As filed with the Securities and Exchange Commission
on or about February 28, 2000
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. 19 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 22 |X|
-------------------
FIRST EAGLE FUNDS
(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 1, 1999 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.
-------------------
<PAGE>
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 January 12, 2000.
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
FIRST EAGLE FUNDS
FIRST EAGLE FUND OF AMERICA
FIRST EAGLE INTERNATIONAL FUND
PROSPECTUS
MARCH 1, 2000
Like all mutual funds, these securities have not been approved or
disapproved by the Securities and Exchange Commission nor has the SEC
passed on the accuracy of this prospectus. It is a federal offense to
claim otherwise.
[LOGO]
<PAGE>
Welcome to First Eagle Funds (the Funds), managed by Arnhold and S.
Bleichroeder Advisers, Inc. (the Adviser), a wholly owned subsidiary
of Arnhold and S. Bleichroeder, Inc. When you read this prospectus you
will learn more about our Funds: the U.S. equity fund, First Eagle
Fund of America and the international equity fund, First Eagle
International Fund. Each Fund offers three classes of shares: a
no-load class Y, a level-load class C, and a front-end load class A.
Before you invest in a mutual fund, you need to know that all mutual
funds have common attributes:
Shares of the mutual fund can rise or fall in value.
You could make money or lose money.
There is no guarantee that a fund will achieve its
investment objective.
This prospectus tells you about our Funds. We urge you to read it very
carefully before you decide to invest and ask that you keep it for
future reference.
<PAGE>
TABLE OF CONTENTS
Page
------
The Funds 2
About First Eagle Fund of America 2
Objective and Approach 2
Related Risks 3
The Fund's Performance 4
The Fund's Fees and Expenses 6
About First Eagle International Fund 8
Objective and Approach 8
Related Risks 9
The Fund's Performance 10
The Fund's Fees and Expenses 12
Our Management Team 14
The Adviser 14
The Portfolio Managers 15
Distribution and Shareholder Services Expenses 16
About Your Investment 17
Choosing a Share Class 17
Purchasing No-load Class Y Shares 17
Purchasing Level-load Class C Shares 17
Purchasing Front-end Load Class A Shares 18
How to Purchase Shares 19
Where to Send Your Application 19
Our Automatic Investment Plan 20
How Fund Share Prices Are Calculated 20
Once You Become a Shareholder 21
Exchanging Your Shares 21
Selling Your Shares 21
How to Sell 21
Receiving Dividends and Distributions 24
Information on Dividends, Distributions and Taxes 25
General Information 25
Federal Taxes 25
Additional Information 25
Financial Highlights 27
Useful Shareholder Information (Back Cover)
<PAGE>
THE FUNDS
Let us tell you about the Funds.
ABOUT FIRST EAGLE FUND OF AMERICA
OUR U.S. EQUITY FUND
OBJECTIVE AND APPROACH
The investment objective of First Eagle Fund of America is capital
appreciation. To achieve its objective, the Fund primarily invests in
U.S. equities. At least 65% of the assets are U.S. equity securities,
including common stocks, preferred stocks, convertible securities and
warrants. Although no change is anticipated, the Fund's investment
objective can be changed without shareholder approval. If ever a
change is made, it will be done in the best interest of our
shareholders.
The Adviser uses a bottom-up, event-driven approach to choose stocks
that it believes are undervalued and should perform well. The approach
looks at companies from the perspective of total enterprise value, as
if buying the whole company. In a bottom-up approach, companies and
securities are researched and chosen individually.
Investing in stocks is actually owning part of a business. The Adviser
uses this principle of ownership to guide the selection of stocks for
the Fund.
- -------------------------------------
In an event-driven approach, the Adviser looks for companies that
appear to be undervalued in relation to their potential value in light
of positive corporate changes. Signals of corporate change can be
management changes, large share repurchases, potential acquisitions or
mergers. If changes are successful, these companies should realize a
rise in the stock price.
- -------------------------------------
2
<PAGE>
The Adviser invests in the securities of companies that it believes
are undervalued relative to their overall financial and managerial
strength. By careful selection, the Adviser believes that the Fund may
have less exposure to loss.
RELATED RISKS
Investing in First Eagle Fund of America involves various risks.
NON-DIVERSIFICATION RISK
First Eagle Fund of America is a non-diversified mutual fund. As such,
an investment in First Eagle Fund of America may expose your money to
greater risks than if you invest in a diversified fund. Because the
Fund may invest in a limited number of companies and industries, gains
or losses in a particular security may have a greater impact on its
share price.
MARKET RISK
In general, a fund's share price moves up and down over the short term
in reaction to stock market movements. This means that an investor
could lose money over short periods, and perhaps over longer periods
during extended market downturns.
EVENT-DRIVEN STYLE RISK
The event-driven investment style used by the Fund carries the
additional risk that the event anticipated occurs later than expected,
does not occur at all, or does not have the desired effect on the
market price of the securities.
3
<PAGE>
THE FUND'S PERFORMANCE
Many factors affect a fund's performance. The following bar chart and
table illustrate the potential risks of investing in the no-load class
Y shares of First Eagle Fund of America. It shows changes in the
Fund's performance from year to year for the last ten years.
CALENDAR YEAR TOTAL RETURNS CHART
FIRST EAGLE FUND OF AMERICA - CLASS Y
YEAR (NUMBERS ARE IN PERCENTAGES)
90 (17.59)
91 20.92
92 24.31
93 23.85
94 (2.60)
95 36.40
96 29.34
97 29.46
98 20.99
99 12.09
For the periods presented in the bar chart above, here is some
additional return information.
- --------------------------------------------------------------------------------
Best Quarter 16.82% Fourth Quarter 1998
Worst Quarter (13.84)% Third Quarter 1998
- --------------------------------------------------------------------------------
4
<PAGE>
The following table illustrates how the Fund's average annual returns
for different calendar periods compare to the return of the Standard &
Poor's 500 Stock Index and the Standard & Poor's Midcap 400 Index. The
Standard & Poor's 500 Stock Index is a widely recognized unmanaged
index of the stocks of 500 U.S. companies. The Standard & Poor's
Midcap 400 Index is an unmanaged measure of the mid-size company
segment of the U.S. market. The figures in the table assume that you
sold your shares at the end of each period.
AVERAGE ANNUAL TOTAL RETURN COMPARISONS TABLE
AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
1 Year 5 Years 10 Years Since inception*
- --------------------------------------------------------------------------------
First Eagle Fund of
America --
Class Y shares 12.09% 25.37% 16.56% 16.57%
Class C shares 9.85% n/a n/a 11.66%
Class A shares 6.45% n/a n/a 10.65%
Standard & Poor's
500 Stock Index 21.03% 28.55% 18.20% 16.62%
Standard & Poor's
Midcap 400 Index 13.35% 21.28% 15.12% 13.58%
- --------------------------------------------------------------------------------
* No-load class Y shares commenced investment operations in April 1987,
level-load class C shares commenced investment operations on March 2, 1998
and front-end load class A shares commenced investment operations on November
20, 1998.
Both the bar chart and table assume reinvestment of dividends and
distributions. As with all mutual funds, past performance is not
an indication of future performance.
5
<PAGE>
THE FUND'S FEES AND EXPENSES
The following table describes the fees and expenses you may pay if you
buy and hold shares of First Eagle Fund of America. The Fund offers
three classes of shares: a no-load class Y, a level-load class C, and
a front-end load class A. The difference between the share classes
goes beyond sales charges. The charges and fees you pay for all three
classes affect the returns of your investment.
Shareholder fees are paid directly from your investment. Operating
expenses are paid from First Eagle Fund of America's assets and are
paid by shareholders indirectly. The expenses in the table below are
based on figures from the fiscal year ended October 31, 1999.
- --------------------------------------------------------------------------------
Front-end
No-load Level-load load
Class Y C A
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
Maximum sales charge (load)
on purchases as a percentage
of offering price None None 5.00%
Maximum deferred sales charge
(load) as a percentage of
the lesser of your purchase
or redemption price None 1.00% None
Redemption fee None None None
Exchange fee None None None
ANNUAL OPERATING EXPENSES
Management fees 1.00% 1.00% 1.00%
Distribution (12b-1) fees None 0.75% 0.25%
Service fees 0.25% 0.25% 0.25%
Other expenses 0.14% 0.14% 0.14%*
----- ----- -----
Total annual operating expenses 1.39% 2.14% 1.64%
- --------------------------------------------------------------------------------
* Other expenses are allocated on a pro rata basis. The numbers shown are based
on the expense experience of no-load class Y and level-load class C for
fiscal 1999 which were in existence for the entire year.
6
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. This
hypothetical example shows what your expenses would be if you invested
$10,000 over the time periods indicated. We assume that you reinvest
all distributions, that the average annual return is 5%, and that
operating expenses remain the same. The example does not represent
First Eagle Fund of America's actual past or future expenses and
returns.
You would pay the following expenses if you sold your shares at the
end of the following periods:
- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
No-Load
class Y shares $142 $440 $ 761 $1,669
Level-load
class C shares $317 $670 $1,149 $2,472
Front-end load
class A shares $658 $991 $1,347 $2,346
- --------------------------------------------------------------------------------
Since only level-load class C shares have a one year contingent
deferred sales charge, you would pay the following expenses if you did
not sell your level-load class C shares at the end of the following
periods:
- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Level-load
class C shares $217 $670 $1,149 $2,472
- --------------------------------------------------------------------------------
7
<PAGE>
ABOUT FIRST EAGLE INTERNATIONAL FUND
OUR INTERNATIONAL EQUITY FUND
OBJECTIVE AND APPROACH
The investment objective of First Eagle International Fund is capital
appreciation. To achieve its objective, the Fund invests at least 65%
of its assets in equity securities issued by non-U.S. companies from
at least three different countries. Equity securities include common
stocks, preferred stocks, convertible securities, and warrants.
Although no change is anticipated, the Fund's investment objective can
be changed without shareholder approval. If ever a change is made, it
will be done in the best interest of our shareholders.
The Adviser uses a bottom-up approach to stock selection. Through
in-depth research, we seek to find sound companies and investment
opportunities wherever they exist, regardless of national boundaries.
Consideration is given to companies with a wide range of market
capitalizations. We seek to find value before the marketplace
recognizes it by applying a business owner's approach to valuation.
Investing in stocks is actually owning part of a business. The Adviser
uses this principle of ownership to guide the selection of stocks for
the Fund. The Adviser invests in companies that it believes are
undervalued relative to the issuing company's overall financial and
managerial strength. By careful selection, the Adviser believes that
the Fund may have less exposure to loss.
First Eagle International Fund may invest to a lesser extent in
currency forwards and futures contracts to manage the risks of local
currency fluctuations. The Fund generally uses these contracts to fix
the U.S. dollar
- -------------------------------------
In a bottom-up approach, securities are researched and chosen
individually.
- -------------------------------------
8
<PAGE>
value of a security that it has agreed to buy or sell. The contracts
are also used to hedge the U.S. dollar value of foreign securities
already owned, particularly if the Fund expects a decline in the value
of the foreign currency.
RELATED RISKS
Investing in First Eagle International Fund involves various risks.
FOREIGN EQUITY SECURITIES RISK
Investing in non-U.S. equity securities involves special risks
including currency exchange rate fluctuation, revaluation of
currencies, and different financial disclosure practices. In addition,
non-U.S. markets are generally less developed than the U.S. market.
Share price volatility may be greater due to political, economic, or
market instability.
NON-DIVERSIFICATION RISK
First Eagle International Fund is a non-diversified mutual fund. As
such, an investment in First Eagle International Fund may expose your
money to greater risks than if you invest in a diversified fund.
Because the Fund may invest in a limited number of companies and
industries, gains or losses in a particular security may have a
greater impact on its share price.
MARKET RISK
In general, a fund's share price moves up and down over the short term
in reaction to stock market movements. This means that an investor
could lose money over short periods, and perhaps over longer periods
during extended market downturns.
9
<PAGE>
CURRENCY FORWARDS AND FUTURES RISK
First Eagle International Fund may invest to a lesser extent in
currency forwards and futures to manage the risks of local currency
fluctuations. The success of these strategies depends upon the
Adviser's ability to predict future exchange rate differences between
foreign currencies and the U.S. dollar.
THE FUND'S PERFORMANCE
Many factors affect a fund's performance. The following bar chart and
table illustrate the potential risks of investing in no-load Class Y
shares of First Eagle International Fund only. It shows changes in the
Fund's performance from year to year since its first full year of
performance.
CALENDAR YEAR TOTAL RETURNS CHART
FIRST EAGLE INTERNATIONAL FUND - CLASS Y
YEAR (NUMBERS ARE IN PERCENTAGES)
95 11.63
96 15.92
97 9.26
98 12.95
99 16.78
For the periods presented in the bar chart above, here is some
additional return information.
- --------------------------------------------------------------------------------
Best Quarter 22.91% Fourth Quarter 1999
Worst Quarter (20.81)% Third Quarter 1998
- --------------------------------------------------------------------------------
10
<PAGE>
The following table illustrates how the Fund's average annual returns
for different calendar periods compare to the return of the Morgan
Stanley Capital International (MSCI) EAFE Index and the MSCI World
Ex-USA. The MSCI EAFE Index is a widely followed unmanaged group of
stocks from 20 international markets. The MSCI World Ex-USA is a
widely followed unmanaged group of stocks from 21 international
markets. The figures in the table assume that you sold your shares at
the end of each period.
AVERAGE ANNUAL TOTAL RETURN COMPARISONS TABLE
AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
1 Year 5 Year Since inception*
- --------------------------------------------------------------------------------
First Eagle International Fund --
Class Y shares 16.78% 13.28% 11.26%
Class C shares 14.24% n/a 9.72%
MSCI EAFE Index 26.96% 12.83% 11.87%
MSCI World Ex-USA 27.93% 13.09% 12.08%
- --------------------------------------------------------------------------------
* No-load class Y shares commenced investment operations in April 1994,
level-load class C shares commenced investment operations on March 2, 1998
and front-end load class A shares commenced investment operations on
March 11, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. As with all mutual funds, past performance is not an
indication of future performance.
11
<PAGE>
THE FUND'S FEES AND EXPENSES
The following table describes the fees and expenses you may pay if you
buy and hold shares of First Eagle International Fund. The Fund
offers three classes of shares: a no-load class Y, a level-load class
C, and a front-end load class A. The difference between the share
classes goes beyond sales charges. The charges and fees you pay for
all three classes affect the returns of your investment.
Shareholder fees are paid directly from your investment. Operating
expenses are paid from First Eagle International Fund's assets and are
paid by shareholders indirectly. The expenses in the table below are
based on figures from the fiscal year ended October 31, 1999.
- --------------------------------------------------------------------------------
Front-end
No-load Level-load load
Class Y C A
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
Maximum sales charge (load)
on purchases as a percentage
of offering price None None 5.00%
Maximum deferred sales charge
(load) as a percentage of
the lesser of your purchase
or redemption price None 1.00% None
Redemption fee (as a percentage
of the lesser of your purchase
price or the amount redeemed
within 30 days of purchase) 2.00% 2.00% 2.00%
Exchange fee None None None
ANNUAL OPERATING EXPENSES
Management fees 1.00% 1.00% 1.00%
Distribution (12b-1) fees None 0.75% 0.25%
Service fees 0.25% 0.25% 0.25%
Other expenses 1.18% 1.18% 1.18%*
----- ----- -----
Total annual operating expenses 2.43% 3.18% 2.68%
- --------------------------------------------------------------------------------
* Other expenses are allocated on a pro rata basis. The numbers shown are
based on the expense experience of no-load class Y and level-load class C
for fiscal 1999 which were in existence for the entire year.
12
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The
hypothetical example shows what your expenses would be if you invested
$10,000 over the time periods indicated. We assume that you reinvest
all distributions, that the average annual return is 5%, and that
operating expenses remain the same. The example does not represent
First Eagle International Fund's actual past or future expenses and
returns.
You would pay the following expenses if you sold your shares at the
end of the following periods:
- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
No-load
class Y shares $246 $ 758 $1,296 $2,766
Level-load
class C shares $421 $ 980 $1,664 $3,485
Front-end load
class A shares $758 $1,291 $1,849 $3,362
- --------------------------------------------------------------------------------
Since only level-load class C shares have a one year contingent
deferred sales charge, you would pay the following expenses if you did
not sell your level-load class C shares at the end of the following
periods:
- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Level-load
class C shares $321 $ 980 $1,664 $3,485
- --------------------------------------------------------------------------------
13
<PAGE>
OUR MANAGEMENT TEAM
THE ADVISER
The Adviser of First Eagle Funds is Arnhold and S. Bleichroeder
Advisers, Inc., a wholly owned subsidiary of Arnhold and S.
Bleichroeder, Inc. (ASB). ASB is the successor firm to two German
banking houses -- Gebr. Arnhold founded in Dresden in 1864 and S.
Bleichroeder founded in Berlin in 1803. The firm moved to New York
City in 1937 and conducts its activities under the current name of
Arnhold and S. Bleichroeder, Inc. ASB has used its experience and
worldwide contacts to provide asset management, global securities
research and trading, and investment banking services to institutional
clients throughout the world.
