(File Nos. 2-91362 and 811-4040)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
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 toss.240.14a-11(c) orss.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)(4)
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 HIGH INCOME FUND
(A SERIES OF PAINEWEBBER MANAGED INVESTMENTS TRUST)
December 30, 2000
Dear Shareholder,
The enclosed proxy materials relate to a special meeting of the
shareholders of PaineWebber High Income Fund ("Fund"), a series of PaineWebber
Managed Investments Trust ("Trust"), to be held on February 8, 2001. The Board
of Trustees of the Trust ("Board") has called this meeting to request
shareholder approval of several proposals relating to the management and
operation of the Fund. With respect to the Fund's investment management
arrangements, the Board seeks shareholder approval of: (a) a new investment
management and administration contract between the Fund and Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins") and (b) a sub-advisory contract
under which Massachusetts Financial Services Company ("MFS") would serve as
sub-adviser for the Fund's investment portfolio. Your Board has approved these
new investment management arrangements, including the appointment of MFS as the
Fund's sub-adviser.
The Board also asks shareholder approval to implement an exemptive
order issued by the Securities and Exchange Commission that would permit
Mitchell Hutchins and the Board, in the future, to replace MFS with a new,
unaffiliated sub-adviser and amend the Fund's sub-advisory contracts without
seeking additional shareholder approval.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THESE PROPOSALS.
YOUR VOTE IS VERY IMPORTANT. Please take the time to review the
enclosed proxy statement and vote your shares today by signing and returning the
enclosed proxy or by voting via telephone or the Internet. We have retained an
outside firm that specializes in proxy solicitation to assist us with any
necessary follow-up. If we have not received your vote as the meeting date
approaches, you may receive a telephone call from Shareholder Communications
Corporation to ask for your vote.
Thank you for your attention to this matter and for your continuing
investment in the Fund.
Very truly yours,
Brian M. Storms
President
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PAINEWEBBER HIGH INCOME FUND
51 West 52nd Street
New York, New York 10019-6114
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2001
---------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders
("Meeting") of PaineWebber High Income Fund ("Fund"), a series of PaineWebber
Managed Investments Trust ("Trust"), will be held on February 8, 2001, at 1285
Avenue of the Americas, 14th Floor, New York, New York, 10019-6028, at 10:00
a.m., Eastern time, for the following purposes:
1. To approve or disapprove a new Investment Management and
Administration Contract for the Fund with Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins");
2. To approve or disapprove a Sub-Advisory Contract between Mitchell
Hutchins and Massachusetts Financial Services Company; and
3. To approve or disapprove a policy to permit Mitchell Hutchins and
the Fund's Board of Trustees to appoint and replace sub-advisers,
enter into sub-advisory contracts, and approve amendments to
sub-advisory contracts on behalf of the Fund without further
shareholder approval.
Shareholders of record as of the close of business on November 30,
2000, are entitled to notice of, and to vote at, the Meeting or any adjournment
thereof.
Please execute and return promptly in the enclosed envelope the
accompanying proxy, which is being solicited by the Trust's Board of Trustees,
or vote your shares by telephone or the Internet. Returning your proxy promptly
is important to ensure a quorum at the Meeting. You may revoke your proxy at any
time before it is exercised by the subsequent execution and submission of a
revised proxy, by giving written notice of revocation to the Fund at any time
before the proxy is exercised or by voting in person at the Meeting.
By Order of the Board of Trustees,
Dianne E. O'Donnell
December 30, 2000
51 West 52nd Street
New York, New York 10019-6114
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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 INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT, THE
SUB-ADVISORY CONTRACT, AND THE SUB-ADVISORY POLICY, AND "FOR" OR "AGAINST" ANY
OTHER BUSINESS WHICH MAY PROPERLY ARISE AT THE MEETING, IN THE PROXIES'
DISCRETION. 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 HTTP://VOTE.PROXY-DIRECT.COM on
the World Wide Web and follow the on-screen instructions.
You may also call 1-800-597-7836 and vote by telephone. If you have any
questions regarding the Meeting agenda or the execution of your proxy, please
call toll-free 1-877-748-9131.
If we do not receive your completed proxy cards after several weeks,
our proxy solicitor, Shareholder Communications Corporation, may contact you.
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.
