(File Nos. 2-91362 and 811-4040)
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
PAINEWEBBER MANAGED INVESTMENTS TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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PAINEWEBBER MANAGED INVESTMENTS TRUST-
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
March 16, 2000
To the Shareholders:
Notice is hereby given that a special meeting of shareholders of
PaineWebber Low Duration U. S. Government Income Fund ("Fund"), a series of
PaineWebber Managed Investments Trust, will be held at 1285 Avenue of the
Americas, 14th floor, New York, New York 10019 on March 16, 2000 at 10:00 a.m.,
Eastern time, or as adjourned from time to time ("Meeting"), for the following
purposes:
I. To approve or disapprove a new sub-advisory contract with
Pacific Investment Management Company;
II. To approve or disapprove a policy to permit the Board of Trustees
("Board") to appoint and terminate sub-advisers, enter into
sub-advisory contracts, and approve amendments to sub-advisory
contracts on behalf of the Fund without further shareholder
approval; and
III. To transact such other business as may properly come before the
Meeting.
After careful consideration, the Board approved each of the proposals and
recommends that shareholders vote "FOR" each proposal.
The matters referred to above are discussed in detail in the proxy
statement attached to this notice. The Board has fixed the close of business on
January 21, 2000 as the record date for determining shareholders entitled to
notice of, and to vote at, the Meeting. Each share of the Fund is entitled to
one vote with respect to proposals on which the Fund's shareholders are entitled
to vote, with fractional votes for fractional shares.
Regardless of whether you plan to attend the Meeting, which you are
cordially invited to attend, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED OR VOTE VIA TELEPHONE OR THE
INTERNET AS DESCRIBED BELOW, SO THAT YOU WILL BE REPRESENTED AT THE MEETING. If
you have returned a proxy card or voted via telephone or the Internet and are
present at the Meeting, you may change the vote previously specified at that
time. However, attendance in person at the Meeting, by itself, will not revoke a
previously tendered proxy.
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By Order of the Board of Trustees,
------------------------------
Dianne E. O'Donnell
Secretary
51 West 52nd Street
New York, NY 10019-6114
February 15, 2000
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, sign
and date the card and return it in the envelope provided. IF YOU SIGN, DATE AND
RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE PROPOSALS DESCRIBED ABOVE. In order to avoid the additional expense of
further solicitation, we ask your cooperation in mailing your proxy card
promptly. As an alternative to using the paper proxy card to vote, you may vote
shares that are registered in your name, as well as shares held in "street name"
through a broker, via the Internet or telephone. To vote in this manner, you
will need the 14-digit "control" number(s) that appear on your proxy card(s).
To vote via the Internet, please access https://vote.proxy-direct.com on
the World Wide Web and follow the on-screen instructions.
You may also call 1-888-634-9904 and vote by telephone.
If we do not receive your completed proxy cards after several weeks, you
may be contacted by our proxy solicitor, Shareholder Communications Corporation.
Our proxy solicitor will remind you to vote your shares or will record your vote
over the phone if you choose to vote in that manner.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
<TABLE>
<CAPTION>
Registration Valid Signature
------------ ---------------
<S> <C>
Corporate Accounts
(1) ABC Corp........................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp........................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer.................. John Doe
(4) ABC Corp. Profit Sharing Plan...................... John Doe, Trustee
Partnership Accounts
(1) The XYZ Partnership................................ Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership............... Jane B. Smith, General Partner
Trust Accounts
(1) ABC Trust Account.................................. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o
John B. Smith, Jr., UGMA/UTMA...................... John B. Smith
(2) Estate of John B. Smith............................ John B. Smith, Jr., Executor
</TABLE>
<PAGE>
PAINEWEBBER MANAGED INVESTMENTS TRUST--
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD March 16, 2000
This proxy statement and enclosed form of proxy are being furnished in
connection with THE SOLICITATION OF PROXIES BY THE BOARD OF TRUSTEES ("BOARD")
OF PAINEWEBBER MANAGED INVESTMENTS TRUST ("Trust") for use at a special meeting
of shareholders of PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
("Fund"), a series of the Trust, to be held at 1285 Avenue of the Americas, 14th
floor, New York, NY 10019 on March 16, 2000 at 10:00 a.m., Eastern time, or as
adjourned from time to time ("Meeting"), for the purposes set forth below. It is
anticipated that the first mailing of proxies and proxy statements to
shareholders will be on or about February 16, 2000.
The Board is soliciting proxies from shareholders of the Fund with respect
to the following proposals:
I. To approve or disapprove a new sub-advisory contract with
Pacific Investment Management Company;
II. To approve or disapprove a policy to permit the Board to appoint and
terminate sub-advisers, enter into sub-advisory contracts, and
approve amendments to sub-advisory contracts on behalf of the Fund
without further shareholder approval; and
III. To transact such other business as may properly come before the
Meeting.
Shareholders of record at the close of business on January 21, 2000
("Record Date") are entitled to notice of, and to vote at, the Meeting. Each
shareholder is entitled to one vote for each full share, and a fractional vote
for each fractional share held. If you give no voting instructions, your shares
will be voted "FOR" the proposals described in this proxy statement. Information
about the vote necessary with respect to each proposal is discussed below in
connection with the proposal.
Timely, properly executed proxies will be voted as instructed by
shareholders. A shareholder may revoke his or her proxy at any time prior to its
exercise by written notice received by the Secretary of the Fund prior to the
Meeting or by voting in person at the Meeting. To be effective, the written
notice must include the shareholder's name and account number and must be
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addressed to the Fund at the principal executive offices of the Fund at 51 West
52nd Street, New York, New York 10019-6114. Attendance in person at the Meeting
by itself will not revoke a previously tendered proxy.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of the Fund is required to constitute a quorum at the
Meeting. Shares held by shareholders present in person or represented by proxy
at the Meeting will be counted both for the purposes of determining the presence
of a quorum and for calculating the votes cast on the issues before the Meeting.
Broker "non-votes" are proxies from brokers or nominees as to which (a)
instructions have not been received from the beneficial owner or other persons
entitled to vote shares on a particular matter and (b) the brokers or nominees
do not have discretionary voting power on a particular matter. Abstentions and
broker non-votes will be counted as shares present for purposes of determining
whether a quorum is present but will not be voted for or against any adjournment
or proposal. Thus, abstentions and non-votes will have the same effect as a
negative vote on adjournment and on the proposals, which require the affirmative
vote of a specified portion of the Fund's outstanding shares. Pursuant to the
rules and policies of the New York Stock Exchange, members of the Exchange may
vote on certain of the proposals to be considered at the Meeting without
instructions from the beneficial owners of the Fund's shares.
In the absence of a quorum or in the event that a quorum is present at the
Meeting but sufficient votes to approve any proposal are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies or to obtain the vote required for
approval of one or more proposals. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote those proxies which
they are entitled to vote "FOR" the proposal in favor of such an adjournment and
will vote those proxies required to be voted "AGAINST" the proposal against any
such adjournment. A shareholder vote may be taken prior to any adjournment of
the Meeting on any proposal for which there are sufficient votes for approval
and it is otherwise appropriate, even though the Meeting is adjourned as to
other proposals.
As of the Record Date, the Fund had 69,537,745 shares issued and
outstanding, consisting of 41,279,000 Class A shares, 2,247,951 Class B
shares, 25,200,038 Class C shares and 810,757 Class Y shares.
COPIES OF THE FUND'S MOST RECENT ANNUAL REPORT, CONTAINING FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1999, HAVE PREVIOUSLY BEEN
FURNISHED TO SHAREHOLDERS. SHAREHOLDERS MAY REQUEST ANOTHER COPY OF THIS REPORT,
WITHOUT CHARGE, BY WRITING TO THE FUND AT 51 WEST 52ND STREET, NEW YORK, NEW
YORK 10019-6114, OR BY CALLING 1-800-647-1568.
