-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GC+gX8Qs3yYlF3tjGAdwtLT40xy27tjAnjHvDUqKl5fR3zX/kDGCSjAdYVzf1Wrs Rf0LvMS8JmAflsuXMolotA== 0000950117-06-000907.txt : 20060227 0000950117-06-000907.hdr.sgml : 20060227 20060224191325 ACCESSION NUMBER: 0000950117-06-000907 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20060227 DATE AS OF CHANGE: 20060224 EFFECTIVENESS DATE: 20060301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST EAGLE FUNDS CENTRAL INDEX KEY: 0000906352 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-63560 FILM NUMBER: 06644691 BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2126983133 MAIL ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 FORMER COMPANY: FORMER CONFORMED NAME: FIRST EAGLE FUNDS INC DATE OF NAME CHANGE: 20030103 FORMER COMPANY: FORMER CONFORMED NAME: FIRST EAGLE SOGEN FUNDS INC DATE OF NAME CHANGE: 20000403 FORMER COMPANY: FORMER CONFORMED NAME: SOGEN FUNDS INC DATE OF NAME CHANGE: 19930714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST EAGLE FUNDS CENTRAL INDEX KEY: 0000906352 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-07762 FILM NUMBER: 06644692 BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2126983133 MAIL ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 FORMER COMPANY: FORMER CONFORMED NAME: FIRST EAGLE FUNDS INC DATE OF NAME CHANGE: 20030103 FORMER COMPANY: FORMER CONFORMED NAME: FIRST EAGLE SOGEN FUNDS INC DATE OF NAME CHANGE: 20000403 FORMER COMPANY: FORMER CONFORMED NAME: SOGEN FUNDS INC DATE OF NAME CHANGE: 19930714 0000906352 S000011211 First Eagle Global Fund C000030894 Class A C000030895 Class I C000030896 Class C 0000906352 S000011212 First Eagle Overseas Fund C000030897 Class A C000030898 Class I C000030899 Class C 0000906352 S000011213 First Eagle U.S. Value Fund C000030900 Class A C000030901 Class I C000030902 Class C 0000906352 S000011214 First Eagle Gold Fund C000030903 Class A C000030904 Class I C000030905 Class C 0000906352 S000011215 First Eagle Fund of America C000030906 Class Y C000030907 Class C C000030908 Class A 485BPOS 1 a41426.txt FIRST EAGLE FUNDS, INC. As filed with the Securities and Exchange Commission on February 24, 2006 REGISTRATION NO. 033-63560 and 811-7762 ------------------------------------------------------------------------------- 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. 25 [x] AND/OR REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x] AMENDMENT NO. 27 [x] (CHECK APPROPRIATE BOX OR BOXES) ------------------- FIRST EAGLE FUNDS (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) ------------------- 1345 AVENUE OF THE AMERICAS NEW YORK, NY 10105 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 698-3000 ROBERT BRUNO FIRST EAGLE FUNDS 1345 AVENUE OF THE AMERICAS NEW YORK, NY 10105 (NAME AND ADDRESS OF AGENT FOR SERVICE) ------------------- COPY TO: PAUL S. SCHREIBER, ESQ. SHEARMAN & STERLING LLP 599 LEXINGTON AVENUE NEW YORK, NY 10022 ------------------- It is proposed that this filing will become effective (check appropriate box): [ ] immediately upon filing pursuant to paragraph (b) [X] on March 1, 2006 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on March 1, 2006 pursuant to paragraph (a)(1) of Rule 485 [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) 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 First Eagle Funds Advised by Arnhold and S. Bleichroeder Advisers, LLC PROSPECTUS March 1, 2006 First Eagle Global Fund First Eagle Overseas Fund First Eagle U.S. Value Fund First Eagle Gold Fund First Eagle Fund of America Prospectus As with all mutual funds, these securities have neither been approved nor disapproved by the Securities and Exchange Commission nor has the SEC passed on the accuracy of this prospectus. It is a criminal offense to claim otherwise. [First Eagle Funds LOGO] Thank you for your interest in First Eagle Funds (the 'Trust'), managed by Arnhold and S. Bleichroeder Advisers, LLC ('ASB Advisers' or the 'Adviser'). Charles de Vaulx of ASB Advisers has primary responsibility for the day-to-day management of First Eagle Global Fund ('Global Fund'), First Eagle Overseas Fund ('Overseas Fund'), First Eagle U.S. Value Fund ('U.S. Value Fund') and First Eagle Gold Fund ('Gold Fund') (each, a 'Fund'). Harold Levy and David Cohen of Iridian Asset Management LLC, a subadviser retained by ASB Advisers, have primary responsibility for the day-to-day management of First Eagle Fund of America (also a 'Fund'). This prospectus contains information about each of the Funds. We encourage you to read it carefully and keep it for future reference. Investment Objective of the Funds FIRST EAGLE GLOBAL FUND (closed to new investors) seeks long-term growth of capital by investing in a range of asset classes from markets in the United States and around the world. More specifically, to achieve its objective, the Global Fund will normally invest its assets primarily in common stocks (and securities convertible into common stocks) of U.S. and foreign companies. FIRST EAGLE OVERSEAS FUND (closed to new investors) seeks long-term growth of capital by investing primarily in equities issued by non-U.S. corporations. The Overseas Fund invests primarily in companies traded in mature markets and may invest in emerging markets. Under normal market conditions, the Overseas Fund invests at least 80% of its total assets in foreign securities. FIRST EAGLE U.S. VALUE FUND seeks long-term growth of capital by investing, under normal market conditions, at least 80% of its assets in domestic equity and debt securities (at least 65% in equity securities). FIRST EAGLE GOLD FUND seeks to provide investors the opportunity to participate in the investment characteristics of gold (and to a limited extent other precious metals) for a portion of their overall investment portfolio. Under normal circumstances, the Gold Fund invests at least 80% of its total assets in gold and/or securities directly related to gold or of issuers principally engaged in the gold industry. FIRST EAGLE FUND OF AMERICA (Class Y closed to new investors) seeks capital appreciation by investing primarily in domestic stocks and to a lesser extent in debt and foreign equity securities. Normally, at least 80% of the Fund's assets will be invested in domestic equity and debt securities and at least 65% will be invested in domestic equity securities. Table of Contents
PAGE The Funds.................................... 2 Investment Objective and Principal Investment Strategies.............. 2 Defensive Investment Strategies...... 6 Principal Investment Risks........... 6 Disclosure of Portfolio Holdings..... 9 The Funds' Performance............... 10 Fees and Expenses.................... 19 Our Management Team.......................... 25 The Adviser.......................... 25 The Subadviser....................... 26 Approval of Advisory and Subadvisory Agreements......................... 26 Distribution and Shareholder Services Expenses........................... 27 About Your Investment........................ 30 How to Purchase Shares............... 30 Anti-Money Laundering Compliance..... 32 How Fund Share Prices Are Calculated......................... 32 Purchases Through Dealers............ 33 Public Offering Price of Class A Shares............................. 34 Purchasing Level-Load Class C Shares............................. 39 Bookshare Account Plan............... 40 Where to Send Your Application....... 40 Minimum Account Size................. 41 Automatic Investment Program......... 41 Once You Become a Shareholder................ 42 Exchanging Your Shares............... 42 Redemption of Shares................. 43 Short-Term Trading Policies.......... 45 Redemption Fee....................... 47 Retirement Plans..................... 49 Information on Dividends, Distributions and Taxes...................................... 49 Privacy Notice for Individual Shareholders... 50 How to Reach First Eagle Funds............... 52 Financial Highlights......................... 53 Useful Shareholder Information............... (Back Cover)
1 THE FUNDS INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES First Eagle Global Fund (closed to new investors) The investment objective of the Global Fund is long-term growth of capital through investments in a range of asset classes from markets in the United States and around the world. To achieve its objective, the Global Fund will normally invest its assets primarily in common stocks (and securities convertible into common stocks) of U.S. and foreign companies. To a lesser extent, the Global Fund reserves the right to invest a portion of its assets in fixed-income securities (including lower-rated securities) of domestic or foreign issuers which, in addition to the income they may provide, appear to offer potential for long-term growth of capital. When deemed appropriate by the Adviser for short-term investment purposes, the Global Fund may hold a portion of its assets in short-term debt instruments including commercial paper and certificates of deposit. The Global Fund may invest in 'structured securities' in which the value is linked to the price of an underlying instrument, such as a currency, commodity or index, and may also invest in precious metals (such as gold bullion) or, subject to certain regulatory limitations, purchase or sell contracts for their future delivery ('futures contracts'). First Eagle Overseas Fund (closed to new investors) The investment objective of the Overseas Fund is long-term growth of capital through investments primarily in equities issued by non-U.S. corporations. To achieve its objective, the Overseas Fund invests primarily in companies traded in mature markets (for example, Japan, Germany and France) and may invest in emerging markets (for example, Brazil and Thailand). The Overseas Fund particularly seeks companies that have financial strength and stability, strong management and fundamental value. However, the Overseas Fund may invest in companies that do not have all of these characteristics. The equity securities in which the Fund may invest include common and preferred stocks, warrants or other similar rights, and convertible securities. The Overseas Fund may also invest up to 20% of its total assets in debt securities, and there are no restrictions as to the rating of these securities. Under normal market conditions, the Overseas Fund invests at least 80% of its total assets, taken at market value, in foreign securities. The Overseas Fund may invest in 'structured 2 securities' in which the value is linked to the price of an underlying instrument, such as a currency, commodity or index, and may also invest in precious metals (such as gold bullion) or, subject to certain regulatory limitations, purchase or sell contracts for their future delivery ('futures contracts'). First Eagle U.S. Value Fund The investment objective of the U.S. Value Fund is long-term growth of capital through investment, under normal market conditions, of at least 80% of its assets in domestic equity and debt securities (at least 65% in equity securities). The U.S. Value Fund particularly seeks companies that have financial strength and stability, strong management and fundamental value. However, the U.S. Value Fund may invest in companies that do not have all of these characteristics. The equity securities in which the U.S. Value Fund may invest include common and preferred stocks, warrants or other similar rights, and convertible securities. The U.S. Value Fund may also invest up to 35% of its total assets in debt securities and may invest to a limited extent in securities of non-U.S. issuers. There are no restrictions as to the rating of debt securities that the Fund may acquire. The U.S. Value Fund may invest in 'structured securities' in which the value is linked to the price of an underlying instrument, such as a currency, commodity or index, and may also invest in precious metals (such as gold bullion) or, subject to certain regulatory limitations, purchase or sell contracts for their future delivery ('futures contracts'). Investment Philosophy of Global Fund, Overseas Fund and U.S. Value Fund. The investment philosophy and strategy of the Global Fund, Overseas Fund and U.S. Value Fund can be broadly characterized as a 'value' approach, in that each of the Funds loosely follows the teachings of Mr. Benjamin Graham, who is known as the founder of the 'value' school of investing. In particular, attention is paid to the ideas of 'intrinsic value,' which the Adviser defines as what a rational investor would pay in cash for 100% of the company, and of 'margin of safety.' A stock is deemed attractive if there is a perceived positive difference between its 'intrinsic value' and the price of the stock in the market since such difference provides the 'margin of safety.' Stocks deemed attractive under this analysis will typically be identified for acquisition or retention by the Funds, while stocks deemed unattractive under this analysis will typically be disposed of by the Funds. 3 First Eagle Gold Fund The investment objective of the Gold Fund is to provide investors the opportunity to participate in the investment characteristics of gold (and to a limited extent other precious metals) for a portion of their overall investment portfolio. An investment in the Gold Fund is not intended to be a complete investment program. However, many investors believe that, historically, a limited exposure to investments in gold or gold-related instruments may provide some offset against the market impact of political and economic disruptions, as well as relieve inflationary or deflationary pressures. Under normal circumstances, at least 80% of the value of the Gold Fund's total assets will be invested in gold and/or securities (which may include both equity and, to a limited extent, debt securities) directly related to gold or of issuers principally engaged in the gold industry, including securities of gold mining finance companies as well as operating companies with long-, medium- or short-life mines. (The Adviser considers a company as being 'principally engaged' in the gold industry if, in the opinion of the Adviser, the company's assets or revenues are significantly related to or derived from activities or investments in that industry.) Because of the Gold Fund's policy of investing primarily in gold, securities directly related to gold and/or of companies engaged in gold mining, processing, dealing in or holding gold, a substantial part of the Gold Fund's assets will generally be invested in securities of companies domiciled or operating in one or more foreign countries, including emerging markets. Up to 20% of the Gold Fund's assets may be invested in equity and, to a limited extent, debt securities unrelated to gold or the gold industry where the Adviser believes such securities are consistent with the Gold Fund's investment objective. The Gold Fund may invest up to 20% of its total assets in debt securities, and there are no restrictions as to the rating of these securities. The Gold Fund may invest in 'structured securities' in which the value is linked to the price of an underlying instrument, such as a currency, commodity or index. The Gold Fund may also invest directly in precious metals (such as gold bullion) or, subject to certain regulatory limitations, purchase or sell contracts for their future delivery ('futures contracts'). 4 First Eagle Fund of America (Class Y closed to new investors) The investment objective of the First Eagle Fund of America is capital appreciation. To achieve its objective, the Fund seeks capital appreciation by investing primarily in domestic stocks and to a lesser extent in debt and foreign equity securities. Normally, at least 80% of the Fund's assets will be invested in domestic equity and debt securities and at least 65% will be invested in domestic equity securities. Equity securities include common stocks, preferred stocks, convertible securities and warrants. Investment Philosophy of First Eagle Fund of America. Investing in stocks is actually owning part of a business. This principle of ownership guides the selection of stocks for the Fund. 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. In an event-driven approach, one 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. The Adviser invests in the securities of companies that it believes are undervalued relative to their overall financial and managerial strength. Investment decisions for the Fund are made without regard to the capitalization (size) of the companies in which it invests and, although the Fund invests primarily in large and medium-size companies, it may invest in companies of any size, including smaller companies. By careful selection, the Adviser believes that the Fund may have less exposure to loss. Changes in Investment Objective. Although no change is anticipated, the investment objective of each Fund (other than the Global Fund) can be changed without shareholder approval. Shareholders will be notified a minimum of 60 days in advance of any change in investment objective or of any change in the '80% of assets' invesment policies described above with respect to the Overseas Fund, U.S. Value Fund, Gold Fund and First Eagle Fund of America. The investment objective of the Global Fund may not be changed without shareholder approval. 5 DEFENSIVE INVESTMENT STRATEGIES The Funds may engage in currency exchange transactions to, among other reasons, hedge against losses in the U.S. dollar value of their portfolio securities resulting from possible variations in exchange rates. A currency exchange may be conducted on a spot (i.e., cash) basis or through a forward currency exchange contract or other cash management position. Although such hedged positions may be used to protect the Funds from adverse currency movements, the use of hedges may reduce or eliminate potential profits from currency fluctuations that are otherwise in the Funds' favor. The Funds have the flexibility to respond promptly to changes in market and economic conditions. For example, a defensive strategy may be warranted during periods of unfavorable market or economic conditions, including periods of market turbulence or periods when prevailing market valuations are higher than those deemed attractive under the investment criteria generally applied on behalf of the Funds. Pursuant to a defensive strategy, the Funds may temporarily hold cash and/or invest up to 100% of their assets in high quality debt securities or money market instruments of U.S. or foreign issuers (U.S. issuers only in the case of the U.S. Value Fund). In such a case, a Fund may not be able to pursue, and may not achieve, its investment objective. It is impossible to predict whether, when or for how long a Fund will employ defensive strategies. PRINCIPAL INVESTMENT RISKS Market Risk In general, the share price of each of the Funds fluctuates in reaction to stock market movements. This means that the shares of each of the Funds can fall in value. Small and Medium-Size Companies Risks In addition to investments in larger companies, each Fund may invest in smaller and medium-size companies, which historically have been more volatile in price than larger company securities, especially over the short-term. Among the reasons for the greater price volatility are the less certain growth prospects of smaller companies, the lower degree of liquidity in the markets for such securities and the greater sensitivity of smaller companies to changing economic conditions. In addition, smaller companies may lack depth of management, they may be unable to generate funds necessary for growth or development, or they may be developing or marketing new products 6 or services for which markets are not yet established and may never become established. The Trust considers small companies to be companies with market capitalizations of less than $1 billion and medium-size companies to have market capitalizations of less than $10 billion. Foreign Investments Risks -- Global Fund, Overseas Fund and Gold Fund Each of the Global Fund, Overseas Fund and Gold Fund invests significantly in foreign securities. Foreign securities involve certain inherent risks that are different from those of domestic securities, including political or economic instability of the issuer or the country of issue, changes in foreign currency and exchange rates, and the possibility of adverse changes in investment or exchange control regulations. Currency fluctuations will also affect the net asset value of a Fund irrespective of the performance of the underlying investments in foreign issuers. Typically, there is less publicly available information about a foreign company, and foreign companies may be subject to less stringent reserve, accounting and reporting requirements. Many foreign stock markets are not as large or as liquid as in the United States; fixed commissions on foreign stock exchanges are generally higher than the negotiated commissions on U.S. exchanges; and there is generally less government supervision and regulation of foreign stock exchanges, brokers and companies than in the United States. Foreign governments can also levy confiscatory taxes, expropriate assets and limit repatriations of assets. As a result of these and other factors, foreign securities may be subject to greater price fluctuation than securities of U.S. companies. These risks may be more pronounced with respect to investments in emerging markets. Debt Securities Risks -- Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund Securities with the lowest investment grade ratings are considered to have speculative characteristics. Debt securities that are unrated are considered by the Adviser to be equivalent to below investment grade (often referred to as 'junk bonds'). On balance, debt securities that are below investment grade are considered predominately speculative with respect to the issuer's capacity to pay interest and repay principal according to the terms of the obligation and, therefore, carry greater investment risk, including the possibility of default and 7 bankruptcy. They are likely to be less marketable and more adversely affected by economic downturns than higher-quality debt securities. Each of the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund may invest in debt securities without considering the maturity of the instrument. Debt securities have varying levels of sensitivity to changes in interest rates. In general, the price of a debt security can fall when interest rates rise and can rise when interest rates fall. Securities with longer maturities can be more sensitive to interest rate changes. In other words, the longer the maturity of a security, the greater the impact a change in interest rates could have on the security's price. In addition, short-term and long-term interest rates do not necessarily move in the same amount or the same direction. Gold Risks -- Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund The Gold Fund maintains a policy of concentrating its investments in gold and gold-related issues. The Global Fund, Overseas Fund and U.S. Value Fund may also invest in assets of this nature. Each is therefore susceptible to specific political and economic risks affecting the price of gold and other precious metals including changes in U.S. or foreign tax, currency or mining laws, increased environmental costs, international monetary and political policies, economic conditions within an individual country, trade imbalances, and trade or currency restrictions between countries. The price of gold, in turn, is likely to affect the market prices of securities of companies mining or processing gold, and accordingly, the value of a Fund's investments in such securities may also be affected. Gold-related investments as a group have not performed as well as the stock market in general during periods when the U.S. dollar is strong, inflation is low and general economic conditions are stable. In addition, returns on gold-related investments have traditionally been more volatile than investments in broader equity or debt markets. Although the risks related to investing in gold and other precious metals directly (as each of the Funds other than First Eagle Fund of America are authorized to do) are similar to those of investing in precious metal finance and operating companies, as just described, there are additional considerations, including custody and transaction costs that may be higher than those involving securities. Moreover, holding gold results in no income being derived from such holding, unlike securities which may pay dividends or make other current payments. Investing in futures contracts, structured securities and similar 'derivative' instruments related to precious metals also carries 8 additional risks, in that these types of instruments are (i) often more volatile than direct investments in the commodity underlying them, because they commonly involve significant 'built in' leverage, and (ii) subject to the risk of default by the counterparty to the contract. Although the Funds have contractual protections with respect to the credit risk of their custodian, gold held in physical form (even in a segregated account) involves the risk of delay in obtaining the assets in the case of bankruptcy or insolvency of the custodian. This could impair disposition of the assets under those circumstances. Finally, although not currently anticipated, if gold in the future were held in book account, it would involve risks of the credit of the party holding the gold. Non-Diversification Risk -- Gold Fund and First Eagle Fund of America The Gold Fund and First Eagle Fund of America are non-diversified mutual funds. As such, an investment in the Gold Fund or First Eagle Fund of America may expose your money to greater risks than if you invest in a diversified fund. Because these Funds may invest in a limited number of companies and industries, gains or losses in a particular security may have a greater impact on their share price. Event-Driven Style Risk -- First Eagle Fund of America The event-driven investment style used by the First Eagle Fund of America 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. DISCLOSURE OF PORTFOLIO HOLDINGS A description of the Funds' policies and procedures with respect to disclosure of their portfolio securities is available in the Funds' Statement of Additional Information, which is available upon request as described on the back cover of this Prospectus, and on the Funds' website at www.firsteaglefunds.com. Top position holdings (generally either top-ten or top-five depending on the concentration represented), as well as certain statistical information relating to portfolio holdings such as country or sector breakdowns, for the Funds are posted to the website on a monthly basis within 30 days after the end of each month. These postings can be located behind the 'Download Portfolio Composition' icon on each Fund's page of the website and generally are available for at least 30 days from their date of posting. Archived top holding postings are also available for up to six months. 9 THE FUNDS' PERFORMANCE Many factors affect an investment fund's performance. The following information provides some indication of the risks of investing in the Funds by showing changes in each Fund's performance from year to year and by showing how each Fund's average annual returns over the periods indicated compare to those of a broad measure of market performance. As with all mutual funds, past performance (before and after tax) is not an indication of future performance. First Eagle Global Fund (closed to new investors) The following bar chart assumes reinvestment of dividends and distributions and does not reflect any sales charges. If sales charges were included, the returns would be lower. Calendar Year Total Return Chart First Eagle Global Fund -- Class A (Numbers are in percentages) '96 13.64 '97 8.54 '98 (0.26) '99 19.56 '00 9.72 '01 10.21 '02 10.23 '03 37.64 '04 18.37 '05 14.91
For the periods presented in the bar chart above, here is some additional return information for Class A shares of the Global Fund. - --------------------------------------------- Best Quarter 15.72% Second Quarter 2003 Worst Quarter (10.98)% Third Quarter 1998 - ---------------------------------------------
Investment performance for the last quarter of 2005 was 3.54%. The following table illustrates how the Global Fund's average annual return for different calendar periods compares to the return of the Morgan Stanley Capital International (MSCI) World Index. The MSCI World Index is a widely followed unmanaged group of stocks from 23 international markets. The before-tax figures in the table assume that you sold your shares at the end of each period, and all figures reflect the effect of the maximum applicable sales charge. 10 Average Annual Total Return Comparison as of December 31, 2005(1)
- ------------------------------------------------------------------------------------ Life of Life of 1 Year 5 Years 10 Years Class C(3) Class I(3) - ------------------------------------------------------------------------------------ First Eagle Global Fund Class A Shares(2) Return Before Taxes........... 9.16% 16.66% 13.45% Return After Taxes on Distributions... 7.67% 15.43% 10.68% Return After Taxes on Distributions and Sale of Fund Shares..... 6.63% 13.97% 10.03% Class C Shares Return Before Taxes........... 12.96% 17.00% N/A 16.76% Class I Shares Return Before Taxes........... 15.22% 18.16% N/A 15.44% MSCI World Index (reflects no deduction for fees, expenses or taxes).. 9.49% 2.18% 7.04% (0.27)% 3.50% - ------------------------------------------------------------------------------------
(1) This table discloses after-tax returns only for Class A shares of this Fund. After-tax returns for Class C and Class I shares will vary. (2) After-tax returns are calculated using the highest individual federal income tax rate for each year included in the presentation, which is currently 35% for ordinary income and short-term capital gains and 15% for long-term capital gains. The effect of applicable tax credits, such as the foreign tax credit, is taken into account in accordance with federal tax law. Such returns do not reflect the effect of state and local taxes, nor do they reflect the phase-outs of certain federal exemptions, deductions, and credits at various income levels, or the impact of the federal alternative minimum tax. Please note that actual after-tax returns depend on your individual tax situation, which may differ from the returns presented. For instance, after-tax returns are not relevant to investors who hold their funds in tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. (3) Inception of Class C shares on June 5, 2000. Inception of Class I shares on July 31, 1998. 11 First Eagle Overseas Fund (closed to new investors) The following bar chart assumes reinvestment of dividends and distributions and does not reflect any sales charges. If sales charges were included, the returns would be lower. Calendar Year Total Return Chart First Eagle Overseas Fund -- Class A (Numbers are in percentages) '96 14.53 '97 3.02 '98 2.53 '99 33.19 '00 5.68 '01 5.35 '02 12.53 '03 41.41 '04 21.83 '05 16.92
For the periods presented in the bar chart above, here is some additional return information for Class A shares of the Overseas Fund. - --------------------------------------------- Best Quarter 16.65% Second Quarter 2003 Worst Quarter (13.82)% Third Quarter 1998 - ---------------------------------------------
Investment performance for the last quarter of 2005 was 3.98%. The following table illustrates how the Overseas Fund's average annual return for different calendar periods compares to the return of the Morgan Stanley Capital International (MSCI) EAFE Index. The MSCI EAFE Index is a total return index, reported in U.S. dollars, based on share prices and reinvested gross dividends of approximately 1,100 companies from 21 countries. The before-tax figures in the table assume that you sold your shares at the end of each period, and all figures reflect the effect of the maximum applicable sales charge. 12 Average Annual Total Return Comparison as of December 31, 2005(1)
- ------------------------------------------------------------------------------------ Life of Life of 1 Year 5 Years 10 Years Class C(3) Class I(3) - ------------------------------------------------------------------------------------ First Eagle Overseas Fund Class A Shares(2) Return Before Taxes............ 11.08% 17.80% 14.62% Return After Taxes on Distributions.... 8.69% 16.78% 11.81% Return After Taxes on Distributions and Sale of Fund Shares........... 8.48% 15.22% 11.10% Class C Shares Return Before Taxes............ 14.94% 18.15% N/A 17.19% Class I Shares Return Before Taxes............ 17.28% 19.29% N/A 16.81% MSCI EAFE Index (reflects no deduction for fees, expenses or taxes)... 13.54% 4.55% 5.84% 1.81% 4.59% - ------------------------------------------------------------------------------------
(1) This table discloses after-tax returns only for Class A shares of this Fund. After-tax returns for Class C and Class I shares will vary. (2) After-tax returns are calculated using the highest individual federal income tax rate for each year included in the presentation, which is currently 35% for ordinary income and short-term capital gains and 15% for long-term capital gains. The effect of applicable tax credits, such as the foreign tax credit, is taken into account in accordance with federal tax law. Such returns do not reflect the effect of state and local taxes, nor do they reflect the phase-outs of certain federal exemptions, deductions, and credits at various income levels, or the impact of the federal alternative minimum tax. Please note that actual after-tax returns depend on your individual tax situation, which may differ from the returns presented. For instance, after-tax returns are not relevant to investors who hold their funds in tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. (3) Inception of Class C shares on June 5, 2000. Inception of Class I shares on July 31, 1998. 13 First Eagle U.S. Value Fund The following bar chart assumes reinvestment of dividends and distributions and does not reflect any sales charges. If sales charges were included, the returns would be lower. Calendar Year Total Return Chart First Eagle U.S. Value Fund -- Class A (Numbers are in percentages) '02 (2.58) '03 29.92 '04 14.67 '05 7.16
For the periods presented in the bar chart above, here is some additional return information for Class A shares of the U.S. Value Fund. - ------------------------------------------ Best Quarter 15.20% Second Quarter 2003 Worst Quarter (9.57)% Third Quarter 2002 - ------------------------------------------
Investment performance for the last quarter of 2005 was 1.08%. The following table illustrates how the U.S. Value Fund's average annual return for different calendar periods compares to the return of the Standard & Poor's 500 Index and the Russell 2000 Index. The Standard & Poor's 500 Index is a widely recognized unmanaged index including a representative sample of 500 leading companies in leading sectors of the U.S. economy. Although this index focuses on larger companies, it is also considered a proxy for the total market. The Russell 2000 Index is a widely followed unmanaged index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The before-tax figures in the table assume that you sold your shares at the end of each period, and all figures reflect the effect of the maximum applicable sales charge. 14 Average Annual Total Return Comparison as of December 31, 2005(1)
- --------------------------------------------------------------------------- Life of 1 Year Fund(3) - --------------------------------------------------------------------------- First Eagle U.S. Value Fund Class A Shares(2) Return Before Taxes............................. 1.81% 12.53% Return After Taxes on Distributions............. 0.90% 11.19% Return After Taxes on Distributions and Sale of Fund Shares................................... 1.46% 10.13% Class C Shares Return Before Taxes............................. 5.28% 13.02% Class I Shares Return Before Taxes............................. 7.44% 14.14% Russell 2000 Index (reflects no deduction for fees, expenses or taxes)................................ 4.55% 10.11% Standard & Poor's 500 Index (reflects no deduction for fees, expenses or taxes)...................... 4.91% 4.03% - ---------------------------------------------------------------------------
(1) This table discloses after-tax returns only for Class A shares of this Fund. After-tax returns for Class C and Class I shares will vary. (2) After-tax returns are calculated using the highest individual federal income tax rate for each year included in the presentation, which is currently 35% for ordinary income and short-term capital gains and 15% for long-term capital gains. The effect of applicable tax credits, such as the foreign tax credit, is taken into account in accordance with federal tax law. Such returns do not reflect the effect of state and local taxes, nor do they reflect the phase-outs of certain federal exemptions, deductions, and credits at various income levels, or the impact of the federal alternative minimum tax. Please note that actual after-tax returns depend on your individual tax situation, which may differ from the returns presented. For instance, after-tax returns are not relevant to investors who hold their funds in tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. (3) Inception on September 4, 2001. 15 First Eagle Gold Fund The following bar chart assumes reinvestment of dividends and distributions and does not reflect any sales charges. If sales charges were included, the returns would be lower. Calendar Year Total Return Chart First Eagle Gold Fund -- Class A (Numbers are in percentages) '96 0.89 '97 (29.79) '98 (18.44) '99 8.09 '00 (17.91) '01 37.31 '02 106.97 '03 39.43 '04 (5.11) '05 26.25
For the periods presented in the bar chart above, here is some additional return information for Class A shares of the Gold Fund. - -------------------------------------------- Best Quarter 50.40% First Quarter 2002 Worst Quarter (22.44)% Fourth Quarter 1997 - --------------------------------------------
Investment performance for the last quarter of 2005 was 14.78%. The following table illustrates how the Gold Fund's average annual return for different calendar periods compares to the return of the Morgan Stanley Capital International (MSCI) World Index and the FTSE Gold Mines Index. The MSCI World Index is a widely followed group of unmanaged stocks from 23 international markets. The FTSE Gold Mines Index is an unmanaged index comprised of 32 gold mining companies. The before-tax figures in the table assume that you sold your shares at the end of each period, and all figures reflect the effect of the maximum applicable sales charge. 16 Average Annual Total Return Comparison as of December 31, 2005(1)
- ----------------------------------------------------------------------------------- Life of Life of 1 Year 5 Years 10 Years Class C(3) Class I(3) - ----------------------------------------------------------------------------------- First Eagle Gold Fund Class A Shares(2) Return Before Taxes.......... 19.94% 35.15% 8.88% Return After Taxes on Distributions.. 18.90% 34.43% 7.71% Return After Taxes on Distributions and Sale of Fund Shares.... 12.93% 31.32% 6.95% Class C Shares Return Before Taxes............ 24.12% N/A N/A 22.43% Class I Shares Return Before Taxes............ 26.53% N/A N/A 23.63% MSCI World Index (reflects no deduction for fees, expenses or taxes)........... 9.49% 2.18% 7.04% 18.36% 18.36% FTSE Gold Mines Index (reflects no deduction for fees, expenses or taxes)........... 27.82% 26.00% 1.27% 24.55% 24.55% - -----------------------------------------------------------------------------------
(1) After-tax returns are shown for Class A shares only and will vary for Class C and Class I shares. (2) After-tax returns are calculated using the highest individual federal income tax rate for each year included in the presentation, which is currently 35% for ordinary income and short-term capital gains and 15% for long-term capital gains. The effect of applicable tax credits, such as the foreign tax credit, is taken into account in accordance with federal tax law. Such returns do not reflect the effect of state and local taxes, nor do they reflect the phase-outs of certain federal exemptions, deductions, and credits at various income levels, or the impact of the federal alternative minimum tax. Please note that actual after-tax returns depend on your individual tax situation, which may differ from the returns presented. For instance, after-tax returns are not relevant to investors who hold their funds in tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. (3) Class C and Class I inception on May 15, 2003. 17 First Eagle Fund of America (Class Y closed to new investors) The performance information depicted below for periods prior to January 1, 2003 was attained by the Fund in its prior format as a series of the prior First Eagle Funds trust. The Fund is managed in the same manner, by the same investment personnel and subject to the same investment policies as when it was a series of that trust. The following bar chart assumes reinvestment of dividends and distributions. Calendar Year Total Returns Chart First Eagle Fund of America -- Class Y (Numbers are in percentages) '96 29.34 '97 29.46 '98 20.99 '99 12.09 '00 0.34 '01 8.25 '02 (7.23) '03 22.21 '04 15.91 '05 6.56
For the periods presented in the bar chart above, here is some additional return information. - -------------------------------------------- Best Quarter 16.82% Fourth Quarter 1998 Worst Quarter (13.48)% Third Quarter 1998 - --------------------------------------------
Investment performance for the last quarter of 2005 was 2.85%. 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 Index. The Standard & Poor's 500 Index is a widely recognized unmanaged index including a representative sample of 500 leading companies in leading sectors of the U.S. economy. Although the index focuses on larger companies, it is also considered a proxy for the total market. The before-tax figures in the table assume that you sold your shares at the end of each period, and all figures reflect the effect of the maximum applicable sales charge. 18 Average Annual Total Return Comparison as of December 31, 2005(1)
- --------------------------------------------------------------------------------------- Life of Life of 1 Year 5 Years 10 Years Class C(3) Class A(3) - --------------------------------------------------------------------------------------- First Eagle Fund of America Class Y Shares(2) Return Before Taxes.... 6.56% 8.68% 13.20% Return After Taxes on Distributions........ 5.12% 7.97% 10.45% Return After Taxes on Distributions and Sale of Fund Shares............... 5.96% 7.42% 10.01% Class C Shares Return Before Taxes.... 4.74% 7.87% N/A 7.67% Class A Shares Return Before Taxes.... 1.21% 7.50% N/A 7.64% Standard & Poor's 500 Index (reflects no deduction for fees, expenses or taxes)....... 4.91% 0.54% 9.07% 3.82% 2.52% - ---------------------------------------------------------------------------------------
(1) After-tax returns presented only for no-load Class Y shares. After-tax returns for Class C shares and Class A shares will vary. (2) After-tax returns are calculated using the highest individual federal income tax rate for each year in the presentation, which is currently 35% for ordinary income and short-term capital gains and 15% for long-term capital gains. The effect of applicable tax credits, such as the foreign tax credit, is taken into account in accordance with federal tax law. Such returns do not reflect the effect of state and local taxes, nor do they reflect the phase-outs of certain federal exemptions, deductions, and credits at various income levels, or the impact of the federal alternative minimum tax. Your actual after-tax returns will depend on your individual tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their funds in tax-deferred arrangements such as 401(k) plans or individual retirement accounts. (3) Inception of Class C shares on March 2, 1998. Inception of Class A shares on November 20, 1998. FEES AND EXPENSES The following information describes the fees and expenses you may pay if you buy and hold shares of each Fund. Shareholder fees are paid directly from your investment. Operating expenses are paid from the Fund's assets and are therefore incurred by shareholders indirectly. 19 First Eagle Global Fund's Fees and Expenses (closed to new investors)
- ----------------------------------------------------------------------------- Class A Class C Class I - ----------------------------------------------------------------------------- Shareholder Fees Maximum Sales Charge (Load) on Purchases (as a percentage of public offering price)...... 5.00% None None 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 90 days of purchase)........ 2.00% 2.00% 2.00% Annual Operating Expenses Management Fees.............................. 0.75% 0.75% 0.75% Distribution (12b-1)/Service Fees............ 0.25% 1.00% None Other Expenses**............................. 0.20% 0.20% 0.20% - ----------------------------------------------------------------------------- Total Annual Operating Expenses.............. 1.20% 1.95% 0.95% - -----------------------------------------------------------------------------
* Redemption proceeds sent by bank wire are subject to a $7.50 fee. ** Other expenses are allocated on a pro rata basis in relationship to the relative net assets of each share class of the Fund. Other expenses reflect the actual expenses experienced during the fiscal year ended October 31, 2005. The largest of these expenses were fees paid and costs reimbursed to parties providing transfer agency services to the Fund, including brokers and other persons providing such services as sub-transfer agents in connection with maintaining omnibus and other 'street name' shareholder accounts with the Fund. Other expenses also reflect credits realized as a result of uninvested cash balances, which are used to reduce certain service provider expenses. Absent these credits, the Fund's expenses would be higher. 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 assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that the average annual return is 5% and that operating expenses remain the same. The example does not represent the Fund's actual past or future expenses and returns. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
- ------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------- Class A shares....................... $616 $862 $1,127 $1,882 Class C shares....................... $298 $612 $1,052 $2,275 Class I shares....................... $ 97 $303 $ 525 $1,166 - -------------------------------------------------------------------------------
Since only Class C shares of the Global Fund have a one year contingent deferred sales charge, you would pay the following expenses if you did not sell your Class C shares of the Fund at the end of the following periods:
- ------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------- Class C shares....................... $198 $612 $1,052 $2,275 - -------------------------------------------------------------------------------
20 First Eagle Overseas Fund's Fees and Expenses (closed to new investors)
- --------------------------------------------------------------------------- Class A Class C Class I - --------------------------------------------------------------------------- Shareholder Fees Maximum Sales Charge (Load) on Purchases (as a percentage of public offering price)................................. 5.00% None None 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 90 days of purchase).............................. 2.00% 2.00% 2.00% Annual Operating Expenses Management Fees......................... 0.75% 0.75% 0.75% Distribution (12b-1)/Service Fees....... 0.25% 1.00% None Other Expenses**........................ 0.18% 0.18% 0.18% - --------------------------------------------------------------------------- Total Annual Operating Expenses......... 1.18% 1.93% 0.93% - ---------------------------------------------------------------------------
* Redemption proceeds sent by bank wire are subject to a $7.50 fee. ** Other expenses are allocated on a pro rata basis in relationship to the relative net assets of each share class of the Fund. Other expenses reflect the actual expenses experienced during the fiscal year ended October 31, 2005. The largest of these expenses were fees paid and costs reimbursed to parties providing transfer agency services to the Fund, including brokers and other persons providing such services as sub-transfer agents in connection with maintaining omnibus and other 'street name' shareholder accounts with the Fund. Other expenses also reflect credits realized as a result of uninvested cash balances, which are used to reduce certain service provider expenses. Absent these credits, the Fund's expenses would be higher. 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 assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that the average annual return is 5% and that operating expenses remain the same. The example does not represent the Fund's actual past or future expenses and returns. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
- --------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years - --------------------------------------------------------------------------- Class A shares................... $614 $856 $1,117 $1,860 Class C shares................... $296 $606 $1,042 $2,254 Class I shares................... $ 95 $296 $ 515 $1,143 - ---------------------------------------------------------------------------
Since only Class C shares of the Overseas Fund have a one year contingent deferred sales charge, you would pay the following expenses if you did not sell your Class C shares of the Fund at the end of the following periods:
- --------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years - --------------------------------------------------------------------------- Class C shares................... $196 $606 $1,042 $2,254 - ---------------------------------------------------------------------------
21 First Eagle U.S. Value Fund's Fees and Expenses
- ------------------------------------------------------------------------- Class A Class C Class I - ------------------------------------------------------------------------- Shareholder Fees Maximum Sales Charge (Load) on Purchases (as a percentage of public offering price).................................. 5.00% None None 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 90 days of purchase)............................... 2.00% 2.00% 2.00% Annual Operating Expenses Management Fees.......................... 0.75% 0.75% 0.75% Distribution (12b-1)/Service Fees........ 0.25% 1.00% None Other Expenses**......................... 0.28% 0.29% 0.29% - ------------------------------------------------------------------------- Total Annual Operating Expenses.......... 1.28% 2.02% 1.04% - -------------------------------------------------------------------------
* Redemption proceeds sent by wire are subject to a $7.50 fee. ** Other expenses are allocated on a pro rata basis in relationship to the relative net assets of each share class of the Fund. Other expenses reflect the actual expenses experienced during the fiscal year ended October 31, 2005. The largest of these expenses were fees paid and costs reimbursed to parties providing transfer agency services to the Fund, including brokers and other persons providing such services as sub-transfer agents in connection with maintaining omnibus and other 'street name' shareholder accounts with the Fund. Other expenses also reflect credits realized as a result of uninvested cash balances, which are used to reduce certain service provider expenses. Absent these credits, the Fund's expenses would be higher. 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 assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that the average annual return is 5% and that operating expenses remain the same. The example does not represent the Fund's actual past or future expenses and returns. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
- ------------------------------------------------------------------------------ 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------ Class A shares....................... $624 $886 $1,167 $1,968 Class C shares....................... $305 $634 $1,088 $2,348 Class I shares....................... $106 $331 $ 574 $1,271 - ------------------------------------------------------------------------------
