine and
feminine genders shall include each other, as applicable. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 6. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust
is to be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware. The Trust shall be of the type commonly called a business
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
business trusts or actions that may be engaged in by business trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
(b) Notwithstanding the first sentence of Section 6(a) of this
Article VIII, there shall not be applicable to the Trust, the Trustees or this
Declaration of Trust (x) the provisions of section 3540 of Title 12 of the
Delaware Code or (y) any provisions of the laws (statutory or common) of the
State of Delaware (other than the Delaware Act) pertaining to trusts that relate
to or regulate: (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges, (ii) affirmative
requirements to post bonds for trustees, officers, agents or employees of a
trust, (iii) the necessity for obtaining a court or other governmental approval
concerning the acquisition, holding or disposition of real or personal property,
(iv) fees or other sums applicable to trustees, officers, agents or employees of
a trust, (v) the allocation of receipts and expenditures to income or principal,
(vi) restrictions or limitations on the permissible nature, amount or
concentration of trust investments or requirements relating to the titling,
storage or other manner of holding of trust assets, or (vii) the establishment
of fiduciary or other standards or responsibilities or limitations on the acts
or powers of trustees that are inconsistent with the limitations or liabilities
or authorities and powers of the Trustees set forth or referenced in this
Declaration of Trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are severable,
and if the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code of 1986, as amended (or any
successor statute thereto), and the regulations thereunder, with the Delaware
Act or with other applicable laws and regulations, the conflicting provision
shall be deemed never to have constituted a part of the Declaration of Trust;
provided, however, that such determination shall not affect any of the remaining
provisions of the Declaration of Trust or render invalid or improper any action
taken or omitted prior to such determination.
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(b) If any provision of the Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of the Declaration of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the
Trustees to create a business trust pursuant to the Delaware Act. It is not the
intention of the Trustees to create a general partnership, limited partnership,
joint stock association, corporation, bailment, or any form of legal
relationship other than a business trust pursuant to the Delaware Act. Nothing
in this Declaration of Trust shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 9. Derivative Actions. In addition to the requirements
set forth in Section 3816 of the Delaware Act, a Shareholder may bring a
derivative action on behalf of the Trust only if the following conditions are
met:
(a) The Shareholder or Shareholders must make a pre-suit
demand upon the Trustees to bring the subject action unless an effort to cause
the Trustees to bring such an action is not likely to succeed. For purposes of
this Section 9(a), a demand on the Trustees shall only be deemed not likely to
succeed and therefore excused if a majority of the Board of Trustees, or a
majority of any committee established to consider the merits of such action, has
a personal financial interest in the transaction at issue, and a Trustee shall
not be deemed interested in a transaction or otherwise disqualified from ruling
on the merits of a Shareholder demand by virtue of the fact that such Trustee
receives remuneration for his service on the Board of Trustees of the Trust or
on the boards of one or more Trusts that are under common management with or
otherwise affiliated with the Trust.
(b) Unless a demand is not required under paragraph (a) of
this Section 9, Shareholders eligible to bring such derivative action under the
Delaware Act who hold at least 10% of the outstanding Shares of the Trust, or
10% of the outstanding Shares of the Series or Class to which such action
relates, shall join in the request for the Trustees to commence such action.
(c) Unless a demand is not required under paragraph (a) of
this Section 9, the Trustees must be afforded a reasonable amount of time to
consider such shareholder request and to investigate the basis of such claim.
The Trustees shall be entitled to retain counsel or other advisors in
considering the merits of the request and shall require an undertaking by the
Shareholders making such request to reimburse the Trust for the expense of any
such advisors in the event that the Trustees determine not to bring such action.
For purposes of this Section 9, the Board of Trustees may
designate a committee of one Trustee to consider a Shareholder demand if
necessary to create a committee with a majority of Trustees who do not have a
personal financial interest in the transaction at issue.
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IN WITNESS WHEREOF, the Initial Trustee named below does
hereby make and enter into this Declaration of Trust as of December 23, 1997.
INITIAL TRUSTEE
/s/ Robert Bruno
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Robert Bruno, as Initial Trustee
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BY-LAWS
OF
FIRST EAGLE TRUST
A Delaware Business Trust
INTRODUCTION
A. Agreement and Declaration of Trust. These By-Laws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of First Eagle Trust, a Delaware business trust (the
"Trust"). In the event of any inconsistency between the terms hereof and the
terms of the Declaration of Trust, the terms of the Declaration of Trust shall
control.
B. Definitions. Capitalized terms used herein and not herein defined
are used as defined in the Declaration of Trust.
ARTICLE I
Offices
Section 1. Principal Office. The Trustees shall fix and, from time to
time, may change the location of the principal executive office of the Trust at
any place within or outside the State of Delaware.
Section 2. Delaware Office. The Trustees shall establish a registered
office in the State of Delaware and shall appoint as the Trust's registered
agent for service of process in the State of Delaware an individual resident of
the State of Delaware or a Delaware corporation or a corporation authorized to
transact business in the State of Delaware; in each case the business office of
such registered agent for service of process shall be identical with the
registered Delaware office of the Trust.
Section 3. Other Offices. The Trustees may at any time establish branch
or subordinate offices at any place or places where the Trust intends to do
business.
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meetings. Meetings of Shareholders shall be held at
any place designated by the Trustees. In the absence of any such designation,
Shareholders' meetings shall be held at the principal executive office of the
Trust.
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Section 2. Call of Meetings. Meetings of the Shareholders may be called
at any time by the Trustees or by the President for the purpose of taking action
upon any matter requiring the vote or authority of the Shareholders as herein
provided or provided in the Declaration of Trust or upon any other matter as to
which such vote or authority is deemed by the Trustees or the President to be
necessary or desirable. To the extent required by the 1940 Act, meetings of the
Shareholders for the purpose of voting on the removal of any Trustee shall be
called promptly by the Trustees upon the written request of Shareholders holding
at least ten percent (10%) of the outstanding Shares entitled to vote.
Section 3. Notice of Meetings of Shareholders. All notices of meetings
of Shareholders shall be sent or otherwise given in accordance with Section 4 of
this Article II not less than ten (10) nor more than ninety (90) days before the
date of the meeting. The notice shall specify (i) the place, date and hour of
the meeting, and (ii) the general nature of the business to be transacted. The
notice of any meeting at which Trustees are to be elected also shall include the
name of any nominee or nominees whom at the time of the notice are intended to
be presented for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a Trustee has a direct or indirect financial
interest, (ii) an amendment of the Agreement and Declaration of Trust of the
Trust, (iii) a reorganization of the Trust, or (iv) a voluntary dissolution of
the Trust, the notice shall also state the general nature of that proposal.
Section 4. Manner of Giving Notice; Affidavit of Notice. Notice of any
meeting of Shareholders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
Shareholder at the address appearing on the books of the Trust or its transfer
agent or given by the Shareholder to the Trust for the purpose of notice. If no
such address appears on the Trust's books or is given, notice shall be deemed to
have been given if sent to the Shareholder by first-class mail or telegraphic or
other written communication to the Trust's principal executive office, or if
published at least once in a newspaper of general circulation in the county
where that office is located. Notice shall be deemed to have been given at the
time when delivered personally or deposited in the mail or sent by telegram or
other means of written communication or, where notice is given by publication,
on the date of publication.
If any notice addressed to a Shareholder at the address appearing on
the books of the Trust is returned to the Trust by the United States Postal
Service marked to indicate that the Postal Service is unable to deliver the
notice to the Shareholder at that address, all future notices or reports shall
be deemed to have been duly given without further mailing if available to the
Shareholder on written demand of the Shareholder to the Trust.
An affidavit of the mailing or other means of giving any notice of any
meeting of Shareholders shall be filed and maintained in the minute book of the
Trust.
-2-
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Section 5. Adjourned Meeting; Notice. Any meeting of Shareholders,
whether or not a quorum is present, may be adjourned from time to time by the
vote of the majority of the Shares represented at that meeting, either in person
or by proxy.
When any meeting of Shareholders is adjourned to another time or place,
notice need not be given of the adjourned meeting at which the adjournment is
taken, unless a new record date of the adjourned meeting is fixed or unless the
adjournment is for more than sixty (60) days from the date set for the original
meeting in which case the Trustees shall set a new record date. If notice of any
such adjourned meeting is required, notice shall be given to each Shareholder of
record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 3 and 4 of this Article II. At any adjourned meeting, the
Trust may transact any business which might have been transacted at the original
meeting.
Section 6. Voting. The Shareholders entitled to vote at any meeting of
Shareholders shall be determined in accordance with the provisions of the
Declaration of Trust of the Trust, as in effect at such time. The Shareholders'
vote may be by voice vote or by ballot, provided, however, that any election for
Trustees must be by ballot if demanded by any Shareholder before the voting has
begun. On any matter other than elections of Trustees, any Shareholder may vote
part of the Shares in favor of the proposal and refrain from voting the
remaining Shares or vote them against the proposal, but if the Shareholder fails
to specify the number of Shares which the Shareholder is voting affirmatively,
it will be conclusively presumed that the Shareholder's approving vote is with
respect to the total Shares that the Shareholder is entitled to vote on such
proposal.
Section 7. Waiver of Notice by Consent of Absent Shareholders. The
actions taken at a meeting of Shareholders, however called and noticed and
wherever held, shall be as valid as though taken at a meeting duly held after
regular call and notice if a quorum is present, either in person or by proxy,
and if either before or after the meeting, a majority of the persons entitled to
vote were present in person or by proxy or signed a written waiver of notice or
a consent to a holding of the meeting or an approval of the minutes. The waiver
of notice or consent need not specify either the business to be transacted or
the purpose of any meeting of Shareholders.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the beginning of the
meeting.
Section 8. Shareholder Action by Written Consent Without a Meeting.
Except as provided in the Declaration of Trust or the 1940 Act, any action that
may be taken at any meeting of Shareholders may be taken without a meeting and
without prior notice if a consent in writing setting forth the action so taken
is signed by Shareholders having not less
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than the minimum number of votes that would be necessary to authorize or take
that action at a meeting at which all Shareholders entitled to vote on that
action were present and voted. All such consents shall be filed with the
Secretary of the Trust and shall be maintained in the Trust's records. Any
Shareholder giving a written consent or a transferee of the Shares or a personal
representative of the Shareholder or their respective proxy holders may revoke
the consent by a writing received by the Secretary of the Trust before written
consents of the number of votes required to authorize the proposed action have
been filed with the Secretary.
If the consents of all Shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
Shareholders shall not have been received, the Secretary shall give prompt
notice of the action approved by the Shareholders without a meeting. This notice
shall be given in the manner specified in Section 4 of this Article II.
Section 9. Record Date for Shareholder Notice, Voting and Giving
Consents.
(a) For purposes of determining the Shareholders entitled to
vote or act at any meeting or adjournment thereof, the Trustees may fix in
advance a record date which shall not be more than ninety (90) days nor less
than ten (10) days before the date of any such meeting. Without fixing a record
date for a meeting, the Trustees may for voting and notice purposes close the
register or transfer books for one or more Series (or Classes) for all or any
part of the period between the earliest date on which a record date for such
meeting could be set in accordance herewith and the date of such meeting.
If the Trustees do not so fix a record date or close the
register or transfer books of the affected Series (or Classes), the record date
for determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be at the close of business on the business day next
preceding the day on which notice is given or if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held.
(b) The record date for determining Shareholders entitled to
give consent to action in writing without a meeting, (i) when no prior action of
the Trustees has been taken, shall be the day on which the first written consent
is given, or (ii) when prior action of the Trustees has been taken, shall be
such date as determined for that purpose by the Trustees, or if no record date
is fixed by the Trustees, the record date shall be the close of business on the
day on which the Trustees adopt the resolution. Nothing in this Section 9 of
Article II shall be construed as precluding the Trustees from setting different
record dates for different Series (or Classes).
(c) Only Shareholders of record on the record date as herein
determined shall have any right to vote or to act at any meeting or give consent
to any action relating to such record date, notwithstanding any transfer of
Shares on the books of the Trust after such record date.
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Section 10. Proxies. Subject to the provisions of the Declaration of
Trust, every Person entitled to vote for Trustees or on any other matter shall
have the right to do so either in person or by proxy, provided that either (i)
an instrument authorizing such a proxy to act is executed by the Shareholder in
writing and dated not more than eleven (11) months before the meeting, unless
the instrument specifically provides for a longer period or (ii) an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act which authorization is received not more
than eleven (11) months before the meeting. A proxy shall be deemed executed by
a Shareholder if the Shareholder's name is placed on the proxy (whether by
manual signature, typewriting, telegraphic transmission or otherwise) by the
Shareholder or the Shareholder's attorney-in-fact or other authorized agent. A
valid proxy which does not state that it is irrevocable shall continue in full
force and effect unless revoked before the vote pursuant to that proxy by a
written notice of revocation of the proxy by the person who executed it
delivered to the Trust; by a subsequent proxy executed by, or attendance at the
meeting and voting in person by, the person executing that proxy; by such person
using any electronic, telephonic, computerized or other alternative means
authorized by the Trustees for authorizing the proxy to act; or by a written
notice to the Trust of the death or incapacity of the maker of that proxy. A
proxy with respect to Shares held in the name of two or more Persons shall be
valid if executed by any one of them unless at or prior to exercise of the proxy
the Trust receives a specific written notice to the contrary from any of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger.
Section 11. Inspectors of Election. Before any meeting of Shareholders,
the Trustees may appoint any person(s) other than nominees for office to act as
inspector(s) of election at the meeting or its adjournment. If no inspector(s)
of election are so appointed, the Chairman of the meeting may appoint
inspector(s) of election at the meeting. If any person appointed as an inspector
fails to appear or fails or refuses to act, the Chairman of the meeting may
appoint a person to fill the vacancy.
The inspector(s) shall:
(a) Determine the number of Shares outstanding and the voting
power of each, the Shares represented at the meeting, the existence of
a quorum and the authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
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(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the
election or vote with fairness to all Shareholders.
ARTICLE III
Trustees
Section 1. Powers. Subject to the applicable provisions of the 1940
Act, the Declaration of Trust and these By-Laws relating to action required to
be approved by the Shareholders, the business and affairs of the Trust shall be
managed and all powers shall be exercised by or under the direction of the
Trustees.
Section 2. Number of Trustees. The exact number of Trustees within any
limits specified in the Declaration of Trust shall be fixed from time to time by
a resolution of the Trustees.
Section 3. Vacancies. Vacancies in the authorized number of Trustees
may be filled as provided in the Declaration of Trust.
Section 4. Place of Meetings and Meetings by Telephone. All meetings of
the Trustees may be held at any place that has been designated in the notice for
such meeting or as designated by the Trustees. In the absence of such a
designation, regular meetings shall be held at the principal executive office of
the Trust. Except as provided under the 1940 Act, any regular or special meeting
may be held by conference telephone or similar communication equipment, so long
as all Trustees participating in the meeting can hear one another, and all such
Trustees shall be deemed to be present in person at such meeting.
Section 5. Regular Meetings. Regular meetings of the Trustees shall be
held without call at such time as shall from time to time be fixed by the
Trustees. Such regular meetings may be held without notice.
Section 6. Special Meetings. Special meetings of the Trustees for any
purpose or purposes may be called at any time by the President or any Vice
President or the Secretary or any two (2) Trustees.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each Trustee or sent by first-class mail, by
telegram or telecopy (or similar electronic means) or by nationally recognized
overnight courier, charges prepaid, addressed to each Trustee at that Trustee's
address as it is shown on the records of the Trust. In case the notice is
mailed, it shall be deposited in the United States mail at least seven (7)
calendar
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days before the time of the holding of the meeting. In case the notice is
delivered personally or by telephone or by telegram, telecopy (or similar
electronic means) or overnight courier, it shall be given at least twenty-four
(24) hours before the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated either to the Trustee or to a
person at the office of the Trustee who the person giving the notice has reason
to believe will promptly communicate it to the Trustee. The notice need not
specify the purpose of the meeting or the place if the meeting is to be held at
the principal executive office of the Trust.
Section 7. Quorum. A third of the authorized number of Trustees shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 9 of this Article III. Every act or decision done or made by
a majority of the Trustees present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Trustees, subject to the provisions
of the Declaration of Trust. A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of Trustees if
any action taken is approved by at least a majority of the required quorum for
that meeting.
Section 8. Waiver of Notice. Notice of any meeting need not be given to
any Trustee who either before or after the meeting signs a written waiver of
notice, a consent to holding the meeting, or approves the minutes of the
minutes. The waiver of notice or consent need not specify the purpose of the
meeting. All such waivers, consents or approvals shall be filed with the records
of the Trust or made a part of the minutes of the meeting. Notice of a meeting
shall also be deemed given to any Trustee who attends the meeting without
protesting before or at its commencement the lack of notice to that Trustee.
Section 9. Adjournment. A majority of the Trustees present, whether or
not constituting a quorum, may adjourn any meeting to another time and place.
Section 10. Notice of Adjournment. Notice of the time and place of
holding an adjourned meeting need not be given unless the meeting is adjourned
for more than forty-eight (48) hours, in which case notice of the time and place
shall be given before the time of the adjourned meeting in the manner specified
in Section 6 of this Article III.
Section 11. Action Without a Meeting. Unless the 1940 Act requires that
a particular action be taken only at a meeting at which the Trustees are present
in person, any action to be taken by the Trustees at a meeting may be taken
without such meeting by the written consent of a majority of the Trustees then
in office. Any such written consent may be executed and given by telecopy or
similar electronic means. Such written consents shall be filed with the minutes
of the proceedings of the Trustees. If any action is so taken by the Trustees by
the written consent of less than all of the Trustees, prompt notice of the
taking of such action shall be furnished to each Trustee who did not execute
such written consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
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Section 12. Fees and Compensation of Trustees. Trustees and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Trustees. This Section 12 shall not be construed to preclude any Trustee from
serving the Trust in any other capacity as an officer, agent, employee, or
otherwise and receiving compensation for those services.
Section 13. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his or her power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall fewer than two (2) Trustees personally exercise the powers granted to
the Trustees, except as otherwise expressly provided herein or by resolution of
the Trustees. Except where applicable law may require a Trustee to be present in
person, a Trustee represented by another Trustee pursuant to such power of
attorney shall be deemed to be present for purposes of establishing a quorum and
satisfying the required vote of Trustees.
ARTICLE IV
Committees
Section 1. Committees of Trustees. The Trustees may by resolution
designate one or more committees, each consisting of two (2) or more Trustees,
to serve at the pleasure of the Trustees. The Trustees may designate one or more
Trustees as alternate members of any committee who may replace any absent member
at any meeting of the committee. Any committee to the extent provided in the
resolution of the Trustee, shall have the authority of the Trustees, except with
respect to:
(a) the approval of any action which under applicable law
requires approval by a majority of the entire authorized number of
Trustees or certain Trustees;
(b) the filling of vacancies of Trustees;
(c) the fixing of compensation of the Trustees for services
generally or as a member of any committee;
(d) the amendment or termination of the Declaration of Trust
or any Series or Class or amendment of the By-Laws or the adoption of
new By-Laws;
(e) the amendment or repeal of any resolution of the Trustees
which by its express terms is not so amendable or repealable;
(f) a distribution to the Shareholders of the Trust, except at
a rate or in a periodic amount or within a designated range determined
by the Trustees; or
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(g) the appointment of any other committees of the Trustees or
the members of such new committees.
Section 2. Meetings and Action of Committees. Meetings and action of
committees shall be governed by and held and taken in accordance with the
provisions of Article III of these By-Laws, with such changes in the context
thereof as are necessary to substitute the committee and its members for the
Trustees generally, except that the time of regular meetings of committees may
be determined either by resolution of the Trustees or by resolution of the
committee. Special meetings of committees may also be called by resolution of
the Trustees. Alternate members shall be given notice of meetings of committees
and shall have the right to attend all meetings of committees. The Trustees may
adopt rules for the governance of any committee not inconsistent with the
provisions of these By-Laws.
ARTICLE V
Officers
Section 1. Officers. The officers of the Trust shall be a President, a
Secretary, and a Treasurer. The Trust may also have, at the discretion of the
Trustees, a Chairman of the Board (Chairman), one or more Vice Presidents, one
or more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article V. Any number of offices may be held by the same person. The
Chairman, if there be one, shall be a Trustee and may but need not be a
Shareholder; and any other officer may but need not be a Trustee or Shareholder.
Section 2. Election of Officers. The officers of the Trust, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article V, shall be chosen by the Trustees, and each shall
serve at the pleasure of the Trustees, subject to the rights, if any, of an
officer under any contract of employment.
Section 3. Subordinate Officers. The Trustees may appoint and may
empower the President to appoint such other officers as the business of the
Trust may require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in these By-Laws or as the
Trustees may from time to time determine.
Section 4. Removal and Resignation of Officers. Subject to the rights,
if any, of an officer under any contract of employment, any officer may be
removed, either with or without cause, by the Trustees at any regular or special
meeting of the Trustees or by the principal executive officer or by such other
officer upon whom such power of removal may be conferred by the Trustees.
Any officer may resign at any time by giving written notice to the
Trust. Any resignation shall take effect at the date of the receipt of that
notice or at any later time
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specified in that notice; and unless otherwise specified in that notice, the
acceptance of the resignation shall not be necessary to make it effective. Any
resignation is without prejudice to the rights, if any, of the Trust under any
contract to which the officer is a party.
Section 5. Vacancies in Offices. A vacancy in any office because of
death, resignation, removal, disqualification or other cause shall be filled in
the manner prescribed in these By-Laws for regular appointment to that office.
The President may make temporary appointments to a vacant office pending action
by the Trustees.
Section 6. Chairman. The Chairman, if such an officer is elected, shall
if present preside at meetings of the Trustees, shall be the chief executive
officer of the Trust and shall, subject to the control of the Trustees, have
general supervision, direction and control of the business and the officers of
the Trust and exercise and perform such other powers and duties as may be from
time to time assigned to him by the Trustees or prescribed by the Declaration of
Trust or these By-Laws.
Section 7. President. Subject to such supervisory powers, if any, as
may be given by the Trustees to the Chairman, if there be such an officer, the
President shall be the chief operating officer of the Trust and shall, subject
to the control of the Trustees and the Chairman, have general supervision,
direction and control of the business and the officers of the Trust. He or she
shall preside at all meetings of the Shareholders, and in the absence of the
Chairman or if there be none, at all meetings of the Trustees. He or she shall
have the general powers and duties of management usually vested in the office of
President of a corporation and shall have such other powers and duties as may be
prescribed by the Trustees, the Declaration of Trust or these By-Laws. The Board
may appoint Co-Presidents, each of which shall have the power of the President.
Section 8. Vice Presidents. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Trustees or if not ranked, the Executive Vice President (who shall be considered
first ranked) and such other Vice Presidents as shall be designated by the
Trustees, shall perform all the duties of the President and when so acting shall
have all powers of and be subject to all the restrictions upon the President.
The Vice Presidents shall have such other powers and perform such other duties
as from time to time may be prescribed for them respectively by the Trustees or
the President or the Chairman or by these By-Laws.
Section 9. Secretary. The Secretary shall keep or cause to be kept at
the principal executive office of the Trust or such other place as the Trustees
may direct a book of minutes of all meetings and actions of Trustees, committees
of Trustees and Shareholders with the time and place of holding, whether regular
or special, and if special, how authorized, the notice given, the names of those
present at Trustees' meetings or committee meetings, the number of Shares
present or represented at meetings of Shareholders and the proceedings.
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The Secretary shall keep or cause to be kept at the principal executive
office of the Trust or at the office of the Trust's transfer agent or registrar,
a Share register or a duplicate Share register showing the names of all
Shareholders and their addresses, the number and classes of Shares held by each
Shareholder.