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PROPOSAL I: TO APPROVE OR DISAPPROVE A NEW SUB-ADVISORY CONTRACT WITH
PACIFIC INVESTMENT MANAGEMENT COMPANY
INTRODUCTION. Since October 1994, Pacific Investment Management Company
("PIMCO") has served as investment sub-adviser to the Fund pursuant to a
sub-advisory contract ("Current Sub-Advisory Contract"). PIMCO will undergo a
change of control as a result of the consummation of the transaction described
below, resulting in the assignment, and therefore automatic termination, of the
Current Sub-Advisory Contract. Upon completion of the transaction, PIMCO
Advisors, L.P. ("PIMCO Advisors") and its subsidiaries, including PIMCO, will be
controlled by Allianz of America, Inc. ("Allianz of America"). It is proposed
that PIMCO continue to serve as investment sub-adviser of the Fund following
completion of the transaction. Therefore, in connection with the transaction and
as required by the Investment Company Act of 1940, as amended ("1940 Act"),
shareholders of the Fund are being asked in Proposal I to approve a new
sub-advisory contract which is substantially similar to the Current Sub-Advisory
Contract ("New Sub-Advisory Contract") except as described herein. The Board of
the Trust recommends that shareholders approve the New Sub-Advisory Contract, a
form of which is attached as Appendix A.
PIMCO is a subsidiary partnership of PIMCO Advisors. The general partners
of PIMCO Advisors are PIMCO Partners, G.P. ("Partners G.P.") and PIMCO Advisors
Holdings L.P. ("PAH"). Partners G.P. is a general partnership between PIMCO
Holding LLC, a Delaware limited liability company and an indirect wholly owned
subsidiary of Pacific Life Insurance Company ("Pacific Life"), and PIMCO
Partners LLC ("Partners LLC"), a California limited liability company controlled
by the current managing directors and two former managing directors of PIMCO
("Managing Directors"). PAH is a publicly traded Delaware limited partnership
and its primary source of income is its proportionate share of the net income of
PIMCO Advisors. Partners G.P. is the sole general partner of PAH. The address of
all the above entities, with the exception of Pacific Life, is 800 Newport
Center Drive, Newport Beach, California 92660. Pacific Life is located at 700
Newport Center Drive, Newport Beach, California 92660.
DESCRIPTION OF THE TRANSACTION. On October 31, 1999, PIMCO Advisors, PAH,
Partners G.P., certain of their affiliates, Allianz of America and certain other
parties named therein entered into an Implementation and Merger Agreement
("Merger Agreement") pursuant to which Allianz of America will acquire majority
ownership of PIMCO Advisors ("Transaction").
The Merger Agreement provides for the acquisition of PAH by Allianz of
America through a merger of a subsidiary of Allianz of America with and into
PAH. In the merger, each of the outstanding limited partnership and general
partner units in PAH will be converted into the right to receive in cash an
amount per unit equal to $38.75, subject to a downward adjustment if the
aggregate annualized investment advisory and sub-advisory fees for all accounts
managed by PIMCO Advisors and its subsidiaries, expressed as a "revenue
run-rate," declines (excluding market-based changes) below a specified level
("Unit Transaction Price"). In no event will the Unit Transaction Price be
reduced below $31.00 per unit. As a result of the merger, PAH will become an
indirect wholly owned subsidiary of Allianz of America.
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Following the merger, subsidiaries of Allianz of America will, in a series
of transactions, acquire for cash additional partnership interests in PIMCO
Advisors, bringing its ownership interest in PIMCO Advisors to approximately
70%, including the approximately 44% interest held through PAH. As part of the
Transaction, a subsidiary of Allianz of America will acquire Partners G.P.
through an acquisition of the managing general partner interest in Partners G.P.
from Partners LLC (the managing general partner of Partners G.P.) for
approximately $5.5 million and of the member interests in Partners G.P. that are
indirectly owned by Pacific Life. Pacific Life, which through subsidiaries owns
approximately a 30% interest in PIMCO Advisors, will retain an indirect interest
in PIMCO Advisors following the closing. As a result of the Transaction, Allianz
of America will control PIMCO Advisors, having acquired approximately 70% of the
outstanding partnership interests in PIMCO Advisors for a total consideration of
approximately $3.3 billion, while the remainder will continue to be owned by
Pacific Life.
In connection with the closing, Allianz of America will enter into a
put/call arrangement for the possible disposition of Pacific Life's indirect
interest in PIMCO Advisors. The put option held by Pacific Life will allow it to
require Allianz of America, on the last business day of each calendar quarter
following the closing of the Transaction, to purchase at a formula-based price
all of the PIMCO Advisors units owned directly or indirectly by Pacific Life.
The call option held by Allianz of America will allow it, beginning January 31,
2003 or upon a change in control of Pacific Life, to require Pacific Life to
sell or cause to be sold to Allianz of America, at the same price, all of the
PIMCO Advisors units owned directly or indirectly by Pacific Life.
The Transaction is expected to be completed by the end of the first
quarter of 2000, although there is no assurance that the Transaction will be
completed. Completion of the Transaction is subject to a number of conditions,
including, among others, (i) the approval of the public unitholders of PAH, (ii)
the receipt of certain regulatory approvals, and (iii) PIMCO Advisors' revenue
run-rate (excluding market-based changes) for all accounts managed by PIMCO
Advisors and its subsidiaries being at least 75% of the September 30, 1999
revenue run-rate amount. Approval of the New Sub-Advisory Contract by the
shareholders of the Fund will help satisfy condition (iii) described in the
preceding sentence by maintaining PIMCO's sub-advisory relationship with the
Fund. If the Transaction is not completed for any reason, the Current
Sub-Advisory Contract will remain in effect. In the event the New Sub-Advisory
Contract is not approved by the Fund's shareholders and the Transaction is
completed, the Board will consider appropriate action.
Pursuant to the Merger Agreement, PIMCO Advisors and PIMCO will enter into
employment, retention and incentive arrangements with key employees of PIMCO
Advisors and PIMCO. These benefits include new employment agreements, retention
and incentive awards vesting over a term of years and restricted stock grants.
In addition, certain key employees of PIMCO Advisors' investment advisory
subsidiaries will receive payments in respect of previously existing
non-competition arrangements in connection with the acquisition by Allianz of
America of the PIMCO Advisors units on which such arrangements were based.
Allianz of America and each of the other parties to the Merger Agreement
have agreed to use reasonable best efforts to ensure compliance with Section
15(f) of the 1940 Act as it applies to the Transaction. Section 15(f) provides a
non-exclusive safe harbor for PIMCO or any affiliated persons to receive any
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amount or benefit in connection with the "change of control" if two conditions
are met. First, the Transaction must not impose any unfair burden on any
investment company client of the adviser, including the Fund. Second, during the
three-year period after the Transaction, at least 75% of the board of each
investment company client, including the Trust, must not be interested persons
of PIMCO (or any predecessor or successor adviser). Currently, no trustee of the
Trust is an interested person of PIMCO, and PIMCO has advised the Board that it
is not aware of any circumstances arising from the Transaction that would impose
an unfair burden on the Fund.
POST-TRANSACTION STRUCTURE AND OPERATIONS. Upon completion of the
Transaction, PIMCO Advisors and its subsidiaries, including PIMCO, will be
controlled by Allianz of America. Allianz of America is a holding company that
owns several insurance and financial service companies and is a subsidiary of
Allianz AG. Allianz of America will control PIMCO Advisors through its managing
member interest in Pacific-Allianz Partners LLC ("PacPartners LLC"), which will
be the sole general partner of PIMCO Advisors following the Transaction. While
Allianz of America will control PacPartners LLC, Pacific Life will hold a
portion of its continuing interest in PIMCO Advisors through an interest in
PacPartners LLC. Allianz of America, through subsidiaries, will be the managing
member of PacPartners LLC and will have the full authority and control over all
actions taken by PacPartners LLC as the general partner of PIMCO Advisors,
provided that Pacific Life's consent is required for certain extraordinary
actions.
Operationally, PIMCO is expected to remain independent and to lead the
global fixed income investment efforts of Allianz AG. In this regard, PIMCO will
coordinate its activities with Allianz Asset Management ("AAM"), a subsidiary of
Allianz AG that coordinates global Allianz asset management activities. To
permit the provision of advisory services to non-U.S. clients of Allianz AG,
PIMCO personnel, including personnel with portfolio management responsibility
for the Fund, may become affiliated with AAM or other Allianz-controlled
advisory firms. PIMCO also may call upon the research capabilities and resources
of Allianz AG and its advisory affiliates in connection with providing
investment advice to its clients. PIMCO is currently expected to continue to
operate in the United States under its existing name.
Both William S. Thompson, Jr., the current Chief Executive Officer of
PIMCO, and William H. Gross, the current Chief Investment Officer of PIMCO, will
have roles on the Executive Committee of AAM, with Mr. Thompson serving as the
Executive Committee's Deputy Chairman. Messrs. Thompson and Gross will enter
into employment contracts with a term of seven years following the Transaction.
