SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
| X| Preliminary proxy statement
|__| Confidential for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
| | Definitive proxy statement
|__| Definitive additional materials
|__| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Third Avenue Variable Series Trust
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
| X | No fee required.
| _ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $0.01 per share.
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(2) Aggregate number of securities to which transactions applies:
N/A
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
N/A
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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June xx, 2002
Dear Contract Owners:
As you may already know, EQSF Advisers, Inc. ("EQSF"), the parent company
of the adviser to the Third Avenue Value Portfolio ("the Manager"), has
reached an agreement with Affiliated Managers Group, Inc. ("AMG") for AMG
to purchase an indirect majority interest in the Manager. We expect to
complete this transaction during the summer (subject to the necessary
regulatory approvals and other customary conditions). Under the Investment
Company Act of 1940, we need your approval of a new investment advisory
agreement relating to the fund to continue to manage the fund after AMG
formally acquires its interest in the Manager.
You have been sent the enclosed proxy statement because, as an owner of a
varible insurance contract who has allocated investment value to the fund,
you have the right to instruct your insurance company on how to vote with
respect to the proposals set forth in the proxy statement.
We place a very high value on our independence and our ability to make
investment decisions free of any consideration other than what is in the
best interests of our clients and the assets we manage. As we have no
interest in changing what we do for our own investments and those entrusted
to us by our clients, the decision to bring in an outside investor has not
been taken lightly. We believe that the AMG transaction will permit us to
continue to pursue our unique deep value style of investing without any
changes upon completion of this transaction.
The partnership with AMG strategically positions our firm for the future.
The senior employees of the Manager will hold significant ownership.
Moreover, we believe the transaction will help us to continue to incent and
attract top quality talent by awarding them equity ownership, and plan for
the next generation of owners. In the meantime, our partnership with AMG is
designed to ensure that our current management team remains intact for many
years to come. Toward this end, we, along with all senior portfolio
managers, have signed long-term employment agreements. This stability, as
well as increased equity ownership for certain key employees, should help
to assure that the new partnership maximizes our continued focus on
creating value for our clients.
AMG's business is to make equity investments in companies such as ours to
perpetuate and encourage an entrepreneurial environment in which to grow
and prosper. AMG's management is of the highest caliber and we believe its
priorities and motivations are totally consistent with our own. AMG has a
proven track record of successful partnerships with firms such as ours,
with 17 autonomous affiliates that collectively manage over $81 billion in
assets.
We believe that the transaction with AMG will serve to strengthen us and
our ability to serve you as we go forward. We hope that you will agree and
instruct your insurance company to vote your shares in favor of the new
investment advisory agreement described in the enclosed proxy statement. In
considering the proposals, please note:
o The investment value you allocated to the Fund and the
advisory fees charged to the Fund will not change.
o The investment objectives and policies of the Fund will
remain the same and key employees of EQSF will continue to
manage your Fund as they have done in the past.
The proxy documents explain each proposal in detail, and we encourage you
to review them. As always, we are available to answer your questions at
1-800-443-1021.
By mailing your vote today, you can help the Third Avenue Value Portfolio
avoid the cost of follow up mailings and phone calls.
Thank you for your time, and the trust you have placed with us.
Sincerely,
-----------------------------
Martin J. Whitman
Chairman of EQSF Advisers, Inc.
---------------------------
David M. Barse
President of EQSF Advisers, Inc.
THIRD AVENUE VARIABLE SERIES TRUST
767 Third Avenue
New York, New York 10017-2023
1-800-443-1021
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 7, 2002
To Shareholders of Third Avenue Variable Series Trust:
We invite you to attend a Special Meeting of Shareholders of Third
Avenue Variable Series Trust, a Delaware business trust consisting of one
portfolio: the Third Avenue Value Portfolio. The Special Meeting will be
held on August 7, 2002 at 2 p.m., Eastern Time, at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP and Affiliates; Four Times Square, 38th
Floor, New York, New York 10036. The Third Avenue Variable Series Trust is
hereinafter referred to as the "Trust," and the Third Avenue Value
Portfolio is hereinafter referred to as the "Fund." As we describe in the
accompanying Proxy Statement, the shareholders will vote on the following
matters:
1. The election of 10 Trustees to the Trust's Board of Trustees
(Proposal 1);
2. Proposals to approve a new Investment Advisory Agreement
between the Trust, on behalf of the Fund, and Third Avenue Management LLC
(the "Manager") to take effect upon the closing of the acquisition of a
majority interest in the Manager's parent company, Third Avenue Holdings
LLC, by Affiliated Managers Group, Inc. (Proposal 2);
3. To consider and act upon such other business as may properly
come before the Special Meeting.
The close of business on June 11, 2002 has been fixed as the
record date (the "Record Date") for the determination of the shareholders
entitled to notice of, and to vote at, the Special Meeting.
The Board of Trustees of the Trust unanimously recommends that you
vote FOR all of the nominees for Trustees and for approval of the new
Investment Advisory Agreement. This notice and related materials are first
being mailed on or about June 27, 2002. This proxy is being solicited on
behalf of the Board of Trustees of the Trust.
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. EVEN IF
YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE
PROXY CARD AND MAIL IT AS SOON AS YOU CAN IN THE ENVELOPE WE HAVE PROVIDED.
IF YOU ATTEND THE SPECIAL MEETING, YOU CAN REVOKE YOUR PROXY AND VOTE YOUR
SHARES IN PERSON IF YOU CHOOSE.
By Order of the Board of Trustees,
W. James Hall
Secretary
New York, New York
June 27, 2002
FREQUENTLY ASKED QUESTIONS
Q: WHY HAVE I RECEIVED THIS PROXY STATEMENT?
Your insurance company and the Trust's Board of Trustees have sent
you this Proxy Statement to ask for your voting instruction as an
owner of a variable insurance contract who has allocated
investment value to the Fund pursuant to the terms of your
variable insurance contract. Because you have the right to
instruct your insurance company on how to vote on the Proposals,
you should generally consider yourself a "shareholder" of the Fund
for the purposes of this Proxy Statement.
Q: HOW WILL MY INSURANCE COMPANY VOTE FUND SHARES?
Shares of the Fund are currently held only by insurance companies
for allocation to certain of their separate accounts established
to fund benefits under variable annuity contracts and/or variable
life insurance policies they issue (each an "Insurance Contract"
and collectively, the "Insurance Contracts"). Under current law,
your insurance company will vote shares of the Fund it owns based
on instructions received from the owners of Insurance Contracts
such as yourself. As a result, you are being sent this proxy
statement and voting instruction form in order to tell your
insurance company how to vote. Shares for which your insurance
company does not receive instructions in time to be voted will be
voted by your insurance company in the same proportion as shares
for which instructions have been received in time to be voted.
Q: WHAT IS BEING VOTED ON?
Fund shareholders will vote on electing 10 Trustees to the Trust's
Board of Trustees and on approving a new Investment Advisory
Agreement between the Trust, on behalf of the Fund, and the
Manager.
Q: WHY ARE SHAREHOLDERS BEING ASKED TO VOTE ON A PROPOSAL TO APPROVE A
NEW INVESTMENT ADVISORY AGREEMENT?
The Fund is presently managed by the Manager. The owners of the
Manager's parent company, Third Avenue Holdings LLC ("Holdings"),
have entered into agreements with Affiliated Managers Group, Inc.
("AMG") pursuant to which AMG will purchase a majority interest in
Holdings, and the senior members of the Manager's management team
will own a substantial interest in Holdings and have entered
into long-term employment agreements to provide greater assurance
of their continuity with the Fund. Upon completion of the AMG
transaction, except in limited circumstances, the Manager's
present management is expected to continue to conduct the
day-to-day business activities of the Manager, including portfolio
management for the Fund. Because it entails a change of control of
the Manager, AMG's investment will result in an "assignment" and
consequent automatic termination of the Fund's current Investment
Advisory Agreement with the Manager under the Investment Company
Act of 1940. In order for the Fund to continue receiving the
Manager's services after the AMG transaction closes, the
shareholders of the Fund must approve a new Investment Advisory
Agreement.
Q: HOW WILL THIS AFFECT FUND SHAREHOLDERS?
The Board of Trustees believe the AMG transaction will be
beneficial for shareholders of the Fund by increasing the stake of
the Manager's professional personnel in the success of the Fund
and strengthening their long-term commitment to the Fund. An
investment in the Fund will remain the same upon completion of
AMG's investment in the Manager. You will still have investment
value allocated to the same Fund in accordance with the terms of
your Insurance Contract. In addition, the advisory services
performed by the Manager are expected to be performed by the same
personnel who have previously provided these services.
Q: WILL THE FUND'S INVESTMENT ADVISORY FEES BE THE SAME?
Yes, the fee rate for investment advice charged to the Fund under
the new Investment Advisory Agreement will remain the same as
under the Fund's current Investment Advisory Agreement.
Q: WHO IS ENTITLED TO VOTE?
Fund Shareholders who owned shares as of the close of business on
the Record Date, June 11, 2002, are entitled to vote. Fund
Shareholders will be entitled to one vote per share for each share
owned on the Record Date. As an owner of a variable insurance
contract who has allocated investment value to the Fund, you have
the right to instruct your insurance company on how to vote on the
Proposals.