The Secretary shall give or cause to be given notice of all meeting of
the Shareholders required to be given by these By-Laws or by applicable law and
shall have such other powers and perform such other duties as may be prescribed
by the Trustees or by these By-Laws.
Section 10. Treasurer. The Treasurer shall be the chief financial
officer and chief accounting officer of the Trust and shall keep and maintain or
cause to be kept and maintained adequate and correct books and records of
accounts of the properties and business transactions of the Trust and each
Series and Class thereof, including accounts of the assets, liabilities,
receipts, disbursements, gains, losses, capital and retained earnings of all
Series and Classes thereof. The books of account shall at all reasonable times
be open to inspection by any Trustee.
The Treasurer shall deposit all monies and other valuables in the name
and to the credit of the Trust with such depositaries as may be designated by
the Board of Trustees. He or she shall disburse the funds of the Trust as may be
ordered by the Trustees, shall render to the President and Trustees, whenever
they request it, an account of all of his or her transactions as chief financial
officer and of the financial condition of the Trust and shall have other powers
and perform such other duties as may be prescribed by the Trustees or these
By-Laws.
ARTICLE VI
Indemnification of Trustees, Officers,
Employees and Other Agents
Section 1. Agents, Proceedings, Expenses. For the purpose of this
Article, "agent" means any person who is or was a Trustee, officer, employee or
other agent of the Trust or is or was serving at the request of the Trust as a
trustee, director, officer, employee or agent of another organization in which
the Trust has any interest as a Shareholder, creditor or otherwise: "proceeding"
means any threatened, pending or completed claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative (including appeals);
and "expenses" includes, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and all other liabilities
whatsoever.
Section 2. Indemnification. Subject to the exceptions and limitations
contained in Section 3 below, every agent shall be indemnified by the Trust to
the fullest extent permitted by law against all liabilities and against all
expenses reasonably incurred or paid by him or her in connection with any
proceeding in which he or she becomes involved as a party or
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otherwise by virtue of his or her being or having been an agent.
Section 3. Limitations, Settlements. No indemnification shall be
provided hereunder to an agent:
(a) who shall have been adjudicated by the court or other body before
which the proceeding was brought to be liable to the Trust or its Shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office
(collectively, "disabling conduct"); or
(b) with respect to any proceeding disposed of (whether by settlement,
pursuant to a consent decree or otherwise) without an adjudication by the court
or other body before which the proceeding was brought that such agent was liable
to the Trust or its Shareholders by reason of disabling conduct, unless there
has been a determination that such agent did not engage in disabling conduct:
(i) by the court or other body before which the proceeding was
brought;
(ii) by at least a majority of those Trustees who are neither
Interested Persons (within the meaning of the 1940 Act) of the Trust
nor are parties to the proceeding based upon a review of readily
available facts (as opposed to a full trial-type inquiry); or
(iii) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full
trial-type inquiry);
provided, however, that indemnification shall be provided hereunder to an agent
with respect to any proceeding in the event of (1) a final decision on the
merits by the court or other body before which the proceeding was brought that
the agent was not liable by reason of disabling conduct, or (2) the dismissal of
the proceeding by the court or other body before which it was brought for
insufficiency of evidence of any disabling conduct with which such agent has
been charged.
Section 4. Insurance, Rights Not Exclusive. The rights of
indemnification herein provided may be insured against by policies maintained by
the Trust on behalf of any agent, shall be severable, shall not be exclusive of
or affect any other rights to which any agent may now or hereafter be entitled
and shall inure to the benefit of the heirs, executors and administrators of any
agent.
Section 5. Advance of Expenses. Expenses incurred by an agent in
connection with the preparation and presentation of a defense to any proceeding
may be paid by the Trust from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such agent that such amount
will be paid over by him or her to the Trust if it is ultimately determined that
he or she is not entitled to indemnification under this Article VI;
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provided, however, that (a) such agent shall have provided appropriate security
for such undertaking, (b) the Trust is insured against losses arising out of any
such advance payments or (c) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the proceeding, or independent
legal counsel in a written opinion, shall have determined, based upon a review
of readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such agent will be found
entitled to indemnification under this Article VI.
Section 6. Fiduciaries of Employee Benefit Plan. This Article does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
ARTICLE VII
Records and Reports
Section 1. Maintenance and Inspection of Share Registrar. The Trust
shall maintain at its principal executive office or at the office of its
transfer agent or registrar, if either be appointed and as determined by
resolution of the Trustees, a record of its Shareholders, giving the names and
addresses of all Shareholders and the number and Series (and, as applicable,
Class) of Shares held by each Shareholder, and the number and date of
certificates issued for the same and the number and date of cancellation of
every certificate surrendered for cancellation. Subject to such reasonable
standards (including standards governing what information and documents are to
be furnished and at whose expense) as may be established by the Trustees from
time to time, the record of the Trust's Shareholders shall be open to inspection
upon the written request of any Shareholder at any reasonable time during usual
business hours for a purpose reasonably related to the holder's interests as a
Shareholder.
Section 2. Maintenance and Inspection of By-Laws. The Trust shall keep
at its principal executive office the original or a copy of these By-Laws as
amended to date, which shall be open to inspection by the Shareholders at all
reasonable times during office hours.
Section 3. Maintenance and Inspection of Other Records. The accounting
books and records and minutes of proceedings of the Shareholders and the
Trustees and any committee or committees of the Trustees shall be kept at such
place or places designated by the Trustees or in the absence of such
designation, at the principal executive office of the Trust. The minutes shall
be kept in written form and the accounting books and records shall be kept
either in written form or in any other form capable of being converted into
written form. Minute books shall be open to inspection upon the written request
of any Shareholder at
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reasonable times during usual business hours for a purpose reasonably related to
the Shareholder's interests as a Shareholder. Any such inspection may be made in
person or by an agent and shall include the right to copy. Notwithstanding the
foregoing, the Trustees shall have the right to keep confidential from
Shareholders for such period of time as the Trustees deem reasonable, any
information which the Trustees reasonably believe to be in the nature of trade
secrets or other information the disclosure of which the Trustees in good faith
believe is not in the best interests of the Trust or could damage the Trust or
its business or which the Trust is required by law or by agreement with a third
party to keep confidential.
Section 4. Inspection by Trustees. Every Trustee shall have the
absolute right at any reasonable time to inspect all books, records, and
documents of every kind and the physical properties of the Trust. This
inspection by a Trustee may be made in person or by an agent or attorney and the
right of inspection includes the right to copy and make extracts of documents.
Section 5 . Financial Statements. A copy of any financial statements
and any income statement of the Trust for each semi-annual period of each fiscal
year and accompanying balance sheet of the Trust as of the end of each such
period that has been prepared by the Trust shall be kept on file in the
principal executive office of the Trust for at least twelve (12) months and each
such statement shall be exhibited at all reasonable times to any Shareholder
demanding an examination of any such statement or a copy shall be mailed to any
such Shareholder.
The semi-annual income statements and balance sheets referred to in
this section shall be accompanied by the report, if any, of any independent
accountants engaged by the Trust or the certificate of an authorized officer of
the Trust that the financial statements were prepared without audit from the
books and records of the Trust.
ARTICLE VIII
General Matters
Section 1. Checks, Drafts, Evidence of Indebtedness. All checks,
drafts, or other orders for payment of money, notes or other evidences of
indebtedness issued in the name of or payable to the Trust shall be signed or
endorsed in such manner and by such person or persons as shall be designated
from time to time in accordance with the resolution of the Board of Trustees.
Section 2. Contracts and Instruments; How Executed. The Trustees,
except as otherwise provided in these By-Laws, may authorize any officer or
officers, agent or agents, to enter into any contract or execute any instrument
in the name of and on behalf of the Trust and this authority may be general or
confined to specific instances; and unless so authorized or ratified by the
Trustees or within the agency power of an officer, no officer, agent, or
employee shall have any power or authority to bind the Trust by any contract or
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engagement or to pledge its credit or to render it liable for any purpose or for
any amount.
Section 3. Certificates for Shares. The Trustees may at any time
authorize the issuance of Share certificates for any one or more Series or
Classes. In that event, each Shareholder of an affected Series or Class shall be
entitled upon request to receive a certificate evidencing such Shareholder's
ownership of Shares of the relevant Series or Class (in such form as shall be
prescribed from time to time by the Trustees). All certificates shall be signed
in the name of the Trust by the President or Vice President and by the Treasurer
or an Assistant Treasurer or the Secretary or any Assistant Secretary,
certifying the number of Shares and the Series of Shares owned by the
Shareholders. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
that officer, transfer agent, or registrar before that certificate is issued, it
may be issued by the Trust with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue. Notwithstanding the
foregoing, the Trust may adopt and use a system of issuance, recordation and
transfer of its Shares by electronic or other means.
Section 4. Lost Certificates. Except as provided in this Section 4, no
new certificates for Shares shall be issued to replace an old certificate unless
the latter is surrendered to the Trust and canceled at the same time. The
Trustees may, in the event any Share certificate or certificate for any other
security is lost, stolen, or destroyed, authorize the issuance of a replacement
certificate on such terms and conditions as the Trustees may require, including
a provision for indemnification of the Trust secured by a bond or other adequate
security sufficient to protect the Trust against any claim that may be made
against it, including any expense or liability on account of the alleged loss,
theft, or destruction of the certificate or the issuance of the replacement
certificate.
Section 5. Representation of Shares of Other Entities held by Trust.
The President or any Vice President or any other person authorized by the
Trustees or by any of the foregoing designated officers, is authorized to vote
or represent on behalf of the Trust any and all Shares of any corporation,
partnership, trusts, or other entities, foreign or domestic, standing in the
name of the Trust. The authority granted may be exercised in person or by a
proxy duly executed by such designated person.
Section 6. Fiscal Year. The fiscal year of the Trust shall be fixed and
refixed or changed from time to time by the Trustees. The fiscal year of the
Trust shall be the taxable year of each Series and Class of the Trust.
Section 7. Seal. The seal of the Trust, if utilized, shall consist of
the words "First Eagle Trust, Delaware Business Trust, 1997" in a circle.
However, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
-15-
<PAGE>
<PAGE>
ARTICLE IX
Amendments
Section 1. Amendment. Except as otherwise provided by applicable law or
by the Declaration of Trust, these By-Laws may be restated, amended,
supplemented or repealed by the Trustees, provided that no restatement,
amendment, supplement or repeal hereof shall limit the rights to indemnification
or insurance provided in Article VI hereof with respect to any acts or omissions
of agents (as defined in Article VI) of the Trust prior to such amendment.
Section 2. Incorporation by Reference into Agreement and Declaration of
Trust by the Trust. These By-Laws and any amendments thereto shall be deemed
incorporated by reference in the Declaration of Trust.
-16-
<PAGE>
<PAGE>
APPLICATION
FIRST EAGLE FUNDS
For application assistance call 1-800-451-3623. To open an IRA account, please
request an Individual Retirement Account Application.
- --------------------------------------------------------------------------------
Mail all forms and checks to: First Eagle Funds, P.O. Box 182497, Columbus, Ohio
43218-2497.
Please make check or money order payable to First Eagle Funds.
- --------------------------------------------------------------------------------
1. SHAREHOLDER APPLICATION OR REVISION [ ]Please check the box if this is a
revision and see Section 8
- --------------------------------------------------------------------------------
FUND SELECTION
Minimum initial investment: Please see 'How to purchase shares' in the
prospectus.
<TABLE>
<S> <C> <C>
[ ] First Eagle Fund of America (amount) [ ] Check
[ ] First Eagle International Fund (amount) [ ] Wire (call 1-800-451-3623
for instructions)
</TABLE>
- --------------------------------------------------------------------------------
2. ACCOUNT REGISTRATION - PLEASE PRINT All owners must sign Section 7
- --------------------------------------------------------------------------------
[ ] INDIVIDUAL OR JOINT ACCOUNT (JOINT OWNERSHIP MEANS 'JOINT TENANTS WITH
RIGHTS OF SURVIVORSHIP' UNLESS OTHERWISE SPECIFIED)
- --------------------------------------------------------------------------------
First Name Middle Initial Last Name Social Security Number (SSN)
- --------------------------------------------------------------------------------
First Name Middle Initial Last Name
- --------------------------------------------------------------------------------
[ ] GIFTS/TRANSFERS TO A MINOR
________________________________As Custodian for________________________________
Name of Custodian (one only) Minor's name (one only)
____________________Uniform Gifts/Transfers to Minors Act_______________________
State (minor's or Minor's Social Security
custodian's state of residence) number
Please Note: A minor is the beneficial owner of the account with an adult
Custodian managing the account until the minor becomes of age, as specified in
the Uniform Gifts/Transfers to Minors Act (UGMA/UTMA). The Custodian's signature
is required for all transactions.
- --------------------------------------------------------------------------------
[ ] TRUST, CORPORATION, PARTNERSHIP, OR OTHER ENTITY
- ------------------------------------------------------ ------------------------
Exact Trust Title, or Name of Corporation, Partnership Taxpayer identification
or Organization number (TIN)
- ---------------------------------------------------- -------------------------
Trustee Names or Names of Officers or Partners Date of Trust Agreement,
authorized to act on the account or Corporate Resolution
- --------------------------------------------------------------------------------
3. ADDRESS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Street address Apartment No. City State Zip Code
_______________(________)__________________________________________(______)_____
Daytime Phone: (Area code) Evening Phone: (Area Code)
- --------------------------------------------------------------------------------
4. DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
Check one - if no box is checked, all dividends and capital gains will be
reinvested in additional shares of the Fund.
[ ] Reinvest all dividends and capital gains [ ] Pay all dividends in
cash and reinvest capital gain
[ ] Pay dividends and capital gains in cash [ ] Pay capital gains in
cash and reinvest dividends
- --------------------------------------------------------------------------------
5. OPTIONAL SHAREHOLDER PRIVILEGES
- --------------------------------------------------------------------------------
A. TELEPHONE TRANSACTIONS (REDEMPTIONS, EXCHANGES): If specific instructions are
not received from the shareholder, either in writing or by telephone, the
telephone privilege as described in the prospectus are automatically extended to
each account. The shareholder should understand, however, that the Trust and its
agents will not be liable for any loss, injury, damage or expense as a result of
acting upon instructions communicated by telephone reasonably believed to be
genuine. The shareholder agrees to hold the Trust and its agents harmless from
any loss, claims or liability arising from its or their compliance with such
instructions. A corporation that hereby accepts and does not reject the
telephone transaction privilege represents and warrants that it has all
necessary corporate authorizations to engage in such redemptions. Proceeds will
be sent to the bank account designated in section 6 or mailed to the address of
record.
[ ] NO, I/WE DO NOT WISH TO ELECT TELEPHONE PRIVILEGES AS DESCRIBED IN THE
PROSPECTUS.
- --------------------------------------------------------------------------------
B. AUTOMATIC INVESTMENT PLAN: Add to your First Eagle Fund automatically and
regularly with a $100 minimum requirement. Your bank must be an Automated
Clearing House (ACH) member.
I/We would like to establish an Automatic Investment Plan (Plan) as described in
the prospectus. I/We agree to reimburse the Fund(s) for any expenses or losses
that it (the) may incur in connection with my/our Plan, including any caused by
my/our bank's failure to act in accordance with my/our request. If my/our bank
makes any erroneous payment or fails to make a payment after shares are
purchased on my/our behalf, any such purchase may be canceled and I/we hereby
authorize redemptions and/or deductions from my/our account for that purpose.
Please have the amounts indicated below withdrawn from my bank account noted in
Section 6 and invested in the fund(s) listed below:
<TABLE>
<S> <C>
Fund Amount $
[ ] Each month on the 1st [ ] Each month on the 15th
[ ] Each month on the 1st and the 15th [ ] Quarterly on the 1st (Mar., Jun., Sept., Dec.)
Fund Amount $
[ ] Each month on the 1st [ ] Each month on the 15th
[ ] Each month on the 1st and the 15th [ ] Quarterly on the 1st (Mar., Jun., Sept., Dec.)
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
6. BANKING INSTRUCTIONS
- --------------------------------------------------------------------------------
For your convenience, you may authorize the First Eagle Funds to transfer money
between your bank account and your First Eagle account. This service is
available for telephone redemptions, and for the Automatic Investment Plan.
Please check with your bank to ensure that they accept Automated Clearing House
(ACH) transactions in the account you are using.
[ ] checking [ ] savings* [ ] money market account*
*Debits to this account count toward the maximum number of withdrawals allowed
by regulations for this type of account.
Please complete the information below or attach a voided check or deposit slip.
- --------------------------------------------------------------------------------
Bank Name Branch Office Bank Telephone Number
- --------------------------------------------------------------------------------
Account Number Bank Routing Number or ABA number (if unknown,
please call your bank)
- --------------------------------------------------------------------------------
Name(s) on Bank Account (must be the same as the First Eagle Account)
- --------------------------------------------------------------------------------
Bank Address (do not use P.O. Box) City State Zip Code
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. SIGNATURE AND TAX CERTIFICATIONS - ALL REGISTERED OWNERS MUST SIGN
APPLICATION
- --------------------------------------------------------------------------------
We must have signatures to process your Application and to certify your taxpayer
identification number.
A. TAXPAYER IDENTIFICATION Please note that the IRS only allows one TIN or
Social Security Number to be listed on an account. On joint accounts, it is
preferred that the primary account owner ( or person listed first on the account
list his/her number as requested below. Please check appropriate boxes:
[ ] I AM A U.S. CITIZEN OR A RESIDENT ALIEN. I certify that the number in
Section 2 is my correct tax payer identification number or Social Security
number, or that of the minor named in Section 2.
[ ] I AM NOT SUBJECT TO BACKUP WITHHOLDING because I have not been notified by
the IRS that I am subject to backup withhholding as a result of a failure to
report all interest or dividends or because the IRS has notified me that I am no
longer subject to backup withholding.
[ ] AWAITING TIN. I certify that I am waiting for a number to be issued to me. I
understand that if I do not provide a TIN to the Fund within 60 days, the Fund
is required to commence 31% backup withholding until I provide a certified TIN.
[ ] FOR ORGANIZATIONS AND BUSINESS ENTITIES EXEMPT FROM BACKUP WITHHOLDING: I
qualify for exemption and my account(s) will not be subject total reporting and
backup withholding.
[ ] CERTIFICATE OF FOREIGN STATUS:. I certify that for dividends, I am not a
U.S. citizen or resident alien (or I am filing for a foreign corporation,
partnership, estate or trust) and I am an exempt foreign person. I have entered
below my complete address in the country where I reside permanently for
income-tax purposes only if different from my mailing address listed in Section
2 of this application.
- --------------------------------------------------------------------------------
Street Address Apt. #
- --------------------------------------------------------------------------------
Postal Code City Country
B. CERTIFICATION:
UNDER THE PENALTIES OF PERJURY, I/WE CERTIFY THAT (1) THE INFORMATION PROVIDED
ON THIS APPLICATION IS TRUE AND COMPLETE, (2) I/WE HAVE READ THE PROSPECTUS FOR
THE FIRST EAGLE TRUST IN WHICH I AM/WE ARE INVESTING AND AGREE TO THE TERMS
THEREOF, AND (3) I/WE HAVE FULL RIGHT, AUTHORITY AND LEGAL CAPACITY AND AM/ARE
OF LEGAL AGE IN STATE OF RESIDENCE TO PURCHASE OR REDEEM SHARES OF THE
DESIGNATED FUND(S). I/WE HEREBY APPOINT BISYS FUND SERVICES, INC. OR ANY
SUCCESSOR TRANSFER AGENT TO RECEIVE DIVIDENDS AND DISTRIBUTIONS FOR AUTOMATIC
REINVESTMENT IN ADDITIONAL SHARES AS I/WE HAVE INDICATED ABOVE.
<TABLE>
<S> <C>
X
- ----------------------------------------------------------------- -----------
Signature of Individual whose TIN or Social Security No. appears
above Date
X
- ----------------------------------------------------------------- -----------
Signature of Joint Registrant (if applicable) Date
X
- ----------------------------------------------------------------- -----------
Signature & Title of Corporate Officer, Partner, Trustee, Etc. Date
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. ACCOUNT REVISION - (if applicable)
- --------------------------------------------------------------------------------
If you are using this application to revise your account registration, a
signature guarantee is required above in Section 7.
<PAGE>
<PAGE>
FIRST EAGLE TRUST
INVESTMENT ADVISORY AGREEMENT
Agreement, made as of 27th day of February 1998, between FIRST
EAGLE TRUST, a Delaware business trust (the "Trust"), and ARNHOLD AND S.
BLEICHROEDER ADVISERS, INC., a registered investment adviser organized under the
laws of the State of Delaware (the "Adviser"),
WITNESSETH:
WHEREAS, the Trust is a non-diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and its shares of beneficial interest ("Shares") are
registered under the Securities Act of 1933;
WHEREAS, the Trust is authorized to issue Shares in Series and
initially intends to offer two Series, the First Eagle Fund of America and the
First Eagle International Fund (individually the "Fund" and collectively with
any subsequently formed Series the "Funds"); and
WHEREAS, the Trust desires to retain the Adviser to render
investment advisory services to the Trust, and the Adviser is willing to render
such services;
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Adviser to act as investment
adviser to the Trust and the initial Funds, and any other Funds as agreed upon
by the Adviser and Trust, for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services herein described, for the compensation herein provided.
2. Subject to the supervision of the Board of Trustees of the
Trust, the Adviser shall manage the investment operations of the Trust and the
Funds and the composition of the Funds' portfolios, including the purchase,
retention and disposition thereof, in accordance with the Funds' investment
objectives, policies and restrictions as stated in the Prospectus and Statement
of Additional Information of the Trust and subject to the following
understandings:
(a) The Adviser shall provide supervision of the Funds'
investments and determine from time to time what investments,
securities or commodity futures contracts and options thereon
("futures") will be purchased, retained, sold or loaned by the Funds,
and what portion of the assets will be invested or held uninvested as
cash.
(b) The Adviser shall use its best judgment in the performance
of its duties under this Agreement.
<PAGE>
<PAGE>
(c) The Adviser, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Agreement and Declaration of Trust, ByLaws, Prospectus and Statement of
Additional Information of the Trust and with the instructions and
directions of the Board of Trustees of the Trust and will conform to
and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations.
(d) The Adviser shall determine the securities and futures to
be purchased or sold by the Funds and will place orders pursuant to its
determinations with or through such persons, brokers, dealers or
futures commission merchants (including Arnhold and S. Bleichroeder,
Inc., which owns the Adviser) in conformity with the policy with
respect to brokerage as set forth in the Trust's Prospectus and
Statement of Additional Information or as the Board of Trustees may
direct from time to time. In providing the Trust and the Funds with
investment management, it is recognized that the Adviser will give
primary consideration to securing most favorable prices and efficient
executions. Consistent with this policy, the Adviser may consider the
financial responsibility, research and investment information and other
services provided by brokers, dealers or futures commission merchants
who may effect or be a party to any such transaction or other
transactions to which other clients of the Adviser may be a party. It
is understood that neither the Trust nor the Adviser has adopted a
formula for allocation of the Funds' investment business. It is also
understood that it is desirable for the Trust and the Funds that the
Adviser have access to supplemental investment and market research and
security and economic analysis provided by brokers or futures
commission merchants who may execute brokerage transactions at a higher
cost to the Trust and the Funds than may result when allocating
brokerage to other brokers or futures commission merchants on the basis
of seeking the most favorable prices and efficient executions.