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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:
REGISTRATION VALID SIGNATURE
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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
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PAINEWEBBER HIGH INCOME FUND
(A SERIES OF PAINEWEBBER MANAGED INVESTMENTS TRUST)
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6114
1-800-647-1568
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2001
This Proxy Statement is being furnished to the shareholders of
PaineWebber High Income Fund ("Fund"), a series of PaineWebber Managed
Investments Trust ("Trust"), in connection with the solicitation of proxies made
by, and on behalf of, the Trust's Board of Trustees ("Board") to be used at the
Special Meeting of Shareholders to be held on February 8, 2001, at 1285 Avenue
of the Americas, 14th Floor, New York, New York, 10019-6028, at 10:00 a.m.,
Eastern time (such meeting and any adjournments thereof are referred to
collectively as the "Meeting"). This Proxy Statement and the accompanying proxy
card are first being mailed to shareholders on or about December 30, 2000.
The presence, in person or by proxy, of Fund shareholders entitled to
cast a majority of all votes entitled to be cast at the Meeting will constitute
a quorum. In the absence of a quorum or in the event that a quorum is present at
the Meeting, but votes sufficient to approve the proposals are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. 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 that
they are entitled to vote "FOR" the proposals in favor of such an adjournment
and will vote those proxies required to be voted "AGAINST" the proposals against
such adjournment. A shareholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
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 voting authority. Abstentions and broker non-votes will be counted
as shares present at the Meeting for quorum purposes but will not be voted for
or against any adjournment or proposal. Accordingly, abstentions and broker
non-votes effectively will be votes against Proposals 1, 2 and 3 because these
proposals require the affirmative vote of a specified majority of the Fund's
outstanding shares.
All properly executed and unrevoked proxies received in time for the
Meeting will be voted as instructed by shareholders. Approval of each proposal
requires the affirmative vote of the lesser of (1) 67% or more of the shares of
the Fund present at the Meeting, if more than 50% of the outstanding shares are
represented at the Meeting in person or by proxy, or (2) more than 50% of the
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outstanding shares entitled to vote at the Meeting. If you execute your proxy
but give no voting instructions, your shares that are represented by proxies
will be voted "FOR" the Investment Management and Administration Contract, "FOR"
the Sub-Advisory Contract, "FOR" the Sub-Advisory Policy and "FOR" or "AGAINST"
any other business which may properly arise at the Meeting, in the proxies'
discretion. Any person giving a proxy has the power to revoke it at any time
prior to its exercise by executing a superseding proxy or by submitting a
written notice of revocation to the Secretary of the Fund ("Secretary"). To be
effective, such revocation must be received by the Secretary prior to the
Meeting and must indicate your name and account number. In addition, although
mere attendance at the Meeting will not revoke a proxy, a shareholder present at
the Meeting may withdraw his or her proxy by voting in person.
Shareholders of record as of the close of business on November 30, 2000
("Record Date"), are entitled to vote at the Meeting. On the Record Date, the
Fund had 42,664,535.132 shares issued and outstanding, consisting of
26,720,266.079 Class A shares, 7,900,370.342 Class B shares, 7,924,567.394 Class
C shares, and 119,331.317 Class Y shares. Shareholders are entitled to one vote
for each full share held and a fractional vote for each fractional share held.
Except as set forth in Appendix A, as of the Record Date, Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins"), the investment adviser,
administrator, and distributor of the Fund, does not know of any person who owns
beneficially or of record 5% or more of any class of shares of the Fund. As of
that same date, the Trustees and officers of the Fund, as a group, owned less
than 1% of any class of the Fund's outstanding shares.
The solicitation of proxies, the cost of which will be borne by
Mitchell Hutchins, will be made by mail, telephone and via the Internet. The
Fund's officers and employees of Mitchell Hutchins who assist in the proxy
solicitation will not receive any additional or special compensation for any
such efforts. The Fund has engaged the services of Shareholder Communications
Corporation ("SCC") to assist it in the solicitation of proxies for the Meeting.
SCC will be paid approximately $28,000 for proxy solicitation services. The Fund
will request broker/dealer firms, custodians, nominees and fiduciaries to
forward proxy materials to the beneficial owners of the shares held of record by
such persons. Mitchell Hutchins may reimburse such broker/dealer firms,
custodians, nominees and fiduciaries for their reasonable expenses incurred in
connection with such proxy solicitation.