Since only Class C shares of the U.S. Value Fund have a one year contingent deferred sales charge, you would pay the following expenses if you did not sell your Class C shares of the U.S. Value Fund at the end of the following periods:
- ------------------------------------------------------------------------------ 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------ Class C shares....................... $205 $634 $1,088 $2,348 - ------------------------------------------------------------------------------
22 First Eagle Gold Fund's Fees and Expenses
- ----------------------------------------------------------------------------- Class A Class C Class I - ----------------------------------------------------------------------------- Shareholder Fees Maximum Sales Charge (Load) on Purchases (as a percentage of public offering price)...... 5.00% None None 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 90 days of purchase)........ 2.00% 2.00% 2.00% Annual Operating Expenses Management Fees.............................. 0.75% 0.75% 0.75% Distribution (12b-1)/Service Fees............ 0.25% 1.00% None Other Expenses**............................. 0.29% 0.29% 0.29% - ----------------------------------------------------------------------------- Total Annual Operating Expenses.............. 1.29% 2.04% 1.04% - -----------------------------------------------------------------------------
* Redemption proceeds sent by wire are subject to a $7.50 fee. ** Other expenses are allocated on a pro rata basis in relationship to the relative net assets of each share class of the Fund. Other expenses reflect the actual expenses experienced during the fiscal year ended October 31, 2005. The largest of these expenses were fees paid and costs reimbursed to parties providing transfer agency services to the Fund, including brokers and other persons providing such services as sub-transfer agents in connection with maintaining omnibus and other 'street name' shareholder accounts with the Fund. Other expenses also reflect credits realized as a result of uninvested cash balances, which are used to reduce certain service provider expenses. Absent these credits, the Fund's expenses would be higher. 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 assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that the average annual return is 5% and that operating expenses remain the same. The example does not represent the Fund's actual past or future expenses and returns. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
- ------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------- Class A shares....................... $625 $889 $1,172 $1,979 Class C shares....................... $307 $640 $1,098 $2,369 Class I shares....................... $106 $331 $ 574 $1,271 - -------------------------------------------------------------------------------
Since only Class C shares of the Fund have a one year contingent deferred sales charge, you would pay the following expenses if you did not sell your Class C shares of the Fund at the end of the following periods:
- ------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------- Class C shares....................... $207 $640 $1,098 $2,369 - -------------------------------------------------------------------------------
23 First Eagle Fund of America's Fees and Expenses (Class Y closed to new investors)
- ----------------------------------------------------------------------------- Class A Class C Class Y - ----------------------------------------------------------------------------- Shareholder Fees Maximum Sales Charge (load) on purchases (as a percentage of offering price)............. 5.00% None None Maximum Deferred Sales Charge (load) on purchases (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 90 days of purchase)........ 2.00% 2.00% 2.00% Annual Operating Expenses Management Fees.............................. 1.00% 1.00% 1.00% Distribution (12b-1)/Service Fees............ 0.25% 1.00% 0.25% Other Expenses**............................. 0.16% 0.17% 0.18% - ----------------------------------------------------------------------------- Total Annual Operating Expenses.............. 1.41% 2.17% 1.43% - -----------------------------------------------------------------------------
* Redemption proceeds sent by bank wire are subject to a $7.50 fee. ** Other expenses are allocated on a pro rata basis in relationship to the relative net assets of each share class of the Fund. Other expenses reflect the actual expenses experienced during the fiscal year ended October 31, 2005. The largest of these expenses were fees paid and costs reimbursed to parties providing transfer agency services to the Fund, including brokers and other persons providing such services as sub-transfer agents in connection with maintaining omnibus and other 'street name' shareholder accounts with the Fund. Other expenses also reflect credits realized as a result of uninvested cash balances, which are used to reduce certain service provider expenses. Absent these credits, the Fund's expenses would be higher. 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 assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that the average annual return is 5% and that operating expenses remain the same. The example does not represent the Fund's actual past or future expenses and returns. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
- ------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------- Class A shares....................... $636 $924 $1,233 $2,106 Class C shares....................... $320 $679 $1,164 $2,503 Class Y shares....................... $146 $452 $ 782 $1,713 - -------------------------------------------------------------------------------
Since only Class C shares have a one year contingent deferred sales charge, you would pay the following expenses if you did not sell your Class C shares at the end of the following periods:
- ------------------------------------------------------------------------------- 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------- Class C shares....................... $220 $679 $1,164 $2,503 - -------------------------------------------------------------------------------
24 OUR MANAGEMENT TEAM The Adviser The Adviser of the Trust is Arnhold and S. Bleichroeder Advisers, LLC, a wholly owned subsidiary of Arnhold and S. Bleichroeder Holdings, Inc. ('ASB Holdings'). Based in New York City since 1937, ASB Holdings 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 Adviser offers a variety of investment management services. In addition to the Funds, its clients include corporations, foundations, major retirement plans and high net worth individuals. As of January 2006, the Adviser had more than $37.3 billion under management. Charles de Vaulx, Senior Vice President of the Trust, is primarily responsible for the day-to-day management of the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund. Mr. de Vaulx is an officer of the Adviser and was formerly associated with Societe Generale Asset Management Corp. since 1987. Mr. de Vaulx has been a Portfolio Manager of the Global Fund, the Overseas Fund and the Gold Fund since December 1999 (Associate Portfolio Manager since December 1996) and the U.S. Value Fund since its inception. Additional information regarding Mr. de Vaulx's compensation, other accounts managed by Mr. de Vaulx and his ownership of securities in the Trust is available in the Statement of Additional Information. Mr. de Vaulx is supported in his duties by a team of research analysts employed by the Adviser. Also available in the Statement of Additional Information is certain background information regarding these analysts. The personnel responsible for the day-to-day management of the First Eagle Fund of America are described below under 'The Subadviser.' Pursuant to an advisory agreement ('Advisory Agreement') with the Funds, the Adviser is responsible for the management of each of the Funds' portfolios and either directly reviews their holdings in the light of its own research analysis and those of other relevant sources or, in the case of the First Eagle Fund of America, oversees and supervises the investment management services provided by the Subadviser. In return for its investment management services, each Fund pays the Adviser a fee at the annual rate of the average daily value of its net assets as follows: Global Fund........... 0.75% Overseas Fund......... 0.75% U.S. Value Fund....... 0.75% Gold Fund............. 0.75% First Eagle Fund of America.............. 1.00%
25 The Adviser also performs certain administrative and accounting services on behalf of the Funds, and, in accordance with its agreement with them, the Funds reimburse the Adviser for costs (including personnel, overhead and other costs) related to those services. These reimbursements may not exceed an annual rate of 0.05% of the value of a Fund's average daily net assets. The Subadviser Pursuant to a subadvisory agreement ('Subadvisory Agreement') with the Adviser, Iridian Asset Management LLC ('Iridian' or the 'Subadviser') manages the investments of the First Eagle Fund of America. Iridian, a registered investment adviser whose primary office is at 276 Post Road West, Westport, CT 06880, is a majority-owned subsidiary of BIAM (US), Inc., a wholly owned U.S. subsidiary of The Governor and Company of The Bank of Ireland. Harold J. Levy is a portfolio manager of the First Eagle Fund of America and, as an employee of ASB Advisers, was a portfolio manager of the Fund in its prior format as a series of the prior First Eagle Funds trust since its inception in April 1987. David L. Cohen is a portfolio manager of the Fund and, as an employee of ASB Advisers, was a portfolio manager of the Fund in its prior format as a series of the prior First Eagle Funds trust since 1989. Messrs. Levy and Cohen are minority owners of Iridian, which they formed in November 1995. Prior to the Subadvisory Agreement, Messrs. Levy and Cohen were also employed by ASB Advisers since 1985 and 1989, respectively. The fees paid to Iridian by the Adviser under the Subadvisory Agreement are based on a reference amount equal to 50% of the combined (i) fees received by the Adviser for advisory services on behalf of the Fund and (ii) the fees received by the Fund's distributor for its shareholder liaison services on behalf of the Fund. These amounts are reduced by certain direct marketing costs borne by the Adviser in connection with the Fund and are further reduced by the amount paid by the Adviser for certain administrative expenses incurred in providing services to the Fund. Additional information regarding these portfolio managers' compensation, other accounts managed by these portfolio managers and their ownership of securities in First Eagle Fund of America is available in the Statement of Additional Information. Approval of Advisory and Subadvisory Agreements For your reference, a discussion regarding the basis of the Board of Trustees' approval of the Advisory and Subadvisory Agreements with 26 the Funds is available in the Statement of Additional Information and will be included in the Semi-Annual Report to Shareholders for the financial reporting period ending April 30, 2006. Distribution and Shareholder Services Expenses The shares of each of the Funds are offered, in states and countries in which such offer is lawful, to investors either through selected securities dealers or directly by First Eagle Funds Distributors, a division of ASB Securities LLC ('First Eagle Distributors' or the 'Distributor'), the Funds' principal underwriter. Like ASB Advisers, ASB Securities LLC is a wholly owned subsidiary of ASB Holdings. Class A shares of each of the Funds are subject to the front-end sales charges described under 'About Your Investment -- Public Offering Price of Class A Shares.' Each of the Funds has adopted Distribution Plans and Agreements pursuant to Rule 12b-1 (the 'Plans') under the Investment Company Act of 1940. Under the Plans, each Fund pays First Eagle Distributors distribution related fees at an annual rate of 0.25% of the average daily net asset value of the Fund attributable to its Class A shares, distribution related fees as well as service fees at a combined annual rate of 1.00% of the average daily net asset value of the Fund attributable to its Class C shares, and in the case of the First Eagle Fund of America, distribution related fees at an annual rate of 0.25% of the average daily net asset value of the Fund attributable to its Class Y shares. First Eagle Distributors has agreed, subject to its right to unilaterally require payments monthly, to accept the payments involved (whether distribution related or service fees) on a quarterly basis other than in certain exceptional cases. First Eagle Distributors is obligated to use the amounts received under the Plans for payments to qualifying dealers for their assistance in the distribution of a Fund's shares, the provision of shareholder services and for other expenses such as advertising costs and the payment for the printing and distribution of prospectuses to prospective investors. However, First Eagle Distributors will not pay dealers 12b-1, distribution related and service fees for any quarter in which they have less than $50,000 in Fund accounts. First Eagle Distributors bears distribution expenses to the extent they are not covered by payments under the Plans. Any distribution expenses incurred by First Eagle Distributors in any fiscal year of a Fund that are not reimbursed from payments under the Plans accrued in such fiscal year will not be carried over for payment under the Plans in any subsequent year. Class I shares of the Global Fund, the Overseas Fund, the U.S. Value Fund and the Gold Fund do not participate in the Plans and are 27 not charged with any portion of the payments made under the Plans. Because the fees are paid from Fund assets on an ongoing basis, over time these fees will increase the cost of an investment in the Funds and may ultimately cost more than paying other types of sales charges. Certain broker-dealers or other third-parties hold their accounts in 'street name' and perform the services normally handled by DST Systems, Inc. ('DST'), the Funds' transfer agent -- e.g., client statements, tax reporting, order-processing and client relations. As a result, they charge the Funds for these services. Sub-transfer agency fees paid by the Funds are in aggregate not more than what otherwise would have been paid to DST for the same services. Arrangements may involve a per-account fee, an asset-based fee, a sales-based fee or, in some cases, a combination of the three. These fees are directly attributable to First Eagle Funds shareholders serviced by the relevant party. (While the Adviser and the Distributor consider these to be payments for services rendered, they represent an additional business relationship between these sub-transfer agents and the Funds that often results, at least in part, from past or present sales of Fund shares by the sub-transfer agents or their affiliates.) Revenue Sharing The Distributor, the Adviser or an affiliate may, from time to time, out of its (or their) own resources, make cash payments -- sometimes referred to as 'revenue sharing' -- to broker dealers or financial intermediaries for various reasons. These payments may support the delivery of services to the Funds or to shareholders in the Funds, including, without limitation, transaction processing and sub-accounting services. These payments also may serve as an incentive to sell shares of the Funds and/or to promote retention of customer assets in the Funds. As such, they may be made to firms that provide various marketing support or other promotional services relating to the Funds, including, without limitation, advertising, access on the part of the Distributor's personnel to sales meetings, sales representatives and/or management representatives of the broker dealer or other financial intermediary, as well as inclusion of the Funds in various promotional and sales programs. Marketing support services also may include business planning assistance, educating broker dealer personnel about the Funds and shareholder financial planning assistance. Revenue sharing payments may include any portion of the sub-transfer agency fees described in the preceding section of the Prospectus that exceed the costs of similar services provided by the Funds' transfer 28 agent, DST Systems, Inc. They also may include any other payment requirement of a broker dealer or another third-party intermediary, including certain agreed upon 'finder's fees' as described in greater detail under 'Public Offering Price of Class A Shares -- Class A Contingent Deferred Sales Charge.' All such payments are paid by the Distributor, the Adviser or an affiliate of either out of its (or their) own resources and are in addition to any Rule 12b-1 payments described elsewhere in this Prospectus. Revenue sharing payments may be structured: (i) as a percentage of sales; (ii) as a percentage of net assets; (iii) as a fixed dollar amount; or (iv) as some combination of any of these. In many cases, they therefore may be viewed as encouraging sales activity or retention of assets in the Funds. Generally, any revenue sharing or other payments of the type just described will have been requested by the party receiving them, often as a condition of distribution, but are subject to negotiation as to their structure and scope. The Distributor, the Adviser and/or an affiliate of either also pays from its (or their) own resources for travel and other expenses, including lodging, entertainment and meals, incurred by brokers or broker representatives related to diligence or informational meetings in which broker representatives meet with investment professionals employed by a Fund's investment adviser, as well as for costs of organizing and holding such meetings. The Funds and/or such related parties to the Funds also may make payments to or on behalf of brokers or their representatives for other types of events, including preapproved conferences, seminars or training programs (and payments for travel, lodging and the like for the same), and may provide certain small gifts and/or entertainment as permitted by applicable rules. A shareholder or prospective investor should be aware that revenue sharing arrangements or other payments to intermediaries could create incentives on the part of the parties receiving the payments to more positively consider the Funds relative to mutual funds either not making payments of this nature or making smaller such payments. A shareholder or prospective investor with questions regarding revenue sharing or other such payments may obtain more details by contacting his or her broker representative or other financial intermediary directly. The Funds' Statement of Additional Information includes a listing of certain parties receiving revenue sharing payments in respect of the Funds. 29 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. How to Purchase Shares The minimum initial and subsequent investment amounts generally required for each Fund and each class of shares within a Fund are listed in the table below:
- --------------------------------------------------------------------------- Minimum Investments Initial* Subsequent - --------------------------------------------------------------------------- Global Fund Class A**........................ $2,500 $100 Global Fund Class C**........................ $2,500 $100 Global Fund Class I**........................ $1 million*** $100 Overseas Fund Class A**...................... $2,500 $100 Overseas Fund Class C**...................... $2,500 $100 Overseas Fund Class I**...................... $1 million*** $100 U.S. Value Fund Class A...................... $2,500 $100 U.S. Value Fund Class C...................... $2,500 $100 U.S. Value Fund Class I...................... $1 million*** $100 Gold Fund Class A............................ $2,500 $100 Gold Fund Class C............................ $2,500 $100 Gold Fund Class I............................ $1 million*** $100 First Eagle Fund of America Class A.......... $2,500 $100 First Eagle Fund of America Class C.......... $2,500 $100 First Eagle Fund of America Class Y**........ $2,500 $100 - ---------------------------------------------------------------------------
* Minimum initial investments with respect to purchases of Class A and Class C shares by an individual retirement account are $1,000 (instead of $2,500 as is otherwise required). ** The Global Fund, the Overseas Fund and Class Y of First Eagle Fund of America currently are closed to new investors, subject to limited exceptions described on the next page. *** The current aggregate net asset value of a shareholder's accounts in any of the Funds may qualify for purposes of meeting the initial minimum investment amount for Class I shares of the Global Fund, the Overseas Fund, the U.S. Value Fund or the Gold Fund. The minimum may be waived for Class I shares for sponsors of 401(k) plans and wrap fee programs if approved by First Eagle Distributors, the Funds' principal underwriter. The Automatic Investment Program and Automatic Exchange Program each require a minimum initial investment of $100 per Fund. 'Starter' checks and third-party checks will not be accepted for purposes of purchasing shares, although third-party checks may be accepted in connection with individual retirement account roll-overs. Third-party transactions, except those for the benefit of custodial accounts or participants in employee benefit plans, are not permitted. The Trust reserves the right to waive the initial minimum investment amounts, at the discretion of the principal underwriter, for certain investors, including Trust employees and trustees and employees and officers of the Adviser and its affiliates. A Fund's shares may be purchased through authorized dealers or through First Eagle 30 Distributors, the Funds' principal underwriter. A completed and signed application is required to open an initial account with the Funds. If there is no application accompanying this Prospectus, please call (800) 334-2143 to obtain one. The Distributor reserves the right to limit the purchase of a Fund's shares when it is in the best interest of the Fund. The Trust and the Distributor each reserves the right to refuse any order for purchase of shares for any reason it deems appropriate (for example, due to nonpayment or with respect to investors identified as money-laundering risks or as responsible for potentially disruptive trading practices such as 'market timing'). Share purchases are not binding on the Trust or the Distributor (and accordingly may be rejected) until they are confirmed as paid by the Funds' transfer agent, DST. All payments must be made in U.S. dollars, and all checks must be drawn on U.S. banks. No cash or cash equivalents (such as travelers' checks, cashiers' checks, bankers' 'official checks' or money orders) will be accepted. As a condition of this offering, if an investor's purchase is canceled due to nonpayment or because his or her check or Automated Clearing House ('ACH') transfer does not clear, the investor will be responsible for any loss a Fund may incur as a result thereof. In limited circumstances, completed purchases also may be cancelled when the Distributor or transfer agent receives satisfactory instructions that a trade order was placed in error. Closed Funds and Share Classes The Global Fund, Overseas Fund and Class Y of the First Eagle Fund of America currently are closed to new investors, subject to limited exceptions for: (a) participants in certain employee benefit plans that were invested (at the plan level) in the relevant Fund or share class prior to its close; (b) accounts benefiting employees, officers, directors and trustees of the Funds, the Funds' investment adviser or the Funds' investment adviser affiliates and these persons' immediate family members; (c) accounts opened with distributions or roll-overs from individual retirement accounts, 401(k) plans or other employer sponsored retirement plans invested in the relevant Fund or share class; (d) accounts currently invested in a closed Fund seeking to open a new account in the same Fund in a different share class; and (e) accounts in a closed Fund opened by way of share transfer from an existing account in the same Fund and share class, provided the new account will be for the benefit of an immediate family member of the beneficial owner of the existing account, or has the 31 same taxpayer identification number or primary mailing address as the existing account or is considered a 'charitable foundation' related to the beneficial owner of the existing account for purposes of the Internal Revenue Code. Except for the foregoing, no new accounts in these closed Funds or share classes will be opened by way of share exchange, transfer or purchase. This will be the case unless and until the Board of Trustees determines to reopen that Fund or share class. Anti-Money Laundering Compliance The Trust and the Distributor are required to comply with various anti-money laundering laws and regulations. Consequently, the Trust or the Distributor may request additional information from you to verify your identity and source of funds. For individual investors, such information typically will include name, address, date of birth and social security number and also may include requests for documents such as a driver's license or other government issued identification. For entity investors, such information typically will include name, principal business address, and taxpayer identification number and also may include requests for documents confirming the authority of persons having control over the entity or its trading, information relating to those persons of the type requested for individual investors generally and corporate documents such as articles of incorporation, trust or partnership agreements, bylaws and the like. If the Trust or the Distributor deems the information submitted does not provide for adequate identity verification, it reserves the right to reject the establishment of your account or may close the account at the then-current net asset value. If at any time the Trust believes an investor may be involved in suspicious activity or if certain account information matches information on government lists of suspicious persons, they may choose not to establish a new account or may be required to 'freeze' a shareholder's account. They also may be required to provide a governmental agency or another financial institution with information about transactions that have occurred in a shareholder's account or to transfer monies received to establish a new account, transfer an existing account or transfer the proceeds of an existing account to a governmental agency. In some circumstances, the law may not permit the Trust or the Distributor to inform the investor that it has taken the actions described above. How Fund Share Prices Are Calculated Net asset value for each share class of each Fund is determined as of the close of trading on the New York Stock Exchange ('NYSE'), normally 4:00 p.m. E.S.T. on each day during which the NYSE is 32 open for trading. The net asset value per share of each class of shares of each Fund is computed by dividing the total current value of the assets of the relevant Fund, which are attributable to the share class, less the total liabilities of the Fund which are attributable to the share class, by the total number of shares of the share class outstanding at the time of such computation. Because each Fund may invest in securities that are listed on foreign exchanges that may trade on weekends or other days when the Funds do not price their shares, the Funds' share values may change on days when shareholders will not be able to purchase or redeem the Funds' shares. The Funds use pricing services to identify the market prices of publicly traded securities in their portfolios. When market prices are determined to be 'stale' as a result of limited market activity for a particular holding, or in other circumstances when market prices are unavailable, such as for private placements, or determined to be unreliable for a particular holding, such holdings will be 'fair valued' in accordance with procedures approved by the Board of Trustees. Additionally, with respect to foreign holdings, specifically in circumstances leading the Adviser to believe that significant events occurring after the close of a foreign market have materially affected the value of a Fund's holdings in that market, such holdings will be fair valued to reflect the events in accordance with procedures approved by the Board. The determination of whether a particular foreign investment should be fair valued will be based on review of a number of factors, including developments in foreign markets, the performance of U.S. securities markets, and security-specific events. The values assigned to a Fund's holdings therefore may differ on occasion from reported market values. The Trust and the Adviser believe relying on the procedures described above will result in prices that are more reflective of the actual market value of portfolio securities held by the Funds. Orders for shares received by DST prior to the close of trading on the NYSE, or orders received by dealers prior to such time and transmitted to the Distributor prior to the latter's close of business, will be effected based on the net asset value per share determined as of the close of trading on the NYSE that day. If an order is received by DST or by the dealer after the close of the NYSE, it will be priced on the next day that the NYSE is open for trading. Purchases Through Dealers Investors may purchase a Fund's shares through selected securities dealers with whom the Distributor has sales agreements. A prospective 33 investor may obtain additional New Account Applications from such authorized dealers. For a list of authorized dealers, please contact the Distributor at (800) 747-2008. Authorized dealers and financial services firms are responsible for promptly transmitting purchase orders to First Eagle Distributors and for monitoring applicable breakpoint or sales charge reductions for their accounts. Certain broker-dealers or financial services firms may purchase shares at their net asset value per share without a sales commission and charge investors a transaction charge or other advisory fee through a wrap fee or other similar program. Class A shares of each Fund are sold with a front-end sales commission and an annual distribution (Rule 12b-1) fee. Class C shares of each Fund are sold with a 'level-load' (consisting of an annual distribution (Rule 12b-1) fee and an annual service fee). Class Y shares of the First Eagle Fund of America are sold with an annual distribution (Rule 12b-1) fee. Class I shares of the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund are sold principally to investors purchasing through a fee-based program with their investment adviser or broker-dealer, through a 401(k) plan in which they participate, or, for certain institutional investors, through direct purchases from the Distributor in quantities of $1 million or more. Authorized dealers and financial services firms may impose a charge for handling purchase transactions placed through them and may have particular requirements concerning purchases. Prospective investors should contact their authorized dealer or financial services firm for more information. Public Offering Price of Class A Shares The public offering price at which share transactions will be effected will be equal to the net asset value per share plus, in the case of Class A shares of each Fund, a sales charge. The sales charges applicable to Class A shares currently in effect are as follows:
- ------------------------------------------------------------------------------------ Sales Charge as a percentage of Dealer Allowance Class A Shares Dollars ------------------------------------ as a percentage of Invested Offering Price Net Amount Invested Offering Price - ------------------------------------------------------------------------------------ Less than $25,000..... 5.00% 5.26% 4.50% $25,000 but less than $50,000.............. 4.50 4.71 4.25 $50,000 but less than $100,000............. 4.00 4.17 3.75 $100,000 but less than $250,000............. 3.25 3.36 3.00 $250,000 but less than $500,000............. 2.50 2.56 2.25 $500,000 but less than $1,000,000........... 1.50 1.52 1.25 $1,000,000 and over*................ 0.00 0.00 0.00 - ------------------------------------------------------------------------------------
* Please see next page. 34 Sales charges applicable to persons residing in countries outside the United States may vary from those listed above. The Distributor reallows discounts to selected dealers with whom it has sales agreements and is entitled to retain the balance over dealer discounts. The Distributor may from time to time reallow the entire sales load, and, as already described under 'Our Management Team -- Distribution and Shareholder Services Expenses' and ' -- Revenue Sharing,' may provide additional promotional incentives, to dealers selling a Fund's shares. In some instances, the entire reallowance or incentives may be offered only to certain dealers which have sold or may sell significant amounts of a Fund's shares. Authorized dealers to whom substantially the entire sales charge is reallowed may be deemed to be underwriters as that term is defined under the Securities Act of 1933. *Class A Contingent Deferred Sales Charge -- Global Fund, Overseas Fund, U.S. Value Fund and First Eagle Fund of America There is no initial sales charge on purchases of Class A shares of one or more of any of the Funds (including the Gold Fund) aggregating $1 million or more. However, First Eagle Distributors, as the Funds' principal underwriter, may pay dealers of record 'finder's fee' commissions in an amount up to 0.75% of purchases of Class A shares of the Global Fund, Overseas Fund, U.S. Value Fund and First Eagle Fund of America that were not previously subject to a front-end sales charge or dealer commission paid by the investor.** These finder's fee commissions will be paid only with respect to purchases (i) aggregating (on a single trade date) $1 million or more by any 'person,' which term includes any account having the same mailing address or tax identification number; (ii) accounts with completed letters of intention of $1 million or more; and (iii) certain employer sponsored retirement plans investing through an omnibus account making any single purchase of Class A shares of the Global, Overseas, U.S. Value Fund or First Eagle Fund of America of $1 million or more. Subsequent purchases will need to aggregate $1 million or more to be eligible for this commission (and appropriate documentation will be required to verify additional aggregations). As such finder's fee commissions may also be paid under certain other circumstances, your dealer will advise you if any such - --------- ** Dealers should call the Distributor at (800) 747-2008 to discuss the further terms that apply to this commission. 35 commissions are paid with respect to your account. If you redeem any shares as to which such a finder's fee commission was paid within 18 months of the end of the calendar month of their purchase, a contingent deferred sales charge (called the 'Class A contingent deferred sales charge') may in the discretion of the Distributor be deducted from the redemption proceeds. The Class A contingent deferred sales charge may be up to, but will not exceed, 0.75% of the lesser of (i) the aggregate net asset value of the redeemed shares at the time of redemption (excluding shares purchased by reinvestment of dividends or capital gain distributions), or (ii) the original net asset value of the redeemed shares. If you are investing through a retirement plan, you may want to contact your plan administrator to discuss whether such a finder's fee commission has been charged against the plan, as these plans may be subject to the Class A contingent deferred sales charge if fully redeemed within 18 months of the end of the calendar month of their purchase. In determining whether a Class A contingent deferred sales charge is payable when shares are redeemed, shares that are not subject to the sales charge, including shares purchased by reinvestment of dividends and capital gains, will be redeemed first. Other shares will then be redeemed in the order in which you purchased them. The Class A contingent deferred sales charge is not charged on Class A exchanges. However, if the shares acquired by exchange are redeemed within 18 calendar months of the end of the calendar month in which the exchanged shares were originally purchased, then the Class A contingent deferred sales charges will apply. The Class A contingent deferred sales charge will be in addition to any applicable redemption fee described under 'Once You Become a Shareholder -- Redemption Fee.' Reducing the Sales Charge As shown in the table under 'Public Offering Price of Class A Shares,' the size of the total investment in Class A shares of a Fund will affect the sales charge on the investment, resulting in what are frequently called sales charge 'breakpoints.' Described below are several methods to reduce the applicable sales charge. In order to claim a breakpoint or other means of reducing the sales charge, an investor should notify, at the time of purchase, his or her dealer, the Distributor or DST of the applicability of one of the following (including, if relevant, the existence of all accounts or balances 36 applicable to the calculation of any breakpoints or other sales charge reductions): Aggregation. The investment schedule applies to the total amount being invested in Class A shares by any 'person,' which term includes any account having the same mailing address or tax identification number. Any such person purchasing for several accounts at the same time may combine these investments into a single transaction in order to reduce the applicable sales charge. Individual accounts may not be aggregated with corporate/partnership accounts for purposes of reducing the sales charge. Rights of Accumulation. A Fund's Class A shares may be purchased at a reduced sales charge by a 'person' (as defined above in 'Aggregation') who is already a shareholder in the Funds by calculating the amount being invested together with the current net asset value of the shares of any share class of any Fund already held by such person. If the current net asset value of the qualifying shares already held plus the net asset value of the current purchase exceeds a point in the schedule of sales charges at which the charge is reduced to a lower percentage, the entire current purchase is eligible for the reduced charge. To be entitled to a reduced sales charge pursuant to these 'Rights of Accumulation,' the investor must notify his or her dealer, the Distributor or DST at the time of purchase that the investor wishes to take advantage of such entitlement. Letter of Intention. A 'person' (as defined above in 'Aggregation') may also qualify for a reduced sales charge by completing the Letter of Intention (the 'Letter') contained in the New Account Application or a form for this purpose which may be obtained by contacting the Trust at (800) 334-2143. This enables the investor to aggregate purchases of Class A shares of any Fund during a thirteen-month period for purposes of calculating the applicable sales charge. Applicable shares of any Fund currently owned by the investor will be credited as purchases toward the completion of the Letter at their account value on the date the Letter is executed. No retroactive adjustments will be made. For each investment made, the investor must notify his or her dealer, the Distributor or DST that a Letter is on file along with all account numbers associated with the Letter. The Letter is not a binding obligation on the investor. However, 5% of the amount specified in the Letter will be held in escrow, and if the investor's purchases are less than the amount specified, the investor will be requested to remit to the appropriate Fund an amount equal to the difference between the sales charge paid and the 37 sales charge applicable to the aggregate purchases actually made. If not remitted within 20 days after written request, an appropriate number of escrowed shares will be redeemed in order to realize the difference. However, the sales charge applicable to the investment will in no event be higher than if the shareholder had not submitted a Letter. Either the shareholder (subject to these escrow rules) or the Trust may cancel the arrangement at will. Sales at Net Asset Value. Class A shares of each Fund can be sold at net asset value per share (i.e., without a sales charge) (i) to registered representatives or employees of authorized dealers, the spouse, parents or children of such persons or to any trust, pension, profit-sharing or other benefit plan for only such persons, (ii) to banks or trust companies or their affiliates when the bank, trust company or affiliate is authorized to make investment decisions on behalf of a client, (iii) to investment advisers and financial planners who place trades for their own accounts or the accounts of their clients and who charge a management, consulting or other fee for their services, (iv) to clients of such investment advisers and financial planners who place trades for their own accounts if the accounts are linked to the master account of such investment adviser or financial planner on the books and records of the broker, agent, investment adviser or financial institution, and (v) to institutional (e.g., generally not broker-directed or broker-advised) retirement and deferred compensation plans and trusts used to fund those plans, including, but not limited to, those defined in Section 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code and 'rabbi trusts.' Investors nonetheless may be charged a fee if they effect transactions in Class A shares through a broker or agent. Class A Shares of the Funds may also be sold at net asset value per share to current officers, trustees and employees of the Trust, ASB Advisers, ASB Holdings, First Eagle Distributors, employees of certain firms providing services to the Funds (such as the custodian and the shareholder servicing agent), and to the spouse, parents and children of any such persons or to any trust, pension, profit-sharing or other benefit plan for only such persons. A Fund may also issue Class A shares at net asset value per share in connection with the acquisition of, or merger or consolidation with, another investment company. The sales of Class A shares at net asset value per share described in this section may, in the discretion of the Distributor, require a written assurance of the purchaser that the purchase is made for investment purposes and that the shares will not be resold except through redemption. If required, such notice 38 must be given to the Distributor or DST at the time of purchase on a form for this purpose as available from the Trust. Reinstatement Privilege In addition, an investor is entitled to a one-time per account privilege to reinvest in Class A shares of any First Eagle Fund the proceeds of a full or partial redemption of shares from the same First Eagle Fund (and for the same account) at the then applicable net asset value per share without payment of a sales charge. To exercise this privilege the investor must submit to the Distributor or DST, within 90 calendar days after the redemption, both a written request for reinstatement and a check or bank wire in an amount not exceeding the redemption proceeds. An investor may also transfer an investment in any Fund to an IRA or other tax qualified retirement plan account in the same First Eagle Fund without payment of a sales charge. Such a transfer involves a redemption of a Fund's shares and a reinvestment of the proceeds and, hence, may involve a taxable transaction for income tax purposes. Reinstatement will not prevent recognition of a gain realized on the redemption, but a loss may be disallowed for tax purposes. The amount of gain or loss resulting from the redemption may be affected by exercise of the reinstatement privilege if the shares redeemed were held for 90 days or less, or if a shareholder reinvests in the Funds within 30 days. Purchasing Level-Load Class C Shares Level-load Class C shares of a Fund can be purchased through an investment professional at net asset value per share. Investors do not have to pay sales charges on Class C shares, but may pay a contingent deferred sales charge equal to 1.00% of the original purchase price or the current market value, whichever is lower (called the 'Class C contingent deferred sales charge'), on shares sold or redeemed within the first year of purchase. Class C shares are also available through 401(k) plans. Investors purchasing Class C shares in connection with wrap programs and participant directed retirement plans, such as 401(k) plans, will not be subject to a front-end sales commission or a Class C contingent deferred sales charge. Level-load Class C shares of each of the Funds carry an annual 0.25% service fee and an annual 0.75% distribution (Rule 12b-1) fee. Because the service and Rule 12b-1 fees are paid from your investment in a Fund on an ongoing basis, over time these fees may ultimately cost more than paying other types of sales charges. 39 Class C shares cannot be converted into Class A, Y or I shares. The Distribution Plans and Agreements adopted by each Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940 are described under 'Our Management Team -- Distribution and Shareholder Services Expenses.' In addition to the fees described above, distributors of shares of the Funds are normally paid a separate initial 1.00% fee on the sale of Class C shares by the underwriter. (The Class C contingent deferred sales charge is intended to compensate the underwriter for these payments with respect to investors holding shares less than one year.) Distributors of Class C shares of each Fund that are not subject to a Class C contingent deferred sales charge will be paid this distribution fee and the service fee on a quarterly basis. The Class C contingent deferred sales charge will be in addition to any applicable redemption fee described under 'Once You Become a Shareholder -- Redemption Fee.' First Eagle Fund of America Class Y Shares (closed to new investors) First Eagle Fund of America no-load Class Y shares can be purchased through an investment professional or directly from the Trust at net asset value per share. Investors in the Fund do not have to pay sales charges, but do have an annual 0.25% distribution (Rule 12b-1) fee. Class Y shares are also available through 401(k) plans. Bookshare Account Plan To facilitate the handling of transactions with shareholders, the Funds use a bookshare account plan for shareholder accounts. DST, as the Funds' transfer agent, automatically opens and maintains an account for each of the Funds' shareholders directly registered with the Fund. All interests in shares, full and fractional (rounded to three decimal places), are reflected in a shareholder's book account. After any purchase, a confirmation is mailed to the shareholder indicating the amount of full and fractional shares purchased, the price per share and a statement of his or her account. Stock certificates will not be issued for the shares of any Fund. Where to Send Your Application Shares of a Fund may be purchased through the Distributor by mailing a check made payable to First Eagle Funds along with the completed New Account Application to First Eagle Funds, c/o DST, P.O. Box 219324, Kansas City, MO 64121-9324. Shares may also be purchased through the Distributor by ACH transfer or by bank 40 wire. Please call (800) 334-2143 for procedures as to how to establish and administer the ACH purchase option, and please call prior to wiring any funds. Investors may purchase a Fund's shares through selected securities dealers with whom the Distributor has sales agreements. A prospective investor may obtain additional New Account Applications from such authorized dealers. For a list of authorized dealers, please call the Distributor at (800) 747-2008. Authorized dealers and financial service firms may charge the investor a transaction fee in addition to any applicable sales load. Authorized dealers and financial service firms are responsible for promptly transmitting purchase orders to the Distributor. Minimum Account Size Due to the high cost of maintaining smaller accounts, the Trust reserves the right to redeem shares in any account, if, as the result of a withdrawal, the value of that account drops below $2,500, except accounts for shareholders currently participating in the Automatic Investment Program (or for retirement accounts). The Trust also reserves the right to redeem shares in any Class I account of the Global Fund, the Overseas Fund, the U.S. Value Fund or the Gold Fund if the value of that Class I account drops below $100,000. A shareholder will be allowed at least 30 days to make an additional investment to bring his or her account value to the stated minimum before the redemption is processed. Automatic Investment Program Investors may make regular semi-monthly, monthly or quarterly investments of $100 (or more) in shares of any Fund automatically from a checking or savings account on or about the 5th and/or 20th of the month. Upon written authorization, DST will debit the investor's designated bank account as indicated and use the proceeds to purchase shares of the Fund for the investor's account. Because approval by the investor's bank is required, establishment of an Automatic Investment Program may require at least 30 days. To establish an Automatic Investment Program, indication must be made on the New Account Application or Special Options Form, and a check (minimum $100, if a new account is being established), savings account deposit slip or savings account statement must be forwarded to DST. Shares purchased through Automatic Investment Program payments are subject to the redemption restrictions for recent purchases described in 'Once You Become a Shareholder -- Redemption of 41 Shares.' The Trust may amend or cease to offer the Automatic Investment Program at any time. 