Q: DO I NEED TO ATTEND THE SPECIAL MEETING IN ORDER TO VOTE?
No. As a contract owner, you can provide voting instructions to
your insurance company by completing and mailing the enclosed
voting instruction card. [If you give instructions by telephone or
internet, do not return your voting instruction card.]
Q: HOW WILL PROXIES BE SOLICITED?
The Trust will solicit proxies by mail. Certain of the Trust's
officers and employees may also solicit by telephone, telegram and
personally. Proxies may also be solicited personally or by mail,
telephone or electronic means by Trustees, officers and regular
employees of the Trust, the Manager and PFPC, Inc., the Fund's
transfer agent. The Trust will not pay these officers and
employees specifically for soliciting proxies. In addition, the
Trust will retain Georgeson Shareholder Communications, Inc., a
professional proxy solicitor, for an estimated fee of
approximately $______ plus out-of-pocket expenses. The Manager and
AMG, not the Fund, will bear the cost of soliciting proxies,
including preparing, printing, assembling and mailing the proxy
material and the fees of Georgeson Shareholder Communications,
Inc.
Q: WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSALS?
Each of the matters being voted on requires that a "quorum" be
present for action to be taken on that matter. A "quorum" means a
majority of the shares entitled to vote on a matter that are
outstanding on the Record Date. An affirmative vote of a majority
of the Fund's outstanding shares on the Record Date, or if less,
at least two-thirds of the shares of the Fund present at the
meeting (if holders of more than 50% of the outstanding shares are
present in person or by proxy) is necessary to approve its new
Investment Advisory Agreement. Trustees are elected by a plurality
of the votes cast at the Meeting. The election of trustees is by
plurality vote, meaning that the nominees with the highest number
of votes will be elected.
Q: CAN THE SPECIAL MEETING BE ADJOURNED?
Yes. The Special Meeting could be adjourned if, for example, a
quorum does not exist. For purposes of any adjournment, proxies
will be voted "FOR" any adjournment favored by the proxies unless
you direct otherwise on the enclosed proxy. The proxies named on
the enclosed proxy card are Michael T. Carney and W. James Hall,
who are senior officers of the Manager.
Q: WHAT HAPPENS IF I SIGN AND RETURN MY VOTING INSTRUCTIONCARD BUT DO
NOT MARK MY INSTRUCTIONS?
Your voting instructions will be voted in favor of all matters.
Q: MAY I REVOKE MY VOTING INSTRUCTIONS?
You may revoke your voting instructions at any time before it is
exercised by giving notice of your revocation to your insurance
company in writing (by subsequent voting instructions or
otherwise).
Q: HOW CAN I OBTAIN A COPY OF THE FUND'S ANNUAL REPORT?
You may request a copy of the Fund's latest annual and semi-annual
reports by writing to its principal executive office at Third
Avenue Funds, 767 Third Avenue, New York, NY 10017, Attention:
Marketing Department, or by calling (800) 443-1021. These copies
will be furnished by the Trust free of charge. You may also
contact your Insurance Company.
Q: WHO ARE THE PRINCIPAL SHAREHOLDERS OF THE FUND?
Shares of the Fund are currently held by only insurance companies
for allocation to certain of their separate accounts to fund
benefits under certain Insurance Contracts. On June 11, 2002, to
the knowledge of the management of the Fund, only IDS Life
Insurance Company, which beneficially owned 8,950,834 shares
(80.59% of the outstanding shares) and Ameritas Variable Life
Insurance Company, which beneficially owned 1,825,758 shares
(16.52% of the outstanding shares) in each case, on behalf of
holders of variable annuity contracts, beneficially owned more
than 5% of the outstanding shares of the Fund.
PRELIMINARY PROXY
THIRD AVENUE VARIABLE SERIES TRUST
767 Third Avenue
New York, New York 10017-2023
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
August 7, 2002
PROPOSAL NO. 1
ELECTION OF A BOARD OF TRUSTEES
TRUSTEE NOMINEES
At the Special Meeting, 10 Trustees will be elected to hold office
until their respective successors are chosen and qualified. The Trust's
Board of Trustees have nominated 10 people for election as Trustees of the
Trust: David M. Barse, Martin J. Whitman, Jack W. Aber, William E. Chapman
II, Lucinda Franks, Edward J. Kaier, Marvin Moser, Eric Rakowski, Martin
Shubik and Charles C. Walden. The nomination of the independent Trustees
was at the discretion of the Trust's incumbent independent Trustees. The
individuals named on the enclosed proxy card intend to vote for the
election of all of the nominees. They will also vote proxies for any person
that the Board of Trustees may recommend in place of a nominee if that
nominee becomes unable to serve as a Trustee before the Special Meeting.
Currently, David M. Barse, Phyllis W. Beck, Barbara Whitman,
Martin J. Whitman, Lucinda Franks, Gerald Hellerman, Marvin Moser, Donald
Rappaport, Myron M. Sheinfeld, Martin Shubik and Charles C. Walden serve as
Trustees of the Trust. Messrs. Aber, Chapman, Kaier and Rakowski have not
previously served on the Trust's Board of Trustees. The election of the
Trustees named below is contingent on the closing of the AMG transaction,
and at such closing, Messrs. Hellerman, Rappaport and Sheinfeld and Ms.
Whitman and Ms. Beck will have been replaced by elected nominees listed
below, and the Board shall be reduced from eleven to ten Trustees. Each
nominee for Trustee has consented to being named as a nominee and to serve
if elected. Certain important information regarding the nominees (including
their principal occupations for at least the last five years) is set forth
below.
Interested Trustee Nominees
No. of
Portfolios
Term of in Fund
Office and Complex Other
Name, Age & Length of Principal Occupation Overseen Directorships
Address Time Served Position(s) During Past 5 Years by Trustee held by Trustee
------- ----------- ----------- ------------------- ---------- ---------------
David M. Trustee President, COO, President and Chief 5 Director (7/97 to
Barse*(40) since 9/01** and Trustee Operating Officer (COO) Present) of CGA
(5/98 to Present), Group, Ltd.
767 Third Trustee (9/01 to (insurance);Director
Avenue Present) and Executive (7/96 to Present)
New York, NY Vice President (4/95 to of Danielson
10017-2023 5/98) of Third Avenue Holding
Trust; President and COO Corporation and
(7/99 to Present), and certain
Trustee (9/01 to subsidiaries;
Present) of Third Avenue Director (2/01 to
Variable Series Trust; Present) of
President and COO (7/96 American Capital
to Present) of Danielson Access Holdings,
Holding Corporation; Inc.
President and COO (2/98
to Present), Executive
Vice President (4/95 to
2/98), and Director
(4/95 to Present) of
EQSF Advisers, Inc. and
its successor, Third
Avenue Management LLC;
Chairman (1/02 to
Present), Chief
Executive Officer (CEO)
(7/99 to Present),
President (6/95 to
Present), Director and
COO (1/95 to Present) of
M.J. Whitman, Inc.
(registered
broker-dealer); CEO
(7/99 to Present),
President (6/95 to
Present), Director and
COO (1/95 to Present) of
M.J. Whitman Advisers,
Inc. (registered
investment adviser).
Martin J. Trustee Chairman, CEO Chairman and CEO (3/90 5 Chairman (8/90 to
Whitman * (77) since 11/90** and Trustee to Present), President 8/99) and
767 Third (1/91 to 5/98) of Third Director (8/90 to
Avenue New Avenue Trust; Chairman Present) of
York, NY and CEO (7/99 to Danielson Holding
10017-2023 Present) of Third Avenue Corporation, and
Variable Series Trust; certain
Chairman and CEO (3/90 subsidiaries;
to Present), President Director (3/91 to
(1/91 to 2/98), of EQSF Present) of
Advisers, Inc. and its Nabors
successor, Third Avenue Industries, Inc.,
Management LLC; Chief (international
Investment Officer (CIO) oil drilling
(12/90 to 7/96) and CEO services);
(7/96 to Present) of Director (5/00 to
Danielson Holding 12/01) of Stewart
Corporation; Chairman, Information
CEO (1/95 to Present), Services Corp.
and CIO (10/92 to (title, real
Present) of M.J. Whitman estate); Director
Advisers, Inc.; (8/97 to 5/01) of
Distinguished Management Tejon Ranch Co.
Fellow (1972 to 6/00) (land development
and Member of the and agribusiness).
Advisory Board (10/94 to
6/95) of the Yale School
of Management at Yale
University; Adjunct
Professor (1/01 to
12/01) of the Columbia
University Graduate
School of Business; CEO,
President and Director
(10/74 to Present) of
Martin J. Whitman & Co.,
Inc. (formerly M.J.
Whitman & Co. Inc.)
(private investment
company); Chartered
Financial Analyst.
Independent Trustee Nominees
Jack W. Aber (64) ** Nominee Professor of Finance, 5 Trustee, The
595 Commonwealth Avenue Boston University School Managers Funds
Boston, MA 02215 of Management since 1972. (10 portfolios);
Trustee
of Managers
AMG Funds (7
portfolios),
Managers Trust
I (2 portfolios)
and Managers
Trust II (1
portfolio). He
serves as a
Director of
Appleton Growth
Fund.