Therefore, the Adviser is authorized to place orders for the purchase
and sale of securities or futures for the Trust and the Funds with such
brokers or futures commission merchants, subject to review by the
Trust's Board of Trustees, from time to time, with respect to the
extent and continuation of this practice. It is understood that the
services provided by such brokers or futures commission merchants may
be useful to the Adviser in connection with its services to other
clients.
On occasions when the Adviser deems the purchase or sale of a
security or a futures contract to be in the best interest of the Trust
and the Funds as well as other clients, the Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities or futures contract to be so
sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event,
allocation of the securities or futures contract so purchased or sold,
as well as the expenses incurred in the transaction, will be made by
the Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Trust and the Funds
and to such other clients.
2
<PAGE>
<PAGE>
(e) The Adviser shall maintain all books and records with
respect to the Trust and the Funds' portfolio transactions that the
Trust is required to keep under Rule 31a-1 under the 1940 Act.
(f) The Adviser shall provide the Trust's Custodian and the
Trust on each business day with information relating to all
transactions concerning the Funds' assets.
(g) The investment management services provided by the Adviser
hereunder are not to be deemed exclusive, and the Adviser shall be free
to render similar services to others.
3. The Trust has delivered to the Adviser copies of each of
the following documents and will deliver to it all future amendments
and supplements, if any:
(a) The Agreement and Declaration of Trust filed with the
State of Delaware (such Agreement and Declaration of Trust, as in
effect on the date hereof and as amended from time to time, is herein
called the "Agreement and Declaration of Trust");
(b) The By-Laws of the Trust (such By-Laws, as in effect on
the date hereof and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Board of Trustees of the
Trust authorizing the appointment of the Adviser and approving the form
of this Agreement;
(d) The Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A (the "Registration
Statement"), as filed with the Securities and Exchange Commission (the
"Commission") relating to the Trust and the Trust's Shares and all
amendments thereto;
(e) The Trust's Notification of Registration of under the 1940
Act on Form N-8A as filed with the Commission and all amendments
thereto; and
(f) Prospectus and Statement of Additional Information of the
Trust (such Prospectus and Statement of Additional Information, as
currently in effect and as amended or supplemented, from time to time,
being herein called the "Prospectus").
4. The Adviser shall authorize and permit any of its
directors, officers and employees who may be elected as trustees or officers of
the Trust to serve in the capacities in which they are elected. Services to be
furnished by the Adviser under this Agreement may be furnished through the
medium of any of such directors, officers or employees.
5. The Adviser shall keep the Trust's books and records
required to be maintained by it pursuant to paragraph 2 hereof. The Adviser
agrees that all records which it maintains for the Trust are the property of the
Trust and it will surrender promptly to the Trust
3
<PAGE>
<PAGE>
any of such records upon the Trust's request. The Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 of the Commission under the
1940 Act any such records as are required to be maintained by the Adviser
pursuant to paragraph 2 hereof.
6. For the services provided pursuant to this Agreement by the
Investment Adviser, the Trust will pay monthly an investment management fee at
the annual rate of 1.00% of the average daily net assets First Eagle Fund of
America and at the annual rate of 1.00% of the average daily net assets First
Eagle International Fund. Net assets of the Funds shall be computed on such days
and at such time or times as described in the Trust's then-current Prospectus
and Statement of Additional Information. Upon any termination of this Agreement
before the end of any month, the fee for such part of a month shall be prorated
and shall be payable upon the date of termination of this Agreement.
7. The Adviser shall not be liable for any error of judgment
or for any loss suffered by the Trust or the Funds in connection with the
matters to which this Agreement relates, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
8. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by the
Trust at any time, without the payment of any penalty, by the Board of Trustees
of the Trust or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Trust, or by the Adviser at any time, without
the payment of any penalty, on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate automatically
in the event of its assignment (as defined in the 1940 Act) by the Adviser.
9. Nothing in this Agreement shall limit or restrict the right
of any of the Adviser's directors, officers, or employees who may also be a
trustee, officer or employee of the Trust to engage in any other business or to
devote time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, nor limit or restrict the
Adviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
10. Except as otherwise provided herein or authorized by the
Board of Trustees of the Trust, from time to time, the Adviser shall for all
purposes herein be deemed to be an independent contractor and shall have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
4
<PAGE>
<PAGE>
11. During the term of this Agreement, the Trust agrees to
furnish the Adviser at its principal office all prospectuses, proxy statements,
reports to Shareholders, sales literature, or other material prepared for
distribution to Shareholders of the Trust or the public, which refer to the
Adviser in any way, prior to use thereof and not to use such material if the
Adviser reasonably objects in writing within five business days (or such other
time as may be mutually agreed) after receipt thereof. In the event of
termination of this Agreement, the Trust will continue to furnish to the Adviser
copies of any of the above-mentioned materials which refer in any way to the
Adviser. Sales literature may be furnished to the Adviser hereunder by first
class or overnight mail, facsimile transmission equipment or hand delivery. The
Trust shall furnish or otherwise make available to the Adviser such other
information relating to the business affairs of the Trust as the Adviser at any
time, or from time to time, reasonably requests in order to discharge its
obligations hereunder.
12. This Agreement constitutes the entire Agreement between
the parties with respect to the subject matter hereof. This Agreement may be
amended by mutual consent, but the consent of the Trust must be approved in
conformity with the requirements of the 1940 Act.
13. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Adviser at 1345 Avenue of the
Americas, New York, NY 10105, Attention: President; or (2) to the Trust at 1345
Avenue of the Americas, New York, NY 10105, Attention: President.
14. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. The Trust may use the name "First Eagle" in connection
with the name of the Trust or any of the Funds or any name including Arnhold and
S. Bleichroeder or any variant thereof, only for so long as this Agreement or
any extension, renewal or amendment hereof remain in effect, including any
similar agreement with any organization which shall have succeeded to the
Adviser's business as investment adviser, or the Distribution and Services
Agreement between the Trust and Arnhold and S. Bleichroeder, Inc. (the
"Distributor") or any extension, renewal or amendment thereof, remains in
effect, including any similar agreement with any organization which shall have
succeeded to the Distributor's business as distributor. At such time as such
Agreement shall no longer be in effect, the Trust will (to the extent that it
lawfully can) cease to use such a name or any other name indicating that it is
advised by, managed by or otherwise connected with the Adviser, the Distributor
or any organization which shall have so succeeded to such businesses. In no
event shall the Trust use the name "Arnhold and S. Bleichroeder" or any variant
thereof if the Adviser's or Distributor's functions are transferred or assigned
to a company of which Arnhold and S. Bleichroeder, Inc. does not have control.
In the event that such Agreement shall no longer be in effect or the Adviser's
or Distributor's functions are transferred or assigned to a company of which
Arnhold and S. Bleichroeder, Inc. does not have control, the Trust shall use its
best efforts to legally change its name by filing the required documentation
with appropriate state and federal agencies.
5
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
FIRST EAGLE TRUST
By: /s/ Robert Bruno
________________________________________
By: /s/ Tracy L. Saltwick
________________________________________
ARNHOLD AND S. BLEICHROEDER ADVISERS, INC.
By: /s/ John P. Arnhold
________________________________________
By:________________________________________
6
<PAGE>
<PAGE>
FIRST EAGLE TRUST
DISTRIBUTION AND SERVICES AGREEMENT
AGREEMENT made as of the 27th day of February, 1998, between
FIRST EAGLE TRUST, a Delaware business trust (the "Trust"), and ARNHOLD AND S.
BLEICHROEDER, INC., a New York corporation (the "Distributor"), such Distributor
to act on behalf of those Series (hereinafter referred to as the "Funds") of the
Trust listed in Exhibit A hereto in the manner contemplated by this Agreement.
W I T N E S S E T H :
WHEREAS, the Trust is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company, and it is in the interest of the Trust to continuously offer shares of
the Funds for sale under the Securities Act of 1933, as amended (the '1933
Act").
WHEREAS, the Trust and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the classes
of shares of beneficial interest of the Funds ("Shares") as listed in Exhibit A
upon the terms described in the Prospectus and Statement of Additional
Information that is included as part of the Trust's Registration Statement on
Form N-1A, as may be amended from time to time (the "Registration Statement").
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Trust hereby
appoints the Distributor to act as its exclusive agent to sell and to arrange
for the sale of Shares on the terms
<PAGE>
<PAGE>
2
and for the period set forth in this Agreement and in accordance with the
Registration Statement, and the Distributor hereby accepts such appointment and
agrees to act hereunder.
Section 2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell, as agent for the Trust
during the term of this Agreement, Shares upon the terms described in the
Prospectus and Statement of Additional Information that is included in
Registration Statement.
(b) The Distributor will make itself available to receive
orders, satisfactory to the Distributor, for the purchase of Shares and will
accept such orders on behalf of the Trust and will transmit such orders to the
Funds' transfer agent as promptly as practicable. Purchase orders shall be
deemed effective at the time and in the manner set forth in the current
Prospectus and Statement of Additional Information (hereinafter referred to
jointly as the "Prospectus").
(c) The offering price of Shares shall be determined following
the receipt of an order in accordance with procedures set forth in the
Prospectus. The Trust shall furnish the Distributor, with all possible
promptness, advice of each computation of net asset value of the Shares.
(d) The Distributor in its discretion may sell Shares to such
registered and qualified retail dealers and financial services firms ("Firms")
as it may select. In making agreements with such firms, the Distributor shall
act only as principal and not as agent for the Trust.
<PAGE>
<PAGE>
3
(e) The Distributor may also appoint such Firms to provide
distribution services to investors. The Firms shall provide such facilities and
personnel as is necessary or beneficial for providing information regarding the
Funds, distribution of sales literature, prospectuses, promotional material and
information, and assisting with Fund services and privileges for clients of such
Firms and shareholders of the Funds. The Distributor may also provide the above
services to the Trust and shall coordinate transfer agency services for the
Trust.
(f) The Distributor shall order Shares from the Trust only to
the extent it has received purchase orders therefor. Shares offered for sale or
sold by the Distributor shall be so offered or sold at a price per share
determined in accordance with the Prospectus. The price the Trust shall receive
for all Shares purchased from it shall be the net asset value of such Shares as
determined in accordance with the Prospectus. The Distributor may pay
commissions or fees to Firms and to others in its discretion in such amounts as
the Distributor shall determine from time to time and as provided in the
Prospectus. The Distributor shall be entitled to receive and retain any
applicable contingent deferred sales charge as described in the current
Prospectus. In addition to sales made by it as agent of the Trust, the
Distributor may also sell Shares as principal to persons with whom it does not
have selling group agreements.
(g) The Distributor will not make, or authorize Firms or
others to make, any short sales of Shares. The Distributor, as agent of and for
the account of the Trust, may repurchase the Shares at such prices and upon such
terms and conditions as shall be specified in the Prospectus. In selling or
reacquiring Shares for the account of the Trust, the Distributor
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4
will in all respects conform to the requirements of all state and federal laws
and the rules and regulations of the National Association of Securities Dealers,
Inc. ("NASD") relating to such sale or reacquisition, as the case may be, and
will indemnify and save harmless the Fund from any damage or expense on account
of any wrongful act by the Distributor or any employee, representative or agent
of the Distributor. The Distributor will observe and be bound by all the
provisions of the Agreement and Declaration of Trust of the Trust and the
provisions of the Prospectus.
(h) The Distributor shall, for all purposes herein provided,
be deemed to be an independent contractor and, unless expressly provided herein
or otherwise authorized, shall have no authority to act for or represent the
Trust in any way. The Distributor and its affiliates, by separate agreement with
the Trust, may also serve the Trust in other capacities. The services of the
Distributor to the Trust under this Agreement are not to be deemed exclusive,
and the Distributor shall be free to render similar services or other services
to others so long as its services hereunder are not materially impaired thereby.
(i) The Distributor shall issue and deliver or shall arrange
for various Firms to issue and deliver on behalf of the Trust such confirmations
of sales made by it pursuant to this Agreement as may be required. At or prior
to the time of issuance of Shares, the Distributor will pay or cause to be paid
to the Trust the amount due the Trust for the sale of such Shares. Certificates
shall be issued or Shares registered on the transfer books of the Trust in such
names and denominations as the Distributor may specify.
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5
Section 3. Compensation to the Distributor. For services
rendered pursuant to this Agreement, the Trust shall pay to the Distributor, on
a monthly basis, the fees as set forth in Exhibit B to this Agreement. This
Agreement contemplates that the Firms providing services in connection with the
sale and servicing of Shares will be compensated by the Distributor in
accordance with the terms of this Agreement and the Prospectus. For the month
and year in which this Agreement becomes effective or terminates, there shall be
an appropriate proration on the basis of the number of days that the Agreement
is in effect during the month and year, respectively. The net asset value per
Share and the net assets of each of the Funds shall be calculated in accordance
with the provisions of the Prospectus. On each day when net asset value is not
calculated, the net asset value per Share shall be deemed to be the net asset
value of such a Share as of the close of business on the last previous day on
which such calculation was made. The fees payable to the Distributor shall be in
addition to and shall not be reduced or offset by the amount of any contingent
deferred sales charge received by the Distributor. The Distributor may also
receive compensation from Arnhold and S. Bleichroeder Advisors, Inc., the Fund's
investment adviser, as the Distributor and the investment adviser may agree from
time to time.
Section 4. Duties of the Trust.
(a) The Trust agrees to sell its Shares so long as it has
Shares available for sale and agrees to deliver or cause the Funds' transfer
agent to deliver Share certificates or to register such Shares on the records of
the Funds in non-certificated form and to register such Shares on the records of
the Funds in such names and amounts as the Distributor has requested
<PAGE>
<PAGE>
6
in writing, as promptly as practicable after receipt by the Trust of the net
asset value thereof and written instructions for registering such Shares.
(b) The Trust shall keep the Distributor fully informed with
regard to its affairs and shall furnish to the Distributor copies of all
financial statements and other information that the Distributor may reasonably
request for use in connection with the distribution of Shares. Upon request by
the Distributor, the Trust will furnish a certified copy of the current
financial statements prepared for the Funds by the Trust's independent
accountants. The Trust will furnish such reasonable number of copies of the
current Prospectus and financial statements as the Distributor may request. The
Trust shall cooperate fully in the efforts of the Distributor to sell and
arrange for the sale of Shares.
(c) The Trust shall take all necessary action to provide for
authorized Shares and for the payment of filing fees as may be necessary to
register the Shares under the 1933 Act and the 1940 Act so that Shares will be
available for sale by the Distributor. The Trust agrees to file from time to
time such amendments, reports and other documents as may be necessary in order
that there will be no untrue statement of a material fact in the Registration
Statement or Prospectus, and so that there will be no omission to state a
material fact in the Registration Statement or Prospectus.
(d) The Trust shall use its best efforts to qualify and
maintain the qualification of an appropriate number of Shares for sale under the
securities laws of such states as the Distributor and the Fund may approve; and,
if necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Trust as a broker or dealer in such states. The
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<PAGE>
7
Trust shall not be required to amend its Agreement of Trust or By-Laws to comply
with the laws of any state, to maintain an office in any state, to change the
terms of the offering of its Shares in any state from the terms set forth in its
Registration Statement, to qualify as a foreign corporation in any state or to
consent to service of process in any state other than with respect to claims
arising out of the offering of Shares. The Distributor shall furnish such
information and other material relating to its affairs and activities as may be
required by the Trust in connection with such qualifications.
Section 5. Expenses.
(a) The Trust shall bear all expenses of the continuous
offering of Shares in connection with: (i) fees and disbursements of its counsel
and independent accountants, (ii) the preparation, filing and printing of the
Registration Statement required by and under the federal securities laws, (iii)
the preparation and mailing of annual and interim reports, Prospectuses and
proxy materials to existing shareholders and (iv) the qualifications of Shares
for sale and of the Trust as a broker or dealer under the securities laws of
such states or other jurisdictions as shall be selected by the Trust and the
Distributor pursuant to Section 4(d) hereof and the cost and expenses payable to
each such state for continuing qualification therein.
(b) The Distributor shall bear (i) the costs and expenses of
preparing, printing and distributing any materials not prepared by the Trust and
other materials used by the Distributor in connection with its offering of
Shares for sale to the public, (ii) the cost and expense of printing such extra
copies of the Prospectus and Statement of Additional Information for use in the
sale of Shares to the public, (iii) the expenses of registration or
qualification of
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<PAGE>
8
the Distributor as a dealer or broker under federal or state laws and the
expense of continuing such registration or qualification and (iv) the expenses
of any sales commissions for sales of the Funds' Shares (except such expenses as
are specifically undertaken by the Trust).
Section 6. Reports to the Board. The Distributor shall prepare
reports for the Board of Trustees of the Trust on a quarterly basis in
connection with the Trust's Rule 12b-1 plan and agreement for such Classes of
Shares subject to Rule 12b-1 as described in the Prospectus showing amounts paid
to the various Firms and such other information as shall be reasonably requested
by the Board of Trustees.
Section 7. Distribution Services Plan. To the extent
applicable, this Agreement constitutes the Rule 12b-1 plan and agreement for
such payments as described in Exhibit B as being made pursuant to Rule 12b-1
under the 1940 Act; and this Agreement and plan shall be approved and renewed in
accordance with Rule 12b-1. However, payments for services not specifically
identified as being in accordance with Rule 12b-1 shall be deemed not to be in
accordance with Rule 12b-1.
Section 8. Indemnification. The Trust agrees to indemnify,
defend and hold the Distributor, its directors, officers and any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its directors, officers or any such controlling person may incur
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any untrue statement of a
<PAGE>
<PAGE>
9
material fact contained in the Registration Statement or arising out of or based
upon any alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such claims, demands, liabilities or expenses arise out of or are based upon any
such untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with information furnished in writing by the
Distributor to the Trust for use in the Registration Statement; provided,
however, that this indemnity agreement shall not inure to the benefit of such
Distributor, director, officer or controlling person unless a court of competent
jurisdiction shall determine in a final decision on the merits that the person
to be indemnified was not liable by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations under this Agreement ("disabling conduct"), or, in
the absence of such a decision, a reasonable determination, based upon a review
of the facts, that the indemnified person was not liable by reason of disabling
conduct, by (a) a vote of a majority of a quorum of trustees who are neither
"interested persons" of the Trust as defined in Section 2(a)(19) of the 1940 Act
nor parties to the proceeding or (b) an independent legal counsel in a written
opinion. The Trust's agreement to indemnify the Distributor, its directors,
officers and any controlling person as aforesaid is expressly conditioned upon
the Trust being promptly notified of any action brought against the Distributor,
its directors, officers or any controlling person, and such notification is to
be given by letter or telegram addressed to the Trust at its principal business
office. The Trust agrees to promptly notify the Distributor of the commencement
of
<PAGE>
<PAGE>
10
any litigation or proceedings against it or any of its trustees or officers in
connection with the issue and sale of Shares.
The Distributor agrees to indemnify, defend and hold the
Trust, its trustees, officers and any person who controls the Trust, if any,
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending against such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which the Trust, its
trustees, officers or any such controlling person may incur under the 1933 Act
or under common law or otherwise, but only to the extent that such liability or
expense incurred by the Trust, its trustees, officers or such controlling person
resulting from such claims or demands shall arise out of or be based upon any
alleged untrue statement of a material fact contained in information furnished
in writing by the Distributor to the Trust for use in the Registration Statement
or Prospectus or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to be stated
in the Registration Statement or Prospectus or necessary to make such
information not misleading. The Distributor's agreement to indemnify the Trust,
its trustees, officers and any such controlling person as aforesaid is expressly
conditioned upon the Distributor's being promptly notified of any action brought
against the Trust, its trustees, officers or any such controlling person, such
notification being given to the Distributor at its principal business office.
Section 9. Compliance with Securities Laws. The Trust
represents that it is registered as an open-end, non-diversified management
investment company under the 1940 Act,
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<PAGE>
11
and agrees that it will comply with all of the provisions of the 1940 Act and of
the rules and regulations thereunder. The Fund and the Distributor each agree to
comply with all of the applicable terms and provisions of the 1940 Act, the 1933
Act and, subject to the provisions of Section 4(d) hereof, all applicable state
securities ("Blue Sky") laws. The Distributor agrees to comply with all of the
applicable terms and provisions of the Securities Exchange Act of 1934.
Section 10. Duration and Termination of this Agreement. This
Agreement shall become effective as of the date first above written. This
Agreement shall continue in effect until February 28, 2000 and shall continue
from year to year thereafter only so long as such continuance is specifically
approved at least annually by (i) the Board of Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the Funds, cast in
person or by proxy, and (ii) a majority of those trustees who are not parties to
this Agreement or interested persons of any such party and who have no direct or
indirect financial interest in this Agreement or in any agreement related
thereto, cast in person at a meeting called for the purpose of voting upon such
approval.
This Agreement may be terminated at any time without the
payment of any penalty, by the Board of Trustees of the Trust, by vote of a
majority of the outstanding voting securities of the Funds or by the Distributor
on not more than sixty (60) days' nor less than thirty (30) days' written notice
to the other party. This Agreement shall automatically terminate in the event of
its assignment, as defined in the 1940 Act.
Section 11. Amendments of this Agreement. This Agreement may
be amended by the parties only if such amendment is specifically approved by (i)
the Board of Trustees of
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<PAGE>
12
the Trust or by vote of a majority of the outstanding voting securities of the
Funds, and (ii) a majority of those trustees of the Trust who are not parties to
this Agreement or interested persons of any such party and who have no direct or
indirect financial interest in this Agreement, cast in person at a meeting
called for the purpose of voting on such approval. However, this Agreement may
not be amended to increase any fee payable hereunder by any existing Fund or
Class of Shares without a vote of shareholders of such Class of Shares or Fund.
Section 12. Notices. Any notice required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Distributor at 1345 Avenue of the
Americas, New York, N.Y. 10105, Attention: Fund Administration Department or (2)
to the Fund at 1345 Avenue of the Americas, New York, N.Y. 10105, Attention:
Secretary.
Section 13. Entire Agreement. Except as provided in the Class
C Share Distribution Agreement and the Services Agreement, this Agreement
contains the entire agreement between the parties hereto and supersedes all
prior agreements, understandings and arrangements with respect to the subject
matter hereof. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder shall not be
thereby affected.
Section 14. Governing Law. This Agreement shall be governed by
and construed in accordance with the applicable federal securities laws and the
laws of the State of New York. This Agreement is the entire contract between the
parties relating to the subject
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<PAGE>
13
matter hereof and supersedes all prior agreements between the parties relating
to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
FIRST EAGLE TRUST ARNHOLD AND S. BLEICHROEDER, INC.
By:______________________________ By:________________________________
By:______________________________ By:________________________________
<PAGE>
<PAGE>
EXHIBIT A
FIRST EAGLE TRUST
DISTRIBUTION AND SERVICES AGREEMENT
The following Series of the Trust are referred to as the "Funds" in the
Distribution Agreement:
First Eagle Fund of America
First Eagle International Fund
Each of the above listed Funds offers the following classes of Shares as
described in the Trust's Registration Statement:
Class Y Shares
Class C Shares
Dated as of the 27th day of February, 1998.
FIRST EAGLE TRUST ARNHOLD AND S. BLEICHROEDER, INC.
By:______________________________ By:________________________________
By:______________________________ By:________________________________
<PAGE>
<PAGE>
EXHIBIT B
FIRST EAGLE TRUST
DISTRIBUTION AND SERVICES AGREEMENT
The following Series of the Trust are referred to as the "Funds" in the
Distribution Agreement:
First Eagle Fund of America
First Eagle International Fund
For services rendered pursuant to this Agreement, the Trust shall pay to the
Distributor, on a monthly basis, a fee at the annual rate of 0.25% of the
average daily net assets of Class Y and Class C of the Funds.