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 Shareholders or authorized parties are entitled to exchange some or all of their shares of any Fund for shares of any other Fund, subject to limitations described elsewhere in this Prospectus and in the following paragraph in respect of Funds or share classes closed to new investors. Class A shares of a Fund may be exchanged for Class A shares of any other Fund; Class C shares of a Fund may be exchanged for Class C shares of any other Fund; Class I shares of the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund may be exchanged for Class I shares of any other such Fund or for Class Y shares of the First Eagle Fund of America; and Class Y shares of the First Eagle Fund of America may be exchanged for Class A shares of any other Fund (if the exchange involves Class Y shares valued at less than $1,000,000) or for Class I shares of any other Fund (if the exchange involves Class Y shares valued at $1,000,000 or more). Shares will be exchanged at their respective net asset values per share computed as of the close of trading on the NYSE on the day the exchange is requested. There is no charge for the exchange privilege, except in the case of First Eagle Fund of America Class Y shareholders exchanging for Class A shares of another Fund, whose shares will be subject to the front-end sales load applicable to those Class A shares. Any exchange, however, must meet the applicable minimum investment amount for the Fund and share class into which the exchange is being made. In addition, because you may be subject to different fees, expenses and investment risks when you make an exchange, you should carefully review the description of the Fund into which you plan to exchange. Exchanges may constitute a taxable event for U.S. federal income tax purposes. For additional information concerning exchanges or to effect exchanges, contact the Trust at (800) 334-2143. Exchanges may be limited in the case of shares to be exchanged for those of any Fund or share class closed to or otherwise restricted for new investors (as is currently the case for shares to be exchanged for those of the Global Fund or Overseas Fund or Class Y of First Eagle Fund of America). Exchanges within 90 days of the investment are assessed a 2% redemption fee as described below under 'Redemption 42 Fee.' As described below under 'Short-Term Trading of Fund Shares,' the Funds in most cases depend on cooperation from intermediaries in reviewing certain accounts (for example, those of retirement plan sponsors, wrap program sponsors and certain omnibus position holders), which limits the Funds' ability to monitor the frequency of exchanges by investors investing through such accounts. Automatic Exchange Program Shareholders who wish to automatically exchange shares of one Fund for another on a monthly basis can do so by means of the Automatic Exchange Program. The minimum exchange amount is $100. If the balance in the account the shareholder is exchanging from falls below the designated automatic exchange amount, all remaining shares will be exchanged and the program will be discontinued. All conditions with respect to exchange transactions apply as discussed above in 'Exchanging Your Shares.' Conversion Class A shares of the Global Fund, the Overseas Fund, the U.S. Value Fund or the Gold Fund having an aggregate value not less than $1 million may be converted into Class I shares of the same Fund upon the election of the shareholder. Such conversions shall take place at net asset value per share of these share classes, shall not result in the realization of income or gain for Federal income tax purposes and shall be tax free to shareholders. Class C shares cannot be converted into Class A, Class Y or Class I shares. For additional information concerning conversions, or to effect a conversion, contact your dealer, financial intermediary or the Funds at (800) 334-2143. Dividend Direction Plan Shareholders in a Fund may elect to have income dividends and capital gains distributions on their Fund shares invested without the payment of any applicable sales charge in shares of any share class of any Fund in which they have an existing account and maintain a minimum account balance. All dividends and distributions so invested are taxable for U.S. federal income tax purposes as though received in cash. For further information about this privilege, contact DST by telephone at (800) 334-2143. Redemption of Shares Shareholders have the right to redeem all or any part of their shares of a Fund for cash at their net asset value per share next computed after receipt of the redemption request in the proper form. 43 Shareholders may redeem either through authorized dealers, through ASB or by telephone. Shares held in the dealer's 'street name' must be redeemed through the dealer, as described in the following paragraph. Redemption through Dealers Shareholders who have an account with an authorized dealer may submit a redemption request to such dealer. Authorized dealers are responsible for promptly transmitting redemption requests to the Distributor. Dealers may impose a charge for handling redemption transactions placed through them and may have particular requirements concerning redemptions. Accordingly, shareholders should contact their authorized dealers for more information. Redemptions through ASB Shareholders may redeem their Fund shares through their dealer or from First Eagle Distributors by transmitting written redemption instructions to First Eagle Funds, c/o DST, P.O. Box 219324, Kansas City, MO 64121-9324. Redemption requests must meet all the following requirements to be considered in the proper form: 1. Written and signed instructions from the registered owner(s) must be received by DST. 2. A letter or a stock power signed by the registered owner(s) must be signature guaranteed by an acceptable guarantor. A guarantee is required for such redemptions to be paid by check greater than $100,000, or where the redemption proceeds are to be sent to an address other than the address of record, to a person other than the registered shareholder(s) for the account or to a bank account number other than the one previously designated by the shareholder. A signature guarantee is not required for any amount redeemed by ACH transfer or bank wire when a pre-designated bank has been identified by the shareholder. 3. All certificates, if any, to be redeemed must be received by DST in negotiable form. 4. In the case of shares held of record in the name of a corporation, trust, fiduciary or partnership, evidence of authority to sign and a stock power with signature(s) guaranteed must be received by DST. 44 Redemption Proceeds Payment of the redemption price will generally be made within three business days after receipt of the redemption request in proper form. The Trust will not mail redemption proceeds for any shares until checks or ACH transfers received in payment for such shares have cleared, which may take up to 15 days. Investors who wish to avoid any such delay should purchase shares by bank wire. Redemption proceeds are normally paid in the form of a check. Proceeds can also be sent to a shareholder's bank account by ACH transfer or by bank wire when a pre-designated bank has been identified in the New Account Application or Special Options Form. Proceeds sent by ACH transfer should generally be credited to a shareholder's account on the second business day after the redemption. Proceeds sent by bank wire should be credited on the business day following the redemption; however, a fee of $7.50 will be deducted from such proceeds. First Eagle Fund of America Redemptions in Kind First Eagle Fund of America normally pays redemption proceeds in cash up to $250,000 or 1% of the Fund's total value, whichever is less. The Trust reserves the right to make higher redemption payments to redeeming shareholders in the form of marketable securities. This is called a 'redemption in kind.' A redeeming shareholder will pay any applicable commission or other fees when selling these securities. Short-Term Trading Policies The Funds are not intended, and will not knowingly permit their use, as vehicles for frequent traders. Frequent trading (including exchanges) of Fund shares -- which is sometimes referred to as 'market timing' -- may increase Fund transaction and administration costs and otherwise negatively impact a Fund's investment program, possibly diluting a Fund's value to its longer-term investors. This is because, among other reasons, as short-term trading monies move in and out of a Fund they may prompt otherwise unnecessary purchases and sales of portfolio securities (with attendant brokerage costs), affect the level of cash held by a Fund over time, affect tax gains and losses realized by a Fund or simply distract a Fund's portfolio manager from his or her longer-term investment program for the Fund. The Global Fund and Overseas Fund may be particularly susceptible to these risks because of their significant investments in foreign securities. Similarly, the Gold Fund may be susceptible to short-term trading because of the nature of its portfolio holdings. Foreign 45 securities and any relatively illiquid or volatile securities typically are considered those most likely to be subject to inappropriate short-term trading strategies. The redemption fee policies described below are one means applied by the Funds to deter undesirable short-term trading. Pursuant to procedures approved by the Board of Trustees, the Funds also routinely review shareholder trades to seek to identify and deter inappropriate trading. Specifically, the Funds seek to identify the types of transactions that may be harmful to a Fund on either an individual basis or as part of a pattern. In limited circumstances, and on occasion even for a trade or exchange for which no redemption fee is assessed, a single trade or exchange may be determined to be inappropriate and subject to these procedures. When inappropriate trading is identified, the Funds will suspend trading (including exchange) privileges in, or close, the relevant account. In the discretion of the Funds, such a suspension or account closure may be temporary or permanent and may or may not be subject to appeal. Persons also may be deemed to be potential short-term traders, and may be subjected to trading suspensions or account closures without advance notice, based on information developed or otherwise available to the Funds that is unrelated to the specific trades in a person's account. This may be the case, for example, if identifying information links an account to an account previously suspended or closed for inappropriate trading or if short-term trading concerns about a particular account are reported to the Funds by a reliable third party. Prospective investors should understand that the Funds cannot guarantee that every instance of inappropriate trading will be identified or prevented. Nonetheless, the Funds' guiding principle in this area is that trading deemed not in the interests of longer-term Fund shareholders will be actively deterred and, when possible, prevented. However, also as described below, the Funds in most cases depend on cooperation from intermediaries in reviewing certain accounts, which limits their ability to monitor and discourage such trading in those circumstances. This is principally because, while the Funds are committed to seeking the cooperation of intermediaries in this respect, the Funds frequently do not have access to individual account-level investment activity for investors investing through an intermediary. In addition, not all intermediaries maintain the types of sophisticated transaction tracking systems that permit them to apply the types of reviews applied by the Funds. The Funds do not have 46 any arrangements intended to permit trading of their shares in contravention of the policies described in this section of the Prospectus. The Funds' policies in respect of short-term trading may be modified at any time. Redemption Fee If sold or exchanged within 90 days of the investment, shares of any share class of each Fund are assessed a 'redemption fee' of 2% of gross redemption proceeds. The application of the fee is determined by reference to the 'first-in-first-out' or FIFO calculation methodology, such that the date of redemption will be compared with the earliest purchase date of shares held in the account. Redemption fees may be collected by deduction from the redemption proceeds or, if assessed after a completed redemption transaction (and upon notice to the account holder), by deduction from any remaining account balance or by direct billing outside the account. The redemption fee may be waived (or reversed, as appropriate) for qualified retirement plans, systematic redemption programs, wrap programs and certain accounts investing through omnibus positions, although the Trust reserves the right to impose redemption fees on shares held by such shareholders. In any event, and as discussed above under 'Short-Term Trading of Fund Shares,' the Trust generally will be dependent on the relevant 'intermediary' (for example, the wrap program sponsor or omnibus account holder) in monitoring trading frequency and therefore in applying the fee to these shareholders. The ability of a Fund to assess a redemption fee on the underlying shareholders of such an account, or otherwise monitor and discourage inappropriate short-term trading, may be further limited by systems limitations applicable to these types of accounts. Redemption fees are intended to defray transaction and other expenses caused by early redemptions and to facilitate portfolio management. The fees do not represent a deferred sales charge nor a commission paid to the Distributor. Any fees collected will be retained by the particular Fund for the benefit of the remaining shareholders. Reversals or waivers of the redemption fee may be granted from time to time on application to the Funds. Historically, and in limited circumstances, these types of exceptions have been granted in the event, for example, of transactions documented as inadvertent or prompted by bona-fide emergency situations. Redemption fee policies may be modified at any time. 47 Telephone Privileges Unless contrary instructions are elected in the New Account Application or Special Options Form, the account will be entitled to make telephone redemptions, exchanges, conversions and account maintenance requests if the shareholder has a preauthorized form on file with the transfer agent. Neither the Trust nor its agents will be liable for following instructions communicated by telephone that are reasonably believed to be genuine. Reasonable procedures will be employed on behalf of the Trust to confirm that the instructions are genuine. Such procedures include, but are not limited to, written confirmation of telephone transactions, tape recording telephone conversations and requiring specific personal information prior to acting upon telephone instructions. Any owner(s), trustee(s) or other fiduciary entity as indicated in the account registration, investment professional of record and/or other parties that can provide specific personal information will be allowed to initiate any of the above referenced telephone transactions. Personal information may include a combination of the following items: (i) the Fund and account number, (ii) the account registration, (iii) the social security or tax identification number on the account, (iv) the address of record, (v) designated bank account information and (vi) any other information deemed appropriate to allow access to the account. Telephone redemption requests received by the Trust or its agents (including authorized dealers, retirement plan administrators or other intermediaries) prior to the close of business on the NYSE on any business day will be effected on that day. Such requests received after the close of business on the NYSE will be effected on the following business day. Shareholders may not make a redemption request by telephone if the proceeds are to be wired to a bank account number or mailed to an address other than the one previously designated by the shareholder. There is a $100,000 maximum on telephone redemptions by check. There is no limitation on redemptions by ACH transfer or by bank wire. Certain retirement accounts are not eligible for all the telephone privileges referenced above. Please call (800) 334-2143 with all inquiries pertaining to telephone privileges. Systematic Withdrawal Plan A shareholder who owns shares of a Fund with a current net asset value of $10,000 or more may use those shares to establish a Systematic Withdrawal Plan that executes withdrawals monthly or quarterly. A check in a stated amount of not less than $50 will be mailed to the shareholder on or about the 3rd day, 15th day, or 48 25th day of the month. Dividends and distributions on shares invested under a Systematic Withdrawal Plan may not be taken in cash but must be reinvested, which will be done at net asset value per share. A Fund's shares will be redeemed as necessary to meet withdrawal payments. Withdrawals in excess of dividends and distributions will reduce and may deplete the invested principal and may result in a gain or loss for tax purposes. Purchases of additional shares made concurrently with withdrawals of shares are undesirable because of sales charges incurred when purchases are made. Accordingly, a shareholder may not maintain a Systematic Withdrawal Plan while simultaneously making regular purchases. New accounts established by check within 15 days of their expected withdrawal date will not begin withdrawals until the following month due to the 15-day hold on check purchases. The Trust may amend or cease to offer the Systematic Withdrawal Plan at any time. Retirement Plans The Trust offers a variety of plans such as IRA, Roth-IRA, SEP, SIMPLE IRA and 403(b)(7) plans which allow investors to save for retirement and defer taxes on investment income, if any. The tax benefits of these plans may not be available for all persons. Investors should consult their tax advisers regarding their eligibility. Retirement plans may purchase Class I shares of the Global Fund, the Overseas Fund, the U.S. Value Fund or the Gold Fund (unless any of these is closed or otherwise restricted for new investment) provided they meet the minimum initial investment amount of $1 million in an omnibus or pooled account within the relevant Fund and will not require the Fund to pay any type of administrative fee or payment per participant account to any third party. Retirement plans requiring the payment of such fees may purchase Class A shares of the Global Fund, the Overseas Fund, the U.S. Value Fund, the Gold Fund or First Eagle Fund of America without an initial sales charge. If a 'finder's fee' was paid, such a plan may be subject to a Class A contingent deferred sales charge on these investments. See 'About Your Investment -- Public Offering Price of Class A Shares -- Class A Contingent Deferred Sales Charge.' INFORMATION ON DIVIDENDS, DISTRIBUTIONS AND TAXES It is the policy of each Fund to make periodic distributions of net investment income and net realized capital gains, if any. Unless a shareholder elects otherwise, ordinary income dividends and capital gain distributions will be reinvested in additional shares of the same 49 share class of the Funds at net asset value per share calculated as of the payment date. The Funds pay both ordinary income dividends and capital gain distributions on a per share basis. As a result, on the ex-dividend date of such payment, the net asset value per share of the Funds will be reduced by the amount of such payment. Each Fund intends to qualify and has elected to be treated as a 'regulated investment company' under Subchapter M of the Internal Revenue Code of 1986, as amended. To qualify, a Fund must meet certain income, diversification and distribution requirements. As a regulated investment company, a Fund generally will not be subject to federal income or excise taxes on ordinary income and capital gains distributed to shareholders within applicable time limits, although foreign source income received by a Fund may be subject to foreign withholding taxes. Shareholders normally will be taxed on the ordinary income dividends and capital gain distributions they receive from a Fund whether received in additional shares or cash. Distributions of capital gains may be taxed at different rates, depending on the length of time the Fund holds the assets to which such gains relate. For taxable years beginning on or before December 31, 2008, certain ordinary income dividends paid by a Fund to non-corporate shareholders (including individuals) may be eligible for taxation at preferential rates applicable in the case of long-term capital gain. A distribution will be treated as paid on December 31 of the current calendar year if it is declared by a Fund in October, November or December with a record date in such a month and paid by the Fund during January of the following calendar year. Tax issues can be complicated. Exchanges of shares of the Funds are treated as sales and purchases and are subject to taxes. Please consult your tax adviser about federal, state, or local tax consequences or with any other tax questions you may have. By January 31st of each year, we will send you a statement showing the tax status of your dividends and distributions for the prior year. There may be tax consequences for shareholders who are nonresident aliens or foreign entities. Please see the Statement of Additional Information for more information. PRIVACY NOTICE FOR INDIVIDUAL SHAREHOLDERS The Trust is committed to protecting your privacy. We are providing you with this privacy notice to inform you of how we handle your personal information that we collect and may disclose to our 50 affiliates. If the Trust changes its information practices, we will provide you with notice of any material changes. This privacy policy supersedes any of our previous policies relating to the information you disclose to us. Why this Privacy Policy Applies to You You obtained a financial product or service from or through us for personal, family or household purposes when you opened a shareholder account with the Trust, and are therefore covered by this privacy policy. What We Do to Protect Your Personal Information We protect personal information provided to us by our individual shareholders according to strict standards of security and confidentiality. These standards apply to both our physical facilities and any online services we may provide. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard consumer information. We permit only authorized individuals, who are trained in the proper handling of individual shareholder information and need to access this information to do their job, to have access to this information. Personal Information that We Collect and May Disclose As part of providing you with the Trust's products and services, we may obtain nonpublic personal information about you from the following sources: Information we receive from you on subscription applications or other forms, such as your name, address, telephone number, Social Security number, occupation, assets and income; Information about your transactions with us, our affiliates, or unaffiliated third parties, such as your account balances, payment history and account activity; and Information from public records we may access in the ordinary course of business. Categories of Affiliates to Whom We May Disclose Personal Information We may share personal information about you with affiliates. Our affiliates do business under names that include Arnhold and S. Bleichroeder Holdings, Inc., Arnhold and S. Bleichroeder Advisers, LLC and ASB Securities LLC. 51 When We May Disclose Your Personal Information to Unaffiliated Third Parties We will only share your personal information collected, as described above, with unaffiliated third parties: o At your request; o When you authorize us to process or service a transaction or product (unaffiliated third parties in this instance may include service providers such as the Trust's distributors, registrar and transfer agent for shareholder transactions, and other parties providing individual shareholder servicing, accounting and recordkeeping services); o With companies that perform sales and marketing services on our behalf with whom we have agreements to protect the confidentiality of your information and to use the information only for the purposes for which we disclose the information to them; or o When required by law to disclose such information to appropriate authorities. We do not otherwise provide information about you to outside firms, organizations or individuals except to our attorneys, accountants and auditors and as permitted by law. What We Do With Personal Information About Our Former Customers If you decide to discontinue doing business with us, the Trust will continue to adhere to this privacy policy with respect to the information we have in our possession about you and your account following the termination of our shareholder relationship. HOW TO REACH FIRST EAGLE FUNDS You can send all requests for information or transactions to: Regular Mail: First Eagle Funds P.O. Box 219324 Kansas City, MO 64121-9324 or Overnight Mail: First Eagle Funds c/o DST Systems, Inc. 330 West 9th Street Kansas City, MO 64105-1807 You can contact us by telephone at (800) 334-2143. 52 FINANCIAL HIGHLIGHTS The Financial Highlights Table is intended to help you understand the financial performance of each Fund for the past five fiscal years. Because the U.S. Value Fund commenced operations on September 4, 2001, however, the Financial Highlights Table contains information for that Fund only from its commencement of operations. Similarly, because Class C and Class I are recently organized share classes for the Gold Fund, financial information prior to May 15, 2003 is provided only for Gold Fund Class A shares. Financial information depicted for the First Eagle Fund of America prior to January 1, 2003 is that for its operations in its prior format as a series of the prior First Eagle Funds trust. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all dividends and distributions). The Financial Highlights Table was derived from the Funds' financial statements, which were audited by KPMG LLP, the Trust's independent registered public accountant for each of the periods shown. KPMG LLP's reports, along with the Funds' financial statements, are contained in the Annual Reports for the Funds for the relevant periods and are incorporated by reference in the Statement of Additional Information. The Annual Reports and the Statement of Additional Information are available upon request. PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, New York 10017-6204 will serve as the Trust's independent registered public accountant for each Fund's fiscal year ending October 31, 2006. 53 FIRST EAGLE FUNDS FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------- Year Ended October 31, ------------------------ 2005 ------------------------ Class Class Class A I C - -------------------------------------------------------------------------- First Eagle Global Fund SELECTED PER SHARE DATA* Net asset value, beginning of period........... $36.53 $36.64 $36.30 ------ ------ ------ Income from investment operations: Net investment income......................... 0.48 0.60 0.19 Net realized and unrealized gains on investments................................. 6.07 6.06 6.01 ------ ------ ------ Total from investment operations.............. 6.55 6.66 6.20 ------ ------ ------ Less distributions: Dividends from net investment income.......... (0.43) (0.50) (0.26) Distributions from capital gains.............. (0.18) (0.18) (0.18) ------ ------ ------ Total distributions........................... (0.61) (0.68) (0.44) ------ ------ ------ Net asset value, end of period.............. $42.47 $42.62 $42.06 ------ ------ ------ ------ ------ ------ Total Return(c)................................ 18.15% 18.42% 17.23% Ratios and Supplemental Data Net assets, end of period (millions)........... $9,526 $1,752 $3,828 Ratio of operating expenses to average net assets(f)..................................... 1.20% 0.95% 1.95% Ratio of net investment income to average net assets(g)..................................... 1.21% 1.48% 0.47% Portfolio turnover rate........................ 12.29% 12.29% 12.29% - --------------------------------------------------------------------------
- -------------------------------------------------------------------------- Year Ended October 31, ------------------------ 2001 ------------------------ Class Class Class A I C - -------------------------------------------------------------------------- First Eagle Global Fund SELECTED PER SHARE DATA* Net asset value, beginning of period........... $25.47 $25.53 $25.44 ------ ------ ------ Income from investment operations: Net investment income......................... 0.53 0.58 0.26 Net realized and unrealized gains on investments................................. 1.45 1.44 1.53 ------ ------ ------ Total from investment operations.............. 1.98 2.02 1.79 ------ ------ ------ Less distributions: Dividends from net investment income.......... (1.39) (1.47) (1.36) Distributions from capital gains.............. (3.19) (3.19) (3.19) ------ ------ ------ Total distributions........................... (4.58) (4.66) (4.55) ------ ------ ------ Net asset value, end of period.............. $22.87 $22.89 $22.68 ------ ------ ------ ------ ------ ------ Total Return(c)................................ 8.96% 9.15% 8.10% Ratios and Supplemental Data Net assets, end of period (millions)........... $1,512 $ 35 $ 11 Ratio of operating expenses to average net assets(f)..................................... 1.38% 1.14% 2.14% Ratio of net investment income to average net assets(g)..................................... 2.24% 2.47% 1.12% Portfolio turnover rate........................ 28.98% 28.98% 28.98% - --------------------------------------------------------------------------
- --------- * Per share amounts have been calculated using the average shares method. Please see Notes to the Financial Highlights on page 62. 54
- ----------------------------------------------------------------------------------- Year Ended October 31, ------------------------------------------------------------------------------- 2004 2003 2002 ------------------------ ------------------------ ------------------------- - ----------------------------------------------------------------------------------- Class A Class I Class C Class A Class I Class C Class A Class I Class C ------------------------------------------------------------------------------- $32.37 $32.41 $32.15 $24.34 $24.36 $24.15 $22.87 $22.89 $22.68 ------ ------ ------ ------ ------ ------ ------ ------ ------- 0.50 0.56 0.23 0.53 0.59 0.30 0.53 0.27 0.72 5.18 5.22 5.18 8.39 8.41 8.38 1.66 1.98 1.29 ------ ------ ------ ------ ------ ------ ------ ------ ------- 5.68 5.78 5.41 8.92 9.00 8.68 2.19 2.25 2.01 ------ ------ ------ ------ ------ ------ ------ ------ ------- (0.67) (0.70) (0.41) (0.49) (0.55) (0.28) (0.63) (0.69) (0.45) (0.85) (0.85) (0.85) (0.40) (0.40) (0.40) (0.09) (0.09) (0.09) ------ ------ ------ ------ ------ ------ ------ ------ ------- (1.52) (1.55) (1.26) (0.89) (0.95) (0.68) (0.72) (0.78) (0.54) ------ ------ ------ ------ ------ ------ ------ ------ ------- $36.53 $36.64 $36.30 $32.37 $32.41 $32.15 $24.34 $24.36 $24.15 ------ ------ ------ ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------ ------ ------ ------- 18.18% 18.47% 17.31% 37.75% 38.14% 36.77% 9.76% 10.03% 8.98% $5,972 $ 641 $1,986 $3,255 $ 242 $ 617 $1,785 $ 85 $ 104 1.24% 0.99% 1.99% 1.32% 1.06% 2.07% 1.34% 1.09% 2.10% 1.46% 1.67% 0.66% 1.91% 2.11% 1.07% 2.14% 2.37% 1.31% 4.94% 4.94% 4.94% 7.20% 7.20% 7.20% 19.75% 19.75% 19.75% - -----------------------------------------------------------------------------------
Please see Notes to the Financial Highlights on page 62. 55 FIRST EAGLE FUNDS FINANCIAL HIGHLIGHTS -- (continued)
- --------------------------------------------------------------------------- Year Ended October 31, ----------------------------- 2005 ----------------------------- Class A Class I Class C - --------------------------------------------------------------------------- First Eagle Overseas Fund SELECTED PER SHARE DATA* Net asset value, beginning of period....... $20.25 $20.37 $19.97 ------ ------ ------ Income from investment operations: Net investment income (losses)............. 0.27 0.33 0.10 Net realized and unrealized gains (losses) on investments........................... 3.96 3.99 3.93 ------ ------ ------ Total from investment operations........... 4.23 4.32 4.03 ------ ------ ------ Less distributions: Dividends from net investment income....... (0.24) (0.25) (0.06) Distributions from capital gains........... (0.11) (0.11) (0.11) ------ ------ ------ Total distributions........................ (0.35) (0.36) (0.17) ------ ------ ------ Net asset value, end of period........... $24.13 $24.33 $23.83 ------ ------ ------ ------ ------ ------ Total Return(c)............................. 21.16% 21.47% 20.28% Ratios and Supplemental Data Net assets, end of period (millions)........ $4,866 $3,028 $ 994 Ratio of operating expenses to average net assets(f).................................. 1.18% 0.93% 1.93% Ratio of net investment income (loss) to average net assets(g)...................... 1.21% 1.46% 0.46% Portfolio turnover rate..................... 19.40% 19.40% 19.40% - ---------------------------------------------------------------------------
- --------------------------------------------------------------------------- Year Ended October 31, ----------------------------- 2001 ----------------------------- Class A Class I Class C - --------------------------------------------------------------------------- First Eagle Overseas Fund SELECTED PER SHARE DATA* Net asset value, beginning of period....... $14.31 $14.34 $14.31 ------ ------ ------ Income from investment operations: Net investment income (losses)............. 0.11 0.13 (0.01) Net realized and unrealized gains (losses) on investments........................... 0.19 0.19 0.21 ------ ------ ------ Total from investment operations........... 0.30 0.32 0.20 ------ ------ ------ Less distributions: Dividends from net investment income....... (0.76) (0.81) (0.72) Distributions from capital gains........... (2.64) (2.64) (2.64) ------ ------ ------ Total distributions........................ (3.40) (3.45) (3.36) ------ ------ ------ Net asset value, end of period........... $11.21 $11.21 $11.15 ------ ------ ------ ------ ------ ------ Total Return(c)............................. 2.01% 2.19% 1.19% Ratios and Supplemental Data Net assets, end of period (millions)........ $ 409 $ 61 $ 6 Ratio of operating expenses to average net assets(f).................................. 1.53% 1.28% 2.26% Ratio of net investment income (loss) to average net assets(g)...................... 0.91% 1.10% (0.08)% Portfolio turnover rate..................... 17.27% 17.27% 17.27% - ---------------------------------------------------------------------------
- --------- * Per share amounts have been calculated using the average shares method. Please see Notes to the Financial Highlights on page 62. 56
- ----------------------------------------------------------------------------------- Year Ended October 31, - ----------------------------------------------------------------------------------- 2004 2003 2002 - ---------------------------- ------------------------ ------------------------- Class A Class I Class C Class A Class I Class C Class A Class I Class C - ----------------------------------------------------------------------------------- $17.50 $17.57 $17.28 $12.45 $12.48 $12.30 $11.21 $11.21 $11.15 ------ ------ ------ ------ ------ ------ ------ ------ ------ 0.17 0.22 0.03 0.18 0.22 0.07 0.12 0.15 0.02 3.20 3.22 3.17 5.09 5.10 5.04 1.12 1.12 1.13 ------ ------ ------ ------ ------ ------ ------ ------ ------ 3.37 3.44 3.20 5.27 5.32 5.11 1.24 1.27 1.15 ------ ------ ------ ------ ------ ------ ------ ------ ------ (0.47) (0.49) (0.36) (0.21) (0.22) (0.12) -- -- -- (0.15) (0.15) (0.15) (0.01) (0.01) (0.01) -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ ------ (0.62) (0.64) (0.51) (0.22) (0.23) (0.13) -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ ------ $20.25 $20.37 $19.97 $17.50 $17.57 $17.28 $12.45 $12.48 $12.30 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ 19.77% 20.09% 18.89% 42.96% 43.29% 41.91% 11.06% 11.33% 10.31% $3,846 $2,152 $ 804 $2,345 $1,084 $ 390 $ 766 $ 209 $ 66 1.25% 1.00% 2.00% 1.31% 1.05% 2.05% 1.39% 1.15% 2.15% 0.90% 1.17% 0.17% 1.23% 1.48% 0.45% 0.96% 1.17% 0.19% 5.88% 5.88% 5.88% 3.46% 3.46% 3.46% 10.52% 10.52% 10.52% - -----------------------------------------------------------------------------------
Please see Notes to the Financial Highlights on page 62. 57 FIRST EAGLE FUNDS FINANCIAL HIGHLIGHTS -- (continued) - ---------------------------------------------------------------------------------- Year Ended October 31, ------------------------- 2005 ------------------------- Class A Class I Class C - ---------------------------------------------------------------------------------- First Eagle U.S. Value Fund SELECTED PER SHARE DATA* Net asset value, beginning of period................... $13.95 $14.05 $13.92 ------ ------ ------ Income from investment operations: Net investment income (loss).......................... 0.20 0.24 0.10 Net realized and unrealized gains on investments...... 1.35 1.36 1.35 ------ ------ ------ Total from investment operations...................... 1.55 1.60 1.45 ------ ------ ------ Less distributions: Dividends from net investment income.................. (0.20) (0.23) (0.12) Distributions from capital gains...................... (0.35) (0.35) (0.35) ------ ------ ------ Total distributions................................... (0.55) (0.58) (0.47) ------ ------ ------ Net asset value, end of period....................... 14.95 15.07 14.90 ------ ------ ------ ------ ------ ------ Total Return(c)........................................ 11.35% 11.65% 10.56% Ratios and Supplemental Data Net assets, end of period (millions)................... $ 150 $ 68 $ 97 Ratio of operating expenses to average net assets(f)... 1.28% 1.04% 2.02% Ratio of net investment income (loss) to average net assets(g)............................................. 1.40% 1.63% 0.67% Portfolio turnover rate................................ 17.22% 17.22% 17.22%
- ----------------------------------------------------------------------------------- Year Ended October 31, ---------------------------- 2005 ---------------------------- Class A Class I Class C - ----------------------------------------------------------------------------------- First Eagle Gold Fund SELECTED PER SHARE DATA* Net asset value, beginning of period................. $16.82 $16.88 $16.76 ------ ------ ------ Income from investment operations: Net investment (loss) income........................ (0.04) (0.00)** (0.16) Net realized and unrealized gains on investments........................................ 0.67 0.67 0.65 ------ ------ ------ Total from investment operations.................... 0.63 0.67 0.49 ------ ------ ------ Less distributions: Dividends from net investment income................ -- -- -- ------ ------ ------ Total distributions................................. -- -- -- ------ ------ ------ Net asset value, end of period..................... $17.45 $17.55 $17.25 ------ ------ ------ ------ ------ ------ Total Return(c)...................................... 3.75% 3.97% 2.92% Ratios and Supplemental Data Net assets, end of period (millions)................. $ 570 $ 84 $ 115 Ratio of operating expenses to average net assets(f). 1.29% 1.04% 2.04% Ratio of net investment (loss) income to average net assets(g)........................................... (0.24)% 0.02% (0.98)% Portfolio turnover rate.............................. 21.73% 21.73% 21.73%
- --------- * Per share amounts have been calculated using the average shares method. ** Amount represents less than $0.01 per share. Please see Notes to the Financial Highlights on page 62. 58 ------------------------------------------------------------------------------------------------------------------ Period from September 4, 2001(d) Year Ended October 31, to October 31, ------------------------------------------------------------------------------ --------------------------------- 2004 2003 2002 2001 ------------------------ ------------------------ ------------------------ --------------------------------- Class A Class I Class C Class A Class I Class C Class A Class I Class C Class A Class I Class C ------------------------------------------------------------------------------------------------------------------ $12.71 $12.76 $12.61 $10.56 $10.59 $10.48 $10.16 $10.16 $10.14 $10.00 $10.00 $10.00 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ 0.22 0.27 0.13 0.19 0.23 0.11 0.13 0.14 0.13 -- -- (0.02) 1.66 1.65 1.64 2.46 2.45 2.43 0.29 0.31 0.23 0.16 0.16 0.16 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ 1.88 1.92 1.77 2.65 2.68 2.54 0.42 0.45 0.36 0.16 0.16 0.14 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ (0.32) (0.31) (0.14) (0.16) (0.17) (0.07) -- -- -- -- -- -- (0.32) (0.32) (0.32) (0.34) (0.34) (0.34) (0.02) (0.02) (0.02) -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ (0.64) (0.63) (0.46) (0.50) (0.51) (0.41) (0.02) (0.02) (0.02) -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ $13.95 $14.05 $13.92 $12.71 $12.76 $12.61 $10.56 $10.59 $10.48 $10.16 $10.16 $10.14 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ 15.38% 15.58% 14.43% 26.10% 26.34% 25.03% 4.12% 4.41% 3.53% 1.60%(b) 1.60%(b) 1.40%(b) $ 62 $ 54 $ 29 $ 41 $ 49 $ 20 $ 22 $ 31 $ 10 $ 7 $ 17 $ 2 1.38% 1.13% 2.13% 1.51% 1.26% 2.26% 1.50% 1.25% 2.25% 1.50%(a) 1.25%(a) 2.25%(a) 1.66% 2.00% 0.95% 1.72% 1.99% 0.97% 1.65% 1.85% 0.93% (0.21)%(a) 0.10%(a) (1.02)%(a) 23.47% 23.47% 23.47% 33.45% 33.45% 33.45% 22.66% 22.66% 22.66% 2.57% 2.57% 2.57%
- ----------------------------------------------------------------------------------------- Year Ended October 31, - ----------------------------------------------------------------------------------------- 2004 2003 2002 2001 - ---------------------------------- -------------------------------- -------- -------- Class A Class I Class C Class A Class I(e) Class C(e) Class A Class A - ----------------------------------------------------------------------------------------- $15.99 $16.03 $15.96 $10.41 $12.41 $12.41 $ 6.17 $ 4.44 ------ ------ ------ ------ ------ ------ ------ ------ (0.10) (0.05) (0.21) (0.06) (0.02) (0.09) 0.01 0.02 1.49 1.48 1.47 5.72 3.64 3.64 4.30 1.92 ------ ------ ------ ------ ------ ------ ------ ------ 1.39 1.43 1.26 5.66 3.62 3.55 4.31 1.94 ------ ------ ------ ------ ------ ------ ------ ------ (0.56) (0.58) (0.46) (0.08) -- -- (0.07) (0.21) ------ ------ ------ ------ ------ ------ ------ ------ (0.56) (0.58) (0.46) (0.08) -- -- (0.07) (0.21) ------ ------ ------ ------ ------ ------ ------ ------ $16.82 $16.88 $16.76 $15.99 $16.03 $15.96 $10.41 $ 6.17 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ 8.59% 8.82% 7.79% 54.64% 29.17%(b) 28.61%(b) 70.70% 45.19% $ 516 $ 75 $ 92 $ 374 $ 30 $ 32 $ 90 $ 13 1.39% 1.14% 2.14% 1.49% 1.23%(a) 2.19%(a) 1.66% 2.65% (0.62)% (0.35)% (1.34)% (0.43)% (0.24)%(a) (1.26)%(a) 0.09% 0.36% 3.61% 3.61% 3.61% 0.98% 0.98% 0.98% 4.27% 29.16%
Please see Notes to the Financial Highlights on page 62. 59 FIRST EAGLE FUNDS FINANCIAL HIGHLIGHTS -- (continued) - ----------------------------------------------------------------------------------------- Year Ended October 31, ---------------------------------------------------- 2005 2004 ------------------------ ------------------------- Class Y Class C Class A Class Y Class C Class A - ----------------------------------------------------------------------------------------- First Eagle Fund of America SELECTED PER SHARE DATA* Net asset value, beginning of period........................... $25.81 $24.44 $25.54 $23.03 $21.99 $22.80 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment loss.............. (0.07) (0.26) (0.09) (0.16) (0.33) (0.22) Net realized and unrealized gains (losses) on investments........ 2.38 2.26 2.36 3.41 3.25 3.43 ------ ------ ------ ------ ------ ------ Total from investment operations....................... 2.31 2.00 2.27 3.25 2.92 3.21 ------ ------ ------ ------ ------ ------ Less distributions: Distributions from capital gains.......................... (1.70) (1.70) (1.70) (0.47) (0.47) (0.47) ------ ------ ------ ------ ------ ------ Total distributions.............. (1.70) (1.70) (1.70) (0.47) (0.47) (0.47) ------ ------ ------ ------ ------ ------ Net asset value, end of period... $26.42 $24.74 $26.11 $25.81 $24.44 $25.54 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total Return(c)................... 9.23% 8.43% 9.16% 14.30% 13.46% 14.27% Ratios and Supplemental Data Net assets, end of period (millions)....................... $ 684 $ 36 $ 29 $ 601 $ 14 $ 17 Ratio of operating expenses to average net assets(f)............ 1.43% 2.17% 1.49% 1.46% 2.21% 1.72% Ratio of net investment loss to average net assets(g)............ (0.27)% (1.03)% (0.34)% (0.63)% (1.39)% (0.91)% Portfolio turnover rate........... 54.54% 54.54% 54.54% 44.68% 44.68% 44.68%
- --------- * Per share amounts have been calculated using the average shares method. Please see Notes to the Financial Highlights on page 62. 60 ------------------------------------------------------------------------------------------------ Year Ended October 31, ------------------------------------------------------------------------------------------------ 2003 2002 2001 ------------------------------ ------------------------------ ------------------------------ Class Y Class C Class A Class Y Class C Class A Class Y Class C Class A ------------------------------------------------------------------------------------------------ $ 19.47 $ 18.73 $ 19.29 $ 20.87 $ 20.24 $ 20.72 $ 20.07 $ 19.62 $ 19.98 ------- ------- ------- ------- ------- ------- ------- ------- ------- (0.17) (0.31) (0.22) (0.17) (0.32) (0.22) (0.06) (0.21) (0.11) 3.73 3.57 3.73 (0.66) (0.62) (0.64) 1.01 0.98 1.00 ------- ------- ------- ------- ------- ------- ------- ------- ------- 3.56 3.26 3.51 (0.83) (0.94) (0.86) 0.95 0.77 0.89 ------- ------- ------- ------- ------- ------- ------- ------- ------- -- -- -- (0.57) (0.57) (0.57) (0.15) (0.15) (0.15) ------- ------- ------- ------- ------- ------- ------- ------- ------- -- -- -- (0.57) (0.57) (0.57) (0.15) (0.15) (0.15) ------- ------- ------- ------- ------- ------- ------- ------- ------- $ 23.03 $ 21.99 $ 22.80 $ 19.47 $ 18.73 $ 19.29 $ 20.87 $ 20.24 $ 20.72 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- 18.28% 17.41% 18.20% (4.21)% (4.90)% (4.39)% 4.8% 4.0% 4.5% $ 554 $ 11 $ 6 $ 473 $ 6 $ 2 $ 393 $ 6 $ 1 1.50% 2.25% 1.75% 1.51% 2.26% 1.76% 1.4% 2.2% 1.7% (0.79)% (1.55)% (1.07)% (0.82)% (1.57)% (1.07)% (0.3)% (1.0)% (0.5)% 47.88% 47.88% 47.88% 51.25% 51.25% 51.25% 83% 83% 83%
Please see Notes to the Financial Highlights on page 62. 61 FIRST EAGLE FUNDS NOTES TO FINANCIAL HIGHLIGHTS (a) Annualized. (b) Not annualized. (c) Does not give effect to the deduction of the CDSC (Contingent Deferred Sales Charge) of 1.00%. (d) September 4, 2001 inception date. (e) May 15, 2003 inception date. (f) The ratio of operating expenses to average net assets without the effect of earnings credits and in the case of the First Eagle U.S. Value Fund, without the effect of earnings credits and expense reimbursements are as follows: - ----------------------------------------------------------------------------------------------------------------------- Year Ended October 31, ------------------------------------------------------------------------------------------------ 2005 2004 2003 --------------------------- --------------------------- ------------------------------------ Class A Class I Class C Class A Class I Class C Class A Class I Class C - ----------------------------------------------------------------------------------------------------------------------- First Eagle Global Fund......... 1.20% 0.95% 1.95% 1.24% 0.99% 1.99% 1.32% 1.07% 2.07% First Eagle Overseas Fund....... 1.18% 0.93% 1.93% 1.25% 1.00% 2.00% 1.31% 1.06% 2.05% First Eagle U.S. Value Fund.......... 1.28% 1.04% 2.02% 1.38% 1.13% 2.13% 1.51% 1.26% 2.26% First Eagle Gold Fund........... 1.30% 1.05% 2.05% 1.39% 1.14% 2.14% 1.50% 1.23%(a)(e) 2.19%(a)(e)
- ----------------------------------------------------------------------------------------------------------------- Year Ended October 31, --------------------------------------------------------------------------------------- 2005 2004 2003 --------------------------- --------------------------- --------------------------- Class Y Class C Class A Class Y Class C Class A Class Y Class C Class A - ----------------------------------------------------------------------------------------------------------------- First Eagle Fund of America................ 1.43% 2.17% 1.49% 1.46% 2.21% 1.72% 1.50% 2.25% 1.75%
(g) The ratio of net investment income to average net assets without the effect of earnings credits and in the case of the First Eagle U.S. Value Fund, without the effect of earnings credits and expense reimbursements are as follows: - ------------------------------------------------------------------------------------------------------------------------ Year Ended October 31, ------------------------------------------------------------------------------------------------- 2005 2004 2003 --------------------------- --------------------------- ------------------------------------- Class A Class I Class C Class A Class I Class C Class A Class I Class C - ------------------------------------------------------------------------------------------------------------------------ First Eagle Global Fund................ 1.20% 1.48% 0.47% 1.46% 1.67% 0.66% 1.91% 2.10% 1.07% First Eagle Overseas Fund................ 1.21% 1.46% 0.46% 0.90% 1.17% 0.17% 1.23% 1.48% 0.45% First Eagle U.S. Value Fund.......... 1.40% 1.63% 0.66% 1.66% 2.00% 0.95% 1.72% 1.99% 0.97% First Eagle Gold Fund................ (0.24)% (0.01)% (0.98)% (0.62)% (0.35)% (1.34)% (0.43)% (0.25)%(a)(e) (1.26)%(a)(e)
- -------------------------------------------------------------------------------------------------------------- Year Ended October 31, --------------------------------------------------------------------------------------- 2005 2004 2003 --------------------------- --------------------------- --------------------------- Class Y Class C Class A Class Y Class C Class A Class Y Class C Class A - -------------------------------------------------------------------------------------------------------------- First Eagle Fund of America............. (0.27)% (1.04)% (0.34)% (0.57)% (1.32)% (0.84)% (0.79)% (1.55)% (1.07)%
62 - ------------------------------------------------------------------------- Year Ended October 31, - ------------------------------------------------------------------------- 2002 2001 - ------------------------------- --------------------------------------- Class A Class I Class C Class A Class I Class C - ------------------------------------------------------------------------- 1.34% 1.10% 2.10% 1.39% 1.14% 2.14% 1.40% 1.15% 2.15% 1.53% 1.28% 2.26% 1.92% 1.69% 2.67% 3.33%(a)(d) 3.16%(a)(d) 4.05%(a)(d) 1.67% -- -- 2.66% -- --
- ------------------------------------------------------------- Year Ended October 31, - ------------------------------------------------------------- 2002 2001 - ------------------------------- --------------------------- Class Y Class C Class A Class Y Class C Class A - ------------------------------------------------------------- 1.51% 2.26% 1.76% 1.4% 2.2% 1.7%
- -------------------------------------------------------------------------- Year Ended October 31, - -------------------------------------------------------------------------- 2002 2001 - ------------------------------- ---------------------------------------- Class A Class I Class C Class A Class I Class C - -------------------------------------------------------------------------- 2.14% 2.37% 1.31% 2.24% 2.47% 1.12% 0.96% 1.17% 0.19% 0.91% 1.10% (0.08)% 2.08% 2.29% 1.35% 1.62%(a)(d) 2.02%(a)(d) 0.80%(a)(d) 0.08% -- -- 0.35% -- --
63 [THIS PAGE INTENTIONALLY LEFT BLANK] 64 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 Reports contain a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the last fiscal year. They also contain 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 without charge on our website (www.firsteaglefunds.com) or by contacting us. You may visit the SEC's website (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. 20549-0102 or by e-mail to publicinfo@sec.gov. 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 (202) 551-8090. How to Reach First Eagle Funds You can send all requests for information or transactions to: First Eagle Funds P.O. Box 219324 Kansas City, MO 64121-9324 You can contact us by telephone at (800) 334-2143. You can also reach us for any reason by visiting our website at: www.firsteaglefunds.com Distributor First Eagle Funds Distributors, a division of ASB Securities LLC 1345 Avenue of the Americas New York, NY 10105 Investment Adviser Arnhold and S. Bleichroeder Advisers, LLC 1345 Avenue of the Americas New York, NY 10105 Investment Company Act File Number: 811-07762 STATEMENT OF ADDITIONAL INFORMATION FIRST EAGLE GLOBAL FUND FIRST EAGLE OVERSEAS FUND FIRST EAGLE U.S. VALUE FUND FIRST EAGLE GOLD FUND FIRST EAGLE FUND OF AMERICA MARCH 1, 2006 ------------------- 1345 AVENUE OF THE AMERICAS NEW YORK, NY 10105 (212) 698-3000 ------------------- ARNHOLD AND S. BLEICHROEDER ADVISERS, LLC 1345 AVENUE OF THE AMERICAS NEW YORK, NY 10105 INVESTMENT ADVISER FIRST EAGLE FUNDS DISTRIBUTORS, A DIVISION OF ASB SECURITIES LLC 1345 AVENUE OF THE AMERICAS NEW YORK, NY 10105 DISTRIBUTOR ------------------- This Statement of Additional Information provides information about First Eagle Global Fund, First Eagle Overseas Fund, First Eagle U.S. Value Fund, First Eagle Gold Fund and First Eagle Fund of America, five separate portfolios of First Eagle Funds (the 'Trust'), an open-end management investment company, which information is in addition to that contained in the Prospectus of the Trust dated March 1, 2006. This Statement of Additional Information is not a prospectus. It relates to and should be read in conjunction with the Prospectus of the Trust, copies of which can be obtained by writing, by calling the Trust at (800) 334-2143 or on the Trust's website at www.firsteaglefunds.com. Certain disclosure, including the Funds' financial statements and the notes thereto, have been incorporated by reference into this Statement of Additional Information from the Trust's annual reports. For a free copy of the annual reports, please call the Trust at (800) 334-2143. ------------------- TABLE OF CONTENTS