Other key employees of PIMCO and PIMCO Advisors, including the Managing
Directors, have also contractually agreed to remain with PIMCO for significant
periods following the Transaction.
DESCRIPTION OF ALLIANZ AG AND ITS AFFILIATES. Allianz AG, the parent of
Allianz of America, is a German AKTIENGESELLSCHQFT (a German publicly-traded
company) which, together with its subsidiaries, comprises the world's second
largest insurance group as measured by premium income. Allianz AG is a leading
provider of financial services, particularly in Europe, and is represented in 68
countries world-wide through subsidiaries, branch and representative offices,
and other affiliated entities. The Allianz group currently has assets under
management of more than $390 billion, and in its last fiscal year wrote
approximately $50 billion in gross insurance premiums. After completion of the
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Transaction, PIMCO and the Allianz group combined will have over $650 billion in
assets under management. Allianz AG's address is: Koniginstrasse 28, D-80802,
Munich, Germany.
Significant institutional shareholders of Allianz AG currently include,
among others, Dresdner Bank AG, Deutsche Bank AG, Munich Reinsurance and
HypoVereinsbank. Following completion of the Transaction, Dresdner Bank AG and
Deutsche Bank AG, as well as certain broker-dealers that might be deemed to be
affiliated with these entities, such as Bankers Trust Company, BT Alex Brown,
Inc., Deutsche Bank Securities, Inc. and Dresdner Kleinwort Benson North America
LLC (collectively, the "Affiliated Brokers"), may be considered to be affiliated
persons of PIMCO. Once the Transaction is completed, absent an exemption from
the U.S. Securities and Exchange Commission ("SEC") or other relief, the Fund
generally would be precluded from effecting principal transactions with the
Affiliated Brokers, and their ability to purchase securities being underwritten
by an Affiliated Broker or to utilize the Affiliated Brokers for agency
transactions would be subject to restrictions. PIMCO does not believe that
applicable restrictions on transactions with the Affiliated Brokers described
above will materially adversely affect its ability, post-closing, to provide
services to the Fund, the Fund's ability to take advantage of market
opportunities, or the Fund's overall performance. Other series of the Trust for
which PIMCO (or an affiliate) does not serve as an investment sub-adviser would
not, in general, be subject to these same restrictions post-closing.
ANTICIPATED IMPACT OF THE TRANSACTION ON MANAGEMENT OF THE FUND. PIMCO has
received structural and contractual protections as terms of the Transaction that
ensure PIMCO's operational autonomy and continuity of management. PIMCO is
confident that Allianz AG is committed to the people and process that have led
to PIMCO's success over the years. Accordingly, PIMCO has represented to
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins") and the Fund's
Board that the Transaction should have no immediate impact, other than as
already noted above, on the management of the Fund or PIMCO's capacity to
provide the type, quality, or quantity of services that it currently provides,
and the Fund should continue to receive the same high quality of service after
the Transaction. As discussed below, however, PIMCO believes that the
Transaction offers the potential to enhance significantly its future ability to
deliver quality sub-advisory services.
THE BENEFITS OF THE TRANSACTION. PIMCO has represented to Mitchell
Hutchins that it anticipates that the Transaction with Allianz AG will benefit
PIMCO and the Fund in a variety of ways, including the following:
o PIMCO's investment expertise will be enhanced because of the
business experience and relationships that Allianz AG has built
around the globe, particularly in Europe. PIMCO's access to European
markets and business opportunities will be greatly enhanced by
Allianz AG's experience and relationships. The combined global
resources of PIMCO and Allianz AG will allow PIMCO to take advantage
of the growth in international markets and the explosive potential
for premier money managers in the global marketplace.
o Allianz AG has a team of fixed income professionals in place that
currently manages more than $100 billion in assets. Integration of
these professionals and assets with PIMCO provides an excellent
opportunity for furthering PIMCO's global fixed income expertise.
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o The rotation of many of PIMCO's key investment professionals through
international offices and overseas personnel through PIMCO's offices
will result in more seasoned professionals with global experience.
o The combination will provide additional career opportunities for
PIMCO professionals, furthering PIMCO's ability to attract and
retain the best people.
o Allianz AG has a stated growth strategy to be among the top five
providers of its services in the world's key markets, which is a key
factor in PIMCO's decision to proceed with the Transaction. The
combined entity will be the sixth largest investment manager in the
world. The Transaction will significantly increase assets under
PIMCO's management, and will offer the opportunity for continued
growth in the future. Strong relative investment results depend on a
sound, disciplined investment process and effective execution; size
can be a benefit to both.
COMPARISON OF THE CURRENT AND NEW SUB-ADVISORY CONTRACTS. The provisions
of the Current Sub-Advisory Contract and the New Sub-Advisory Contract
(collectively, the "Sub-Advisory Contracts") are substantially similar.
The Current Sub-Advisory Contract, dated November 14, 1994, was last
approved by the Board, including a majority of the Trustees who are not parties
to the Current Sub-Advisory Contract or interested persons (as defined by the
1940 Act) of the Trust (other than as Trustees of the Trust), Mitchell Hutchins
or PIMCO ("Independent Trustees"), at a meeting held on February 10, 2000. The
Current Sub-Advisory Contract was last submitted to shareholders for approval on
October 19, 1994, for the purpose of implementing the Fund's current
sub-advisory arrangements. If the Transaction is not consummated, PIMCO will
continue to serve as investment sub-adviser to the Fund under the Current
Sub-Advisory Contract.
PIMCO has advised the Fund that it currently anticipates that the same
persons responsible for management of the Fund under the Current Sub-Advisory
Contract will continue to be responsible for management of the Fund under the
New Sub-Advisory Contract. PIMCO has advised the Trust that it does not
anticipate that the Transaction will cause any reduction in the quality or types
of services now provided to the Fund or have any adverse effect on PIMCO's
ability to fulfill its obligations to the Fund.
Under both Sub-Advisory Contracts, PIMCO is responsible, subject to the
supervision of the Board and Mitchell Hutchins, for the actual investment
management of the Fund's assets, including placing purchase and sell orders for
investments and for other related transactions. Under those contracts, PIMCO
agrees to provide a continuous investment program for the Fund, including
investment research and management. The New Sub-Advisory Contract provides that
PIMCO may seek research assistance and rely upon resources available to it
through its affiliated companies to the extent that such actions would not
constitute an "assignment" for purposes of the 1940 Act. However, such
assistance and/or reliance will not relieve PIMCO of its obligations under the
New Sub-Advisory Contract. In addition, the New Sub-Advisory Contract provides
that, from time to time, PIMCO will assist in the fair valuation of all
portfolio securities.
Both Sub-Advisory Contracts recognize that PIMCO may, under certain
circumstances, pay higher brokerage commissions by executing portfolio
transactions with brokers who provide PIMCO with research, analysis, advice or
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similar services. In addition, both Sub-Advisory Contracts provide that PIMCO
will vote proxies of issuers of securities held by the Fund and will maintain
all books and records required to be maintained by PIMCO pursuant to the 1940
Act and the rules and regulations promulgated thereunder with respect to
transactions on behalf of the Fund. Both Sub-Advisory Contracts also provide
that PIMCO will furnish the Board and Mitchell Hutchins with such periodic and
special reports as the Board or Mitchell Hutchins reasonably may request, will
provide the Board and Mitchell Hutchins, on a regular basis, with economic and
investment analyses and reports and will make available to the Board and
Mitchell Hutchins upon request any economic, statistical and investment services
normally available to other customers of PIMCO.
Both Sub-Advisory Contracts provide that PIMCO is entitled to receive from
Mitchell Hutchins, and not the Fund, a sub-advisory fee, calculated daily and
paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets.
PIMCO bears all expenses incurred by it (and not the Fund) in connection with
its services under each Sub-Advisory Contract. Neither the Trust nor the Fund
has any responsibility to pay sub-advisory fees to PIMCO. During the Fund's last
fiscal year ended November 30, 1999, Mitchell Hutchins, and not the Fund, paid
PIMCO $342,583 for sub-advisory services.
Both Sub-Advisory Contracts provide that PIMCO will not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund, the
Trust, its shareholders or Mitchell Hutchins in connection with the matters to
which the Sub-Advisory Contract relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under the
Sub-Advisory Contract.
Moreover, both Sub-Advisory Contracts provide for termination, without
payment of any penalty, by vote of the Board or by a vote of a majority of the
Fund's outstanding voting securities on 60 days' written notice to PIMCO.