COPIES OF THE FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS,
INCLUDING FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO SHAREHOLDERS.
SHAREHOLDERS MAY REQUEST COPIES OF THE FUND'S ANNUAL AND SEMI-ANNUAL REPORTS BY
WRITING THE FUND AT 51 WEST 52ND STREET, NEW YORK, NEW YORK 10019-6114, OR BY
CALLING 1-800-647-1568.
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INTRODUCTION
The Board of Trustees has approved proposals by Mitchell Hutchins to
restructure the manner in which the Fund's assets are managed. To implement new
investment management arrangements for the Fund, the Board, effective October 6,
2000, terminated the existing investment advisory and administration contract
between the Fund and Mitchell Hutchins and approved a new interim investment
management and administration contract with Mitchell Hutchins ("Interim
Management Contract") and an interim sub-advisory contract ("Interim
Sub-Advisory Contract") between Mitchell Hutchins and Massachusetts Financial
Services Company ("MFS"). Under the Interim Management Contract, Mitchell
Hutchins serves as investment manager for the Fund and provides portfolio
management oversight of MFS as sub-adviser, instead of directly managing the
Fund's portfolio. The Fund pays Mitchell Hutchins the same annual fee, 0.50% of
the Fund's average daily net assets, under the Interim Management Contract that
it paid under the preceding investment advisory and administration contract.
Under the Interim Sub-Advisory Contract, MFS provides the Fund with a continuous
investment program for which Mitchell Hutchins, not the Fund, pays MFS the
annual fee of 0.45% of the Fund's average daily net assets. The Interim
Management Contract and Interim Sub-Advisory Contract will terminate
automatically on the earlier of 150 days from their effective date or the date
Fund shareholders approve the new Investment Management and Administration
Contract and the Sub-Advisory Contract.
Under the proposal, MFS, an entity unaffiliated with Mitchell Hutchins,
would continue to manage the Fund's assets as its investment sub-adviser and
Mitchell Hutchins would continue to oversee MFS' activities as sub-adviser and
evaluate its performance. Mitchell Hutchins would continue to provide
administrative services to the Fund. The Board is asking the Fund's shareholders
to approve a new Investment Management and Administration Contract with Mitchell
Hutchins to incorporate updated language about Mitchell Hutchins' ability to
appoint sub-advisers, as described further below. In addition, the Board is
asking the Fund's shareholders to approve a policy that permits Mitchell
Hutchins and the Board to appoint and replace sub-advisers, enter into
sub-advisory contracts, and amend sub-advisory contracts without further
shareholder approval.
PROPOSAL 1: TO APPROVE OR DISAPPROVE A NEW INVESTMENT MANAGEMENT AND
ADMINISTRATION CONTRACT BETWEEN MITCHELL HUTCHINS AND THE FUND.
Mitchell Hutchins proposed to the Board, and the Board approved at its
meeting on November 8, 2000, an amended Investment Management and Administration
Contract ("Proposed Management Contract") between the Fund and Mitchell
Hutchins. The Proposed Management Contract is substantially similar to the
Fund's current Interim Management Contract and the Fund's recently terminated
Investment Advisory and Administration Contract ("Old Advisory Contract"). Under
the Proposed Management Contract, Mitchell Hutchins will have the same duties
and responsibilities and will receive the same compensation as under the Interim
Management Contract and the Old Advisory Contract. A form of the Proposed
Management Contract is attached as Appendix B.
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COMPARISON BETWEEN (1) THE OLD ADVISORY CONTRACT AND (2) THE INTERIM MANAGEMENT
CONTRACT AND THE PROPOSED MANAGEMENT CONTRACT
The main difference between the Interim Management Contract and the
Proposed Management Contract (collectively, the "New Contracts") on the one
hand, and the Old Advisory Contract, on the other hand, is the change of
Mitchell Hutchins' role under the New Contracts. Under the Old Advisory
Contract, Mitchell Hutchins' role was to provide a continuous investment program
for the Fund, including investment research and management with respect to all
securities, investments and cash equivalents in the Fund, and to determine what
securities and other investments would be purchased, retained or sold by the
Fund. Under the New Contracts, the role of Mitchell Hutchins is to oversee the
management of the Fund's portfolio by one or more investment sub-advisers,
rather than managing the Fund itself. Such oversight includes reviewing
prospective sub-advisers, selecting such sub-advisers, and monitoring and
evaluating their performance. Mitchell Hutchins will report to the Trust's Board
the results of its evaluation, supervision, and monitoring duties and will make
recommendations to the Board concerning the renewal, modification or termination
of sub-advisory agreements.