STATEMENT OF ADDITIONAL INFORMATION PAGE ---- Organization of the Funds................................... 1 Investment Objective, Policies and Restrictions............. 2 Management of the Trust..................................... 17 Investment Advisory and Other Services...................... 25 Voting of Proxies........................................... 29 Distributor of the Funds' Shares............................ 30 Fund Shares................................................. 32 Computation of Net Asset Value.............................. 32 Disclosure of Portfolio Holdings............................ 33 How to Purchase Shares...................................... 34 Tax Status.................................................. 34 Portfolio Transactions and Brokerage........................ 39 Custody of Portfolio........................................ 41 Independent Registered Public Accounting Firm............... 41 Financial Statements........................................ 41 Appendix.................................................... A-1
ORGANIZATION OF THE FUNDS First Eagle Global Fund (formerly First Eagle SoGen Global Fund), First Eagle Overseas Fund (formerly First Eagle SoGen Overseas Fund), First Eagle U.S. Value Fund, First Eagle Gold Fund (formerly First Eagle SoGen Gold Fund) and First Eagle Fund of America (each individually referred to as a 'Fund,' collectively, the 'Funds' or, alternatively, the 'Global Fund,' the 'Overseas Fund,' the 'U.S. Value Fund,' the 'Gold Fund,' and the 'First Eagle Fund of America,' respectively) are five separate portfolios of First Eagle Funds (the 'Trust'), formerly First Eagle Funds, Inc., an open-end investment management company originally incorporated under the laws of Maryland in May 1993. The shareholders of the Trust approved reorganization of the Funds as a Delaware statutory trust, effective April 23, 2004. Prior to the reorganization, the Board of Directors of the former company approved changing the name of that company from 'First Eagle SoGen Funds, Inc.' to 'First Eagle Funds, Inc.' effective December 31, 2002. (In addition, prior to June 5, 2002, the First Eagle Fund of America was a separate portfolio of a different Delaware statutory trust also named First Eagle Funds, which trust has since been liquidated.) Each Fund is a separate, diversified portfolio of assets (other than the Gold Fund and the First Eagle Fund of America, each of which is a non-diversified portfolio of assets) and has a different investment objective which it pursues through separate investment policies, as described below. The Trust's investment adviser is Arnhold and S. Bleichroeder Advisers, LLC ('ASB Advisers' or the 'Adviser'), a registered investment adviser. The Trust's principal underwriter is First Eagle Funds Distributors, a division of ASB Securities LLC ('First Eagle Distributors' or the 'Distributor'), a registered broker-dealer located in New York. Both ASB Advisers and ASB Securities LLC are wholly owned subsidiaries of Arnhold and S. Bleichroeder Holdings, Inc., a privately owned holding company organized under the laws of New York. Pursuant to the laws of Delaware, the Trust's state of formation, the Board of Trustees of the Trust has adopted By-Laws of the Trust that do not require annual meetings of the Funds' shareholders. The absence of a requirement that the Trust hold annual meetings of the Funds' shareholders reduces its expenses. Meetings of shareholders will continue to be held when required by the Investment Company Act of 1940, as amended (the 'Investment Company Act'), or Delaware law, or when called by the Chairman of the Board of Trustees, the President or shareholders owning 10% of a Fund's outstanding shares. The cost of any such notice and meeting will be borne by the Funds. Under the provisions of the Investment Company Act, a vacancy on the Board of Trustees of the Trust may be filled between meetings of the shareholders of the Trust by vote of the Trustees then in office if, immediately after filling such vacancy, at least two-thirds of the Trustees then holding office have been elected to the office of Trustee by the shareholders of the Funds. In the event that at any time less than a majority of the Trustees of the Trust holding office at that time were elected by the shareholders of the Funds, the Board of Trustees or the Chairman of the Board shall, within sixty days, cause a meeting of shareholders to be held for the purpose of electing trustees to fill any vacancies in the Board of Trustees. The staff of the Securities and Exchange Commission ('SEC') has advised the Funds that it interprets Section 16(c) of the Investment Company Act, which provides a means for dissident shareholders of common-law trusts to communicate with other shareholders of such trusts and to vote upon the removal of trustees upon the request in writing by the record holders of not less than 10 percent of the outstanding shares of the trust, to apply to investment companies, such as the Trust, that are incorporated under Delaware law. 1 INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS Investment Objective of the Funds GLOBAL FUND. The Global Fund's investment objective is to provide long-term growth of capital through investments in a range of asset classes from markets in the United States and around the world. In seeking to achieve this objective, the Fund will normally invest its assets primarily in common stocks (and in securities convertible into common stocks) of U.S. and foreign companies. However, the Fund reserves the right to invest a portion of its assets in fixed-income securities of domestic or foreign issuers which, in addition to the income they may provide, appear to offer potential for long-term growth of capital. OVERSEAS FUND. The Overseas Fund seeks long-term growth of capital through investments primarily in equities issued by non-U.S. corporations. In seeking to achieve this objective, the Overseas Fund invests primarily in companies traded in mature markets and may invest in emerging markets. Under normal market conditions, the Overseas Fund invests at least 80% of its total assets, taken at market value, in foreign securities. The Fund uses the techniques and invests in the types of securities described below and in the Fund's Prospectus. U.S. VALUE FUND. The U.S. Value Fund seeks long-term growth of capital by investing, under normal market conditions, at least 80% of its assets in domestic equity and debt securities (at least 65% in equity securities). The Fund uses the techniques and invests in the types of securities described below and in the Fund's Prospectus. GOLD FUND. The Gold Fund seeks to provide investors the opportunity to participate in the investment characteristics of gold (and to a limited extent other precious metals) for a portion of their overall investment portfolio. Gold-related investments have provided protection against loss of purchasing power during periods of extensive price inflation and/or following periods of extensive credit expansion. Under normal circumstances, at least 80% of the value of the Fund's total assets will be invested in precious metals and/or securities (which may include both equity and, to a limited extent, debt securities) directly related to precious metals or of issuers engaged in gold or other precious metal operations, including securities of gold mining finance companies as well as operating companies with long, medium or short-life mines. FIRST EAGLE FUND OF AMERICA. The First Eagle Fund of America seeks capital appreciation by investing primarily in domestic stocks and to a lesser extent in debt and foreign equity securities. Normally at least 80% of First Eagle Fund of America's assets will be invested in domestic equity and debt securities and at least 65% will be invested in domestic equity securities. When deemed appropriate by a Fund's investment adviser for short-term investment or defensive purposes, a Fund may hold up to 100% of its assets in short-term debt instruments including U.S. government obligations, commercial paper and certificates of deposits. Investors should refer to each Fund's Prospectus for further discussion of the Fund's investment objective and policies. There can be no assurance that a Fund's stated objective will be realized. Policies and Techniques Applicable to All Funds The investment objective of each Fund describes its principal investment strategies. Except as otherwise described below, each of the investment techniques below is considered to be a non-principal technique for each Fund. Investment Policies, Techniques and Risks of the Funds Structured Notes. Each of the Global Fund and the U.S. Value Fund may invest up to 5% of its assets in structured notes and/or preferred stock, the value of which is linked to the price of a referenced commodity. Structured notes and/or preferred stock differ from other types of securities in which the Fund may invest in several respects. For example, not only the coupon but also the redemption amount at maturity may be increased or decreased depending on the change in the price of the referenced commodity. The Overseas Fund may invest in structured notes and/or preferred stock, the value of which is linked to currencies, interest rates, other commodities, indices or other financial indicators, and the Gold Fund may invest in structured notes and/or preferred stock, the value of which is linked to the price of gold or other precious metals. Structured securities differ from other types of securities in which the Funds may invest in several respects. For 2 example, the coupon dividend and/or redemption amount at maturity may be increased or decreased depending on changes in the value of the underlying instrument. Investment in structured securities involves certain risks. In addition to the credit risk of the security's issuer and the normal risks of price changes in response to changes in interest rates, the redemption amount may decrease as a result of changes in the price of the underlying instrument. Further, in the case of certain structured securities, the coupon and/or dividend may be reduced to zero, and any further declines in the value of the underlying instrument may then reduce the redemption amount payable on maturity. Finally, structured securities may be more volatile than the price of the underlying instrument. Foreign Securities. Each Fund may (and the Global Fund and the Overseas Fund will) invest in foreign securities, which may entail a greater degree of risk (including risks relating to exchange rate fluctuations, tax provisions, or expropriation of assets) than does investment in securities of domestic issuers. Investing in foreign securities is a principal investment strategy of the Global Fund and the Overseas Fund. The Funds may invest in securities of foreign issuers directly or in the form of American Depository Receipts (ADRs), Global Depository Receipts (GDRs), European Depository Receipts (EDRs), or other securities representing underlying shares of foreign issuers. Positions in these securities are not necessarily denominated in the same currency as the common stocks into which they may be converted. ADRs are receipts typically issued by an American bank or trust company evidencing ownership of the underlying securities. EDRs are European receipts evidencing a similar arrangement. GDRs are global offerings where two securities are issued simultaneously in two markets, usually publicly in non-U.S. markets and privately in the U.S. market. Generally, ADRs, in registered form, are designed for use in the U.S. securities markets, EDRs, in bearer form, are designed for use in European securities markets, and GDRs are designed for use in the U.S. and European securities markets. Each of the Funds may invest in both 'sponsored' and 'unsponsored' ADRs. In a sponsored ADR, the issuer typically pays some or all of the expenses of the depository and agrees to provide its regular shareholder communications to ADR holders. An unsponsored ADR is created independently of the issuer of the underlying security. The ADR holders generally pay the expenses of the depository and do not have an undertaking from the issuer of the underlying security to furnish shareholder communications. Issuers of unsponsored ADRs are not obligated to disclose material information in the United States and, therefore, there may not be a correlation between such information and the market value of the ADRs. Each Fund (other than First Eagle Fund of America) does not expect to invest more than 5% of its total assets in unsponsored ADRs. With respect to portfolio securities that are issued by foreign issuers or denominated in foreign currencies, the investment performance of a Fund is affected by the strength or weakness of the U.S. dollar against these currencies. For example, if the dollar falls in value relative to the Japanese yen, the dollar value of a yen-denominated stock held in the portfolio will rise even though the price of the stock remains unchanged. Conversely, if the dollar rises in value relative to the yen, the dollar value of the yen-denominated stock will fall. (See also the discussion under 'Currency Exchange Transactions.') Investors should understand and consider carefully the risks involved in foreign investing. Investing in foreign securities, positions which are generally denominated in foreign currencies, and utilization of forward foreign currency exchange contracts (or other foreign cash management positions) involve certain risks and opportunities not typically associated with investing in U.S. securities. These considerations include: fluctuations in the rates of exchange between the U.S. dollar and foreign currencies; possible imposition of exchange control regulations or currency restrictions that would prevent cash from being brought back to the United States; less public information with respect to issuers of securities; less governmental supervision of stock exchanges, securities brokers, and issuers of securities; different accounting, auditing and financial reporting standards; different settlement periods and trading practices; less liquidity and frequently greater price volatility in foreign markets than in the United States; imposition of foreign taxes; and sometimes less advantageous legal, operational and financial protections applicable to foreign sub-custodial arrangements. Although the Funds seek to invest in companies and governments of countries having stable political environments, there is the possibility of expropriation or confiscatory taxation, seizure or nationalization of foreign bank deposits or other assets, establishment of exchange controls, the adoption of foreign government restrictions, or other adverse political, social or diplomatic developments that could affect investment in these nations. The cost of investing in foreign securities is higher than the cost of investing in U.S. securities. Investing in each Fund (other than the U.S. Value Fund and First Eagle Fund of America, each of which expects to invest in foreign securities on only a limited basis) is an efficient way for an individual to participate in foreign markets, but 3 its expenses, including advisory and custody fees, are higher than the expenses of many mutual funds that invest in domestic equities. Restricted and Illiquid Securities. Each Fund may invest up to 15% of its net assets (10% in the case of the Global Fund and the U.S. Value Fund) in illiquid securities, including certain securities that are subject to legal or contractual restrictions on resale ('restricted securities'). Generally, restricted securities may be sold only in privately negotiated transactions or in a public offering with respect to which a registration statement is in effect under the Securities Act of 1933 (the '1933 Act'). Where registration is required, a Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than that which prevailed when it decided to sell. Restricted securities will be priced at fair value as determined in good faith by the Board of Trustees. Notwithstanding the above, a Fund may purchase securities that have been privately placed but that are eligible for purchase and sale under Rule 144A under the 1933 Act. That rule permits certain qualified institutional buyers, such as the Funds, to trade in privately placed securities that have not been registered for sale under the 1933 Act. The Adviser, under the supervision of the Board of Trustees of the Trust, will consider whether securities purchased under Rule 144A are illiquid and thus subject to a Fund's restriction on investing in illiquid securities. A determination as to whether a Rule 144A security is liquid or not is a factual issue requiring an evaluation of a number of factors. In making this determination, the Adviser will consider the trading markets for the specific security, taking into account the unregistered nature of a Rule 144A security. In addition, the Adviser could consider (1) the frequency of trades and quotes, (2) the number of dealers and potential purchasers, (3) the dealer undertakings to make a market, and (4) the nature of the security and of market place trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities would be monitored and if, as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, a Fund's holdings of illiquid securities would be reviewed to determine what steps, if any, are required to assure that the Fund does not invest more than the maximum percentage of its assets in illiquid securities. Investing in Rule 144A securities could have the effect of increasing the amount of a Fund's assets invested in illiquid securities if qualified institutional buyers are unwilling to purchase such securities. Private Investment Funds. Each Fund may invest to a limited extent in private investment funds. Such funds are not registered under the Investment Company Act and are therefore not subject to the extensive regulatory requirements it imposes. Private investment funds typically do not disclose the contents of their portfolios, which may make it difficult for the Funds to independently verify the value of an investment in a private investment fund. In addition, a Fund typically will not be able to withdraw an investment in a private investment fund except at certain designated times, presenting the risk that a Fund would not be able to withdraw from a private investment fund as soon as desired, especially during periods of volatility in markets in which such a private investment fund invests. Investments in private investment funds generally will be subject to each Fund's limitations on investments in 'illiquid securities,' as described immediately above. Investment in Other Investment Companies. Certain markets are closed in whole or in part to equity investments by foreigners. The Global Fund, the Overseas Fund and the U.S. Value Fund may be able to invest in such markets solely or primarily through registered investment companies, either U.S. or foreign. Each of these Funds generally may invest up to 10% of its assets in shares of other investment companies and up to 5% of its assets in any one investment company (in each case measured at the time of investment), as long as no investment represents more than 3% of the outstanding voting stock of the acquired investment company at the time of investment. These restrictions do not apply to certain investment companies known as private investment companies and 'qualified purchaser' investment companies (described above under 'Private Investment Funds'). Investment in another investment company may involve the payment of a premium above the value of the issuer's portfolio securities, and is subject to market availability. In the case of a purchase of shares of such a company in a public offering, the purchase price may include an underwriting spread. These Funds do not intend to invest in such an investment company unless, in the judgment of the Funds' investment adviser, the potential benefits of such investment justify the payment of any applicable premium or sales charge. As a shareholder in an investment company, each of these Funds would bear its ratable share of that investment company's expenses, including its advisory and administration fees. At the same time, each of these Funds would continue to pay its own advisory fees and other expenses. 4 Bank Obligations. Each Fund (other than First Eagle Fund of America) may invest in bank obligations, which may include bank certificates of deposit, time deposits or bankers' acceptances. Certificates of deposit and time deposits are negotiable certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified return. Bankers' acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are 'accepted' by a bank, meaning in effect that the bank unconditionally agrees to pay the face value of the instrument on maturity. Investments in these instruments are limited to obligations of domestic banks (including their foreign branches) and U.S. and foreign branches of foreign banks having capital surplus and undivided profits in excess of $100 million. Lower-Rated Debt Securities. Each of the Funds may invest in debt securities, including lower-rated securities (i.e., securities rated BB or lower by Standard & Poor's Corporation ('S&P') or Ba or lower by Moody's Investors Service, Inc. ('Moody's'), commonly called 'junk bonds') and securities that are not rated. There are no restrictions as to the ratings of debt securities acquired by a Fund or the portion of a Fund's assets that may be invested in debt securities in a particular rating category, except that each of the Overseas Fund and the Gold Fund will not invest more than 20% of its assets in securities rated below investment grade or unrated securities considered by the investment adviser to be of comparable credit quality. Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade ratings) are considered to be of medium grade and to have speculative characteristics. Debt securities rated below investment grade are predominantly speculative with respect to the issuer's capacity to pay interest and repay principal. Although lower-rated debt and comparable unrated debt securities may offer higher yields than do higher-rated securities, they generally involve greater volatility of price and risk of principal and income, including the possibility of default by, or bankruptcy of, the issuers of the securities. In addition, the markets in which lower-rated and unrated debt securities are traded are more limited than those in which higher-rated securities are traded. Adverse publicity and investors' perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of lower-rated debt securities, especially in a thinly traded market. During periods of thin trading in these markets, the spread between bid and asked prices is likely to increase significantly, and a Fund may have greater difficulty selling its portfolio securities. See 'Computation of Net Asset Value.' Analyses of the creditworthiness of issuers of lower-rated debt securities may be more complex than for issuers of higher-rated securities, and the ability of the Fund to achieve its investment objective may, to the extent of investment in lower-rated debt securities, be more dependent upon such creditworthiness analyses than would be the case if the Fund were investing in higher-rated securities. Lower-rated debt securities may be more susceptible to real or perceived adverse economic and competitive industry conditions than investment grade securities. The prices of lower-rated debt securities have been found to be less sensitive to interest rate changes than higher-rated investments, but more sensitive to adverse economic downturns or individual corporate developments. A projection of an economic downturn or of a period of rising interest rates, for example, could cause a decline in lower-rated debt securities' prices because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest payments on its debt securities. If the issuer of lower-rated debt securities defaults, a Fund may incur additional expenses seeking recovery. The First Eagle Fund of America has no current intention of investing more than 5% of its net assets in high yield bonds. A more complete description of the characteristics of bonds in each rating category is included in the appendix to this Statement of Additional Information. Futures and Options on Futures. The Overseas Fund, Gold Fund and First Eagle Fund of America may utilize futures contracts and options on futures. These transactions may be effected on securities exchanges or in the over-the-counter market. When purchased over-the-counter, a Fund bears the risk that the counterparty to the contract will be unable or unwilling to perform its obligations. These contracts may also be illiquid and, in such cases, a Fund may have difficulty closing out its position. Engaging in these types of transactions is a specialized activity and involves risk of loss. In addition, engaging in these types of transactions may increase the volatility of returns, because they commonly involve significant 'built in' leverage and can be entered into with relatively small 'margin' commitments relative to the resulting investment exposure. Futures contracts and similar 'derivative' instruments are also subject to the risk of default by the counterparties to the contracts. The Overseas Fund, Gold Fund and First Eagle Fund of America may enter into futures contracts in U.S. markets or on exchanges located outside the United States. Foreign markets may offer advantages such as trading opportunities or arbitrage possibilities not available in the United States. Foreign markets, however, may have greater risk potential than U.S. markets. For example, some foreign exchanges are principal markets so that no common 5 clearing facility exists and an investor may look only to the broker for performance of the contract. In addition, any profits realized could be eliminated by adverse changes in the exchange rate. Transactions on foreign exchanges may include both commodities that are traded on U.S. exchanges and those that are not. Unlike trading on U.S. commodity exchanges, trading on foreign commodity exchanges is not regulated by the Commodity Futures Trading Commission ('CFTC'). Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Futures contract prices could move to the limit for several consecutive trading days with little or no trading, preventing prompt liquidation of futures positions and potentially subjecting a Fund to substantial losses. Successful use of futures also is subject to the investment adviser's ability to predict correctly movements in the direction of the relevant market, and, to the extent the transaction is entered into for hedging purposes, to determine the appropriate correlation between the transaction being hedged and the price movements of the futures contract. Positions of the SEC and its staff may require a Fund to segregate liquid assets in connection with its options and commodities (futures) transactions in an amount generally equal to the value of the underlying option or commodity. The segregation of these assets will have the effect of limiting the investment adviser's ability otherwise to invest those assets. Futures and related options transactions must constitute permissible transactions pursuant to regulations promulgated by the CFTC. As a general matter, the investment adviser intends to conduct the operations of each Fund in compliance with CFTC Rule 4.5 under the Commodity Exchange Act of 1974, as amended, in order to avoid regulation by the CFTC as a commodity pool operator with respect to the Fund. Commodities and Commodity Contracts. Each Fund, other than First Eagle Fund of America, may purchase or sell such precious metals as gold or silver directly or may invest in precious metal commodity contracts and options on such contracts (metals are considered 'commodities' under the federal commodities laws). Investing in precious metals in this manner carries risks, as described below under 'Additional Investment Risks Applicable to the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund.' These Funds also may invest in instruments related to precious metals, including securities of precious metal finance and operating companies. Currency Exchange Transactions. Each Fund may engage in a currency exchange transaction through a forward currency exchange contract (or other cash management position). A currency exchange transaction may be conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or selling currency prevailing in the foreign exchange market or through a forward currency exchange contract ('Forward Contract') (or other cash management position). A Forward Contract is an agreement to purchase or sell a specified currency at a specified future date (or within a specified time period) at a price set at the time of the contract. Forward Contracts are usually entered into with banks and broker/dealers, are not exchange traded and are usually for less than one year. Currency exchange transactions may involve currencies of the different countries in which the Funds may invest, and may serve as hedges against possible variations in the exchange rates between these currencies and the U.S. dollar. A Fund's currency transactions may include transaction hedging and portfolio hedging involving either specific transactions or portfolio positions. Transaction hedging is the purchase or sale of a Forward Contract (or other cash management position) with respect to specific payables or receivables of a Fund in connection with the purchase or sale of portfolio securities. Portfolio hedging is the use of a Forward Contract (or other cash management position) with respect to one or more portfolio security positions denominated or quoted in a particular currency. A Fund may engage in portfolio hedging with respect to the currency of a particular country in amounts approximating actual or anticipated positions in securities denominated in that currency. In addition to hedging transactions, a Fund's currency transactions may include those intended to profit from anticipated currency exchange fluctuations, even if not related to any particular Fund transaction or portfolio position, which can result in losses if such fluctuations do not occur as anticipated. At the maturity of a Forward Contract to deliver a particular currency, a Fund may either sell the portfolio security related to such contract and make delivery of the currency, or it may retain the security and either acquire the currency on the spot market or terminate its contractual obligation to deliver the currency by purchasing an offsetting contract with the same currency trader obligating it to purchase on the same maturity date the same amount of the currency. It is impossible to forecast with absolute precision the market value of portfolio securities at the expiration of a Forward Contract. Accordingly, it may be necessary for a Fund to purchase additional currency on the spot market 6 (and bear the expense of such purchase) if the market value of the security is less than the amount of currency the Fund is obligated to deliver, and if a decision is made to sell the security and make delivery of the currency. Conversely, it may be necessary to sell on the spot market some of the currency received upon the sale of the portfolio security if its market value exceeds the amount of currency the Fund is obligated to deliver. If a Fund retains the portfolio security and engages in an offsetting transaction, the Fund will incur a gain or a loss to the extent that there has been movement in Forward Contract prices. If a Fund engages in an offsetting transaction, it may subsequently enter into a new Forward Contract to sell the currency. Should forward prices decline during the period between the date a Fund enters into a Forward Contract for the sale of a currency and the date it enters into an offsetting contract for the purchase of the currency, the Fund will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the Fund will suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell. A default on the contract would deprive the Fund of unrealized profits or force the Fund to cover its commitments for purchase or sale of currency, if any, at the current market price. Hedging against a decline in the value of a currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. Such transactions also preclude the opportunity for gain if the value of the hedged currency should rise. Moreover, it may not be possible for a Fund to hedge against a devaluation that is so generally anticipated that the Fund is not able to contract to sell the currency at a price above the devaluation level it anticipates. The cost to a Fund of engaging in currency exchange transactions varies with such factors as the currency involved, the length of the contract period and prevailing market conditions. Since currency exchange transactions are usually conducted on a principal basis, no fees or commissions are involved. Making Loans. Each Fund (other than First Eagle Fund of America) may purchase or sell loans or other direct debt instruments, including loan participations. Investing directly in loans or other direct debt instruments exposes the Funds to various risks similar to those borne by a creditor. Such risks include the risk of default, the risk of delayed repayment, and the risk of inadequate collateral. Investments in loans are also less liquid than investment in publicly traded securities and carry less legal protections in the event of fraud or misrepresentation. Unlike debt instruments that are securities, investments in loans are not regulated by federal securities laws or the SEC. In addition, loan participations involve a risk of insolvency by the lending bank or other financial intermediary. Arbitrage Transactions. Each 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. The Funds 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 the Funds may not be able to sell securities subject to an arbitrage at prices exceeding the costs of purchasing those securities. The Funds will attempt to limit that risk by effecting arbitrage transactions only when the prices of the securities are confirmed in advance of the trade. The First Eagle Fund of America currently intends to invest no more than 5% of the value of its net assets in such transactions. When-Issued or Delayed-Delivery Securities. Each Fund may purchase securities on a 'when-issued' or 'delayed-delivery' basis. Although the payment and interest terms of these securities are established at the time a Fund enters into the commitment, the securities may be delivered and paid for a month or more after the date of purchase, when their value may have changed. A Fund makes such commitments only with the intention of actually acquiring the securities, but may sell the securities before settlement date if the investment adviser deems it advisable for investment reasons. At the time a Fund enters into a binding obligation to purchase securities on a when-issued basis, liquid assets of the Fund having a value at least as great as the purchase price of the securities to be purchased will be segregated on the books of the Fund and held by the custodian throughout the period of the obligation. The use of these investment strategies, as well as any borrowing by a Fund, may increase net asset value fluctuation. Securities purchased on a when-issued or delayed-delivery basis are recorded as assets on the day following the purchase and are marked-to-market daily. A Fund will not invest more than 25% of its assets in when-issued or delayed-delivery securities, does not intend to purchase such securities for speculative purposes and will make commitments to purchase securities on a when-issued or delayed-delivery basis with the intention of actually acquiring the securities. However, the Funds reserve the right to sell acquired when-issued or delayed-delivery securities before their settlement dates if deemed advisable. 7 Additional Policies Applicable to the First Eagle Fund of America Borrowing. The First Eagle Fund of America 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. The Fund also may borrow from those banks to facilitate the meeting of redemption requests or for temporary or emergency purposes and may pledge its assets to secure those borrowings. In accord with the borrowing rules under the Investment Company Act, any borrowings by the 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 the Fund's assets at any time should fail to meet this 300% asset coverage, described above, the 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. Notwithstanding the above, such borrowings may not exceed 10% of the First Eagle Fund of America's net assets at the time of borrowing. Warrants. The First Eagle Fund of America 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. The First Eagle Fund of America 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. Repurchase agreements of greater than seven days maturity may be deemed to be illiquid. The First Eagle Fund of America intends to invest no more than 5% of its net assets in repurchase agreements. Reverse Repurchase Agreements. A reverse repurchase agreement involves the sale of a debt security owned by a fund coupled with an agreement by such fund to repurchase the instrument at a stated price, date and interest payment. The First Eagle Fund of America 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 the Fund enters into a reverse repurchase agreement, it will have securities designated to repurchase its securities. The First Eagle Fund of America 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 the Fund and, therefore, may be subject to the same risks involved in any borrowing. The 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. The First Eagle Fund of America does not intend to invest more than 5% of the value of its net assets in reverse repurchase agreements. Lending of Securities. The First Eagle Fund of America 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 the 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. The 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. The advantage of portfolio lending is that the 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, the 8 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 their investment in the securities which are subject to the loan. The Fund will pay reasonable finders', administrative and custodial fees in connection with a loan of securities or may share the interest earned on collateral with the borrower. The First Eagle Fund of America intends to invest no more than 5% of the value of its net assets in portfolio loans. Options Transactions. The Adviser believes that certain transactions in options on securities and on stock indices may be useful in limiting the First Eagle Fund of America's investment risk and augmenting its investment return. The Adviser expects, however, the amount of the First Eagle Fund of America's assets that will be involved in options transactions to be small relative to the First Eagle Fund of America's assets. Accordingly, it is expected that only a relatively small portion of the First Eagle Fund of America's investment return will be attributable to transactions in options on securities and on stock indices. The First Eagle Fund of America 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 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 the First Eagle Fund of America ultimately intends to buy. Hedge protection is provided during the life of the call because the First Eagle Fund of America, 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 the First Eagle Fund of America 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 the First Eagle Fund of America, other mutual funds advised by the Adviser and other clients of the Adviser may be considered such a group. Position limits may restrict the First Eagle Fund of America's ability to purchase or sell options on particular securities and on stock indices. Covered Option Writing. The First Eagle Fund of America 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 the First Eagle Fund of America 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 the First Eagle Fund of America in cash, Treasury bills or other high grade short-term obligations in a segregated account with its custodian. A put option is 'covered' if the First Eagle Fund of America maintains cash, Treasury bills or other high grade short-term obligations with a value equal to the exercise price in a segregated account with its custodian, or holds on a share-for-share basis a put on the same equity or debt security as the put written where the exercise price of the put held is equal to or greater than the exercise price of the put written, or lower than the exercise price of the put written if the difference is maintained in a segregated account with its custodian. One reason for writing options 9 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 the First Eagle Fund of America in the case of a call option, or a moderate increase in the value of securities the First Eagle Fund of America intends to purchase in the case of a put option. If a covered option written by the First Eagle Fund of America expires unexercised, it 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 the First Eagle Fund of America, it 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 the First Eagle Fund of America. Options on Stock Indices. The First Eagle Fund of America will write call options on broadly based stock market indices only if at the time of writing it holds a portfolio of stocks. When the First Eagle Fund of America writes a call option on a broadly based stock market index, it 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 the First Eagle Fund of America 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, the First Eagle Fund of America 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 the First Eagle Fund of America. If the First Eagle Fund of America were assigned an exercise notice on a call it has written, it 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 the First Eagle Fund of America has written a call, there is also a risk that the market may decline between the time the First Eagle Fund of America 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, the First Eagle Fund of America will not learn that an index option has been exercised until the day following the exercise date but, unlike a call on stock where it would be able to deliver the underlying securities in settlement, the First Eagle Fund of America 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 the First Eagle Fund of America has written is 'covered' by an index call held by the First Eagle Fund of America with the same strike price, it will bear the risk that the level of the index may decline between the close of trading on the date the exercise notice is filed with the Options Clearing Corporation and the close of trading on the date the First Eagle Fund of America 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. Over the Counter Derivative Transactions. The First Eagle Fund of America 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. The First Eagle Fund of America may enter into interest rate, currency and index swaps and the purchase or sale of related caps, floors and collars. The First Eagle Fund of America 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 10 involve the exchange by the First Eagle Fund of America 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. The First Eagle Fund of America 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 the First Eagle Fund of America 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, the First Eagle Fund of America 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 First Eagle Fund of America originally dealt. Any such cancellation may require the First Eagle Fund of America to pay a premium to that dealer. In those cases in which the First Eagle Fund of America has entered into a covered derivative transaction and cannot voluntarily terminate the derivative, the First Eagle Fund of America will not be able to sell the underlying security until the derivative expires or is exercised or different cover is substituted. The First Eagle Fund of America intends 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 the First Eagle Fund of America. There is also no assurance that the First Eagle Fund of America will be able to liquidate an OTC derivative at any time prior to expiration. Additional Investment Risks Applicable to the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund The Gold Fund maintains a policy of concentrating its investments in gold and gold-related issues. The Global Fund, Overseas Fund and U.S. Value Fund may also invest in assets of this nature. Each is therefore susceptible to specific political and other risks affecting the price of gold and other precious metals. Fluctuations in the Price of Gold. The price of gold has been subject to substantial upward and downward price movements over short periods of time and may be affected by unpredictable international monetary and political policies, such as currency devaluations or revaluations, economic conditions within an individual country, trade imbalances or trade or currency restrictions between countries and world inflation rates and interest rates. The price of gold, in turn, is likely to affect the market prices of securities of companies mining, processing or dealing in gold, and, accordingly, the value of a Fund's investments in such securities also may be affected. Other Risks of Investing in Gold. In addition to investing in precious metal finance and operating companies, each of the Funds (other than the First Eagle Fund of America) may also invest directly in precious metals (such as gold bullion) or purchase or sell contracts for their future delivery ('futures contracts,' the risks of which are described above under 'Futures and Options on Futures'). The risks related to investing in precious metals directly are similar to those of investing in precious metal finance and operating companies, as described in the Funds' Prospectus. There are, however, additional considerations related to such direct precious metal investments, including custody and transaction costs that may be higher than those involving securities. Moreover, holding gold, whether in physical form or book account, results in no income being derived from such holding, unlike securities which may pay dividends or make other current payments. In addition, income derived from trading in gold must be closely monitored to avoid potentially negative tax consequences. Although the Funds have contractual 11 protections with respect to the credit risk of its custodian, gold held in physical form (even in a segregated account) involves the risk of delay in obtaining the assets in the case of bankruptcy or involvency of the custodian. This could impair disposition of the assets under those circumstances. Finally, although not currently anticipated, if gold in the future were held in book account, it would involve risks of the credit of the party holding the gold. Change of Objective The investment objective of each Fund (other than the Global Fund) is not a fundamental policy and, accordingly, may be changed by the Board of Trustees without shareholder approval. Shareholders will be notified a minimum of 60 days in advance of any change in investment objective. The investment objective of the Global Fund, on the other hand, is a fundamental policy of the Fund and may not be changed without shareholder approval. Investment Restrictions of the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund In pursuing its investment objective, each Fund (listed above and except as otherwise noted) will not: 1. (Global Fund, Overseas Fund and U.S. Value Fund) -- With respect to 75% of the value of a Fund's total assets, invest more than 5% of its total assets (valued at time of investment) in securities of any one issuer, except securities issued or guaranteed by the government of the United States, or any of its agencies or instrumentalities, or acquire securities of any one issuer which, at the time of investment, represent more than 10% of the voting securities of the issuer; 2. Issue senior securities or borrow money except unsecured borrowings from banks as a temporary measure in exceptional circumstances, and such borrowings may not exceed 10% of a Fund's net assets at the time of the borrowing. A Fund will not purchase securities while borrowings exceed 5% of its total assets; 3. (Gold Fund) -- Change its sub-classification under the Investment Company Act from non-diversified to diversified. 4. (Overseas Fund and Gold Fund) -- Invest more than 25% of its assets (valued at time of investment) in securities of companies in any one industry other than U.S. Government Securities (except that the Gold Fund will, as a matter of fundamental policy, concentrate its investments in the precious metals industry); 5. (Global Fund and U.S. Value Fund) -- Purchase the securities of any issuer if such purchase would cause more than 25% of the value of its total assets to be invested in securities of any one issuer or industry, with the exception of the securities of the United States government and its corporate instrumentalities. 6. (Global Fund and U.S. Value Fund) -- Purchase or sell its portfolio securities from or to any of its officers, trustees or employees, its investment adviser or its principal underwriter, except to the extent that such purchase or sale may be permitted by an order, rule or regulation of the Securities and Exchange Commission; 7. Make loans, but this restriction shall not prevent a Fund from (a) buying a part of an issue of bonds, debentures or other obligations that are publicly distributed, or from investing up to an aggregate of 15% of its total assets (taken at market value at the time of each purchase) in parts of issues of bonds, debentures or other obligations of a type privately placed with financial institutions; (b) lending portfolio securities*, provided that a Fund may not lend securities if, as a result, the aggregate value of all securities loaned would exceed 33% of its total assets (taken at market value at the time of such loan); and (c) purchasing or selling loans or other direct debt instruments, including loan participations; 8. (Overseas Fund and Gold Fund) -- Underwrite the distribution of securities of other issuers; however, a Fund may acquire 'restricted' securities which, in the event of a resale, might be required to be registered under the 1933 Act on the grounds that the Fund could be regarded as an underwriter as defined by the 1933 Act with respect to such resale;
- --------- * The Funds have no present intention of lending their portfolio securities. 12 9. (Global Fund and U.S. Value Fund) -- Engage in the underwriting of securities of other issuers, except to the extent it may be deemed to be an underwriter in selling portfolio securities as part of an offering registered under the 1933 Act; 10. (Overseas Fund and Gold Fund) -- Purchase and sell real estate or interests in real estate, although it may invest in marketable securities of enterprises that invest in real estate or interests in real estate; 11. (Global Fund and U.S. Value Fund) -- Purchase or sell real estate or interests therein, commodities or commodity contracts. The Fund may, however, invest in real estate investment trusts and companies holding real estate and may sell commodities received by it as distributions on portfolio investments. (To the extent the Fund's portfolio includes a commodity distributed to it, the Fund will be subject to the risk of change in the value of such commodity.) Notwithstanding the foregoing, the Fund may purchase or sell precious metals directly and purchase or sell precious metal commodity contracts or options on such contracts in compliance with applicable commodities laws; 12. (Overseas Fund and Gold Fund) -- Purchase or sell commodities or commodity contracts, except that it may enter into forward contracts and may sell commodities received by it as distributions on portfolio investments (however, the Fund may purchase or sell precious metals directly and purchase or sell precious metal commodity contracts or options on such contracts in compliance with applicable commodities laws); 13. (Overseas Fund and Gold Fund) -- Make margin purchases of securities, except for the use of such short term credits as are needed for clearance of transactions; and 14. Sell securities short or maintain a short position, except, in the case of the Overseas Fund, the Gold Fund and the U.S. Value Fund, short sales against-the-box.