For services pursuant to the Trust's Rule 12b-1 plan and agreement, the Trust
shall pay to the Distributor, on a monthly basis, a fee at the annual rate of
0.75% of the average daily net assets of Class C Shares of the Funds.
Dated as of the 27th day of February, 1998.
FIRST EAGLE TRUST ARNHOLD AND S. BLEICHROEDER, INC.
By:______________________________ By:________________________________
By:______________________________ By:________________________________
<PAGE>
<PAGE>
ARNHOLD AND S. BLEICHROEDER, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NY 10105
(212) 698-3000
FIRST EAGLE TRUST
SELLING GROUP AGREEMENT
--------------------
As Distributor and principal underwriter of the shares of
beneficial interest (the "Shares") of First Eagle Trust (the "Trust"), we invite
you to join a selling group for the distribution of the Shares. As exclusive
agent of the Trust, we offer to sell you Shares on the following terms:
1. Orders received from you will be accepted only at the
offering price applicable to each order, as described in the then current
Prospectus and Statement of Additional Information of the Trust (the
"Prospectus"). Acceptance of orders shall be subject to all provisions of the
Prospectus, including the applicable minimum and the Trust's right to decline to
accept any order, and to the terms and conditions set forth herein. No
conditional orders will be accepted. As Distributor of the Shares, we shall have
full authority to take such action as we may deem advisable in respect of all
matters pertaining to the distribution of such Shares. The procedures relating
to the handling of orders shall be subject to instructions that we shall forward
to you from time to time.
2. Each series of the Trust currently issues multiple classes
of Shares as reflected in the Prospectus. In the future, the Trust may create
additional series and classes of Shares. The Prospectus will be revised to
reflect the creation of any such additional series and classes of Shares. This
Agreement is applicable to the distribution of any and all Shares, whether of a
series or class currently issued or issued in the future. The creation of any
series or class of Shares in the future will not affect the terms of this
Agreement with respect to any existing series or class of Shares, and will not
constitute an amendment or modification to this Agreement. The sales charges and
dealer concessions applicable to sales of Shares by you which are accepted by us
shall be as set forth in the Prospectus. For the payment of asset based sales
charges and service fees, as set forth in the Prospectus and/or in accordance
with any distribution plan or plans adopted by the Board of Trustees of the
Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended, with respect to any class of Shares of any series, you will assist us
in providing services to your customers who may, from time to time, directly or
beneficially own Shares, including, but not limited to, distributing
prospectuses, sales literature, advertising and promotional material, answering
routine customer inquiries regarding the Trust, assisting customers in effecting
administrative changes, such as, changing dividend options, account designations
and addresses, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and distributions automatically in Shares and
providing such
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<PAGE>
2
other information and services as the Trust or customer may reasonably request.
3. All fees, concessions or commissions payable to you shall
be in accordance with the then current Prospectus. You understand that all fees
and concessions relating to the Shares, including any Rule 12b-1 fees applicable
to any series or class of Shares, shall be payable to you only if and to the
extent that such fees, concessions, or commissions are actually received by us
from the Trust. Any sales commission due upon a sale of Shares, as set forth in
the Prospectus, shall be payable only upon the Trust's receipt of the full
public offering price of Shares in New York clearing house funds, and we shall
have no obligation to make any disbursement thereof to you until after receipt
of New York clearing house funds by or for the Trust. We reserve the right at
any time without notice to modify, suspend or terminate such payments hereunder.
All such payments shall be subject to our continued authority to distribute the
Shares and the Trust's authority to terminate or modify its Distribution and
Services Agreement with us.
4. You shall have the option of placing orders for Shares
through the Transfer Agent as set forth the Prospectus or the National
Securities Clearing Corporation ("NSCC"). Payment for Shares shall be made to
the Transfer Agent on or before the settlement date specified in the applicable
confirmation, and payment shall be in New York clearing house funds. If such
payment is not received or payment is not valid, we reserve the right, without
notice, forthwith to cancel the sale or, at our option, to resell the Shares on
your behalf to the Trust at the prevailing repurchase price. In this event or in
the event you cancel the trade for any reason, you agree to be responsible for
any loss, expense, liability or damage resulting to the Trust or us or our
designated agent from your failure to make payment as aforesaid. You shall not
be entitled to any benefit, whether by offset or otherwise, resulting from any
increase in the asset value of Shares, payment for which has not been received
by us.
5. By accepting this Agreement you agree that:
a. You will order Shares only from us and our designated
agents. All such purchases shall be made only to cover purchase orders
already received from your customers or for your own bona fide
investment.
b. You will not delay in placing orders received from your
customers so as to profit yourself as a result of such delay, and you
will place orders for purchases and redemptions promptly upon receipt
from your customers.
c. You will not purchase Shares from your customers at a price
lower than the bid price then quoted by or for the Fund involved. You
may, however, sell Shares for the account of your customer or to us as
agent for the Trust, at the bid price currently quoted by or for such
Fund and charge your customer a fair commission for handling the
transaction.
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<PAGE>
3
6. By opening an omnibus account for any series or class of
Shares, you thereby represent, warrant and covenant that you will accurately
perform the necessary sub-accounting functions, including properly computing and
remitting applicable contingent deferred sales charges and any conversions or
exchanges of a series or class of Shares to another under the terms of the
Prospectus.
7. If any of the Shares sold through you hereunder are
redeemed by the Trust or repurchased by us as agent for the Trust within seven
business days after confirmation of the original purchase, it is agreed that you
shall forfeit your right to the entire dealer concession received by you on such
Shares. We will notify you of any such repurchase or redemption within ten
business days from the date thereof and you shall forthwith refund to us the
entire amount of all concessions or payments received by you on such sale. We
agree, in the event of any such repurchase or redemption, to refund to the Trust
our share of the sales charge or fees retained by us, if any, and upon receipt
from you of the refund of the concession allowed to you, to pay such refund
forthwith to the Trust.
8. No person is authorized to make any representations
concerning the Shares except those contained in the Prospectus and in sales
literature issued by us supplemental to the Prospectus. We will furnish
additional copies of the Prospectus and any sales literature and other
information issued by us or the Trust in reasonable quantities upon your
request. If you wish to use your own advertising material, such as mailers,
brochures, prospecting letter, etc., with respect to the availability of Shares
of the Trust, all such advertising must be submitted to us for review and
approval prior to use. You shall be responsible for filing and obtaining any
approvals of such advertising as may be required by applicable law or
regulation.
9. In all sales of Shares to the public, you shall act as
dealer for your own account, and in no transaction shall you have any authority
to act as agent for the Trust, for us or for any other member of the selling
group. You are responsible for your own conduct, for the employment, control and
conduct of your employees and agents, for injury to such employees or agents or
to others through such employees or agents, and for thorough and prior training
of such employees or agents concerning the selling methods to be used in
connection with the offer and sale of Shares, giving special emphasis to the
principles of full and fair disclosure to prospective investors. You assume full
responsibility for your employees and agents under applicable laws and agree to
pay all employer taxes relating thereto.
10. This Agreement is conditioned upon your representation and
warranty that you (i) are a member in good standing of the National Association
of Securities Dealers, Inc. (the "NASD") and are registered as a broker-dealer
under the Securities Exchange Act of 1934 or in the alternative, that you are a
foreign broker-dealer not eligible for membership in the NASD; (ii) are
qualified to act as a broker-dealer in each jurisdiction in which you will offer
Shares; and (iii) will maintain such registrations, qualifications and
memberships throughout the term of this Agreement. You shall comply with all
applicable federal laws, the laws of each
<PAGE>
<PAGE>
4
jurisdiction in which you will offer Shares and the rules and regulations of the
NASD and any self-regulatory organization to which you, the Trust or we are
subject. You will provide immediate notice to us if you become the subject of
any order of expulsion or suspension. Expulsion from the NASD will automatically
terminate this Agreement. You shall not be entitled to any compensation during
any period in which you have been suspended or for any period following your
expulsion from membership in the NASD. You further agree that you will not make
available Shares in any state or other jurisdiction in which such Shares may not
be lawfully offered for sale. You shall promptly answer all written complaints
received by you relating to Trust accounts and forward copies of such complaints
and your responses to Arnhold and S. Bleichroeder, Inc., 1345 Avenue of the
Americas, New York, NY 10105, Attn.: Ms. Tracy LaPointe Saltwick, Senior Vice
President, Compliance.
11. You agree to indemnify, defend and hold us and our
directors and officers and the Trust and its trustees and officers and any
person who controls us and/or the Trust within the meaning of Section 15 of the
Securities Act of 1933, as amended, free and harmless from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims and any counsel fees incurred or in
connection therewith) which we or our directors and officers, or the Trust and
its trustees and officers, and any such controlling person, as aforesaid, may
incur arising out of or based upon (i) any breach of any representation,
warranty or covenant made by you herein, (ii) any failure by you to perform your
obligations as set forth herein, (iii) your action or inaction relating to any
duties, functions, procedures or responsibilities undertaken by you pursuant to
your use of the Transfer Agent or the NSCC, including that which may arise out
of the malfunction of your programs, systems and equipment, or (iv) any
violation by you of any law, rule or regulation, which violation may result in
liability to us or to the Trust. In the event that we or the Trust determine to
refund any amounts paid by an investor by reason of your breach, failure or
violation, you shall return to us or the Trust any fees previously paid to you
by us with respect to the transaction for which the refund is being made. This
section shall survive termination of this Agreement.
12. This Agreement shall become effective when accepted by you
below. We and the Trust reserve the right, in our discretion upon notice to you,
to amend, modify or terminate this Agreement at any time or to suspend sales or
withdraw the offering of Shares entirely or to change the fees payable
hereunder. You may, upon notice to us, terminate this Agreement at any time.
Orders received following notice to you of any amendment or modification to this
Agreement shall be deemed to be a confirmation of your acceptance of such
amendment or modification.
13. This Agreement is not assignable or transferable, except
that we may assign or transfer this Agreement to any successor which becomes
general distributor of the Trust.
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<PAGE>
5
14. All communications to us should be sent to: Arnhold and S.
Bleichroeder, Inc., 1345 Avenue of the Americas, New York, NY 10105 Attn: Ms.
Tracy LaPointe Saltwick, Senior Vice President, Compliance. Any notice to you
shall be duly given if mailed or telefaxed to you at the address specified by
you below. This Agreement shall be construed under the laws of the State of New
York. This agreement is subject to the Prospectus from time to time in effect,
and, in the event of a conflict, the terms of the Prospectus shall control. Any
changes, modifications or additions reflected in any Prospectus shall be
effective on the date of the Prospectus (or supplement thereto) unless specified
otherwise.
Please confirm your acceptance of this Agreement by executing
both copies of this Agreement and returning one of the originals to us for our
files.
ARNHOLD AND S. BLEICHROEDER, INC. (Distributor)
By:______________________________
By:______________________________
Accepted and Dated:___________________________________
______________________________________________________
(SELLING GROUP MEMBER)
By:___________________________________________________
Name:_________________________________________________
Title:________________________________________________
______________________________________________________
(Address)
______________________________________________________
(City) (State) (Zip Code)
<PAGE>
<PAGE>
CUSTODY AGREEMENT
Agreement made as of this 27th day of February, 1998, between FIRST
EAGLE TRUST, a Delaware business trust organized and existing under the laws
of the State of Delaware, having its principal office and place of business at
1345 Avenue of the Americas, New York, New York 10105 (hereinafter called the
"Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to do a
banking business, having its principal office and place of business at 48 Wall
Street, New York, New York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the
Fund and the Custodian agree as follows:
ARTICLE I.
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Authorized Persons" shall be deemed to include any person, whether
or not such person is an officer or employee of the Fund, duly authorized by the
Board of Trustees of the Fund to execute any Certificate, instruction, notice or
other instrument on behalf of the Fund and listed in the Certificate annexed
hereto as Appendix A or such other Certificate as may be received by the
Custodian from time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its successor
or successors and its nominee or nominees.
3. "Call Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
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4. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian which is actually received by the Custodian and signed on behalf
of the Fund by any two Authorized Persons, and the term Certificate shall also
include Instructions.
5. "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.
6. "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII herein.
7. "Composite Currency Unit" shall mean the European Currency Unit or
any other composite unit consisting of the aggregate of specified amounts of
specified Currencies as such unit may be constituted from time to time.
8. "Covered Call Option" shall mean an exchange traded option entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying Securities
(excluding Futures Contracts) which are owned by the writer thereof and subject
to appropriate restrictions.
9. "Currency" shall mean money denominated in a lawful currency of any
country or the European Currency Unit.
10. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board of Trustees specifically approving deposits therein by the
Custodian.
11. "Financial Futures Contract" shall mean the firm commitment to buy
or sell fixed income securities including, without limitation, U.S. Treasury
Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of
deposit, and Eurodollar certificates of deposit, during a specified month at an
agreed upon price.
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12. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
13. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
14. "FX Transaction" shall mean any transaction for the purchase by one
party of an agreed amount in one Currency against the sale by it to the other
party of an agreed amount in another Currency.
15. "Instructions" shall mean instructions communications transmitted
by electronic or telecommunications media including S.W.I.F.T.,
computer-to-computer interface, dedicated transmission line, facsimile
transmission (which may be signed by an Authorized Person or unsigned) and
tested telex.
16. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.
17. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United States
or agencies or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority, commercial
paper, certificates of deposit and bankers' acceptances, repurchase agreements
with respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale.
18. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
19. "Option" shall mean a Call Option, Covered Call Op- tion, Stock
Index Option and/or a Put Option.
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20. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person.
21. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
22. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
23. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements,
common stocks and other securities having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities, (including, without limitation, general
obligation bonds, revenue bonds, industrial bonds and industrial development
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or assets.
24. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recorda- tion or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.
25. "Series" shall mean the various portfolios, if any, of the Fund
listed on Appendix B hereto as amended from time to time.
26. "Shares" shall mean the shares of beneficial inter- est of the
Fund, each of which is, in the case of a Fund hav- ing Series, allocated to a
particular Series.
27. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to
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take or make delivery of an amount of cash equal to a specified dollar amount
times the difference between the value of a particular stock index at the close
of the last business day of the contract and the price at which the futures
contract is originally struck.
28. "Stock Index Option" shall mean an exchange traded option entitling
the holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.
ARTICLE II.
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian
of the Securities and money at any time owned by the Fund during the period of
this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III.
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all money owned by it, at any time during the period of this
Agreement, and shall specify with respect to such Securities and money the
Series to which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate and apart. The
Custodian will not be responsible for any Securities and money not actually
received by it. The Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously made and money is not
finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the Custodian on a
continuous and on-going basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities and deliveries and returns of Securities collateral. Prior
to a deposit of Securities specifically allocated to a Series in
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the Depository, the Fund shall deliver to the Custodian a certified resolution
of the Board of Trustees of the Fund, substantially in the form of Exhibit B
hereto, approving, authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate actually
received by the Custodian to deposit in the Depository all Securities
specifically allocated to such Series eligible for deposit therein, and to
utilize the Depository to the extent possible with respect to such Securities in
connection with its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities collateral. Securities and
money deposited in either the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the Custodian acts
in a fiduciary or representative capacity and will be specifically allocated on
the Custodian's books to the separate account for the applicable Series. Prior
to the Custodian's accepting, utilizing and acting with respect to Clearing
Member confirmations for Options and transactions in Options for a Series as
provided in this Agreement, the Custodian shall have received a certified
resolution of the Fund's Board of Trustees, substantially in the form of Exhibit
C hereto, approving, authorizing and instructing the Custodian on a continuous
and on-going basis, until instructed to the contrary by a Certificate actually
received by the Custodian, to accept, utilize and act in accordance with such
confirmations as provided in this Agreement with respect to such Series.
2. The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each Series
all money received by it for the account of the Fund with respect to such
Series. Money credited to a separate account for a Series shall be disbursed by
the Custodian only:
(a) as hereinafter provided;
(b) pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the Series account from
which payment is to be made and the purpose for which payment is to be made; or
(c) in payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series basis,
of all transfers to or from the account of the Fund for a Series, either
hereunder or with any co-custodian or sub-custodian appointed in accordance with
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this Agreement during said day. Where Securities are transferred to the account
of the Fund for a Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian shall furnish
the Fund with a detailed statement, on a per Series basis, of the Securities and
money held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the Fund, in the name
of any duly appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or nominees. The
Fund agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or the
Depository any Securities which it may hold hereunder and which may from time to
time be registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in the Depository in a separate account in the name of such
Series physically segregated at all times from those of any other person or
persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to Securities
held hereunder and therein deposited, shall with respect to all Securities held
for the Fund hereunder in accordance with preceding paragraph 4:
(a) collect all income, dividends and distributions due or
payable;
(b) give notice to the Fund and present payment and collect
the amount payable upon such Securities which are called, but only if either (i)
the Custodian receives a written notice of such call, or (ii) notice of such
call appears in one or more of the publications listed in Appendix C annexed
hereto, which may be amended at any time by the Custodian without the prior
notification or consent of the Fund;
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(c) present for payment and collect the amount pay- able upon
all Securities which mature;
(d) surrender Securities in temporary form for definitive
Securities;
(e) execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect;
(f) hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of a
Series, all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder; and
(g) deliver to the Fund all notices, proxies, proxy soliciting
materials, consents and other written information (including, without
limitation, notices of tender offers and exchange offers, pendency of calls,
maturities of Securities and expiration of rights) relating to Securities held
pursuant to this Agrement which are actually received by the Custodian, such
proxies and other similar materials to be executed by the registered owner (if
Securities are registered otherwise than in the name of the Fund), but without
indicating the manner in which proxies or consents are to be voted.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities held by the
Custodian hereunder for the Series specified in such Certificate may be
exercised;
(b) deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities received in
exchange;
(c) deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
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corporation, and receive and hold hereunder specifically allocated to such
Series such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) make such transfers or exchanges of the assets of the
Series specified in such Certificate, and take such other steps as shall be
stated in such Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a Certificate no later
than the business day preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall comply with Section
17(f) of the Investment Company Act of 1940, as amended, in connection with the
purchase, sale, settlement, closing-out or writing of Futures Contracts,
Options, or Futures Contract Options by making payments or deliveries specified
in Certificates received by the Custodian in connection with any such purchase,
sale, writing, settlement or closing-out upon its receipt from a broker, dealer,
or futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or futures commission merchants with respect to such Futures Contracts,
Options, or Futures Contract Options, as the case may be, confirming that such
Security is held by such broker, dealer or futures commission merchant, in
book-entry form or otherwise, in the name of the Custodian (or any nominee of
the Custodian) as custodian for the Fund, provided, however, that
notwithstanding the foregoing, payments to or deliveries from the Margin
Account, and payments with respect to Securities to which a Margin Account
relates, shall be made in accordance with the terms and conditions of the Margin
Account Agreement. Whenever any such instruments or certificates are available,
the Custodian shall, notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or Futures Contract
Option for which such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or such certificate,
and deliver any Futures Contract, Option or
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Futures Contract Option for which such instruments or such certificates are
available only against receipt by the Custodian of payment therefor. Any such
instrument or certificate delivered to the Custodian shall be held by the
Custodian hereunder in accordance with, and subject to, the provisions of this
Agreement.
ARTICLE IV.
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other than a
purchase of an Option, a Futures Contract, or a Futures Contract Option, the
Fund shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate or Oral
Instructions, specifying with respect to each such purchase: (a) the Series to
which such Securities are to be specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the total amount
payable upon such purchase; (g) the name of the person from whom or the broker
through whom the purchase was made, and the name of the clearing broker, if any;
and (h) the name of the broker to whom payment is to be made. The Custodian
shall, upon receipt of Securities purchased by or for the Fund, pay to the
broker specified in the Certificate out of the money held for the account of
such Series the total amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such Certificate or Oral
Instructions.
2. Promptly after each sale of Securities by the Fund, other than a
sale of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect
to each sale of Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a Certificate or
Oral Instructions, specifying with respect to each such sale: (a) the Series to
which such Securities were specifically allocated; (b) the name of the issuer
and the title of the Security; (c) the number of shares or principal amount
sold, and accrued interest, if any; (d) the date of sale; (e) the sale price per
unit; (f) the total amount payable to the Fund upon such sale; (g) the name of
the broker through whom or the person to whom the sale was made, and the name of
the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. The Custodian shall deliver the Securities
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specifically allocated to such Series to the broker specified in the Certificate
against payment of the total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable as set forth in such
Certificate or Oral Instructions.
ARTICLE V.
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund
shall deliver to the Custodian a Certificate specifying with respect to each
Option purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or call); (c) the name of the issuer and the title
and number of shares subject to such Option or, in the case of a Stock Index
Option, the stock index to which such Option relates and the number of Stock
Index Options purchased; (d) the expiration date; (e) the exercise price; (f)
the dates of purchase and settlement; (g) the total amount payable by the Fund
in connection with such purchase; (h) the name of the Clearing Member through
whom such Option was purchased; and (i) the name of the broker to whom payment
is to be made. The Custodian shall pay, upon receipt of a Clearing Member's
statement confirming the purchase of such Option held by such Clearing Member
for the account of the Custodian (or any duly appointed and registered nominee
of the Custodian) as custodian for the Fund, out of money held for the account
of the Series to which such Option is to be specifically allocated, the total
amount payable upon such purchase to the Clearing Member through whom the
purchase was made, provided that the same conforms to the total amount payable
as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by the Fund pursuant
to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the Series to which such Option
was specifically allocated; (b) the type of Option (put or call); (c) the name
of the issuer and the title and number of shares subject to such Option or, in
the case of a Stock Index Option, the stock index to which such Option relates
and the number of Stock Index Options sold; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the Clearing Member through whom the sale was
made. The Custodian shall consent to the delivery of the Option sold by the
Clearing Member which previously supplied the confirmation described in
preceding paragraph 1 of this Article with respect to such Option against
payment to the Custodian of the total amount payable to the Fund, provided that
the same conforms to the total amount payable as set forth in such Certificate.
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3. Promptly after the exercise by the Fund of any Call Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Call Option: (a) the
Series to which such Call Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid by the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Call Option was exercised.
The Custodian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the money held for the account of the Series to
which such Call Option was specifically allocated the total amount payable to
the Clearing Member through whom the Call Option was exercised, provided that
the same conforms to the total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Put Option: (a) the
Series to which such Put Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid to the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Put Option was exercised.