Over the years, we have always pursued superior investment
opportunities for our clients. Our goal in managing the First Eagle
Funds is to provide our fellow investors with quality long-term
returns. But these returns do not come easily. We put all of our
energy into serving investors who desire long-term growth instead of
those who desire a quick gain. Essentially, we believe that the
results of our investment style will encourage you to keep investing
with us through the years.
Our philosophy is quite simple. We base our investment decisions on a
few basic principles:
The best way to manage risk is company by company. Investing in
fundamentally sound companies should reduce investment risks and
should lead to the potential for superior returns.
Valuation is only half of the story. We look for companies that
we perceive to be undervalued and that have the potential to
grow in the future.
14
<PAGE>
We think like business owners. Instead of concentrating on the
earnings (price to earnings ratio) of a company, we scrutinize
the whole company and examine its cash flow as though we were
actually buying the business.
These simple guiding principles have led to the past success of our
Funds and the past success of our shareholders. Nothing is possible,
though, without tireless research. Our company continues research long
after we make our initial investment. We continually search for the
best opportunities and select what we believe to be the most promising
companies.
The Adviser is responsible for the continuous supervision and
management of the Funds under the direction of the Board of Trustees.
Each Fund pays the Adviser a monthly fee at the annual rate of 1.00%
of its average daily net assets for its advisory services.
THE PORTFOLIO MANAGERS
Harold J. Levy has been portfolio manager of First Eagle Fund of
America since its inception in April 1987, and David L. Cohen has been
portfolio manager of First Eagle Fund of America since 1989. Mr. Levy
and Mr. Cohen are also the principal owners of Iridian Asset
Management LLC, which they formed in November 1995. ASB owns 27.5% of
Iridian. Mr. Levy began his career at ASB in 1985, and Mr. Cohen began
his career at ASB in 1989. Currently, they are employed by the Adviser
to serve as co-portfolio managers for First Eagle Fund of America.
15
<PAGE>
Arthur F. Lerner has been the portfolio manager of First Eagle
International Fund since its inception in April 1994. He is a Senior
Vice President of Arnhold and S. Bleichroeder, Inc. and has been with
the firm since 1969.
DISTRIBUTION AND SHAREHOLDER
SERVICES EXPENSES
Arnhold and S. Bleichroeder, Inc. is the distributor of the Funds. For
providing shareholder and administrative services, ASB receives a
service fee as compensation.
To pay for the cost of promoting the Funds and servicing your
shareholder account, level-load class C and front-end load class A
shares of the Funds have adopted a Rule 12b-1 plan which requires fees
to be paid out of the assets of each class. Over time, the fees will
increase your cost of investing and may cost you more than paying
other types of sales charges. Other broker-dealers who sell the Funds'
shares may receive a portion of this fee as compensation for services
they provide. The following table shows the distribution and service
fees associated with investing in each class of shares.
FIRST EAGLE FUND OF AMERICA AND
FIRST EAGLE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
Distribution Fee (12b-1) Service Fee
- --------------------------------------------------------------------------------
No-load class Y None 0.25%
Level-load class C 0.75% 0.25%
Front-end load class A 0.25% 0.25%
- --------------------------------------------------------------------------------
16
<PAGE>
ABOUT YOUR INVESTMENT
Investing well requires a plan. Whether you invest on your own or use
the services of a financial professional, you should create a strategy
that will best meet your financial goals over the longer term.
CHOOSING A SHARE CLASS
The following section describes the share classes in greater detail.
Please read it carefully to decide which class is best for you.
PURCHASING NO-LOAD CLASS Y SHARES
IF YOU INVEST ON YOUR OWN OR SEEK PROFESSIONAL GUIDANCE
You can purchase no-load class Y shares directly from us or through an
investment professional. An investment professional can purchase class
Y shares for you, and you may have to pay a fee to compensate the
professional if you choose to seek advice. Our class Y shares have no
sales charges or distribution fees, but do have an annual 0.25%
service fee. We issue your shares at net asset value after we receive
your initial investment and completed application. Class Y shares are
also available through 401(k) plans.
PURCHASING LEVEL-LOAD CLASS C SHARES
IF YOU SEEK PROFESSIONAL GUIDANCE
You can purchase level-load class C shares at net asset value through
an investment professional. The shares carry an annual 0.25% service
fee and an annual 0.75% Rule 12b-1 fee. You do not have to pay sales
charges on class C shares. However, you may pay a contingent deferred
sales charge (CDSC) equal to 1% of the original purchase price or the
current market value, whichever is lower, if you sell your shares
within the first year of purchase. Class C shares are also available
through 401(k) plans.
Investors purchasing Class C shares in connection with participant
directed retirement plans, such as 401(k) plans, will not be subject
to a 1% contingent deferred sales charge. Distributors of shares of
the funds are normally paid an initial 1% fee on the sale of Class C
shares. Distributors of Class C shares that are not subject to a 1%
contingent deferred sales charge will be paid the distribution fee and
the service fee on a quarterly basis.
17
<PAGE>
PURCHASING FRONT-END LOAD CLASS A SHARES
IF YOU SEEK PROFESSIONAL GUIDANCE
You can purchase front-end load class A shares through an investment
professional at net asset value plus an initial sales charge as shown
in the table below. Class A shares also carry an annual 0.25% service
fee and an annual 0.25% Rule 12b-1 fee.
- --------------------------------------------------------------------------------
Sales Charge as a % of
Class A Shares ---------------------- Dealer Allowance
Dollars Offering Net Amount as a % of
Invested Price Invested Offering Price
- --------------------------------------------------------------------------------
Less than $50,000 5.00% 5.26% 4.50%
$50,000 but
less than $100,000 4.50 4.71 4.00
$100,000 but
less than $250,000 3.75 3.90 3.25
$250,000 but
less than $500,000 2.75 2.83 2.50
$500,000 but
less than $1,000,000 1.75 1.78 1.50
$1,000,000
or more None None None
- --------------------------------------------------------------------------------
Class A shares are also available through 401(k) plans, other
qualified employee benefit plans and broker-dealer wrap programs.
These purchases are free of sales charges. You may also qualify for a
quantity discount (the total of your investments in class A shares of
both Funds) on each new purchase of class A shares. Ask your
investment professional to see if you qualify.
YOU MAY BE ELIGIBLE FOR A DISCOUNT
You can receive a quantity discount without purchasing your shares all
at once. If you intend to purchase a large dollar amount over a
13-month period to qualify for a discount, you can complete a "letter
of intent" form. Once we receive the letter, we will give you the
discount and place any purchases you make into escrow until you have
purchased the intended quantity.
If you do not make the required purchase within the 13-month time
frame, we will deduct any sales charges from the escrow shares.
ASB, the distributor may waive the front-end sales charge for
investors who are purchasing class A shares with the proceeds from the
redemption of another "load" mutual fund made within 60 days of the
purchase. The investor or the investor's broker or financial
institution placing the trade must notify ASB at the time the order to
purchase Class A shares is made and must provide a copy of the
investor's prior load fund account statement showing the redemption.
18
<PAGE>
DEALER REALLOWANCE
ASB, the distributor, normally pays broker-dealers 4.50% of the 5.00%
maximum sales charge. At times, ASB reallows broker-dealers the full
portion of the sales charge.
Shares of the various classes of the Funds may be offered outside the
United States. These shares may be subject to different sales charges.
HOW TO PURCHASE SHARES
You can make an investment in the Funds on any Business Day. A
Business Day is any day the New York Stock Exchange (NYSE) is open for
trading. The NYSE is closed for trading on New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. Purchase
orders received in good order are executed at the next calculated net
asset value. Incomplete orders and orders that are not paid for in a
timely manner are returned. Your investments are subject to the
minimums described in the table below.
- --------------------------------------------------------------------------------
Minimum Investment Initial Additional
- --------------------------------------------------------------------------------
Regular accounts $1,000 $100
IRAs $ 500 No minimum
Retirement plans, such as 401(k) $ 500 No minimum
Employment of Arnhold and
S. Bleichroeder, Inc. $ 500 No minimum
- --------------------------------------------------------------------------------
WHERE TO SEND YOUR APPLICATION
If you are purchasing no-load class Y shares, send your completed
application and your check or money order to the address listed on the
application. If you wish to purchase your shares and pay for them
through a federal funds wire, fax your application to the Funds'
transfer
19
<PAGE>
agent at (614) 470-8702 and call our transfer agent at (800) 451-3623
to place your wire order. If you are purchasing level-load class C or
front-end load class A shares, give your purchase request and your
check or money order to your investment professional.
OUR AUTOMATIC INVESTMENT PLAN
If you are investing directly with the Funds, additional investments
can also be made using our Automatic Investment Plan, which deducts
the amount you designate directly from your checking or savings
account. See the "Optional Shareholder Privileges" section on the
application or you can call (800) 451-3623 to obtain more information
on this service.
HOW FUND SHARE PRICES ARE CALCULATED
Net asset value for each share class is determined 15 minutes after
the close of trading on the NYSE (normally 4:00 p.m. Eastern Time).
For front-end load class A shares, the net asset value plus any
front-end sales charge equals the offering price.
First Eagle Funds uses market quotes to price their securities.
Non-U.S. securities are valued based on quotes from their primary
trading market and converted into U.S. dollars. Securities that are
otherwise not readily marketable, are restricted as to resale, or for
which market quotations are not readily available, are valued at fair
value under procedures adopted by the Board of Trustees.
Portfolio securities of the Funds that are traded on non-U.S. stock
exchanges may trade on weekends and
- -------------------------------------
Net Asset Value = A Fund's total assets
less any liabilities [div] shares outstanding
- -------------------------------------
20
<PAGE>
holidays when the Funds' net asset values are not calculated and when
shares of the Funds cannot be purchased or redeemed.
ONCE YOU BECOME
A SHAREHOLDER
After you have opened an account with us, you can exchange or sell
your shares to meet your changing investment goals or other needs.
EXCHANGING YOUR SHARES
You can exchange your shares in any class of one Fund for shares of
the same class in the other Fund. Exchanges are made at net asset
value for each class and are free of charge. You can make up to six
exchanges in any 12-month period.
SELLING YOUR SHARES
You can access your investment at any time by selling your shares on
any Business Day.
HOW TO SELL
WRITTEN REQUESTS
To sell your shares, please submit a written request to the Funds'
transfer agent or to your investment professional and sign it exactly
as the account is registered.
New shareholders do not receive share certificates. However, if you
already have a certificate, sign it and return it to the transfer
agent. Remember that there needs to be a signature for every name that
appears on the certificate.
21
<PAGE>
In some instances, a signature guarantee may be required. These
include:
Redemption payments over $25,000.
Redemption payments sent to addresses different
from the one we have on record.
Changes in registration.
We reserve the right to change the guarantee requirements from time to
time. A signature guarantee must be from a member of the Signature
Guarantee Medallion Program (generally, a bank, trust company, savings
and loan association or any broker or securities dealer) for each
person whose name is on the account.
If a corporation, partnership, trust, or fiduciary owns the
certificate, written evidence of their authority must be submitted.
TELEPHONE REQUESTS
You can also request to sell your shares by telephone by calling (800)
451-3623 on any Business Day. For security purposes we will ask you to
provide proper identification and to verify account information before
we can honor your telephone request.
We employ reasonable procedures to confirm that all telephone requests
are genuine, but neither the Funds nor the transfer agent are
responsible for the authenticity of these requests. Therefore, you
will have to bear any loss due to telephone requests made in your
name. Telephone calls may be recorded for your protection.
DETERMINING YOUR SELLING PRICE
After we receive your request, we will sell your shares at the next
determined net asset value. If you are selling shares that you have
recently purchased by check or by using the Automatic Investment Plan,
we will hold the proceeds of your sale until your payment clears. This
may take up to ten Business Days.
22
<PAGE>
SALES PROCEEDS
We normally mail proceeds for shares you have sold to the address we
have on record. We mail checks within seven days after we receive your
request.
If your sales proceeds exceed $5,000, you can choose to have them
deposited into a bank account through a federal funds wire. You can
indicate this option on your application. Or, you can submit a
signature guaranteed written request at a later date. You may,
however, have to pay a fee if you use the federal funds wire feature
and you will have to pay a fee if you request overnight delivery of
your sales proceeds. We normally wire payments on the next business
day after we receive your request.
The Funds may suspend payments under certain emergency conditions when
allowed by the SEC.
FIRST EAGLE INTERNATIONAL FUND'S REDEMPTION FEE
First Eagle International Fund is not designed for short-term traders
whose frequent purchases and redemptions can generate substantial
purchases and sales of portfolio investments that can unnecessarily
disrupt the Fund's investment program. Short-term traders often redeem
when the market is most turbulent, thereby forcing the sale of
portfolio securities held by the Fund at the worst possible time as
far as long-term investors are concerned. These short-term
transactions affect all shareholders by increasing transaction costs.
Because of this, if you sell First Eagle International Fund shares
within one month of purchase, you will pay a 2% redemption fee on the
lesser of your purchase price or the amount redeemed. This fee applies
to all three share classes of First Eagle International Fund. The
redemption fee is retained by the Fund.
Shares purchased through 401(k) plans are excluded from the redemption
fees.
23
<PAGE>
REDEMPTIONS IN KIND
The Funds normally pay sales proceeds in cash up to $250,000 or 1% of
each Fund's total value, whichever is less. We reserve the right to
make higher redemption payments to you in the form of marketable
securities. This is called a "redemption in kind." You will pay any
applicable sales charge or other fees when you sell these securities.
INVOLUNTARY SALE
To reduce expenses, we may sell your shares and close your account if
the value of your account falls below $500. We will give you 60 days'
notice before we sell your shares. This gives you an opportunity to
purchase enough shares to raise your account value to the $500 minimum
to avoid closing the account.
RECEIVING DIVIDENDS AND DISTRIBUTIONS
We expect to pay dividends and distribute any net capital gains
annually. Because First Eagle Funds invest primarily in equity
securities and with a long-term outlook, generally there are more
capital gains distributions than investment income dividend
distributions.
All dividend and distribution payments are reinvested at the net asset
value of the Fund in which you currently hold shares, unless you elect
to receive distributions in cash. To receive a distribution in cash,
simply submit a written request more than five business days before we
make the payment. We may elect to make distributions more frequently.
24
<PAGE>
INFORMATION ON DIVIDENDS
DISTRIBUTIONS AND TAXES
Tax issues can be complicated. Please consult your tax adviser about
federal, state, or local tax consequences or with any other tax
questions you may have.
GENERAL INFORMATION
The Funds may make both dividend and capital gains distributions. Both
dividends and short-term capital gains distributions are taxed as
ordinary income and are subject to a maximum federal rate of 39.6% for
individual shareholders. Long-term capital gains distributions are
taxed at a maximum rate of 20%.
Dividends and distributions are generally taxable whether they are
taken in cash or reinvested. Any dividends and distributions declared
in November or December and paid in January are taxable as though they
were paid on December 31st.
Remember that exchanges of Fund shares are considered sales and any
gains may be taxable.
FEDERAL TAXES
Federal tax laws require us to withhold 31% of ordinary income
dividends, capital gain dividends, and sales proceeds from
shareholders who do not furnish their tax identification numbers on
IRS form W-9 or form W-8 for non-U.S. investors.
ADDITIONAL INFORMATION
By January 31st of each year, we will mail you a statement showing the
tax status of your dividends and distributions for the prior year.
- -------------------------------------
A dividend is a payment of net
investment income. A distribution is the
payment of capital gains.
- -------------------------------------
25
<PAGE>
There may be tax consequences for shareholders who are nonresident
aliens or foreign entities. Please see the SAI for more information.
No 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 Funds, the Adviser or the Distributor.
This prospectus does not constitute an offer to sell, or a
solicitation of any offer to buy, any of the securities of the Funds
in any jurisdiction to any person to whom it is unlawful to make such
offer in such jurisdiction.
- -------------------------------------
When you sell your shares, your tax
basis is the total of your cash
investments plus dividends and
distributions that have been reinvested,
less any return of capital.
- -------------------------------------
26
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables are intended to help you understand the Funds'
financial performance for the past five years. The information has
been audited by KPMG LLP, whose report concerning these highlights
appears in the Annual Report dated October 31, 1999. This information
should be read in conjunction with the Statement of Additional
Information (SAI), which is available on request. Through February 28,
1998, the Funds issued only one class of shares, currently called
class Y shares. Class C shares commenced investment operations on
March 2, 1998. Class A shares commenced investment operations on
November 20, 1998 for First Eagle Fund of America and on March 11,
1999 for First Eagle International Fund. Remember that past
performance is not an indication of future performance.