Restrictions 1 through 14 above (except the portions in parentheses) are 'fundamental,' which means that they cannot be changed without the vote of a majority of the outstanding voting securities of a Fund (defined by the Investment Company Act), as the lesser of (i) 67% of a Fund's shares present at a meeting if more than 50% of the shares outstanding are present or (ii) more than 50% of a Fund's outstanding shares). In addition, each Fund is subject to a number of restrictions that may be changed by the Board of Trustees without shareholder approval. Under those non-fundamental restrictions, a Fund will not: a. Invest in companies for the purpose of management or the exercise of control; b. (Global Fund and U.S. Value Fund) -- Purchase securities on margin, except for the use of such short term credits as are needed for clearance of transaction; c. (Overseas Fund and Gold Fund) -- Invest in oil, gas or other mineral leases or exploration or development programs, although it may invest in marketable securities of enterprises engaged in oil, gas or mineral exploration; d. (Global Fund and U.S. Value Fund) -- Purchase interests in oil, gas or other mineral exploration programs or leases; however, this policy will not prohibit the acquisition of securities of companies engaged in the production or transmission of oil, gas or other minerals; e. (Overseas Fund and Gold Fund) -- Invest more than 10% of its net assets (valued at time of investment) in warrants, valued at the lower of cost or market; provided that warrants acquired in units or attached to securities shall be deemed to be without value for purposes of this restriction; f. (Global Fund and U.S. Value Fund) -- Purchase warrants which are not offered in units or attached to other portfolio securities if, immediately after such purchase, more than 5% of the Fund's net assets would be invested in such unattached warrants, valued at the lower of cost or market. The Fund will not purchase unattached warrants not listed on the New York or American Stock Exchange if, immediately after such purchase, more than 2% of the Fund's net assets would be invested in such unattached, unlisted warrants; g. (Overseas Fund and Gold Fund) -- Pledge, mortgage or hypothecate its assets, except as may be necessary in connection with permitted borrowings or in connection with short sales;
13 h. (Global Fund and U.S. Value Fund) -- Purchase certificates of deposit or other short-term bank instruments except to the extent deemed appropriate for short-term investment purposes or as a temporary defensive measure. The Fund will limit its purchases of certificates of deposit and other short-term bank instruments to those issued by United States banks and savings and loan associations, including foreign branches of such banks, and United States branches or agencies of foreign banks, which have total assets (as of the date of their most recently published financial statements) of at least $1 billion; i. Purchase or sell put and call options on securities or on futures contracts; and j. (Global Fund and U.S. Value Fund) -- Purchase illiquid securities or securities the proceeds from the sale of which could not readily be repatriated to the United States if, immediately after such purchase, more than 10% of the value of its net assets would be invested in such securities.
In addition, under normal circumstances the Global Fund will invest in at least three foreign countries. Among the types of fixed income securities in which the Global Fund may invest from time to time are United States government obligations. United States government obligations include Treasury Notes, Bonds and Bills which are direct obligations of the United States government backed by the full faith and credit of the United States, and securities issued by agencies and instrumentalities of the United States government, which may be (i) guaranteed by the United States Treasury, such as the securities of the Government National Mortgage Association, or (ii) supported by the issuer's right to borrow from the Treasury and backed by the credit of the federal agency or instrumentality itself, such as securities of the Federal Intermediate Land Banks, Federal Land Banks, Bank of Cooperatives, Federal Home Loan Banks, Tennessee Valley Authority and Farmers Home Administration. Notwithstanding the foregoing investment restrictions, the Overseas Fund and the Gold Fund may purchase securities pursuant to the exercise of subscription rights, provided that such purchase will not result in a Fund's ceasing to be a diversified investment company. Japanese and European corporations frequently issue additional capital stock by means of subscription rights offerings to existing shareholders at a price substantially below the market price of the shares. The failure to exercise such rights would result in a Fund's interest in the issuing company being diluted. The market for such rights is not well developed in all cases and, accordingly, a Fund may not always realize full value on the sale of rights. The exception applies in cases where the limits set forth in the investment restrictions would otherwise be exceeded by exercising rights or would have already been exceeded as a result of fluctuations in the market value of a Fund's portfolio securities with the result that a Fund would be forced either to sell securities at a time when it might not otherwise have done so, or to forego exercising the rights. Investment Restrictions of the First Eagle Fund of America The following investment restrictions are fundamental policies of the First Eagle Fund of America. The First Eagle Fund of America may not: 1. Change its sub-classification under the Investment Company Act 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;
14 6. Invest more than 25% of its assets in the securities of issuers engaged in any one industry other than U.S. Government securities; and 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. The First Eagle Fund of America may not: a. With respect to 50% of the value of its total assets, invest more than 25% of the value of its total assets in the securities of one issuer, and with respect to the other 50% of the value of its total assets, invest more than 5% of the value of its total assets in the securities of one issuer or acquire more than 10% of the outstanding voting securities of a single issuer. This restriction shall not apply to U.S. Government securities; b. 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; c. Pledge, mortgage or hypothecate its assets in an amount exceeding 33 1/3% of its total assets; d. 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; and e. 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.
Performance Total Return. From time to time each Fund advertises its average annual total return. Returns may be calculated both on a before-tax and an after-tax basis (and are so presented in the Prospectus with respect to each Fund's largest and/or oldest share class). During the one year period ended October 31, 2005, average annual rates of return before-tax were 12.24%, 15.11%, 5.79% and (1.44)%, for the Global Fund Class A shares, the Overseas Fund Class A shares, the U.S. Value Fund Class A shares and the Gold Fund Class A shares, respectively. Quotations of average annual returns for each Fund will be expressed in terms of the average annual compounded rates of return of a hypothetical investment in each Fund over periods of 1, 5 and 10 years (up to the life of the Fund), calculated pursuant to the following formula: P(1+T)n=ERV (where P = a hypothetical initial payment of $1000, T = the average annual return, n = the number of years, and ERV = the ending redeemable value of a hypothetical $1000 payment made at the beginning of the period). This calculation assumes deduction of a proportional share of Fund expenses on an annual basis and deduction of the maximum sales charge of 5.00% on the amount initially invested, and assumes reinvestment of all income dividends and capital gains distributions during the period. Under the same assumptions utilized in the preceding calculation, an investment in the Global Fund Class A shares over the ten year period ended October 31, 2005 would have increased at an average annual compounded rate of return before-tax of 13.25%, an investment in the Overseas Fund Class A shares over the ten year period ended October 31, 2005 would have increased at an average annual compounded rate of return before-tax of 14.33%, and an investment in the Gold Fund Class A shares over the ten year period ended October 31, 2005 would have increased at an average annual compounded rate before-tax of 7.03%. As noted above, returns may also be calculated on certain after-tax bases under similar assumptions and using similar formulae as specified by the SEC. For example, returns may be calculated after taxes on distributions, which assume reinvestment of the amount of any distributions less applicable taxes on such distributions. Returns may also be calculated after taxes on distributions and the sale (redemption) of Fund shares. After-tax returns assume the highest individual federal income tax rate for each year included in the calculation, which is currently 35% for ordinary income and short-term capital gains and 15% for long-term capital gains. The effect of applicable tax credits, such as the foreign tax credit, is taken into account in accordance with federal tax law. Such returns do not reflect the effect of state and local taxes, nor do they reflect the phase-outs of certain federal exemptions, deductions, and credits at various income levels, or the impact of the federal alternative minimum tax. In addition, actual after-tax returns depend on each investor's individual tax situation, which may differ from the returns presented. For 15 instance, after-tax returns are not relevant to investors who hold their funds in tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Using the methodologies described above, during the one year period ended October 31, 2005, the average annual rate of return before-taxes for the First Eagle Fund of America Class Y shares was 9.23%. Also using the methodologies described above, an investment in the First Eagle Fund of America Class Y shares over the ten year period ended October 31, 2005 would have increased at an average annual compounded rate of return before-tax of 13.33%. First Eagle Fund of America Class Y shares are not subject to a front-end sales load. Comparison of Portfolio Performance. From time to time the Trust may discuss in sales literature and advertisements, specific performance grades or rankings or other information as published by recognized mutual fund statistical services, such as Morningstar, Inc. or Lipper Analytical Services, Inc., or by publications of general interest such as Barron's, Business Week, Financial World, Forbes, Fortune, Kiplinger's Personal Finance, Money, Morningstar Mutual Funds, Smart Money, The Wall Street Journal or Worth. Portfolio Turnover. Although the Funds will not make a practice of short-term trading, purchases and sales of securities will be made whenever appropriate, in the investment adviser's view, to achieve a Fund's investment objective. The rate of portfolio turnover is calculated by dividing the lesser of the cost of purchases or the proceeds from sales of portfolio securities (excluding short-term U.S. government obligations and other short-term investments) for the particular fiscal year by the monthly average of the value of the portfolio securities (excluding short-term U.S. government obligations and short-term investments) owned by a Fund during the particular fiscal year. Although higher portfolio turnover rates are likely to result in higher brokerage commissions paid by the Funds, higher levels of realized capital gains and more short-term capital gain (taxable to individuals at ordinary income tax rates) than lower portfolio turnover rates, portfolio turnover is not a limiting factor when management deems portfolio changes appropriate to achieve a Fund's stated objective. However, it is possible that, under certain circumstances, a Fund may have to limit its short-term portfolio turnover to permit it to qualify as a 'regulated investment company' under the Internal Revenue Code of 1986, as amended. 16 MANAGEMENT OF THE TRUST The business of the Trust is managed by its Board of Trustees, which elects officers responsible for the day to day operations of the Funds and for the execution of the policies formulated by the Board of Trustees. Pertinent information regarding the members of the Board of Trustees and principal officers of the Trust is set forth below. Some of the 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' as that term is defined in the Investment Company Act. INDEPENDENT TRUSTEES(1)
NUMBER OF TERM OF PORTFOLIOS OFFICE(2) IN THE FUND OTHER POSITION(S) AND LENGTH PRINCIPAL COMPLEX DIRECTORSHIPS/ HELD WITH OF TIME OCCUPATION(S) OVERSEEN BY TRUSTEESHIPS NAME, AGE AND ADDRESS THE TRUST SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE --------------------- --------- ------ ------------------- ------- --------------- Lisa Anderson ......... Trustee December James T. Shotwell 6 Chair, Social Science 1345 Avenue of the 2005 to Professor of Research Council; Member, Americas present International American Political New York, New York Relations and Dean, Science Association; 10105 School of Member, Carnegie Council (born October 1950) International and on Ethics and Public Affairs, International Affairs; Columbia University; Member Emerita, Human President, Middle Rights Watch; Member, East Studies Carnegie Council on Association Ethics and International Affairs Candace K. Beinecke ...... Trustee December Chair, Hughes 6 Director, ALSTOM; One Battery Park Plaza (Chair) 1999 to Hubbard & Reed Director, Partnership for New York, New York present(3) New York City; Director, 10004 Merce Cunningham Dance (born December 1946) Foundation, Inc.; Director, Rockefeller Financial Services, Inc.; Director, Rockefeller & Company, Inc.; Trustee, First Eagle Variable Funds (Chair) (1 portfolio)
- --------- (1) Trustees who are not 'interested persons' of the Trust as defined in the Investment Company Act. (2) The term of office of each Trustee expires on his/her 70th birthday. (3) Ms. Beinecke also served as a trustee of a predecessor fund to First Eagle Fund of America since 1996.
17
NUMBER OF TERM OF PORTFOLIOS OFFICE(1) IN THE FUND OTHER POSITION(S) AND LENGTH PRINCIPAL COMPLEX DIRECTORSHIPS/ HELD WITH OF TIME OCCUPATION(S) OVERSEEN BY TRUSTEESHIPS NAME, AGE AND ADDRESS THE TRUST SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE - --------------------- --------- ------ ------------------- ------- --------------- Jean D. Hamilton ...... Trustee March 2003 Private Investor/ 6 Director, 1345 Avenue of the to present Independent Consultant; RenaissanceRe Holdings Americas Member, Brock Capital Ltd; Member, The New York, New York Group LLC; prior to University of Chicago 10105 November 2002, Chief Council on the Graduate (born January 1947) Executive Officer, School of Business; Prudential Director, Four Nations; Institutional, and Trustee, First Eagle Executive Vice Variable Funds President, Prudential (1 portfolio) Financial, Inc.; prior to November 1998, various executive positions within the Prudential organization William M. Kelly ...... Trustee December President, Lingold 6 Trustee, New York 500 Fifth Avenue, 1999 to Associates Foundation; Treasurer and 50th Floor present(2) Trustee, Black Rock New York, New York Forest Consortium; 10110 Trustee, St. Anselm (born February 1944) College; Trustee, First Eagle Variable Funds (1 portfolio) Paul J. Lawler ...... Trustee March 2002 Vice President 6 Director, Junior One Michigan Avenue to present Investments and Chief Achievement of Southwest East Battle Creek, Investment Officer, Michigan; Finance Michigan 49017 W.K. Kellogg Committee Member, Battle (born May 1948) Foundation; prior to Creek Community June 1997, Vice Foundation; Custody President for Finance, Advisory Committee Rensselaer Polytechnic Member, The Bank of New Institute York; Trustee, First Eagle Variable Funds (1 portfolio) Dominique M.......... Trustee April Independent Consultant/ 6 Trustee, First Eagle Raillard 1987 to Private Investor; prior Variable Funds 15 Boulevard Delessert present to December 2001, (1 portfolio) 75016 Paris France Managing Director of (born June 1938) Act 2 International (Consulting)
- --------- (1) The term of office of each Trustee expires on his/her 70th birthday. (2) Mr. Kelly also served as a trustee of a predecessor fund to First Eagle Fund of America since 1998.
18 INTERESTED TRUSTEES(1)
NUMBER OF TERM OF PORTFOLIOS OFFICE(2) IN THE FUND OTHER POSITION(S) AND LENGTH PRINCIPAL COMPLEX DIRECTORSHIPS/ HELD WITH OF TIME OCCUPATION(S) OVERSEEN BY TRUSTEESHIPS NAME, AGE AND ADDRESS THE TRUST SERVED DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE --------------------- --------- ------ ------------------- ------- --------------- John P. Arnhold(3) ...... President and December Co-President, Co-CEO 6 Director, Arnhold 1345 Avenue of the Trustee 1999 to and Director, Ceramics; Director, The Americas present Arnhold Arnhold Foundation; New York, New York and S. Bleichroeder Director, The Mulago 10105 Holdings, Inc.; Foundation; Director, (born December 1953) Chairman, CEO and Hanseatic Asset Director, Arnhold Management LBG; Trustee, and S. Bleichroeder Trinity Episcopal Schools Advisers, LLC and Corp.; Trustee, Vassar ASB Securities LLC; College; Trustee, Sports prior to March 2005, and Arts in Schools President and Foundation; Trustee, Jazz Director, Natexis at Lincoln Center; Bleichroeder, Inc. President and Trustee, and Natexis First Eagle Variable Bleichroeder, UK Funds (1 portfolio) James E. Jordan(4) ...... Trustee December Private Investor and 6 Director, Leucadia 1345 Avenue of the 1999 to Independent National Corporation; Americas present Consultant; prior to Director, Empire New York, New York July 2005, Managing Insurance Company; 10105 Director, Arnhold Director JZ Equity (born April 1944) and S. Bleichroeder Partners, Plc. (U.K. Advisers, LLC and investment trust Director, ASB company); Director, Securities LLC and Florida East Coast ASB Advisers UK, Industries; Director, Limited; prior to Columbia University July 2002, private School of International investor and and Public Affairs; consultant to The Chairman's Council, Jordan Company Conservation (private investment International; Trustee, banking firm) since First Eagle Variable June 1997 Funds (1 portfolio)
- --------- (1) Trustees who are 'interested persons' of the Trust as defined in the Investment Company Act. (2) The term of office of each Trustee expires on his/her 70th birthday. (3) Mr. Arnhold is an Interested Trustee because he is an officer and director of the Trust's investment adviser and principal underwriter. (4) The Trust has determined to consider Mr. Jordan as an Interested Trustee because of his prior affiliation with the Trust's investment adviser and principal underwriter. (He is not, however, an 'interested person' of the Trust within the meaning of the Investment Company Act.)
19 OFFICERS
POSITION(S) TERM OF OFFICE HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) NAME, AGE AND ADDRESS THE TRUST TIME SERVED(1) DURING PAST FIVE (5) YEARS --------------------- --------- -------------- -------------------------- John P. Arnhold ....................... President and December 1999 See table on preceding page related to 1345 Avenue of the Americas Trustee to present Interested Trustees New York, New York 10105 (born December 1953) Charles de Vaulx ...................... Senior Vice December 1999 Senior Vice President, Arnhold and 1345 Avenue of the Americas President to present S. Bleichroeder Advisers, LLC; Senior New York, New York 10105 (portfolio (with Vice President, First Eagle Variable (born October 1961) manager) portfolio Funds; Chief Investment Officer, Global management Value Group (a department of Arnhold responsibility and S. Bleichroeder Advisers, LLC) since December since January 2005; Senior Vice 1996) President, Societe Generale Asset Management Corp. since 1998, Associate Portfolio Manager from December 1996, Securities Analyst, prior to December 1996 Robert Bruno .......................... Chief December 1999 Senior Vice President, Arnhold and 1345 Avenue of the Americas Operations and to present S. Bleichroeder Advisers, LLC; Chief New York, New York 10105 Financial Compliance Officer and Senior Vice (born June 1964) Officer President, ASB Securities LLC; Chief Operations and Financial Officer, First Eagle Variable Funds Mark D. Goldstein ..................... Chief February 2005 General Counsel, Chief Compliance 1345 Avenue of the Americas Compliance to present Officer and Senior Vice President, New York, New York 10105 Officer Arnhold and S. Bleichroeder Advisers, (born October 1964) LLC; General Counsel and Secretary of Arnhold and S. Bleichroeder Holdings, Inc., and Chief Compliance Officer, First Eagle Variable Funds from February 2005; Senior Counsel and Chief Compliance Officer, MacKay Shields LLC from April 2004; Senior Associate General Counsel, UBS Financial Services, Inc. from May 1998 Suzan J. Afifi ........................ Vice President December 1999 Vice President, Arnhold and S. 1345 Avenue of the Americas and Secretary to present Bleichroeder Advisers, LLC; Vice New York, New York 10105 President, ASB Securities LLC; Vice (born October 1952) President and Secretary, First Eagle Variable Funds Stefanie Spritzler .................... Vice President May 2000 to Vice President, Arnhold and S. 1345 Avenue of the Americas and Treasurer present Bleichroeder Advisers, LLC; Vice New York, New York 10105 President, ASB Securities LLC; Vice (born July 1973) President and Treasurer, First Eagle Variable Funds Edwin S. Olsen ........................ Vice President November 2000 Vice President, Arnhold and 1345 Avenue of the Americas to present S. Bleichroeder Advisers, LLC; Vice New York, New York 10105 President, First Eagle Variable Funds; (born September 1939) Vice President, SG Cowen Securities Corp. from prior to 1999 Michael Luzzatto ...................... Assistant Vice December 2004 Vice President, Arnhold and S. 1345 Avenue of the Americas President to present Bleichroeder Advisers, LLC; Vice New York, New York 10105 President, ASB Securities LLC; (born April 1977) Assistant Vice President, First Eagle Variable Funds from December 2004 Winnie Chin ........................... Assistant March 2001 to Assistant Vice President, Arnhold and 1345 Avenue of the Americas Treasurer present S. Bleichroeder Advisers, LLC; New York, New York 10105 Assistant Treasurer, First Eagle (born July 1974) Variable Funds Philip Santopadre ..................... Assistant September 2005 Assistant Vice President, Arnhold and 1345 Avenue of the Americas Treasurer to present S. Bleichroeder Advisers, LLC; New York, New York 10105 Assistant Treasurer, First Eagle (born August 1977) Variable Funds; Senior Accountant, Bank of New York from prior to July 2001
- --------- (1) The term of office of each officer is indefinite. Length of time served represents time served as an officer of the Trust (or its predecessor entities), although various positions may have been held during the period. 20 The following table describes the standing committees of the Board of Trustees of the Trust.
NUMBER OF COMMITTEE MEETINGS IN THE COMMITTEE NAME MEMBERS FUNCTION(S) LAST FISCAL YEAR -------------- ------- ----------- ---------------- Audit Committee...... Jean D. Hamilton Reviews the contract 6 William M. Kelly between the Trust Paul J. Lawler (Chair) and its independent registered public accounting firm (in this regard, assists the Board in selecting the independent registered public accounting firm and is directly responsible for supervising that firm's compensation and performance), oversees the Funds' accounting and financial reporting policies, procedures and internal controls and acts as liaison to the independent registered public accounting firm; reviews and, as appropriate, approves in advance non-audit services provided by the independent registered public accounting firm to the Trust, the Adviser, and, in certain cases, other affiliates of the Trust. Nominating and Candace K. Beinecke (Chair) Nominates new 4 Governance William M. Kelly Independent Trustees Committee.......... Dominique M. Raillard of the Trust. (The Nominating Committee does not consider shareholder recommendations.) Considers various matters relating to the governance and operations of the Board of Trustees, including committee structure and Trustee compensation. Valuation Committee.... John P. Arnhold Sets and recommends 10 Jean D. Hamilton securities valuation policies, supervises the Adviser in the valuation of Fund assets, and, in certain instances, values Fund assets directly.
21 COMPENSATION OF TRUSTEES. The Trust makes no payments to any of its officers for services. However, effective November 1, 2005 those Trustees of the Trust who are not officers or employees of the Adviser or Arnhold and S. Bleichroeder Holdings, Inc. ('ASB Holdings') are paid by the Trust and First Eagle Variable Funds an annual fee of $66,000, a fee of $3,500 for each in-person meeting and $1,000 (subject to the discretion of the Chair) for each telephonic meeting of the Trust's Board of Trustees, and a fee of $2,000 for each meeting of any Committee of the Board that they attend. These Trustees also receive an annual fee of $25,000 for serving as the chair of any standing committee of Trustees. In the case of the Valuation Committee, the corresponding additional annual fee is $5,000 payable to any Independent Trustee member of that committee. The Chair of the Board of Trustees receives an additional annual fee of $66,000 for serving in that position. Such fees are allocated, generally, between the Trust and First Eagle Variable Funds on a pro rata basis in relationship to their relative net assets. Each Trustee is reimbursed by the Trust for any expenses he may incur by reason of attending such meetings or in connection with services he may perform for the Trust. During the fiscal year ended October 31, 2005, an aggregate of $491,720 was paid, accrued or owed for Trustees' fees and expenses by the Trust. The following table sets forth information regarding compensation of Trustees by the Trust and by the fund complex of which the Trust is a part for the fiscal year ended October 31, 2005. Officers of the Trust and Interested Trustees (except Mr. Jordan as shown below) do not receive any compensation from the Trust or any other fund in the fund complex which is a U.S. registered investment company. COMPENSATION TABLE FISCAL YEAR ENDED OCTOBER 31, 2005
TOTAL PENSION COMPENSATION OR PAID OR RETIREMENT OWED FROM AGGREGATE BENEFITS ESTIMATED REGISTRANT COMPENSATION ACCRUED ANNUAL AND FUND PAID OR AS PART OF BENEFITS COMPLEX OWED FROM FUND UPON PAID TO NAME OF PERSON, POSITION REGISTRANT EXPENSES RETIREMENT TRUSTEES*** - ------------------------ ---------- -------- ---------- ----------- Lisa Anderson*.................................. $ 0 N/A N/A $ 0(1) John P. Arnhold, Trustee**...................... $ 0 N/A N/A $ 0(1) Candace K. Beinecke, Trustee.................... $ 95,197 N/A N/A $ 96,882(1) Jean D. Hamilton, Trustee....................... $ 90,300 N/A N/A $ 91,256(1) James E. Jordan, Trustee**...................... $ 10,743 N/A N/A $ 10,833(1) William M. Kelly, Trustee....................... $ 88,282 N/A N/A $ 89,256(1) Paul J. Lawler, Trustee......................... $ 99,300 N/A N/A $100,613(1) Dominique M. Raillard, Trustee.................. $ 76,373 N/A N/A $ 77,256(1)
- --------- * Ms. Anderson joined the Board of Trustees in December 2005. Her compensation for such service thus commenced only after the period shown in this table. ** Interested Trustee or considered as such as described above. *** For this purpose, the fund complex consists of five portfolios of the Trust (Global Fund, Overseas Fund, U.S. Value Fund, Gold Fund and First Eagle Fund of America), plus the First Eagle Overseas Variable Fund. The number in parentheses indicates the total number of other boards in the fund complex on which the Trustee served as of October 31, 2005.
ADDITIONAL INFORMATION REGARDING THE TRUSTEES. The following table sets forth information as of December 31, 2005 regarding ownership by the Trustees of the Trust of equity securities of the Trust or any other fund in the same fund complex for which each is also a director or trustee. ('Fund complex' has the same meaning as in the footnote to the table above.) Dollar ranges of ownership are indicated as follows: A = None; B = $1 to $10,000; C = $10,001 to $50,000; D = $50,001 to $100,000; E = over $100,000. 22 INDEPENDENT TRUSTEES
AGGREGATE DOLLAR DOLLAR DOLLAR DOLLAR DOLLAR RANGE OF RANGE OF RANGE OF RANGE OF RANGE OF DOLLAR EQUITY EQUITY EQUITY EQUITY EQUITY RANGE OF SECURITIES IN SECURITIES IN SECURITIES IN SECURITIES IN SECURITIES IN EQUITY FIRST EAGLE ALL FUNDS GLOBAL OVERSEAS U.S. VALUE SECURITIES IN FUND OF OVERSEEN NAME FUND FUND FUND GOLD FUND AMERICA BY TRUSTEE ---- ---- ---- ---- --------- ------- ---------- Lisa Anderson*............. A A A A A A Candace K. Beinecke**...... E E A A D E Jean D. Hamilton........... E A A A A E William M. Kelly........... C A C A C E Paul J. Lawler............. E D D D C E Dominique M. Raillard...... E A A A A E
- --------- * Ms. Anderson joined the Board of Trustees in December 2005. ** These amounts include holdings as to which Ms. Beinecke has disclaimed beneficial interest.
INTERESTED TRUSTEES
AGGREGATE DOLLAR DOLLAR DOLLAR DOLLAR DOLLAR RANGE OF RANGE OF RANGE OF RANGE OF RANGE OF DOLLAR EQUITY EQUITY EQUITY EQUITY EQUITY RANGE OF SECURITIES IN SECURITIES IN SECURITIES IN SECURITIES IN SECURITIES IN EQUITY FIRST EAGLE ALL FUNDS GLOBAL OVERSEAS U.S. VALUE SECURITIES IN FUND OF OVERSEEN NAME FUND FUND FUND GOLD FUND AMERICA BY TRUSTEE ---- ---- ---- ---- --------- ------- ---------- John P. Arnhold............ E E E E E E James E. Jordan............ E A A E E E
Since January 1, 2005, none of the independent Trustees who is a trustee of another investment company whose adviser and principal underwriter are ASB Advisers and First Eagle Distributors, respectively (i.e., First Eagle Variable Funds), has held any other position with (i) the Trust (other than as a Trustee), (ii) an investment company having the same adviser or principal underwriter as the Funds or an adviser or principal underwriter that controls, is controlled by, or is under common control with the Adviser or the Distributor (other than as a Trustee), (iii) the Adviser, the Distributor or other affiliate of the Trust, or (iv) any person controlling, controlled by or under common control with the Adviser or the Distributor. Also since January 1, 2005, none of these individuals owns, beneficially or of record, securities issued by (i) the Adviser or the Distributor or (ii) any person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control with the Adviser or the Distributor. Finally, none of these individuals or their immediate family members has an interest in a transaction with a 'related person' of the company. A 'related person' is (i) an executive officer of the Trust, (ii) an investment company having the same adviser or principal underwriter as the Funds or an adviser or principal underwriter that controls, is controlled by or is under common control with the Adviser or the Distributor, (iii) an executive officer of such an investment company, (iv) the Adviser or the Distributor, (v) an executive officer of the Adviser or the Distributor, (vi) a person directly or indirectly controlling, controlled by, or under common control with the Adviser or the Distributor, or (vii) an executive officer of a person described in clause (vi) above. The Trust, the Adviser, and the Distributor have adopted a code of ethics under Rule 17j-1 of the Investment Company Act. This code of ethics permits personnel subject to the code to invest in securities, including securities that may be purchased or held by the Funds of the Trust, with certain exceptions. As of January 31, 2006, to the knowledge of the Funds, the Trustees and officers of the Trust, as a group, owned beneficially approximately 1.22% of the shares of beneficial interest of the First Eagle Fund of America. As to the remaining Funds, and also as of that date and to the knowledge of the Funds, the Trustees and officers of the Trust, as a group, owned less than 1% of the shares of beneficial interest of each. As of January 31, 2006, to the knowledge of the Funds, the following shareholders owned 5.00% or more of the Funds' securities: To the knowledge of the Funds, share ownership shown on the following page is record ownership unless marked as both record and beneficial ownership via the '(R/B)' notation. 23 FIRST EAGLE GLOBAL FUND: CLASS A -- Charles Schwab & Co Inc., 101 Montgomery Street San Francisco, CA 94104, 12.74%; Citigroup, 333 W 34th St New York, NY 10001, 7.09%. CLASS I -- Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 22.64%; Charles Schwab & Co Inc., 101 Montgomery Street San Francisco, CA 94104, 7.94%; Northern Trust Co Cust, 801 S. Canal Chicago, IL 60675-0001, 6.60%; FTC & Co, Attn: Datalynx, PO Box 173736 Denver, CO 80217, 5.56%; NFSC FEBO, SG Constellation LLC, Attn: Patrick H Mcallister, 1221 Avenue of the Americas New York, NY 10020-1001, 5.53%(R/B). CLASS C -- Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 23.09%; Citigroup, 333 W 34th St New York, NY 10001, 17.71%. FIRST EAGLE OVERSEAS FUND: CLASS A -- Charles Schwab & Co Inc., 101 Montgomery Street San Francisco, CA 94104, 31.12%. CLASS I -- Charles Schwab & Co Inc., 101 Montgomery Street San Francisco, CA 94104, 14.44%; Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 9.53%; Reel Cabin & Co Cust, FBO J.Paul Getty Trust, C/O State Street Bank, 1 Enterprise Dr Ste 3B Quincy, MA 02171, 7.58%(R/B). CLASS C -- Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 25.34%; Citigroup, 333 W 34th St New York, NY 10001, 14.81%. FIRST EAGLE US VALUE: CLASS A -- Charles Schwab & Co Inc., 101 Montgomery Street San Francisco, CA 94104, 12.97%; Citigroup, 333 W 34th St New York, NY 10001, 5.63%. CLASS I -- Natexis Bleichroeder, Inc., 1345 Avenue of the Americas New York, NY 10105, 41.25%; Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 26.23%; Charles Schwab & Co Inc., 101 Montgomery Street San Francisco, CA 94104, 7.76%. CLASS C -- Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 20.33%; Citigroup, 333 W 34th St New York, NY 10001, 14.66%. FIRST EAGLE GOLD FUND CLASS A -- Charles Schwab & Co Inc., 101 Montgomery Street San Francisco, CA 94104, 13.92%; Citigroup, 333 W 34th St New York, NY 10001, 10.61%; Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 6.68%. CLASS I -- Fair Oaks LLC, John N. Robson Trust B, 3415 N. Pines Way, Ste 206 #11 Wilson, WY 83014-9169, 11.68%(R/B); Natexis Bleichroeder, Inc., 1345 Avenue of the Americas New York, NY 10105, 8.65%; BDG & Co, C/O Bingham Legg Advisers LLC, Attn: Operations, 45 Milk St Fl 2 Boston, MA 02109, 7.38%; John Hunter & Paula Hunter Jt Wros, 110 Kennedy Ave, Apt 3 San Antonio, TX 78209-5256, 6.37%(R/B); Northern Trust Company, PO BOX 92956 Chicago, IL 60675, 6.0%; E-Trust Company, 4400 Harding Pike Ste 310 Nashville, TN 37205, 5.17%. CLASS C -- Citigroup, 333 W 34th St New York, NY 10001, 29.29%; Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 26.14%. FIRST EAGLE FUND OF AMERICA CLASS Y -- Charles Schwab & Co Inc., 101 Montgomery Street San Francisco, CA 94104, 20.16%; National Financial Services, One World Financial Center, 200 Liberty Street New York, NY 10281, 15.85%; Bost & Co, FBO Eastman Kodak Employee's Savings And Investment Plan, 525 William Penn Way, PO BOX 3198 Pittsburgh, PA 15230, 6.21%(R/B). CLASS C -- Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive Jacksonville, FL 32246-6486, 16.65%. 24 INVESTMENT ADVISORY AND OTHER SERVICES THE ADVISER As described in the Trust's Prospectus, ASB Advisers is the Trust's investment adviser and, as such, manages the Global Fund, the Overseas Fund, the U.S. Value Fund, the Gold Fund and the First Eagle Fund of America. ASB Advisers is a wholly owned subsidiary of ASB Holdings, a privately owned holding company. The Adviser's primary offices are located at 1345 Avenue of the Americas, New York, NY 10105. Under its investment advisory contracts with the Trust on behalf of the Global Fund, the Overseas Fund and the Gold Fund, which became effective December 31, 1999, and on behalf of the First Eagle Fund of America, which became effective on January 1, 2003, ASB Advisers furnishes each Fund with investment advice consistent with its stated investment objective. Prior to December 31, 1999, the Global Fund, the Overseas Fund and the Gold Fund had an advisory contract with Societe Generale Asset Management Corp. ('SGAM Corp.'). ASB Advisers also furnishes the Trust with office space and certain facilities required for the business of the Funds, and statistical and research data, and pays any compensation and expenses of the Trust's officers. On December 22, 1999, the shareholders of the Global Fund, the Overseas Fund and the Gold Fund, and on August 31, 2001, the shareholders of the U.S. Value Fund approved the Advisory Agreement between the Trust and the Adviser applicable to those Funds. On December 10, 2002, the shareholders of the First Eagle Fund of America approved the Advisory Agreement between the Trust and the Adviser applicable to that Fund. The Board of Trustees approved these Advisory Agreements most recently on December 8, 2005. In doing so, the Trustees considered the desirability of continuing the Funds' historic relationship with the Adviser in light of the total compensation to be received by the Adviser, the expenses incurred by the Adviser in performing services under the Advisory Agreements and the total cost to the Funds of using the Adviser's services, taking into account any expenses that the Adviser may pass to the Funds. The Trustees determined that the compensation to be received by the Adviser and the expenses both incurred by the Adviser and passed to the Funds are reasonable and appropriate in light of the nature, extent and quality of the services provided by the Adviser. The Trustees also considered the effects of indirect compensation to the Adviser, such as soft dollar and other service benefits, and the effect of the advisory fee on the ratio of total expenses to total assets (including the allocation of the benefits of economies of scale among the parties as the Funds grow), which the Trustees determined are reasonable and appropriate. In addition, they compared competitive prices for comparable services and advisory fees charged to institutional clients of the Adviser and evaluated the Adviser's past performance and reliability as well as its profitability, capabilities and financial condition. Among other things, the Trustees determined that the Adviser's fees were competitive to those charged by investment advisers to similar funds (i.e., each Fund's net management fee was approximately the same as or lower than its renewed peer group average, except in the case of First Eagle Fund of America, whose net management fee was higher than that average) and, given differences in the legal and practical requirements of such clients, to institutional clients of the Adviser, total compensation was reasonable, and the Funds' expense ratios were reasonable both on an absolute basis and when compared to those of similar funds. The Trustees also determined that the Adviser's past performance and reliability on behalf of the Funds were excellent (i.e., generally higher and more consistent on a medium- and long-term basis than the reviewed peer group average) when compared with investment advisers to similar funds and the Adviser's profitability and financial condition were satisfactory. The Trustees also noted their confidence in the capability and integrity of the senior management and staff of the Adviser. Accordingly, they concluded that the Advisory Agreements serve the interests of the Funds and their shareholders. THE SUBADVISER Pursuant to a subadvisory agreement ('Subadvisory Agreement') and subject to the oversight of the Adviser, Iridian Asset Management LLC ('Iridian') manages the investments of the First Eagle Fund of America. Iridian is a Delaware limited liability company and is a majority-owned subsidiary of BIAM (US), Inc. ('BIAM'), a wholly owned U.S. subsidiary of The Governor and Company of the Bank of Ireland. Iridian's primary offices are located at 276 Post Road, Westport, CT 06880. Harold J. Levy is a portfolio manager of the First Eagle Fund of America and, as an employee of ASB Advisers, was a portfolio manager of First Eagle Fund of America in its prior format as a series of the First Eagle Funds trust since its inception in April 1987. David L. Cohen is a portfolio manager of the First Eagle Fund of America and, as an employee of ASB Advisers, was a portfolio manager of the First Eagle Fund of America in its prior format as a series of the First Eagle Funds trust since 1989. Messrs. Levy and Cohen are indirect minority owners of Iridian, which they formed in November 1995. Prior to the Subadvisory Agreement, Messrs. Levy and Cohen were also employed by ASB Advisers since 1985 and 1989, respectively. 25 The shareholders of the First Eagle Fund of America approved the Subadvisory Agreement on December 10, 2002. The Board of Trustees approved the Agreement most recently on December 8, 2005. In doing so, the Trustees considered the desirability of continuing the Fund's historic relationship with Messrs. Levy and Cohen and the Adviser's commitment to supervise their provision of portfolio management services under the Agreement. They also noted that the fees paid to the Subadviser are paid by the Adviser and do not increase the advisory fees borne directly by Fund shareholders. In this regard, they noted positively the quality of the services (measured in terms of investment performance, which generally was higher and more consistent on a long-term basis than that of its reviewed peer group average) delivered by the Subadviser. They also considered the costs incurred by the Subadviser relative to these services and to the fees paid under the Subadvisory Agreement. In doing so, they considered the effects of other benefits to the Subadviser resulting from its relationship to the Fund, including soft dollar and other service benefits. The Trustees concluded that the Subadvisory Agreement serves the interest of the Fund and its shareholders. (A number of the factors evaluated by the Trustees in considering the Advisory Agreement were found not to be additionally relevant in respect of the Subadvisory Agreement, principally because the payments in question had been separately evaluated in respect of the Advisory Agreement.) As to each Fund, the Advisory Agreement, and additionally with respect to the First Eagle Fund of America, the Subadvisory Agreement, will continue in effect after the end of the initial two-year period from the date of execution only so long as such continuance is specifically approved at least annually in conformity with the Investment Company Act. The Advisory Agreement provides that the Adviser will not be liable for any error of judgment or for any loss suffered by the Funds in connection with the matters to which the Advisory Agreement relates, except a loss resulting from willful misfeasance, bad faith, gross negligence or reckless disregard of duty. The Advisory Agreement provides that it will terminate automatically if assigned, within the meaning of the Investment Company Act, and that it may be terminated without penalty by either party upon not more than 60 days' nor less than 30 days' written notice. The Subadvisory Agreement provides that Iridian will not be liable for any error of judgment or for any loss suffered by the First Eagle Fund of America in connection with the matters to which the Subadvisory Agreement relates, except a loss resulting from willful misfeasance, bad faith, gross negligence or reckless disregard of duty. The Subadvisory Agreement provides that it will terminate automatically if assigned, within the meaning of the Investment Company Act, and that it may be terminated without penalty by either party upon not more than 60 days' nor less than 30 days' written notice. In return for the services listed above, each Fund pays ASB Advisers a fee at the annual rate of the average daily value of the Fund's net assets as follows: Global Fund.............................. 0.75% Overseas Fund............................ 0.75% U.S. Value Fund.......................... 0.75% Gold Fund................................ 0.75% First Eagle Fund of America.............. 1.00%
The Adviser also performs certain administrative and accounting services on behalf of the Funds, and, in accordance with its agreement with them, the Funds reimburse the Adviser for costs (including personnel, overhead and other costs) related to those services. These reimbursements may not exceed an annual rate of 0.05% of the value of a Fund's average daily net assets. With respect to the First Eagle Fund of America, the fees to be paid to Iridian under the Subadvisory Agreement will be be based on a reference amount equal to 50% of the combined (i) fees received by the ASB Advisers for advisory services on behalf of the First Eagle Fund of America and (ii) fees received by First Eagle Distributors, the Fund's distributor (previously defined as the 'Distributor'), for its shareholder liaison services on behalf of the First Eagle Fund of America (as described under the section 'Distributor of the Funds' Shares' below). These amounts are reduced by certain direct marketing costs borne by the Adviser in connection with the Fund and are further reduced by the amount paid by the Adviser for certain administrative expenses incurred in providing services to the Fund. Advisory and Subadvisory fees are paid monthly. The annual fee rates listed above for the Global Fund, the Overseas Fund and the Gold Fund, respectively, are higher than the rate of fees paid by most U.S. mutual funds that invest primarily in domestic equity securities. The Trust believes, however, that the advisory fee rates are not higher than the rate of fees paid by most other mutual funds that invest significantly in foreign equity securities. For the fiscal year ended October 31, 2005, the Global Fund, Overseas Fund, U.S. Value Fund, Gold Fund and First Eagle Fund of America paid investment advisory fees in the amount of $96,884,787, $60,561,728, $1,622,712 and $5,190,853, $7,233,183, respectively. 26 For the fiscal year ended October 31, 2004, the Global Fund, Overseas Fund, U.S. Value Fund, Gold Fund and First Eagle Fund of America paid investment advisory fees in the amount of $46,419,241, $43,982,481, $968,191, $4,093,025 and $6,122,740, respectively. For the fiscal year ended October 31, 2003, the Global Fund, Overseas Fund, U.S. Value Fund, Gold Fund and First Eagle Fund of America paid investment advisory fees in the amount of $20,942,937, $15,290,320, $627,599, $1,742,491 and $5,095,774, respectively. PORTFOLIO MANAGERS Charles de Vaulx, as the sole portfolio manager of the Global Fund, Overseas Fund, U.S. Value Fund and Gold Fund, has primary responsibility for these Funds' day-to-day management. In that capacity he receives significant input and support from a team of analysts. Additional information regarding these analysts is available on page 27. Harold J. Levy and David L. Cohen, employees of Iridian, are the portfolio managers of the First Eagle Fund of America. The two share primary responsibility for this Fund's day-to-day management. The following table provides information as of October 31, 2005 relating to the activities, and investments in the Funds, by the portfolio managers of the Funds.