The Old Advisory Contract and the New Contracts all permit Mitchell
Hutchins to delegate its duties under the Contracts to a sub-adviser. However,
the New Contracts now specifically anticipate that Mitchell Hutchins will
delegate all of its investment management duties to a sub-adviser. Furthermore,
the New Contracts explicitly permit Mitchell Hutchins to delegate its duties to
more than one sub-adviser. Under the New Contracts, Mitchell Hutchins also has
the power to allocate and reallocate responsibility for the management of a
specific portion of the Fund's assets among the sub-advisers. In addition, the
New Contracts have been amended to acknowledge that Mitchell Hutchins can engage
a sub-adviser subject only to approval of the sub-advisory contract by the Board
of Trustees and to any requirements of the securities laws pertaining thereto,
which would permit Mitchell Hutchins to implement Proposal 3, if approved by
shareholders. As described in Proposal 3, Mitchell Hutchins and the Fund have
received an order from the Securities and Exchange Commission ("SEC") permitting
the engagement of unaffiliated sub-advisers by the Board of Trustees acting
alone and without the need for approval by the vote of the holders of a majority
of the outstanding shares of the Fund. See Proposal 3 for more information.
As administrator, under both the Old Advisory Contract and the New
Contracts, Mitchell Hutchins will manage the affairs of the Fund, subject to the
supervision of the Board. Mitchell Hutchins will provide the Fund with such
corporate, administrative and clerical personnel (including officers of the
Fund) and services as are deemed reasonably necessary or advisable by the Board,
including the maintenance of certain books and records of the Fund. Mitchell
Hutchins will arrange, but not pay, for the periodic preparation, updating,
filing and dissemination (as applicable) of reports to the Fund's shareholders
and the SEC and other appropriate federal or state regulatory authorities.
Mitchell Hutchins will provide the Fund with, or obtain for it, adequate office
space and all necessary office equipment and services, including telephone
service, heat, utilities, stationery supplies and similar items. Mitchell
Hutchins will provide the Board on a regular basis with economic and investment
analyses and reports and make available to the Board, upon request, any
economic, statistical and investment services normally available to
institutional or other customers of Mitchell Hutchins.
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Under the New Contracts, for both the services provided and the
expenses assumed, with respect to the Fund, the Fund will pay to Mitchell
Hutchins a fee, computed daily and paid monthly, at an annual rate of 0.50% of
the average daily net assets of the Fund. This fee is identical to the fee
payable to Mitchell Hutchins in the Old Advisory Contract.
Under both the Old Advisory Contract and the New Contracts, Mitchell
Hutchins will not be liable for any error in judgment or mistake of law or for
any loss suffered by the Fund or its shareholders in connection with the matters
to which the Contract relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of Mitchell Hutchins in the
performance of its duties or from reckless disregard by it of its obligations
and duties under the Contract. The only difference between the Contracts with
respect to liability is that the New Contracts specifically extend the
limitation of liability to Mitchell Hutchins' officers, directors, employees and
delegates and to any sub-advisers to the Fund, whereas the Old Advisory Contract
does not explicitly include such persons in its corresponding section. Both the
Old Advisory Contract and the New Contracts provide that the Trustees of the
Trust and Fund shareholders will not be liable for any obligations of the Fund
or the Trust under the Contracts, and that Mitchell Hutchins will look only to
the assets and property of the Trust in settlement of any rights or claims under
the Contracts.
Both the Old Advisory Contract and the New Contracts terminate
automatically upon assignment and are terminable at any time without penalty by
the Board or by vote of the holders of a majority of the Fund's outstanding
voting securities on 60 days' written notice to Mitchell Hutchins or, without
penalty, by Mitchell Hutchins on 60 days' written notice to the Fund.