Mitchell Hutchins may also terminate the Sub-Advisory Contracts, without payment
of any penalty: (1) on 120 days' written notice to PIMCO; (2) upon material
breach by PIMCO of representations and warranties contained in the Sub-Advisory
Contracts, if such breach has not been cured within a 20 day period after notice
of such breach; or (3) immediately if PIMCO becomes unable to discharge its
duties and obligations under the Sub-Advisory Contracts. The New Sub-Advisory
Contract provides the following examples of PIMCO's inability to discharge its
duties and obligations: PIMCO's financial insolvency and circumstances that
could adversely affect the Fund. In addition, PIMCO may terminate the
Sub-Advisory Contracts, without payment of any penalty, on 120 days' written
notice to Mitchell Hutchins. The Sub-Advisory Contracts terminate automatically
in the event of "assignment" (as defined in the 1940 Act).
The New Sub-Advisory Contract includes a few additional provisions. It
provides that neither PIMCO nor any of its affiliates will in any way refer
directly or indirectly to its relationship with the Trust, the Fund, Mitchell
Hutchins or any of their respective affiliates in offering, marketing or other
promotional materials without the express written consent of Mitchell Hutchins.
It also stipulates that PIMCO will notify Mitchell Hutchins if there is a change
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of control or a change in key personnel (e.g., Fund portfolio managers or senior
managers of PIMCO) and specifies notice procedures under the Sub-Advisory
Contract.
The New Sub-Advisory Contract also implements Proposal II by providing
that the Sub-Advisory Contract could be amended without a shareholder vote if
the Fund obtains a SEC order or no-action letter allowing the Trust to modify
the Sub-Advisory Contract without a vote of a majority of the Fund's outstanding
voting securities. Mitchell Hutchins and the Trust have received an order of
exemption from the SEC that permits Mitchell Hutchins not only to terminate the
New Sub-Advisory Contract but also to appoint a new sub-adviser, subject to
approval by the Board of the Trust but not by the holders of a majority of the
outstanding shares of the Trust or the Fund. Shareholders must approve this
policy before it may be implemented. See Proposal II for more information.
At the November 11, 1999 Board meeting, the New Sub-Advisory Contract was
approved unanimously by the Board, including all of the Independent Trustees.
The New Sub-Advisory Contract, as approved by the Board, is submitted for
approval by the shareholders of the Fund.
If the New Sub-Advisory Contract is approved by the Fund's shareholders,
it will take effect immediately upon the closing of the Transaction. The New
Sub-Advisory Contract will remain in effect for two years from the date it takes
effect and, unless earlier terminated, will continue from year to year with
respect to the Fund, provided that each such continuance is approved annually,
(i) by the Board or by the vote of a majority of the outstanding voting
securities of the Fund, and, in either case, (ii) by a majority of the Trustees
who are not parties to the New Sub-Advisory Contract or "interested persons" of
any such party (other than as Trustees of the Trust). In the event that, due to
adjournments of the Meeting, the Transaction closes before shareholders approve
the new Sub-Advisory Contract, the Board, including a majority of the
Independent Trustees, has authorized an interim contract which has the same
terms as the New contract. Pursuant to Rule 15a-4 under the 1940 Act, this
interim contract may continue in effect for up to 150 days after the automatic
termination of the Current Sub-Advisory Contract and sub-advisory fees would be
held in an escrow account pending shareholder approval.
EVALUATION BY THE BOARD. The Board has determined that, by approving the
New Sub-Advisory Contract on behalf of the Fund, the Trust can best assure
itself that services currently provided to the Fund by PIMCO, its officers and
employees, will continue without interruption after the Transaction. The Board
believes that, like the Current Sub-Advisory Contract, the New Sub-Advisory
Contract will enable the Fund to obtain high quality services at a cost that is
appropriate, reasonable, and in the best interests of the Fund and its
shareholders.
In determining whether it was appropriate to approve the New Sub-Advisory
Contract and to recommend approval to shareholders, the Board, including the
Independent Trustees, considered various materials and representations provided
by PIMCO, including information concerning compensation and employment
arrangements to be implemented in connection with the Transaction and considered
a report provided by Allianz AG.
Information considered by the Trustees included, among other things, the
following: (1) PIMCO's representation that the same persons responsible for
management of the Fund under the Current Sub-Advisory Contract are expected to
continue to manage the Fund under the New Sub-Advisory Contract, thus helping to
ensure continuity of management; (2) the compensation to be received by PIMCO
under the New Sub-Advisory Contract is the same as the compensation paid under
the Current Sub-Advisory Contract, which the Board previously has determined to
be fair and reasonable; (3) PIMCO's representation that it will not seek to
increase the rate of sub-advisory fees paid by the Fund for a period of at least
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two years following the Transaction; (4) the substantial commonality of the
terms and provisions of the New Sub-Advisory Contract with the terms of the
Current Sub-Advisory Contract; (5) representations made by PIMCO concerning the
impact of affiliated brokerage relationships on its ability to provide services
to the Fund, and on the Fund's ability to engage in portfolio transactions; (6)
the representations by PIMCO and Allianz AG that the integration of Allianz AG's
and PIMCO's operations could produce benefits to shareholders through economies
of scale, expansion of PIMCO's investment expertise through the addition of
Allianz AG's fixed income investment business expertise and global
relationships, the expansion of PIMCO's investment research capabilities, and
the ability to enhance the quality of services provided to shareholders; (7) the
nature and quality of the services rendered by PIMCO under the Current
Sub-Advisory Contract; (8) the results achieved by PIMCO for the Fund; and (9)
the quality of the personnel, operations, financial condition, investment
management capabilities, methodologies, and performance of PIMCO.
Based upon its review, the Board determined that, by approving the New
Sub-Advisory Contract, the Fund can best be assured that services from PIMCO
will be provided without interruption. The Board also determined that the New
Sub-Advisory Contract is in the best interests of the Fund and its shareholders.
Accordingly, after consideration of the above factors, and such other factors
and information it considered relevant, the Board unanimously approved the New
Sub-Advisory Contract and voted to recommend its approval by the Fund's
shareholders.
REQUIRED VOTE. Approval of Proposal I requires the vote of a "majority of
the outstanding voting securities" of the Fund, as defined in the 1940 Act,
which means the vote of 67% or more of the voting securities of the Fund present
at the Meeting, if the holders of more than 50% of the outstanding shares of the
Fund are present or represented by proxy, or the vote of more than 50% of the
outstanding voting securities of the Fund, whichever is less.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" PROPOSAL I.
PROPOSAL II: TO APPROVE A POLICY TO PERMIT THE BOARD OF TRUSTEES TO
APPOINT AND TERMINATE SUB-ADVISERS, TO ENTER INTO SUB-ADVISORY CONTRACTS AND TO
APPROVE AMENDMENTS TO THE SUB-ADVISORY CONTRACTS, ON BEHALF OF THE FUND WITHOUT
FURTHER SHAREHOLDER APPROVAL.
SUMMARY. At the Board meeting on July 9, 1998, the Board approved, and
recommended that shareholders of the Fund approve, a policy to permit Mitchell
Hutchins, subject to the approval of the Board, to appoint and terminate
sub-advisers, to enter into sub-advisory contracts and to amend sub-advisory
contracts on behalf of the Fund without further shareholder approval
("Sub-Adviser Approval Policy"). At the Board meeting on November 11, 1999, the
Board approved submission of the Sub-Adviser Approval Policy to Shareholders at
this meeting.
THE SECTION 15 EXEMPTIVE ORDER. Implementation of the Sub-Adviser Approval
Policy requires an order from the SEC exempting the Trust from the provisions of
Section 15(a) of the 1940 Act and Rule 18f-2 thereunder. This order was granted
by the SEC on January 19, 1999. Absent this order, the provisions of the 1940
Act require that shareholders of the Fund approve a new sub-advisory contract
with the sub-adviser as well as material amendments to an existing sub-advisory
contract. If shareholders approve this proposal, Mitchell Hutchins will be
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authorized, subject to approval by the Board, to evaluate, select and retain new
sub-advisers for the Fund or modify the Fund's existing Sub-Advisory Contract
(including termination) without obtaining further approval of the Fund's
shareholders whenever Mitchell Hutchins and the Board believe these actions will
benefit the Fund and its shareholders. As explained below, shareholders would
receive detailed information regarding any change in sub-adviser or a material
change to the sub-advisory contract.