William E. Chapman II ** Nominee Trustee; President and 5 Trustee, The
(62) Owner, Longboat Managers Funds
605A Creek View Avenue Retirement Planning (10 portfolios);
Annapolis, MD 21403 Solutions since 1998. He Trustee of
serves as part time Managers AMG
employee of Hewitt Funds (7
Associates, LLC portfolios),
delivering retirement and Managers Trust I
investment education (2 portfolios)
seminars. From 1990 to and Managers
1998, he served in a Trust II (1
variety of roles with portfolio).
Kemper Funds, the last of
which was President of
the Retirement Plans
Group. Prior to joining
Kemper, he spent 24 years
with CIGNA in investment
sales, marketing and
general management roles.
Lucinda Franks (55) Trustee Trustee Journalist (1969 to 5 N/A
64 East 86th Street since Present); Special
New York, NY 10028 2/98** Correspondent, Talk
Magazine (1999-2000);
Trustee of Third Avenue
Variable Series Trust
(7/99 to Present);
Trustee of Third Avenue
Trust (2/98 to Present).
Edward J. Kaier (56) ** Nominee Partner, Hepburn Willcox 5 Trustee, The
111 N. Lowry's Lane Hamilton & Putnam (law Managers Funds
Rosemont, PA 19010 firm) since 1977. (10 portfolios),
Trustee of Managers
AMG Funds (7
portfolios), Managers
Trust I (2
portfolios) and
Managers Trust
II (1 portfolio).
Marvin Moser, M.D. (78) Trustee Trustee Trustee (1992 to Present) 5 Director (1997
13 Murray Hill Road since of the Trudeau Institute, to Present) of
Scarsdale, NY 10583 11/94** a medical research Nutrition 21 Co.
institute; Clinical (marketing);
Professor of Medicine Director
(1984 to Present) at Yale (9/00-2/02) of
University School of Innovative
Medicine; Senior Medical Clinical
Consultant (1974 to Solutions Ltd.
Present) for the National (pharmaceuticals
High Blood Pressure site management).
Education Program of the
National Heart, Lung and
Blood Institute; Trustee
of Third Avenue Variable
Series Trust (7/99 to
Present); Trustee or
Director of Third Avenue
Trust or its predecessor
(11/94 to Present).
Eric Rakowski (44) ** Nominee Professor, University of 5 Trustee, The
School of Law (Boalt California at Berkeley Managers Funds
Law) School of Law since (10 portfolios),
University of 1990. Visiting Trustee of
California at Berkeley Professor, Harvard Law Managers AMG
Berkeley, CA 94720-7200 School 1998-1999. Funds (7
portfolios),
Managers
Trust I (2
portfolios) and
Managers Trust
II (1 portfolio).
Martin Trustee Trustee Seymour H. Knox Professor 5 N/A
Shubik (76) since (1975 to Present) of
Yale University Dept. 11/90** Mathematical and
of Economics Institutional Economics,
Box 2125, Yale University; Trustee
Yale Station of Third Avenue Variable
New Haven, CT 06520 Series Trust (7/99 to
Present); Trustee or
Director of Third Avenue
Trust or its predecessor
(11/90 to Present).
Charles C. Walden (57) Trustee Trustee Executive Vice-President 5 N/A
11 Williamsburg since -Investments (1973 to
Circle, 5/96** Present) (Chief
Madison, CT 06443 Investment Officer) of
Knights of Columbus
(fraternal benefit
society selling life
insurance and annuities);
Chartered Financial
Analyst; Trustee of Third
Avenue Variable Series
Trust (7/99 to Present);
Trustee or Director of
Third Avenue Trust or its
predecessor (5/96 to
Present).
- ----------
* Messrs. Barse and Whitman are "interested Trustees" of the Trust due
to their employment with and indirect ownership interests in the
Manager.
** Each Trustee serves until his successor is duly elected and qualified.
FUND SHARE OWNERSHIP
The following table provides information describing the
dollar range of equity securities beneficially owned by each nominee for
Trustee in the Fund and in the Fund Complex in the aggregate overseen or to
be overseen by such nominee as of June 11, 2002.
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Aggregate Dollar Range of Equity
Securities in all Registered
Investment Companies Overseen by
Dollar Range of Equity Trustees in Family of Investment
Name of Nominee Securities in the Fund Companies
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Interested Trustee Nominees
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David M. Barse $0* over $100,000
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Martin J. Whitman $0* over $100,000
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Independent Trustee Nominees
- -----------------------------
Jack W. Aber $0* $0
- ----------------------------------------------------------------------------------------------------------------------
Lucinda Franks $0* $10,001-50,000
- ----------------------------------------------------------------------------------------------------------------------
William E. Chapman II $0* $10,001-50,000
- ----------------------------------------------------------------------------------------------------------------------
Edward J. Kaier $0* over $100,000
- ----------------------------------------------------------------------------------------------------------------------
Marvin Moser $0* over $100,000
- ----------------------------------------------------------------------------------------------------------------------
Eric Rakowski $0* $0
- ----------------------------------------------------------------------------------------------------------------------
Martin Shubik $0* over $100,000
- ----------------------------------------------------------------------------------------------------------------------
Charles C. Walden $0* over $100,000
- ----------------------------------------------------------------------------------------------------------------------
* Because the Fund is only offered to insurance companies for allocation
to their separate accounts established to fund Insurance Contracts,
Trustees, officers and Nominees do not own shares of the Trust.
COMPENSATION
The table below sets forth the compensation paid by the
Fund to each of the Trustees of the Third Avenue Variable Series Trust
during the fiscal year ended December 31, 2001:
- --------------------------------------------------------------------------------------------------------
Name and Position Held Aggregate Compensation Total Compensation
From Registrant For Fiscal From Registrant and
Year Fund Complex
Ended December 31, 2001* Paid to Trustees*
- --------------------------------------------------------------------------------------------------------
David M. Barse, President, COO, Trustee+ $ 0 $ 0
- --------------------------------------------------------------------------------------------------------
Phyllis W. Beck, Trustee + $ 0 $ 0
- --------------------------------------------------------------------------------------------------------
Lucinda Franks, Trustee $ 8,000 $32,000
- --------------------------------------------------------------------------------------------------------
Gerald Hellerman, Trustee** $ 8,250 $33,000
- --------------------------------------------------------------------------------------------------------
Marvin Moser, Trustee $ 8,000 $32,000
- --------------------------------------------------------------------------------------------------------
Donald Rappaport, Trustee $ 8,000 $32,000
- --------------------------------------------------------------------------------------------------------
Myron M. Sheinfeld, Trustee** $ 8,250 $33,000
- --------------------------------------------------------------------------------------------------------
Martin Shubik, Trustee $ 8,000 $32,000
- --------------------------------------------------------------------------------------------------------
Charles C. Walden, Trustee** $ 8,250 $33,000
- --------------------------------------------------------------------------------------------------------
Barbara Whitman, Trustee+ $ 0 $ 0
- --------------------------------------------------------------------------------------------------------
Martin J. Whitman, Chairman, CEO and Trustee+ $ 0 $ 0
- --------------------------------------------------------------------------------------------------------
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $422 for all Trustees as a group.
** Audit Committee Member.
+ Denotes a Trustee who is an "interested person" of the Trust.
BOARD MEETINGS AND COMMITTEES
The Trust's Board of Trustees met four times during the fiscal
year ended December 31, 2001. Each Trustee attended at least 75% of the
meetings of the Board of Trustees.
The Trust's Board of Trustees has an Audit Committee composed of
Messrs. Hellerman, Sheinfeld and Walden. The Audit Committee is charged
with reviewing accounting matters with the Trust's independent auditors. In
the fiscal year ended December 31, 2001, the Audit Committee met once. The
Board of Trustees does not have any other standing committees. Each member
attended the meeting of the Audit Committee.
RECOMMENDATION
The Trust's Board of Trustees recommends a vote "FOR" all the
nominees.
PROPOSAL NO. 2
APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE
TRUST ON BEHALF OF THE FUND AND THE MANAGER FOR THE FUND
SUMMARY OF THE TRANSACTION
Third Avenue Holdings LLC ("Holdings"), the parent company of the
Fund's present investment adviser, has entered into agreements pursuant to
which AMG, through a wholly-owned indirect subsidiary, will purchase a
majority interest in Holdings. The Manager was formed by the Fund's prior
investment adviser, EQSF Advisers, Inc. ("EQSF") on May 15, 2002 to act as
the successor to EQSF's business. At the time of the transaction with AMG,
M.J. Whitman Advisers Inc., an affiliate of the Manager that advises
separate accounts in the same style as that of the Fund, will transfer
substantially all of its business to the Manager, and M.J. Whitman, Inc.,
an affiliated broker-dealer, will transfer substantially all of its
business to MJ Whitman LLC (the "Broker"). Holdings will own 100% of each
of the Manager and the Broker. This proxy statement refers to Holdings, the
Manager and the Broker as "the Company." After the AMG transaction is
completed, AMG will own 60% of the interests in Holdings, and the senior
management of the Company (including Martin J. Whitman) and the children of
Martin J. Whitman will own 40% of the interests in Holdings upon completion
of the transaction.