The Custodian shall, upon receipt of the amount payable upon the exercise of the
Put Option, deliver or direct the Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the amount
payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to such Stock Index Option:
(a) the Series to which such Stock Index Option was specifically allocated; (b)
the type of Stock Index Option (put or call); (c) the number of Options being
exercised; (d) the stock index to which such Option relates; (e) the expiration
date; (f) the exercise price; (g) the total amount to be received by the Fund in
connection with such exercise; and (h) the Clearing Member from whom such
payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Covered Call Option: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such
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Covered Call Option was written; and (g) the name of the Clearing Member through
whom the premium is to be received. The Custodian shall deliver or cause to be
delivered, in exchange for receipt of the premium specified in the Certificate
with respect to such Covered Call Option, such receipts as are required in
accordance with the customs prevailing among Clearing Members dealing in Covered
Call Options and shall impose, or direct the Depository to impose, upon the
underlying Securities specified in the Certificate specifically allocated to
such Series such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right, upon prior written
notification to the Fund, at any time to refuse to issue any receipts for
Securities in the possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate instructing the Custodian to deliver, or
to direct the Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares subject
to the Covered Call Option; (c) the Clearing Member to whom the underlying
Securities are to be delivered; and (d) the total amount payable to the Fund
upon such delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver,
or direct the Depository to deliver, the underlying Securities as specified in
the Certificate against payment of the amount to be received as set forth in
such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the name of
the issuer and the title and number of shares for which the Put Option is
written and which underlie the same; (c) the expiration date; (d) the exercise
price; (e) the premium to be received by the Fund; (f) the date such Put Option
is written; (g) the name of the Clearing Member through whom the premium is to
be received and to whom a Put Option guarantee letter is to be delivered; (h)
the amount of cash, and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior Security
Account for such Series; and (i) the amount of cash and/or the amount and kind
of Securities specifically allocated to such Series to be deposited into the
Collateral Account for such Series. The Custodian shall, after making the
deposits into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the Custodian on
the date hereof, and deliver the same to the Clearing Member
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specified in the Certificate against receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall be under no
obligation to issue any Put Option guarantee letter or similar document if it is
unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of shares subject to
the Put Option; (c) the Clearing Member from whom the underlying Securities are
to be received; (d) the total amount payable by the Fund upon such delivery; (e)
the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of Securities,
specifically allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in connection with
such Put Option, the Custodian shall pay out of the money held for the account
of the Series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set forth
in such Certificate against delivery of such Securities, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series for which such Stock Index Option was
written; (b) whether such Stock Index Option is a put or a call; (c) the number
of options written; (d) the stock index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through whom
such Option was written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Senior Security Account for such
Series; (j) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Collateral Account
for such Series; and (k) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be deposited in a
Margin Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium specified in the
Certificate, make the deposits, if any, into the Senior Security Account
specified in the Certificate, and either (1) deliver such receipts, if any,
which the Custodian has specifically agreed to issue, which are in accordance
with the customs prevailing among Clearing Members in Stock Index Options and
make the deposits into the Collateral Account
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specified in the Certificate, or (2) make the deposits into the Margin Account
specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the Series for which such Stock Index Option was written; (b)
such information as may be necessary to identify the Stock Index Option being
exercised; (c) the Clearing Member through whom such Stock Index Option is being
exercised; (d) the total amount payable upon such exercise, and whether such
amount is to be paid by or to the Fund; (e) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Margin Account; and (f) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Senior Security Account for such Series; and the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from the Collateral
Account for such Series. Upon the return and/or cancellation of the receipt, if
any, delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the money held for the account of the Series to which
such Stock Index Option was specifically allocated to the Clearing Member
specified in the Certificate the total amount payable, if any, as specified
therein.
12. Whenever the Fund purchases any Option identical to a previously
written Option described in paragraphs, 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transaction; (b) the
Series for which the Option was written; (c) the name of the issuer and the
title and number of shares subject to the Option, or, in the case of a Stock
Index Option, the stock index to which such Option relates and the number of
Options held; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the type of Option (put or call); (h) the date of
such purchase; (i) the name of the Clearing Member to whom the premium is to be
paid; and (j) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Collateral Account, a specified Margin Account, or
the Senior Security Account for such Series. Upon the Custodian's payment of the
premium and the return and/or cancellation of any receipt issued pursuant to
paragraphs 6, 8 or 10 of this Article with respect to the Option being
liquidated through the Closing Purchase Transaction, the Custodian shall remove,
or direct the Depository to remove, the previously imposed restrictions on the
Securities underlying the Call Option.
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13. Upon the expiration, exercise or consummation of a Closing Purchase
Transaction with respect to any Option purchased or written by the Fund and
described in this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein,
and upon the return and/or cancellation of any receipts issued by the Custodian,
shall make such withdrawals from the Collateral Account, and the Margin Account
and/or the Senior Security Account as may be specified in a Certificate received
in connection with such expiration, exercise, or consummation.
ARTICLE VI.
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Futures Contract, (or with respect to any number of identical Futures
Contract(s)): (a) the Series for which the Futures Contract is being entered;
(b) the category of Futures Contract (the name of the underlying stock index or
financial instrument); (c) the number of identical Futures Contracts entered
into; (d) the delivery or settlement date of the Futures Contract(s); (e) the
date the Futures Contract(s) was (were) entered into and the maturity date; (f)
whether the Fund is buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in the Senior Security Account for such Series; (h) the
name of the broker, dealer, or futures commission merchant through whom the
Futures Contract was entered into; and (i) the amount of fee or commission, if
any, to be paid and the name of the broker, dealer, or futures commission
merchant to whom such amount is to be paid. The Custodian shall make the
deposits, if any, to the Margin Account in accordance with the terms and
conditions of the Margin Account Agreement. The Custodian shall make payment out
of the money specifically allocated to such Series of the fee or commission, if
any, specified in the Certificate and deposit in the Senior Security Account for
such Series the amount of cash and/or the amount and kind of Securities
specified in said Certificate.
2. (a) Any variation margin payment or similar payment required to be
made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a
broker, dealer, or futures commission merchant to the
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Fund with respect to an outstanding Futures Contract, shall be received and
dealt with by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian a Certificate specifying: (a)
the Futures Contract and the Series to which the same relates; (b) with respect
to a Stock Index Futures Contract, the total cash settlement amount to be paid
or received, and with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (c) the broker, dealer, or
futures commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn from the
Senior Security Account for such Series. The Custodian shall make the payment or
delivery specified in the Certificate, and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security Account for such
Series as may be specified in such Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
5. Notwithstanding any other provision in this Agreement to the
contrary, the Custodian shall deliver cash and Securities to a futures
commission merchant upon receipt of a Certificate from the Fund specifying: (a)
the name of the futures commission merchant; (b) the specific cash and
Securities to be delivered; (c) the date of such delivery; and (d) the date of
the agreement between the Fund and such futures commission merchant entered
pursuant to Rule 17f-6 under the Investment Company Act 1940, as amended. Each
delivery of such a Certificate by the Fund shall constitute (x) a representation
and warranty by the Fund that the Rule 17f-6 agreement has been duly authorized,
executed and delivered by the Fund and the futures commission merchant and
complies with Rule 17f-6, and (y) an agreement by the Fund that the Custodian
shall not be liable for the acts or omissions of any such futures commission
merchant.
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ARTICLE VII.
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the
Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying
with respect to such Futures Contract Option: (a) the Series to which such
Option is specifically allocated; (b) the type of Futures Contract Option (put
or call); (c) the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Contract
Option purchased; (d) the expiration date; (e) the exercise price; (f) the dates
of purchase and settlement; (g) the amount of premium to be paid by the Fund
upon such purchase; (h) the name of the broker or futures commission merchant
through whom such option was purchased; and (i) the name of the broker, or
futures commission merchant, to whom payment is to be made. The Custodian shall
pay out of the money specifically allocated to such Series, the total amount to
be paid upon such purchase to the broker or futures commissions merchant through
whom the purchase was made, provided that the same conforms to the amount set
forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) Series to
which such Futures Contract Option was specifically allocated; (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Contract and such
other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker or futures commission merchant through
whom the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of the
total amount payable to the Fund, provided the same conforms to the total amount
payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of exercise; (e) the name
of the broker or futures commission merchant through whom the Futures Contract
Option is exercised; (f) the net total amount, if any, payable by the Fund; (g)
the amount, if any, to be received by the Fund; and
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(h) the amount of cash and/or the amount and kind of Securities to be deposited
in the Senior Security Account for such Series. The Custodian shall make, out of
the money and Securities specifically allocated to such Series, the payments, if
any, and the deposits, if any, into the Senior Security Account as specified in
the Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series for which such Futures Contract Option
was written; (b) the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) the premium to be received by the Fund; (g)
the name of the broker or futures commission merchant through whom the premium
is to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for such
Series. The Custodian shall, upon receipt of the premium specified in the
Certificate, make out of the money and Securities specifically allocated to such
Series the deposits into the Senior Security Account, if any, as specified in
the Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a
call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom such Futures
Contract Option was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise; and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such Series. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in such Certificate make the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall
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promptly deliver to the Custodian a Certificate specifying: (a) the Series to
which such Option was specifically allocated; (b) the particular Futures
Contract Option exercised; (c) the type of Futures Contract underlying such
Futures Contract Option; (d) the name of the broker or futures commission
merchant through whom such Futures Contract Option is exercised; (e) the net
total amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount and
kind of Securities and/or cash to be withdrawn from or deposited in, the Senior
Security Account for such Series, if any. The Custodian shall, upon its receipt
of the net total amount payable to the Fund, if any, specified in the
Certificate, make out of the money and Securities specifically allocated to such
Series, the payments, if any, and the deposits, if any, into the Senior Security
Account as specified in the Certificate. The deposits to and/or withdrawals from
the Margin Account, if any, shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to
a previously written Futures Contract Option described in this Article in order
to liquidate its position as a writer of such Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) the Series to which such Option
is specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Option Contract; (d) the
exercise price; (e) the premium to be paid by the Fund; (f) the expiration date;
(g) the name of the broker or futures commission merchant to whom the premium is
to be paid; and (h) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for such Series. The
Custodian shall effect the withdrawals from the Senior Security Account
specified in the Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased by
the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals from the
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Margin Account, if any, shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article VI
hereof.
10. Notwithstanding any other provision in this Agreement to the
contrary, the Custodian shall deliver cash and Securities to a futures
commission merchant upon receipt of a Certificate from the Fund specifying: (a)
the name of the futures commission merchant; (b) the specific cash and
Securities to be delivered; (c) the date of such delivery; and (d) the date of
the agreement between the Fund and such futures commission merchant entered
pursuant to Rule 17f-6 under the Investment Company Act 1940, as amended. Each
delivery of such a Certificate by the Fund shall constitute (x) a representation
and warranty by the Fund that the Rule 17f-6 agreement has been duly authorized,
executed and delivered by the Fund and the futures commission merchant and
complies with Rule 17f-6, and (y) an agreement by the Fund that the Custodian
shall not be liable for the acts or omissions of any such futures commission
merchant.
ARTICLE VIII.
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund
shall promptly deliver to the Custodian a Certificate specifying: (a) the Series
for which such short sale was made; (b) the name of the issuer and the title of
the Security; (c) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (d) the dates of the sale and settlement; (e) the
sale price per unit; (f) the total amount credited to the Fund upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (h) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Senior Security
Account, and (i) the name of the broker through whom such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
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2. In connection with the closing-out of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the Series for which such transaction is being made; (b)
the name of the issuer and the title of the Security; (c) the number of shares
or the principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund upon such closing-out; (g) the net total amount
payable to the broker upon such closing-out; (h) the amount of cash and the
amount and kind of Securities to be withdrawn, if any, from the Margin Account;
(i) the amount of cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account; and (j) the name of the broker
through whom the Fund is effecting such closing-out. The Custodian shall, upon
receipt of the net total amount payable to the Fund upon such closing-out, and
the return and/or cancellation of the receipts, if any, issued by the Custodian
with respect to the short sale being closed-out, pay out of the money held for
the account of the Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Senior Security
Account, as the same are specified in the Certificate.
ARTICLE IX.
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate, or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate or Oral Instructions
specifying: (a) the Series for which the Reverse Repurchase Agreement is
entered; (b) the total amount payable to the Fund in connection with such
Reverse Repurchase Agreement and specifically allocated to such Series; (c) the
broker or dealer through or with whom the Reverse Repurchase Agreement is
entered; (d) the amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (e) the date of such Reverse Repurchase Agreement; and
(f) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in a Senior Security
Account for such Series in connection with such Reverse Repurchase Agreement.
The Custodian shall, upon receipt of the total amount payable to the Fund
specified in the Certificate or Oral Instructions make the delivery to the
broker or dealer, and the deposits, if any, to the Senior Security Account,
specified in such Certificate or Oral Instructions.
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2. Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money Market
Security, a Certificate or Oral Instructions to the Custodian specifying: (a)
the Reverse Repurchase Agreement being terminated and the Series for which same
was entered; (b) the total amount payable by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received by the Fund
and specifically allocated to such Series in connection with such termination;
(d) the date of termination; (e) the name of the broker or dealer with or
through whom the Reverse Repurchase Agreement is to be terminated; and (f) the
amount of cash and/or the amount and kind of Securities to be withdrawn from the
Senior Securities Account for such Series. The Custodian shall, upon receipt of
the amount and kind of Securities to be received by the Fund specified in the
Certificate or Oral Instructions, make the payment to the broker or dealer, and
the withdrawals, if any, from the Senior Security Account, specified in such
Certificate or Oral Instructions.
ARTICLE X.
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall deliver or
cause to be delivered to the Custodian a Certificate specifying with respect to
each such loan: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities, (c) the
number of shares or the principal amount loaned, (d) the date of loan and
delivery, (e) the total amount to be delivered to the Custodian against the loan
of the Securities, including the amount of cash collateral and the premium, if
any, separately identified, and (f) the name of the broker, dealer, or financial
institution to which the loan was made. The Custodian shall deliver the
Securities thus designated to the broker, dealer or financial institution to
which the loan was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or bank cashier's check payable to
the order of the Fund or the Custodian drawn on New York Clearing House funds
and may deliver Securities in accordance with the customs prevailing among
dealers in securities.
2. Promptly after each termination of the loan of Securities by the
Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with
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respect to each such loan termination and return of Securities: (a) the Series
to which the loaned Securities are specifically allocated; (b) the name of the
issuer and the title of the Securities to be returned, (c) the number of shares
or the principal amount to be returned, (d) the date of termination, (e) the
total amount to be delivered by the Custodian (including the cash collateral for
such Securities minus any offsetting credits as described in said Certificate),
and (f) the name of the broker, dealer, or financial institution from which the
Securities will be returned. The Custodian shall receive all Securities returned
from the broker, dealer, or financial institution to which such Securities were
loaned and upon receipt thereof shall pay, out of the money held for the account
of the Fund, the total amount payable upon such return of Securities as set
forth in the Certificate.
ARTICLE XI.
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and the number of shares or the principal amount
of any particular Securities to be deposited by the Custodian into, or withdrawn
from, a Senior Securities Account, the Custodian shall be under no obligation to
make any such deposit or withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing Member in
whose name, or for whose benefit, the account was established as specified in
the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may enforce
its lien and realize on any such property whenever the Custodian
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has made payment or delivery pursuant to any Put Option guarantee letter or
similar document or any receipt issued hereunder by the Custodian. In the event
the Custodian should realize on any such property net proceeds which are less
than the Custodian's obligations under any Put Option guarantee letter or
similar document or any receipt, such deficiency shall be a debt owed the
Custodian by the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account for any Series,
the Custodian shall furnish the Fund with a statement with respect to such
Collateral Account specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding the
delivery to the Fund of such statement, the Fund shall furnish to the Custodian
a Certificate specifying the then market value of the Securities described in
such statement. In the event such then market value is indicated to be less than
the Custodian's obligation with respect to any outstanding Put Option guarantee
letter or similar document, the Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in such Collateral Account to
eliminate such deficiency.
ARTICLE XII.
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Trustees of the Fund, certified by the Secretary or any Assistant
Secretary, either (i) setting forth with respect to the Series specified therein
the date of the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein the declaration of
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dividends and distributions on a daily basis and authorizing the Custodian to
rely on Oral Instructions or a Certificate setting forth the date of the
declaration of such dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall be determined,
the amount payable per Share of such Series to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution, Oral
Instructions or Certificate, as the case may be, the Custodian shall pay out of
the money held for the account of each Series the total amount payable to the
Dividend Agent and any sub-dividend agent or co-dividend agent of the Fund with
respect to such Series.
ARTICLE XIII.
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver to the
Custodian a Certificate duly specifying:
(a) the Series, the number of Shares sold, trade date, and
price; and
(b) the amount of money to be received by the Custodian for
the sale of such Shares and specifically allocated to the separate account in
the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account in the name of the Series for
which such money was received.
3. Upon issuance of any Shares of any Series described in the foregoing
provisions of this Article, the Custodian shall pay, out of the money held for
the account of such Series, all original issue or other taxes required to be
paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder in
connection with a redemption of any Shares, it shall furnish to the Custodian a
Certificate specifying:
(a) the number and Series of Shares redeemed; and
(b) the amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the
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Transfer Agent for redemption and that such Shares are in good form for
redemption, the Custodian shall make payment to the Transfer Agent out of the
money held in the separate account in the name of the Series the total amount
specified in the Certificate issued pursuant to the foregoing paragraph 4 of
this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate, shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the money held in
the separate account of the Series of the Shares being redeemed.
ARTICLE XIV.
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the money held by the
Custodian in the separate account for such Series shall be insufficient to pay
the total amount payable upon a purchase of Securities specifically allocated to
such Series, as set forth in a Certificate or Oral Instructions, or which
results in an overdraft in the separate account of such Series for some other
reason, or if the Fund is for any other reason indebted to the Custodian with
respect to a Series, including any indebtedness to The Bank of New York under
the Fund's Cash Management and Related Services Agreement, (except a borrowing
for investment or for temporary or emergency purposes using Securities as
collateral pursuant to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund for such Series payable on demand
and shall bear interest from the date incurred at a rate per annum (based on a
360-day year for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time to time, such rate
to be adjusted on the effective date of any change in such prime commercial
lending rate but in no event to be less than 6% per annum. In addition, the Fund
hereby agrees that the Custodian shall have a continuing lien, security
interest, and security entitlement in and to any property including any
investment property or any financial asset specifically allocated to such Series
at any time held by it for the benefit of such Series or in which the Fund may
have an interest which is then in the Custodian's possession or
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control or in possession or control of any third party acting in the Custodian's
behalf. The Fund authorizes the Custodian, in its sole discretion, at any time
to charge any such overdraft or indebtedness together with interest due thereon
against any balance of account standing to such Series' credit on the
Custodian's books. In addition, the Fund hereby covenants that on each Business
Day on which either it intends to enter a Reverse Repurchase Agreement and/or
otherwise borrow from a third party, or which next succeeds a Business Day on
which at the close of business the Fund had outstanding a Reverse Repurchase
Agreement or such a borrowing, it shall prior to 9 a.m., New York City time,
advise the Custodian, in writing, of each such borrowing, shall specify the
Series to which the same relates, and shall not incur any indebtedness not so
specified other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
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collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XV.
INSTRUCTIONS
1. With respect to any software provided by the Custodian to a Fund in
order for the Fund to transmit Instructions to the Custodian (the "Software"),
the Custodian grants to such Fund a personal, nontransferable and nonexclusive
license to use the Software solely for the purpose of transmitting Instructions
to, and receiving communications from, the Custodian in connection with its
account(s). The Fund agrees not to sell, reproduce, lease or otherwise provide,
directly or indirectly, the Software or any portion thereof to any third party
without the prior written consent of the Custodian.
2. The Fund shall obtain and maintain at its own cost and expense all
equipment and services, including but not limited to communications services,
necessary for it to utilize the Software and transmit Instructions to the
Custodian. The Custodian shall not be responsible for the reliability,
compatibility with the Software or availability of any such equipment or
services or the performance or nonperformance by any nonparty to this Custody
Agreement.
3. The Fund acknowledges that the Software, all data bases made
available to the Fund by utilizing the Software (other than data bases relating
solely to the assets of the Fund and transactions with respect thereto), and any
proprietary data, processes, information and documentation (other than which are
or become part of the public domain or are legally required to be made available
to the public) (collectively, the "Information"), are the exclusive and
confidential property of the Custodian. The Fund shall keep the Information
confidential by using the same care and discretion that the Fund uses with
respect to its own confidential property and trade secrets and shall neither
make nor permit any disclosure without the prior written consent of the
Custodian. Upon termination of this Agreement or the Software license granted
hereunder for any reason, the Fund shall return to the Custodian all copies of
the Information which are in its possession or under its control or which the
Fund distributed to third parties.
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4. The Custodian reserves the right to modify the Software from time to
time upon reasonable prior notice and the Fund shall install new releases of the
Software as the Custodian may direct. The Fund agrees not to modify or attempt
to modify the Software without the Custodian's prior written consent. The Fund
acknowledges that any modifications to the Software, whether by the Fund or the
Custodian and whether with or without the Custodian's consent, shall become the
property of the Custodian.
5. The Custodian makes no warranties or representations of any kind
with regard to the Software or the method(s) by which the Fund may transmit
Instructions to the Custodian, express or implied, including but not limited to
any implied warranties of merchantability or fitness for a particular purpose.
6. Where the method for transmitting Instructions by the Fund involves
an automatic systems acknowledgment by the Custodian of its receipt of such
Instructions, then in the absence of such acknowledgment the Custodian shall not
be liable for any failure to act pursuant to such Instructions, the Fund may not
claim that such Instructions were received by the Custodian, and the Fund shall
deliver a Certificate by some other means.
7. (a) The Fund agrees that where it delivers to the Custodian
Instructions hereunder, it shall be the Fund's sole responsibility to ensure
that only persons duly authorized by the Fund transmit such Instructions to the
Custodian. The Fund will cause all persons transmitting Instructions to the
Custodian to treat applicable user and authorization codes, passwords and
authentication keys with extreme care, and irrevocably authorizes the Custodian
to act in accordance with and rely upon Instructions received by it pursuant
hereto.
(b) The Fund hereby represents, acknowledges and agrees that
it is fully informed of the protections and risks associated with the various
methods of transmitting Instructions to the Custodian and that there may be more
secure methods of transmitting instructions to the Custodian than the method(s)
selected by the Fund. The Fund hereby agrees that the security procedures (if
any) to be followed in connection with the Fund's transmission of Instructions
provide to it a commercially reasonable degree of protection in light of its
particular needs and circumstances.
8. The Fund hereby represents, warrants and covenants to the Custodian
that this Agreement has been duly approved by a resolution of its Board of
Trustees, and that its transmission of Instructions pursuant hereto shall at all
times comply with the Investment Company Act of 1940, as amended.
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9. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, its ability to send
Instructions as promptly as practicable, and in any event within 24 hours after
the earliest of (i) discovery thereof, (ii) the Business Day on which discovery
should have occurred through the exercise of reasonable care and (iii) in the
case of any error, the date of actual receipt of the earliest notice which
reflects such error, it being agreed that discovery and receipt of notice may
only occur on a business day. The Custodian shall promptly advise the Fund
whenever the Custodian learns of any errors, omissions or interruption in, or
delay or unavailability of, the Fund's ability to send Instructions.
ARTICLE XVI.
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to employ, as
sub-custodian for each Series' Securities for which the primary market is
outside the United States ("Foreign Securities") and other assets, the foreign
banking institutions and foreign securities depositories and clearing agencies
designated on Schedule I hereto ("Foreign Sub- Custodians") to carry out their
respective responsibilities in accordance with the terms of the sub-custodian
agreement between each such Foreign Sub-Custodian and the Custodian, copies of
which have been previously delivered to the Fund and receipt of which is hereby
acknowledged (each such agreement, a "Foreign Sub-Custodian Agreement"). Upon
receipt of a Certificate, together with a certified resolution acceptable to the
Custodian of the Fund's Board of Trustees, the Fund may designate any additional
foreign sub-custodian with which the Custodian has an agreement for such entity
to act as the Custodian's agent, as its sub-custodian and any such additional
foreign sub-custodian shall be deemed added to Schedule I. Upon receipt of a
Certificate from the Fund, the Custodian shall cease the employment of any one
or more Foreign Sub-Custodians for maintaining custody of the Fund's assets and
such Foreign Sub-Custodian shall be deemed deleted from Schedule I.
2. Each Foreign Sub-Custodian Agreement shall be substantially in the
form previously delivered to the Fund and will not be amended in a way that
materially adversely affects the Fund without the Fund's prior written consent.