CURRENT SUB-ADVISER APPROVAL PROCESS. Currently, Mitchell Hutchins enters
into sub-advisory contracts pursuant to which the selected sub-adviser has
authority to provide the Fund with advice concerning the investment management
of all (or a portion) of the Fund's assets. The sub-adviser determines what
securities shall be purchased, what securities shall be sold and what portion of
the Fund's assets shall remain uninvested. For these sub-advisory services to
the Fund, Mitchell Hutchins pays the sub-adviser a monthly fee as specified in
the sub-advisory contract. The sub-adviser bears its own expenses of providing
sub-advisory services to the Fund. Neither the Trust nor the Fund has any
responsibility to pay sub-advisory fees to the sub-adviser. The Fund's
sub-advisory contracts are subject to approval by the Board, including the
Independent Trustees, and in the absence of exemptive relief from the SEC,
approval by the Fund's shareholders.
PROPOSED SUB-ADVISER APPROVAL POLICY. Approval of the Sub-Adviser Approval
Policy will not affect any of the requirements under the federal securities laws
that govern the Trust, the Fund, Mitchell Hutchins, any sub-adviser, or any
sub-advisory contract, other than the requirement to call and hold a meeting of
the Fund's shareholders for the purpose of approving a sub-advisory contract.
The Board, including the Independent Trustees, will continue to evaluate and
approve all new sub-advisory contracts between Mitchell Hutchins and any
sub-adviser as well as all changes to existing sub-advisory contracts. In
addition, the Trust and Mitchell Hutchins will be subject to several conditions
imposed by the SEC to ensure that the interests of the Fund's shareholders are
adequately protected whenever Mitchell Hutchins acts under the Sub-Adviser
Approval Policy. Furthermore, within 90 days of any change in sub-adviser or a
material change to a sub-advisory contract, the Trust will provide the Fund's
shareholders with an information statement that contains substantially the same
relevant information about the sub-adviser, the sub-advisory contract and the
sub-advisory fee that would be required to be sent to the Fund's shareholders in
a proxy statement. This statement will inform the Fund's shareholders of the new
sub-advisory arrangements. If not satisfied, shareholders would be able to
exchange or redeem their shares.
Shareholder approval of this Proposal II will not result in an increase or
decrease in the total amount of investment advisory fees paid by the Fund to
Mitchell Hutchins. If the Trust implements the Sub-Adviser Approval Policy,
Mitchell Hutchins, pursuant to the Trust's Investment Advisory and
Administration Contract, will continue to provide the same level of management
and administrative services to the Fund that it has always provided.
The Sub-Adviser Approval Policy permits Mitchell Hutchins to change
sub-advisers or sub-advisory arrangements in the following types of situations:
(1) the sub-adviser has a record of substandard performance; (2) the individual
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employees responsible for portfolio management of the Fund move from the
sub-adviser to another investment advisory firm; (3) there is a change of
control of the sub-adviser; (4) Mitchell Hutchins decides to diversify the
Fund's management by adding another sub-adviser; (5) there is a change in
investment style of the Fund; and (6) Mitchell Hutchins negotiates a reduction
(or the sub-adviser negotiates an increase) in the portion of the advisory fee
that Mitchell Hutchins pays to the sub-adviser. Furthermore, where there is a
decrease in a sub-adviser's compensation paid by Mitchell Hutchins, the
concomitant increase in the compensation available for retention by Mitchell
Hutchins would not be deemed to be an increase in advisory compensation that
requires a shareholder meeting. The Sub-Adviser Approval Policy will not be used
to approve any sub-adviser that is affiliated with Mitchell Hutchins as that
term is used in the 1940 Act or materially amend any sub-advisory contract with
an affiliated sub-adviser.
REASONS FOR REQUESTING SECTION 15 EXEMPTIVE RELIEF. The Board believes
that providing Mitchell Hutchins with maximum flexibility to perform those
duties that shareholders expect Mitchell Hutchins to perform--selecting,
supervising and evaluating sub-advisers--without incurring the unnecessary delay
or expense of obtaining further shareholder approval is in the best interests of
the Fund's shareholders because it will allow the Fund to operate more
efficiently. Currently, in order for Mitchell Hutchins to appoint a sub-adviser
or materially modify a sub-advisory contract, the Trust must call and hold a
shareholder meeting of the Fund, create and distribute proxy materials and
solicit votes from the Fund's shareholders. This process is time-intensive, slow
and costly. These costs are generally borne entirely by the Fund. Without the
delay inherent in holding shareholder meetings, the Board would be able to act
more quickly and with less expense to appoint a sub-adviser when the Board and
Mitchell Hutchins feel that the appointment would benefit the Fund and its
shareholders.
Also, the Board believes that it is appropriate to vest the selection,
supervision and evaluation of the sub-advisers in Mitchell Hutchins (subject to
review by the Board) in light of Mitchell Hutchins' significant experience and
expertise in selecting sub-advisers and shareholders' expectation that Mitchell
Hutchins will utilize that expertise to select the most competent sub-advisers.
Mitchell Hutchins has demonstrated that it has the requisite expertise to
evaluate, select and supervise sub-advisers. The Board believes that many
investors choose to invest in the Fund because of Mitchell Hutchins' experience
in this respect.
Finally, the Board will provide sufficient oversight of the sub-adviser
selection process to ensure that shareholders' interests are protected whenever
Mitchell Hutchins selects a sub-adviser or modifies a sub-advisory contract. The
Board, including a majority of the Independent Trustees, will continue to
evaluate and approve all new sub-advisory contracts as well as any modification
to existing sub-advisory contracts. In each review, the Board will analyze all
factors that it considers to be relevant to the determination, including the
nature, quality and scope of services provided by the sub-advisers. The Board
will compare the investment performance of the assets managed by the sub-adviser
with other accounts with similar investment objectives managed by other advisers
and will review the sub-adviser's compliance with federal securities laws and
regulations. The Board believes that its review will ensure that Mitchell
Hutchins continues to act in the best interests of the Fund and its
shareholders. The Sub-Advisory Contract will continue to be subject to all
provisions of the 1940 Act for which relief was granted by the SEC.
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REQUIRED VOTE. Approval of Proposal II requires the vote of a "majority of
the outstanding voting securities" of the Fund, as defined in the 1940 Act,
which means the vote of 67% or more of the voting securities of the Fund present
at the Meeting, if the holders of more than 50% of the outstanding shares of the
Fund are present or represented by proxy, or the vote of more than 50% of the
outstanding voting securities of the Fund, whichever is less.
THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL II.
III. OTHER BUSINESS
Management does not know of any matters to be presented at the Meeting
other than those set forth in this proxy statement. If other business should
properly come before the Meeting, proxies will be voted in accordance with the
judgment of the persons named in the accompanying proxy in the best interests of
the Fund.
PROXY SOLICITATION
PROXY SOLICITATION. The costs of the Meeting, including the solicitation
of proxies, will be borne by PIMCO Advisors and Allianz of America. The
principal solicitation will be by mail, but proxies also may be solicited by
telephone, telegraph, the Internet or personal interview by regular employees of
PaineWebber Incorporated ("PaineWebber") and Mitchell Hutchins, who will not
receive any compensation from the Fund for doing so. Shareholder Communications
Corporation ("SCC") has been retained to assist with proxy solicitation
activities and will be paid fees of approximately $3,500, plus reasonable
expenses. If votes are recorded by telephone, SCC will use procedures designed
to authenticate shareholders' idenities, to allow shareholders to authorize
the voting of their shares in accordance with their instructions and to confirm
that a shareholder's instructions have been properly recorded. The Trust will
forward to record owners proxy materials for any beneficial owners that such
record owners may represent.
ADDITIONAL INFORMATION
ADDITIONAL INFORMATION ABOUT MITCHELL HUTCHINS
Mitchell Hutchins, a Delaware corporation and the Fund's investment
adviser and administrator, is a wholly owned asset management subsidiary of
PaineWebber, a wholly owned subsidiary of Paine Webber Group Inc. ("PW Group"),
a publicly held corporation. The principal business offices of Mitchell Hutchins
are located at 51 West 52nd Street, New York, New York 10019-6114. The principal
business offices of PaineWebber and PW Group are located at 1285 Avenue of the
Americas, New York, New York 10019. In addition, Mitchell Hutchins serves as the
distributor of the Fund's shares under separate distribution contracts with
respect to each class of the Fund's shares that require Mitchell Hutchins to use
its best efforts to sell the Fund's shares. During its fiscal year ended
November 30, 1999, the Fund did not pay commissions to any broker that was
affiliated with the Fund, Mitchell Hutchins or PIMCO.