Upon the closing of the AMG transaction, the Manager expects to
have the same personnel with the same responsibilities as before, and a
Management Committee comprised of the Manager's senior management, will
conduct the day-to-day business activities of the Manager (except in
limited circumstances), including portfolio management of the Fund. The
firm's Management Committee is initially expected to consist of Martin J.
Whitman, David M. Barse, Michael T. Carney and Curtis R. Jensen. The AMG
transaction is expected to close (the "Closing") during the summer of 2002
and is subject to the satisfaction or waiver of various conditions,
including (i) the approval by the shareholders of the Fund of a new
Investment Advisory Agreement between the Trust, on behalf of the Fund, and
the Manager (the "New Advisory Agreement") and (ii) the approval by the
shareholders of the Trust of the composition arrangement of the Board of
Trustees set forth in Proposal 1.
Upon completion of the AMG transaction, the Company will continue
to operate out of its present New York offices. Martin J. Whitman, David M.
Barse, Curtis R. Jensen, Michael H. Winer, Amit B. Wadhwaney, Yang T. Lie,
and Michael R. Lehmann have each signed long-term employment contracts,
effective upon the Closing. Upon the Closing, under the Company's
organizational documents, the day-to-day operations of the Company will be
conducted by its Management Committee, which will delegate day-to-day
supervision of the investment process and marketing matters to an
Investment Committee. The initial Management Committee is expected to
consist of Messrs. Whitman, Barse, Carney and Jensen, and the initial
Investment Committee is expected to consist of Messrs. Whitman, Jensen, and
Barse. Except for Curtis R. Jensen, who will be joining the Management
Committee and Investment Committee, these are the same persons as are
presently responsible for the day-to-day operation of the Company. Except
in limited circumstances, AMG generally will have no authority to manage
the day-to-day operations, or participate in the investment process, of the
Manager. AMG will have the contractual power to replace the Management
Committee and Investment Committee members. However, AMG has informed the
Trust's Board of Trustees that it has no present intention to exercise
those powers. Thus, in the view of the Board of Trustees, and the Manager,
the AMG transaction is not expected to result in any changes in the
portfolio management and investment operations of the Fund.
AMG, a Delaware corporation with a principal place of business at
600 Hale Street, Prides Crossing, Massachusetts 01965, is an asset
management holding company which holds equity interests in investment
management firms (its "Affiliates"). In connection with the equity
investments AMG has made in its Affiliates, the members of the management
team of each Affiliate retain or receive significant direct ownership in
their firm. The management teams of AMG's Affiliates generally maintain
autonomy over the day-to-day operations and independently manage such
operations, and AMG does not participate in the day-to-day management or
the investment process except in certain limited circumstances. AMG's
affiliated investment management firms managed approximately $81 billion in
assets at March 31, 2002. AMG is a public corporation and not controlled by
any person.
Pursuant to Section 15 of the Investment Company Act, the Fund's
existing Investment Advisory Agreement terminates automatically upon its
"assignment," which term includes any transfer of a controlling interest in
an adviser or control person of an adviser, such as will occur in respect
of Holdings and the Manager in connection with the transaction. Section
15(a) of the Act prohibits any person from serving as an investment adviser
to a registered investment company except pursuant to a written contract
that has been approved by the shareholders. Therefore, in order for the
Manager to continue to provide investment advisory services to the Fund
after the Closing, the shareholders of the Fund must approve a New Advisory
Agreement.
The AMG transaction also contemplates that the Manager, AMG and
other persons will use all commercially reasonable efforts to comply with
the requirements of Section 15(f) of the Act after the Closing. Section
15(f) provides, in pertinent part, that affiliated persons (including
owners) of the Manager may receive any amount or benefit in connection with
a sale of securities of, or a sale of any other interest in, the Manager
which results in an assignment of the investment advisory contract if (1)
for a period of three years after the time of such action, at least 75% of
the members of the Board of Trustees of any investment company which it
advises are not "interested persons" (as defined in the Act) of the new or
old investment adviser; and (2) for a two-year period there is no "unfair
burden" imposed on any such investment company as a result of the AMG
transaction. The election of the nominees set forth in Proposal 1 will
satisfy the foregoing 75% condition. AMG and the Manager have discussed the
transaction with the Trust's Board of Trustees and the Board believes that
neither AMG nor the Manager has an express or implied understanding or
arrangement that would impose an unfair burden on the Trust as a result of
the transaction.
Pursuant to the AMG transaction, Martin J. Whitman, Barbara
Whitman and David M. Barse (each of whom is a trustee of the Trust) and
Michael T. Carney, W. James Hall and Julie Smith (each of whom is an
officer of the Trust) have agreed to sell to AMG their respective direct
and indirect existing ownership interests in Holdings at the Closing in
exchange for substantial cash payments to be made to them at the Closing.
In addition, Messrs. Whitman, Barse, Carney and Hall and Ms. Whitman and
Ms. Smith will receive substantial new minority ownership interests in
Holdings at the Closing and will have certain contractual rights to sell a
portion of such interests to AMG over time (in the case of Mr. Whitman and
Ms. Whitman, beginning following the third anniversary of the Closing, and
in the case of Messrs. Barse, Carney, and Hall and Ms. Smith, beginning
following the fifth anniversary of the Closing) for potentially substantial
additional cash payments to be made to them at the time of such sales. Mr.
Whitman and Ms. Whitman also have agreed to sell the remainder of their
ownership interests in Holdings to AMG in connection with Mr. Whitman's
retirement (or other termination of employment), and Messrs. Barse, Carney
and Hall and Ms. Smith have agreed to sell the remainder of their ownership
interests in Holdings to AMG in connection with their respective retirement
(or other termination of employment). As a result of the foregoing
payments, which are conditioned on the completion of the AMG transaction
(which, as described above, is itself conditioned on, among other things,
the approval of the board composition arrangement described in Proposal 1
and the New Advisory Agreement described in Proposal 2), these trustees and
officers of the Trust have a material financial interest in the approval of
the Proposals.
BENEFITS TO SHAREHOLDERS
The Board has identified the following benefits which the
shareholders are expected to realize as a result of the AMG transaction:
1. Martin J. Whitman has entered into a new long-term employment
agreement and is expected to serve on the Management Committee and the
Investment Committee of the Company as of the Closing and, together with
David M. Barse, Michael T. Carney and Curtis R. Jensen, continue to oversee
the team of investment professionals that manage the Fund;
2. David M. Barse, Curtis R. Jensen, Michael H. Winer, Amit B.
Wadhwaney, Yang T. Lie and Michael R. Lehmann, each of whom has not
previously been a party to any employment contract, will be subject to
long-term employment agreements and will have significant interests in
Holdings, thereby providing the Fund with greater assurance of continuing
to receive their services for a substantial time period.
THE INVESTMENT ADVISER
The Manager, 767 Third Avenue, New York, New York 10017, currently
serves as the Fund's investment adviser. The Manager manages the Fund's
investments, provides various administrative services (not otherwise
provided by third parties) and supervises the Fund's daily business
affairs, subject to supervision by the Trust's Board of Trustees. All
investment decisions for the Fund are made by a team of the Manager's
investment professionals, any of who may make recommendations subject to
the final approval of the Fund's portfolio manager or another senior member
of the management team to whom they may delegate the authority. The Manager
currently is controlled by the Whitman family and senior employees of the
Manager.
Information about the principal executive officers of the Manager
is provided in the following table:
- ----------------------------------------------------------------------------------------------------------------
Name Position Address
- ----------------------------------------------------------------------------------------------------------------
Martin J. Whitman Chairman, CEO, Trustee 767 Third Avenue New York, NY 10017-2023
- ----------------------------------------------------------------------------------------------------------------
David M. Barse President, COO, Trustee 767 Third Avenue New York, NY 10017-2023
- ----------------------------------------------------------------------------------------------------------------
Michael T. Carney Treasurer, CFO 767 Third Avenue New York, NY 10017-2023
- ----------------------------------------------------------------------------------------------------------------
W. James Hall General Counsel, Secretary 767 Third Avenue New York, NY 10017-2023
- ----------------------------------------------------------------------------------------------------------------
Richard V. Barry Co-Controller 767 Third Avenue New York, NY 10017-2023
- ----------------------------------------------------------------------------------------------------------------
Julie A. Smith Co-Controller 767 Third Avenue New York, NY 10017-2023
- ----------------------------------------------------------------------------------------------------------------
The Manager also serves as the adviser to four other
open-end mutual funds and the sub-adviser to nine other open-end mutual
funds. The following table provides information describing these
relationships as of June 11, 2002:
OTHER FUNDS MANAGEMENT
MANAGED BY THE MANAGER FEE*** ASSETS UNDER MANAGEMENT
- ------------------------------------------------------------------------------------------------------------
Third Avenue Value Fund* 0.90%
Third Avenue Small-Cap Value Fund* 0.90%
Third Avenue Real Estate Value Fund* 0.90%
Third Avenue International Value Fund* 1.25%
Aegon/Transamerica Series Third Avenue 0.40%
Value**
SunAmerica Focused 2000 Value Portfolio** 0.50% on first $100 million
of the Fund's average daily
net assets,
0.45% on next $100 million of
the Fund's average daily net
assets,
0.40% on amounts over $200
million
SunAmerica Focused Multi-Cap Value 0.50% on first $100 million
Portfolio** of the Fund's average daily
net assets, 0.45% on
next $100 million of
the Fund's average
daily net assets,
0.40% on amounts
over $200 million
Seasons Series Trust Focus Value 0.50% on first $100 million
Portfolio** of the Fund's average daily
net assets, 0.45% on
next $100 million of
the Fund's average
daily net assets,
0.40% on amounts
over $200 million
Legends Fund Third Avenue Value** 0.40%
AXP Partners Small Cap Value Fund** 0.50% on first $100 million
of the Fund's average daily
net assets,
0.45% on next $100 million of
the Fund's average daily net
assets,
0.40% on amounts over $200
million
AXP Variable Portfolio - Partners Small 0.50% on first $100 million
Cap Value Fund** of the Fund's average daily
net assets, 0.45% on
next $100 million of
the Fund's average
daily net assets,
0.40% on amounts
over $200 million
Quintara Small Cap Value Fund** 1.075% on first $30 million
of the Fund's average daily
net assets,
0.925% on next $120 million
of the Fund's average daily
net assets,
0.875% on amounts over $150
million****
Met Investors Series Trust Third Avenue 0.50%
Small Cap Value Portfolio**
* Advisory relationship.