27
<PAGE>
FIRST EAGLE FUND OF AMERICA
Fund of America Class Y Shares
<TABLE>
<CAPTION>
For the year ended October 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $21.53 $20.59 $17.97 $16.28 $15.45
Income from investment operations
Net investment income (loss) 0.07 (0.08) (0.06) (0.04) (0.04)
Net realized and unrealized gain 2.45 3.62 5.31 4.08 2.87
------ ------ ------ ------ ------
Total from investment operations 2.52 3.54 5.25 4.04 2.83
------ ------ ------ ------ ------
Less distributions from:
Net investment income -- -- -- -- --
Net realized gain (3.59) (2.60) (2.63) (2.35) (2.00)
------ ------ ------ ------ ------
Total distributions (3.59) (2.60) (2.63) (2.35) (2.00)
------ ------ ------ ------ ------
Net asset value, end of year $20.46 $21.53 $20.59 $17.97 $16.28
====== ====== ====== ====== ======
Total Return* 12.1% 19.2% 31.0% 27.1% 21.6%
Net assets, end of year $536,157,945 $391,797,350 $254,438,325 $163,402,847 $134,350,180
Ratios to Average Net Assets:
Expenses(1) 1.4% 1.5% 1.7% 1.8% 1.9%
Net investment income (loss) 0.3% (0.4)% (0.3)% (0.2)% (0.3)%
Portfolio turnover rate 89% 83% 98% 93% 81%
</TABLE>
* Past performance is not predictive of future performance.
(1) For the years ended October 31, 1999 and 1998, the Fund earned credits
from the custodian which reduced service fees incurred. If the credits
were taken into consideration, the ratio of expenses to average net
assets would have been 1.4% and 1.5% respectively.
<TABLE>
<CAPTION>
Fund of America Class C Shares Class A Shares
----------------------------------------- -------------------
For the year ended March 2, 1998** November 20, 1998**
October 31, through Oct. 31, through October 31,
1999 1998 1999
---- ---- ----
<S> <C> <C> <C>
Net asset value, beginning of year $ 21.43 $ 21.07 $ 20.33
Income from investment operations
Net investment loss (0.20) (0.16) (0.09)
Net realized and unrealized gain 2.54 0.52 1.93
----------- -------- ----------
Total from investment operations 2.34 0.36 1.84
----------- -------- ----------
Less distributions from:
Net investment income -- -- --
Net realized gain (3.59) -- (1.75)
----------- -------- ----------
Total distributions (3.59) -- (1.75)
----------- -------- ----------
Net asset value, end of year $ 20.18 $ 21.43 $ 20.42
=========== ======== ==========
Total Return* 11.2% 1.7%++ 8.6%++
Net assets, end of year $19,601,461 $674,944 $1,670,284
Ratios to Average Net Assets:
Expenses 2.1%(A) 2.2%+(A) 1.6%+(B)
Net investment loss (0.9)% (1.1)%+ (0.4)%+
Portfolio turnover rate 89% 83% 89%
</TABLE>
* Past performance is not predictive of future performance.
** Commencement of investment operations
+ Annualized
++ Total return not annualized
(A) For the year ended October 31, 1999 and for the period from March 2, 1998
to October 31, 1998, the Fund earned credits from the custodian which
reduced service fees incurred. If the credits were taken into
consideration, the ratio of expenses to average net assets would have
been 2.1% and 2.2%+.
(B) For the period from November 20, 1998 to October 31, 1999, the Fund
earned credits from the custodian which reduced service fees incurred. If
the credits were taken into consideration, the ratio of expenses to
average net assets would have been 1.6%+.
28
<PAGE>
International Fund Class Y shares
<TABLE>
<CAPTION>
For the
period
from April 4,
For the year ended January 1, For the year ended 1994**
October 31, thru December 31, through
--------------------------- October 31, --------------------------- December 31,
1999 1998 1997 1996 1995 1994
------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $16.09 $16.17 $15.04 $13.38 $12.37 $12.50
Income from investment operations
Net investment loss (0.17) (0.06) (0.12) (0.16) (0.13) (0.02)
Net realized and unrealized
gain (loss) 1.60 0.95 1.25 2.29 1.57 (0.11)
------ ------ ------ ------ ------ -----
Total from investment
operations 1.43 0.89 1.13 2.13 1.44 (0.13)
------ ------ ------ ------ ------ -----
Less distributions
Dividends (from net investment
income) -- -- -- -- -- --
Distributions (from capital
gains) (1.34) (0.97) -- (0.47) (0.43) --
------ ------ ------ ------ ------ -----
Total distributions (1.34) (0.97) -- (0.47) (0.43) --
------ ------ ------ ------ ------ -----
Net asset value, end of year $16.18 $16.09 $16.17 $15.04 $13.38 $12.37
====== ====== ====== ====== ====== ======
Total Return* 9.4% 5.8% 7.5%++ 15.9% 11.6% (1.0)%++
Net assets, end of year $34,781,555 $38,222,433 $36,320,210 $32,105,280 $22,420,889 $20,152,024
Ratios to Average Net Assets:
Expenses(1) 2.4% 2.4% 2.3%+ 2.9% 3.1% 2.0%+
Net investment loss (1.1)% (0.5)% (1.0)%+ (1.1)% (1.1)% (0.3)%+
Portfolio turnover rate 87% 85% 54% 101% 166% 170%
</TABLE>
* Past performance is not predictive of future performance.
** Commencement of investment operations
+ Annualized
++ Total return not annualized
(1) For the years ended October 31, 1999 and 1998 the Fund earned credits
from the custodian which reduced service fees incurred. If the credits
were taken into consideration the expense ratios would have been 2.4% and
2.3%, respectively.
<TABLE>
<CAPTION>
International Fund Class C shares Class A shares
-------------------------------------- ----------------
For the March 2, 1998** March 11, 1999**
year ended through through
October 31, October 31, October 31,
1999 1998 1999
-------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of year $ 16.01 $ 16.90 $ 15.06
Income from investment operations
Net investment (loss) income (0.29) 0.84 (0.15)
Net realized and unrealized gain (loss) 1.57 (1.73) 1.24
-------- -------- -------
Total from investment operations 1.28 (0.89) 1.09
-------- -------- -------
Less distributions
Dividends (from net investment income) -- -- --
Distributions (from capital gains) (1.34) -- --
-------- -------- -------
Total distributions (1.34) -- --
-------- -------- -------
Net asset value, end of year $ 15.95 $ 16.01 $ 16.15
======== ======== =======
Total Return* 8.4% (5.3)%++ 7.2%++
Net assets, end of year $745,850 $307,738 $72,305
Ratios to Average Net Assets:
Expenses 3.2%(A) 2.9%+(A) 2.7%+(B)
Net investment (loss)/income (1.9)%+ 7.0%+ (1.6)%+
Portfolio turnover rate 87% 85% 87%
</TABLE>
* Past performance is not predictive of future performance.
** Commencement of investment operations
+ Annualized
++ Total return not annualized
(A) For the year ended October 31, 1999 and for the period from March 2, 1998
to October 31, 1998, the Fund earned credits from the custodian which
reduced service fees incurred. If the credits were taken into
consideration the ratio of expenses to average net assets would have been
3.1% and 2.8%+, respectively.
(B) For the period from March 11, 1999 to October 31, 1999, the Fund earned
credits from the custodian which reduced service fees incurred. If the
credits were taken into consideration the ratio of expenses to average
net assets would have been 2.7%+.
29
<PAGE>
USEFUL SHAREHOLDER INFORMATION
How to Obtain Our Shareholder Reports
We will send you copies of our Annual and Semi-annual Reports on a regular basis
once you become a shareholder. The Annual Report contains a discussion of the
market conditions and investment strategies that significantly affected the
Funds' performance during the last fiscal year. It also contains audited
financial statements by the Funds' independent accountants.
How to Obtain Our Statement of Additional Information
The Statement of Additional Information (SAI), which is referenced in this
prospectus is available to you without charge from us. You may visit the SEC's
Internet Website (http://www.sec.gov) to view the SAI and other information.
Also, you can obtain copies of the SAI by sending your request and fee to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. You also may review
and copy information about the Funds, including the SAI, at the SEC's Public
Reference Room in Washington, D.C. To find out more about the public reference
room, call the SEC at 1-800-SEC-0330.
How to Reach First Eagle Funds
You can send all requests for information or transactions to:
First Eagle Funds
P.O. Box 182497
Columbus, OH 43218-2497
You can contact us by telephone at (800) 451-3623.
You can also reach us for any reason by visiting our website at:
http://www.firsteaglefunds.com
Distributor Investment Adviser
Arnhold and S. Bleichroeder, Inc. Arnhold and S. Bleichroeder Advisers, Inc.
1345 Avenue of the Americas 1345 Avenue of the Americas
New York, NY 10105 New York, NY 10105
Investment Company Act File Number: 811-04935
<PAGE>
FIRST EAGLE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH 1, 2000
FIRST EAGLE FUNDS (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, the Adviser's and the Distributor's address is 1345 Avenue of
the Americas, New York, New York 10105. The Trust's 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, in at least three different countries.
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, 1999, 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.
All documents incorporated by reference herein have been previously filed
with other shareholder reports which are available, without charge, upon request
at (800) 451-3623.
------------------------
<PAGE>
TABLE OF CONTENTS PAGE
----------------- ----
Organization and History.................................................... 2
Additional Investment Information........................................... 2
Investment Restrictions..................................................... 11
Trustees, Officers, and Principal Stockholders.............................. 13
Adviser..................................................................... 16
Distributor................................................................. 17
Portfolio Transactions and Brokerage........................................ 17
Net Asset Value............................................................. 20
Stockholder Investment Account.............................................. 20
Redemptions................................................................. 21
Tax Treatment of Certain Transactions....................................... 24
Performance Information..................................................... 26
Custodian, Transfer and Dividend Disbursing Agent and Independent Auditors.. 26
First Eagle Fund of America Investment Portfolio............................ F-1
First Eagle International Fund Investment Portfolio......................... F-5
Financial Statements........................................................ F-8
<PAGE>
ORGANIZATION AND HISTORY
First Eagle Fund of America was initially incorporated in Maryland on
December 11, 1986. First Eagle International Fund was initially 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 Board of Trustees of
the Trust approved changing the name of the Trust name from 'First Eagle Trust'
to 'First Eagle Funds' on February 23, 1999. The Trust may have multiple series
and classes of shares. First Eagle Fund of America and First Eagle International
Fund were reorganized and 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 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. First Eagle Fund of America may under certain circumstances invest in
securities issued by other investment companies. If First Eagle Fund of America
invests in such securities, investors may be subject to duplicate investment
management or distribution fees.
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.
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.
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
2
<PAGE>
securities exchanges, brokers and listed companies abroad than in the United
States. Settlement of securities traded on foreign markets often takes longer
than on U.S. markets. In some foreign countries, there is a possibility of
expropriation, confiscatory taxation or diplomatic developments which could
affect investments in those countries. To attempt to limit the risks of
investing in foreign securities, the Fund may use hedging techniques. 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.
DEBT SECURITIES
The Funds may invest in debt securities without regard to credit ratings.
Investing in debt securities involves other risks including interest rate and
credit risks. Interest rate risk is the risk that a rise in interest rates will
cause the value of the debt securities to go down. Credit rate risk is the risk
that the issuer of a debt security will not be able to make principal and
interest rate payments.
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. 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.
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
3
<PAGE>
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
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 ultimately intends 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.
4
<PAGE>
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 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 a securities exchange or on the 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
5
<PAGE>
the close of trading on the date the exercise notice is filed with the Options
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.
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
6
<PAGE>
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 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.
7
<PAGE>
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 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
8
<PAGE>
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 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.
ILLIQUID 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.
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.
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
9
<PAGE>
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 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.
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
10
<PAGE>
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.
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
11
<PAGE>
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.
In connection with offering the shares of First Eagle Fund of America and
First Eagle International Fund (the 'Funds') in Japan, each of the Funds have
agreed to comply with the following additional investment restrictions:
13. The assets of the Fund will not be used for short sales of
securities.
14. Borrowing is prohibited if such will result in an aggregate amount
of borrowing outstanding in excess of 10% of the total assets of the Fund,
but in the case of a merger, amalgamation or the like, this 10% may be
temporarily exceeded.
15. More than 10% of the assets of the Fund must not be invested in
the shares of stock of any one issuer.
16. More than 10% of the total issued and outstanding shares of stock
of any one company will not be acquired. If several funds are managed by
the same management company, the funds as a group will not acquire more
than 15% of the issued and outstanding shares of stock of any one company.
17. More than 10% of the assets of the Fund will not be invested in
other investment fund securities, but this rule does not prevent the Fund
from holding other investment fund securities temporarily as a result of a
merger, amalgamation or the like.
18. More than 10% of the assets of the Fund will not be invested in
shares of stock privately placed, mortgage securities or unlisted shares of
stock, which cannot be readily realized.
19. The assets dominated in yen will be less than 50% of the assets of
the Fund.
20. More than 50% of the assets of the Fund will be those instruments
which are defined as 'securities' under the Securities and Exchange Law of
Japan.
21. Portfolio securities of the Fund may not be purchased from or sold
or loaned to any Trustee of the Fund, the investment adviser of the Fund,
or any affiliate thereof or any of their directors, officers, employees or
major shareholders (meaning a shareholder who holds shares on his own
account, whether in his own or in another's name (as well as a nominee's
name)) unless the transaction is made within the investment restrictions
set forth in the Fund's prospectus and statement of additional information
and either (i) at a price determined by current publicly available
quotations or (ii) at competitive prices or interest rates prevailing from
time to time on internationally recognized securities markets or
internationally recognized money markets.
12
<PAGE>
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.
<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.; Co-President and Director,
Arnhold and S. Bleichroeder Advisers, Inc.;
President and Director, Arnhold and S.
Bleichroeder UK Ltd.; Co-President and Director,
ASB Securities, Inc.; Director, Aquila
International Fund, Ltd.; President, WorldVest,
Inc.; Co-President and Director, First Eagle SoGen
Funds, Inc. and First Eagle SoGen Variable Funds,
Inc.
Candace K. Beinecke ................. Trustee Chair, Hughes Hubbard & Reed; Director, Jacob's
One Battery Park Plaza Pillow Dance Festival, Inc., and Merce Cunningham
New York, NY 10004 Dance Foundation, Inc.; Director, First Eagle
SoGen Funds, Inc. and First Eagle SoGen Variable
Funds, 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; Director,
First Eagle SoGen Funds, Inc. and First Eagle
SoGen Variable Funds, Inc.
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; Director, First Eagle
New York, NY 10168 SoGen Funds, Inc. and First Eagle SoGen Variable
Funds, Inc.
James E. Jordan ..................... Trustee Private investor; Consultant to The Jordan Company
767 Fifth Avenue (private investment banking company); until June
New York, NY 10153 1997, President and Chief Investment Officer of
The William Penn Company (a registered investment
adviser); Director, Leucadia National Corporation,
Empire Insurance Company and J.Z. Equity Partners,
Plc. (a British investment trust company);
Director, School of International and Public
Affairs of Columbia University; and Vice Chairman,
New York State Board of The Nature Conservancy;
Director, First Eagle SoGen Funds, Inc. and First
Eagle SoGen Variable Funds, Inc.
William M. Kelly .................... Trustee Senior Associate, Lingold Associates; Independent
500 Fifth Avenue - 50th Floor General Partner, ML Venture Partners II, L.P.;
New York, NY 10110 Trustee, New York Foundation; Treasurer and Trustee,
Black Rock Forest Conservation; Director, First Eagle
SoGen Funds, Inc. and First Eagle SoGen Variable
Funds, Inc.
</TABLE>
(table continued on next page)
13
<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>
*Stanford S. Warshawsky.............. Trustee and Chairman Co-President, Secretary and Director, Arnhold and
of the Board S. Bleichroeder, Inc.; Co-President and Director,
Arnhold and S. Bleichroeder Advisers, Inc.;
Chairman and Director, Arnhold and S. Bleichroeder
UK Ltd.; Co-President and Director, ASB
Securities, Inc.; Director, German-American
Chamber of Commerce; Chairman and Director, First
Eagle SoGen Funds, Inc. and First Eagle SoGen
Variable Funds, Inc.
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
David L. Cohen....................... Senior Vice 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.
Arthur F. Lerner..................... Senior Vice President Senior Vice President, Arnhold and S. Bleichroeder,
Inc.; Portfolio Manager, Arnhold and S. Bleichroeder
Advisers, Inc.;
Robert Miller........................ Treasurer Senior Vice President and Director, Arnhold and S.
Bleichroeder, Inc.; Vice President, Secretary and
Treasurer, Arnhold and S. Bleichroeder Advisers, Inc.;
and Director, Arnhold and S. Bleichroeder UK Ltd.
Robert Bruno......................... Vice President and Senior Vice President, Arnhold and S. Bleichroeder,
Secretary Inc.; Vice President, Arnhold and S. Bleichroeder
Advisers, Inc.; prior to 1997, President and
Chief Operating Officer, Coelho Associates LLC;
Senior Vice President, Schroder Wertheim
Investment Services, Inc.; and Vice President,
Secretary and Treasurer, First Eagle SoGen Funds,
Inc. and First Eagle SoGen Variable Funds, Inc.
Tracy LaPointe Saltwick.............. Vice President and Senior Vice President, Arnhold and S.
Compliance Officer Bleichroeder, Inc.; Vice President ASB Securities
Inc.; Vice President and Compliance
Officer, First Eagle SoGen Funds, Inc. and First
Eagle SoGen Variable Funds, Inc.