As of December 31, 1999, Mitchell Hutchins served as adviser or
sub-adviser to 33 investment companies with an aggregate of 76 separate
portfolios and aggregate assets under management of approximately $50.8 billion.
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ADDITIONAL INFORMATION ABOUT PIMCO
As of December 31, 1999, PIMCO has approximately $186 billion in assets
under management. Information concerning PIMCO, its principal executive officer
and directors is included in Appendix B. Information regarding advisory fees
paid by other investment companies advised by PIMCO with investment objectives
similar to the Fund also is included in Appendix B.
BENEFICIAL OWNERSHIP OF SHARES
To the best knowledge of the Fund's management, the executive officers and
Trustees of the Fund, as a group, own less than 1% of the Fund's outstanding
shares. The following shareholder is shown on the Fund's records as owning more
than 5% of its shares:
NUMBER AND PERCENTAGE OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED AS OF FEBRUARY 1, 2000
Chestnut III.......................... 29,331,598 42.38%
The shareholder may be contacted c/o Mitchell Hutchins Asset Management
Inc., 1285 Avenue of the Americas, New York, New York 10019.
SHAREHOLDER PROPOSALS
As a general matter, the Trust does not hold regular annual or other
meetings of shareholders. Any shareholder who wishes to submit proposals to be
considered at a special meeting of the Fund's shareholders should send such
proposals to the Fund at 51 West 52nd Street, New York, New York 10019-6114.
Proposals must be received a reasonable period of time prior to any meeting to
be included in the proxy materials. Moreover, inclusion of such proposals is
subject to limitations under the federal securities laws. Persons named as
proxies for any subsequent shareholders' meeting will vote in their discretion
with respect to proposals submitted on an untimely basis.
TO ENSURE THE PRESENCE OF A QUORUM AT THE MEETING, PROMPT EXECUTION AND
RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Trustees,
---------------------------
Dianne E. O'Donnell
Secretary
February 15, 2000
51 West 52nd Street
New York, NY 10019-6114
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APPENDIX A
FORM OF SUB-ADVISORY CONTRACT
Contract made as of __________, 2000 between MITCHELL HUTCHINS ASSET
MANAGEMENT INC. ("Mitchell Hutchins"), a Delaware corporation, and PACIFIC
INVESTMENT MANAGEMENT COMPANY ("Sub-Adviser"), a Delaware partnership
(hereinafter referred to as the "Contract").
RECITALS
(1) Mitchell Hutchins has entered into an Investment Advisory and
Administration Contract dated April 21, 1988, as supplemented by a separate Fee
Agreement dated March 29, 1993, ("Advisory Contract") with PaineWebber Managed
Investments Trust ("Trust"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act");
(2) The Trust offers for public sale distinct series of shares of
beneficial interest, including a series of shares of the Trust known as
PaineWebber Low Duration U.S. Government Income Fund ("Fund");
(3) Under the Advisory Contract, Mitchell Hutchins has agreed to provide
certain investment advisory and administrative services to the Fund;
(4) The Advisory Contract permits Mitchell Hutchins to delegate certain of
its duties as investment adviser thereunder to a sub-adviser;
(5) Mitchell Hutchins wishes to retain the Sub-Adviser to furnish certain
investment advisory services to Mitchell Hutchins and the Fund; and
(6) The Sub-Adviser is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Mitchell Hutchins and the Sub-Adviser agree as follows:
1. APPOINTMENT. Mitchell Hutchins hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the Fund for the period and on the terms
set forth in this Contract. The Sub-Adviser accepts such appointment and agrees
to render the services herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision and direction of the Trust's Board of
Trustees ("Board") and review by Mitchell Hutchins, and any written guidelines
adopted by the Board or Mitchell Hutchins, the Sub-Adviser will provide a
continuous investment program for the Fund, including investment research and
management. The Sub-Adviser may from time to time seek research assistance and
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may rely upon resources available to it through its affiliated companies to the
extent such actions would not constitute an "assignment" for purposes of the
1940 Act but in no case shall such assistance and/or reliance relieve the
Sub-Adviser of any of its obligations hereunder, nor shall the Fund or Mitchell
Hutchins be responsible for any additional fees or expenses hereunder as a
result. The Sub-Adviser will determine from time to time what investments will
be purchased, retained or sold by the Fund. The Sub-Adviser will be responsible
for placing purchase and sell orders for investments and for other related
transactions. The Sub-Adviser will be responsible for voting proxies of issuers
of securities held by the Fund. The Sub-Adviser understands that the Fund's
assets need to be managed so as to permit the Fund to qualify or to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code, as amended ("Code"). The Sub-Adviser will provide services under
this Contract in accordance with the Fund's investment objective, policies and
restrictions as stated in the Fund's Prospectus and in the Trust's currently
effective registration statement under the 1940 Act, and any amendments or
supplements thereto ("Registration Statement").
(b) The Sub-Adviser agrees that, in placing orders with brokers, it will
obtain the best net result in terms of price and execution; provided that, on
behalf of the Fund, the Sub-Adviser may, in its discretion, use brokers who
provide the Sub-Adviser with research, analysis, advice and similar services to
execute portfolio transactions on behalf of the Fund, and the Sub-Adviser may
pay to those brokers in return for brokerage and research services a higher
commission than may be charged by other brokers, subject to the Sub-Adviser's
determination in good faith that such commission is reasonable in terms either
of the particular transaction or of the overall responsibility of the
Sub-Adviser to the Fund and its other clients and that the total commissions
paid by the Fund will be reasonable in relation to the benefits to the Fund over
the long term. In no instance will portfolio securities be purchased from or
sold to Mitchell Hutchins or the Sub-Adviser, or any affiliated person thereof,
except in accordance with the federal securities laws and the rules and
regulations thereunder. The Sub-Adviser may aggregate sales and purchase orders
with respect to the assets of the Fund with similar orders being made
simultaneously for other accounts advised by the Sub-Adviser or its affiliates.
Whenever the Sub-Adviser simultaneously places orders to purchase or sell the
same security on behalf of the Fund and one or more other accounts advised by
the Sub-Adviser, the orders will be allocated as to price and amount among all
such accounts in a manner believed to be equitable over time to each account.
Mitchell Hutchins recognizes that in some cases this procedure may adversely
affect the results obtained for the Fund.
(c) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to actions by the Sub-Adviser on behalf of the Fund, and
will furnish the Board and Mitchell Hutchins with such periodic and special
reports as the Board or Mitchell Hutchins reasonably may request. In compliance
with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby
agrees that all records that it maintains for the Fund are the property of the
Trust, agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any records that it maintains for the Trust and that are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Trust any records which it maintains for the Fund upon request
by the Trust.
(d) At such times as shall be reasonably requested by the Board or
Mitchell Hutchins, the Sub-Adviser will provide the Board and Mitchell Hutchins
with economic and investment analyses and reports and make available to the
Board and Mitchell Hutchins any economic, statistical and investment services
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that the Sub-Adviser normally makes available to its institutional or other
customers.
(e) In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting in the fair valuation
of all portfolio securities and will use its reasonable efforts to arrange for
the provision of a price(s) from a party(ies) independent of the Sub-Adviser for
each portfolio security for which the custodian does not obtain prices in the
ordinary course of business from an automated pricing service.
3. FURTHER DUTIES. In all matters relating to the performance of this
Contract, the Sub-Adviser will seek to act in conformity with the Trust's
Declaration of Trust, By-Laws and Registration Statement and with the written
instructions and written directions of the Board and Mitchell Hutchins; and will
comply with the requirements of the 1940 Act, and the Investment Advisers Act of
1940, as amended ("Advisers Act") and the rules under each, and all other
federal and state laws and regulations applicable to the Trust and the Fund.
Mitchell Hutchins agrees to provide to the Sub-Adviser copies of the Trust's
Declaration of Trust, By-Laws, Registration Statement, written instructions and
directions of the Board and Mitchell Hutchins, and any amendments or supplements
to any of these materials as soon as practicable after such materials become
available; and further agrees to identify to the Sub-Adviser in writing any
broker-dealers that are affiliated with Mitchell Hutchins (other than
PaineWebber Incorporated and Mitchell Hutchins itself).
4. SERVICES NOT EXCLUSIVE. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive, and except as the Sub-Adviser may
otherwise agree in writing, the Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of the Sub-Adviser, who may also be a trustee,
officer or employee of the Trust, to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
5. EXPENSES. During the term of this Contract, the Sub-Adviser will bear
all expenses incurred by it in connection with its services under this Contract.