NUMBER OF NUMBER OF REGISTERED OTHER POOLED NUMBER OF INVESTMENT INVESTMENT OTHER COMPANIES VEHICLES ACCOUNTS MANAGED AND BENEFICIAL MANAGED AND MANAGED AND TOTAL ASSETS OWNERSHIP OF TOTAL ASSETS TOTAL ASSETS FOR SUCH EQUITY SECURITIES FOR SUCH FOR SUCH PORTFOLIO MANAGER ACCOUNTS* IN THE TRUST ACCOUNTS ACCOUNTS ----------------- --------- ------------ -------- -------- Charles de Vaulx....... 5 accounts with assets Over $1,000,000 3 accounts with assets 9 accounts with assets of $25.3 billion of $2.6 billion of $1 billion Harold J. Levy......... 1 account with assets Over $1,000,000 2 accounts with assets 147 accounts with of $749.5 million of 318.3 million assets of $7.27 billion David L. Cohen......... 3 accounts with assets Over $1,000,000 5 accounts with assets 177 accounts with of $895.7 million of $575.8 million assets of $8.51 billion
- --------- * The data provided herein includes the Funds. With respect to the accounts identified in the table above, Mr. de Vaulx manages 2 pooled investment vehicles and 2 other accounts with assets totaling $2.2 billion and $181 million, respectively, for which the advisory fees are based in part on performance of the accounts. Performance fees for a particular account of the Adviser do not accrue, however, to any particular portfolio manager, including Mr. de Vaulx. As of January 1, 2006, the Adviser's portfolio manager compensation is a combination of salary, discretionary bonus and automatic participation in a company-funded retirement plan. Mr. de Vaulx earns his discretionary bonus in any year that his performance, defined in terms of a blended benchmark consisting of 50% Global Fund performance and 50% Overseas Fund performance, exceeds a blended benchmark comprised of 50% of MSCI World Index performance and 50% of MSCI EAFE Index performance, on a rolling nine-year period beginning January 1, 1997. The discretionary bonus is based in part upon a percentage of the Adviser's pre-tax and pre-bonus profits with respect to certain accounts. With respect to the accounts identified in the table above, Mr. Levy and Mr. Cohen manage one pooled investment vehicle with assets totaling $64.0 million and three other accounts with assets totaling $300.6 million for which the advisory fees are based in part on performance of such accounts. Performance fees for a particular account of Iridian do not accrue, however, to any particular portfolio manager. As of January 1, 2006, Iridian's portfolio manager compensation is a combination of salary, discretionary bonus and automatic participation in a company-funded retirement plan. Cash bonuses are the most significant portion of total compensation, and annual bonus compensation is based on a portfolio manager's (i) success at moving the investment process forward; (ii) generation of successful research ideas; and (iii) the extent of his or her participation in the firm's overall success. Iridian's portfolio managers are not compensated for new business development and client retention. In addition, Iridian has established a program in which it will grant interests in Iridian akin to stock options to current and future employees as a form of long-term incentive. The program is designed to allow investment staff and other key employees to participate in the long-term growth of the value of the firm. Once awarded, these interests start to vest after three years -- 25% each year thereafter. Although the identified portfolio managers (i.e., Messrs. de Vaulx, Levy and Cohen) are assisted by a team of professionals, which may include research analysts and trading personnel, no other person has final responsibility for Fund investment decisions. In order to provide you with additional information regarding the Adviser, the following 27 table identifies the team of professionals assisting Mr. de Vaulx and provides information regarding their professional backgrounds.
POSITION(S) HELD WITH THE AREAS OF ADVISER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS SPECIALTY ------- ------------------------------------------- --------- DIRECTOR OF RESEARCH Charles de Lardemelle, Co-Director of Mr. de Lardemelle joined the Adviser as a Capital goods, hotels, CFA......................... Research and research analyst in October 1996 and in technology, services, Vice President January 2005 became Co-Director of Research transportation indus- with Mr. de Vaulx. He earned his tries and North Asian post-graduate degree in Finance at Ecole des companies. Hautes Etudes Commerciales du Nord (EDHEC) in Lille, France in 1996. RESEARCH ANALYSTS Simon Fenwick,.............. Associate Mr. Fenwick joined the Adviser as a research Gold, industrial, Portfolio analyst in March 2003 and in January 2005 utilities, food and Manager (Gold became Associate Portfolio Manager of the beverage industries Fund) and Vice Gold Fund. As an equity research analyst, he and Australian, New President spent two years at SG Securities and, prior Zealand, Canadian and to that, six years at BNP Paribas. Mr. South African com- Fenwick is a graduate of Queensland panies. University and has completed post-graduate studies with the Securities Institute of Australia. Alan Barr, CFA.............. Vice President Mr. Barr joined the Adviser as a research Paper and forest analyst in March 2001. As an equity research products, chemicals, analyst, he spent four years at PNC Bank telecommunications, and, prior to that, seven years at insurance industries, Rittenhouse Financial Services. Mr. Barr Japanese and East graduated from Temple University in 1985 European companies. with an undergraduate degree in Communications. Maureen Levelis, CFA........ Vice President Ms. Levelis joined the Adviser in August Banking, real estate, 1999 as a Trading Assistant and was promoted and technology-hard- to research analyst in January 2002. From ware/software indus- August 1998 to August 1999, Ms. Levelis tries and Latin worked as a Sales Assistant for Salomon American and Korean Smith Barney in their Private Client Group. companies. She earned her undergraduate degree in Chemistry from Lafayette College in 1998. Michael Malafronte.......... Vice President Mr. Malafronte joined the Adviser in July Oil and gas, media, 2005. He previously spent nine years as a real estate, financial securities analyst at Oppenheimer & Close. services, retail, and He is a graduate of Babson College in British and German Wellesley, Massachusetts. companies. Thibaut Pizenberg........... Vice President Mr. Pizenberg joined the Adviser as a Automobile, building research analyst in August 2001. As an products/construction, equity analyst, he spent 15 months at SG and healthcare indus- Cowen Asset Management. Mr. Pizenberg is a tries and Scandinavi- graduate of Paris Dauphine University and an companies. has completed his post-graduate degree in Corporate Finance at the European School of Management (ESCP) in Paris, France in 2000. Edward Dwek................. Assistant Vice Mr. Dwek joined the Adviser in July 2005. Airports, energy, President He previously worked as an analyst at Bear healthcare, software, Stearns Asset Management and, prior to that, and Eastern Europe- as an institutional equity salesperson at an, Italian, Dutch, Bear Stearns. He is a graduate of Harvard Belgian, Lux- College and Columbia Business School. emburgish and Aus- trian companies. Anita Krishnamoorthy, CFA... Assistant Vice Ms. Krishnamoorthy joined the Adviser as a Financial President research analyst in July 2004. Her prior institutions, retail, work experience includes corporate tax insurance, elec- advisory at PriceWaterhouseCoopers, business tronics and agricul- analysis at Standard Chartered Bank and ture, and Asian investment banking at Morgan Stanley. Ms. companies. Krishnamoorthy earned her MBA from the Wharton School, University of Pennsylvania in 2004.
28
POSITION(S) HELD WITH THE AREAS OF ADVISER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS SPECIALTY ------- ------------------------------------------- --------- Vinodh Nalluri.............. Assistant Vice Mr. Nalluri joined the Adviser in May 2005. Chemicals, shipping & President His prior work experience includes product shipbuilding, development at Texas Instruments and equity semiconductors, IT research at Lions Gate Capital. He earned services, and Spanish, his MBA from Columbia Business School in May Portuguese and Indi- 2005. an companies.
CONFLICTS OF INTEREST Personnel of the Adviser and/or Subadviser (including the Funds' portfolio managers identified above) serve as portfolio managers to certain clients and unregistered investment companies that may utilize an investment program that is substantially similar to that of a Fund managed by such person. In addition, the Adviser and Subadviser currently serve, or may in the future serve, as investment adviser to other registered investment companies, unregistered investment companies or accounts (including proprietary accounts), some of which provide for incentive compensation (such as performance fees). Consequently, the Adviser's and Subadviser's investment management activities may present conflicts between the interests of a Fund and those of the Adviser and/or Subadviser and potentially among the interests of various accounts managed by the Adviser and/or Subadviser, principally with respect to allocation of investment opportunities among similar strategies. Although each of the Adviser and the Subadviser has adopted allocation procedures intended to provide for equitable treatment of all accounts, it is possible that unforeseen or unusual circumstances may arise requiring case-by-case treatment. The allocation procedures generally contemplate like treatment for like accounts, with exceptions for various special considerations, including an account's tax position, cash management requirements, concentration tolerance or minimum investment size policies. VOTING OF PROXIES The Board of Trustees has delegated to the Adviser (and Subadviser in the case of First Eagle Fund of America) the authority to vote proxies received by the Funds from the companies in which they invest (for this purpose, the 'portfolio positions'). The Adviser and Subadviser have adopted policies and procedures (the 'Policies') regarding the voting of such proxies, which Policies have been reviewed and approved by the Board of Trustees as appropriate to their management of the Funds' assets. The Policies provide that the Adviser or Subadviser, as the case may be, will vote client proxies in a manner that serves the best interest of the client, as determined by the Adviser or Subadviser in its discretion, taking into account relevant factors, including: (i) the impact on returns to be earned by the client; (ii) alignment of the interests of management of the portfolio position with that of the client, including establishing appropriate incentives for management; (iii) the ongoing relationship between the client and the portfolio positions in which it is invested, including the continued or increased availability of information regarding such position; and (iv) industry and business practices. The Policies also establish guidelines under which the Adviser or Subadviser generally will vote with management of a portfolio position on various routine matters (such as the election of directors/trustees, the appointment of auditors, and establishing the date and place of an annual meeting, among others) but will evaluate non-routine matters (such as compensation plans, changes in investment policies, and changes in voting rights, among others) on a case by case basis. Finally, the Policies provide procedures that address conflicts of interest between the Adviser or Subadviser and a client with respect to voting proxies, which may involve review of a proposed vote by their compliance personnel and, in certain circumstances, will require consultation with the client or its representative (the Board of Trustees, in the case of the Trust). The Adviser or Subadviser may abstain from voting from time to time when it determines that the costs associated with voting a proxy outweigh the benefits derived from exercising the right to vote. Information regarding the Adviser's and Subadviser's proxy-voting record on behalf of the Trust for the most recent twelve-month period ended June 30 is available by calling the Trust at (800) 334-2143 to request this information, which is also available on the SEC's website at http://www.sec.gov. 29 DISTRIBUTOR OF THE FUNDS' SHARES First Eagle Funds Distributors, a division of ASB Securities LLC, serves as the Distributor of the Funds' shares. ASB Securities LLC is a registered broker-dealer and a member of the National Association of Securities Dealers ('NASD'). ASB Securities LLC, like the Adviser, is a wholly-owned subsidiary of ASB Holdings. Each Fund pays the Distributor a Rule 12b-1 fee to cover expenses incurred by the Distributor for providing shareholder liaison services, including assistance with subscriptions, redemptions and other shareholder questions 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. Each Fund pays the Distributor Rule 12b-1 and service fees on Class C shares at the combined annual rate of up to 1.00% of the average daily net assets of each Fund's outstanding Class C shares. The First Eagle Fund of America pays the Distributor a Rule 12b-1 fee on Class Y shares at the annual rate of up to 0.25% of the average daily net assets of the Fund's outstanding Class Y shares. These payments (other than service fees) may also be used to cover expenses incurred by the Distributor for providing sales and promotional activities under the Funds' Rule 12b-1 Plan, including the printing and distribution of sales literature and prospectuses sent to prospective investors. 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 1933 Act. Pursuant to the Distribution and Services Agreements between the Distributor and the Trust, the Funds agree to indemnify the Distributor against certain liabilities under the 1933 Act. The Funds' 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 (and Class Y shares for the First Eagle Fund of America). The Class I shares of the Global Fund, the Overseas Fund, the U.S. Value Fund and the Gold Fund do not participate in the Plan. Under the Rule 12b-1 Plan, for the 12-month period ended September 30, 2005, the Distributor (or its predecessor, another affiliate or related party of the Adviser) paid $63,466,232 to financial services firms as fees for distribution of Fund shares, $11,102,603 for compensation and overhead for internal marketing personnel, $446,668 for printing costs (for example, with respect to prospectuses for prospective investors or marketing materials for the Funds), $419,854 for payments to marketing consultants and for other professional services, and $624,120 for miscellaneous distribution-related costs. These payments aggregated $76,059,477, of which $65,069,267 was paid by the Distributor (or its predecessor) from amounts received by it under the Funds' Rule 12b-1 Plan (which amounts included $1,619,268 retained by the Distributor (or its predecessor) under that Plan as fees for its own distribution activities on behalf of the Funds). The remainder of that aggregate amount was paid by the Distributor (or its predecessor) from its own assets. A Fund may, under policies approved by the Trust's Board of Trustees, from time to time, enter into arrangements with institutions to provide sub-transfer agent services and other related services (e.g., client statements, tax reporting, order-processing and client relations) where a number of persons hold Fund shares through omnibus or other 'street name' accounts registered with the Fund's transfer agent, DST Systems, Inc. ('DST'). Under those arrangements, a Fund may compensate the institution rendering such services on a per sub- account basis, as an asset-based fee, as a sales fee or in some cases through a combination of the three. While the Adviser and the Distributor consider these to be payments for services rendered, they represent an additional business relationship between these sub-transfer agents and the Funds that often results, at least in part, from past or present sales of Fund shares by the sub-transfer agents or their affiliates. Such compensation paid by the Fund does not amount in aggregate for more than what otherwise would have been paid to DST for the same services. For the twelve-month period ended December 31, 2005, total sub-transfer agency payments of this nature made by the Funds were approximately $10.7 million. Additional payments relating to sub-transfer agency services are paid by the Distributor, the Adviser or an affiliate out of its or their own resources, as described below under the heading 'Revenue Sharing.' 30 REVENUE SHARING The Distributor, the Adviser or an affiliate may, from time to time, out of its (or their) own resources, make cash payments -- sometimes referred to as 'revenue sharing' -- to broker dealers or financial intermediaries for various reasons. These payments may support the delivery of services to the Funds or to shareholders in the Funds, including, without limitation, transaction processing and sub-accounting services. These payments also may serve as an incentive to sell shares of the Funds and/or to promote retention of customer assets in the Funds. As such, they may be made to firms that provide various marketing support or other promotional services relating to the Funds, including, without limitation, advertising, access on the part of the Distributor's personnel to sales meetings, sales representatives and/or management representatives of the broker dealer or other financial intermediary, as well as inclusion of the Funds in various promotional and sales programs. Marketing support services also may include business planning assistance, educating broker dealer personnel about the Funds and shareholder financial planning assistance. Revenue sharing payments may include any portion of the sub-transfer agency fees described in the paragraph immediately preceding this revenue sharing discussion that exceed the costs of similar services provided by the Funds' transfer agent, DST. Such excess sub-transfer agency payments are paid by the Distributor, the Adviser or an affiliate out of its or their own resources. For the twelve-month period ended December 31, 2005, the three firms receiving the largest such excess payments from these parties, in descending order of the size of the payments, were Charles Schwab & Co., Inc., Financial Data Services, Inc. (an affiliate of Merrill Lynch, Pierce, Fenner & Smith, Inc.), and Pershing LLC. Because these payments will vary according to a number of factors (including, for example, numbers of shareholder accounts serviced), this listing of firms can be expected to change in order and composition from time to time. Revenue sharing also may include any other payment requirement of a broker dealer or another third-party intermediary, including certain agreed upon 'finder's fees' as described in greater detail in the Prospectus. All such payments are paid by the Distributor, the Adviser or an affiliate of either out of its (or their) own resources and are in addition to any Rule 12b-1 payments described elsewhere in this Statement of Additional Information. Revenue sharing payments may be structured: (i) as a percentage of sales; (ii) as a percentage of net assets; (iii) as a fixed dollar amount; or (iv) as some combination of any of these. In many cases, they therefore may be viewed as encouraging sales activity or retention of assets in the Funds. Generally, any revenue sharing or other payments of the type just described will have been requested by the party receiving them, often as a condition of distribution, but are subject to negotiation as to their structure and scope. The Distributor, the Adviser and/or an affiliate of either also pays from its (or their) own resources for travel and other expenses, including lodging, entertainment and meals, incurred by brokers or broker representatives related to diligence or informational meetings in which broker representatives meet with investment professionals employed by a Fund's investment adviser, as well as for costs of organizing and holding such meetings. The Funds and/or such related parties to the Funds also may make payments to or on behalf of brokers or their representatives for other types of events, including sales or training seminars, and may provide certain small gifts and/or entertainment as permitted by applicable rules. As of December 31, 2005, the parties with whom the Distributor, the Adviser and/or an affiliate of either have entered into written agreements to make revenue sharing payments with respect to the Funds are as follows (such payments not including, for this purpose, 'finders' fees' paid, the sub-transfer agency payments described above, and payments for entertainment, training and education activities for the brokers and broker representatives, their investment professionals and/or their clients or potential clients): PARTIES HAVING REVENUE SHARING AGREEMENTS WITH THE DISTRIBUTOR, THE ADVISER OR AN AFFILIATE Citigroup Global Markets, Inc. Morgan Stanley Dean Witter, Inc. Raymond James Financial Services, Inc. UBS Financial Services, Inc. The above-listed revenue sharing counterparties may change from time to time. Shareholders or prospective investors should be aware that revenue sharing arrangements or other payments to intermediaries could create incentives on the part of the parties receiving the payments to more positively consider 31 the Funds relative to mutual funds either not making payments of this nature or making smaller such payments. A shareholder or prospective investor with questions regarding revenue sharing or other such payments may obtain more details by contacting his or her broker representative or other financial intermediary directly. FUND SHARES The shares of the beneficial interests of the Trust are currently classified as Class A shares, Class C shares and Class I shares of the Global Fund, Class A shares, Class C shares and Class I shares of the Overseas Fund, Class A shares, Class C shares and Class I shares of the U.S. Value Fund, Class A shares, Class C shares and Class I shares of the Gold Fund and Class A shares, Class C shares and Class Y shares of the First Eagle Fund of America. All shares issued and outstanding are redeemable at net asset value at the options of shareholders. Shares have no preemptive or conversion rights. The Board of Trustees is authorized to reclassify and issue any shares of the Trust without shareholder approval. Accordingly, in the future, the trustees may create additional series or class of shares with different investment objectives, policies or restrictions. Any issuance of shares of another series or class would be governed by the 1940 Act and Delaware law. Each share of each Fund is entitled to one vote for each dollar of net asset value and a proportionate fraction of a vote for each fraction of a dollar of net asset value. Generally, shares of each Fund vote together on any matter submitted to shareholders, except when otherwise required by the 1940 Act or when a matter does not affect any interest of a particular class, in which case only shareholders of such other class or classes whose interests may be affected shall be entitled to vote. Shareholders shall not be entitled to cumulative voting in the election of Trustees or on any other matter. COMPUTATION OF NET ASSET VALUE Each Fund computes its net asset value once daily as of the close of trading on each day the New York Stock Exchange is open for trading. The Exchange is closed on the following days: New Year's Day, Rev. Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset value per share is computed by dividing the total current value of the assets of a Fund, less its liabilities, by the total number of shares outstanding at the time of such computation. A portfolio security (including an option), other than a bond, which is traded on a U.S. national securities exchange or a securities exchange abroad is normally valued at the price of the last sale on the exchange as of the close of business on the date on which assets are valued. If there are no sales on such date, such portfolio investment will be valued at the mean between the closing bid and asked prices (and if there is only a bid or only an asked price on such date, valuation will be at such bid or asked price for long or short positions, respectively). Securities other than bonds, traded in the over-the-counter market are valued at the mean between the last bid and asked prices prior to the time of valuation (and if there is only a bid or only an asked price on such date, valuation will be at such bid or asked price for long or short positions, respectively), except if such unlisted security traded on the NASDAQ in which case it is valued at its last sale price (or, if available in the case of NASDAQ securities, the NASDAQ Official Closing Price ('NOCP')). Commodities (such as physical metals) are valued at the price of the last sale on the COMEX exchange as of the close of business on the date on which the assets are valued. Forward currency contracts are valued at the current cost of covering or offsetting such contracts. All bonds, whether listed on an exchange or traded in the over-the-counter market (and except for short-term investments as described in the next sentence), for which market quotations are readily available are valued at the mean between the last bid and asked prices received from dealers in the over-the-counter market in the United States or abroad, except that when no asked price is available, bonds are valued at the last bid price alone. Short-term investments maturing in sixty days or less are valued at cost plus interest earned (or discount amortized, as the case may be), which is deemed to approximate value. London closing exchange rates typically are used to convert foreign security prices into U.S. dollars. Any security that is listed or traded on more than one exchange (or traded in multiple markets) is valued at the relevant quotation on the exchange or market deemed by the Adviser to be the primary trading venue for that security. In the absence of such a quotation, a quotation from the exchange or market deemed by the Adviser to be the secondary trading venue for the particular security shall be used. The Funds use pricing services to identify the market prices of publicly traded securities in their portfolios. When market prices are determined to be 'stale' as a result of limited market activity for a particular holding, or in other circumstances when market prices are unavailable, such as for 32 private placements, or determined to be unreliable for a particular holding, such holdings may be 'fair valued' in accordance with procedures approved by the Board of Trustees. Additionally, with respect to foreign holdings, specifically in circumstances leading the Adviser to believe that significant events occurring after the close of a foreign market have materially affected the value of a Fund's holdings in that market, such holdings may be fair valued to reflect the events in accordance with procedures approved by the Board. The determination of whether a particular foreign investment should be fair valued will be based on review of a number of factors, including developments in foreign markets, the performance of U.S. securities markets, and security-specific events. The values assigned to a Fund's holdings therefore may differ on occasion from reported market values. The Trust and the Adviser believe relying on the procedures described above will result in prices that are more reflective of the actual market value of portfolio securities held by the Funds. DISCLOSURE OF PORTFOLIO HOLDINGS A Fund's portfolio holdings are made public, as required by law, in the Fund's annual and semi-annual reports. These reports are filed with the SEC and mailed to shareholders approximately 60 days after the last day of the relevant period. (In addition, these reports are available upon request as described on the front cover of this Statement of Additional Information.) Also as required by law, a Fund's portfolio holdings are reported to the SEC approximately 60 days after the last day of the Fund's relevant first or third fiscal quarterly period. Top position holdings (generally either top-ten or top-five depending on the concentration represented), as well as certain statistical information relating to portfolio holdings such as country or sector breakdowns, are posted to the Funds' website on a monthly basis within 30 days after the end of each month. These postings can be located behind the 'Download Portfolio Composition' icon on each Fund's page of the website and generally are available for at least 30 days from their date of posting. Archived top holding postings are also available for up to six months. As should be clear, because the Funds consider current portfolio holding information proprietary, such information is typically withheld for some time before being made public. When authorized by appropriate executive officers of the Funds, portfolio holdings information may be given more frequently than as just described to third-party Fund service providers, various mutual fund rating and ranking organizations and certain affiliated persons of the Funds. As of the date of this Statement of Additional Information, these persons are limited to the Distributor, the Funds' custodian (full portfolio daily, no lag) and internal and external (State Street Bank & Trust Co.) accounting personnel (full portfolio daily, no lag), the Funds' independent registered public accounting firm, Institutional Shareholder Services (full portfolio at month end, no lag) and other proxy voting agents, R.S. Rosenbaum & Co., in connection with financial printing (full portfolio quarterly, approximately 30-day lag), portfolio analytics software provider FactSet Research Systems (full portfolio daily, no lag -- only advisory and advisory support personnel of the Adviser have access to the FactSet outputs derived from these disclosures), portfolio analytics software provider Vestek (a Thomson Financial company) (full portfolio monthly, 45-day lag -- Vestek, in turn, makes this information available to Smith Barney, although internal Smith Barney controls prohibit dissemination to Smith Barney traders, brokers or clients information other than top-10 holdings and general portfolio statistics), and the following mutual fund rating/ranking organizations, whose further dissemination is subject to the subscription rules of these rating/ranking organizations: Morningstar (full portfolio month-end, 45-day lag), Lipper (full portfolio month-end, 45-day lag), Bloomberg (full portfolio semi-annually, 45-day lag), Value Line (full portfolio month-end, 45-day lag), Standard & Poor's (full portfolio month-end, 45-day lag) and CDA Weisenberger/Thomson Financial (full portfolio month-end, 45-day lag). Finally, on occasion the Funds may disclose one or more individual holdings to pricing or valuation services (or to broker-dealers acting as market makers) for assistance in considering the valuation of the relevant holdings. In such cases, the information provided is subject to limitations on use intended to prohibit the recipient from trading on or inappropriately further disseminating it. As part of the internal policies and procedures, conflicts between the interests of the investors and those parties receiving portfolio information will be considered. In addition to the Funds' policies and procedures in this area, a number of fund service providers maintain their own written procedures limiting use and further transmission of portfolio holdings information disclosed to them. Neither the Funds nor the Adviser (nor its affiliates) receives any compensation in connection with disclosure of information to these parties, and all such arrangements are pursuant to policies approved by the Board of Trustees, which has determined that they are appropriate and in the best interests of Fund shareholders. These Fund policies and procedures will be reviewed by the Trustees on an annual basis, for adequacy and effectiveness, in connection with the Funds' compliance program under Rule 38a-1 under the Investment Company Act; and related issues will be brought to the attention of the Trustees on an as appropriate basis. 33 Additionally, the Adviser or its personnel from time to time may comment to the press, Fund shareholders, prospective investors or shareholder or investor fiduciaries or agents (orally or in writing) on one or more of the Funds' portfolio securities or may state that the Funds recently purchased or sold one or more securities. This commentary also may include such statistical information as industry, country or capitalization exposure, credit quality information, specialized financial characteristics (alpha, beta, maturity, sharpe ratio, standard deviation, default rate, etc.), price comparisons to various measures, portfolio turnover and the like. No comments may be made, however, if likely to permit, in the sole judgment of the Adviser, inappropriate trading of Fund shares or of Fund portfolio securities. HOW TO PURCHASE SHARES The methods of buying and selling shares and the sales charges applicable to purchases of shares of a Fund are described in the Trust's Prospectus. As stated in the Prospectus, shares of each Fund may be purchased at net asset value by various persons associated with the Trust, the Adviser, ASB Securities LLC, ASB Holdings, certain firms providing services to the Trust or affiliates thereof for the purpose of promoting good will with employees and others with whom the Trust has business relationships, as well as in other special circumstances. Shares are offered to other persons at net asset value in circumstances where there are economies of selling efforts and sales related expenses with respect to offers to certain investors. TAX STATUS Each Fund intends to qualify annually as a 'regulated investment company' under the Internal Revenue Code of 1986, as amended (the 'Code'). In order to qualify as a regulated investment company for a taxable year, a Fund must, among other things, (a) derive at least 90% of its gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities or foreign currencies or other income (such as gains from options, futures or forward contracts) derived with respect to the business of investing in such stock, securities or currencies; (b) diversify its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of its assets is represented by cash, cash items, U.S. government securities, securities of other regulated investment companies and other securities, with such other securities of any one issuer qualifying only if the Fund's investment is limited to an amount not greater than 5% of the value of the Fund's assets and not more than 10% of the 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 U.S. government securities or securities of other regulated investment companies) or of two or more issuers which the Fund controls and which are determined, under Treasury regulations, to be engaged in the same or similar trades or businesses or related trades or businesses; and (c) distribute at least 90% of its investment company taxable income (which includes, among other items, dividends and interest net of expenses and net short-term capital gains in excess of net long-term capital losses) for the year. Each Fund (other than First Eagle Fund of America) may invest in certain assets, such as gold bullion, that do not constitute 'securities' for purposes of the regulated investment company qualification tests referred to in the previous paragraph and other assets, such as certain commodity-linked notes, the status of which as 'securities' for such purposes may not be fully settled. If a sufficient portion of a Fund's assets were not stock or such securities or if a sufficient portion of a Fund's gross income were not derived from stock or such securities for any taxable year, that Fund would fail to qualify as a regulated investment company for such taxable year. If a Fund fails to qualify for taxation as a regulated investment company for any taxable year, the Fund's income will be taxed at Fund-level at regular corporate rates. In addition, in order to requalify for taxation as a regulated investment company that is accorded special tax treatment, such Fund may be required to recognize unrealized gains, incur substantial taxes and interest on such unrealized gains, and make certain substantial distributions. As a regulated investment company, each Fund generally will not be subject to U.S. federal income tax on its investment company taxable income and net capital gains (the excess of net long-term capital gains over net short-term capital losses), if any, that it distributes to shareholders. Each Fund intends to distribute to its shareholders, at least annually, substantially all of its investment company taxable income and net capital gains. Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a non-deductible 4% excise tax. To prevent imposition of the excise tax, each Fund must distribute during each calendar year an amount equal to or exceeding the sum of (1) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (2) at least 98% of its capital gains in excess of its capital losses (adjusted for certain ordinary losses) for the one-year period ending on October 31 of the calendar year, and (3) 34 100% of any ordinary income and capital gains for the preceding year that were not distributed during that year. A distribution will be treated as paid on December 31 of the current calendar year if it is declared by a Fund in October, November or December with a record date in such a month and paid by the Fund during January of the following calendar year. Such distributions will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received. To prevent application of the excise tax, each Fund intends to make its distributions in accordance with the calendar year distribution requirement. Finally, any foreign currency transactions that are not directly related to a Fund's investments in securities (possibly including, but not limited to, speculative currency positions or currency derivatives not used for hedging purposes) could, under future administrative guidance issued by the Internal Revenue Service, produce income not among the types of 'qualifying income' from which the Fund must derive at least 90 percent of its annual gross income. Different tax treatment is accorded accounts maintained as IRAs, including a penalty on pre-retirement distributions that are not properly rolled over to other IRAs. Shareholders should consult their tax advisers for more information. Dividends paid out of a Fund's investment company taxable income will be taxable to a U.S. shareholder as ordinary income. For taxable years beginning on or before December 31, 2008, certain dividends received by non-corporate shareholders (including individuals), known as 'qualified dividend income,' may be eligible for the maximum 15% tax rate applicable in the case of long-term capital gains. To the extent that a portion of a Fund's income consists of dividends paid by U.S. corporations, a portion of the dividends paid by the Fund may be eligible for the corporate dividends-received deduction if so designated by the Fund in a written notice to shareholders. However, any dividends paid by a Fund that are attributable to distributions from real estate investment trusts ('REITs') will not qualify for the corporate dividends-received deduction, nor will they qualify for the maximum 15% tax rate on certain Fund dividends earned by noncorporate shareholders (including individuals). A Fund's investments in REIT equity securities may require such Fund to accrue and distribute income not yet received. In order to generate sufficient cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio that it otherwise would have continued to hold (including when it is not advantageous to do so). For taxable years beginning on or before December 31, 2008, distributions of net capital gains derived from all sales of portfolio securities by a Fund, if any, designated as capital gains distributions, are generally taxable to individual shareholders at a maximum 15% capital gains rate, regardless of whether the shareholder has held the Fund's shares for more than one year, and are not eligible for the dividends-received deduction. After the close of each fiscal year, each Fund will designate the portion of its dividend income constituting qualified dividend income, dividends eligible for the corporate dividends received deduction, and capital gain dividends. Shareholders receiving distributions in the form of additional shares, rather than cash, generally will recognize income and have a cost basis in each such share equal to the net asset value of a share of the Fund on the reinvestment date. Distributions in excess of a Fund's earnings and profits will first reduce the adjusted tax basis of a shareholder's shares and, after such adjusted tax basis is reduced to zero, will constitute capital gains to such shareholder (assuming the Fund shares are held as a capital asset). Collectible gains, such as gains on gold and silver bullion, held for less than one year, are taxable to a U.S. shareholder as ordinary income. Gains realized on collectibles held for greater than one year currently are subject to a 28% tax rate. Shareholders will be notified annually as to the U.S. federal income tax status of distributions, and shareholders receiving distributions in the form of additional shares will receive a report as to the net asset value of those shares. Investments by a Fund in securities issued or acquired at a discount, or providing for deferred interest or payment of interest in the form of additional obligations could result in income to the Fund equal generally to a portion of the excess of the face value of the securities over their issue or acquisition price (the 'original issue discount') each year that the securities are held, even though the Fund receives no interest payments. In addition, a Fund's investment in foreign currencies or foreign currency denominated or referenced debt, certain asset-backed securities, Section 1256 contracts (as described below) and, contingent payment and inflation-indexed debt instruments also may increase or accelerate a Fund's recognition of income, including the recognition of taxable income in excess of the cash generated by such investments. Such income must be included in determining the amount of income which the Fund must distribute to maintain its status as a regulated investment company and to avoid the imposition of federal income tax and the 4% excise tax. In such case, the Fund could be required to dispose of securities which it might otherwise have continued to hold or borrow to generate cash to satisfy its distribution requirements. If a Fund invests in certain high yield original issue discount obligations issued by U.S. corporations, a portion of the original issue discount accruing on such an obligation may be eligible for the 35 corporate dividends-received deduction. In such event, a portion of the dividends from investment company taxable income paid by the Fund to its corporate shareholders may be eligible for this corporate dividends-received deduction if so designated by the Fund in a written notice to shareholders. Certain regulated futures, nonequity option, and foreign currency contracts in which the Funds may invest are 'section 1256 contracts.' Gains or losses on section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses; however, foreign currency gains or losses arising from certain section 1256 contracts may be treated as ordinary income or loss. Also, section 1256 contracts held by a Fund at the end of each taxable year (and, generally, for purposes of the 4% excise tax, on October 31 of each year) are 'marked-to-market' (that is, treated as sold at fair market value), resulting in unrealized gains or losses being treated as though they were realized. Generally, the hedging transactions undertaken by the Funds may result in 'straddles' for U.S. federal income tax purposes. The straddle rules may cause certain gains to be treated as short-term rather than long-term and may cause certain losses to be treated as long-term rather than short-term. In addition, losses realized by these Funds on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized and certain interest expenses may be required to be capitalized. Because only a few regulations implementing the straddle rules have been promulgated, the tax consequences to these Funds of engaging in hedging transactions are not entirely clear. Hedging transactions may increase the amount of short-term capital gains realized by a Fund which is taxed as ordinary income when distributed to shareholders. Each Fund may make one or more of the elections available under the Code which are applicable to straddles. If any of these Funds makes any of such elections, the amount, character and/or timing of the recognition of gains or losses from the affected straddle positions will be determined under rules that vary according to the election(s) made. The rules applicable under certain of the elections may operate to accelerate the recognition of gains or losses from the affected straddle positions. Because the straddle rules may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected straddle positions, the amount which must be distributed to shareholders, and which will be taxed to them as ordinary income or long-term capital gains, may be increased or decreased as compared to a fund that did not engage in such hedging transactions. Notwithstanding any of the foregoing, a Fund may recognize gain from a constructive sale of certain 'appreciated financial positions' if generally the Fund enters into a short sale of offsetting notional principal contract with respect to, or a futures or a forward contract to deliver the same or substantially identical property or, in the case of an appreciated financial position that is a short sale, an offsetting notional principal contract or a futures or forward contract, if the Fund acquires the same or substantially identical property as the underlying property for the position. Appreciated financial positions subject to this constructive sale treatment are interests (including options and forward contracts and short sales) in stock, partnership interests, certain actively traded trust instruments and certain debt instruments. Constructive sale treatment does not apply to certain transactions that are closed before the end of the 30th day after the end of the taxable year in which the transaction was entered into if the taxpayer holds the appreciated financial position throughout the 60 day period beginning on the date the transaction is closed and at no time during this 60 day period is the taxpayer's risk of loss with respect to the appreciated securities reduced by certain circumstances. If a Fund has long-term capital gain from a 'constructive ownership transaction' with respect to any financial asset, the amount of such gain which may be treated as long-term capital gain by the Fund is limited to the amount of such gain which the Fund would have recognized if it had been holding such financial asset directly, rather than through a constructive ownership transaction, with any gain in excess of this amount being treated as ordinary income. In addition, any such gain recharacterized as ordinary income is treated as having been realized ratably over the duration of such constructive ownership transaction grossed up by an interest charge when reported in the year recognized. A constructive ownership transaction includes holding a long position under a notional principal contract with respect to, or entering into a forward or futures contract to acquire certain financial assets, or both holding a call option and granting a put option with respect to certain financial assets where such options have substantially equal strike prices and contemporaneous maturity dates. Under the Code, gains or losses attributable to fluctuations in exchange rates which occur between the time a Fund accrues receivables or liabilities denominated in a foreign currency or determined with reference to one or 36 more foreign currencies and the time the Fund actually collects such receivables, or pays such liabilities, generally are treated as ordinary income or loss. Similarly, on disposition of debt securities denominated in a foreign currency or determined with reference to one or more foreign currencies gains or losses attributable to fluctuations in the value of foreign currency between the date of acquisition of the security or contract and the date of disposition thereof also are treated as ordinary income or loss. Generally gains or losses with respect to forward contracts, futures contracts, options or similar financial instruments (other than section 1256 contracts) which are denominated in terms of a foreign currency or determined by reference to the value of one or more foreign currencies are treated as ordinary gains or losses, as the case may be. These gains or losses, referred to under the Code as 'section 988' gains or losses, may increase or decrease the amount of a Fund's investment company taxable income to be distributed to its shareholders as ordinary income. However, in certain circumstances, it may be possible to make an election to treat such gains or losses as capital gains or losses or as subject to the rules applicable to section 1256 contracts, rather than subject to section 988 treatment. Furthermore, if section 988 losses exceed other investment company taxable income generated by a Fund during a taxable year, the Fund's distributions for the taxable year (including distributions made before such section 988 losses were recouped) would be treated as a return of capital to the Fund's shareholders (rather than as dividends), thereby reducing the basis of each shareholder's Fund shares and potentially resulting in a capital gain for any shareholder receiving a distribution greater than such shareholder's adjusted tax basis in Fund shares (assuming such shares are held as a capital asset). Upon the sale or other disposition of shares of a Fund, a shareholder may realize a capital gain or loss which may be eligible for reduced federal income tax rates, generally depending upon the shareholder's holding period for the shares. Any loss recognized on a sale or exchange will be disallowed to the extent the shares disposed of are replaced (including shares acquired pursuant to a dividend reinvestment plan) within a period of 61 days beginning 30 days before and ending 30 days after disposition of the shares. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss. Any loss realized by a shareholder on a disposition of Fund shares held by the shareholder for six months or less generally will be treated as a long-term capital loss to the extent of any distributions received by the shareholder with respect to such shares that are treated as long-term capital gains. No gain or loss will be recognized by a Fund shareholder on the conversion or exchange of a class of shares in the same Fund to a different class of shares in the same Fund. A shareholder's tax basis in the class of Fund shares acquired will be the same as such shareholder's basis in the class of Fund shares converted, and the holding period in the class of Fund shares acquired will include the holding period for the converted Fund shares. Under certain circumstances the sales charge incurred in acquiring shares of a Fund may not be taken into account in determining the gain or loss on the disposition of those shares. This rule applies if shares of a Fund are exchanged within 90 days after the date they were purchased and the new shares are acquired without a sales charge or at a reduced sales charge. In that case, the gain or loss recognized on the exchange will generally be determined by excluding from the tax basis of the shares exchanged the sales charge that was imposed on the acquisition of those shares to the extent of such reduction to the sales charge upon the exchange. This exclusion applies to the extent that the otherwise applicable sales charge with respect to the newly acquired shares is reduced as a result of having incurred the initial sales charge. The portion of the initial sales charge that is excluded from the basis of the exchanged shares is instead treated as an amount paid for the new shares. Each Fund may be subject to foreign withholding taxes on income and gains derived from its investments outside the United States. Such taxes would reduce the yield on the Funds' investments. Tax treaties between certain countries and the United States may reduce or eliminate such taxes. If more than 50% of the value of a Fund's total assets at the close of any taxable year consists of stocks or securities of foreign corporations, the Fund may elect, for U.S. federal income tax purposes, to treat any foreign source income or foreign withholding taxes paid by the Fund that can be treated as income taxes under U.S. federal income tax principles, as respectively earned and paid by its shareholders. For any year that a Fund makes such an election, each of its shareholders will be required to include in computing its income its allocable share of such taxes paid by the Fund, and will be entitled, subject to certain limitations, to credit its share of such taxes against its U.S. federal income tax due, if any, or to deduct it (as an itemized deduction) from its U.S. federal gross income, if any. Generally, a credit for foreign taxes is subject to the limitation that it may not exceed the amount of shareholder's U.S. federal income tax liability attributable to its foreign source taxable income. With respect to the Global Fund, the Overseas Fund and Gold Fund, if the pass through election described above is made, the source of the electing Fund's income flows through to its shareholders. Certain gains from the sale of securities and certain foreign currency gains will not be treated as foreign source taxable income. In addition, this foreign tax credit 37 limitation must be applied separately to certain categories of foreign source income, one of which is foreign source 'passive income.' For this purpose, foreign source 'passive income' generally includes foreign source dividends (other than dividends from non-controlled section 902 corporations, and certain other corporations), interest, capital gains and foreign currency gains. As a consequence, some shareholders may not be able to claim a foreign tax credit for the full amount of their proportionate share of foreign taxes paid by the Fund. The foreign tax credit limitation rules do not apply to certain electing individual taxpayers who have limited creditable foreign taxes and no foreign source income other than 'qualified passive income.' The foreign tax credit is disallowed with respect to foreign taxes withheld on dividends if the dividend paying shares are held by the Fund for less than 16 days (46 days in the case of preferred shares) during the 30-day period (90-day period for preferred shares) beginning 15 days (45 days for preferred shares) before the shares become ex-dividend. The foreign tax credit can be used to offset only 90% of the alternative minimum tax (as computed under the Code for purposes of this limitation) imposed on corporations and individuals. Furthermore, certain retirement accounts cannot claim the benefit of the foreign tax credit from dividends paid on foreign securities held by a Fund. If a Fund is not eligible to make the pass-through election described above, the foreign taxes it pays will reduce its income, if any, and distributions by the Fund will be treated as U.S. source income. Each shareholder will be notified within 60 days after the close of an eligible Fund's taxable year whether, pursuant to the election described above, the foreign taxes paid by the Fund will be treated as paid by its shareholders for that year and, if so, such notification will designate (i) such shareholder's portion of the foreign taxes paid to a foreign country and (ii) the portion of the Fund's dividends and distributions that represents income derived from sources within such country. Shareholders of an eligible Fund would be required to include their proportionate share of foreign taxes paid by the Fund in their U.S. income tax returns as gross income, treat such proportionate share as taxes paid by them, and either deduct such proportionate share of taxes in computing their taxable incomes or, alternatively, claim such amounts as foreign tax credits against their U.S. income taxes. No deduction for foreign taxes may be claimed by noncorporate shareholders who do not itemize deductions. A U.S. nonresident individual or U.S. nonresident corporation may be subject to U.S. withholding taxes on the gross income resulting from an eligible Fund's election described above, but may not be able to claim a credit or deduction against such U.S. tax for the foreign taxes treated as having been paid by such shareholder. Investments by a Fund in stock of certain foreign corporations which generate mostly passive income, or at least half of the assets of which generate such income (referred to as 'passive foreign investment companies' or 'PFICs'), are subject to special tax rules designed to prevent deferral of U.S. taxation of the Fund's share of the PFIC's earnings. In the absence of certain elections to report these earnings on a current basis, regardless of whether the Fund actually receives any distributions from the PFIC, a Fund would be required to report certain 'excess distributions' from, and any gain from the disposition of stock of, the PFIC as ordinary income. Such ordinary income would be allocated ratably to a Fund's holding period for the stock. Any amounts allocated to prior taxable years would be taxable to the Fund at the highest rate of tax on ordinary income applicable in that year, increased by an interest charge at the rate prescribed for underpayments of tax. Amounts allocated to the year of the distribution or disposition would be included in the Fund's net investment income for that year and, to the extent distributed as a dividend to the Fund's shareholders, would not be taxable to the Fund. A Fund may be able elect to mark to market its PFIC stock, resulting in the stock being treated as sold at fair market value on the last business day of each taxable year. Any resulting gain and any gain from an actual disposition of the stock would be reported as ordinary income; any resulting loss and any loss from an actual disposition of the stock would be reported as ordinary loss to the extent of any net gains reported as ordinary income in prior years. Alternatively, the Fund may be able to make an election, known as a qualified electing fund ('QEF') election, in lieu of being taxable in the manner described above, to include annually in income its pro rata share of the ordinary earnings and net capital gain of the PFIC, regardless of whether it actually received any distributions from the PFIC. These amounts would be included in the Fund's investment company taxable income and net capital gain which, to the extent distributed by the Fund as ordinary or capital gain dividends, as the case may be, would not be taxable to the Fund (but would be taxable to shareholders). In order to make a QEF election, the Fund would be required to obtain certain information from PFICs in which it invests, which in many cases may be difficult to obtain. Each Fund may be required to withhold U.S. federal income tax currently at the rate of 28% of all distributions and gross sale proceeds payable to shareholders who fail to provide the Fund with their correct taxpayer identification number or otherwise fail to comply with the applicable requirements of the backup withholding rules. Corporate shareholders and certain other shareholders specified in the Code generally are exempt from such backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be allowed as a refund or a 38 credit against the shareholder's U.S. federal income tax liability, provided that the required information is timely furnished to the IRS. Ordinary income dividends paid by a Fund to shareholders who are non-resident aliens or foreign entities generally will be subject to a 30% U.S. withholding tax under existing provisions of the Code applicable to foreign individuals and entities unless a reduced rate of withholding is provided under applicable treaty law. However, pursuant to recently enacted legislation, for taxable years beginning after December 31, 2004 and before January 1, 2008, certain 'interest-related dividends' and 'short-term capital gain dividends' paid by a Fund to a foreign shareholder, and designated as such would be eligible for an exemption from U.S. withholding tax. Interest-related dividends generally are dividends derived from certain interest income earned by a Fund that would not be subject to U.S. withholding tax if earned by a foreign shareholder directly. Short-term capital gain dividends generally are dividends derived from the excess of a Fund's net short-term capital gains over net long-term capital losses. The Funds do not intend to designate interest-related or short-term capital gain dividends. Non-resident shareholders are urged to consult their own tax advisers concerning the applicability of U.S. withholding tax. Since, at the time of an investor's purchase of a Fund's shares, a portion of the per share net asset value by which the purchase price is determined may be represented by realized or unrealized appreciation in the Fund's portfolio or undistributed income of the Fund, subsequent distributions (or a portion thereof) on such shares may in economic reality represent a return of his capital. However, such a subsequent distribution would be taxable to such investor even if the net asset value of his shares is, as a result of the distributions, reduced below his cost for such shares. Prior to purchasing shares of the Fund, an investor should carefully consider such tax liability which he might incur by reason of any subsequent distributions of net investment income and capital gains. Fund shareholders may be subject to state, local and foreign taxes on their Fund distributions and redemptions of Fund shares. Also, the tax consequences to a foreign shareholder of an investment in a Fund may be different from those described above. Shareholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in a Fund. 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 Funds, the selection of brokers, dealers and futures commission merchants to effect those transactions and the negotiations 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 over-the-counter market and bonds, including convertible bonds, are generally traded on a 'net' basis with dealers acting as principal for their own accounts without a stated commission, although the price of the security usually includes a profit to the dealer. In underwritten offerings, securities are purchased at a fixed price which includes an amount of compensation to the underwriters, generally referred to as the underwriter's concession or discount. On occasion, certain money market instruments and U.S. government agency securities may be purchased directly from the issuer, in which case no commissions or discounts are paid. Each Fund will not deal with the Distributor in any transaction in which the Distributor acts as principal. Thus, it will not deal with the Distributor acting as market maker, and it will not execute a negotiated trade with 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, 39 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 the Fund's, 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 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 arm's-length transaction. Furthermore, the Board of Trustees, including a majority of the Trustees who are not 'interested' trustees, has adopted procedures which are reasonably designed to provide that any commissions, fees or other remuneration paid to the Distributor is consistent with the foregoing standard. Brokerage transactions with the Distributor also are subject to such fiduciary standards as may be imposed by applicable law. From time to time a Fund may engage in agency cross transactions with respect to securities that meet its investment objective and policies. An agency cross transaction occurs when a broker sells securities from one client's account to another client's account. Cross transactions are executed with written permission from a Fund. This authorization permits cross transactions only between a Fund on one side and clients for which the Distributor acts as broker, but does not act as investment adviser, on the other side. The authorization can be terminated at any time by written notice to the Distributor. 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 or the Adviser. 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. With respect to the Global Fund, the Overseas Fund, the U.S. Value Fund and the Gold Fund: for the fiscal years ended October 31, 2005, October 31, 2004 and October 31, 2003, the Funds paid total brokerage commissions which were attributable to research services (i.e., proprietary and 'soft dollar' research) of $17,129,880, $12,502,757 and $6,621,472, respectively, in connection with transactions amounting to $7,845,414,036, $5,140,372,815 and $1,807,297,114, respectively. During the fiscal years ended October 31, 2005, October 31, 2004 and October 31, 2003, the Funds paid total brokerage commissions of $17,324,578, $12,508,757 and $6,637,041, respectively, of which $138,119 (representing 2.02% of total brokerage commissions), $467,167 (representing 3.73% of total brokerage commissions) and $186,439 (representing 2.81% of total brokerage commissions), respectively, were paid to a broker-dealer affiliate or related party of the Adviser. For the same periods, the percentage of the aggregate dollar amount of brokerage transactions involving payment of commissions to a broker-dealer affiliate or related party of the Adviser was 6.44% of such aggregate transactions, 3.47% of such aggregate dollar amount of brokerage transactions and 1.6% of such aggregate dollar amount of brokerage transactions, respectively. (Percentages shown in the preceding two sentences for the fiscal year ended October 31, 2005 have been restated to show such percentages only relative to transactions for the period November 1, 2004 through March 16, 2005. This is because after such date, no brokerage commissions were paid to a party that is a broker-dealer affiliate or related party of the Adviser.) With respect to the First Eagle Fund of America: for the years ended October 31, 2005, October 31, 2004 and October 31, 2003, First Eagle Fund of America paid total brokerage commissions of $2,030,216, $1,882,459 and 40 $2,139,477, respectively, of which $0, $19,780 and $25,235, respectively, were paid to broker-dealer affiliates of the Adviser. For the fiscal years ended October 31, 2005, October 31, 2004 and October 31, 2003, brokerage commissions paid to a broker-dealer affiliate or related party of the Adviser constituted 0%, 1.05% and 1.18%, respectively, of the total brokerage commissions paid by First Eagle Fund of America, and represented 0%, 1% and 2%, respectively, of the aggregate dollar amount of its portfolio transactions involving the payment of commissions. For the fiscal years ended October 31, 2005, October 31, 2004 and October 31, 2003, options clearing charges of $112,292, $186,276 and $66,636, respectively, were paid to a broker-dealer affiliate or related party of the Adviser. (Percentages shown in the two preceding sentences for the fiscal year ended October 31, 2005 have been restated to show such percentages only relative to transactions for the period November 1, 2004 through March 16, 2005. This is because after such date, no brokerage commissions were paid to a party that is a broker-dealer affiliate or related party of the Adviser.) Of the total brokerage commissions paid during the fiscal years ended October 31, 2005, October 31, 2004 and October 31, 2003, $1,892,820 (or 93%), $1,828,355 (or 97%) and $2,021,191 (or 94%), respectively, 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. CUSTODY OF PORTFOLIO The Trust's custodian and foreign custody manager for the Funds' assets is State Street Bank and Trust Company, 801 Pennsylvania, Kansas City, Missouri 64105. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP ('PwC'), 300 Madison Avenue, New York, New York 10017-6204 serves as the Trust's independent registered public accountant. In this capacity, PwC audits and reports on each Fund's annual financial statements and financial highlights. PwC prepares each Fund's federal income, state income, and excise tax returns. PwC's engagement commences with each Fund's fiscal year ending October 31, 2006. KPMG LLP ('KPMG') was previously the independent registered public accountant for the Funds. On January 30, 2006, that firm's appointment as independent registered public accountant was terminated. In connection with the audits of the two fiscal years ended October 31, 2005, and the subsequent interim period through January 30, 2006, there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement. The audit reports of KPMG on the financial statements of the Funds as of and for the years ended October 31, 2005 and 2004 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. FINANCIAL STATEMENTS The Funds' financial statements and notes thereto appearing in their October 31, 2005 Annual Reports to Shareholders and the reports thereon of KPMG are incorporated by reference in this Statement of Additional Information. The Fund will furnish, without charge, a copy of the Annual Reports and/or Semi-Annual Reports to Shareholders on request. All such requests should be directed to First Eagle Funds, P.O. Box 219324, Kansas City, MO 64121-9324. 41 APPENDIX RATINGS OF INVESTMENT SECURITIES The rating of a rating service represents the service's opinion as to the credit quality of the security being rated. However, the ratings are general and are not absolute standards of quality or guarantees as to the creditworthiness of an issuer. Consequently, the Funds' investment adviser believes that the quality of debt securities in which a Fund invests should be continuously reviewed. A rating is not a recommendation to purchase, sell or hold a security, because it does not take into account market value or suitability for a particular investor. When a security has received a rating from more than one service, each rating should be evaluated independently. Ratings are based on current information furnished by the issuer or obtained by the ratings services from other sources which they consider reliable. Ratings may be changed, suspended or withdrawn as a result of changes in or unavailability of such information, or for other reasons. The following is a description of the characteristics of ratings used by Moody's Investors Service, Inc. ('Moody's') and Standard & Poor's Corporation ('S&P'). Moody's Ratings AAA -- Bonds rated Aaa are judged to be the best quality. They carry the smallest degree of investment risk and are generally referred to as 'giltedge.' Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. Although the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such bonds. AA -- Bonds rated Aa are judged to be high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa bonds or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than in Aaa bonds. A -- Bonds rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. BAA -- Bonds rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. BA -- Bonds rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B -- Bonds rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. CAA -- Bonds rated Caa are of poor standing. Such bonds may be in default or there may be present elements of danger with respect to principal or interest. CA -- Bonds rated Ca represent obligations which are speculative in a high degree. Such bonds are often in default or have other marked shortcomings. S&P Ratings AAA -- Bonds rated AAA have the highest rating. Capacity to pay principal and interest is extremely strong. AA -- Bonds rated AA have a very strong capacity to pay principal and interest and differ from AAA bonds only in small degree. A -- Bonds rated A have a strong capacity to pay principal and interest, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories. A-1 BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay principal and interest. Whereas they normally exhibit protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay principal and interest for bonds in this capacity than for bonds in higher rated categories. BB -- B -- CCC -- CC -- BONDS A-1 -- A-RATED BB, B, CCC AND CC are regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. BB indicates the lowest degree of speculation among such bonds and CC the highest degree of speculation. Although such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. A-2 [THIS PAGE INTENTIONALLY LEFT BLANK] FIRST EAGLE FUNDS PART C OTHER INFORMATION Item 23. Exhibits
EXHIBIT - ------- (a) -- Declaration of Trust of Registrant.******** (b) -- By-Laws of the Registrant.******** (c) -- Specimen Certificates representing shares of Common Stock ($.001 par value).** (d)(1) -- Amended and Restated Investment Advisory Contract between the Registrant and Arnhold and S. Bleichroeder Advisers, Inc. ("ASB Advisers").***** (d)(2) -- Amended and Restated Investment Advisory Contract between the Registrant and ASB Advisers with respect to First Eagle Fund of America.****** (d)(3) -- Sub-advisory Agreement between ASB Advisers and Iridian Asset Management LLC with respect to the First Eagle Fund of America.****** (e)(1) -- Amended and Restated Underwriting Agreement between the Registrant and First Eagle Funds Distributors, a division of ASB Securities, Inc. ("First Eagle Distributors"). ***** (e)(2) -- Form of Selling Group Agreement. **** (f) -- Not applicable. (g)(1) -- Custody Agreement between the Registrant and State Street Bank and Trust Company. Filed herewith. (g)(2) -- Special Custody Agreement between the Registrant and HSBC Bank USA.****** (g)(3) -- Transfer Agency and Registrar Agreement between the Registrant and DST Systems, Inc.*** (g)(4) -- Investment Accounting Agreement between the Registrant and State Street Bank and Trust Company.**** (h) -- Not applicable. (i) -- Not applicable. (j) -- Consent of KPMG LLP. Filed herewith. (k) -- Not applicable. (l) -- Not applicable. (m)(1) -- Amended and Restated Rule 12b-1 Distribution Plan and Agreement between the Registrant and First Eagle Distributors. ******* (m)(2) -- Amended and Restated Rule 12b-1 Distribution Plan and Agreement between the Registrant and First Eagle Distributors with respect to First Eagle Fund of America.****** (n)(1) -- Amended and Restated Multiple Class Plan pursuant to Rule 18f-3.******* (o) -- Not applicable. (p) -- Code of Ethics.*****
** Incorporated herein by reference to Pre-Effective Amendment No. 2 filed on or about August 30, 1993. *** Incorporated herein by reference to Post-Effective Amendment No. 4 filed on or about July 25, 1997. **** Incorporated herein by reference to Post-Effective Amendment No. 13 filed on or about February 28, 2001. ***** Incorporated herein by reference to Post-Effective Amendment No. 17 filed on or about August 17, 2001. ****** Incorporated herein by reference to Pre-Effective Amendment No. 20 filed on or about December 27, 2002. ******* Incorporated herein by reference to Pre-Effective Amendment No. 21 filed on or about May 14, 2003. ******** Incorporated herein by reference to Post-Effective Amendment No. 23 filed on or about December 30, 2004. Item 24. Person Controlled or Under Common Control With Registrant None. Item 25. Indemnification Reference is made to the provisions of Article Three, Section Seven and Article Seven, Section Two of Registrant's Declaration of Trust, together with the entirety of Article Six of Registrant's By-Laws, each of which documents is incorporated herein by reference to Post-Effective Amendment No. 25 to the Registration Statement on Form N-1A (File No. 811-7762) filed on December 30, 2004. The general effect of these provisions, and related statutory indemnification benefits as may be available under Delaware or other applicable state or federal laws, is to protect trustees, officers, employees and agents of Registrant against legal liability and expenses incurred by reason of their service to Registrant. In accord with the foregoing, Registrant shall indemnify its trustees, officers, employees and agents against judgments, fines, penalties, settlements and expenses to the fullest extent authorized, and in the manner permitted, by applicable state and federal law. In addition, the Registrant will maintain a trustees' and officers' errors and omissions liability insurance policy protecting directors and officers against liability for claims made by reason of any acts, errors or omissions committed in their capacity as trustees or officers. The policy will contain certain exclusions, among which is exclusion from coverage for active or deliberate dishonest or fraudulent acts and exclusion for fines or penalties imposed by law or other matters deemed uninsurable. C-2 Item 26. Business and Other Connections of Investment Adviser ASB Advisers is the Registrant's investment adviser. Its primary office is located at 1345 Avenue of the Americas, New York, New York, 10105. In addition to the Registrant, ASB Advisers acts as investment adviser to First Eagle Variable Funds and to certain investment vehicles and accounts not subject to registration with the Securities and Exchange Commission. ASB Advisers is a wholly owned subsidiary of Arnhold and S. Bleichroeder Holdings, Inc. ("ASB Holdings"), a privately-owned holding company organized under the laws of the State of New York, which has a substantial amount of assets under management in the form of individual accounts, and, through the Adviser, fund accounts. In connection with another wholly owned subsidiary, ASB Securities, LLC., a registered broker-dealer, and, through its First Eagle Funds Distributors division, the principal underwriter to the Registrant, ASB Holdings is substantially involved in the distribution of mutual fund shares. 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 Holdings, Inc.; Director, Aquila International Fund Limited; Trustee, The New School for Social Research; Director, Conservation International. John P. Arnhold....... Chairman, CEO and Director Co-President, Co-CEO and Director, Arnhold and S. Bleichroeder Holdings, Inc.; Chairman, CEO and Director, ASB Securities, LLC.; Director, Hanseatic Asset Management LBG; Director, Arnhold Ceramics; President and Trustee, First Eagle Funds and First Eagle Variable Funds. Michael M. Kellen....... Vice Chairman and Director Co-CEO and Director, Arnhold and S. Bleichroeder Holdings, Inc; Director, Arnhold and S. Bleichroeder Advisers UK, Ltd.; Director, ASB Securities LLC; Director, Arnhold Ceramics. Robert Miller......... Vice President, Secretary Director, Arnhold and S. Bleichroeder, UK Ltd. and Treasurer Mark D. Goldstein..... General Counsel, Chief Chief Compliance Officer, First Eagle Funds and Compliance Officer and First Eagle Variable Funds from February 2005; Senior Vice President Senior Counsel and Chief Compliance Officer, MacKay Shields LLC (April 2004 to February 2005); Senior Associate General Counsel, UBS Financial Services, Inc. (May 1998 to April 2004). Robert Bruno.......... Senior Vice President Chief Compliance Officer and Senior Vice President, ASB Securities, LLC.; Chief Operations and Financial Officer, First Eagle Funds and First Eagle Variable Funds. Charles de Vaulx..... Senior Vice President Senior Vice President, First Eagle Funds and First Eagle Variable Funds. Chief Investment Officer, Global Value Group (a department of the Adviser).
Iridian Asset Management LLC ("Iridian"), whose primary office is located at 276 Post Road West, Westport, Connecticut 06880, is the investment sub-adviser to the First Eagle Fund of America. Iridian is a majority owned subsidiary of The Governor and Company of the Bank of New York and, in addition to First Eagle Fund of America, provides investment management services to other registered and unregistered investment companies, institutional investors and individuals. The business and other connections of Iridian's directors and officers are as follows:
POSITION WITH BUSINESS AND NAME IRIDIAN OTHER CONNECTIONS - ------------------------------------------------------------------------------------------------- David L. Cohen Director, Co-Chief Executive Officer Co-Chief Investment Officer
C-3 Harold J. Levy Director, Co-Chief Executive Officer Co-Chief Investment Officer Jeffrey M. Elliott Director, Chief Financial Officer, Chief Operating Officer, Compliance Officer Alice B. Hicks Director, Executive Vice President
Additional information regarding both ASB Advisers and Iridian is provided in the body of this Registration Statement on Form N-1A under the heading "Investment Advisory and Other Services." Item 27. Principal Underwriters (a) First Eagle Funds Distributors is the Registrant's distributor (the "Distributor"). It also serves as principal underwriter for First Eagle Variable Funds. (b) The positions and offices of the Distributor's directors and officers who serve the Registrant are as follows:
NAME AND POSITION AND POSITION AND OFFICES ADDRESS* OFFICES WITH UNDERWRITER WITH REGISTRANT - ----------------------------------------------------------------------------------------------- John Arnhold Co-President and Director President and Trustee Robert Bruno Senior VP, Registered Principal Chief Operating and Financial Officer Howard Green Chief Financial Officer N/A Stefanie Spritzler Vice President Vice President and Treasurer Suzan Afifi Vice President Vice President and 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 All accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are maintained at the offices of the Registrant, 1345 Avenue of the Americas, New York, NY 10105 with the exception of certain accounts, books and other documents which are kept by the Registrant's custodian, State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas City, Missouri 64105 and registrar and shareholder servicing agent, DST Systems, Inc., P.O. Box 419324, Kansas City, Missouri, 64141-6324. Item 29. Management Services Not applicable. Item 30. Undertakings The Registrant 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 a Fund's outstanding shares, and that it will assist communication with other shareholders as required by Section 16(c) of the Investment Company Act of 1940. C-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for the effectiveness of this Registration Statement pursuant to Rule 485(a) under the Securities Act of 1933 and the Registration 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 24th day of February, 2006. FIRST EAGLE FUNDS By: /s/ JOHN P. ARNHOLD* JOHN P. ARNHOLD 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/ LISA ANDERSON* Trustee February 24, 2006 (LISA ANDERSON) /s/ JOHN P. ARNHOLD* Trustee February 24, 2006 (JOHN P. ARNHOLD) /s/ CANDACE K. BEINECKE* Trustee February 24, 2006 (CANDACE K. BEINECKE) /s/ JEAN D. HAMILTON* Trustee February 24, 2006 (JEAN D. HAMILTON) /s/ JAMES E. JORDAN* Trustee February 24, 2006 (JAMES E. JORDAN) /s/ WILLIAM M. KELLY* Trustee February 24, 2006 (WILLIAM M. KELLY) /s/ PAUL J. LAWLER* Trustee February 24, 2006 (PAUL J. LAWLER) /s/ DOMINIQUE M. RAILLARD* Trustee February 24, 2006 (DOMINIQUE RAILLARD) /s/ ROBERT BRUNO Chief Operations and Financial February 24, 2006 - ------------------ Officer (Principal Financial (ROBERT BRUNO) and Accounting Officer)
*By: /s/ ROBERT BRUNO ----------------- ROBERT BRUNO POWER-OF-ATTORNEY C-5 Exhibit Index (g)(1) Custody Agreement between the Registrant and State Street Bank and Trust Company. (j) Consent of KPMG LLP. EX-99.G 2 ex99-g1.txt EXHIBIT (G)(1) CUSTODIAN AGREEMENT This Agreement, dated as of July 22, 2005, is by and between FIRST EAGLE FUNDS AND FIRST EAGLE VARIABLE FUNDS, each a business trust organized and existing under the laws of Delaware (the "Fund"), and STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company (the "Custodian"). WITNESSETH: WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends that this Agreement initially be applicable to the series listed on Schedule 1 hereto (such series together with all other series subsequently established by the Fund and made subject to this Agreement in accordance with Section 17.2, be referred to herein as the "Portfolio(s)"); NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows: SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT. The Fund hereby employs the Custodian as the custodian of the assets of the Portfolios of the Fund, including securities which the Fund, on behalf of the applicable Portfolio, desires to be held in places within the United States ("domestic securities") and securities it desires to be held outside the United States ("foreign securities"). The Fund, on behalf of the Portfolio(s), agrees to deliver to the Custodian all securities and cash of the Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of beneficial interest of the Fund representing interests in the Portfolios ("Shares") as may be issued or sold from time to time. The Custodian shall not be responsible for any property of a Portfolio held or received by the Portfolio and not delivered to the Custodian. Upon receipt of "Proper Instructions" (as such term is defined in Section 6 hereof), the Custodian shall on behalf of the applicable Portfolio(s) from time to time employ one or more sub-custodians located in the United States, but only in accordance with an applicable vote by the Board of Trustees of the Fund (the "Board") on behalf of the applicable Portfolio(s). The Custodian may employ as sub-custodian for the Fund's foreign securities on behalf of the applicable Portfolio(s) the foreign banking institutions and foreign securities depositories designated in Schedules A and B hereto, but only in accordance with the applicable provisions of Sections 3 and 4. The Custodian shall have no more or less responsibility or liability to the Fund on account of any actions or omissions of any sub-custodian so employed than any such sub-custodian has to the Custodian at the time of the actions or omissions of the sub-custodian. SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE CUSTODIAN IN THE UNITED STATES SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate for the account of each Portfolio all non-cash property, to be held by it in the United States, 1 including all domestic securities owned by such Portfolio other than securities which are maintained pursuant to Section 2.8 in a clearing agency which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury (each, a "U.S. Securities System"). SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver domestic securities owned by a Portfolio held by the Custodian or in a U.S. Securities System account of the Custodian only upon receipt of Proper Instructions on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: 1) Upon sale of such securities for the account of the Portfolio and receipt of payment therefor; 2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Portfolio; 3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.8 hereof; 4) To the depository agent in connection with tender or other similar offers for securities of the Portfolio; 5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian; 6) To the issuer thereof, or its agent, for transfer into the name of the Portfolio or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.7 or into the name or nominee name of any sub-custodian appointed pursuant to Section 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian; 7) Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian's own negligence or willful misconduct; 8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 2 9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 10) For delivery in connection with any loans of securities made by the Portfolio, but only if the Portfolios determine to engage in securities lending activities (which shall be subject to a separate agreement if the Custodian is the agent of the Fund therefor), and only against receipt of adequate collateral as agreed upon from time to time by the Fund (and the Custodian if the Custodian is the agent of the Fund therefore) on behalf of the Portfolio, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to the Custodian's account in the book-entry system authorized by the U.S. Department of the Treasury, subject to the provisions of Section 14, the Custodian will not be held liable or responsible for the delivery of securities owned by the Portfolio prior to the receipt of such collateral. 11) For delivery as security in connection with any borrowing by the Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of the Portfolio, but only against receipt of amounts borrowed, except that where additional collateral is required to secure a borrowing already made, upon Custodian's receipt of Proper Instructions, further securities may be released and delivered for that purpose; 12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio of the Fund; 13) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian, and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission ("CFTC") and/or any contract market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Portfolio of the Fund; 14) Upon receipt of instructions from the transfer agent for the Fund (the "Transfer Agent") for delivery to such Transfer Agent or to the holders of Shares in connection with distributions in kind, as may be described from time to time in the currently effective prospectus and statement of additional information of the Fund related to the Portfolio (the "Prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; 3 15) For delivery as initial or variation margin in connection with futures or options on futures contracts entered into by the Fund on behalf of the Portfolio; and 16) For any other purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio specifying the securities of the Portfolio to be delivered and naming the person or persons to whom delivery of such securities shall be made. SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian (other than bearer securities) shall be registered in the name of the Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio or of any nominee of the Custodian which nominee shall be assigned exclusively to the Portfolio, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment advisor as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.7 or in the name or nominee name of any sub-custodian appointed pursuant to Section 1. All securities accepted by the Custodian on behalf of the Portfolio under the terms of this Agreement shall be in "street name" or other good delivery form. If, however, the Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers. SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of each Portfolio of the Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Agreement, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940, as amended (the "1940 Act"). Funds held by the Custodian for a Portfolio may be deposited by it to its credit as Custodian in the banking department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity. SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which each Portfolio shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent thereof and shall credit such income, as collected, to such Portfolio's custodian account. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due each Portfolio on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund. The Custodian will have 4 no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Portfolio is properly entitled. SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of a Portfolio in the following cases only: 1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Portfolio but only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Portfolio or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.8 hereof; (c) in the case of repurchase agreements entered into between the Fund on behalf of the Portfolio and the Custodian, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Portfolio of securities owned by the Custodian along with written evidence of the agreement by the Custodian to repurchase such securities from the Portfolio; or (d) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined herein; 2) In connection with conversion, exchange or surrender of securities owned by the Portfolio as set forth in Section 2.2 hereof; 3) For the redemption or repurchase of Shares issued as set forth in Section 5 hereof; 4) For the payment of any expense or liability incurred by the Portfolio, including but not limited to the following payments for the account of the Portfolio: interest, taxes, management, accounting, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; 5) For the payment of any dividends on Shares declared pursuant to the governing documents of the Fund; 6) For payment of the amount of dividends received in respect of securities sold short; 5 7) For delivery as initial or variation margin in connection with futures or options on futures contracts entered into by the Fund on behalf of the Portfolio; and 8) For any other purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the Portfolio specifying the amount of such payment and naming the person or persons to whom such payment is to be made. SECTION 2.7 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the 1940 Act to act as a custodian, as its agent to carry out such of the provisions of this Section 2 as the Custodian may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder. SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The Custodian may deposit and/or maintain securities owned by a Portfolio in a U.S. Securities System in compliance with the conditions of Rule 17f-4 of the 1940 Act, as amended from time to time. SECTION 2.9 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper Instructions on behalf of each applicable Portfolio establish and maintain a segregated account or accounts for and on behalf of each such Portfolio, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the CFTC or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Portfolio or commodity futures contracts or options thereon purchased or sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio with the procedures required by Investment Company Act Release No. 10666, or any subsequent release of the U.S. Securities and Exchange Commission (the "SEC"), or interpretative opinion of the staff of the SEC, relating to the maintenance of segregated accounts by registered investment companies, and (iv) for any other purpose upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio. SECTION 2.10 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Portfolio held by it and in connection with transfers of securities. SECTION 2.11 PROXIES. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Portfolio such proxies, all proxy soliciting materials and all notices relating to such securities. 6 SECTION 2.12 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund for each Portfolio all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund on behalf of the Portfolio and the maturity of futures contracts purchased or sold by the Portfolio) received by the Custodian from issuers of the securities being held for the Portfolio. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Portfolio all written information received by the Custodian (including, upon actual receipt, from any sub-custodian appointed pursuant to Section 1 hereof or any agent appointed pursuant to Section 2.7 hereof) from issuers of the securities whose tender or exchange is sought and from the party (or its agents) making the tender or exchange offer. Unless alternative procedures are mutually agreed upon in respect of particular transactions, if the Portfolio desires to take action with respect to any tender offer, exchange offer or any other similar transaction, the Portfolio shall notify the Custodian at least two (2) business days prior to the date on which the Custodian is to take such action. In cases when the Fund provides the Custodian with less than two (2) business days' notice of its desired action, the Custodian shall use reasonable efforts to timely transmit the Fund's notice to the appropriate party. SECTION 3. PROVISIONS RELATING TO RULES 17F-5 AND 17F-7 SECTION 3.1. DEFINITIONS. As used throughout this Agreement, the capitalized terms set forth below shall have the indicated meanings: "Country Risk" means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such country's political environment, economic and financial infrastructure (including any Eligible Securities Depository operating in the country), prevailing or developing custody and settlement practices, and laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country. "Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act; the term does not include any Eligible Securities Depository. "Eligible Securities Depository" has the meaning set forth in section (b)(1) of Rule 17f-7. "Foreign Assets" means any of the Portfolios' investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect the Portfolios' transactions in such investments. "Foreign Custody Manager" has the meaning set forth in section (a)(3) of Rule 17f-5. "Rule 17f-5" means Rule 17f-5 promulgated under the 1940 Act. "Rule 17f-7" means Rule 17f-7 promulgated under the 1940 Act. 7 SECTION 3.2. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. 3.2.1 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The Fund, by resolution adopted by its Board, hereby delegates to the Custodian, subject to Section (b) of Rule 17f-5, the responsibilities set forth in this Section 3.2 with respect to Foreign Assets of the Portfolios held outside the United States, and the Custodian hereby accepts such delegation as Foreign Custody Manager with respect to the Portfolios. 3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible for performing the delegated responsibilities defined below only with respect to the countries and custody arrangements for each such country listed on Schedule A to this Agreement, which list of countries may be amended from time to time by the Fund with the agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list on Schedule A the Eligible Foreign Custodians selected by the Foreign Custody Manager to maintain the assets of the Portfolios, which list of Eligible Foreign Custodians may be amended from time to time in the sole discretion of the Foreign Custody Manager. The Foreign Custody Manager will provide amended versions of Schedule A in accordance with Section 3.2.5 hereof. Upon the receipt by the Foreign Custody Manager of Proper Instructions to open an account or to place or maintain Foreign Assets in a country listed on Schedule A, and the fulfillment by the Fund, on behalf of the Portfolios, of the applicable account opening requirements for such country, the Foreign Custody Manager shall be deemed to have been delegated by the Board on behalf of the Portfolios responsibility as Foreign Custody Manager with respect to that country and to have accepted such delegation. Execution of this Agreement by the Fund shall be deemed to be a Proper Instruction to open an account, or to place or maintain Foreign Assets, in each country listed on Schedule A in which the Custodian has previously placed or currently maintains Foreign Assets pursuant to the terms of the Agreement. Following the receipt of Proper Instructions directing the Foreign Custody Manager to close the account of a Portfolio with the Eligible Foreign Custodian selected by the Foreign Custody Manager in a designated country, the delegation by the Board on behalf of the Portfolios to the Custodian as Foreign Custody Manager for that country shall be deemed to have been withdrawn and the Custodian shall immediately cease to be the Foreign Custody Manager of the Portfolios with respect to that country. The Foreign Custody Manager may withdraw its acceptance of delegated responsibilities with respect to a designated country upon written notice to the Fund. Thirty days (or such longer period to which the parties agree in writing) after receipt of any such notice by the Fund, the Custodian shall have no further responsibility in its capacity as Foreign Custody Manager to the Fund with respect to the country as to which the Custodian's acceptance of delegation is withdrawn. 3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES: (a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions of this Section 3.2, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodian selected by the Foreign Custody Manager in each country listed on Schedule A, as amended from time to time. In performing its delegated responsibilities 8 as Foreign Custody Manager to place or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the country in which the Foreign Assets will be held by that Eligible Foreign Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation the factors specified in Rule 17f-5(c)(1). (b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody Manager shall determine that the contract governing the foreign custody arrangements with each Eligible Foreign Custodian selected by the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2). (c) MONITORING. In each case in which the Foreign Custody Manager maintains Foreign Assets with an Eligible Foreign Custodian selected by the Foreign Custody Manager, the Foreign Custody Manager shall establish a system to monitor (i) the appropriateness of maintaining the Foreign Assets with such Eligible Foreign Custodian and (ii) the contract governing the custody arrangements established by the Foreign Custody Manager with the Eligible Foreign Custodian. In the event the Foreign Custody Manager determines that the custody arrangements with an Eligible Foreign Custodian it has selected are no longer appropriate, the Foreign Custody Manager shall notify the Board in accordance with Section 3.2.5 hereunder. 3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of this Section 3.2, the Board shall be deemed to have considered and determined to accept such Country Risk as is incurred by placing and maintaining the Foreign Assets in each country for which the Custodian is serving as Foreign Custody Manager of the Portfolios. 