Cari Levine.......................... Assistant Treasurer Assistant Vice President, Arnhold and S.
Bleichroeder, Inc.; Assistant Secretary, First
Eagle SoGen Funds, Inc. and First Eagle SoGen
Variable Funds, Inc.
Suzan J. Afifi....................... Assistant Secretary Assistant Vice President, Arnhold and S.
Bleichroeder, Inc. since 1997; prior thereto,
Managing Director, Effectinvest Bank, Vienna,
Austria; Assistant Secretary, First Eagle SoGen
Funds, Inc. and First Eagle SoGen Variable Funds,
Inc.
</TABLE>
14
<PAGE>
- ------------
* '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.
The Trust paid each of its Trustees who are not interested persons an
annual retainer of $8,000 plus $750 per meeting of the Board and $500 per
meeting of a Committee 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 and First Eagle International Fund for its most recently completed
fiscal year ended October 31, 1999. 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.
<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........................................ 4,125 5,750 9,875
Edwin J. Ehrlich........................................... 4,750 6,125 10,875
K. Georg Gabriel........................................... 6,000 6,125 12,125
Robert J. Gellert.......................................... 5,500 6,375 11,875
James E. Jordan............................................ 1,750 1,750 3,500
Michael M. Kellen*......................................... 0 0 0
William M. Kelly........................................... 5,250 6,125 11,375
Stanford S. Warshawsky*.................................... 0 0 0
</TABLE>
*Interested trustee.
As of December 31, 1999, the Trustees and officers of First Eagle Fund of
America, as a group, owned beneficially approximately 1,669,648 shares or
6.24% 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 346,622 shares or 14.69% of the outstanding common stock of
First Eagle International Fund.
As of December 31, 1999, Arnhold and S. Bleichroeder, Inc. Profit Sharing
Plan, 1345 Avenue of the Americas, New York, NY 10105, owned beneficially and of
record approximately 10.74% of First Eagle International Fund's outstanding
Class Y shares.
15
<PAGE>
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.
As of December 31, 1999, the following shareholders owned 5% or more of the
Funds securities:
First Eagle Fund of America
Class Y: Charles Schwab & Co., Inc., 101 Montgomery St., San
Francisco, CA 94104, 18.5%; National Financial Services Corp., 200
Liberty Street, New York, NY 10281, 6.9%.
Class A: Raymond James Assoc. Inc., 105 Meriden Dr., Hockessin,
DE 19707, 8.3%; Jyujiya Securities Co., Ltd., Chuo Ku, Tokyo, Japan
103-0-025, 7.4%.
First Eagle International Fund
Class Y: Arnhold and S. Bleichroeder, Inc., 1345 Avenue of the
Americas, New York, NY 10005, 16.7%.
Class C: Arnhold and S. Bleichroeder, Inc., 1345 Avenue of the
Americas, New York, NY 10105, 21.2%; Cowen Co., Financial Square, New
York, NY 10005, 7.0%.
Class A: Jyujiya Securities Co., Ltd., Chuo Ku, Tokyo, Japan
103-0-025, 91.8%.
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, 1999,
1998 and 1997, First Eagle Fund of America paid the Adviser an advisory fee of
$5,356,510, $3,520,419, $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 fiscal years ended October 31, 1999,
1998, and for the fiscal period ended October 31, 1997, First Eagle
International Fund paid the Adviser an advisory fee of $365,474, $494,580 and
$452,626, respectively.
On February 19, 1998, the shareholders, and most recently on November 30,
1999, the Board of Trustees of the Trust approved the Advisory Agreement between
the Trust and the Adviser. 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
16
<PAGE>
terminated without penalty by either party upon not more than 60 days nor less
than 30 days written notice.
Harold J. Levy has been portfolio manager of First Eagle Fund of America
since its inception in April 1987, and David L. Cohen has been portfolio manager
of First Eagle Fund of America since 1989. Mr. Levy and Mr. Cohen are also the
principal owners of Iridian Asset Management LLC, which they formed in November
1995. Arnhold and S. Bleichroeder, Inc. owns 27.5% of Iridian. Mr. Levy began
his career at Arnhold and S. Bleichroeder, Inc. in 1985, and Mr. Cohen began his
career at Arnhold and S. Bleichroeder, Inc. in 1989. Currently, they are
employed by the Adviser to serve as co-portfolio managers for First Eagle Fund
of America.
Arthur F. Lerner has been the portfolio manager of First Eagle
International Fund since its inception in April 1994. He is a Senior Vice
President of Arnhold and S. Bleichroeder, Inc. and has been with the firm since
1969.
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, Class C and Class A shares.
The Distributor receives a service fee payable monthly at the annual rate
of 0.25% of the average daily net assets of all Classes of shares of the Funds,
to cover expenses incurred by the Distributor 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 A
shares at the annual rate of up to 0.25% of the average daily net assets of each
Fund's outstanding Class A shares and a Rule 12b-1 fee on Class C shares at the
annual rate of up to 0.75% of the average daily net assets of each Fund's
outstanding Class C shares. The Distributor also normally retains part of the
initial sales charge as its underwriter's allowance on sales of Class A shares,
and when it does broker-dealers may be deemed to be underwriters as that term is
defined under the Securities Act of 1933. Pursuant to the Distribution and
Services Agreement, dated February 27, 1998, the Funds agree to indemnify the
Distributor against certain liabilities under the Securities Act of 1933, as
amended.
The Fund's Rule 12b-1 Plan is a compensation plan which means that the
Funds pay the Distributor for distributor services based on the net assets of
Class C and Class A shares. The Distributor pays financial services firms fees
for distributing the Class C and Class A shares. For the fiscal year ended
October 31, 1999, First Eagle Fund of America paid the Distributor Rule 12b-1
fees of $97,663 for Class C shares and $2,279 for Class A shares and First Eagle
International Fund paid the Distributor Rule 12b-1 fees of $3,806 for Class C
shares and $76 for Class A shares.
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 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.
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
17
<PAGE>
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 the
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.
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 arms-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
18
<PAGE>
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.
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, 1999, 1998 and 1997, First Eagle Fund of
America paid total brokerage commissions of $1,422,242, $745,444 and $453,073,
respectively, of which $59,670, $128,836 and $26,580, respectively, were paid to
the Distributor. For the year ended October 31, 1999, brokerage commissions paid
to the Distributor constituted 4% of the total brokerage commissions paid by
First Eagle Fund of America, and represented 6% of the aggregate dollar amount
of its portfolio transactions involving the payment of commissions. Of the total
brokerage commissions paid during the fiscal year ended October 31, 1999,
$1,351,435 (or 95%) 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 fiscal years ended October 31, 1999 and 1998 and the fiscal period
ended October 31, 1997, First Eagle International Fund paid total brokerage
commissions of $143,459, $142,365 and $53,846, respectively, of which $6,997,
$16,221 and $7,709, respectively, were paid to the Distributor. For the fiscal
year ended October 31, 1999, brokerage commissions paid to the Distributor
constituted 5% of the total brokerage commissions paid by First Eagle
International Fund, and represented 6% of the aggregate dollar amount of its
portfolio transactions involving the payment of commissions. Of the total
brokerage commissions paid during the fiscal year ended October 31, 1999,
$136,462 (or 95%) 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.
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 89%, 83% and 98%,
respectively, in the fiscal years ended October 31, 1999, 1998 and 1997. The
portfolio turnover rates for First Eagle International Fund were 87%, 85% and
54%, respectively, in the fiscal years ended October 31, 1999 and 1998, and for
the fiscal period ended October 31, 1997. Higher portfolio turnover
19
<PAGE>
rates are likely to result in higher brokerage commissions and higher levels of
realized capital gains than lower portfolio turnover rates.
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 the Fund's portfolio
securities do not affect net asset value. The net asset value per share will not
be determined on such federal and non-federal holidays as are observed by the
New York Stock Exchange.
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 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. 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 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 Trustees 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'
holdings of illiquid securities, if any.
STOCKHOLDER INVESTMENT ACCOUNT
Investments in the Funds may be made on each day the New York Stock
Exchange is open for business (a 'Business Day'). 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 the Prospectus and this Statement of Additional Information. 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
20
<PAGE>
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. Collection may take significantly longer for a check drawn on a
foreign bank than for a check drawn on a domestic bank. Therefore, if an order
is accompanied by a check drawn on a foreign bank, funds must normally be
collected before shares will be purchased. 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
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%. 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. Shares purchased by check or the Automatic Investment Plan will not be
allowed until the purchase payment has cleared, which may take 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 that is a member of the Signature
Guarantee Medallion Program. 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, Telephone Purchase and Redemption Form or in a letter to the Funds
which is signature guaranteed for all redemptions of $5,000 or more. If you do
not provide payment instructions for the proceeds of a redemption, a check will
be sent to the address of record.
21
<PAGE>
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) 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.
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 incur 12b-1
fees, dividends on Class Y Shares will be higher than dividends on Class C
Shares.
Each of the Funds will be treated as a separate corporation for purposes of
the Internal Revenue Code (except for purposes of the definitional requirements
for regulated investment companies under Internal Revenue Code Section 851(a).
By paying dividends representing its investment company taxable income within
the time periods specified in the Internal Revenue Code and by meeting certain
other requirements, the Funds intend to qualify as regulated investment
companies under the Internal Revenue Code. If as expected each Fund will
distribute annually its entire investment company taxable income and net capital
gains, 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 could 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.
22
<PAGE>
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. 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
12 months ('long-term capital gains distributions') are subject to a maximum tax
rate of 20% (10% 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 distributions gain held for more than one
year during such six-month period.
You 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 Fund 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 of your Fund shares, please keep your year-end
account statements with your other tax records.
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
such 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 held by the
Fund. In addition, the Code provides other limitations with respect to the
ability of a qualifying corporate shareholder to claim the dividends received
deduction in connection with holding First Eagle Fund of America shares.
Dividends and interest received by a 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 such foreign
taxes incurred by a Fund. Foreign taxes paid by a 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.
23
<PAGE>
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
Fund 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 as an 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 gross 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.
A shareholder who is a nonresident alien or foreign entity generally will
not be subject to federal income tax on distributions attributable to long-term
capital gains, 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 shareholder 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. tax. In particular, dividend distributions
attributable to a Fund's ordinary income or short-term capital gain which are
not effectively connected with a trade or business in the United States will
generally 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. shareholders are urged to consult their own tax advisers
concerning the applicability of U.S. tax.
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.
TAX TREATMENT OF 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 made by a
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
24
<PAGE>
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 captial gain rate 20% maximum (10% for
individuals in the 15% tax bracket), the ordinary income tax rate (39.6%
maximum) depends upon whether or not the affected option has been held for more
than 12 months. For this purpose, an unexercised option 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 is held for less than
one year or the underlying stock or security is 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 Internal Revenue 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 issued under Section 1092 of the Internal Revenue Code
provides for the coordination of the wash sale rules and the short sale rules
with the straddle rules. Generally, the wash sale rules prevent the current
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.
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. For taxable years beginning after
December 31, 1997, a Fund may mark to market its PFIC shares if it is eligible
to
25
<PAGE>
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.
The foregoing discussion is intended only as a brief discussion of the
federal income tax consequences of an investment in shares of a Fund and the tax
treatment of certain Fund transactions. 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.
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
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)
The calculation (i) assumes all dividends and distributions by the Fund are
reinvested at net asset value 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
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)
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 Agent 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 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.
26
<PAGE>
FIRST EAGLE FUND OF AMERICA
Investment Portfolio
October 31, 1999
MARKET
SHARES SECURITY COST VALUE
- --------------------------------------------------------------------------------
COMMON STOCK (94.62%)
Basic Materials (0.79%)
256,000 Solutia Inc. $ 5,901,148 $ 4,400,000
Capital Goods (15.59%)
370,500 Ball Corp. 15,432,592 14,935,781
617,600 General Dynamics Corp. 29,913,918 34,238,200
215,300 General Motors Cl H*+ 8,519,592 15,676,531
262,900 L-3 Communications Corp.* 9,542,022 11,091,094
726,000 Loral Space & Communications
Ltd. 12,240,406 10,935,375
------------ ------------
75,648,530 86,876,981
Communications Services (7.81%)
86,600 Global Grossing Ltd.* 2,373,601 2,998,525
157,700 GTE Corp. 11,208,219 11,827,500
276,500 Nextel Communications Inc.*+ 8,003,609 23,830,844
384,100 Snyder Communications Inc. 8,108,245 4,897,275
------------ ------------
29,693,674 43,554,144
Consumer Cyclicals (10.40%)
613,600 Dun & Bradstreet Corp. 17,602,775 18,024,500
232,700 Readers Digest Association 6,831,103 7,504,575
349,200 Starwood Hotels & Resorts 11,031,250 8,009,775
157,800 Tandy Corp.+ 3,178,047 9,931,537
38,500 USA Networks Inc.* 1,503,394 1,734,906
183,100 Whirlpool Corp. 12,325,307 12,759,781
------------ ------------
52,471,876 57,965,074
Consumer Staples (8.49%)
488,748 AT&T Corp./Liberty Media
Group* 7,190,873 19,397,186
165,000 Cablevision Systems* 11,617,634 11,147,813
320,800 Fortune Brands Inc. 10,811,010 11,368,350
617,900 Rite Aid Corp. 14,894,898 5,406,625
------------ ------------
44,514,415 47,319,974
See Notes to Financial Statements.
F-1
<PAGE>
MARKET
SHARES SECURITY COST VALUE
- --------------------------------------------------------------------------------
Financial (19.68%)
270,100 C.I.T. Group Inc. $ 7,542,085 $ 6,448,638
46,200 Comerica Inc. 2,529,160 2,746,013
535,700 Finova Group 17,987,030 23,604,281
516,019 Fleet Boston Corp. 15,480,192 22,511,329
188,100 Greenpoint Financial Corp. 6,133,856 5,360,850
225,500 Household International 7,778,324 10,062,938
458,600 Mellon Financial Corp. 14,640,994 16,939,538
296,400 Travelers Property & Casualty
Insurance 9,499,433 10,670,400
344,106 Unumprovident Corp. 14,801,007 11,333,991
------------ ------------
96,392,081 109,677,978
Health Care (12.13%)
206,900 Amgen Inc.*+ 12,008,116 16,500,275
211,700 Bausch & Lomb Inc. 12,365,885 11,431,800
418,600 Becton, Dickinson & Co. 13,036,573 10,621,975
320,200 Genzyme Corp.* 14,563,400 12,247,650
43,463 Genzyme Surgical Products* 240,741 233,614
575,800 St. Jude Medical Inc.* 18,138,676 15,762,525
120,900 Ventiv Health Inc.* 1,616,795 861,412
------------ ------------
71,970,186 67,659,251
Technology (19.73%)
25,000 Aavid Thermal Technology* 54,941 562,500
391,400 Cabletron Systems Inc.* 6,924,479 6,482,562
103,300 Ceridian Corp.* 2,033,933 2,266,143
96,025 Circle.com* 1,716,025 1,392,362
676,100 Comdisco Inc. 17,177,236 13,648,769
234,700 Convergys Corp.* 4,463,563 4,591,319
447,600 Equifax Inc. 14,394,711 12,085,200
311,100 Galileo International Inc. 12,454,780 9,352,444
403,400 General Instrument Corp.*+ 11,020,123 21,707,963
434,800 Harris Corp. 15,262,736 9,755,825
355,100 NCR Corp.* 14,928,384 11,762,688
855,500 Silicon Graphics Inc.* 11,224,297 6,630,125
504,700 Storage Technology Corp.* 12,343,715 7,949,025
74,300 Unisys Corp.* 1,777,353 1,801,775
------------ ------------
125,776,276 109,988,700
------------ ------------
Total Common Stock 502,368,186 527,442,102
------------ ------------
See Notes to Financial Statements.
F-2
<PAGE>
MARKET
SHARES SECURITY COST VALUE
- --------------------------------------------------------------------------------
Preferred Stock (2.96%)
67,777 Assistive Technology Inc.
Ser. E-1*+ $ 881,641 $ 881,641
51,966 Assistive Technology Inc.
Ser. E-2*+ 500,000 500,000
505,700 News Corp. Ltd. 12,312,655 13,938,356
1,200 Tidewater Holdings Inc. Ser. A
Conv.*+ 1,200,000 1,200,000
------------ ------------
Total Preferred Stock 14,894,296 16,519,997
------------ ------------
Warrants (0.00%)
9,873 Assistive Technology Inc.* 382 382
1,455 Assistive Technology Inc.
Ser. E-1* 0 0
------------ ------------
Total Warrants 382 382
------------ ------------
Other Investments (0.27%)
16.1616 Euro Outlet Malls, L.P.+ 0 1,500,000
------------ ------------
CONTRACTS
- --------------------------------------------------------------------------------
Call Options (0.15%)
1,800 Snyder Communications @
15 exp. Dec. 1999 1,171,088 821,250
------------ ------------
Total Investments $518,433,952 $546,283,731
============ ============
PRINCIPAL
- --------------------------------------------------------------------------------
Short Term Investments (3.28%)
17,000,000 United States Treasury Bill
due 1/20/00 16,816,212 16,814,139
1,500,000 United States Treasury Bill
due 1/27/00 1,482,201 1,482,129
------------ ------------
Total Short Term Investments 18,298,413 18,296,268
============ ============
See Notes to Financial Statements.