** Sub advisory relationship.
*** As a percentage of each fund's average daily net assets.
**** Fee is subject to a monthly performance fee adjustment.
During the fiscal year ended December 31, 2001, the Fund paid EQSF
fees of $846,404.
EQSF, the former investment adviser of the Fund, formed the
Manager on May 15, 2002 and contributed substantially all of its business,
including its investment advisory agreements with the Fund, Third Avenue
Trust and the sub-advised funds in exchange for 100% of the interests in
the Manager (held indirectly through Holdings).
Upon the closing of the transaction with AMG, the Manager expects
to have the same personnel as EQSF had, with such personnel having
substantially the same responsibilities for day-to-day management and
investment decisions as they had while employed with EQSF. After the
closing of the AMG transaction, the Manager will be controlled by AMG.
Effective upon the Closing, the Management Committee of the Manager is
expected to consist of Martin J. Whitman, David M. Barse, Michael T. Carney
and Curtis R. Jensen, all current employees of the Manager.
THE EMPLOYMENT AGREEMENTS
Martin J. Whitman, David M. Barse, Curtis R. Jensen, Michael H.
Winer, Amit B. Wadhwaney, Yang T. Lie, and Michael R. Lehmann, have entered
into employment agreements, effective at Closing, that provide for the
continued service of each of them to the Company for at least 10 years (or,
in the case of Mr. Whitman, 5 years) after the Closing. Each of these
employment agreements provides for these individuals to be subject to
long-term non-competition and solicitation provisions following the
Closing.
THE CURRENT ADVISORY AGREEMENT
Pursuant to the current Investment Advisory Agreement between the
Manager and the Trust, on behalf of the Fund (the "Current Advisory
Agreement"), the Manager has been retained to manage the investments of the
Fund and to provide such investment research, advice and supervision, in
conformity with the Fund's investment objectives and policies, as may be
necessary for the operations of the Fund.
The Current Advisory Agreement for the Fund is on substantially
the same terms as the initial investment advisory agreement entered into in
connection with the organization of the Fund. The Current Advisory
Agreement for the Fund was approved by EQSF as its sole shareholder on June
16, 1999. The Current Advisory Agreements was last approved by the Board of
Trustees on May 22, 2002. The Current Advisory Agreement is dated May 24,
2000.
THE NEW ADVISORY AGREEMENT
As discussed above, the Fund is asking you to approve a New
Advisory Agreement. The New Advisory Agreement is substantially identical
to the Current Advisory Agreement (and identical with respect to fees). The
discussion of the New Advisory Agreement below is qualified by reference to
the form of the New Advisory Agreement attached as Appendix A hereto.
The New Advisory Agreement provides that the Fund will pay an
annual investment advisory fee, which is calculated daily and paid monthly,
at an annual rate of 0.90% of its net assets.
The New Advisory Agreement provides, among other things, that the
Manager will bear all expenses of its employees and overhead incurred in
connection with its duties, and that the Fund will pay all direct and
indirect costs, charges, and expenses of or related to the Fund's business
and operations, including the compensation of the Trust's trustees (other
than those trustees who are officers of the Trust or interested persons of
the Manager).
Pursuant to the New Advisory Agreement, although the Manager
intends to devote such time and effort to the business of a Fund as is
reasonably necessary to perform its duties to the Fund, the services of the
Manager are not exclusive and the Manager may provide similar services to
other investment companies and other clients and may engage in other
activities.
The New Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Manager is not liable to the Fund or the
shareholders of the Fund for any act or omission by the Manager in the
course of, or connected with, rendering services thereunder, or for any
losses that may be sustained in the purchase, holding or sale of any
security.
The New Advisory Agreement permits the Manager to cause the Fund
to pay broker-dealers, which provide brokerage and research services to the
Manager, commissions for effecting securities transactions in excess of the
amount other broker-dealers would charge if the Manager determines in good
faith that the amount of the commissions are reasonable in relation to the
value of the brokerage and research services provided.
The New Advisory Agreement, if approved by the contract owners,
will commence at the Closing, will remain in effect for an initial two-year
term and will continue indefinitely thereafter if, and so long as, such
continuance is specifically approved annually by (a) the Board of Trustees
of the Trust and by the vote of the "majority of the outstanding voting
securities" of the Fund, as such term is defined in the Investment Company
Act, or (b) the Board of Trustees of the Trust in the manner required by
the Investment Company Act. The New Advisory Agreements may be terminated
on 60 days' written notice at any time without the payment of any penalty
either by the Board of Trustees or by a vote of a "majority of the
outstanding voting securities" of the Fund, or by the Manager.
EVALUATION BY THE BOARD
On May 7 and May 21, 2002, a Special Committee of the Board
comprised of Gerald Hellerman, Marvin Moser, Myron M. Sheinfeld and Charles
C. Walden met formally with their independent counsel to discuss the AMG
transaction. Both before and after these meetings, the Special Committee
members met and conferred among themselves and with counsel concerning the
AMG transaction. In addition, the Committee interviewed senior management
of the Manager to discuss the effects of the transaction and also
interviewed a representative of another AMG affiliate. The Committee
members also interviewed the nominees for Trustees who previously had not
served as Trustees. On May 22, 2002, the independent trustees of the Board
of Trustees of the Trust met and discussed the AMG transaction and its
possible effect on the Trust and the Fund and evaluated the New Advisory
Agreement. Representatives of the Manager and AMG were present to answer
questions from the Board. In evaluating the New Advisory Agreement, the
Board reviewed materials furnished by the Manager and AMG relevant to its
decision. Those materials included information regarding the Manager and
AMG (including information describing their respective personnel and
operations) as well as materials regarding the services rendered, absolute
and relative performance of the Fund and comparative advisory fee
information. Representatives of the Manager discussed with the Board the
Manager's management philosophy and methods of operation insofar as they
relate to the Fund and indicated their belief that, as a consequence of the
AMG transaction, the operations of the Manager and its ability to provide
services to the Fund would be strengthened and would not be adversely
affected. Representatives of AMG discussed with the Board AMG's management
philosophy and expected relationship with the Manager and the Fund. In its
deliberations, the Board considered certain terms of the AMG transaction,
including, among other things, the continuity of management personnel,
which it believed to be important to assure continuity of the advisory
services provided by the Manager to the Fund. The Board also considered
comparative information on other investment companies with similar
investment objectives. In addition, the Board reviewed and discussed the
terms and provisions of the New Advisory Agreement and compared fees and
expenses under the New Advisory Agreement with those paid by other
investment companies. The Board also considered the benefits that the Fund
might obtain from AMG becoming the majority owner of the Manager.
In determining to recommend that the shareholders of the Fund vote
to approve the New Advisory Agreement as being in the best interest of the
Fund's shareholders, the Board noted that the advisory services to be
provided by the Manager are expected to be performed by the same personnel
who had previously been providing such services through EQSF and the
Manager, and that the investment advisory fee rates payable by the Fund
upon completion of the AMG transaction would not be any greater than those
under the Current Advisory Agreement.
Accordingly, after consideration of the above and such other
factors and information as it deemed relevant, the Board of Trustees,
including all of the members of the Board present at the meeting who are
not parties to the New Advisory Agreement or "interested persons" (as
defined by the Investment Company Act) of the Trust, the Manager or AMG,
approved the New Advisory Agreement and voted to recommend their approval
to the Fund's shareholders.
RECOMMENDATION
After careful consideration, the Trust's Board of Trustees
recommend a vote "FOR" the New Advisory Agreement between the Trust, on
behalf of the Fund, and the Manager, to take effect upon the consummation
of the transaction with AMG.
ADDITIONAL INFORMATION
TRUSTEES
The following table provides information about current Trustees of
the Trust who are not standing for reelection and will have been replaced
by elected nominees contingent on the closing of the AMG transaction. Ms.