3. The Custodian shall identify on its books as belonging to each
Series of the Fund the Foreign Securities of such Series held by each Foreign
Sub-Custodian. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims by the
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Fund or any Series against a Foreign Sub-Custodian as a consequence of any loss,
damage, cost, expense, liability or claim sustained or incurred by the Fund or
any Series if and to the extent that the Fund or such Series has not been made
whole for any such loss, damage, cost, expense, liability or claim.
4. Upon request of the Fund, the Custodian will, consistent with the
terms of the applicable Foreign Sub- Custodian Agreement, use reasonable efforts
to arrange for the independent accountants of the Fund to be afforded access to
the books and records of any Foreign Sub-Custodian insofar as such books and
records relate to the performance of such Foreign Sub-Custodian under its
agreement with the Custodian on behalf of the Fund.
5. The Custodian will supply to the Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of each
Series held by Foreign Sub-Custodians, including but not limited to, an
identification of entities having possession of each Series' Foreign Securities
and other assets, and advices or notifications of any transfers of Foreign
Securities to or from each custodial account maintained by a Foreign Sub-
Custodian for the Custodian on behalf of the Series.
6. The Custodian shall transmit promptly to the Fund all notices,
reports or other written information received pertaining to the Fund's Foreign
Securities, including without limitation, notices of corporate action, proxies
and proxy solicitation materials.
7. Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for securities received for the account of any Series and
delivery of securities maintained for the account of such Series may be effected
in accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer.
8. Notwithstanding any other provision in this Agreement to the
contrary, with respect to any losses or damages arising out of or relating to
any actions or omissions of any Foreign Sub-Custodian the sole responsibility
and liability of the Custodian shall be to take appropriate action at the Fund's
expense to recover such loss or damage from the Foreign Sub-Custodian. It is
expressly understood and agreed that the Custodian's sole responsibility and
liability shall
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be limited to amounts so recovered from the Foreign Sub- Custodian.
ARTICLE XVII.
FX TRANSACTIONS
1. Whenever the Fund shall enter into an FX Transaction, the Fund shall
promptly deliver to the Custodian a Certificate or Oral Instructions specifying
with respect to such FX Transaction: (a) the Series to which such FX Transaction
is specifically allocated; (b) the type and amount of Currency to be purchased
by the Fund; (c) the type and amount of Currency to be sold by the Fund; (d) the
date on which the Currency to be purchased is to be delivered; (e) the date on
which the Currency to be sold is to be delivered; and (f) the name of the person
from whom or through whom such currencies are to be purchased and sold. Unless
otherwise instructed by a Certificate or Oral Instructions, the Custodian shall
deliver, or shall instruct a Foreign Sub- Custodian to deliver, the Currency to
be sold on the date on which such delivery is to be made, as set forth in the
Certificate, and shall receive, or instruct a Foreign Sub- Custodian to receive,
the Currency to be purchased on the date as set forth in the Certificate.
2. Where the Currency to be sold is to be delivered on the same day as
the Currency to be purchased, as specified in the Certificate or Oral
Instructions, the Custodian or a Foreign Sub-Custodian may arrange for such
deliveries and receipts to be made in accordance with the customs prevailing
from time to time among brokers or dealers in Currencies, and such receipt and
delivery may not be completed simultaneously. The Fund assumes all
responsibility and liability for all credit risks involved in connection with
such receipts and deliveries, which responsibility and liability shall continue
until the Currency to be received by the Fund has been received in full.
3. Any FX Transaction effected by the Custodian in connection with this
Agreement may be entered with the Custodian, any office, branch or subsidiary of
The Bank of New York Company, Inc., or any Foreign Sub-Custodian acting as
principal or otherwise through customary banking channels. The Fund may issue a
standing Certificate with respect to FX Transaction but the Custodian may
establish rules or limitations concerning any foreign exchange facility made
available to the Fund. The Fund shall bear all risks of investing in Securities
or holding Currency. Without limiting the foregoing, the Fund shall bear the
risks that rules or procedures imposed by a Foreign Sub-Custodian or foreign
depositories, exchange controls, asset freezes or other laws, rules, regulations
or orders shall prohibit or impose burdens
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or costs on the transfer to, by or for the account of the Fund of Securities or
any cash held outside the Fund's jurisdiction or denominated in Currency other
than its home jurisdiction or the conversion of cash from one Currency into
another currency. The Custodian shall not be obligated to substitute another
Currency for a Currency (including a Currency that is a component of a Composite
Currency Unit) whose transferability, convertibility or availability has been
affected by such law, regulation, rule or procedure. Neither the Custodian nor
any Foreign Sub-Custodian shall be liable to the Fund for any loss resulting
from any of the foregoing events.
ARTICLE XVIII.
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in Article XVI,
neither the Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agreement, except for
any such loss or damage arising out of its own negligence or willful misconduct.
In no event shall the Custodian be liable to the Fund or any third party for
special, indirect or consequential damages or lost profits or loss of business,
arising under or in connection with this Agreement, even if previously informed
of the possibility of such damages and regardless of the form of action. The
Custodian may, with respect to questions of law arising hereunder or under any
Margin Account Agreement, apply for and obtain the advice and opinion of counsel
to the Fund, or of its own counsel, at the expense of the Fund, and shall be
fully protected with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall be liable to the
Fund for any loss or damage resulting from the use of the Book-Entry System or
any Depository arising by reason of any negligence or willful misconduct on the
part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) the validity of the issue of any Securities purchased,
sold, or written by or for the Fund, the legality of the purchase, sale or
writing thereof, or the propriety of the amount paid or received therefor;
(b) the legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor;
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(c) the legality of the declaration or payment of any dividend
by the Fund;
(d) the legality of any borrowing by the Fund using Securities
as collateral;
(e) the legality of any loan of portfolio Securities, nor
shall the Custodian be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer, or financial institution or held
by it at any time as a result of such loan of portfolio Securities of the Fund
is adequate collateral for the Fund against any loss it might sustain as a
result of such loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for the Fund is
sufficient collateral for the Fund, but such duty or obligation shall be the
sole responsibility of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of the Fund are lent pursuant to Article X of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or
(f) the sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or Collateral
Account in connection with transactions by the Fund. In addition, the Custodian
shall be under no duty or obligation to see that any broker, dealer, futures
commission merchant or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund may be entitled to
receive from such broker, dealer, futures commission merchant or Clearing
Member, to see that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's receipt or
non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchange offers,
tenders, interest rate changes
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or similar matters relating to Securities held in the Depository, unless the
Custodian shall have actually received timely notice from the Depository. In no
event shall the Custodian have any responsibility or liability for the failure
of the Depository to collect, or for the late collection or late crediting by
the Depository of any amount payable upon Securities deposited in the Depository
which may mature or be redeemed, retired, called or otherwise become payable.
However, upon receipt of a Certificate from the Fund of an overdue amount on
Securities held in the Depository the Custodian shall make a claim against the
Depository on behalf of the Fund, except that the Custodian shall not be under
any obligation to appear in, prosecute or defend any action, suit or proceeding
in respect to any Securities held by the Depository which in its opinion may
involve it in expense or liability, unless indemnity satisfactory to it against
all expense and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may in addition to the employment of Foreign
Sub-Custodians pursuant to Article XVI appoint one or more banking institutions
as Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as
Co-Custodian or Co-Custodians including, but not limited to, banking
institutions located in foreign countries, of Securities and money at any time
owned by the Fund, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the Custodian, the Fund and
the appointed institution.
8. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it or by
any Foreign Sub-Custodian, for the account of the Fund and specifically
allocated to a Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus, or (b) to ascertain
whether any transactions by the Fund, whether
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or not involving the Custodian, are such transactions as may properly be engaged
in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Custodian
may charge such compensation and any expenses with respect to a Series incurred
by the Custodian in the performance of its duties pursuant to such agreement
against any money specifically allocated to such Series. Unless and until the
Fund instructs the Custodian by a Certificate to apportion any loss, damage,
liability or expense among the Series in a specified manner, the Custodian shall
also be entitled to charge against any money held by it for the account of a
Series such Series' pro rata share (based on such Series, net asset value at the
time of the charge to the aggregate net asset value of all Series at that time)
of the amount of any loss, damage, liability or expense, including counsel fees,
for which it shall be entitled to reimbursement under the provisions of this
Agreement. The expenses for which the Custodian shall be entitled to
reimbursement hereunder shall include, but are not limited to, the expenses of
sub-custodians and foreign branches of the Custodian incurred in settling
outside of New York City transactions involving the purchase and sale of
Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions actually received by the Custodian
hereinabove provided for. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming such Oral Instructions in such
manner so that such Certificate or facsimile thereof is received by the
Custodian, whether by hand delivery, telecopier or other similar device, or
otherwise, by the close of business of the same day that such Oral Instructions
are given to the Custodian. The Fund agrees that the fact that such confirming
instructions are not received, or that contrary instructions are received, by
the Custodian shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund in acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing,
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<PAGE>
the Custodian shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its expenses of
providing such copies. Upon reasonable request of the Fund, the Custodian shall
provide in hard copy or on micro-film, whichever the Custodian elects, any
records included in any such delivery which are maintained by the Custodian on a
computer disc, or are similarly maintained, and the Fund shall reimburse the
Custodian for its expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System, the Depository or O.C.C., and with such reports on its own systems of
internal accounting control as the Fund may reasonably request from time to
time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with this Agreement, including the Custodian's payment or non-payment
of checks pursuant to paragraph 6 of Article XIII as part of any check
redemption privilege program of the Fund, except for any such liability, claim,
loss and demand arising out of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of this Agreement, including,
without limitation, those contained in Article XVI and XVII the Custodian may
deliver and receive Securities, and receipts with respect to such Securities,
and arrange for payments to be made and received by the Custodian in accordance
with the customs prevailing from time to time among brokers or dealers in such
Securities. When the Custodian is instructed to deliver Securities against
payment, delivery of such Securities and receipt of payment therefor may not be
completed simultaneously. The Fund assumes all responsibility and liability for
all credit risks involved in
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<PAGE>
connection with the Custodian's delivery of Securities pursuant to instructions
of the Fund, which responsibility and liability shall continue until final
payment in full has been received by the Custodian.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE XIX.
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it shall be accompanied
by a copy of a resolution of the Board of Trustees of the Fund, certified by the
Secretary or any Assistant Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be a bank
or trust company having not less than $2,000,000 aggregate capital, surplus and
undivided profits. In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Custodian a copy of a
resolution of the Board of Trustees of the Fund, certified by the Secretary or
any Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, and the Custodian shall upon receipt
of a notice of acceptance by the successor custodian on that date deliver
directly to the successor custodian all Securities and money then owned by the
Fund and held by it as Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and money then owned by
the Fund be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book
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<PAGE>
Entry System which cannot be delivered to the Fund to hold such Securities
hereunder in accordance with this Agreement.
ARTICLE XX.
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Authorized Persons of the Fund under its seal, setting forth the names
and the signatures of the present Authorized Persons. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event that
other or additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the Authorized Persons as set forth in the last delivered Certificate.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other place as the
Custodian may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing.
4. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Trustees of the Fund.
5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Trustees.
6. This Agreement shall be construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles thereof.
Each party hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any
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<PAGE>
dispute arising hereunder and hereby waives its right to trial by jury.
7. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
FIRST EAGLE TRUST
[SEAL] By: /s/ ROBERT BRUNO
_______________________
Attest:
_______________________
THE BANK OF NEW YORK
[SEAL] By: /s/ STEPHEN E. GRUNSTON
_______________________
Name: Stephen E. Grunston
Title: Vice President
Attest:
/s/ [ILLEGIBLE]
_______________________
<PAGE>
<PAGE>
APPENDIX A
I, , President and I, ,
of FIRST EAGLE TRUST, a Delaware business trust
(the "Fund"), do hereby certify that:
The following persons have been duly authorized in conformity with the
Fund's Declaration of Trust and By-Laws to execute any Certificate, instruction,
notice or other instrument on behalf of the Fund, and the signatures set forth
opposite their respective names are their true and correct signatures:
Name Position Signature
____________________ ___________________ _________________
<PAGE>
<PAGE>
APPENDIX B
SERIES
First Eagle Fund of America
First Eagle International Fund
<PAGE>
<PAGE>
APPENDIX C
I, Vincent Blazewicz, a Vice President with THE BANK OF NEW YORK do
hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>
<PAGE>
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of this 27th day of February, 1998 by and between
FIRST EAGLE TRUST, a Delaware business trust having its principal place of
business at 1345 Avenue of the Americas, New York, New York 10105 (hereinafter
called the "Fund") and The Bank of New York, a New York corporation authorized
to do a banking business, having its principal place of business at 48 Wall
Street, New York, New York 10286 (hereinafter called the "Bank").
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, the Fund
and the Bank hereby agree as follows:
1. The Fund hereby appoints the Bank to perform the duties hereinafter
set forth.
2. The Bank hereby accepts appointment and agrees to perform the duties
hereinafter set forth.
3. Subject to the provisions of paragraphs 5 and 6 below, the Bank
shall compute the net asset value per share of each Series of shares (the
"Series") of the Fund and shall value the securities held by the Fund (the
"Securities") at such times and dates and in the manner specified in the then
currently effective Prospectus of the Fund.
4. Subject to the provisions of paragraphs 5 and 6 below, the Bank
shall also compute the net income of each Series for dividend purposes and the
net income per share at such times and dates and in the manner specified in the
then currently effective Prospectus of the Fund.
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<PAGE>
5. To the extent valuation of Securities or computation of a Series'
net asset value, net income for dividend purposes, or net income per share as
specified in the Fund's then currently effective Prospectus is at any time
inconsistent with any applicable laws or regulations, the Fund shall immediately
so notify the Bank in writing and thereafter shall either furnish the Bank at
all appropriate times with the values of such Securities, each Series' net asset
value, net income for dividend purposes or net income per share, as the case may
be, or subject to the prior approval of the Bank, instruct the Bank in writing
to value Securities and compute each Series' net asset value, net income for
dividend purposes, and net income per share in a manner which the Fund then
represents in writing to be consistent with all applicable laws and regulations.
The Fund may also from time to time, subject to the prior approval of the Bank,
instruct the Bank in writing to compute the value of the Securities, a Series'
net asset value, net income for dividend purposes, or net income per share in a
manner other than as specified in paragraphs 3 and 4 of this Agreement. By
giving such instruction, the Fund shall be deemed to have represented that such
instruction is consistent with all applicable laws and regulations and the then
currently effective Prospectus of the Fund. The Fund shall have sole
responsibility for determining the method of valuation of Securities and the
method of computing each Series' net asset value, net income for dividend
purposes and net income per share.
6. The Fund shall furnish the Bank with any and all instructions,
explanations, information, specifications and documentation deemed necessary by
the Bank in the performance of its duties hereunder, including, without
limitation, the amounts or written formula for calculating the amounts and times
of accrual of Fund liabilities and expenses. The Fund shall also furnish the
Bank with bid, offer, or market values of Securities if the Bank notifies the
Fund that same are not available to the Bank from a security pricing or similar
service utilized, or subscribed to, by the Bank which the Bank in its judgment
deems
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<PAGE>
reliable at the time such information is required for calculations hereunder. At
any time and from time to time, the Fund also may furnish the Bank with bid,
offer, or market values of Securities and instruct the Bank to use such
information in its calculations hereunder. The Bank shall at no time be required
or obligated to commence or maintain any utilization of, or subscriptions to,
any securities pricing or similar service.
7. The Bank shall advise the Fund, the Fund's custodian and the Fund's
transfer agent of the net asset value, net income for dividend purposes, and net
income per share of each Series upon completion of the computations required to
be made by the Bank pursuant to this Agreement.
8. The Bank shall, as agent for the Fund, maintain and keep current the
books, accounts and other documents, if any, listed in Appendix A hereto and
made a part hereof, as such Appendix A may be amended from time to time, and
preserve any such books, accounts and other documents in accordance with the
applicable provisions of Rule 31a-2 of the General Rules and Regulations under
the Investment Company Act of 1940, as amended (the "Rules"). Such books,
accounts and other documents shall be made available upon reasonable request for
inspection by officers, employees and auditors of the Fund during the Bank's
normal business hours.
9. All records maintained and preserved by the Bank pursuant to this
Agreement which the Fund is required to maintain and preserve in accordance with
the above-mentioned Rules shall be and remain the property of the Fund and shall
be surrendered to the Fund promptly upon request in the form in which such
records have been maintained and preserved. Upon reasonable request of the Fund,
the Bank shall provide in hard copy or on micro-film, whichever the Bank shall
elect, any records included in any such delivery which are maintained by the
Bank on a computer disc, or are similarly maintained, and
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<PAGE>
the Fund shall reimburse the Bank for its expenses of providing such hard copy
or micro-film.
10. The Bank, in performing the services required of it under the terms
of this Agreement, shall be entitled to rely fully on the accuracy and validity
of any and all instructions, explanations, information, specifications and
documentation furnished to it by the Fund and shall have no duty or obligation
to review the accuracy, validity or propriety of such instructions,
explanations, information, specifications or documentation, including, without
limitation, evaluations of Securities; the amounts or formula for calculating
the amounts and times of accrual of Series' liabilities and expenses; the
amounts receivable and the amounts payable on the sale or purchase of
Securities; and amounts receivable or amounts payable for the sale or redemption
of Fund shares effected by or on behalf of the Fund. In the event the Bank's
computations hereunder rely, in whole or in part, upon information, including,
without limitation, bid, offer or market values of Securities or other assets,
or accruals of interest or earnings thereon, from a pricing or similar service
utilized, or subscribed to, by the Bank which the Bank in its judgment deems
reliable, the Bank shall not be responsible for, under any duty to inquire into,
or deemed to make any assurances with respect to, the accuracy or completeness
of such information.
11. The Bank shall not be required to inquire into any valuation of
Securities or other assets by the Fund or any third party described in preceding
paragraph 10 hereof, even though the Bank in performing services similar to the
services provided pursuant to this Agreement for others may receive different
valuations of the same or different securities of the same issuers.
12. The Bank, in performing the services required of it under the terms
of this Agreement, shall not be responsible for determining whether any interest
accruable to the Fund is or
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<PAGE>
will be actually paid, but will accrue such interest until otherwise instructed
by the Fund.
13. The Bank shall not be responsible for delays or errors which occur
by reason of circumstances beyond its control in the performance of its duties
under this Agreement, including, without limitation, labor difficulties within
or without the Bank, mechanical breakdowns, flood or catastrophe, acts of God,
failures of transportation, communication or power supply, or other similar
circumstances. Nor shall the Bank be responsible for delays or failures to
supply the information or services specified in this Agreement where such delays
or failures are caused by the failure of any person(s) other than the Bank to
supply any instructions, explanations, information, specifications or
documentation deemed necessary by the Bank in the performance of its duties
under this Agreement.
14. No provision of this Agreement shall prevent the Bank from offering
services similar or identical to those covered by this Agreement to any other
corporations, associations or entities of any kind. Any and all operational
procedures, techniques and devices developed by the Bank in connection with the
performance of its duties and obligations under this Agreement, including those
developed in conjunction with the Fund, shall be and remain the property of the
Bank, and the Bank shall be free to employ such procedures, techniques and
devices in connection with the performance of any other contract with any other
person whether or not such contract is similar or identical to this Agreement.
15. The Bank may, with respect to questions of law, apply to and obtain
the advice and opinion of counsel to the Fund or its own counsel and shall be
entitled to rely on the advice or opinion of such counsel. The costs of any such
advice or opinion shall be borne by the Fund.
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<PAGE>
16. The Bank shall be entitled to rely upon any oral instructions
received by the Bank and reasonably believed by the Bank to be given by or on
behalf of the Fund, even if the Bank subsequently receives written instructions
contradicting such oral instructions. The books and records of the Bank with
respect to the content of any oral instruction shall be binding and conclusive.
17. The Bank shall not be liable for any loss, damage or expense,
including counsel fees and other costs and expenses of a defense against any
claim or liability, resulting from, arising out of, or in connection with its
performance hereunder, including its actions or omissions, the incompleteness or
inaccuracy of any specifications or other information furnished by the Fund, or
for delays caused by circumstances beyond the Bank's control, unless such loss,
damage or expense arises out of the bad faith, negligence, or willful misconduct
of the Bank. In no event shall the Bank be liable to the Company or any third
party for special, indirect, or consequential damages, or for lost profits or
loss of business, arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages and regardless of the
form of action.
18. Without limiting the generality of the foregoing, the Fund shall
indemnify the Bank against and save the Bank harmless from any loss, damage or
expense, including counsel fees and other costs and expenses of a defense
against any claim or liability, arising from any one or more of the following:
(a) Errors in records or instructions, explanations,
information, specifications or documentation of any kind, as the case may be,
supplied to the Bank by any third party described in preceding paragraph 10
hereof or by or on behalf of the Fund;
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<PAGE>
(b) Action or inaction taken or omitted to be taken by the
Bank pursuant to written or oral instructions of the Fund or otherwise without
bad faith, negligence or willful misconduct;
(c) Any action taken or omitted to be taken by the Bank in
good faith in accordance with the advice or opinion of counsel for the Fund or
its own counsel;
(d) Any improper use by the Fund or its agents, distributor or
investment advisor of any valuations or computations supplied by the Bank
pursuant to this Agreement;
(e) The method of valuation of the Securities and the method
of computing each Series' net asset value, net income for dividend purposes, and
net income per share; or
(f) Any valuations of Securities, net asset value, net income
for dividend purposes, or net income per share provided by the Fund.
19. In consideration for all of the services to be performed by the
Bank as set forth herein the Bank shall be entitled to receive reimbursement for
all out-of-pocket expenses and such compensation as may be agreed upon in
writing from time to time between the Bank and the Fund.
20. Attached hereto as Appendix B is a list of persons duly authorized
by the Fund's Declaration of Trust and By-Laws to execute this Agreement and
give any written or oral instructions, or written or oral specifications, by or
on behalf of the Fund. From time to time the Fund may deliver a new Appendix B
to add or delete any person and the Bank shall be entitled to rely on the last
Appendix B actually received by the Bank.
21. The Fund represents and warrants to the Bank that it has all
requisite power to execute and deliver this Agreement,
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<PAGE>
to give any written or oral instructions contemplated hereby, and to perform the
actions or obligations contemplated to be performed by it hereunder, and has
taken all necessary action to authorize such execution, delivery, and
performance.
22. Unless The Bank of New York is acting as the sole custodian for the
Fund, on each day on which the Bank is to make calculations hereunder, the Fund
shall deliver to the Bank, at least one-half hour before the Bank is to make any
such calculations, a signed written specification of the Securities of each
Series. The Bank shall be entitled to rely on such specifications in making its
calculations hereunder for such day. If The Bank of New York is acting as the
sole custodian for the Fund, the Bank shall be entitled to rely on
specifications of Securities furnished by The Bank of New York as custodian.
23. This Agreement shall not be assignable by the Fund without the
prior written consent of the Bank, or by the Bank without the prior written
consent of the Fund.
24. Either of the parties hereto may terminate this Agreement by giving
the other party a notice in writing specifying the date of such termination,
which shall not be less than ninety (90) days after the date of giving of such
notice. Upon the date set forth in such notice, the Bank shall deliver to the
Fund all records then the property of the Fund and, upon such delivery, the Bank
shall be relieved of all duties and responsibilities under this Agreement.
25. This Agreement may not be amended or modified in any manner except
by written agreement executed on behalf of both parties hereto.
26. This Agreement is executed in the State of New York and all laws
and rules of construction of the State of New York
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(other than those relating to choice of laws) shall govern the rights, duties
and obligations of the parties hereto.