F-3
<PAGE>
MARKET
CONTRACTS SECURITY COST VALUE
- -----------------------------------------------------------------------------
Covered Call Options Written (-1.43%)
1,069 Amgen Inc. @ 80 exp. Nov.
1999 $ (307,337)
1,000 Amgen Inc. @ 85 exp. Nov.
1999 (112,500)
1,000 General Instrument Corp. @
50 exp. Dec. 1999 (600,000)
3,034 General Instrument Corp. @
55 exp. Dec. 1999 (910,200)
600 General Motors Cl H @ 70
exp. Dec. 1999 (345,000)
1,000 General Motors Cl H @ 75
exp. Dec. 1999 (300,000)
921 Nextel Communications @
70 exp. Nov. 1999 (1,531,163)
1,844 Nextel Communications @
80 exp. Nov. 1999 (1,613,500)
1,578 Tandy Corp. @ 50 exp. Jan.
2000 (2,248,650)
------------
Total Covered Call Options
Written (premium $5,104,916) (7,968,350)
------------
Total Investment Portfolio
(99.85%) $531,627,449 556,611,649
============
Other assets in excess of other
liabilities (0.15%) 818,041
------------
NET ASSETS (100.00%) $557,429,690
============
* Non-income producing security.
+ At October 31, 1999, a portion of this security was
segregated to cover collateral requirements for options.
++ 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,
1999 is shown below:
Security Acquisition Date Cost
--------------------------------------------------------------
Assistive Technology Inc.
Ser. E-1+ 10/3/95 $ 881,641
Assistive Technology Inc.
Ser. E-2+ 12/19/96 $ 500,000
Euro Outlet Malls, L.P. 12/30/94 --
Tidewater Holdings Inc. Ser. A
Conv. Pfd. Stock 7/9/96 $1,200,000
See Notes to Financial Statements.
F-4
<PAGE>
FIRST EAGLE INTERNATIONAL FUND
Investment Portfolio
October 31, 1999
MARKET
SHARES COST VALUE
- --------------------------------------------------------------------------------
COMMON STOCK (84.48%)
Australia (0.91%)
141,000 Cable & Wireless Optus Ltd.*
(telecommunications) $ 321,653 $ 322,559
Finland (3.30%)
10,260 Nokia OYJ
(telecommunications) 674,844 1,173,296
France (16.44%)
9,800 AXA (insurance) 842,944 1,381,167
10,700 Banque Nationale de Paris
(banking) 686,548 938,991
10,000 Casino Guichard Perrachon
(supermarkets) 1,021,107 1,135,050
7,500 Club Mediterranee* (recreation) 810,109 750,394
9,600 Rexel SA (electrical equipment) 1,012,942 857,593
11,000 Valeo SA (automobile parts) 904,325 789,595
---------- ----------
5,277,975 5,852,790
Germany (11.48%)
22,000 Commerzbank AG (banking) 839,324 840,231
13,465 Deutsche Bank AG (banking) 914,660 962,008
11,800 Deutsche Pfandbrief AG
(mortgage bank) 750,681 1,039,863
7,578 Hannover Rueckversicherungs
AG (insurance) 437,146 568,649
4,290 Mannesmann AG
(telecommunications) 605,160 675,850
---------- ----------
3,546,971 4,086,601
Italy (5.79%)
65,000 Arnoldo Mondadori Editore
(publishing) 1,119,635 1,216,658
20,000 Bipop-Carire SpA (banking) 615,291 846,033
---------- ----------
1,734,926 2,062,691
See Notes to Financial Statements.
F-5
<PAGE>
MARKET
SHARES COST VALUE
- --------------------------------------------------------------------------------
Japan (21.27%)
105 DDI Corp. (long distance
telephone services) $ 379,801 $ 1,146,991
18,000 Kao Corp. (household &
chemical products) 490,684 548,486
113,000 Kikkoman Corp. (food products) 846,250 927,951
23,000 Matsushita Electric Industrial
(electronics) 492,524 483,758
111,000 Nikko Securities Co. (banking) 738,514 1,042,353
96 Nippon Telegraph & Telephone
Corp. (telecommunications) 1,238,837 1,471,828
5,000 Sony Corp. (electronics) 507,266 779,034
3,700 Sony Corp. ADD (electronics)** 359,122 591,075
35,000 The Bank of Tokyo-Mitsubishi
(banking) 539,617 579,532
----------- -----------
5,592,615 7,571,008
Netherlands (11.81%)
12,238 Aegon NV (insurance) 1,194,402 1,128,623
37,778 Hunter Douglas NV (window
treatments) 1,223,334 1,022,368
174 ING Groep NV (banking) 8,505 10,255
13,129 Philips Electronics (electronics) 1,216,372 1,345,326
20,882 Wolters Kluwer NV (publishing) 303,767 697,237
----------- -----------
3,946,380 4,203,809
Philippines (0.47%)
2,700 Philippine Long Distance
Telephone Co. ADR
(telephone) 54,950 55,519
5,400 Philippine Long Distance
Telephone Co. (telephone) 146,656 112,304
----------- -----------
201,606 167,823
Singapore (0.38%)
31,600 Jardine Matheson Holdings
(miscellaneous) 145,467 135,881
Switzerland (3.50%)
2,325 Charles Voegele Holdings*
(apparel retailer) 443,226 442,508
1,420 Zuerich Allied AG (insurance) 732,952 804,266
----------- -----------
1,176,178 1,246,774
United Kingdom (9.13%)
38,000 Cable & Wireless Plc.
(telecommunications) 482,724 443,666
59,500 Peninsular & Oriental Steam
Navigation Co. (shipping) 945,184 850,418
100,000 Scottish Power Plc. (power &
energy) 973,593 925,500
94,350 WPP Group Plc. (advertising) 407,762 1,032,679
----------- -----------
2,809,263 3,252,263
----------- -----------
Total Common Stock 25,427,878 30,075,495
=========== ===========
See Notes to Financial Statements.
F-6
<PAGE>
MARKET
PRINCIPAL COST VALUE
- --------------------------------------------------------------------------------
Short Term Investments (13.96%)
1,000,000 United States Treasury Bill
due 11/4/99 $ 999,620 $ 999,518
2,000,000 United States Treasury Bill
due 12/2/99** 1,992,061 1,992,228
1,000,000 United States Treasury Bill
due 1/13/00 990,246 989,983
1,000,000 United States Treasury Bill
due 1/27/00 988,098 988,086
----------- -----------
Total Short Term Investments 4,970,025 4,969,815
----------- -----------
CONTRACTS
- --------------------------------------------------------------------------------
Covered Call Options Written (-0.20%)
25 Sony Corp. @ 135 exp.
Jan. 2000 (70,781)
-----------
Total Covered Call Options Written (premium $75,235)
Total Investment Portfolio
(98.24%) $30,322,668 34,974,529
===========
Other assets in excess of
other liabilities (1.76%) 625,181
-----------
NET ASSETS (100.00%) $35,599,710
===========
* Non-income producing security.
** At October 31, 1999, a portion of this
security was segregated to cover collateral
requirements for options.
See Notes to Financial Statements.
F-7
<PAGE>
Statement of Assets and Liabilities
October 31, 1999
<TABLE>
<CAPTION>
First Eagle First Eagle
Fund of America International Fund
<S> <C> <C>
ASSETS:
Investments-Cost $518,433,952 $25,427,878
Short-term investments-Cost 18,298,413 4,970,025
Investments, at value 546,283,731 30,075,495
Short-term investments, at value 18,296,268 4,969,815
Cash 554,219 602,928
Dividends and interest receivable 326,181 87,920
Receivable for Fund shares sold 1,141,640 1,030
Receivable for investments sold 4,164,895 4,828,351
------------ -----------
Total Assets 570,766,934 40,565,539
------------ -----------
LIABILITIES:
Options written at value** (note 4) 7,968,350 70,781
Payable for investments purchased 3,987,471 4,722,202
Payable for Fund shares redeemed 606,655 3,249
Management fee payable 465,795 29,199
Accrued operating expenses 308,973 140,398
------------ -----------
Total Liabilities 13,337,244 4,965,829
------------ -----------
Net Assets $557,429,690 $35,599,710
============ ===========
Net Assets were comprised of:
Par value of capital shares (note 6) 272,600 21,997
Capital paid in excess of par value
(note 6) 493,235,183 27,817,393
Net unrealized appreciation of
investments, written options and
foreign currency related transactions 24,984,200 4,651,494
Accumulated not realized gain on
investments, written options and
foreign currency related transactions 38,937,707 3,108,826
------------ -----------
Net Assets $557,429,690 $35,599,710
============ ===========
Shares Outstanding
Class Y 26,206,684 2,148,490
Class C 971,532 46,731
Class A 81,789 4,474
NET ASSET VALUE PER SHARE:
Class Y (and redemption price) $20.46 $16.18
Class C* $20.18 $15.95
Class A $20.42 $16.15
</TABLE>
* Redemption price is NAV of Class C shares reduced by a 1.25% CDSC if
shares are redeemed within the first year of purchase.
** Premiums received for First Eagle Fund of America and First Eagle
International Fund were $5,104,916 and $75,235 respectively.
See Notes to Financial Statements.
F-8
<PAGE>
Statement of Operations
October 31, 1999
<TABLE>
<CAPTION>
First Eagle First Eagle
Fund of America International Fund
<S> <C> <C>
INVESTMENT INCOME:
Dividend income $ 4,687,124 $ 483,246
Interest income 1,573,813 142,038
Miscellaneous Income 2,777,626 --
Less: Foreign withholding tax (11,587) (39,148)
------------ ------------
TOTAL INVESTMENT INCOME 9,026,976 586,136
------------ ------------
EXPENSES:
Management fee (note 2) 5,356,510 365,474
Services fee (note 2) 1,339,126 91,368
Transfer agent fees 270,135 39,641
Legal fees 149,044 108,435
Custodian fees (note 3) 74,673 55,226
Registration expenses 74,772 32,996
Audit fees 48,055 47,325
Accounting fees 58,318 78,069
Organizational expenses -- 12,240
Trustee fees 28,688 31,438
Printing expenses 31,753 8,567
Miscellaneous expenses 44,012 18,007
Distribution fees (note 2) 99,942 3,882
------------ ------------
TOTAL EXPENSES 7,575,028 892,668
------------ ------------
Less: Custody earnings credits (note 3) (19,412) (17,838)
------------ ------------
NET EXPENSES 7,555,616 874,830
------------ ------------
NET INVESTMENT INCOME/(LOSS) 1,471,360 (288,694)
------------ ------------
REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS,
WRITTEN OPTIONS AND FOREIGN
CURRENCY RELATED TRANSACTIONS:
Net Realized Gain/(Loss) from:
Investment transactions 82,107,831 3,618,207
Forward foreign currency contracts -- (104,286)
------------ ------------
Net Realized Gain 82,107,831 3,513,921
Change in Net Unrealized Appreciation of
Investments, Written Options and
Foreign Currency Related Transactions:
Beginning of year 62,245,749 4,647,432
End of year 24,984,200 4,651,494
------------ ------------
Increase/(Decrease) in Net Unrealized
Appreciation (37,261,549) 4,062
------------ ------------
Net Gain on Investments, Written
Options and Foreign Currency Related
Transactions 44,846,282 3,517,983
------------ ------------
Increase in Net Assets From Operations $ 46,317,642 $ 3,229,289
============ ============
</TABLE>
See Notes to Financial Statements.
F-9
<PAGE>
First Eagle fund of America
Statement of Changes in Net Assets
For he years ended October 31, 1999 and October 31, 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
OPERATIONS:
Net investment gain/(loss) $ 1,471,360 $ (1,337,216)
Net realized gain 82,107,831 32,670,646
Increase/(decrease) in net unrealized appreciation (37,261,549) 14,035,368
------------- -------------
Increase in Net Assets Resulting From Operations 46,317,642 45,368,798
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- --
Net realized gain (79,492,608) (32,159,998)
------------- -------------
Decrease in Net Assets From Distributions to Shareholders (79,492,608) (32,159,998)
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 256,276,010 154,415,411
Net asset value of shares issued for reinvestment of capital gains 69,129,616 27,394,898
Cost of shares redeemed (127,273,264) (56,985,140)
------------- -------------
Increase in Net Assets From Fund Share Transactions 198,132,362 124,825,169
------------- -------------
Increase in Net Assets 164,957,396 138,033,969
NET ASSETS:
Beginning of year 392,472,294 254,438,325
------------- -------------
End of year $ 557,429,690 $ 392,472,294
============= =============
</TABLE>
See Notes to Financial Statements
F-10
<PAGE>
First Eagle International Fund
Statement of Changes in Net Assets
For the years ended October 31, 1999 and October 31, 1998
<TABLE>
<S> <C> <C>
OPERATIONS: 1999 1998
Net investment loss $ (288,694) $ (148,257)
Net realized gain 3,513,921 2,544,157
Increase/(decrease) in net unrealized appreciation 4,062 (210,168)
------------ ------------
Increase in Net Assets Resulting From Operations 3,229,289 2,185,732
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- --
Net realized gain (3,269,629) (2,212,663)
------------ ------------
Decrease in Net Assets From Distributions to Shareholders (3,269,629) (2,212,663)
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 5,260,401 26,925,432
Net asset value of shares issued for reinvestment of capital gains 2,737,672 1,785,523
Cost of shares redeemed (10,888,194) (26,474,063)
------------ ------------
Increase/(Decrease) in Net Assets From Fund Share Transactions (2,890,121) 2,236,892
------------ ------------
Increase/(Decrease) in Net Assets (2,930,461) 2,209,961
NET ASSETS:
Beginning of year 38,530,171 36,320,210
------------ ------------
End of year $ 35,599,710 $ 38,530,171
============ ============
</TABLE>
See Notes to Financial Statements
F-11
<PAGE>
FIRST EAGLE FUNDS
Notes to Financial Statements
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES - First Eagle Fund of America, Inc.
and First Eagle International Fund, Inc., each a Maryland corporation, were
reorganized as separate Series of First Eagle Trust, a Delaware business trust,
(the "Trust") effective February 28, 1998. The Trust is registered under the
Investment Company Act of 1940 as amended (the "Act") as a non-diversified,
open-end management investment company. The Trust presently consists of two
separate portfolios ("Series"): First Eagle Fund of America (a "Fund") and First
Eagle International Fund (a "Fund"). Each Series has distinct investment
objectives and policies. A shareholder's interest is limited to the Series in
which she or he owns shares. Each Series offers Class Y, Class C, and Class A
shares (inception November 19, 1998). All classes of shares have identical
rights to earnings, assets, and voting privileges, except that each class has
its own distribution and/or service plan, and has exclusive voting rights with
respect to matters affecting only that class.
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 Trustees 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. A Valuation Committee of the Board of Trustees has been
established
F-12
<PAGE>
to determine the value of such securities after consultation with the Trust'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 specific identification
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, a Fund may buy and sell put and call options,
write covered call options on portfolio securities and write cash-secured put
options.
A Fund generally purchases put options or writes covered call options to hedge
against adverse movements in the value of portfolio holdings. A Fund may also
use options for speculative purposes, although it does not employ options for
this purpose at the present time. A Fund will segregate assets to cover its
obligations under option contracts.
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. A 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 a 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 a 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 a Fund pays a premium whether or not the option is
exercised. A Fund also has the additional risk of not being able to enter into a
closing transaction if a liquid secondary market does not exist. A Fund may also
write over-the-counter options where the completion of the obligation is
dependent upon the credit standing of the counterparty.
Forward Currency Contracts: In connection with purchases and sales of securities
denominated in foreign currencies, a Fund may enter into forward currency
contracts. Additionally, a Fund may enter into such contracts to hedge certain
other foreign currency denomi-
F-13
<PAGE>
nated 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. A 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, a
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 a Fund are presented at the foreign exchange rates and market
values at the close of the period. A 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 Funds' 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 Funds record dividends and
distributions to its shareholders on the record date.
F. Deferred Organization Expenses - A total of $146,000 was incurred in
connection with the organization of the International 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. As of October 31, 1999, all organization costs have been
fully amortized.
F-14
<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
Arnhold and S. Bleichroeder, Inc. ("ASB"), manages the Trust. 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.
ASB (the "Distributor") serves as the distributor of the Trust's Class Y, Class
C, and Class A shares. The Distributor receives services fee at the annual rate
of 0.25% of the Funds' daily net assets payable monthly, pursuant to a
Distribution and Services Agreement which was approved by the Board of Trustees,
to cover expenses incurred by ASB for providing shareholder liaison services,
including assistance with subscriptions, redemptions and other shareholder
questions.