Beck and Ms. Whitman will remain as advisory members of the Board.
Name, Age & Address Position(s) Principal Occupations Last 5 Years
------------------- ----------- ----------------------------------
Interested Trustees
- -------------------
Phyllis W. Beck Trustee An Associate Judge (1981 to Present) of the Superior
(75) Court of Pennsylvania; Trustee of Third Avenue Variable
GSB Building Suite 800 Series Trust (7/99 to Present); Trustee or Director of
City Line & Belmont Ave. Third Avenue Trust or its predecessor (11/92 to
Bala Cynwyd, PA 19004-1611 Present).
Barbara Whitman Trustee Director (1/02 to Present) and Registered Securities
(43) Representative (11/96 to Present) of M.J. Whitman, Inc.;
767 Third Avenue New York, Director (4/95 to Present) of EQSF Advisers, Inc. and
NY 10017-2023 Third Avenue Holdings LLC; Director (12/99 to Present)
of the Beck Institute for Cognitive Therapy and
Research; Director (8/97 to 6/98) of Riverside Stage
Company; Trustee of Third Avenue Variable Series Trust
(7/99 to Present); Trustee of Third Avenue Trust (9/97
to Present).
Independent Trustees
- --------------------
Gerald Hellerman Trustee Managing Director (8/93 to Present) of Hellerman
(64) Associates, (financial and corporate consulting); Chief
10965 Eight Bells Lane Financial Analyst (1976 to 7/93) of the Antitrust
Columbia, MD 21044 Division of US Department of Justice; Trustee of Third
Avenue Variable Series Trust (7/99 to Present); Trustee
or Director of Third Avenue Trust or its predecessor
(9/93 to Present)
Donald Rappaport Trustee Private investor and consultant (1987 to 5/97 and 5/99
(75) to Present); Chief Financial and Chief Information
1619 31st Street, N.W. Officer for the US Department of Education (5/97 to
Washington, D.C. 20007 5/99); Trustee of Third Avenue Variable Series Trust
(7/99 to Present); Trustee or Director of Third Avenue
Trust or its predecessor (11/91 to 5/97) and (6/99 to
Present).
Myron M. Sheinfeld Trustee Senior Counsel (4/01 to present) of Akin, Gump, Strauss,
(72) Hauer & Feld, LLP; Counsel to Sheinfeld, Maley & Kay
1900 Pennzoil Place, South P.C. (12/96 to 4/01) and Trustee of Third Avenue
Tower Variable Series Trust (7/99 to Present); Trustee or
711 Louisiana Street Director of Third Avenue Trust or its predecessor (11/90
Houston, TX 77002 to Present). Director (1988 to Present) of Nabors
Industries, Inc.; Director (11/98 to 4/01) of Anchor
Glass Container Corp.; Director (6/99 to 11/00) of Repap
Enterprises, Inc. (paper manufact.); Director (8/00 to
6/01) of Southern Mineral Corp. (oil and gas).
OFFICERS OF THE TRUST
Name, Age & Address Position(s) Principal Occupations Last 5 Years
------------------- ----------- ----------------------------------
Michael T. Carney Treasurer and CFO Treasurer and Chief Financial Officer (CFO) of Third
(48) Avenue Trust (3/90 to Present); Treasurer and CFO (6/99
767 Third Avenue to Present) of Third Avenue Variable Series Trust;
New York, NY 10017-2023 Director (1/95 to Present), Executive Vice President,
Chief Financial Officer (6/95 to Present) of M.J.
Whitman, Inc.; Treasurer, Director (1/95 to Present),
Executive Vice President (6/95 to Present) and CFO
(10/92 to Present) of M.J. Whitman Advisers, Inc.; CFO
(8/90 to Present) of Danielson Holding Corporation;
Director (8/96 to present) of National American
Insurance Company of California; CFO and Treasurer (5/89
to Present) of EQSF Advisers, Inc. and its successor,
Third Avenue Management LLC and Third Avenue Holdings
LLC.
Kerri Weltz Assistant Treasurer Assistant Treasurer (5/96 to Present) and Controller of
(34) Third Avenue Trust (1/96 to 9/01), Controller (1/96 to
767 Third Avenue 9/01) of EQSF Advisers, Inc. and its successor Third
New York, NY 10017-2023 Avenue Investment Management LLC; Assistant Treasurer
(6/99 to Present) of Third Avenue Variable Series Trust;
Controller (8/96 to Present), of Danielson Holding
Corporation; Controller (5/96 to Present) of Martin J.
Whitman & Co., Inc.
W. James Hall General Counsel and General Counsel and Secretary (6/00 to Present) of Third
(37) Secretary Avenue Trust; General Counsel and Secretary (9/00 to
767 Third Avenue Present) of EQSF Advisers, Inc., and its successor,
New York, NY 10017-2023 Third Avenue Investment Management LLC, and Third Avenue
Holdings LLC; General Counsel and Secretary (9/00 to
Present) of Third Avenue Variable Series Trust; General
Counsel and Secretary (12/00 to Present) of Danielson
Holding Corporation; General Counsel and Secretary (5/00
to Present) of M.J. Whitman, Inc. and M.J. Whitman
Advisers, Inc.; Associate (2/00 to 6/00) at Paul, Weiss,
Rifkind, Wharton & Garrison LLP; Associate (11/96 to
1/00) at Morgan, Lewis & Bockius LLP (law firms).
Julie A. Smith Controller Controller (9/01 to Present), Assistant Controller (2/97
(31) to 9/01) of Third Avenue Trust; Controller (9/01 to
767 Third Avenue Present), Assistant Controller (6/99 to 9/01) of the
New York, NY 10017-2023 Third Avenue Variable Series Trust; Controller (9/01 to
Present), Assistant Controller (2/97 to 9/01) of EQSF
Advisers, Inc., and its successor, Third Avenue
Management LLC, and Third Avenue Holdings LLC; Assistant
Controller (3/99 to Present) of Danielson Holding
Corporation; Assistant Controller (2/97 to Present) of
Martin J. Whitman & Co., Inc.
INDEPENDENT AUDITORS
The Trust's Board of Trustees (including a majority of the
trustees who are not "interested persons" of the Trust) have selected
PricewaterhouseCoopers LLP, independent accountants, to continue to serve
as independent auditors of the Fund for the fiscal year ending December 31,
2002. In such capacity, PricewaterhouseCoopers LLP performs a variety of
functions, including examining the financial statements of the Fund and
issuing a report on internal controls and procedures for inclusion in
Securities and Exchange Commission filings. A representative of
PricewaterhouseCoopers LLP is not expected to be present at the meeting.
In connection with the fiscal year ended December 31, 2001,
PricewaterhouseCoopers LLP provided various audit and non-audit services to
the Trust and billed the Trust for these services as follows:
1. Audit Fees. Aggregate fees billed to the Trust by
PricewaterhouseCoopers LLP for professional services rendered for the audit
of the Fund's financial statements for the fiscal year ended December 31,
2001 totaled $33,000.
2. Financial Information Systems Design and Implementation Fees.
PricewaterhouseCoopers LLP did not render any services respecting financial
information systems design and implementation during the fiscal year ended
December 31, 2001 to the Trust, their investment adviser or any entity
controlling, controlled by, or under common control with their investment
adviser that provides services to the Trust.
3. All Other Fees. Aggregate fees billed to the Trust by
PricewaterhouseCoopers LLP for non-audit services rendered for the fiscal
year ended December 31, 2001 to the Trust, their investment adviser or any
entity controlling, controlled by, or under common control with their
investment adviser that provides services to the Trust, including tax
related services, totaled $0.
The Board of Trustees have considered whether the provision of the
non-audit services is compatible with maintaining the independence of
PricewaterhouseCoopers LLP and has determined that such services have not
adversely affected the independence of PricewaterhouseCoopers LLP.
ADMINISTRATOR
The administrator to the Fund is PFPC, Inc. Its principal office
is located at 211 South Gulph Road, P.O. Box 61503, King of Prussia, PA
19406.
PRINCIPAL UNDERWRITER
The principal underwriter for the Fund is M.J. Whitman, Inc.
("MJW, Inc."). Its principal office is located at 767 Third Avenue, New
York, NY 10017. For the fiscal year ended December 31, 2001, the Fund paid
brokerage commissions of $205,872 to MJW, Inc. representing 93.73% of total
brokerage commissions paid by the Fund. In connection with the Closing,
MJW, Inc. will transfer substantially all of its business to the Broker,
which subsequently will act as the Fund's distributor. It is anticipated
that the Fund will continue to execute portfolio transactions through the
Broker following the Closing.
SHARES OUTSTANDING
At the close of business on the Record Date, the Fund had ___
shares outstanding.
REQUIRED VOTE
Some proposals require more votes than others to be approved. An
affirmative vote of a majority of the Fund's outstanding shares on the
Record Date, or if less, at least two-thirds of the shares of the Fund
present at the meeting (if holders of more than 50% of the outstanding
shares are present in person or by proxy) is necessary to approve its New
Advisory Agreement. Trustees are elected by a plurality of the votes cast
at the Meeting. Broker non-votes are shares held in street name for which
the broker indicates that instructions have not been received from the
beneficial owners or other persons entitled to vote and for which the
broker does not have discretionary authority.