6. COMPENSATION.
(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Contract, Mitchell Hutchins, and not the Fund, will pay to the
Sub-Adviser a fee, computed daily and payable monthly, at an annual rate of
0.25% of the Fund's average daily net assets (computed in the manner specified
in the Advisory Contract), together with a schedule showing the manner in which
the fee was computed.
(b) The fee shall be accrued daily and payable monthly to the Sub-Adviser
on or before the last business day of the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of the month or
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from the beginning of such month to the date of termination, as the case may be,
shall be pro-rated according to the proportion that such period bears to the
full month in which such effectiveness or termination occurs.
7. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund, the
Trust or its shareholders or by Mitchell Hutchins in connection with the matters
to which this Contract relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Contract. Nothing in this paragraph shall be deemed a limitation or waiver of
any obligation or duty that may not by law be limited or waived.
8. REPRESENTATIONS OF SUB-ADVISER. The Sub-Adviser represents, warrants
and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Contract
remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act
from performing the services contemplated by this Contract; (iii) has met, and
will seek to continue to meet for so long as this Contract remains in effect,
any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Contract; (iv) has
the authority to enter into and perform the services contemplated by this
Contract; and (v) will promptly notify Mitchell Hutchins of the occurrence of
any event that would disqualify the Sub-Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise.
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide Mitchell
Hutchins and the Board with a copy of such code of ethics, together with
evidence of its adoption. Within fifteen days of the end of the last calendar
quarter of each year that this Contract is in effect, the president or a
vice-president of the Sub-Adviser shall certify to Mitchell Hutchins that the
Sub-Adviser has complied with the requirements of Rule 17j-1 during the previous
year and that there has been no violation of the Sub-Adviser's code of ethics
or, if such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of Mitchell Hutchins, the
Sub-Adviser shall permit Mitchell Hutchins, its employees or its agents to
examine the reports required to be made to the Sub-Adviser by Rule 17j-1 and all
other records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided Mitchell Hutchins with a copy of its Form
ADV, as most recently filed with the Securities and Exchange Commission ("SEC"),
and promptly will furnish a copy of all amendments to Mitchell Hutchins at least
annually.
(d) The Sub-Adviser shall provide notice to Mitchell Hutchins within a
reasonable time after being informed or learning of the death or withdrawal of
any of its partners, upon the admission of any new partners or upon any other
change in its membership.
A-4
<PAGE>
(e) The Sub-Adviser will notify Mitchell Hutchins of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel who are either
the portfolio manager(s) of the Fund or senior management of the Sub-Adviser, in
each case prior to, or promptly after, such change.
(f) The Sub-Adviser agrees that neither it, nor any of its affiliates,
will in any way refer directly or indirectly to its relationship with the Trust,
the Fund, Mitchell Hutchins or any of their respective affiliates in offering,
marketing or other promotional materials without the express written consent of
Mitchell Hutchins.
9. REPRESENTATIONS OF MITCHELL HUTCHINS.
Mitchell Hutchins represents that (i) the Trust was organized as a
Massachusetts business trust under the laws of the Commonwealth of Massachusetts
by Declaration of Trust dated November 21, 1986, (ii) the appointment of the
Sub-Adviser has been duly authorized and (iii) the Trust has acted and will
continue to act in conformity with the 1940 Act and other applicable laws.
10. DURATION AND TERMINATION.
(a) This Contract shall-become effective upon the date first above
written, provided that this Contract shall not take effect unless it has first
been approved (i) by a vote of a majority of those trustees of the Trust who are
not parties to this Contract or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Fund's outstanding securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually: (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Fund.
(c) Notwithstanding the foregoing, this Contract may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Sub-Adviser. This Contract may also be terminated by Mitchell
Hutchins: (i) upon 120 days' written notice to the Sub-Adviser; without the
payment of any penalty, (ii) upon material breach by the Sub-Adviser of any of
the representations and warranties set forth in Paragraph 8 of this Contract, if
such breach shall not have been cured within a 20 day period after notice of
such breach; or (iii) immediately if, in the reasonable judgment of Mitchell
Hutchins, the Sub-Adviser becomes unable to discharge its duties and obligations
under this Contract, including circumstances such as financial insolvency of the
Sub-Adviser or other circumstances that could adversely affect the Fund. The
Sub-Adviser may terminate this Contract at any time, without the payment of any
penalty, on 120 days' written notice to Mitchell Hutchins. This Contract will
terminate automatically in the event of its assignment or upon termination of
A-5
<PAGE>
the Advisory Contract as it relates to the Fund.
11. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought. To the extent required by applicable law, no
amendment of this Contract shall be effective until approved by vote of a
majority of the Fund's outstanding voting securities (unless the Trust receives
an SEC order or no-action letter permitting it to modify the Contract without
such vote).
12. GOVERNING LAW. This Contract shall be construed in accordance with the
1940 Act and the laws of the State of Delaware, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
13. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," "broker," "investment adviser," "net assets,"
"sale," "sell" and "security" shall have the same meaning as such terms have in
the 1940 Act, subject to such exemption as may be granted by the SEC by any
rule, regulation or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Contract is made less
restrictive by a rule, regulation or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. This Contract may be signed in counterpart.
14. NOTICES. Any notice herein required is to be in writing and is deemed
to have been given to the Sub-Adviser or Mitchell Hutchins upon receipt of the
same at their respective addresses set forth below. All written notices required
or permitted to be given under this Contract will be delivered by personal
service, by postage mail - return receipt requested or by facsimile machine or a
similar means of same day delivery which provides evidence of receipt (with a
confirming copy by mail as set forth herein). All notices provided to Mitchell
Hutchins will be sent to the attention of Victoria E. Schonfeld, General
Counsel. All notices provided to the Sub-Adviser will be sent to the attention
of ______________, compliance officer.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
A-6
<PAGE>
Attest: MITCHELL HUTCHINS ASSET MANAGEMENT INC.
51 West 52nd Street
New York, New York 10019-6114
By:_____________________________ By:_________________________________
Name: Name:
Title: Title:
Attest: PACIFIC INVESTMENT MANAGEMENT COMPANY
840 Newport Center Drive, Suite 300
Newport Beach, California 92660
By:_____________________________ By:_________________________________
Name: Name:
Title: Title:
A-7
<PAGE>
APPENDIX B
INFORMATION ABOUT PIMCO
The following information has been provided by PIMCO to the Fund.
The address of PIMCO is 840 Newport Center Drive, Suite 300, Newport
Beach, California 92660. PIMCO is registered as an investment adviser under the
Investment Advisers Act of 1940 and is registered as a commodity trading advisor
with the Commodity Futures Trading Commission.
PIMCO's directors and principal executive officer, their principal
occupations and dates of service are shown below. The address of each director
and officer is 840 Newport Center Drive, Suite 300, Newport Beach, California
92660.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
NAME POSITION AND PRINCIPAL OCCUPATION
LENGTH OF SERVICE ---------------------------------
- -----------------
<S> <C>
William S. Thompson, Jr. Managing Director, Chief Executive Officer and Executive
April 1993 to Present Committee Member, PIMCO; Managing Director, Chief Executive
Officer and Director, PIMCO Management, Inc.; Member of
Management Board and Executive Committee, PIMCO Advisors L.P.;
President, Chief Executive officer and Member, PIMCO Partners
LLC.
William R. Benz, II Managing Director, PIMCO; Managing Director and Director, PIMCO
June 1986 to Present Management, Inc.; Member of PIMCO Partners LLC.
Robert Wesley Burns Managing Director and Executive Committee Member, PIMCO;
February 1987 to Present Managing Director and Director, PIMCO Management, Inc.; Member
of PIMCO Partners LLC.
Chris P. Dialynas Managing Director, PIMCO; Managing Director and Director PIMCO
July 1980 to Present Management, Inc.; Member of PIMCO Partners LLC.
Mohamed A. El-Erian Managing Director, PIMCO; Managing director and Director, PIMCO
May 1999 to Present Management, Inc.
William H. Gross Managing Director, PIMCO; Managing Director and Director, PIMCO
June 1971 to Present Management, Inc.; Director and Vice President, StocksPLUS
Management, Inc.; Member of Management Board, PIMCO Advisors
L.P.; Member of PIMCO Partners LLC.
John L. Hague Managing Director and Executive Committee Member, PIMCO.
September 1987 to Present Managing Director and Director, PIMCO Management, Inc. Member
of PIMCO Partners LLC.