Shareholders pay the distributor a contingent deferred sales charge ("CDSC") of
1.25% on Class C shares which applies if redemption occurs within the first year
of purchase. In addition, the Trust also pays a distribution fee (12b-1) with
respect to Class C shares and Class A shares calculated at the annual rate of
0.75% and 0.25% respectively, of the average daily net assets. For the year
ended October 31, 1999, total 12b-1 fees for Class C shares and Class A shares
were as follows:
Class C Class A
------- -------
First Eagle Fund of America $97,663 $2,279
First Eagle International Fund $ 3,806 $ 76
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, 1999 the
portfolio's custodian fees and related offset were as follows:
Custodian Fees Credits Earned
-------------- --------------
First Eagle Fund of America $74,673 $19,412
First Eagle International Fund $55,226 $17,838
F-15
<PAGE>
NOTE 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES - The aggregate
costs of purchases and proceeds from sales of investments (including maturities,
but excluding short-term investments), during the year ended October 31, 1999
were as follows:
Purchases Sales
--------- -----
First Eagle Fund of America $611,250,593 $441,211,143
First Eagle International Fund $ 28,319,798 $ 32,037,124
For the year ended October 31, 1999, First Eagle Fund of America and First Eagle
International Fund had the following written options transactions:
Number of Contracts Premium
------------------- -------
First Eagle Fund of America
Options outstanding at
October 31, 1998 5,292 $ 1,900,893
Options written 63,427 28,925,236
Options exercised 11,779 7,553,057
Options expired/closed 44,894 18,168,156
------ -----------
Options outstanding at
October 31, 1999 12,046 $ 5,104,916
====== ===========
First Eagle International Fund
Options outstanding at
October 31, 1998 -- --
Options written 55 $ 78,248
Options exercised -- --
Options expired/closed 30 3,013
------ -----------
Options outstanding at
October 31, 1999 25 $ 75,235
====== ===========
For the year ended October 31, 1999, the First Eagle Fund of America and First
Eagle International Fund paid brokerage commissions on securities transactions
of $1,422,242 and $143,459 of which $59,670 and $6,997 was paid to ASB,
respectively.
NOTE 5. FEDERAL INCOME TAXES - During the year ended October 31, 1999, the First
Eagle Fund of America and First Eagle International Fund realized net capital
gains of $82,107,831 and $3,618,207 respectively. The United States federal
income tax basis of the Funds' investments at October 31, 1999 was substantially
the same as the basis for financial reporting purposes and accordingly, the
aggregate gross unrealized appreciation on investments was $96,660,110 for the
First Eagle Fund of America and $6,177,521 for the First Eagle International
Fund and the aggregate unrealized gross
F-16
<PAGE>
depreciation was $71,675,910 and $1,526,027 respectively, resulting in net
unrealized appreciation for United States income tax purposes of $24,984,200 and
$4,651,494 respectively.
NOTE 6. CAPITAL SHARES - The Declaration of the Trust authorizes the issuance
of an unlimited number of shares of beneficial interest without par value. The
Trust has established Class Y, Class C, and Class A shares. Each share of a
class represents an identical interest in the portfolio and has the same rights,
except that each class bears certain expenses specifically related to the
distribution of its shares.
At October 31, 1999, total paid-in capital amounted to the following for each
class:
Class Y Class C Class A
------- ------- -------
First Eagle Fund of America $472,433,775 $ 21,368,721 $ 1,837,439
First Eagle International Fund $ 27,024,662 $ 759,749 $ 66,722
Transactions in shares of each portfolio were as follows:
<TABLE>
<CAPTION>
Year ended Year ended
October 31, 1999 October 31, 1998
---------------- ----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
First Eagle Fund of America Class Y
Shares sold 10,506,742 $ 234,618,369 7,168,769 $ 153,754,128
Shares redeemed (5,720,598) (126,601,217) (2,802,071) (56,985,140)
Shares issued on
reinvestment 3,223,043 67,570,333 1,474,429 27,394,898
---------- ------------- ----------- -------------
Net Increase 8,009,187 $ 175,587,485 5,841,127 $ 124,163,886
========== ============= ========== =============
<CAPTION>
For the period from
Year ended March 2, 1998 to
October 31, 1999 October 31, 1998
---------------- ----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
First Eagle Fund of America Class C
Shares sold 902,526 $ 19,902,637 31,502 $ 661,283
Shares redeemed (31,574) (671,996) -- --
Shares issued on
reinvestment 69,078 1,476,797 -- --
------- ------------ ------ ------------
Net Increase 940,030 $ 20,707,438 31,502 $ 661,283
======= ============ ====== ============
</TABLE>
F-17
<PAGE>
For the period from November 20, 1998
to October 31, 1999
-------------------
Shares Amount
------ ------
First Eagle Fund of America Class A
Shares sold 77,985 $1,755,004
Shares redeemed (2) (51)
Shares issued on reinvestment 3,806 82,486
------ ----------
Net Increase 81,789 $1,837,439
====== ==========
<TABLE>
<CAPTION>
Year ended Year ended
October 31, 1999 October 31, 1998
---------------- ----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
First Eagle International Fund Class Y
Shares sold 301,060 $ 4,668,298 1,473,222 $ 26,579,885
Shares redeemed (704,487) (10,755,409) (1,460,355) (26,474,063)
Shares issued on
reinvestment 175,851 2,716,066 117,160 1,785,523
-------- ------------ ------- ------------
Net Increase (227,576) $ (3,371,045) 130,027 $ 1,891,345
======== ============ ======= ============
<CAPTION>
<CAPTION>
For the period from
Year ended March 2, 1998 to
October 31, 1999 October 31, 1998
---------------- ----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
First Eagle International Fund Class C
Shares sold 34,641 $ 525,359 19,217 $ 345,547
Shares redeemed (8,536) (132,763) -- --
Shares issued on reinvestment 1,409 21,606 -- --
------ --------- ------ ---------
Net Increase 27,514 $ 414,202 19,217 $ 345,547
====== ========= ====== =========
</TABLE>
For the period from March 11, 1999
to October 31, 1999
-------------------
Shares Amount
------ ------
First Eagle International Fund Class A
Shares sold 4,475 $ 66,744
Shares redeemed (1) (22)
Shares issued on reinvestment -- --
----- --------
Net Increase 4,474 $ 66,722
===== ========
Of the 27,260,005 shares of common stock outstanding for First Eagle Fund of
America and 2,199,695 shares of common stock outstanding for First Eagle
International Fund at October 31, 1999 ASB owned 31,696 and 9,856 shares and the
ASB Profit Sharing Plan owned 475,428 and 226,724 shares respectively. The
directors and officers of the Trust owned approximately 1,113,195 shares of
First Eagle Fund of America and 302,937 shares of the First Eagle International
Fund at October 31, 1999.
F-18
<PAGE>
Financial Highlights
Selected data for a share of common stock outstanding throughout each year
Fund of America Class Y shares
<TABLE>
<CAPTION>
For the year ended October 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $21.53 $20.59 $17.97 $16.28 $15.45
Income from investment operations
Net investment income (loss) 0.07 (0.08) (0.06) (0.04) (0.04)
Net realized and unrealized gain 2.45 3.62 5.31 4.08 2.87
------ ------ ------ ------ ------
Total from investment operations 2.52 3.54 5.25 4.04 2.83
------ ------ ------ ------ ------
Less distributions from:
Net investment income -- -- -- -- --
Net realized gain (3.59) (2.60) (2.63) (2.35) (2.00)
------ ------ ------ ------ ------
Total distributions (3.59) (2.60) (2.63) (2.35) (2.00)
------ ------ ------ ------ ------
Net asset value, end of year $20.46 $21.53 $20.59 $17.97 $16.28
====== ====== ====== ====== ======
Total Return* 12.1% 19.2% 31.0% 27.1% 21.6%
Net assets, end of year $536,157,945 $391,797,350 $254,438,325 $163,402,847 $134,350,180
Ratios to Average Net Assets:
Expenses(1) 1.4% 1.5% 1.7% 1.8% 1.9%
Net investment income (loss) 0.3% (0.4)% (0.3)% (0.2)% (0.3)%
Portfolio turnover rate 89% 83% 98% 93% 81%
</TABLE>
* Past performance is not predictive of future performance,
(1) For the years ended October 31, 1999 and 1998, the Fund earned credits
from the custodian which reduced service fees incurred. If the credits
were taken into consideration, the ratio of expenses to average net assets
would have been 1.4% and 1.5% respectively.
F-19
<PAGE>
Financial Highlights
Selected data for a share of common stock outstanding throughout each
period:
Fund of America Class C shares
For the year ended March 2, 1998**
October 31, through Oct. 31,
1999 1998
---- ----
Net asset value, beginning of year $ 21.43 $ 21.07
Income from investment operations
Net investment loss (0.20) (0.16)
Net realized and unrealized gain 2.54 0.52
----------- --------
Total from investment operations 2.34 0.36
----------- --------
Less distributions from:
Net investment income -- --
Net realized gain (3.59) --
----------- --------
Total distributions (3.59) --
----------- --------
Net asset value, end of year $ 20.18 $ 21.43
=========== ========
Total Return* 11.2% 1.7%++
Net assets, end of year $19,601,461 $674,944
Ratios to Average Net Assets:
Expenses(1) 2.1% 2.2%+
Net investment loss (0.9)% (1.1)%+
Portfolio turnover rate 89% 83%
* Past performance is not predictive of future performance.
** Commencement of investment operations
+ Annualized
++ Total return not annualized
(1) For the year ended October 31, 1999 and for the period from March 2, 1998
to October 31, 1998, the Fund earned credits from the custodian which
reduced service fees incurred. If the credits were taken into
consideration, the ratio of expenses to average net assets would have been
2.1% and 2.2%+.
F-20
<PAGE>
Financial Highlights
Selected data for a share of common stock outstanding throughout each
period:
Fund of America Class A shares
November 20, 1998**
through October 31,
1999
----
Net asset value, beginning of period $ 20.33
Income from investment operations
Net investment loss (0.09)
Net realized and unrealized gain 1.93
----
Total from investment operations 1.84
----
Less distributions from:
Net investment income --
Net realized gain (1.75)
-----
Total distributions (1.75)
-----
Net asset value, end of period 20.42
=====
Total Return* 8.6 %++
Net assets, end of period $1,670,284
Ratios to Average Net Assets:
Expenses(1) 1.6 %+
Net investment loss (0.4)%+
Portfolio turnover rate 89%
* Past performance is not predictive of future performance.
** Commencement of investment operations
+ Annualized
++ Total return not annualized
(1) For the period from November 20, 1998 to October 31, 1999, the Fund earned
credits from the custodian which reduced service fees incurred. If the
credits were taken into consideration, the ratio of expenses to average
net assets would have been 1.6%+.
F-21
<PAGE>
Financial Highlights
Selected data for a share of common stock outstanding throughout each period:
International Fund Class Y shares
<TABLE>
<CAPTION>
For the
period
from
January 1,
For the year ended thru For the year ended
October 31, October 31 December 31,
----------- ----------- ------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $16.09 $16.17 $15.04 $13.38 $12.37
Income from investment operations
Net investment loss (0.17) (0.06) (0.12) (0.16) (0.13)
Net realized and unrealized gain (loss) 1.60 0.95 1.25 2.29 1.57
------ ------ ------ ------ ------
Total from investment operations 1.43 0.89 1.13 2.13 1.44
------ ------ ------ ------ ------
Less distributions
Dividends (from net investment income) -- -- -- -- --
Distributions (from capital gains) (1.34) (0.97) -- (0.47) (0.43)
------ ------ ------ ------ ------
Total distributions (1.34) (0.97) -- (0.47) (0.43)
------ ------ ------ ------ ------
Net asset value, end of year $16.18 $16.09 $16.17 $15.04 $13.38
====== ====== ====== ====== ======
Total Return* 9.4% 5.8% 7.5%++ 15.9% 11.6%
Net assets, end of year $34,781,555 $38,222,433 $36,320,210 $32,105,280 $22,420,889
Ratios to Average Net Assets:
Expenses(1) 2.4% 2.4% 2.3%+ 2.9% 3.1%
Net investment loss (1.1)% (0.5)% (1.0)%+ (1.1)% (1.1)%
Portfolio turnover rate 87% 85% 54% 101% 166%
<CAPTION>
April 4,
1994**
through
December 31,
------------
1994
------------
<S> <C>
Net asset value, beginning of year $12.50
Income from investment operations
Net investment loss (0.02)
Net realized and unrealized gain (loss) (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 year $12.37
======
Total Return* (1.0)%++
Net assets, end of year $20,152,024
Ratios to Average Net Assets:
Expenses(1) 2.0%+
Net investment loss (0.3)%+
Portfolio turnover rate 170%
</TABLE>
* Past performance is not predictive of future performance.
** Commencement of investment operations
+ Annualized
++ Total return not annualized
(1) For the years ended October 31, 1999 and 1998 the Fund earned credits from
the custodian which reduced service fees incurred. If the credits were
taken into consideration the expense ratios would have been 2.4% and 2.3%,
respectively.
F-22
<PAGE>
Financial Highlights
Selected data for a share of common stock outstanding throughout each period:
International Fund Class C shares
For the March 2, 1998**
year ended through
October 31, October 31,
1999 1998
---- ----
Net asset value, beginning of year $ 16.01 $ 16.90
Income from investment operations
Net investment (loss) income (0.29) 0.84
Net realized and unrealized gain (loss) 1.57 (1.73)
-------- --------
Total from investment operations 1.28 (0.89)
-------- --------
Less distributions
Dividends (from net investment income) -- --
Distributions (from capital gains) (1.34) --
-------- --------
Total distributions (1.34) --
-------- --------
Net asset value, end of year $ 15.95 $ 16.01
======== ========
Total Return* 8.4% (5.3)%++
Net assets, end of year $745,850 $307,738
Ratios to Average Net Assets:
Expenses(1) 3.2% 2.9%+
Net investment (loss)/income (1.9)%+ 7.0%+
Portfolio turnover rate 87% 85%
* Past performance is not predictive of future performance.
** Commencement of investment operations
+ Annualized
++ Total return not annualized
(1) For the year ended October 31, 1999 and for the period from March 2, 1998
to October 31, 1998 the Fund earned credits from the custodian which
reduced service fees incurred. If the credits were taken into
consideration the ratio of expenses to average net assets would have been
3.1 % and 2.8%+, respectively.
F-23
<PAGE>
Financial Highlights
Selected data for a share of common stock outstanding throughout through
each period:
International Fund Class A shares
March 11, 1999**
through
October 31,
1999
----
Net asset value, beginning of period $15.06
Income from investment operations
Net investment loss (0.15)
Net realized and unrealized gain 1.24
----
Total from investment operations 1.09
----
Less distributions
Dividends (from net investment income) --
Distributions (from capital gains) --
----
Total distributions --
----
Net asset value, end of period $16.15
======
Total Return* 7.2%++
Net assets, end of period $72,305
Ratios to Average Net Assets:
Expenses(1) 2.7%+
Net investment loss (1.6)%+
Portfolio turnover rate 87%
* Past performance is not predictive of future performance.
** Commencement of investment operations
+ Annualized
++ Total return not annualized
(1) For the period from March 11, 1999 to October 31, 1999, the Fund earned
credits from the custodian which reduced service fees incurred. If the
credits were taken into consideration the ratio of expenses to average net
assets would have been 2.7%+.
F-24
<PAGE>
The Shareholders and Board of Trustees of First Eagle Funds:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of First Eagle Fund of America and First Eagle
International Fund as of October 31, 1999, the related statements of operations
for the year then ended, the statements 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 with respect to First Eagle Fund
of America and for the two years then ended and the period from January 1, 1997
to October 31, 1997, the years then ended December 31, 1996 and December 31,
1995 and for the period from April 4, 1994 (commencement of operations) to
December 31, 1994 with respect to First Eagle International Fund. 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 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 and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1999, by correspondence with the custodian. As to securities
purchased or sold but not yet received or delivered we performed other
alternative 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 the financial highlights referred
to above present fairly, in all material aspects, the financial positions of
First Eagle Fund of America, and First Eagle International Fund as of October
31, 1999, the results of their operations for the year then ended, the changes
in their net assets for the two years then ended and the financial highlights
for each of the years in the five year period then ended with respect to First
Eagle Fund of America, and for the two years then ended and 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, with respect to First Eagle International
Fund, in conformity with generally accepted accounting principles.
New York, New York
December 20, 1999
F-25
<PAGE>
FIRST EAGLE TRUST
PART C
OTHER INFORMATION
February 25, 2000
ITEM 22. Financial Statements
For First Eagle Fund of America:
1. Schedule of Investments dated October 31, 1999.
2. Statement of Assets and Liabilities dated October 31, 1999.
3. Statement of Operations for the year ended October 31, 1999.
4. Statement of Changes in Net Assets for the years ended October
31, 1999 and 1998.
5. Financial highlights.
6. Notes to Financial Statements.
7. Independent Auditors' Report -- KPMG LLP dated December 20, 1999.
For First Eagle International Fund:
1. Schedule of Investments dated October 31, 1999.
2. Statement of Assets and Liabilities dated October 31, 1999.
3. Statement of Operations for the period ended October 31, 1999.
4. Statement of Changes in Net Assets for the years ended October
31, 1999 and 1998.