3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the placement of such Foreign Assets with another Eligible Foreign Custodian by providing to the Board an amended Schedule A at the end of the calendar quarter (or more frequently as reasonably specified by the Board) in which an amendment to such Schedule has occurred. The Foreign Custody Manager shall make written reports containing such information as the Fund or the Board may reasonably request and at such times as reasonably specified by the Board but at least quarterly, including notifying the Board of any other material change in the foreign custody arrangements of the Portfolios described in this Section 3.2 after the occurrence of the material change; provided, that the information is readily available to the Custodian and that the Fund and the Custodian have agreed to the Custodian's compensation payable with respect to such information and reports other than those required by Rule 17f-5(b)(2) under the 1940 Act. 3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO. In performing the responsibilities delegated to it, the Foreign Custody Manager agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of assets of management investment companies registered under the 1940 Act would exercise. 3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as defined in section (a)(7) of Rule 17f-5. The Fund 9 represents to the Custodian that the Board has determined that it is reasonable for the Board to rely on the Custodian to perform the responsibilities delegated pursuant to this Agreement to the Custodian as the Foreign Custody Manager of the Portfolios. 3.2.8 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The Board's delegation to the Custodian as Foreign Custody Manager of the Portfolios shall be effective as of the date hereof and shall remain in effect until terminated at any time, without penalty, by written notice from the terminating party to the non-terminating party. Termination will become effective thirty (30) days after receipt by the non-terminating party of such notice. The provisions of Section 3.2.2 hereof shall govern the delegation to and termination of the Custodian as Foreign Custody Manager of the Portfolios with respect to designated countries. SECTION 3.3 ELIGIBLE SECURITIES DEPOSITORIES. 3.3.1 ANALYSIS AND MONITORING. The Custodian shall (a) provide the Fund (or its duly-authorized investment manager or investment advisor) with an analysis of the custody risks associated with maintaining assets with the Eligible Securities Depositories set forth on Schedule B hereto in accordance with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a continuing basis, and promptly notify the Fund (or its duly-authorized investment manager or investment advisor) of any material change in such risks, in accordance with section (a)(1)(i)(B) of Rule 17f-7. 3.3.2 STANDARD OF CARE. The Custodian agrees to exercise reasonable care, prudence and diligence in performing the duties set forth in Section 3.3.1. SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD OUTSIDE THE UNITED STATES SECTION 4.1 DEFINITIONS. As used throughout this Agreement, the capitalized terms set forth below shall have the indicated meanings: "Foreign Securities System" means an Eligible Securities Depository listed on Schedule B hereto. "Foreign Sub-Custodian" means a foreign banking institution serving as an Eligible Foreign Custodian. SECTION 4.2. HOLDING SECURITIES. The Custodian shall identify on its books as belonging to the Portfolios the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. The Custodian may hold foreign securities for all of its customers, including the Portfolios, with any Foreign Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to foreign securities of the Portfolios which are maintained in such account shall identify those securities as belonging to the Portfolios and (ii), to the extent permitted and customary in the market in which the account is maintained, the Custodian shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian. 10 SECTION 4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be maintained in a Foreign Securities System in a designated country through arrangements implemented by the Custodian or a Foreign Sub-Custodian, as applicable, in such country. SECTION 4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. 4.4.1. DELIVERY OF FOREIGN ASSETS. The Custodian or a Foreign Sub-Custodian shall release and deliver foreign securities of the Portfolios held by the Custodian or such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: (i) upon the sale of such foreign securities for the Portfolio in accordance with commercially reasonable market practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivery against expectation of receiving later payment; or (B) in the case of a sale effected through a Foreign Securities System, in accordance with the rules governing the operation of the Foreign Securities System; (ii) in connection with any repurchase agreement related to foreign securities; (iii) to the depository agent in connection with tender or other similar offers for foreign securities of the Portfolios; (iv) to the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable; (v) to the issuer thereof, or its agent, for transfer into the name of the Custodian (or the name of the respective Foreign Sub-Custodian or of any nominee of the Custodian or such Foreign Sub-Custodian) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; (vi) to brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the Foreign Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Foreign Sub-Custodian's own negligence or willful misconduct; (vii) for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; 11 (viii) in the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; (ix) for delivery as security in connection with any borrowing by the Portfolios requiring a pledge of assets by the Portfolios; (x) for delivery as initial or variation margin in connection with futures or options on futures contracts entered into by the Fund on behalf of the Portfolio; (xi) in connection with the lending of foreign securities; and (xii) for any other purpose, but only upon receipt of Proper Instructions specifying the foreign securities to be delivered and naming the person or persons to whom delivery of such securities shall be made. 4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, monies of a Portfolio in the following cases only: (i) upon the purchase of foreign securities for the Portfolio, unless otherwise directed by Proper Instructions, by (A) delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or (B) in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System; (ii) in connection with the conversion, exchange or surrender of foreign securities of the Portfolio; (iii) for the payment of any expense or liability of the Portfolio, including but not limited to the following payments: interest, taxes, investment advisory fees, transfer agency fees, fees under this Agreement, legal fees, accounting fees, and other operating expenses; (iv) for the purchase or sale of foreign exchange or foreign exchange contracts for the Portfolio, including transactions executed with or through the Custodian or its Foreign Sub-Custodians; (v) for delivery as initial or variation margin in connection with futures or options on futures contracts entered into by the Fund on behalf of the Portfolio; (vi) for payment of part or all of the dividends received in respect of securities sold short; (vii) in connection with the borrowing or lending of foreign securities; and 12 (viii) for any other purpose, but only upon receipt of Proper Instructions specifying the amount of such payment and naming the person or persons to whom such payment is to be made. 4.4.3. MARKET CONDITIONS. Notwithstanding any provision of this Agreement to the contrary, settlement and payment for Foreign Assets received for the account of the Portfolios and delivery of Foreign Assets maintained for the account of the Portfolios may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer. The Custodian shall provide to the Board the information with respect to custody and settlement practices in countries in which the Custodian employs a Foreign Sub-Custodian described on Schedule C hereto at the time or times set forth on such Schedule. The Custodian may revise Schedule C from time to time, provided that no such revision shall result in the Board being provided with substantively less information than had been previously provided hereunder. SECTION 4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities maintained in the custody of a Foreign Sub-Custodian (other than bearer securities) shall be registered in the name of the applicable Portfolio or in the name of the Custodian or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing, and the Fund on behalf of such Portfolio agrees to hold any such nominee harmless from any liability as a holder of record of such foreign securities. The Custodian or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a Portfolio under the terms of this Agreement unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market practice. SECTION 4.6 BANK ACCOUNTS. The Custodian shall identify on its books as belonging to the Fund cash (including cash denominated in foreign currencies) deposited with the Custodian. Where the Custodian is unable to maintain, or market practice does not facilitate the maintenance of, cash on the books of the Custodian, a bank account or bank accounts shall be opened and maintained outside the United States on behalf of a Portfolio with a Foreign Sub-Custodian. All accounts referred to in this Section shall be subject only to draft or order by the Custodian (or, if applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this Agreement to hold cash received by or from or for the account of the Portfolio. Cash maintained on the books of the Custodian (including its branches, subsidiaries and affiliates), regardless of currency denomination, is maintained in bank accounts established under, and subject to the laws of, The Commonwealth of Massachusetts. SECTION 4.7. COLLECTION OF INCOME. The Custodian shall use reasonable commercial efforts to collect all income and other payments with respect to the Foreign Assets held hereunder to which the Portfolios shall be entitled and shall credit such income, as collected, to the applicable Portfolio. In the event that extraordinary measures are required to collect such income, the Fund and the Custodian shall consult as to such measures and as to the compensation and expenses of the Custodian relating to such measures. 13 SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held pursuant to this Section 4, the Custodian will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights, subject always to the laws, regulations and practical constraints that may exist in the country where such securities are issued. The Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of the Fund to exercise shareholder rights. SECTION 4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The Custodian shall transmit promptly to the Fund written information with respect to materials received by the Custodian via the Foreign Sub-Custodians from issuers of the foreign securities being held for the account of the Portfolios (including, without limitation, pendency of calls and maturities of foreign securities and expirations of rights in connection therewith). With respect to tender or exchange offers, the Custodian shall transmit promptly to the Fund written information with respect to materials so received by the Custodian from issuers of the foreign securities whose tender or exchange is sought or from the party (or its agents) making the tender or exchange offer. Subject to the provisions of Section 14, the Custodian shall not be liable for any untimely exercise of any tender, exchange or other right or power in connection with foreign securities or other property of the Portfolios at any time held by it unless (i) the Custodian or the respective Foreign Sub-Custodian is in actual possession of such foreign securities or property and (ii) the Custodian receives Proper Instructions with regard to the exercise of any such right or power, and both (i) and (ii) occur at least two (2) business days prior to the date on which the Custodian is to take action to exercise such right or power. SECTION 4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian shall, to the extent possible, require the Foreign Sub-Custodian to exercise reasonable care in the performance of its duties, and to indemnify, and hold harmless, the Custodian from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the Foreign Sub-Custodian's performance of such obligations. The Custodian shall notify the Fund of any such agreement with a Sub-Custodian not meeting the standards to be sought under the preceding sentence pursuant to the requirements of Section 3.2.5 and upon the request of the Fund at any time with respect to any particular market. At the Fund's election, the Portfolios shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Portfolios have not been made whole for any such loss, damage, cost, expense, liability or claim. SECTION 4.11 TAX LAW. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Fund, the Portfolios or the Custodian as custodian of the Portfolios by the tax law of the United States or of any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the Fund with respect to the Portfolios or the Custodian as custodian of the Portfolios by the tax law of countries other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist the Fund with respect to any claim for exemption or refund under the tax law of countries for which the Fund has provided such information. 14 SECTION 4.12. LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth with respect to sub-custodians generally in the Agreement and, regardless of whether assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign Securities System, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism, or any other loss where the Sub-Custodian has otherwise acted with reasonable care. SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES. The Custodian shall receive from the distributor for the Shares or from the Transfer Agent and deposit into the account of the appropriate Portfolio such payments as are received for Shares thereof issued or sold from time to time by the Fund. The Custodian will provide timely notification to the Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio. From such funds as may be available for the purpose, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by the Fund to the holder of Shares, when presented to the Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time between the Fund and the Custodian. SECTION 6. PROPER INSTRUCTIONS. Proper Instructions, which may also be standing instructions, as used throughout this Agreement, shall mean instructions received by the Custodian from the Fund, the Fund's investment manager, or a person or entity duly authorized by either of them. Such instructions may be in writing signed by the authorized person or persons or may be in a tested communication or in a communication utilizing access codes effected between electro-mechanical or electronic devices or may be by such other means and utilizing such intermediary systems and utilities as may be agreed to from time to time by the Custodian and the person or entity giving such instructions, provided that the Fund has followed any security procedures agreed to from time to time by the Fund and the Custodian, including, but not limited to, the security procedures selected by the Fund in the Funds Transfer Addendum to this Agreement. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Fund shall cause all oral instructions to be confirmed promptly in writing. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian pursuant to any multi-party agreement which requires a segregated asset account in accordance with Section 2.10 of this Agreement. The Fund or the Fund's investment manager shall cause its duly authorized officer to certify to the Custodian in writing the names and specimen signatures of persons authorized to give Proper Instructions, together with a statement as to the number of such authorized persons (if more than one) whose signature or approval is required with respect to particular types of transactions. The Custodian shall be entitled to rely upon the identity and authority of such persons until it receives notice 15 from the Fund to the contrary. SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in its discretion, without express authority from the Fund on behalf of each applicable Portfolio: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Agreement, provided that all such payments shall be accounted for to the Fund on behalf of the Portfolio; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as otherwise directed by the Board. SECTION 8. EVIDENCE OF AUTHORITY. The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper reasonably and in good faith believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a copy of a resolution certified by the Secretary or an Assistant Secretary of the Fund ("Certified Resolution") as conclusive evidence (a) of the authority of any person to act in accordance with such resolution or (b) of any determination or of any action by the Board as described in such resolution, and such resolution may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary. SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF NET ASSET VALUE AND NET INCOME. The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board to keep the books of account of each Portfolio and/or compute the net asset value per Share of the outstanding Shares or, if directed in writing to do so by the Fund on behalf of the Portfolio, shall itself keep such books of account and/or compute such net asset value per Share. If so directed, the Custodian shall also calculate daily the net income of the Portfolio as described in the Prospectus and shall advise the Fund and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer of the Fund to do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per Share and the daily income of each Portfolio shall be made at the time or times described from time to time in the Prospectus. SECTION 10. RECORDS. The Custodian shall with respect to each Portfolio create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of the Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the SEC. The Custodian shall, at the Fund's request, supply the Fund with a tabulation 16 of securities owned by each Portfolio and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. Upon request, the Custodian shall furnish the Fund confirmation of each transfer to or from the account of the Fund in the form of a written advice or notice from the Custodian and shall furnish to the Fund copies of the Custodian's daily transaction sheets relating thereto. SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT. The Custodian shall take all reasonable action, as the Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from the Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any other requirements thereof. SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. The Custodian shall provide the Fund, on behalf of each of the Portfolios at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a U.S. Securities System or a Foreign Securities System (either, a "Securities System"), relating to the services provided by the Custodian under this Agreement; such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state. SECTION 13. COMPENSATION OF CUSTODIAN.The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between the Fund on behalf of each applicable Portfolio and the Custodian. SECTION 14. RESPONSIBILITY OF CUSTODIAN. So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. Except as otherwise expressly set forth herein, the Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Agreement, but shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by it in good faith without negligence, including, without limitation, acting in accordance with any Proper Instruction. It shall be entitled to rely on and may act upon advice of counsel, selected, with reasonable care, (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. The Custodian shall be without liability to the Fund and the Portfolios for any loss, liability, claim or expense resulting from or caused by anything which is part of Country Risk (as defined in Section 3 hereof), including without limitation nationalization, expropriation, currency restrictions, or acts of war, revolution, riots or terrorism. 17 In order for the indemnification provision contained in this Section to apply, it is understood that if in any case the Fund is asked by the Custodian to indemnify or hold the Custodian harmless, the Fund shall be fully and promptly advised of all pertinent facts known to the Custodian concerning the situation in question. The Fund shall have the option to defend the Custodian at the Fund's expense against any claim which may be the subject of a claim for indemnification hereunder. The Fund will notify the Custodian in writing within a reasonable time not to exceed 120 days after notification of the Custodian's claim for indemnification whether it will defend the Custodian at the Fund's own cost and expense. If the Fund shall agree to take over complete defense of the claim against the Custodian, the Fund shall be entitled to direct the defense with counsel selected by it and the Custodian shall in no case confess any claim or make any compromise with respect thereto except with the Fund's prior written consent for as long as the Fund is conducting a good faith and diligent defense. The Custodian shall at all times have the right to fully participate in the defense at its own expense directly or through counsel; provided, however, that if the named parties to the action or proceeding include both the Fund and the Custodian and the Custodian is advised that representation of both parties by the same counsel would be inappropriate under applicable standards of professional conduct, the Custodian may engage separate counsel at the expense of the Fund. If such good faith and diligent defense is not undertaken promptly or ceases to be conducted by the Fund, the Custodian shall have the right, at the expense of the Fund, to undertake the defense with counsel selected by the Custodian and to compromise or settle it, exercising reasonable business judgment. Nothing herein shall be construed to limit any right or cause of action on the part of the Custodian under this Agreement that is independent of any right or cause of action on the part of the Fund. Except as may arise from the Custodian's own negligence or willful misconduct or the negligence or willful misconduct of a sub-custodian or agent, the Custodian shall be without liability to the Fund for any loss, liability, claim or expense resulting from or caused by; (i) events or circumstances beyond the reasonable control of the Custodian or any sub-custodian or Securities System or any agent or nominee of any of the foregoing, including, without limitation, the interruption, suspension or restriction of trading on or the closure of any securities market, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, or other similar events or acts; (ii) errors by the Fund or its duly-authorized investment manager or investment advisor in their instructions to the Custodian provided such instructions have been in accordance with this Agreement; (iii) the insolvency of or acts or omissions by a Securities System; (iv) any delay or failure of any broker, agent or intermediary, central bank or other commercially prevalent payment or clearing system to deliver to the Custodian's sub-custodian or agent securities purchased or in the remittance or payment made in connection with securities sold; (v) any delay or failure of any company, corporation, or other body in charge of registering or transferring securities in the name of the Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or any consequential losses arising out of such delay or failure to transfer such securities including non-receipt of bonus, dividends and rights and other accretions or benefits; (vi) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security or Securities System; and (vii) any provision of any present or future law or regulation or order of the United States of America, or any state thereof, or any other country, or political subdivision thereof or of any court of competent jurisdiction. 18 The Custodian shall be liable for the acts or omissions of a Foreign Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth with respect to sub-custodians generally in this Agreement. If the Fund on behalf of a Portfolio requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund or the Portfolio being liable for the payment of money or incurring liability of some other form, the Fund on behalf of the Portfolio, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it. If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolio's assets to the extent necessary to obtain reimbursement. In no event shall the Custodian be liable for indirect, special or consequential damages. SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, and may be amended at any time by mutual agreement of the parties hereto. This Agreement may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party. If the Fund is the terminating party, such termination shall take effect not sooner than ninety (90) days after the date of such delivery or mailing; provided, however, that the Fund shall not amend or terminate this Agreement in contravention of any applicable federal or state regulations, or any provision of the Fund's Declaration of Trust, and further provided, that the Fund on behalf of one or more of the Portfolios may at any time by action of its Board (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Agreement in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. If the Custodian is the terminating party, such termination shall take effect not sooner than 180 days after the date of delivery or mailing of the termination notice, provided, however, that if the Fund has defaulted in its obligation to pay or repay any amount due to the Custodian hereunder, such notice period shall be reduced to not sooner than thirty (30) days. Upon termination of the Agreement, the Fund on behalf of each applicable Portfolio shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements. SECTION 16. SUCCESSOR CUSTODIAN. If a successor custodian for one or more Portfolios shall be appointed by the Board, the Custodian shall, upon termination, deliver to such successor 19 custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities of each applicable Portfolio then held by it hereunder and shall transfer to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a Certified Resolution, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such resolution. In the event that no written order designating a successor custodian or Certified Resolution shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $50,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Portfolio and all instruments held by the Custodian relative thereto and all other property held by it under this Agreement on behalf of each applicable Portfolio, and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Agreement. In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof owing to failure of the Fund to procure the Certified Resolution to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Agreement relating to the duties and obligations of the Custodian shall remain in full force and effect. SECTION 17. MISCELLANEOUS PROVISIONS. SECTION 17.1 1NTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation of this Agreement, the Custodian and the Fund on behalf of each of the Portfolios, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Fund's Declaration of Trust. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement. SECTION 17.2 ADDITIONAL FUNDS. In the event that the Fund establishes one or more series of Shares in addition to those in existence on the date hereof, with respect to which it desires to have the Custodian render services as custodian under the terms hereof, it shall so notify the Custodian in writing, and if the Custodian agrees to provide such services, such series of Shares shall become a Portfolio hereunder. SECTION 17.3 MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts. 20 SECTION 17.3 PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of the date hereof, all prior Agreements between the Fund on behalf of each of the Portfolios and the Custodian relating to the custody of the Fund's assets. SECTION 17.4 NOTICES. Any notice, instruction or other instrument required to be given hereunder may be delivered in person to the offices of the parties as set forth herein during normal business hours or delivered prepaid registered mail or by telex, cable or telecopy to the parties at the following addresses or such other addresses as may be notified by any party from time to time. To the Fund: FIRST EAGLE FUND 1345 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10105] Attention: Robert Bruno Telephone: (212) 698-3130 Telecopy: With a copy to: Arnhold and S. Bleichroeder Advisers, LLC 1345 Avenue of the Americas New York, New York 10105 Attn: General Counsel To the Custodian: STATE STREET BANK AND TRUST COMPANY 801 Pennsylvania Avenue Kansas City, MO 64105 Attention: Senior Vice President, Mutual Funds Services Telephone: 816-871-4100 Telecopy: 816-871-9675 Such notice, instruction or other instrument shall be deemed to have been served in the case of a registered letter at the expiration of five business days after posting, in the case of cable twenty-four hours after dispatch and, in the case of telex, immediately on dispatch and if delivered outside normal business hours it shall be deemed to have been received at the next time after delivery when normal business hours commence and in the case of cable, telex or telecopy on the business day after the receipt thereof. Evidence that the notice was properly addressed, stamped and put into the post shall be conclusive evidence of posting. SECTION 17.5 REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, addenda, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that 21 any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. SECTION 17.6 REMOTE ACCESS SERVICES ADDENDUM. The Custodian and the Fund agree to be bound by the terms of the Remote Access Services Addendum attached hereto. SECTION 17.7 SHAREHOLDER COMMUNICATIONS ELECTION. SEC Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, the Custodian needs the Fund to indicate whether it authorizes the Custodian to provide the Fund's name, address, and share position to requesting companies whose securities the Fund owns. If the Fund tells the Custodian "no", the Custodian will not provide this information to requesting companies. If the Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For the Fund's protection, the Rule prohibits the requesting company from using the Fund's name and address for any purpose other than corporate communications. Please indicate below whether the Fund consents or objects by checking one of the alternatives below. YES [ ] The Custodian is authorized to release the Fund's name, address, and share positions. NO [X] The Custodian is not authorized to release the Fund's name, address, and share positions. SECTION 17.8 SEVERABILITY. In the event any provision of this Agreement is held illegal, void or unenforceable, the balance shall remain in effect. SECTION 17.9 CONFIDENTIALITY. The Custodian agrees that during the term of this Agreement it will maintain policies reasonably designed to prohibit the dissemination or use of the Fund's nonpublic portfolio holdings information by the Custodian or its employees, unless such dissemination or use is: (i) for the purposes set forth in or contemplated by this Agreement, (ii) at the direction of the Fund, (iii) if the Fund becomes a securities lending client of the Custodian, disclosed to borrowers and borrowers' affiliates in connection with loans made pursuant to the securities lending agreement between the Fund and the Custodian, or (iv) requested or required in any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, or required by operation of law or regulation. In the circumstances described in clause (iv), other than a routine audit or examination of the Custodian, the Custodian shall, to the extent permitted under applicable law and regulation, provide the Fund with prompt notice of such requirement to disclose the information (provided that giving such notice shall not be a pre-condition to supplying the information to the party requesting or requiring it) in order to enable the Fund to seek an appropriate protective order or other remedy, to consult with the Custodian with respect to the Fund's taking steps to resist or narrow the scope of such requirement or legal process, or to waive compliance, in whole or in part, with the terms of this Agreement. The Custodian will reasonably cooperate with the Fund, at the Fund's expense, in connection with the Fund's efforts to ensure that all information that is 22 so disclosed will be accorded confidential treatment. In addition, the Custodian and its affiliates may also report and use nonpublic portfolio holdings information of its clients, including the Fund, on an aggregated basis with all or substantially all other client information and without specific reference to the Fund. SECTION 17.10 ASSIGNMENT. This Agreement may not be assigned by either party without the written consent of the other, which consent shall not be unreasonably withheld, except that either party may assign its rights and obligations hereunder to a party controlling, controlled by, or under common control with such party. 23 IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the date first above written. FIRST EAGLE FUNDS FIRST EAGLE VARIABLE FUNDS FUND SIGNATURE ATTESTED TO BY: By: _________________________ By: ____________________ Name: _________________________ Name: ____________________ Vice President Treasurer STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY: By: ________________________ By: _____________________ Robert G. Novellano Beverly Z. Edwards Senior Vice President Vice President 24 SCHEDULE 1 To Custody Agreement by and between State Street Bank and Trust Company and First Eagle Funds/First Eagle Variable Funds dated July 22, 2005 First Eagle Global Fund First Eagle Overseas Fund First Eagle U.S. Value Fund First Eagle Gold Fund First Eagle Fund of America First Eagle Variable Overseas Fund 25 SCHEDULE A: STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS Market Subcustodian Argentina Citibank, N.A. Australia Westpac Banking Corporation Citibank Pty. Limited Austria Erste Bank der oesterreichischen Sparkassen AG Bahrain HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited) Bangladesh Standard Chartered Bank Belgium BNP Paribas Securities Services, S.A. Benin via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast Bermuda Bank of Bermuda Limited Botswana Barclays Bank of Botswana Limited Brazil Citibank, N.A. Bulgaria ING Bank N.V. Burkina Faso via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast Canada State Street Trust Company Canada Cayman Islands Scotiabank & Trust (Cayman) Limited Chile BankBoston, N.A. People's Republic The Hongkong and Shanghai Banking Corporation of China Limited, Shanghai and Shenzhen branches Colombia Cititrust Colombia S.A. Sociedad Fiduciaria Costa Rica Banco BCT S.A. Croatia Privredna Banka Zagreb d.d Cyprus Cyprus Popular Bank Ltd. Czech Republic Ceskoslovenska obchodni banka, A.S. Denmark Danske Bank A/S Ecuador Banco de la Produccion S.A. Egypt HSBC Bank Egypt S.A.E. (as delegate of The Hongkong and Shanghai Banking Corporation Limited) 26 SCHEDULE A: STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS Market Subcustodian Estonia AS Hansapank Finland Nordea Bank Finland Plc. France BNP Paribas Securities Services, S.A. Germany Deutsche Bank AG Ghana Barclays Bank of Ghana Limited Greece National Bank of Greece S.A. Guinea-Bissau via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast Hong Kong Standard Chartered Bank (Hong Kong) Limited Hungary HVB Bank Hungary Rt. Iceland Kaupthing Bank hf. India Deutsche Bank AG The Hongkong and Shanghai Banking Corporation Limited Indonesia Deutsche Bank AG Ireland Bank of Ireland Israel Bank Hapoalim B.M. Italy BNP Paribas Securities Services, S.A. Ivory Coast Societe Generale de Banques en Cote d'Ivoire Jamaica Bank of Nova Scotia Jamaica Ltd. Japan Mizuho Corporate Bank Ltd. Sumitomo Mitsui Banking Corporation Jordan HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited) Kazakhstan HSBC Bank Kazakhstan (as delegate of The Hongkong and Shanghai Banking Corporation Limited) Kenya Barclays Bank of Kenya Limited Republic of Korea Deutsche Bank AG The Hongkong and Shanghai Banking Corporation Limited Latvia A/s Hansabanka Lebanon HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited) 27 SCHEDULE A: STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS Market Subcustodian Lithuania Vilniaus Bankas AB Malaysia Standard Chartered Bank Malaysia Berhad Mali via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast Malta HSBC Bank Malta Plc. Mauritius The Hongkong and Shanghai Banking Corporation Limited Mexico Banco Nacional de Mexico S.A. Morocco Attijariwafa bank Namibia Standard Bank Namibia Limited Netherlands Deutsche Bank AG KAS BANK N.V. New Zealand Westpac Banking Corporation Niger via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast Nigeria Stanbic Bank Nigeria Limited Norway Nordea Bank Norge ASA Oman HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited) Pakistan Deutsche Bank AG Palestine HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited) Panama HSBC Bank (Panama) S.A. Peru Citibank del Peru, S.A. Philippines Standard Chartered Bank Poland Bank Handlowy w Warszawie S.A. Portugal Banco Comercial Portugues S.A. Puerto Rico Citibank N.A. Qatar HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited) Romania ING Bank N.V. Russia ING Bank (Eurasia) ZAO, Moscow 28 SCHEDULE A: STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS Market Subcustodian Senegal via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast Serbia HVB Bank Serbia and Montenegro a.d. Singapore DBS Bank Limited United Overseas Bank Limited Slovak Republic Ceskoslovenska obchodni banka, A.S., pobocka zahranicnej banky v SR Slovenia Bank Austria Creditanstalt d.d. - Ljubljana South Africa Nedcor Bank Limited Standard Bank of South Africa Limited Spain Santander Investment Services, S.A. Sri Lanka The Hongkong and Shanghai Banking Corporation Limited Swaziland Standard Bank Swaziland Limited Sweden Skandinaviska Enskilda Banken AB Switzerland UBS AG Taiwan - R.O.C. Central Trust of China Thailand Standard Chartered Bank Togo via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast Trinidad & Tobago Republic Bank Limited Tunisia Banque Internationale Arabe de Tunisie Turkey Citibank, A.S. Uganda Barclays Bank of Uganda Limited Ukraine ING Bank Ukraine United Arab Emirates HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited) United Kingdom State Street Bank and Trust Company, United Kingdom branch Uruguay BankBoston, N.A. Venezuela Citibank, N.A. Vietnam The Hongkong and Shanghai Banking Corporation Limited Zambia Barclays Bank of Zambia Plc. Zimbabwe Barclays Bank of Zimbabwe Limited 29 SCHEDULE B: STATE STREETGLOBAL CUSTODY NETWORK DEPOSITORIES OPERATING IN NETWORK MARKETS Market Depository Argentina Caja de Valores S.A. Australia Austraclear Limited Austria Oesterreichische Kontrollbank AG (Wertpapiersammelbank Division) Bahrain Clearing, Settlement, and Depository System of the Bahrain Stock Exchange Bangladesh Central Depository Bangladesh Limited Belgium Banque Nationale de Belgique Caisse Interprofessionnelle de Depots et de Virements de Titres, S.A. Benin Depositaire Central - Banque de Reglement Bermuda Bermuda Securities Depository Brazil Central de Custodia e de Liquidacao Financeira de Titulos Privados (CETIP) Companhia Brasileira de Liquidacao e Custodia Sistema Especial de Liquidacao e de Custodia (SELIC) Bulgaria Bulgarian National Bank Central Depository AD Burkina Faso Depositaire Central - Banque de Reglement Canada The Canadian Depository for Securities Limited Chile Deposito Central de Valores S.A. People's Republic China Securities Depository and Clearing Corporation of China Limited, Shanghai Branch China Securities Depository and Clearing Corporation Limited, Shenzhen Branch Colombia Deposito Central de Valores Deposito Centralizado de Valores de Colombia S.A. (DECEVAL) Costa Rica Central de Valores S.A. Croatia Sredisnja depozitarna agencija d.d. Cyprus Central Depository and Central Registry Czech Republic Czech National Bank Stredisko cennych papiru - Ceska republika Denmark Vaerdipapircentralen Egypt Misr for Clearing, Settlement, and Depository S.A.E. Estonia AS Eesti Vaartpaberikeskus Finland Suomen Arvopaperikeskus France Euroclear France Germany Clearstream Banking AG, Frankfurt 30 SCHEDULE B: STATE STREETGLOBAL CUSTODY NETWORK DEPOSITORIES OPERATING IN NETWORK MARKETS Market Depository Greece Apothetirion Titlon AE Bank of Greece, System for Monitoring Transactions in Securities in Book-Entry Form Guinea-Bissau Depositaire Central - Banque de Reglement Hong Kong Central Moneymarkets Unit Hong Kong Securities Clearing Company Limited Hungary Kozponti Elszamolohaz es Ertektar (Budapest) Rt. (KELER) Iceland Icelandic Securities Depository Limited India Central Depository Services (India) Limited National Securities Depository Limited Reserve Bank of India Indonesia Bank Indonesia PT Kustodian Sentral Efek Indonesia Israel Tel Aviv Stock Exchange Clearing House Ltd. (TASE Clearinghouse) Italy Monte Titoli S.p.A. Ivory Coast Depositaire Central - Banque de Reglement Jamaica Jamaica Central Securities Depository Japan Bank of Japan - Net System Japan Securities Depository Center (JASDEC) Incorporated Jordan Securities Depository Center Kazakhstan Central Securities Depository Kenya Central Depository and Settlement Corporation Limited Central Bank of Kenya Republic of Korea Korea Securities Depository Latvia Latvian Central Depository Lebanon Banque du Liban Custodian and Clearing Center of Financial Instruments for Lebanon and the Middle East (Midclear) S.A.L. Lithuania Central Securities Depository of Lithuania Malaysia Bank Negara Malaysia Bursa Malaysia Depository Sdn. Bhd. Mali Depositaire Central - Banque de Reglement Malta Central Securities Depository of the Malta Stock Exchange Mauritius Bank of Mauritius 31 SCHEDULE B: STATE STREETGLOBAL CUSTODY NETWORK DEPOSITORIES OPERATING IN NETWORK MARKETS Market Depository Central Depository and Settlement Co. Ltd. Mexico S.D. Indeval, S.A. de C.V. Morocco Maroclear Namibia Bank of Namibia Netherlands Euroclear Nederland New Zealand New Zealand Central Securities Depository Limited Niger Depositaire Central - Banque de Reglement Nigeria Central Securities Clearing System Limited Norway Verdipapirsentralen Oman Muscat Depository & Securities Registration Company, SAOC Pakistan Central Depository Company of Pakistan Limited State Bank of Pakistan Palestine Clearing, Depository and Settlement, a department of the Palestine Securities Exchange Panama Central Latinoamericana de Valores, S.A. (LatinClear) Peru Caja de Valores y Liquidaciones, Institucion de Compensacion y Liquidacion de Valores S.A. Philippines Philippine Depository & Trust Corporation Registry of Scripless Securities (ROSS) of the Bureau of Treasury Poland Rejestr Papierow Wartooeciowych Krajowy Depozyt Papierow Wartosciowych S.A. Portugal INTERBOLSA - Sociedade Gestora de Sistemas de Liquidacao e de Sistemas Centralizados de Valores Mobiliarios, S.A. Qatar Central Clearing and Registration (CCR), a department of the Doha Securities Market Romania Bucharest Stock Exchange Registry Division National Bank of Romania National Securities Clearing, Settlement and Depository Company Russia Vneshtorgbank, Bank for Foreign Trade of the Russian Federation Senegal Depositaire Central - Banque de Reglement Serbia Central Registrar and Central Depository for Securities Singapore The Central Depository (Pte) Limited Monetary Authority of Singapore Slovak Republic Narodna banka slovenska Centralny depozitar cennych papierov SR, a.s. 32 SCHEDULE B: STATE STREETGLOBAL CUSTODY NETWORK DEPOSITORIES OPERATING IN NETWORK MARKETS Market Depository Slovenia KDD - Centralna klirinsko depotna druzba d.d. South Africa Share Transactions Totally Electronic (STRATE) Ltd. Spain IBERCLEAR Sri Lanka Central Depository System (Pvt) Limited Sweden Vardepapperscentralen VPC AB Switzerland SegaIntersettle AG (SIS) Taiwan - R.O.C. Taiwan Securities Central Depository Company Limited Thailand Bank of Thailand Thailand Securities Depository Company Limited Togo Depositaire Central - Banque de Reglement Trinidad and Tobago Trinidad and Tobago Central Bank Tunisia Societe Tunisienne Interprofessionelle pour la Compensation et de Depots des Valeurs Mobilieres (STICODEVAM) Turkey Central Bank of Turkey Takas ve Saklama Bankasi A.S. (TAKASBANK) Uganda Bank of Uganda Ukraine Mizhregionalny Fondovy Souz National Bank of Ukraine United Arab Emirates Clearing and Depository System, a department of the Dubai Financial Market United Kingdom CrestCo. Uruguay Banco Central del Uruguay Venezuela Banco Central de Venezuela Caja Venezolana de Valores Vietnam Securities Registration, Clearing and Settlement, Depository Department of the Securities Trading Center Zambia Bank of Zambia LuSE Central Shares Depository Limited TRANSNATIONAL Euroclear Clearstream Banking, S.A. 33 SCHEDULE C: MARKET INFORMATION April, 2005 Publication/Type of Information Brief Description (scheduled frequency)
- ------------------------------------------------------------------------------------------------------------------ The Guide to Custody in World Markets An overview of settlement and safekeeping procedures, custody (CD annually and regular updates) practices and foreign investor considerations for the markets in which State Street offers custodial services. - ------------------------------------------------------------------------------------------------------------------ Global Custody Network Review Information relating to Foreign Subcustodians in State Street's Global (annually) Custody Network. The Review stands as an integral part of the materials that State Street provides to its U.S. mutual fund clients to assist them in complying with SEC Rule 17f-5. The Review also gives insight into State Street's market expansion and Foreign Subcustodian selection processes, as well as the procedures and controls used to monitor the financial condition and performance of our Foreign Subcustodian banks. - ------------------------------------------------------------------------------------------------------------------ Securities Depository Review Custody risk analyses of the Foreign Securities Depositories presently (annually) operating in Network markets. This publication is an integral part of the materials that State Street provides to its U.S. mutual fund clients to meet informational obligations created by SEC Rule 17f-7. - ------------------------------------------------------------------------------------------------------------------ Global Legal Survey With respect to each market in which State Street offers custodial (annually) services, opinions relating to whether local law restricts (i) access of a fund's independent public accountants to books and records of a Foreign Subcustodian or Foreign Securities System, (ii) a fund's ability to recover in the event of bankruptcy or insolvency of a Foreign Subcustodian or Foreign Securities System, (iii) a fund's ability to recover in the event of a loss by a Foreign Subcustodian or Foreign Securities System, and (iv) the ability of a foreign investor to convert cash and cash equivalents to U.S. dollars. - ------------------------------------------------------------------------------------------------------------------ Subcustodian Agreements Copies of the contracts that State Street has entered into with each (annually) Foreign Subcustodian that maintains U.S. mutual fund assets in the markets in which State Street offers custodial services. - ------------------------------------------------------------------------------------------------------------------ Global Market Bulletin Information on changing settlement and custody conditions in markets (daily or as necessary) where State Street offers custodial services. Includes changes in market and tax regulations, depository developments, dematerialization information, as well as other market changes that may impact State Street's clients. - ------------------------------------------------------------------------------------------------------------------ Foreign Custody Advisories For those markets where State Street offers custodial services that (as necessary) exhibit special risks or infrastructures impacting custody, State Street maintains market advisories to highlight those unique market factors which might impact our ability to offer recognized custody service levels. - ------------------------------------------------------------------------------------------------------------------ Material Change Notices Informational letters and accompanying materials confirming State (presently on a quarterly basis or as Street's foreign custody arrangements, including a summary of material otherwise necessary) changes with Foreign Subcustodians that have occurred during the previous quarter. The notices also identify any material changes in the custodial risks associated with maintaining assets with Foreign Securities Depositories. - ------------------------------------------------------------------------------------------------------------------
34 EX-99.I 3 ex99-j.txt EXHIBIT (J) [KPMG LOGO] KPMG LLP 345 Park Avenue New York, NY 10154 Consent of Independent Registered Public Accounting Firm To the Shareholders and Board of Trustees of First Eagle Funds: We consent to the incorporation by reference, in this registration statement, to our report dated December 22, 2005, on the statements of assets and liabilities, including the schedules of investments, for the First Eagle Global Fund, First Eagle Overseas Fund, First Eagle U.S. Value Fund, First Eagle Gold Fund and First Eagle Fund of America ("the Funds"), each a series of the First Eagle Funds, as of October 31, 2005, and 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 the periods indicated in the Annual Report. These financial statements and financial highlights and our report thereon are included in the Annual Report of the Funds as filed on Form N-CSR. We also consent to the references to our firm under the headings "Financial Highlights" in the Prospectus and "Independent Registered Public Accounting Firm" and "Financial Statements" in the Statement of Additional Information. KPMG LLP New York, New York February 24, 2006 KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative. -----END PRIVACY-ENHANCED MESSAGE-----