If approved by the Fund's shareholders, the Proposed Management
Contract will become effective on the date of approval and will remain in effect
for an initial two-year term. Thereafter, the Proposed Management Contract will
continue in effect if it is approved at least annually by a vote of the Fund's
shareholders or by the Board, provided that, in either event, continuance is
approved by the vote of a majority of those Trustees who are not "interested
persons," as defined by the Investment Company Act of 1940, as amended ("1940
Act"), of the Fund or Mitchell Hutchins ("Independent Trustees"), which vote
must be cast in person at a meeting called for the purpose of voting on such
approval.
The Old Advisory Contract is dated April 21, 1988 and was last
submitted to a vote of shareholders of the Fund on April 21, 1988 in connection
with the determination that Mitchell Hutchins should provide advisory and
administrative services directly to the Fund, rather than through a delegation
from PaineWebber Incorporated ("PaineWebber"). Under the Old Advisory Contract,
the Fund paid (or accrued) investment advisory and administrative fees to
Mitchell Hutchins in the amount of $2,408,964 during the fiscal year ended
November 30, 1999.
Further information about Mitchell Hutchins is set forth in Appendix C.
COMPARISON OF THE INTERIM MANAGEMENT CONTRACT AND THE PROPOSED MANAGEMENT
CONTRACT
The Interim Management Contract and the Proposed Management Contract
are substantially similar, with the only real differences stemming from the
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provisional nature of the Interim Management Contract pursuant to the
requirements of Rule 15a-4 under the 1940 Act. The Interim Management Contract
is only effective for 150 days from the termination date of the Old Advisory
Contract, not two years from the date of adoption as under the Proposed
Management Contract, and only 10 days' written notice is required for
termination of the Interim Management Contract by the Fund, rather than the 60
days' written notice required under the Proposed Management Contract.
EVALUATION BY THE BOARD
In considering the Proposed Management Contract, the Board reviewed and
analyzed the factors they deemed relevant, including (1) the services now being
provided by Mitchell Hutchins; (2) the nature, quality, and scope of such
services as well as the Fund's investment performance; (3) the nature and scope
of the services to be provided to the Fund by Mitchell Hutchins under the
Proposed Management Contract; (4) the ability of Mitchell Hutchins to provide
such services; and (5) the potential effect of the Proposed Management Contract
on shareholders. The Trustees reviewed the proposed fees payable to Mitchell
Hutchins under the Proposed Management Contract. The Board also considered the
management, advisory and/or administration fees paid by other investment
companies with similar objectives and characteristics.
After full consideration of these and other factors, the Board,
including the Independent Trustees, approved the Proposed Management Contract
and authorized the submission of the Proposed Management Contract to the Fund's
shareholders for their approval at the Meeting.
REQUIRED VOTE
Approval of Proposal 1 requires the affirmative vote of the lesser of
(1) 67% or more of the shares of the Fund present at the Meeting, if more than
50% of the outstanding shares are represented at the Meeting in person or by
proxy, or (2) more than 50% of the outstanding shares entitled to vote at the
Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 1.
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PROPOSAL 2: TO APPROVE OR DISAPPROVE A SUB-ADVISORY CONTRACT BETWEEN
MITCHELL HUTCHINS AND MFS.
Mitchell Hutchins proposed to the Board, and the Board approved at its
meeting on November 8, 2000, a sub-advisory contract between Mitchell Hutchins
and MFS (" Proposed Sub-Advisory Contract"). The Proposed Sub-Advisory Contract
is substantially similar to the Interim Sub-Advisory Contract adopted by the
Board on October 6, 2000. A form of the Proposed Sub-Advisory Contract is
attached as Appendix D.
Further information about MFS is set forth in Appendix E.
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PROPOSED SUB-ADVISORY CONTRACT
Under the Proposed Sub-Advisory Contract, MFS would be responsible,
subject to the supervision of the Board and Mitchell Hutchins, for the actual
investment management of all or a designated portion of the assets of the Fund,
including placing purchase and sell orders for investments and for other related
transactions. MFS agrees to provide a continuous investment program for the
Fund's assets, including investment research and management. The Proposed
Sub-Advisory Contract recognizes that MFS may, under certain circumstances, pay
higher brokerage commissions by executing portfolio transactions with brokers
that provide the sub-adviser with research, analysis, advice or similar
services. The Proposed Sub-Advisory Contract also provides that MFS will (1)
maintain all books and records required to be maintained by it pursuant to the
1940 Act and the rules and regulations promulgated thereunder with respect to
transactions the sub-adviser effects 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 may reasonably request; (2) provide the Board or Mitchell
Hutchins with economic and investment analyses and reports, as well as quarterly
reports, setting forth the Fund's performance with respect to its investments
and make available to the Board and Mitchell Hutchins any economic, statistical
and investment services that MFS normally makes available to its institutional
investors or other customers; and (3) provide assistance in the fair valuation
of, and use reasonable efforts to arrange for the provision of a price or prices
from one or more parties independent of MFS, for each portfolio security for
which the custodian does not obtain prices in the ordinary course of business
from an automated pricing service.