5. Financial highlights.
6. Notes to Financial Statements.
7. Independent Auditors' Report -- KPMG LLP dated December 20, 2000.
ITEM 23. Exhibits
1. (a) Agreement and Declaration of Trust of the Registrant.*
(b) Name Change Amendment to the Agreement and Declaration of
Trust of the Registrant.****
2. By-laws of the Registrant.*
4. Account Application Form.**
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.*
11. Consent of Independent Auditors.
13. Subscription Agreement.**
17. Financial Data Schedule.
18. Rule 18f-3 Plan.*
19. Power of Attorney.*
20. Code of Ethics.
C-1
<PAGE>
- ---------------------
* Previously filed on or about February 27, 1998 with Post-Effective
Amendment No. 16 to the Registration Statement of the Registrant on Form
N-1A and incorporated herein by reference.
** Previously filed and incorporated by reference.
*** Previously filed on or about December 31, 1998 with Post-Effective
Amendment No. 17 to the Registration Statement of the Registrant on Form
N-1A and incorporated herein by reference.
**** Previously filed on or about March 1, 1999 with Post-Effective Amendment
No. 18 to the Registration Statement on Form N-1A and incorporated by
reference.
+ To be filed by amendment.
ITEM 24. Persons Controlled by or under Common Control with Registrant
No persons are controlled by or under common control with the Registrant.
ITEM 25. 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 26. 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
amount 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:
Position with the Business and Other
Name Adviser Connections
- ---- ----------------- ------------------
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 Co-President and Co-President and Director,
Director Arnhold and S. Bleichroeder,
Inc.; President and Director,
Arnhold and S. Bleichroeder, UK
Ltd.; Co-President and
Director, ASB Securities, Inc.;
Director, Aquila International
Fund Limited; President,
WorldVest, Inc.; Co-President
and Trustee, First Eagle Funds;
Co-President and Director,
First Eagle SoGen Funds, Inc.
and First Eagle SoGen Variable
Funds, Inc.
C-2
<PAGE>
Position with the Business and Other
Name Adviser Connections
- ---- ----------------- ------------------
Stanford S. Warshawsky Co-President and Co-President, Secretary and
Director Director, Arnhold and S.
Bleichroeder, Inc.;
Co-President and Director, ASB
Securities, Inc.; Director,
German-American Chamber of
Commerce; Chairman and
Director, Arnhold and S.
Bleichroeder, UK Ltd.; Chairman
of the Board and Trustee, First
Eagle Trust; Trustee, First
Eagle Funds, Director, First
Eagle SoGen Funds, Inc. and
First Eagle SoGen Variable
Funds, Inc.
Stephen M. Kellen Director Co-Chairman of the Board of
Arnhold and S. Bleichroeder
Inc.; Trustee, The Carnegie
Society and WNET/Thirteen;
Trustees Council of The
National Gallery of Art;
Robert Miller Vice President, Senior Vice President, and
Secretary and Director, Arnhold and S.
Treasurer Bleichroeder, Inc.; Director,
Arnhold and S. Bleichroeder,
UK Ltd.; Treasurer, First Eagle
Funds
Gary Lee Fuhrman Director Senior Vice President and
Director, Arnhold and S.
Bleichroeder, Inc.; Director,
Medical Resources, Inc.
Ronald A. Bendelius Vice President Senior Vice President and Chief
Financial Officer, Arnhold and
S. Bleichroeder, Inc.
Robert Bruno Vice President Senior Vice President, Arnhold
and S. Bleichroeder, Inc.; Vice
President and Secretary, First
Eagle Funds; Vice President,
Secretary and Treasurer, First
Eagle SoGen Funds, Inc. and
First Eagle SoGen Variable
Funds, Inc.
William P. Casciani Vice President Senior Vice President and
Compliance Officer, Arnhold and
S. Bleichroeder, Inc.
Michael G. Klemballa Vice President Senior Vice President and
Comptroller, Arnhold and S.
Bleichroeder, Inc.
Allan Langman Vice President Senior Vice President,
Treasurer and Director, Arnhold
and S. Bleichroeder, Inc.
Vincent S. Viglione Vice President Senior Vice President and
Assistant Treasurer, Arnhold
and S. Bleichroeder, Inc.
C-3
<PAGE>
ITEM 27. 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:
Name and Position and Offices Position and Offices with
Business Address* with Underwriter Registrant
- ------------------------- ------------------------- --------------------------
Stanford S. Warshawsky... Co-President, Director Chairman of the Board and
and Secretary Trustee
John P. Arnhold.......... Co-President and Director Co-President and Trustee
Michael M. Kellen........ Senior Vice President and Vice Chairman of the
Director Board and Trustee
Arthur F. Lerner......... Senior Vice President Senior Vice President
Tracy LaPointe Saltwick.. Senior Vice President Vice President
Robert Miller............ Senior Vice President Treasurer
and Director
Robert Bruno............. Senior Vice President Vice President and
Secretary
Cari Levine.............. Assistant Vice President Assistant Treasurer
Suzan Afifi.............. Assistant Vice President Assistant Secretary
- ----------
* 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 28. 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 29. 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 30. 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.
C-4
<PAGE>
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-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to its 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 25th day of February, 2000.
FIRST EAGLE FUNDS
By:/s/ John P. Arnhold
-------------------
John P. Arnhold,
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.
Signature Capacity Date
--------- -------- ----
/s/ John P. Arnhold Trustee February 25, 2000
- ---------------------------------
John P. Arnhold
/s/ Candace K. Beinecke* Trustee February 25, 2000
- ---------------------------------
Candace K. Beinecke
/s/ Edwin J. Ehrlich* Trustee February 25, 2000
- ---------------------------------
Edwin J. Ehrlich
/s/ K. Georg Gabriel* Trustee February 25, 2000
- ---------------------------------
K. Georg Gabriel
/s/ Robert J. Gellert* Trustee February 25, 2000
- ---------------------------------
Robert J. Gellert
/s/ James E. Jordan* Trustee February 25, 2000
- ---------------------------------
James E. Jordan
/s/ Michael M. Kellen* Trustee February 25, 2000
- ---------------------------------
Michael M. Kellen
/s/ William M. Kelly* Trustee February 25, 2000
- ---------------------------------
William M. Kelly
/s/ Stanford S. Warshawsky* Trustee February 25, 2000
- ---------------------------------
Stanford S. Warshawsky
/s/ Robert Miller Treasurer (Principal February 25, 2000
- --------------------------------- Financial and Accounting
Robert Miller Officer
* by power-of-attorney by /s/ John P. Arnhold
-------------------
John P. Arnhold
<PAGE>
EXHIBIT INDEX
B. Exhibits
1. (a) Agreement and Declaration of Trust of the Registrant.*
(b) Name Change Amendment to the Agreement and Declaration of Trust
of the Registrant.****
2. By-laws of the Registrant.*
4. Account Application Form.**
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.*
11. Consent of Independent Auditors.
13. Subscription Agreement.**
17. Financial Data Schedule.
18. Rule 18f-3 Plan.*
19. Power of Attorney.*
20. Code of Ethics
- ---------------------
* Previously filed on or about February 27, 1998 with Post-Effective
Amendment No. 16 to the Registration Statement of the Registrant on Form
N-1A and incorporated herein by reference.
** Previously filed and incorporated by reference.
*** Previously filed on or about December 31, 1998 with Post-Effective
Amendment No. 17 to the Registration Statement of the Registrant on Form
N-1A and incorporated herein by reference.
**** Previously filed on or about March 1, 1999 with Post-Effective Amendment
No. 18 to the Registration Statement on Form N-1A and incorporated by
reference.
+ To be filed by amendment.
Independent Auditors' Consent
To the Shareholders and Board of Trustees of
First Eagle Funds:
We consent to the use of our report dated December 20, 1999, with respect to the
First Eagle Fund of America and the First Eagle International Fund incorporated
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 LLP
New York, New York
February 22, 2000
CODE OF ETHICS
1. Statement of General Principles
This Code of Ethics ("Code") expresses the policy and procedures of
Arnhold and S. Bleichroeder, Inc. ("A&SB") and Arnhold and S. Bleichroeder
Advisers, Inc. ("A&SB Advisers") (collectively, the "Adviser"), First Eagle
Funds, First Eagle SoGen Funds, Inc. and First Eagle Sogen Variable Funds, Inc.
and any other registered investment company for which the Adviser may act as
adviser or subadviser (the "Funds"). The Code is enforced to insure that no one
is taking advantage of his or her position, or even giving the appearance of
placing his or her own interests above those of the Funds. Investment company
personnel must at all levels act as fiduciaries, and as such must place the
interests of the shareholders of the Funds before their own.
Rule 17j-1 under the Investment Company Act of 1940, as amended (the
"Act"), makes it unlawful for certain persons, in connection with the purchase
or sale of securities, to, among other things, engage in any act, practice or
course of business which operates or would operate as a fraud or deceit upon a
registered investment company. In compliance with Rule 17j-1, this Code contains
provisions that are reasonably necessary to eliminate the possibility of any
such conduct.
2. Definitions
"Access Person" shall mean any director, trustee, officer, general
partner, or Advisory Person of the Funds or of the Adviser, who in the ordinary
course of his or her business makes, participates in or obtains information
regarding the purchase or sale of securities for the Funds or whose functions or
duties as part of the ordinary course of his or her business relate to the
making of any recommendation to the Funds regarding the purchase or sale of
securities.
"Advisory Person" of the Funds means any employee of the Funds or the
Adviser who, in connection with his regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale of a
security by the Funds, or whose functions relate to the making of any
recommendations with respect to such purchases or sales, and shall include any
natural person in a control relationship with the Funds or the Adviser who
obtains information concerning recommendations made to the Funds with regard to
the purchase or sale of a security.
<PAGE>
The term "beneficial ownership" " shall mean any person who has or
shares, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise, a direct or indirect pecuniary
interest in a Security. "Pecuniary interest" means the opportunity, directly or
indirectly, to profit or share in any profit derived from a transaction in the
Security. "Indirect pecuniary interest" includes, but is not limited to, an
interest in a Security held by members of your immediate family who share your
household, including your spouse, children and stepchildren, parents,
grandparents, brothers and sisters, and in-laws.
"Board" shall mean the board of directors or board of trustees of the
Funds.
"Compliance Officer" shall mean the compliance officer appointed by the
Board of the Funds.
"Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act.
The term "Covered Security" shall mean a security defined in Section
2(a)(36) of the Act and shall include options, but shall not include direct
obligations of the United States, bankers' acceptances, bank certificates of
deposit, commercial paper, other money market instruments including repurchase
agreements, and shares of registered open-end investment companies.
"Disinterested Director" of the Funds shall mean a director or trustee
thereof who is not an "interested person" of the Funds within the meaning of
Section 2(a)(19) of the Act.
"Fund" shall mean the Funds or any other registered investment company
to which the Adviser acts as adviser or subadviser.
"Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, as amended, by or for an issuer of such
securities which, immediately before the registration, was not subject to the
reporting requirements of Section 13 or 15d of the 1934 Act.
"Investment Compliance Committee" shall mean the committee appointed by
the management of A&SB.
"Investment Personnel" of the Funds or the Adviser includes Portfolio
Managers and those persons who provide information and advice to the Portfolio
Managers or who help execute the Portfolio Managers' decisions (e.g. securities
analysts and traders).
"Portfolio Managers" shall mean those persons who have direct
responsibility and authority to make investment decisions for a Fund.
<PAGE>
"Principal Underwriter" shall mean A&SB.
The "purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
3. Prohibited Securities Transactions
The prohibitions described below will only apply to a transaction in a
Covered Security in which the designated person has, or by reason of such
transaction acquires or disposes, any direct or indirect beneficial ownership in
such Covered Security ("Securities Transaction").
A. Blackout Trading Periods - Access Persons
No Access Person shall execute a Securities Transaction on a day during
which the Funds have a pending buy or sell order in that same Covered Security
until that order is executed or withdrawn. Any profits realized on trades within
the proscribed periods are required to be disgorged to a charity selected by the
Adviser.
B. Blackout Trading Periods - Portfolio Managers
No Portfolio Manager shall buy or sell a Covered Security within seven
calendar days before and after the Fund that he or she manages trades in that
Covered Security. Any profits realized on trades within the proscribed periods
are required to be disgorged to a charity selected by the Adviser.
C. Ban on Short-Term Trading Profits - Investment Personnel
Investment Personnel may not profit in the purchase and sale, or sale
and purchase, of the same (or equivalent) securities within 60 calendar days.
Any profits realized on such short-term trades are required to be disgorged to a
charity selected by the Adviser.
D. Ban on Securities Purchases of an Initial Public Offering - Investment
Personnel
Investment Personnel may not acquire any securities in an Initial Public
Offering.
E. Securities Offered in a Private Offering - Investment Personnel
Investment Personnel may not acquire any securities in a private
offering without the prior written consent of the Compliance Officer.
Furthermore, should written consent be given, Investment Personnel are required
to disclose such investment when participating in the Fund's subsequent
consideration of an investment in such issuer. In such circumstances, the Fund's
decision to purchase securities of such issuer should be subject to an
independent review by the Investment Compliance Committee.
<PAGE>
4. Exempted Transactions
A. Subject to compliance with preclearance procedures in accordance with
Section 5 below, the prohibitions of Sections 3A, 3B and 3C of this Code shall
not apply to:
(i) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control, or in any account
of the Access Person which is managed on a discretionary basis by a
person other than such Access Person and with respect to which such
Access Person does not in fact influence or control such transactions.
(ii) Purchases or sales of securities which are not eligible for
purchase or sale by the Funds.
(iii) Purchases or sales which are non-volitional on the part of either
the Access Person or the Funds.
(iv) Purchases which are part of an automatic dividend reinvestment
plan.
(v) Purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
(vi) Any equity securities transaction, or series of related
transactions, involving 500 shares or less or amounting to $10,000 or
less, in the aggregate if i) the Access Person has no prior knowledge of
transactions in such Covered Security by the Funds and (ii) if the
issuer has a market capitalization (outstanding shares multiplied by the
current price per share) greater than $1 billion.
(vii) Any fixed income securities transaction involving $50,000
principal amount or less if the Access Person has no prior knowledge of
transactions in such securities by the Funds.
(viii) All other transactions contemplated by an Access Person which
receive the prior approval of the Investment Compliance Committee in
accordance with the preclearance procedures described in Section 5
below. Purchases or sales of a specific Covered Security may receive the
prior approval of the Investment Compliance Committee because the
Committee has determined that no abuse is involved and that such
purchases and sales would be very unlikely to have any economic impact
on the Funds or on the Fund's ability to purchase or sell such Covered
Securities.
B. The prohibition in Section 3A shall not apply to Disinterested
Directors of the Funds, unless a Disinterested Director, at the time of a
transaction, knew or, in the ordinary course of fulfilling his or her official
duties as a Disinterested Director of the Funds, should have known that the
Funds had a pending buy or sell order in that same Covered Security, which order
had not yet been executed or withdrawn.
<PAGE>
C. A transaction by Access Persons (other than Investment Personnel)
inadvertently effected during the period proscribed in Section 3A will not be
considered a violation of the Code and disgorgement will not be required so long
as the transaction was effected in accordance with the preclearance procedures
described in Section 5 and without prior knowledge of any Securities Transaction
by the Funds.
D. The prohibition in Section 3C shall not apply to profits earned from
a Securities Transactions in which securities are not the same (or equivalent)
to those owned, shorted or in any way traded by the Funds during the 60 day
period; provided, however, that if the Investment Compliance Committee
determines that a review of the Access Person's reported personal securities
transactions indicates an abusive pattern of short-term trading, the Committee
may prohibit such Access Person from profiting in the purchase and sale, or sale
and purchase, of the same (or equivalent) securities within 60 calendar days
whether or not such Covered Security is the same (or equivalent) to that owned,
shorted or in any way traded by the Funds.
5. Preclearance
Access Persons (other than Disinterested Directors) must preclear all
Securities Transactions. All requests for preclearance must be submitted to the
Investment Compliance Committee. Such requests shall be made by submitting a
Personal Investment Request Form, in the form annexed hereto as Appendix A. All
approved orders must be executed by the close of business on the day
preclearance is granted. If any order is not timely executed, a request for
preclearance must be resubmitted.
Disinterested Directors need not preclear their personal investments in
securities unless a Disinterested Director knows, or in the course of fulfilling
his or her official duties as a Disinterested Director should know, that, within
the most recent 15 days, any of the Funds have purchased or sold, or considered
for purchase or sale, such Covered Security or is proposing to purchase or sell,
directly or indirectly, any Covered Security in which the Disinterested Director
has, or by reason of such Securities Transaction would acquire, any direct or
indirect beneficial ownership.
6. Reporting
A. The Compliance Officer shall periodically identify all Access Persons
and Inform such Access Persons of their reporting and compliance obligations
under this Code of Ethics.
B. Access Persons (other than Disinterested Directors) are required to
direct their broker(s) to supply to the Compliance Officer on a timely basis
duplicate copies of confirmations of all personal Securities Transactions and
copies of periodic statements for all securities accounts, whether existing
currently or to be established in the future. A sample letter for this purpose
is attached as Appendix B. The Securities Transaction reports and/or duplicates
should
<PAGE>
be addressed "Personal and Confidential." Compliance with this Code requirement
will be deemed to satisfy the reporting requirements imposed on Access Persons
under Rule 17j-1.