Pasi M. Hamalainen Managing Director, PIMCO; Managing Director and Director, PIMCO
January 1994 to Present Management, Inc.
Brent R. Harris Managing Director and Executive Committee Member, PIMCO.
June 1985 to Present Managing Director and Director, PIMCO Management, Inc.; Director
and Vice President, StocksPLUS Management, Inc.; Member of
Management Board and Executive Committee, PIMCO Advisors L.P.;
Member of PIMCO Partners LLC.
- -----------------------------------------------------------------------------------------------
B-1
<PAGE>
- -----------------------------------------------------------------------------------------------
NAME POSITION AND PRINCIPAL OCCUPATION
LENGTH OF SERVICE ---------------------------------
- -----------------
Brent L. Holden Managing Director, PIMCO; Managing Director and Director, PIMCO
December 1989 to Present Management, Inc.
Margaret E. Isberg Managing Director, PIMCO; Managing Director and Director, PIMCO
August 1983 to Present Management, Inc.; Member of PIMCO Partners LLC.
John S. Loftus Managing Director, PIMCO; Managing Director and Director, PIMCO
August 1986 to Present Management, Inc.
Dean S. Meiling Managing Director, PIMCO; Managing Director and Director, PIMCO
December 1976 to Present Management, Inc.; Member of PIMCO Partners LLC.
James F. Muzzy Managing Director and Executive Committee Member, PIMCO;
September 1971 to Present Managing Director and Director, PIMCO Management, Inc.; Director
and Vice President, StocksPLUS Management, Inc.; Member of PIMCO
Partners LLC.
William F. Podlich, III Managing Director, PIMCO; Managing Director and Director, PIMCO
August 1969 to Present Management, Inc.; Member of Management Board, PIMCO Advisors
L.P.; Member of PIMCO Partners LLC.
William C. Powers Managing Director, PIMCO; Managing Director and Director, PIMCO
January 1991 to Present Management, Inc.; Member of PIMCO Partners LLC.
Ernest L. Schmider Managing Director and Secretary, PIMCO; Managing Director and
March 1994 to Present Secretary, PIMCO Management, Inc.; Director and Assistant
Secretary, StocksPLUS Management, Inc.; Senior Vice President,
PIMCO Advisors L.P.; Secretary, PIMCO Partners LLC.
Lee R. Thomas Managing Director, PIMCO; Managing Director and Director, PIMCO
April 1995 to Present Management, Inc.; Member of PIMCO Partners LLC.
Benjamin L. Trosky Managing Director, PIMCO; Managing Director and Director, PIMCO
October 1990 to Present Management, Inc.; Member of Management Board, PIMCO Advisors
L.P.; Member of PIMCO Partners LLC.
- -----------------------------------------------------------------------------------------------
</TABLE>
OTHER INVESTMENT COMPANY CLIENTS
PIMCO also serves as investment adviser or sub-adviser to the following
investment companies, which have similar investment objectives to the Fund's, at
the fee rates set forth below. These investment companies had the indicated net
assets as of September 30, 1999.
B-2
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
NAME OF FUND ADVISORY FEE RATE APPROXIMATE ASSETS
------------ ----------------- ------------------
- -------------------------------------------------------------------------------------------------
PIMCO FUNDS:
PACIFIC INVESTMENT
MANAGEMENT SERIES
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Low Duration Fund Annual rate of 0.25% of average $4,612,199,034
daily net assets
- -------------------------------------------------------------------------------------------------
Low Duration Fund II Annual rate of 0.25% of average 465,267,930
daily net assets
- -------------------------------------------------------------------------------------------------
Low Duration Fund III Annual rate of 0.25% of average 25,361,958
daily net assets
- -------------------------------------------------------------------------------------------------
PIMCO VARIABLE INSURANCE TRUST
- -------------------------------------------------------------------------------------------------
Low Duration Bond Portfolio Annual rate of 0.40% of average 5,098,362
daily net assets
- -------------------------------------------------------------------------------------------------
THE HARBOR GROUP
- -------------------------------------------------------------------------------------------------
Harbor Bond Fund Annual rate of 0.50% of average 622,475,175
daily net assets on first $25 million;
0.375% of average daily net assets
on next $25 million; 0.25% of average
daily net assets over $50 million
- -------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST
- -------------------------------------------------------------------------------------------------
Limited Maturity Bond Portfolio Annual rate of 0.30% of average 421,807,622
daily net assets on first $150 million;
0.25% of average daily net assets
on assets over $150 million paid monthly
- -------------------------------------------------------------------------------------------------
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
- -------------------------------------------------------------------------------------------------
Prudential Diversified Moderate Annual rate of 0.25% of average daily net 23,259,990
Growth assets computed daily and paid monthly
- -------------------------------------------------------------------------------------------------
Prudential Diversified Conservative Annual rate of 0.25% of average daily net 28,956,072
Growth assets computed daily and paid monthly
- -------------------------------------------------------------------------------------------------
Prudential Diversified Conservative Annual rate of 0.25% of average daily net 29,627,910
Portfolio assets computed daily and paid monthly
- -------------------------------------------------------------------------------------------------
</TABLE>
B-3
<PAGE>
- ---------------------------
PAINEWEBBER
MANAGED
INVESTMENTS
TRUST -
PAINEWEBBER
LOW DURATION
U.S. GOVERNMENT
INCOME FUND
- ---------------------------
-------------
PAINEWEBBER
MANAGED
INVESTMENTS
TRUST -
PAINEWEBBER
LOW DURATION
U.S. GOVERNMENT
INCOME FUND
-------------
----------------
Notice of
Special Meeting
to be held on
March 16, 2000
and
Proxy Statement
----------------
PROXY
STATEMENT
<PAGE>
PAINEWEBBER MANAGED INVESTMENTS TRUST -
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
SPECIAL MEETING OF SHAREHOLDERS - MARCH 16, 2000
This proxy is being solicited on behalf of the Board of Trustees of
PAINEWEBBER MANAGED INVESTMENTS TRUST ("Trust") and relates to the proposals
with respect to PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND ("Fund")
indicated below. The undersigned hereby appoints as proxies Andrew Novak and
Victoria Drake and each of them (with the power of substitution) to vote for the
undersigned all shares of beneficial interest of the undersigned in the Fund at
the Special Meeting of Shareholders to be held at 10:00 a.m., Eastern time, on
March 16, 2000, at the offices of the Fund, 1285 Avenue of the Americas, 14th
Floor, New York, New York 10019, and any adjournment thereof ("Meeting"), with
all the power the undersigned would have if personally present. The shares
represented by this card will be voted as instructed. UNLESS INDICATED TO THE
CONTRARY, THIS PROXY SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE "FOR" ALL
PROPOSALS RELATING TO THE FUND WITH THE DISCRETIONARY POWER TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
YOUR VOTE IS IMPORTANT. Please date and sign this proxy below and return
it promptly in the enclosed envelope. This proxy will not be voted unless it is
dated and signed exactly as instructed. If you vote by telephone or on the
Internet, there is no need to return your proxy card.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
VOTE BY TELEPHONE: 1-888-634-9904
CONTROL NUMBER:
If shares are held by an individual, sign your name exactly as it appears
on this card. If shares are held jointly, either party may sign, but the name of
the party signing should conform exactly to the name shown on this proxy card.
If shares are held by a corporation, partnership or similar account, the name
and the capacity of the individual signing the proxy card should be indicated,
unless it is reflected in the form of registration. For example: "ABC Corp. John
Doe, Treasurer."
Sign exactly as name appears hereon.
------------------------------------
Signature
------------------------------------
Signature (if held jointly)
------------------------------------
Date
PLEASE MARK YOUR VOTE ON THE REVERSE SIDE OF THIS CARD
<PAGE>
When properly signed, the proxy will be voted as instructed below. If no
instruction is given for a proposal, voting will be made "FOR" that proposal.
The Board of Trustees recommends a vote "FOR" each of the following
proposals: Please indicate your vote by filing in the box completely.
Example: / /
FOR AGAINST ABSTAIN
1. Approve a new sub-advisory
contract between Mitchell Hutchins / / / / / /
Asset Management Inc. and Pacific
Investment Management Company
("PIMCO").
2. Approve a policy to permit the
Board of Trustees to appoint and
terminate sub-advisers, to enter
into sub-advisory contracts and to / / / / / /
amend sub-advisory contracts, on
behalf of the Fund without further
shareholder approval.
PLEASE DATE AND SIGN THE REVERSE SIDE OF THIS CARD