27. The performance and provisions of this Agreement are intended to
benefit only the Bank and the Fund, and no rights shall be granted to any other
person by virtue of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
FIRST EAGLE TRUST
By: /s/ Robert Bruno
_______________________
Attest:
_______________________
THE BANK OF NEW YORK
By: /s/ STEPHEN E. GRUNSTON
_______________________
Stephen E. Grunston
Vice President
Attest:
/s/ [ILLEGIBLE]
_______________________
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<PAGE>
APPENDIX A TO FUND ACCOUNTING AGREEMENT
BETWEEN
THE BANK OF NEW YORK
AND
FIRST EAGLE TRUST
I. The Bank of New York (the "Bank"), as agent for FIRST EAGLE TRUST
(the "Fund"), shall maintain the following records on a daily basis for each
Series.
1. Report of priced portfolio securities
2. Statement of net asset value per share
3. Net income of the Fund for dividend purposes
4. Net income per share
5. Yield of the Fund
II. The Bank shall maintain the following records on a monthly basis
for each Series:
1. General Ledger
2. General Journal
3. Cash Receipts Journal
4. Cash Disbursements Journal
5. Subscriptions Journal
6. Redemptions Journal
7. Accounts Receivable Reports
8. Accounts Payable Reports
9. Open Subscriptions/Redemption Reports
10. Transaction (Securities) Journal
11. Broker Net Trades Reports
III. The Bank shall prepare a Holdings Ledger on a quarterly basis, and
a Buy-Sell Ledger (Broker's Ledger) on a semiannual basis for each Series.
Schedule D shall be produced on an annual basis for each Series.
<PAGE>
<PAGE>
The above reports may be printed according to any other required
frequency to meet the requirements of the Internal Revenue Service, The
Securities and Exchange Commission and the Fund's Auditors.
IV. For internal control purposes, the Bank uses the Account Journals
produced by The Bank of New York Custody System to record daily settlements of
the following for each Series:
1. Securities bought
2. Securities sold
3. Interest received
4. Dividends received
5. Capital stock sold
6. Capital stock redeemed
7. Other income and expenses
All portfolio purchases for the Fund are recorded to reflect expected
maturity value and total cost including any prepaid interest.
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APPENDIX B
I, , of FIRST EAGLE TRUST, a Delaware
business trust (the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the
Fund, and each has been duly elected or appointed by the Board of Trustees of
the Fund to each such position and qualified therefor in conformity with the
Fund's Declaration of Trust and By-Laws, and the signatures set forth opposite
their respective names are their true and correct signatures. Each such person
is authorized to give written or oral instructions or written or oral
specifications by or on behalf of the Fund to the Bank.
Name Position Signature
____________________ ___________________ _________________
<PAGE>
<PAGE>
FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT made as of February 27, 1998, between First Eagle Trust (the
"Fund") and The Bank of New York ("BNY").
W I T N E S S E T H:
WHEREAS, the Fund desires to appoint BNY as a Foreign Custody Manager on
the terms and conditions contained herein;
WHEREAS, BNY desires to serve as a Foreign Custody Manager and perform
the duties set forth herein on the terms and condition contained herein;
NOW THEREFORE, in consideration of the mutual promises hereinafter
contained in this Agreement, the Fund and BNY hereby agrees as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. Capitalized terms used in this Agreement and not otherwise defined in
this Agreement shall have the meanings given such terms in the Rule.
2. "BOARD" shall mean the board of directors or board of trustees, as
the case may be, of the Fund.
3. "ELIGIBLE FOREIGN CUSTODIAN" shall have the meaning provided in the
Rule.
4. "MONITORING SYSTEM" shall mean a system established by BNY to
fulfill the Responsibilities specified in clauses (d) and (e) of Article III of
this Agreement.
5. "QUALIFIED FOREIGN BANK" shall have the meaning provided in the
Rule.
6. "RESPONSIBILITIES" shall mean the responsibilities delegated to BNY
as a Foreign Custody Manager with respect to each Specified Country and each
Eligible Foreign Custodian selected by BNY, as such responsibilities are more
fully described in Article III of this Agreement.
7. "RULE" shall mean Rule 17f-5 under the Investment Company Act of
1940, as amended, as such Rule became effective on June 16, 1997.
8. "SECURITIES DEPOSITORY" shall mean any securities depository or
clearing agency within the meaning of Section (a)(1)(ii) or (a)(1)(iii) of the
Rule.
<PAGE>
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2
9. "SPECIFIED COUNTRY" shall mean each country listed on Schedule I
attached hereto and each country, other than the United States, constituting the
primary market for a security with respect to which the Fund has given
settlement instructions to The Bank of New York as custodian (the "Custodian")
under its Custody Agreement with the Fund.
ARTICLE II
BNY AS A FOREIGN CUSTODY MANAGER
1. The Fund on behalf of its Board hereby delegates to BNY with respect
to each Specified Country the Responsibilities.
2. BNY accepts the Board's delegation of Responsibilities with respect
to each Specified Country and agrees in performing the Responsibilities as a
Foreign Custody Manager to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of the Fund's assets would
exercise.
3. BNY shall provide to the Board at such times as the Board deems
reasonable and appropriate based on the circumstances of the Fund's foreign
custody arrangements written reports notifying the Board of the placement of
assets of the Fund with a particular Eligible Foreign Custodian within a
Specified Country and of any material change in the arrangements (including, in
the case of Qualified Foreign Banks, any material change in any contract
governing such arrangements and in the case of Securities Depositories, any
material change in the established practices or procedures of such Securities
Depositories) with respect to assets of the Fund with any such Eligible Foreign
Custodian.
ARTICLE III
RESPONSIBILITIES
1. Subject to the provisions of this Agreement, BNY shall with respect
to each Specified Country select an Eligible Foreign Custodian. In connection
therewith, BNY shall: (a) determine that assets of the Fund held by such
Eligible Foreign Custodian will be subject to reasonable care, based on the
standards applicable to custodians in the relevant market in which such Eligible
Foreign Custodian operates, after considering all factors relevant to the
safekeeping of such assets, including, without limitation, those contained in
Section (c)(1) of the Rule; (b) determine that the Fund's foreign custody
arrangements with each Qualified Foreign Bank are governed by a written contract
with the Custodian (or, in the case of a Securities Depository, by such a
contract, by the rules or established practices or procedures of the Securities
Depository, or by any combination of the foregoing) which will provide
reasonable care for the Fund's assets based on the standards specified in
paragraph (c)(1) of the Rule; (c) determine that each contract with a Qualified
Foreign Bank shall include the provisions specified in paragraph (c)(2)(i)(A)
through (F) of the Rule or, alternatively, in lieu of any or all of such
(c)(2)(i)(A) through (F) provisions, such other provisions as BNY determines
will provide, in their entirety, the same or a greater level of care and
protection for the assets of the Fund as such specified provisions; (d) monitor
pursuant to the Monitoring System the appropriateness of maintaining the assets
of the Fund with a particular Eligible Foreign Custodian pursuant to paragraph
(c)(1) of the Rule and in
<PAGE>
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3
the case of a Qualified Foreign Bank, any material change in the contract
governing such arrangement and in the case of a Securities Depository, any
material change in the established practices or procedures of such Securities
Depository); and (e) advise the Fund whenever an arrangement (including, in the
case of a Qualified Foreign Bank, any material change in the contract governing
such arrangement and in the case of a Securities Depository, any material change
in the established practices or procedures of such Securities Depository)
described in preceding clause (d) no longer meets the requirements of the Rule.
Anything in this Agreement to the contrary notwithstanding, BNY shall in no
event be deemed to have selected any Securities Depository the use of which is
mandatory by law or regulation or because securities cannot be withdrawn from
such Securities Depository, or because maintaining securities outside the
Securities Depository is not consistent with prevailing custodial practices
(each, a "Compulsory Depository").
2. (a) For purposes of Clauses (a) and (b) of preceding Section 1 of
this Article, with respect to Securities Depositories, it is understood that
such determination shall be made on the basis of, and limited by, publicly
available information with respect to each such Securities Depository.
(b) For purposes of clause (d) of preceding Section 1 of this Article,
BNY's determination of appropriateness shall not include, nor be deemed to
include, any evaluation of Country Risks associated with investment in a
particular country. For purposes hereof, "Country Risks" shall mean systemic
risks of holding assets in a particular country including, but not limited to,
(a) the use of Compulsory Depositories, (b) such country's financial
infrastructure, (c) such country's prevailing custody and settlement practices,
(d) nationalization, expropriation or other governmental actions, (e) regulation
of the banking or securities industry, (f) currency controls, restrictions,
devaluations or fluctuations, and (g) market conditions which affect the orderly
execution of securities transactions or affect the value of securities.
ARTICLE IV
REPRESENTATIONS
1. The Fund hereby represents that: (a) this Agreement has been duly
authorized, executed and delivered by the Fund, constitutes a valid and legally
binding obligation of the Fund enforceable in accordance with its terms, and no
statute, regulation, rule, order, judgment or contract binding on the Fund
prohibits the Fund's execution or performance of this Agreement; (b) this
Agreement has been approved and ratified by the Board at a meeting duly called
and at which a quorum was at all times present; and (c) the Board or its
investment advisor has considered the Country Risks associated with investment
in each Specified Country and will have considered such risks prior to any
settlement instructions being given to the Custodian with respect to any other
Specified Country.
2. BNY hereby represents that: (a) BNY is duly organized and existing
under the laws of the State of New York, with full power to carry on its
businesses as now conducted, and to enter into this Agreement and to perform its
obligations hereunder; (b) this Agreement has been duly authorized, executed and
delivered by BNY, constitutes a valid and legally binding obligation of BNY
enforceable in accordance with its terms, and no statute, regulation, rule,
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<PAGE>
4
order, judgment or contract binding on BNY prohibits BNY's execution or
performance of this Agreement; and (c) BNY has established the Monitoring
System.
ARTICLE V
CONCERNING BNY
1. BNY shall not be liable for any costs, expenses, damages,
liabilities or claims, including attorneys' and accountants' fees, sustained or
incurred by, or asserted against, the Fund except to the extent the same arises
out of the failure of BNY to exercise the care, prudence and diligence required
by Section 2 of Article II hereof. In no event shall BNY be liable to the Fund,
the Board, or any third party for special, indirect or consequential damages, or
for lost profits or loss of business, arising in connection with this Agreement.
2. The Fund agrees to indemnify BNY and holds it harmless from and
against any and all costs, expenses, damages, liabilities or claims, including
attorneys' and accountants' fees, sustained or incurred by, or asserted against,
BNY by reason or as a result of any action or inaction, or arising out of BNY's
performance hereunder, provided that the Fund shall not indemnify BNY to the
extent any such costs, expenses, damages, liabilities or claims arises out of
BNY's failure to exercise the reasonable care, prudence and diligence required
by Section 2 of Article II hereof.
3. BNY shall have only such duties as are expressly set forth herein. In
no event shall BNY be liable for any Country Risks associated with investments
in a particular country.
ARTICLE VI
MISCELLANEOUS
1. This Agreement constitutes the entire agreement between the Fund and
BNY, and no provision in the Custody Agreement between the Fund and the
Custodian shall affect the duties and obligations of BNY hereunder, nor shall
any provision in this Agreement affect the duties or obligations of the
Custodian under the Custody Agreement.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to BNY, shall be sufficiently given if received by it
at its offices at 90 Washington Street, New York, New York 10286, or at such
other place as BNY may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if received
by it at its offices at 1345 Avenue of the Americas, New York, NY 10105, or at
such other place as the Fund may from time to time designate in writing.
4. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceablility of the remaining provisions shall not in any way be affected
thereby. This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties.
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5
This Agreement shall extend to and shall be binding upon the parties hereto, and
their respective successors and assigns; provided however, that this Agreement
shall not be assignable by either party without the written consent of the
other.
5. This Agreement shall be construed in accordance with the substantive
laws of the State of New York, without regard to conflicts of laws principles
thereof. The Fund and BNY hereby consent to the jurisdiction of a state or
federal court situated in New York City, New York in connection with any dispute
arising hereunder. The Fund hereby irrevocably waives, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an inconvenient
forum. The Fund and BNY each hereby irrevocably waives any and all rights to
trial by jury in any legal proceeding arising out of or relating to this
Agreement.
6. The parties hereto agree that in performing hereunder, BNY is acting
solely on behalf of the Fund and no contractual or service relationship shall be
deemed to be established hereby between BNY and any other person.
7. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
8. This Agreement shall terminate simultaneously with the termination
of the Custody Agreement between the Fund and the Custodian, and may otherwise
be terminated by either party giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than thirty
(30) days after the date of such notice.
9. In consideration of the services provided by BNY hereunder, the Fund
shall pay to BNY such compensation and out-of-pocket expenses as may be agreed
upon from time to time.
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<PAGE>
6
IN WITNESS WHEREOF, the Fund and BNY have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first above written.
FIRST EAGLE TRUST
By: /s/ Robert Bruno
--------------------------
Title: Secretary
Tax Identification No.:
THE BANK OF NEW YORK
By: Stephen E. Grunston
--------------------------
STEPHEN E. GRUNSTON
Title: Vice President
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FOREIGN CUSTODY MANAGER AGREEMENT
SCHEDULE I
Argentina Luxembourg
Australia Malaysia
Austria Mauritius
Bangladesh Mexico
Belgium Morocco
Bermuda Namibia
Botswana Netherlands
Brazil New Zealand
Bulgaria Nigeria
Canada Norway
Chile Pakistan
China Peru
Columbia Philippines
Cyprus Poland
Czech Republic Portugal
Denmark Russia
Easdaq Singapore
Ecuador Slovenia
Egypt South Africa
Estonia Spain
Euromarket (Ceder) Sri Lanka
Finland Swaziland
France Sweden
Germany Switzerland
Ghana Taiwan
Greece Thailand
Hong Kong Tunisia
Hungary Turkey
India Ukraine
Indonesia United Kingdom
Ireland United States
Israel Uruguay
Italy Venezuela
Ivory Coast Zambia
Japan Zimbabwe
Jordan
Kenya
Korea
Latvia
Lebanon
Lithuania
<PAGE>
<PAGE>
TRANSFER AGENCY AGREEMENT
AGREEMENT made this 27th day of February, 1998, between FIRST EAGLE
TRUST (the "Company"), a Delaware business trust having its principal place of
business at 1345 Avenue of the Americas, New York, New York 10105, and BISYS
FUND SERVICES, INC. ("BISYS"), a Delaware corporation having its principal place
of business at 3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Company desires that BISYS perform certain services for
each series of the Company (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services.
BISYS shall perform for the Company the transfer agent services
set forth in Schedule A hereto.
BISYS also agrees to perform for the Company such special
services incidental to the performance of the services enumerated herein as
agreed to by the parties from time to time. BISYS shall perform such additional
services as are provided on an amendment to Schedule A hereof, in consideration
of such fees as the parties hereto may agree.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the
Company (individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Company or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.
2. Fees.
The Company shall pay BISYS for the services to be provided by
BISYS under this Agreement in accordance with, and in the manner set forth in,
Schedule B hereto. BISYS may increase the fees it charges pursuant to the fee
schedule; provided, however, that BISYS may not increase such fees until the
expiration of the Initial Term of this Agreement (as defined below), unless the
Company otherwise agrees to such change in writing. Fees for any additional
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<PAGE>
services to be provided by BISYS pursuant to an amendment to Schedule A hereto
shall be subject to mutual agreement at the time such amendment to Schedule A is
proposed.
3. Reimbursement of Expenses.
In addition to paying BISYS the fees described in Section 2
hereof, the Company agrees to reimburse BISYS for BISYS' out-of-pocket expenses
in providing services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges
incurred by BISYS in delivering materials to and from the Company and
in delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy
or other electronic transmission expenses incurred by BISYS in
communication with the Company, the Company's investment adviser or
custodian, dealers, shareholders or others as required for BISYS to
perform the services to be provided hereunder;
(c) Costs of postage, couriers, stock computer paper,
statements, labels, envelopes, checks, reports, letters, tax forms,
proxies, notices or other form of printed material which shall be
required by BISYS for the performance of the services to be provided
hereunder;
(d) The cost of microfilm or microfiche of records or other
materials; and
(e) Any expenses BISYS shall incur at the written direction of
an officer of the Company thereunto duly authorized.
4. Effective Date.
This Agreement shall become effective as of the date first written
above (the "Effective Date").
5. Term.
This Agreement shall continue in effect with respect to a Fund, unless
earlier terminated by either party hereto as provided hereunder, until February
28, 1999. Thereafter, it shall be renewed automatically for successive one-year
terms unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term; provided, however, that after such termination, for so long as BISYS, with
the written consent of the Company, in fact continues to perform any one or more
of the services contemplated by this Agreement or any Schedule or exhibit
hereto, the provisions of this Agreement, including without limitation the
provisions dealing with indemnification,
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<PAGE>
shall continue in full force and effect. Fees and out-of-pocket expenses
incurred by BISYS but unpaid by the Company upon such termination shall be
immediately due and payable upon and notwithstanding such termination. BISYS
shall be entitled to collect from the Company, in addition to the fees and
disbursements provided by Sections 2 and 3 hereof, the amount of all of BISYS'
cash disbursements and a reasonable fee (which fee shall be not less than one
hundred and two percent (102%) of the sum of the actual costs incurred by BISYS
in performing such service) for services in connection with BISYS' activities in
effecting such termination, including without limitation, the delivery to the
Company and/or its distributor or investment adviser and/or other parties, of
the Company's property, records, instruments and documents, or any copies
thereof. Subsequent to such termination, BISYS, for a reasonable fee, will
provide the Company with reasonable access to any Company documents or records
remaining in its possession.
6. Uncontrollable Events.
BISYS assumes no responsibility hereunder, and shall not be liable for
any damage, loss of data, delay or any other loss whatsoever caused by events
beyond its reasonable control.
7. Legal Advice.
BISYS shall notify the Company at any time BISYS believes that it is in
need of the advice of counsel (other than counsel in the regular employ of BISYS
or any affiliated companies) with regard to BISYS' responsibilities and duties
pursuant to this Agreement; and after so notifying the Company, BISYS, at its
discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing, such advice to be at the expense of the Company or the
Funds unless relating to a matter involving BISYS' willful misfeasance, bad
faith, gross negligence or reckless disregard with respect to BISYS'
responsibilities and duties hereunder and BISYS shall in no event be liable to
the Company or any Fund or any shareholder or beneficial owner of the Company
for any action reasonably taken pursuant to such advice.
8. Instructions.
Whenever BISYS is requested or authorized to take action hereunder
pursuant to instructions from a shareholder, or a properly authorized agent of a
shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication, believed by BISYS to be genuine and to have been properly made,
signed or authorized by an officer or other authorized agent of the Company or
by the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by an officer of the Company or
any other person authorized by the Company's Board of Trustees or by the
shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Company relating
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to the Funds to the extent that such services are described therein unless BISYS
receives written instructions to the contrary in a timely manner from the
Company.
9. Standard of Care; Reliance on Records and Instructions;
Indemnification.
BISYS shall use its best efforts to ensure the accuracy of all services
performed under this Agreement, but shall not be liable to the Company for any
action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, gross negligence or from reckless disregard by it of its
obligations and duties. The Company agrees to indemnify and hold harmless BISYS,
its employees, agents, directors, officers and nominees from and against any and
all claims, demands, actions and suits, whether groundless or otherwise, and
from and against any and all judgments, liabilities, losses, damages, costs,
charges, counsel fees and other expenses of every nature and character arising
out of or in any way relating to BISYS' actions taken or nonactions with respect
to the performance of services under this Agreement or based, if applicable,
upon reasonable reliance on information, records, instructions or requests given
or made to BISYS by the Company, the investment adviser and on any records
provided by any fund accountant or custodian thereof; provided that this
indemnification shall not apply to actions or omissions of BISYS in cases of its
own bad faith, willful misfeasance, gross negligence or from reckless disregard
by it of its obligations and duties; and further provided that prior to
confessing any claim against it which may be the subject of this
indemnification, BISYS shall give the Company written notice of and reasonable
opportunity to defend against said claim in its own name or in the name of
BISYS.
10. Record Retention and Confidentiality.
BISYS shall keep and maintain on behalf of the Company all books and
records which the Company or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS further agrees that
all such books and records shall be the property of the Company and to make such
books and records available for inspection by the Company or by the Securities
and Exchange Commission (the "Commission") at reasonable times and otherwise to
keep confidential all books and records and other information relative to the
Company and its shareholders, except when requested to divulge such information
by duly-constituted authorities or court process, or requested by a shareholder
or shareholder's agent with respect to information concerning an account as to
which such shareholder has either a legal or beneficial interest or when
requested by the Company, the shareholder, or shareholder's agent, or the dealer
of record as to such account.
11. Reports.
BISYS will furnish to the Company and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports at such times as are
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<PAGE>
prescribed in Schedule C attached hereto, or as subsequently agreed upon by the
parties pursuant to an amendment to Schedule C. The Company agrees to examine
each such report or copy promptly and will report or cause to be reported any
errors or discrepancies therein not later than three business days from the
receipt thereof. In the event that errors or discrepancies, except such errors
and discrepancies as may not reasonably be expected to be discovered by the
recipient within three days after conducting a diligent examination, are not so
reported within the aforesaid period of time, a report will for all purposes be
accepted by and be binding upon the Company and any other recipient, and BISYS
shall have no liability for errors or discrepancies therein and shall have no
further responsibility with respect to such report except to perform reasonable
corrections of such errors and discrepancies within a reasonable time after
requested to do so by the Company.
12. Rights of Ownership.
All computer programs and procedures developed to perform services
required to be provided by BISYS under this Agreement are the property of BISYS.
All records and other data except such computer programs and procedures are the
exclusive property of the Company and all such other records and data will be
furnished to the Company in appropriate form as soon as practicable after
termination of this Agreement for any reason.
13. Return of Records.
BISYS may at its option at any time, and shall promptly upon the
Company's demand, turn over to the Company and cease to retain BISYS' files,
records and documents created and maintained by BISYS pursuant to this Agreement
which are no longer needed by BISYS in the performance of its services or for
its legal protection. If not so turned over to the Company, such documents and
records will be retained by BISYS for six years from the year of creation. At
the end of such six-year period, such records and documents will be turned over
to the Company unless the Company authorizes in writing the destruction of such
records and documents.
14. Bank Accounts.
The Company and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Company, as are
necessary in order that BISYS may perform the services required to be performed
hereunder. To the extent that the performance of such services shall require
BISYS directly to disburse amounts for payment of dividends, redemption proceeds
or other purposes, the Company and Funds shall provide such bank or banks with
all instructions and authorizations necessary for BISYS to effect such
disbursements.
15. Representations of the Company.
The Company certifies to BISYS that: (a) as of the close of business on
the Effective Date, the Company has authorized unlimited shares, and (b) by
virtue of its Declaration of Trust, shares which are redeemed by the Company may
be sold by the Company from its
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<PAGE>
treasury, and (c) this Agreement has been duly authorized by the Company and,
when executed and delivered by the Company, will constitute a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties.
16. Representations of BISYS.
BISYS represents and warrants that: (a) BISYS has been in, and shall
continue to be in, substantial compliance with all provisions of law, including
Section 17A(c) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), required in connection with the performance of its duties under this
Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Company and BISYS' records, data, equipment, facilities and other property used
in the performance of its obligations hereunder are adequate and that it will
make such changes therein from time to time as are required for the secure
performance of its obligations hereunder.
17. Insurance.
BISYS shall notify the Company should its insurance coverage with
respect to professional liability or errors and omissions coverage be canceled
or reduced. Such notification shall include the date of change and the reasons
therefor. BISYS shall notify the Company of any material claims against it with
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Company from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
18. Information to be Furnished by the Company.
The Company has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Company and of any
amendments thereto, certified by the proper official of the state
in which such Declaration has been filed.