C. A Disinterested Director shall report to the Compliance Officer, no
later than ten days after the end of the calendar quarter in which the
transaction to which the report relates was effected, the information required
in Appendix C hereto with respect to any Securities Transaction in which such
Disinterested Director has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership in a Covered Security that such
Disinterested Director knew, or in the course of fulfilling his or her official
duties as a director should have known, during the 15-day period immediately
preceding or after the date of the Securities Transaction by the Disinterested
Director, to have been purchased or sold by the Funds or considered for purchase
or sale by the Funds. With respect to those transactions executed through a
broker, a Disinterested Director of the Funds may fulfill this requirement by
directing the broker(s) to transmit to the Legal Compliance Officer a duplicate
of confirmations of such transactions, and copies of the statements of such
brokerage accounts, whether existing currently or to be established in the
future. The transaction reports and/or duplicates should be addressed "Personal
and Confidential" and submitted to the Compliance Officer and may contain a
statement that the report shall not be construed as an admission by the person
making such report that he or she has any direct or indirect beneficial
ownership in the Covered Security to which the report relates. Securities
Transactions effected for any account over which a Disinterested Director does
not have any direct or indirect influence or control, or which is managed on a
discretionary basis by a person other than the Disinterested Director and with
respect to which such Disinterested Director does not in fact influence or
control such transactions, need not be reported.
D. Whenever a person designated as Investment Personnel recommends that
the Funds purchase or sell a Covered Security, he or she shall disclose to the
person to whom the recommendation is made, as well as to the Compliance Officer,
whether he or she presently owns such Covered Security, or whether he or she is
considering the purchase or sale of such Covered Security.
E. Not later than ten days after a person becomes an Access Person, and
thereafter on an annual basis Access Persons (other than Disinterested
Directors) will disclose all personal securities holdings and all their accounts
with any broker or dealer. On an annual basis Access Persons (other than
Disinterested Directors) will be sent a copy of the list of such Access Person's
securities accounts in which he or she has a beneficial ownership interest to
verify its accuracy and make any necessary additions or deletions. The Access
Person shall immediately notify the Compliance Officer upon establishing any
account with a securities or derivatives broker or dealer.
F. All personal matters discussed with the Compliance Officer, or
members of the Investment Compliance Committee, and all confirmations, account
statements and personal investment reports shall be kept in confidence, but will
be available for inspection by the Boards of the Funds and the Adviser and by
the appropriate regulatory agencies.
<PAGE>
7. Annual Certification
On an annual basis Access Persons will be sent a copy of this Code for
their review. Access Persons will be asked to certify that they have read and
understand this Code and recognize that they are subject hereto. Access Persons
will be further asked to certify annually that they have complied with the
requirements of this Code and that they have disclosed or reported all personal
securities transactions required to be disclosed or reported pursuant to this
Code. A sample of the certification is attached as Appendix D.
8. Confidential Status of the Fund's Portfolio
The current portfolio positions of the Funds managed, advised and/or
administered by the Adviser and current portfolio transactions, programs and
analyses must be kept confidential.
If non-public information regarding the Fund's portfolio should become
known to any Access Person, whether in the line of duty or otherwise, he or she
should not reveal it to anyone unless it is properly part of his or her work to
do so.
9. Non-Public Material Information
No Access Person may purchase or sell any Covered Security, or be
involved in any way in the purchase or sale of a Covered Security, while in
possession of material non-public information about the Covered Security or its
issuer, regardless of the manner in which such information was obtained. This
prohibition covers transactions for clients, as well as transactions for
personal accounts.
Furthermore, no Access Person possessing material non-public information
may disclose such information to any person other than the Compliance Officer,
except to the extent authorized by the Compliance Officer. Disclosing non-public
material information to others is known as "tipping" and is prohibited.
Non-public information includes corporate information, such as
undisclosed financial information about a corporation, and market information,
such as a soon-to-be-published article about a corporation. Material information
is information which an investor would consider important in making an
investment decision and which would substantially affect the market price of a
security if disclosed.
10. Gifts - Investment Personnel
Investment Personnel shall not receive any gift or other thing of more
than de minimis value from any person or entity that does business with or on
behalf of the Funds. For purposes of this Code, "more than de minimis value"
shall mean any gift in excess of a value of $100 per year.
<PAGE>
11. Services as a Director in a Publicly Traded Company - Investment
Personnel
Investment Personnel shall not serve on the boards of directors of
publicly traded companies, absent prior authorization by the Board of the Funds,
based upon a determination that the board service would be consistent with the
interests of the Funds and its shareholders. When such authorization is
provided, the Investment Personnel serving as a director will be isolated from
making investment decisions with respect to the pertinent company through
"Chinese Wall" or other procedures.
12. Outside Employment
No Access Person may render investment advice to persons other than the
Adviser's clients, unless the advisory relationship, including the identity of
those involved and any fee arrangements, has been disclosed to and approved by
the Adviser. All transactions for such outside advisory clients of the Access
Person are subject to the reporting requirements of Section 6 above.
13. Compliance Review
The Compliance Officer shall compare the reported personal Securities
Transactions with completed and contemplated portfolio transactions of the Funds
to determine whether a violation of this Code may have occurred. The Compliance
Officer shall bring any questionable transactions to the attention of the
Investment Compliance Committee. Before making any determination that a
violation has been committed by any person, the Investment Compliance Committee
shall give such person an opportunity to supply additional information regarding
the Securities Transaction in question.
14. Sanctions
The Board of the Funds and the Board of Directors of the Adviser will be
informed of Code violations of this Code on a quarterly basis and the relevant
Board may impose such sanctions as they deem appropriate, including inter alia,
a letter of censure or suspension or termination of employment of the Access
Person or a request for disgorgement of any profits received from a Securities
Transaction done in violation of this Code.
15. Board Review
The Board of the Funds shall annually receive a copy of the existing
Code, along with a list of recommendations, if any, to change the existing Code
based upon experience, evolving industry practices or developments in applicable
laws or regulations. No less frequently than annually, the Compliance Officer
shall submit to the Board of the Funds a written report that:
(A) Describes any issues arising under this Code or its procedures since
the last report to the Board, including, but not limited to, information about
material violations of this Code or its
<PAGE>
procedures and sanctions imposed in response to the material violations; and,
(B) Certifies that the Funds, and the Adviser have adopted procedures
reasonably necessary to prevent Access Persons from violating this Code.
16. Recordkeeping
The Compliance Officer shall maintain, at the Funds' and the Adviser's
principal place of business, the following record and shall make these records
available to the Securities and Exchange Commission and its representatives:
A. A copy of each Code in effect during the past five years.
B. A record of any violation and the action taken during the past
five years.
C. A copy of each Access Person's reports.
D. A record of all Access Persons.
E. A copy of the written reports to the Board.
F. A record of the reasons for preapproving Initial Public Offerings
or Private Offerings of Covered Securities.
<PAGE>
Appendix A
This trade approval request is the form used on A&SB's intranet website.
All Securities Transactions should receive preclearance through the
intranet site.
Trade Approval Request
To: Investment Compliance Committee
From: ____________________________
Date: ____________________________
Permission is requested to (BUY) / (SELL) ________________________ shares
of ____________________________________________________________.
The trade is to be executed at (ASB) / (Other Firm: ____________________)
I have no material, non-public information regarding the above
referenced security. I have checked our trading desk to ensure that
there are no pending customer orders.
Employee Signature: _____________________________
Note: This form will not be approved without the employee first signing.
Filling out this form is the responsibility of the person requesting
approval, not the person granting approval!
Approved By: _____________________________ Date: __________________
<PAGE>
Appendix B
Date
XYZ Broker Dealer
Re:
Dear Sir/Madam:
Please accept this letter as permission, pursuant to NYSE Rule 407, to allow
___________, an employee of our firm , to maintain an account(s) with your firm.
In regards to the above, please send duplicate confirmations and statements on
all transactions to the following:
Arnhold and S. Bleichroeder, Inc.
Ms. Tracy L. Saltwick
Senior Vice President
1345 Avenue of the Americas
New York, New York 10105-4300
Thank you for your prompt attention to this matter.
Sincerely,
ARNHOLD AND S. BLEICHROEDER, INC.
By:
<PAGE>
Appendix C
Information required to be reported:
(1) The date of the transaction, the title, the interest rate and maturity date
(if applicable), the number of shares and the principal amount of each
Covered Security involved;
(2) The nature of the transaction (i.e., purchase, sale or any other type of
acquisition or disposition);
(3) The price of the Covered Security at which the transaction was effected;
(4) The name of the broker, dealer or bank with or through which the transaction
was effected; and
(5) The date that the report is submitted by the Access Person.
<PAGE>
Appendix D
Certification
I hereby certify that:
I have received a current copy of the Code of Ethics, and have read and
understand the Code.
I recognize that I am subject to the Code and certify that have complied with
the requirements of the Code.
I have disclosed or reported all my personal securities transactions required to
be disclosed or reported pursuant to this Code.
_____________________
Name
Date:________________
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 013
<NAME> FIRST EAGLE FUND OF AMERICA CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 536732365
<INVESTMENTS-AT-VALUE> 564579999
<RECEIVABLES> 5632716
<ASSETS-OTHER> 554219
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 570766934
<PAYABLE-FOR-SECURITIES> 3987471
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9349743
<TOTAL-LIABILITIES> 13337244
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1837439
<SHARES-COMMON-STOCK> 81789
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 35334195
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24984200
<NET-ASSETS> 557429690
<DIVIDEND-INCOME> 4675537
<INTEREST-INCOME> 1573813
<OTHER-INCOME> 2777626
<EXPENSES-NET> 7457953
<NET-INVESTMENT-INCOME> 1373697
<REALIZED-GAINS-CURRENT> 82107831
<APPREC-INCREASE-CURRENT> (37261549)
<NET-CHANGE-FROM-OPS> 46317642
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 79492608
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 77985
<NUMBER-OF-SHARES-REDEEMED> 2
<SHARES-REINVESTED> 3806
<NET-CHANGE-IN-ASSETS> 164957396
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5356510
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7477365
<AVERAGE-NET-ASSETS> 529801520
<PER-SHARE-NAV-BEGIN> 20.33
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> 1.93
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.75
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.42
<EXPENSE-RATIO> 1.6
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> FIRST EAGLE FUND OF AMERICA CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 536732365
<INVESTMENTS-AT-VALUE> 564579999
<RECEIVABLES> 5632716
<ASSETS-OTHER> 554219
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 570766934
<PAYABLE-FOR-SECURITIES> 3987471
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9349773
<TOTAL-LIABILITIES> 13337244
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21368721
<SHARES-COMMON-STOCK> 971532
<SHARES-COMMON-PRIOR> 31502
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 35334195
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24984200
<NET-ASSETS> 557429690
<DIVIDEND-INCOME> 4575537
<INTEREST-INCOME> 1573813
<OTHER-INCOME> 2777626
<EXPENSES-NET> 7553337
<NET-INVESTMENT-INCOME> 1469081
<REALIZED-GAINS-CURRENT> 82107831
<APPREC-INCREASE-CURRENT> (37261549)
<NET-CHANGE-FROM-OPS> 46317642
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 79492608
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 902526
<NUMBER-OF-SHARES-REDEEMED> 31574
<SHARES-REINVESTED> 69078
<NET-CHANGE-IN-ASSETS> 164957396
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 32718972
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5356510
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7572749
<AVERAGE-NET-ASSETS> 529801520
<PER-SHARE-NAV-BEGIN> 21.43
<PER-SHARE-NII> (.20)
<PER-SHARE-GAIN-APPREC> 2.54
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 3.59
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.18
<EXPENSE-RATIO> 2.1
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> FIRST EAGLE FUND OF AMERICA CLASS Y
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 536732365
<INVESTMENTS-AT-VALUE> 564579999
<RECEIVABLES> 5632716
<ASSETS-OTHER> 554219
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 570766934
<PAYABLE-FOR-SECURITIES> 3987471
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9349773
<TOTAL-LIABILITIES> 13337244
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 472433775
<SHARES-COMMON-STOCK> 26206684
<SHARES-COMMON-PRIOR> 18197497
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 35334195
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24984200
<NET-ASSETS> 557429690
<DIVIDEND-INCOME> 4675537
<INTEREST-INCOME> 1573813
<OTHER-INCOME> 2777626
<EXPENSES-NET> 7455674
<NET-INVESTMENT-INCOME> 1371418
<REALIZED-GAINS-CURRENT> 82107831
<APPREC-INCREASE-CURRENT> (37261549)
<NET-CHANGE-FROM-OPS> 46317642
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 79492608
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10506742
<NUMBER-OF-SHARES-REDEEMED> 5720598
<SHARES-REINVESTED> 3223043
<NET-CHANGE-IN-ASSETS> 164957396
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 32718972
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5356510
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7475086
<AVERAGE-NET-ASSETS> 529801520
<PER-SHARE-NAV-BEGIN> 21.53
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> 2.45
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 3.59
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.46
<EXPENSE-RATIO> 1.4
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 023
<NAME> FIRST EAGLE INTERNATIONAL CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 30397903
<INVESTMENTS-AT-VALUE> 35045310
<RECEIVABLES> 4917301
<ASSETS-OTHER> 602928
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40565539
<PAYABLE-FOR-SECURITIES> 4722202
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 243627
<TOTAL-LIABILITIES> 4965829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66722
<SHARES-COMMON-STOCK> 4474
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3385777
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4651494
<NET-ASSETS> 35599710
<DIVIDEND-INCOME> 444098
<INTEREST-INCOME> 142038
<OTHER-INCOME> 0
<EXPENSES-NET> 871024
<NET-INVESTMENT-INCOME> (284888)
<REALIZED-GAINS-CURRENT> 3513921
<APPREC-INCREASE-CURRENT> 4062
<NET-CHANGE-FROM-OPS> 3229289
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3269629
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4475
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2930461)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 365474
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 888862
<AVERAGE-NET-ASSETS> 36686537
<PER-SHARE-NAV-BEGIN> 15.06
<PER-SHARE-NII> (.15)
<PER-SHARE-GAIN-APPREC> 1.24
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.15
<EXPENSE-RATIO> 2.7
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> FIRST EAGLE INTERNATIONAL CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 30397903
<INVESTMENTS-AT-VALUE> 35045310
<RECEIVABLES> 4917301
<ASSETS-OTHER> 602928
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40565539
<PAYABLE-FOR-SECURITIES> 4722202
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 243627
<TOTAL-LIABILITIES> 4965829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 759749
<SHARES-COMMON-STOCK> 46731
<SHARES-COMMON-PRIOR> 19217
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3385777
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4651494
<NET-ASSETS> 355599710
<DIVIDEND-INCOME> 444098
<INTEREST-INCOME> 142038
<OTHER-INCOME> 0
<EXPENSES-NET> 874754
<NET-INVESTMENT-INCOME> (288618)
<REALIZED-GAINS-CURRENT> 3513921
<APPREC-INCREASE-CURRENT> 4062
<NET-CHANGE-FROM-OPS> 3229289
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3269629
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34641
<NUMBER-OF-SHARES-REDEEMED> 8536
<SHARES-REINVESTED> 1409
<NET-CHANGE-IN-ASSETS> (2930461)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3141485
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 365474
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 892592
<AVERAGE-NET-ASSETS> 36686537
<PER-SHARE-NAV-BEGIN> 16.01
<PER-SHARE-NII> (.29)
<PER-SHARE-GAIN-APPREC> 1.57
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.34
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.95
<EXPENSE-RATIO> 3.2
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> FIRST EAGLE INTERNATIONAL FUND CLASS Y
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 30397903
<INVESTMENTS-AT-VALUE> 35045310
<RECEIVABLES> 4917301
<ASSETS-OTHER> 602928
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40565539
<PAYABLE-FOR-SECURITIES> 4722202
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 243627
<TOTAL-LIABILITIES> 4965829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27024662
<SHARES-COMMON-STOCK> 2148490
<SHARES-COMMON-PRIOR> 2376066
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3385777
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4651494
<NET-ASSETS> 35599710
<DIVIDEND-INCOME> 444098
<INTEREST-INCOME> 142038
<OTHER-INCOME> 0
<EXPENSES-NET> 870948
<NET-INVESTMENT-INCOME> (284812)
<REALIZED-GAINS-CURRENT> 3513921
<APPREC-INCREASE-CURRENT> 4062
<NET-CHANGE-FROM-OPS> 3229289
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3269629
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 301060
<NUMBER-OF-SHARES-REDEEMED> 704487
<SHARES-REINVESTED> 175851
<NET-CHANGE-IN-ASSETS> (2930461)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3141485
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 365474
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 888786
<AVERAGE-NET-ASSETS> 36686537
<PER-SHARE-NAV-BEGIN> 16.09
<PER-SHARE-NII> (.17)
<PER-SHARE-GAIN-APPREC> 1.60
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.34
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.18
<EXPENSE-RATIO> 2.4
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