Under current law, insurance companies will vote shares of the
Fund they own based on instructions received from the owners of Insurance
Contracts. Shares for which an insurance company does not receive
instructions in time to be voted will be voted by such insurance company in
the same proportion as shares for which instructions have been received in
time to be voted. Shares held by an insurance company for its own account
also will be voted by such insurance company in the same proportion as
shares for which instructions have been received from contract owners.
Because the Fund is owned only by Insurance Companies on
behalf of their separate accounts to fund benefits under Insurance
Contracts, the Fund believes that it is unlikely that there will be broker
non-votes.
Abstentions will be counted as shares present for purposes of
determining whether a quorum is present but will not be voted for or
against any adjournment or proposal. Accordingly, abstentions effectively
will be a vote against adjournment or against Proposal 2.
PROXIES
The proxies named on the enclosed proxy card are Michael T. Carney
and W. James Hall, who are senior officers of the Manager. Proxies may be
revoked by shareholders of record at any time before they are exercised by
giving notice of revocation to the Trust in writing (by subsequent proxy or
otherwise). Presence at the Special Meeting does not itself revoke a proxy.
Proxies that are signed by shareholders of record but do not indicate a
vote on a Proposal will be voted for the Proposal. Voting instructions may
be revoked at any time before they are exercised by giving notice of
revocation to the insurance company in writing, by subsequent voting
instructions or otherwise.
RECEIPT OF SHAREHOLDER PROPOSALS
Under the proxy rules of the Securities and Exchange Commission,
shareholder proposals meeting tests contained in those rules may, under
certain conditions, be included in the Trust's proxy materials for a
particular meeting of shareholders. One of these conditions relates to the
timely receipt by the Trust of any such proposal. Since the Trust does not
have regular annual meetings of shareholders, under these rules, proposals
submitted for inclusion in the proxy materials for a particular meeting
must be received by the Trust within a reasonable time before the
solicitation of proxies for the meeting is made. The fact that the Trust
receives a shareholder proposal in a timely manner does not ensure its
inclusion in the proxy materials since there are other requirements in the
proxy rules relating to such inclusion.
OTHER MATTERS
The Board of Trustees knows of no other matters that may come
before the Special Meeting. If any other matters properly come before the
Special Meeting, it is the intention of the persons acting pursuant to the
enclosed form of proxy to vote the shares represented by said proxies in
accordance with their best judgment with respect to such matters.
IF YOU WOULD LIKE TO RECEIVE A COPY OF THE LATEST ANNUAL REPORT
FOR THE FUND, PLEASE WRITE TO THE THIRD AVENUE FUNDS AT 767 THIRD AVENUE,
NEW YORK, NY 10017, ATTENTION: MARKETING DEPARTMENT, OR BY CALLING (800)
443-1021 OR BY CONTACTING YOUR INSURANCE COMPANY. THE COMPANIES WILL
FURNISH THESE COPIES FREE OF CHARGE.
THIRD AVENUE VARIABLE SERIES TRUST
W. James Hall
Secretary
New York, New York
June 17, 2002
APPENDIX A
FORM OF INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement dated as of _________2002, between
Third Avenue Variable Series Trust (the "Trust"), a Delaware business
trust, on behalf of its series, Third Avenue Value Portfolio (the "Fund"),
and Third Avenue Management LLC (the "Adviser"), a Delaware limited
liability company.
In consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. In General
The Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Fund with respect to the investment of the assets
of the Fund and to supervise and arrange the purchase and sale of assets
held in the investment portfolio of the Trust. The Adviser may delegate any
or all of its responsibilities to one or more sub-advisers or
administrators, subject to the approval of the Board of Trustees of the
Trust. Such delegation shall not relieve the Adviser of its duties and
responsibilities hereunder.
2. Duties and Obligations of the Adviser With Respect to
Investments of Assets of the Fund
(a) Subject to the succeeding provisions of this paragraph
and subject to the direction and control of the Trust's Board of Trustees,
the Adviser shall (i) act as investment adviser for and supervise and
manage the investment and reinvestment of the Fund's assets and in
connection therewith have complete discretion in purchasing and selling
securities and other assets for the Fund and in voting, exercising consents
and exercising all other rights appertaining to such securities and other
assets on behalf of the Fund; and (ii) arrange for the purchase and sale of
securities and other assets held in the investment portfolio of the Fund.
Nothing contained herein shall be construed to restrict the Fund's right to
hire its own employees or to contract separately with the Adviser or others
to provide administrative services to the Fund, including but not limited
to, the calculation of net asset value of the Fund's shares.
(b) In the performance of its duties under this Agreement,
the Adviser shall at all times use all reasonable efforts to conform to,
and act in accordance with, any requirements imposed by (i) the provisions
of the Investment Company Act of 1940, as amended (the "Act"), and of any
rules or regulations in force thereunder; (ii) any other applicable
provisions of law; (iii) the provisions of the Trust Instrument and By-Laws
of the Trust, as such documents are amended from time to time; (iv) the
investment objective, policies and restrictions applicable to the Fund as
set forth in the Fund's Prospectus (including its Statement of Additional
Information) and (v) any policies and determinations of the Board of
Trustees of the Trust.
(c) The Adviser will seek to provide qualified personnel to
fulfill its duties hereunder and will bear all costs and expenses
(including any overhead and personnel costs) incurred in connection with
its duties hereunder and shall bear the costs of any salaries or trustees
fees of any officers or trustees of the Trust who are affiliated persons
(as defined in the Act) of the Adviser. Subject to the foregoing, the Fund
shall be responsible for the payment of all the Fund's other expenses,
including (i) payment of the fees payable to the Adviser under paragraph 4
hereof; (ii) organizational expenses; (iii) brokerage fees and commissions;
(iv) taxes; (v) interest charges on borrowing; (vi) the cost of liability
insurance or fidelity bond coverage for the Fund's officers and employees,
and trustees' and officers' errors and omissions insurance coverage; (vii)
legal, auditing, and accounting fees and expenses; (viii) charges of the
Fund's administrator, custodian, transfer agent and other service
providers; (ix) the Fund's pro rata portion of dues, fees and charges of
any trade association of which the Fund is a member; (x) the expenses of
printing, preparing and mailing proxies, stock certificates and reports,
including the Fund's prospectus and statements of additional information,
and notices to shareholders; (xi) filing fees for the registration or
qualification of the Fund and its shares under federal or state securities
laws; (xii) the fees and expenses involved in registering and maintaining
registration of the Fund's shares with the Securities and Exchange
Commission; (xiii) the expenses of holding shareholder meetings; (xiv) the
compensation, including fees, of any of the Trust's trustees, officers or
employees who are not affiliated persons of the Adviser; (xv) all expenses
of computing the Fund's net asset value per share, including any equipment
or services obtained solely for the purpose of pricing shares or valuing
the Fund's investment portfolio; (xvi) expenses of personnel performing
shareholder servicing functions and all other distribution expenses payable
by the Fund; (xvii) expenses of redemption of shares and (xviii) litigation
and other extraordinary or non-recurring expenses and other expenses
properly payable by the Fund.
(d) The Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, but neither the
Adviser nor any of its officers, directors, employees, agents or
controlling persons shall be liable for any act or omission or for any loss
sustained by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties under this agreement,
provided, however, that the foregoing shall not constitute a waiver of any
rights which the Fund may have which may not be waived under applicable
law.
(e) Nothing in this Agreement shall prevent the Adviser or
any director, officer, employee or other affiliate thereof from acting as
investment adviser for any other person, firm or corporation, or from
engaging in any other lawful activity, and shall not in any way limit or
restrict the Adviser or any of its directors, employees or agents from
buying, selling or trading any securities for its or their own accounts or
for the accounts of others for whom it or they may be acting.
3. Portfolio Transactions
In the course of the Adviser's execution of portfolio transactions
for the Fund, it is agreed that the Adviser shall employ securities brokers
and dealers which, in its judgment, will be able to satisfy the policy of
the Fund to seek the best execution of its portfolio transactions at
reasonable expenses. For purposes of this Agreement, "best execution" shall
mean prompt, efficient and reliable execution at the most favorable price
obtainable. Under such conditions as may be specified by the Trust's Board
of Trustees in the interest of its shareholders and to ensure compliance
with applicable law and regulations, the Adviser may (a) place orders for
the purchase or sale of the Fund's portfolio securities with its
affiliates, M.J. Whitman LLC and Private Debt LLC; (b) pay commissions to
brokers other than its affiliates which are higher than might be charged by
another qualified broker or obtain brokerage and/or research services
considered by the Adviser to be useful or desirable in the performance of
its duties hereunder and for the investment management of other advisory
accounts over which it or its affiliates exercise investment discretion;
and (c) consider sales by brokers (other than its affiliated distributor)
of shares of the Fund and any other mutual fund for which it or its
affiliates act as investment adviser, as a factor in its selection of
brokers and dealers for the Fund's portfolio transactions.