(b) Copies of the following documents:
1. The Company's By-Laws and any amendments thereto;
2. Certified copies of resolutions of the Board of Trustees
covering the following matters:
A. Approval of this Agreement and authorization of a
specified officer of the Company to execute and
deliver this
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Agreement and authorization for specified officers of
the Company to instruct BISYS hereunder; and
B. Authorization of BISYS to act as Transfer Agent
for the Company on behalf of the Funds.
(c) A list of all officers of the Company, together with specimen
signatures of those officers, who are authorized to instruct BISYS
in all matters.
(d) Two copies of the following (if such documents are employed by the
Company):
1. Prospectuses and Statement of Additional Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Company or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the Company
authorized, issued, and outstanding as of the Effective Date of
BISYS' appointment as Transfer Agent (or as of the date on which
BISYS' services are commenced, whichever is the later date) and as
to receipt of full consideration by the Company for all shares
outstanding, such statement to be certified by the Treasurer of the
Company.
19. Information Furnished by BISYS.
BISYS has furnished to the Company the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' Bylaws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the following
matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver this
Agreement;
2. Authorization of BISYS to act as Transfer Agent for the
Company.
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(d) A copy of the most recent independent accountants' report relating
to internal accounting control systems as filed with the Commission
pursuant to Rule 17Ad-13 under the Exchange Act.
20. Amendments to Documents.
The Company shall furnish BISYS written copies of any amendments to, or
changes in, any of the items referred to in Section 18 hereof forthwith upon
such amendments or changes becoming effective. In addition, the Company agrees
that no amendments will be made to the Prospectuses or Statement of Additional
Information of the Company which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Company
first obtains BISYS' approval of such amendments or changes.
21. Reliance on Amendments.
BISYS may rely on any amendments to or changes in any of the documents
and other items to be provided by the Company pursuant to Sections 18 and 20 of
this Agreement and the Company hereby indemnifies and holds harmless BISYS from
and against any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, counsel fees and other expenses of every nature
and character which may result from actions or omissions on the part of BISYS in
reasonable reliance upon such amendments and/or changes. Although BISYS is
authorized to rely on the above-mentioned amendments to and changes in the
documents and other items to be provided pursuant to Sections 18 and 20 hereof,
BISYS shall be under no duty to comply with or take any action as a result of
any of such amendments or changes unless the Company first obtains BISYS'
written consent to and approval of such amendments or changes.
22. Compliance with Law.
Except for the obligations of BISYS set forth in Section 10 hereof, the
Company assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Company as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Company's shares. The Company
represents and warrants that no shares of the Company will be offered to the
public until the Company's registration statement under the 1933 Act and the
1940 Act has been declared or becomes effective.
23. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address:
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3435 Stelzer Road, Columbus, Ohio 43219, or at such other address as such party
may from time to time specify in writing to the other party pursuant to this
Section.
24. Headings.
Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
25. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1 hereof.
26. Matters Relating to the Trust as a Delaware Business Trust.
It is expressly agreed that the obligations of the Company hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Company personally, but shall bind only the trust
property of the Company. The execution and delivery of this Agreement have been
authorized by the Trustees, and this Agreement has been signed and delivered by
an authorized officer of the Company, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such other
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Company as provided in the Company's Agreement and Declaration
of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
FIRST EAGLE TRUST
By: /s/ Robert Bruno
______________________________
BISYS FUND SERVICES, INC.
By: /s/ J. David Huber
________________________________
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SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
FIRST EAGLE TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENCY SERVICES
1. Shareholder Transactions
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new shares,
through dividend reimbursement.
2. Shareholder Information Services
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.
A-1
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3. Compliance Reporting
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which each Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service forms
for each Fund and shareholder income and capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
a. Provide reports for tracking rights of accumulation and purchases
made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load
Fund.
5. Shareholder Account Maintenance
a. Maintain all shareholder records for each account in the Company.
b. Issue customer statements on scheduled cycle, providing duplicate
second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
A-2
<PAGE>
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
FIRST EAGLE TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENT FEES
Annual Base Fee: $20,000.00
Annual Per Account Fee:
Open Accounts $ 19.00
Closed Accounts $ 5.00
Multiple Classes of Shares:
Classes of shares which have different net asset values or pay different daily
dividends will be treated as separate classes, and the fee schedule above,
including the appropriate minimums, will be charged for each separate class.
Additional Services:
Additional services such as IRA processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash sweeps
between DDAs and mutual fund accounts and coordination of the printing and
distribution of prospectuses, annual reports and semi-annual reports are subject
to additional fees which will be quoted upon request. Programming costs or
database management fees for special reports or specialized processing will be
quoted upon request.
Out-of-pocket Expenses:
BISYS shall be entitled to be reimbursed for all reasonable out-of-pocket
expenses including, but not limited to, the expenses set forth in Section 3 of
the Transfer Agency Agreement to which this Schedule B is attached.
B-1
<PAGE>
<PAGE>
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
FIRST EAGLE TRUST
AND
BISYS FUND SERVICES, INC.
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS' shareholder
system and internal accounting control systems to be filed with the Securities
and Exchange Commission pursuant to Rule 17Ad-13 of the Securities Exchange Act
of 1934, as amended.
C-1
<PAGE>
<PAGE>
8. Monthly Discretionary Account Summary
This report will list all accounts identified as discretionary
and will show their balances.
9. Monthly Statistical Report
This report will include statistical data such as share range
analysis, account type analysis, social code analysis,
resident code analysis and such other items that may be agreed
upon by the parties.
10. Monthly Customer Analysis Report
This report will include various types of account information
including account size, tax-related information, retirement
plan/fees analysis and such other items that may be agreed
upon by the parties.
C-2
<PAGE>
<PAGE>
[LETTERHEAD OF MORRIS, NICHOLS, ARSHT & TUNNELL]
February 24, 1998
First Eagle Trust
1345 Avenue of the Americas
New York, NY 10105
Re: First Eagle Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel to First Eagle Trust, a
Delaware business trust (the "Trust"), in connection with certain matters
relating to the creation of the Trust and the issuance of Shares of beneficial
interest in the Trust. Capitalized terms used herein and not herein defined are
used as defined in the Agreement and Declaration of Trust of the Trust dated
December 23, 1997 (the "Governing Instrument").
In rendering this opinion, we have examined copies of the
following documents, each in the form provided to us: the Certificate of Trust
of the Trust as filed in the Office of the Secretary of State of the State of
Delaware (the "State Office") on December 24, 1997 (the "Certificate"); the
Governing Instrument; the By-laws of the Trust; the resolutions of the Trustees
of the Trust prepared for adoption at the Trustees' February 20, 1998 meeting;
Post-Effective Amendment No. 16 to the Registration Statement under the
Securities Act of 1933 on Form N-1A of First Eagle Fund of America, Inc., a
Maryland corporation, by which the Trust adopted such Registration Statement as
filed with the Securities and Exchange Commission on or about the date hereof
(the "Post-Effective Amendment"); and a certification of good standing of the
Trust obtained as of a recent date from the State Office. In such examinations,
we have assumed the genuineness of all signatures, the conformity to original
documents of documents submitted to us as copies or drafts of documents to be
executed, and the legal capacity of natural
<PAGE>
<PAGE>
First Eagle Trust
February 24, 1998
Page 2
persons to complete the execution of documents. We have further assumed for
purposes of this opinion: (i) the due adoption, authorization, execution and
delivery by, or on behalf of, each of the parties thereto of the
above-referenced resolutions, instruments, certificates and other documents, and
of all documents contemplated by the Governing Instrument and applicable
resolutions of the Trustees to be executed by investors desiring to become
Shareholders; (ii) the payment of consideration for Trust Shares, and the
application of such consideration, as provided in the Governing Instrument, and
compliance with the other terms, conditions and restrictions set forth in the
Governing Instrument and all applicable resolutions of the Trustees in
connection with the issuance of Trust Shares (including, without limitation, the
taking of all appropriate action by the Trustees to designate Series of Trust
Shares and the rights and preferences attributable thereto as contemplated by
the Governing Instrument); (iii) that appropriate notation of the names and
addresses of, the number of Trust Shares held by, and the consideration paid by,
Shareholders will be maintained in the appropriate registers and other books and
records of the Trust in connection with the issuance or transfer of Trust
Shares; (iv) that no event has occurred subsequent to the filing of the
Certificate that would cause a termination or reorganization of the Trust under
Section 2 or Section 3 of Article VIII of the Governing Instrument; (v) that the
Trust had or will become a registered investment company under the 1940 Act
within 180 days following the first issuance of beneficial interests by the
Trust; (vi) that the activities of the Trust have been and will be conducted in
accordance with the terms of the Governing Instrument and the Delaware Business
Trust Act, 12 Del. C. 'SS''SS' 3801 et. seq.; and (vii) that each of the
documents examined by us is in full force and effect and has not been amended,
supplemented or otherwise modified except as herein referenced. No opinion is
expressed herein with respect to the requirements of, or compliance with,
federal or state securities laws including, without limitation, the 1940 Act.
Further, we express no opinion on the sufficiency or accuracy of any
registration or offering material relating to the Trust or the Trust Shares. As
to any fact material to our opinion, other than those assumed, we have relied
without independent investigation on the above referenced documents and on the
accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all
respects to matters of Delaware law, it is our opinion that:
<PAGE>
<PAGE>
First Eagle Trust
February 24, 1998
Page 3
1.The Trust is a duly created and validly existing business trust
in good standing under the laws of the State of Delaware.
2. The Shares, when issued to a Shareholders in accordance with
the terms, conditions, requirements and procedures set forth in the Governing
Instrument, will constitute legally issued, fully paid and non-assessable shares
of a beneficial interest in the Trust.
3. Under the Delaware Act and the terms of the Governing
Instrument, each Shareholder of the Trust, in such capacity, will be entitled to
the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the general corporation law of
the State of Delaware; provided, however, that we express no opinion with
respect to the liability of any Shareholder who is, was or may become a named
Trustee of the Trust. Notwithstanding the foregoing or the opinion expressed in
paragraph 2 above, we note that, pursuant to Section 6 of Article IV of the
Governing Instrument, the Trustees have the power to cause Shareholders, or
Shareholders of a particular Series, to pay certain custodian, transfer,
servicing or similar agent charges by setting off the same against declared but
unpaid dividends or by reducing Share ownership (or by both means).
We hereby consent to the filing of a copy of this opinion with
the Securities and Exchange Commission together with the Post-Effective
Amendment. In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. The opinion set forth above is
expressed solely for your benefit in connection with the transactions
contemplated hereby and may not be relied upon for any other purpose or by any
other person or entity without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ Morris, Nichols, Arsht & Tunnell
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
To the Shareholders and Board of Trustees of
First Eagle Trust:
We consent to the use of our reports dated December 8, 1997 with respect to
First Eagle Fund of America, Inc. and First Eagle International Fund, Inc.
included herein and to the references to our Firm under the headings "Financial
Highlights" in the Prospectus and "Custodian, Transfer and Dividend Disbursing
Agent and Independent Auditors" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
.....................................
KPMG Peat Marwick LLP
New York, New York
February 27, 1998
<PAGE>
<PAGE>
FIRST EAGLE TRUST
RULE 18F-3 MULTI-CLASS PLAN
I. INTRODUCTION.
In accordance with Rule 18f-3 under the Investment Company Act of
1940 (the "1940 Act"), the following Multiple Class Plan (the "Plan") specifies
the differences among each individual class of shares of the series of
investment funds of First Eagle Trust (the "Trust") and sets forth the separate
arrangements for allocating expenses among each class of shares that may be
issued under the Trust's multiple class distribution system.
The Trust is an open-end series investment company registered
under the 1940 Act and its shares are registered under the Securities Act of
1933. The Trust currently offers two series (each, a "Series"): First Eagle Fund
of America and First Eagle International Fund.
As of the date hereof, the Trust hereby elects to offer multiple
classes of shares in each of its Series pursuant to the provisions of Rule 18f-3
and this Plan. Each share in a Series will represent an equal pro rata interest
in the underlying assets of the respective Series.
II. GENERAL.
The Trust reserves the right to increase, decrease or waive the
contingent deferred sales charge ("CDSC") imposed on any existing or future
classes of shares within the ranges permissible under applicable rules and
regulations of the Securities and Exchange Commission (the "SEC"), and the rules
of the National Association of Securities Dealers, Inc. (the "NASD"), as such
rules and regulations may be amended, modified or adopted from time to time. As
described more fully herein, the Trust currently intends to issue Class Y Shares
and Class C Shares of each of its Series. The Trust may in the future alter the
terms of existing classes or create new classes in compliance with applicable
rules and regulations of the SEC and the NASD.
III. ALLOCATION OF EXPENSES.
Pursuant to Rule 18f-3 under the 1940 Act, the Trust shall
allocate to each class of shares in a Series (i) any fees and expenses incurred
by the Trust in connection with the distribution of such class of shares under a
distribution plan adopted for such class of shares pursuant to Rule 12b-1 under
the 1940 Act, and (ii) any fees and expenses incurred by the Trust under a
shareholder servicing plan in connection with the provision of shareholder
services to the holders of such class of shares. In addition, pursuant to Rule
18f-3, the Trust
<PAGE>
<PAGE>
2
may allocate the following fees and expenses to a particular class of shares (to
the extent such expenses actually vary among each class of shares or vary by
types of services provided to each class of shares) in any Series:
(i) transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses,
reports, and proxies to current shareholders of such class of shares or
to regulatory agencies with respect to such class of shares;
(iii) blue sky and SEC registration or qualification fees
incurred by such class of shares;
(iv) the expenses of administrative personnel and services as
required to support the shareholders of such class of shares;
(v) litigation or other legal expenses relating solely to such
class of shares;
(vi) Trustees' fees incurred as a result of issues relating to
such class of shares; and
(vii) other expenses that are subsequently identified and
determined to be properly allocated to such class of shares.
IV. CLASS ARRANGEMENTS.
The following is a summary of the features applicable to each
class of shares for each Series. Additional details regarding such fees and
services are set forth in the Trust's current Prospectus.
A. CLASS Y SHARES
1. First Eagle Fund of America and First Eagle
International Fund:
a. Contingent Deferred Sales Charge: None.
b. Services Fees: 0.25% service fee.
c. Conversion Features: None.
<PAGE>
<PAGE>
3
d. Exchange Privileges: Subject to the restrictions
and conditions set forth in the Prospectus,
Class Y Shares may be exchanged for
Class Y Shares of any other Series.
C. CLASS C SHARES
1. First Eagle Fund of America and First Eagle
International Fund
a. Maximum Sales Charge: None.
b. Contingent Deferred Sales Charge: 1.25% for shares
redeemed within one year of purchase.
c. Rule 12b-1 Fees: 0.75%, plus a 0.25% service fee.
d. Conversion Features: None.
e. Exchange Privileges: Subject to the restrictions
and conditions set forth in the Prospectus, Class C
Shares of a Series are only exchangeable at net
asset value for Class C Shares of another
Series.
V. CONVERSION FEATURE.
A Series may issue one or more than one class of shares (each a
"Purchase Class") that may convert to another class ("Target Class") after a
specified period of time on the basis of the relative net asset value per share
of the two classes without the imposition of an additional sales load, fee, or
other charge. Shares of a Target Class will be subject to a lower distribution
expense and/or service expense, in the aggregate, than the shares of the
Purchase Class that converts to such Target Class.
The actual terms of a conversion feature would be determined on a
class by class basis. Any class of shares with a conversion feature will convert
into another class of shares on the basis of the relative net asset values of
the two classes, without the imposition of any sales load, fee, or other charge.
After a conversion, the converted shares will be subject to an asset-based sales
charge and/or service fee (as those terms are defined in the NASD rules), if
any, that in the aggregate are lower than the asset-based sales charge and
service fee to which they were subject prior to the conversion. Any conversion
feature will be subject to a determination that the conversion of shares does
not constitute a taxable event under federal tax law. Any conversion feature
adopted by a Series will be fully disclosed in the Trust's then-current
prospectus.
<PAGE>
<PAGE>
4
VI. NET ASSET VALUE.
Under the Plan, all expenses incurred by the Trust will continue
to be allocated among the various classes of shares based upon the net assets of
the Trust attributable to each class, except that shares of a particular class
will continue to bear the class expenses incurred by such class. Consequently,
the net income of, and the dividends payable with respect to, each particular
class would generally differ from the net income of, and the dividends payable
with respect to, the other classes of shares of a particular Series. Therefore,
the net asset value per share of the classes will differ at times. Expenses of a
Series allocated to a class of shares will continue to be borne on a pro rata
basis by each outstanding share of that class.
VII. ACCOUNTANTS' PROCEDURES.
The methodology and procedures for calculating the net asset
value, dividends and distributions of the classes of shares and the proper
allocation of income and expenses shall be in accordance with Rule 18f-3 under
the Investment Company Act of 1940, as amended.
VIII. COMPENSATION FOR BROKER-DEALERS AND FINANCIAL PLANNERS.
As described more fully in the Trust's Prospectuses,
broker-dealers and financial planners that sell shares of any Series will
continue to be compensated differently depending on the class of shares an
investor chooses.
IX. CONFLICTS OF INTEREST.
The Trust does not believe that the implementation of the Plan
will give rise to any conflicts of interest. The Board of Trustees will continue
to monitor, on an ongoing basis, the Trust for the existence of any material
conflicts among the interests of the holders of the various classes of shares
and will take any action reasonably necessary to eliminate any such conflicts
that may develop. The Trust also believes that the interests of the various
classes of shares as to the investment advisory fees of the Trust are the same
and not in conflict. These fees are used to compensate the Trust's investment
adviser for providing investment advisory services that are common to all
investors, regardless of the class of shares.
X. BOARD REVIEW.
The Board of Trustees of the Trust shall review this Plan as
frequently as it deems necessary. Prior to any material amendment(s) to this
Plan, the Trust's Board of Trustees, including a majority of the Trustees that
are not interested persons of the Trust, shall find that the Plan, as proposed
to be amended (including any proposed amendments to the method of allocating
class and/or Trust expenses), is in the best interest of each class of shares of
any Series individually and the Trust as a whole. In considering whether to
approve any
<PAGE>
<PAGE>
5
proposed amendment(s) to the Plan, the Trustees shall request and evaluate such
information as they consider reasonably necessary to evaluate the proposed
amendment(s) to the Plan. Such information shall address, among other issues,
the issue of whether any waivers or reimbursements of advisory or administrative
fees could be considered a cross-subsidization of one class by another.
In making its initial determination to approve this Plan, the
Board has focused on, among other things, the relationship between or among the
classes and has examined potential conflicts of interest among classes
(including those potentially involving a cross-subsidization between classes)
regarding the allocation of fees, services, waivers and reimbursements of
expenses, and voting rights. The Board has evaluated the level of services
provided to each class and the cost of those services to ensure that the
services are appropriate and the allocation of expenses is reasonable. In
approving any subsequent amendments to this Plan, the Board shall focus on and
evaluate such factors as well as any others deemed necessary by the Board.
* * *
This Plan is hereby approved by a majority of the Trustees of the
Trust, including a majority of the Trustees who are not interested persons of
the Trust (collectively, the "Trustees"). The Trustees have found that this
Plan, including the expense allocation, is in the best interests of each class
individually and the Trust as a whole. The Trustees have made this determination
after requesting and evaluating such information as may be reasonably necessary
to evaluate this Plan.
This Plan is intended to conform to Rule 18f-3 and Rule 6c-10
under the 1940 Act and any inconsistencies shall be read to conform with such
Rules.
Dated: February 27, 1998
<PAGE>
<PAGE>
POWER OF ATTORNEY
The person whose signature appears below hereby appoints John P. Arnhold, Robert
Miller and Robert Bruno and each of them, any of whom may act without the
joinder of others, as his attorney-in-fact to sign and file on his behalf
individually an in the capacity stated below such registration statements,
amendments, post-effective amendments, exhibits, applications and other
documents with the Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the public
offering of shares of the First Eagle Trust.
/s/ John P. Arnhold
____________________________________________
John P. Arnhold, Co-President and Trustee
/s/ Harold J. Levy
____________________________________________
Harold J. Levy, Co-President
/s/ Candace K. Beinecke
____________________________________________
Candace K. Beinecke, Trustee
/s/ Edwin J. Ehrlich
____________________________________________
Edwin J. Ehrlich, Trustee
/s/ K. Georg Gabriel
____________________________________________
K. Georg Gabriel, Trustee
/s/ Robert J. Gellert
____________________________________________
Robert J. Gellert, Trustee
____________________________________________
Michael M. Kellen, Trustee
/s/ William M. Kelly
____________________________________________
William M. Kelly, Trustee
/s/ Stanford S. Warshawsky
____________________________________________
Stanford S. Warshawsky, Trustee
/s/ Robert Miller
- --------------------------------------------
Robert Miller, Treasurer (Principal Financial
and Accounting Officer)
Date: February 20, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 30,646,618
<INVESTMENTS-AT-VALUE> 36,653,835
<RECEIVABLES> 181,193
<ASSETS-OTHER> 41,440
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37,640,769
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,320,559
<TOTAL-LIABILITIES> 1,320,559
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,510,248
<SHARES-COMMON-STOCK> 2,246,039
<SHARES-COMMON-PRIOR> 2,134,166
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,929,902
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,857,600
<NET-ASSETS> 36,320,210
<DIVIDEND-INCOME> 317,488
<INTEREST-INCOME> 101,045
<OTHER-INCOME> 0
<EXPENSES-NET> 678,939
<NET-INVESTMENT-INCOME> (260,406)
<REALIZED-GAINS-CURRENT> 3,161,433
<APPREC-INCREASE-CURRENT> (489,685)
<NET-CHANGE-FROM-OPS> 2,411,342
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,803,588)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 254,815
<NUMBER-OF-SHARES-REDEEMED> (197,199)
<SHARES-REINVESTED> 54,257
<NET-CHANGE-IN-ASSETS> 4,214,930
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 452,626
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 827,374
<AVERAGE-NET-ASSETS> 36,169,354
<PER-SHARE-NAV-BEGIN> 15.04
<PER-SHARE-NII> (.12)
<PER-SHARE-GAIN-APPREC> 1.25
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.13
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.17
<EXPENSE-RATIO> 2.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 204,040,968
<INVESTMENTS-AT-VALUE> 252,251,349
<RECEIVABLES> 3,773,335
<ASSETS-OTHER> 353,772
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 256,378,456
<PAYABLE-FOR-SECURITIES> 879,735
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 1,060,396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 173,892,448
<SHARES-COMMON-STOCK> 12,356,370
<SHARES-COMMON-PRIOR> 9,094,649
<ACCUMULATED-NII-CURRENT> 4,404
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 32,207,528
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 48,210,381
<NET-ASSETS> 254,438,325
<DIVIDEND-INCOME> 2,542,127
<INTEREST-INCOME> 386,996
<OTHER-INCOME> 0
<EXPENSES-NET> 3,589,306
<NET-INVESTMENT-INCOME> (660,183)
<REALIZED-GAINS-CURRENT> 49,926,578
<APPREC-INCREASE-CURRENT> 5,949,601
<NET-CHANGE-FROM-OPS> 55,215,996
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (7,243,648)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,081,544
<NUMBER-OF-SHARES-REDEEMED> (1,095,568)
<SHARES-REINVESTED> 1,275,745
<NET-CHANGE-IN-ASSETS> 91,035,478
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,672,362
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,619,064
<AVERAGE-NET-ASSETS> 216,890,599
<PER-SHARE-NAV-BEGIN> 17.97
<PER-SHARE-NII> (.06)
<PER-SHARE-GAIN-APPREC> 5.21
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.63)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.49
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