4. Compensation of the Adviser
(a) The Fund agrees to pay to the Adviser out of the Fund's
assets and the Adviser agrees to accept as full compensation for all
services rendered by or through the Adviser a fee computed daily and
payable monthly in arrears an amount equal to 1/12 of 0.90% of the Fund's
daily average net assets for such month. For any period less than a month
during which this Agreement is in effect, the fee shall be prorated
according to the proportion which such period bears to a full month of 28,
29, 30 or 31 days, as the case may be.
(b) For purposes of this Agreement, the net assets of the
Fund shall be calculated pursuant to the procedures adopted by resolutions
of the Trustees of the Trust for calculating the net asset value of the
Fund's shares.
5. Indemnity
(a) The Fund hereby agrees to indemnify the Adviser and each
of the Adviser's directors, officers, employees, and agents (including any
individual who serves at the Adviser's request as director, officer,
partner, trustee or the like of another corporation) and controlling
persons (each such person being an "indemnitee") against any liabilities
and expenses, including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees (all as provided in
accordance with applicable corporate law) reasonably incurred by such
indemnitee in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body which he may be or may have been
involved as a party or otherwise or with which he may have been threatened,
while acting in any capacity set forth above in this paragraph or
thereafter by reason of his having acted in any such capacity, except with
respect to any matter as to which he shall have been adjudicated not to
have acted in good faith in the reasonable belief that his action was in
the best interest of the Fund and furthermore, in the case of any criminal
proceeding, so long as he had no reasonable cause to believe that the
conduct was unlawful, provided, however, that (1) no indemnitee shall be
indemnified hereunder against any liability to the Fund or its shareholders
or any expense of such indemnitee arising by reason of (i) willful
misfeasance, (ii) bad faith, (iii) gross negligence (iv) reckless disregard
of the duties involved in the conduct of his position (the conduct referred
to in such clauses (i) through (iv) being sometimes referred to herein as
"disabling conduct"), (2) as to any matter disposed of by settlement or a
compromise payment by such indemnitee, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless there has been a determination that such
settlement or compromise is in the best interests of the Fund and that such
indemnitee appears to have acted in good faith in the reasonable belief
that his action was in the best interest of the Fund and did not involve
disabling conduct by such indemnitee and (3) with respect to any action,
suit or other proceeding voluntarily prosecuted by any indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of
such action, suit or other proceeding by such indemnitee was authorized by
a majority of the full Board of the Trust. Notwithstanding the foregoing,
the Fund shall not be obligated to provide such indemnification (i) to the
extent such provision would waive any right which the Fund cannot lawfully
waive or (ii) with respect to any obligation, liability or expense of any
other series of shares of the Trust.
(b) The Fund shall make advance payments in connection with
the expenses of defending any action with respect to which indemnification
might be sought hereunder if the Fund receives a written affirmation of the
indemnitee's good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to reimburse the
Fund unless it is subsequently determined that he is entitled to such
indemnification and if the trustees of the Trust determine that the facts
then known to them would not preclude indemnification. In addition, at
least one of the following conditions must be met: (A) the indemnitee shall
provide a security for his undertaking, (B) the Fund shall be insured
against losses arising by reason of any lawful advances, or (C) a majority
of a quorum of trustees of the Trust who are neither "interested persons"
of the Trust (as defined in Section 2(a)(19) of the Act) nor parties to the
proceeding ("Disinterested Non-Party Trustees") or an independent legal
counsel in a written opinion, shall determine based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the indemnitee ultimately will be found entitled to
indemnification.
(c) All determinations with respect to indemnification
hereunder shall be made (1) by a final decision on the merits by a court or
other body before whom the proceeding was brought that such indemnitee is
not liable by reason of disabling conduct or, (2) in the absence of such a
decision, by (i) a majority vote of a quorum of the Disinterested Non-Party
Trustees of the Trust, or (ii) if such a quorum is not obtainable or even,
if obtainable, if a majority vote of such quorum so directs, independent
legal counsel in a written opinion.
The rights accruing to any indemnitee under these
provisions shall not exclude any other right to which he may be lawfully
entitled.
6. Duration and Termination
This Agreement shall become effective upon the date hereof and
shall continue in effect for a period of two years and thereafter from year
to year, but only so long as such continuation is specifically approved at
least annually in accordance with the requirements of the Act.
This Agreement may be terminated by the Adviser at any time
without penalty upon giving the Fund sixty days written notice (which may
be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving the Adviser sixty days notice (which notice may
be waived by the Adviser), provided that such termination by the Fund shall
be directed or approved by the vote of a majority of the Trustees of the
Trust in office at the time or by the vote of the holders of a "majority of
the voting securities" (as defined in the Act) of the Fund at the time
outstanding and entitled to vote. This Agreement shall terminate
automatically in the event of its assignment (as "assignment" is defined in
the Act and the rules thereunder).
It is understood and hereby agreed that the name "Third Avenue"
and any associated logo and mask are the property of the Adviser for
copyright and other purposes. The Fund further agrees that the words "Third
Avenue" may freely be used by the Adviser for other investment companies,
entities or products. The Fund further agrees that, in the event that the
Adviser shall cease to act as investment adviser to the Fund, the Fund
shall promptly take all necessary and appropriate action to change its name
to names which do not include the words "Third Avenue"; provided, however,
that the Fund may continue to use the words "Third Avenue" if the Adviser
consents in writing to such use.
7. Notices
Any notice under this Agreement shall be in writing to the other
party at such address as the other party may designate from time to time
for the receipt of such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth day after the
postmark if such notice is mailed first class postage prepaid.
8. Governing Law
This Agreement shall be construed in accordance with the laws of
the State of New York for contracts to be performed entirely therein and in
accordance with the applicable provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the
day and the year first above written.
THIRD AVENUE VARIABLE SERIES TRUST,
FOR THE THIRD AVENUE VALUE PORTFOLIO
By:___________________________________
Name:
Title:
THIRD AVENUE MANAGEMENT LLC
By:___________________________________
Name:
Title:
FORM OF PROXY CARD
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
August 7, 2002
THIRD AVENUE VARIABLE SERIES TRUST (the "Trust")
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael T. Carney and W. James Hall as
proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side
hereof, all the shares of common shares of Third Avenue Value Portfolio
(the "Fund") held of record by the undersigned on June 27, 2002 at the
Special Meeting of Shareholders of the Trust to be held on August 7, 2002
or at any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER, IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
PLEASE MARK BOXES IN BLUE OR BLACK INK.
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE PAID ENVELOPE.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- -------------------------------- ---------------------------------
- -------------------------------- ---------------------------------
- -------------------------------- ---------------------------------
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIRD AVENUE VALUE PORTFOLIO
Mark box at right if an address change or comment has been
noted on the reverse side of this card. [_]
Vote on Proposals:
1. Election of Trustees:
David M. Barse, Martin J. Whitman, Jack W. Aber, William E. Chapman II,
Lucinda Franks, Edward J. Kaier, Marvin Moser, Eric Rakowski, Martin
Shubik and Charles C. Walden
[ ] [ ] ----------
For All Withhold from For All
Nominees All Nominees Nominees
except as
noted above
2. To approve a new Investment Advisory Agreement for the Fund between the
Trust, on behalf of the Fund, and Third Avenue Management LLC
[ ] [ ] [ ]
For Against Abstain
Please be sure to sign and date this proxy. Date
[Name of Insurance Company]
[Name of Separate Account]
FORM OF VOTING INSTRUCTION CARD
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
August 7, 2002
THIRD AVENUE VARIABLE SERIES TRUST (the "Trust")
At the Special Meeting of Shareholders of the Trust scheduled to
be held on August 7, 2002, and at any adjournments thereof, the undersigned
owner of [an annuity contract] participating in [Name of Separate Account]
hereby instructs [Name of Insurance Company] to vote shares of the Third
Avenue Value Portfolio of the Trust held under my contract or policy (the
"Shares") in accordance with the instructions set forth on this card, and
to vote the Shares on any other matters that may properly come before the
meeting, all as set forth in the Notice of Special Meeting and Proxy
Statement that accompanied this Voting Instruction Card.
The undersigned instructs [name of insurance company] to vote the Shares as
follows:
1. Election of Trustees:
David M. Barse, Martin J. Whitman, Jack W. Aber, William E. Chapman
II, Lucinda Franks, Edward J. Kaier, Marvin Moser, Eric Rakowski,
Martin Shubik and Charles C. Walden
[ ] [ ] ----------
For All Withhold from For All
Nominees All Nominees Nominees
except as
noted above
2. To approve a new Investment Advisory Agreement for the Fund between
the Trust, on behalf of the Fund, and Third Avenue Management LLC
[ ] [ ] [ ]
For Against Abstain
The Shares will be voted as directed. If no instruction is given
on Proposals above, the Shares will be voted "FOR" the Proposals described
in the Proxy Statement. [Name of Insurance Company] will vote on any other
business that may properly come before the meeting in the discretion of its
management.
The undersigned acknowledges receipt with this voting instruction
card along with a copy of the Notice of Special Meeting of Shareholders and
the Proxy Statement of the Board of Trustees of the Trust.
Please be sure to sign and date this voting instruction card.
________________________________ Dated:
Signature