The Proposed Sub-Advisory Contract provides that MFS will not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund, its shareholders, the Trust or Mitchell Hutchins in connection with the
matters to which the Contract relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of MFS in the performance
of its duties or from reckless disregard by it of its obligations and duties
under the Contract. In addition, MFS will not have any responsibilities for any
other series of the Trust, for any portion of the Fund's assets that it does not
manage or for the acts or omissions of any other sub-adviser for the Fund or the
Trust. In particular, if at any time MFS only manages a portion of the Fund's
assets, MFS will have no responsibility for the Fund being in violation of any
law or regulation or Fund policy or restriction, or for the Fund's failure to
qualify as a "regulated investment company" for federal tax purposes, if the
portion of the Fund's portfolio managed by MFS would not be in such violation or
fail to so qualify if such portion were deemed a separate series of the Trust or
a separate "regulated investment company."
Mitchell Hutchins has agreed to indemnify, defend and hold harmless
MFS, its affiliates, and each of their officers, directors, employees,
shareholders, agents, and representatives from and against any and all losses,
claims, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) arising from or related to the services contemplated under the
Proposed Sub-Advisory Contract, except to the extent that such losses, claims,
damages, liabilities, costs and expenses result from MFS' willful misfeasance,
bad faith, or gross negligence in the performance of its duties or from reckless
disregard by MFS of its obligations and duties under the Contract.
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The Proposed Sub-Advisory Contract provides that the Fund, by the vote
of a majority of the Board of Trustees or a majority of its outstanding voting
securities, may terminate the Contract, without penalty, on 60 days' written
notice to MFS and MFS may terminate the Contract, without penalty, on 60 days'
written notice to Mitchell Hutchins. The Proposed Sub-Advisory Contract also
permits Mitchell Hutchins to terminate the Contract, without penalty, upon
material breach by MFS of any of certain specific representations and warranties
in the Contract. These representations and warranties concern failure to be
registered as an investment adviser, failure to adopt a code of ethics, failure
to notify Mitchell Hutchins of changes in control and failure to obtain written
consent from Mitchell Hutchins before referring to MFS' relationship with the
Fund, the Trust, Mitchell Hutchins or any of their affiliates in promotional
materials. MFS may cure such breach within a 20 day period after notice thereof.
Additionally, Mitchell Hutchins may terminate the Proposed Sub-Advisory Contract
without penalty if, in the reasonable judgment of Mitchell Hutchins, MFS becomes
unable to discharge its duties and obligations under the Contract, including
circumstances such as financial insolvency of MFS or any other circumstances
which could adversely affect the Fund. In addition, the Proposed Sub-Advisory
Contract is automatically terminable upon assignment.
Under the Proposed Sub-Advisory Contract, for the services performed
and the expenses assumed, MFS would receive a sub-advisory fee from Mitchell
Hutchins (not the Fund), computed daily and paid monthly, at an annual rate of
0.45% of the portion of the Fund's average daily net assets under MFS'
management.
If approved by the Fund's shareholders, the Proposed Sub-Advisory
Contract will become effective on the date of approval and will remain in effect
for an initial two-year term. Thereafter, the Proposed Sub-Advisory Contract
will continue in effect if it is approved at least annually by a vote of the
Fund's shareholders or by the Board, provided that, in either event, continuance
is approved by the vote of a majority of the Independent Trustees, which vote
must be cast in person at a meeting called for the purpose of voting on such
approval.
COMPARISON OF THE INTERIM SUB-ADVISORY CONTRACT AND THE PROPOSED SUB-ADVISORY
CONTRACT
The Interim Sub-Advisory Contract and the Proposed Sub-Advisory
Contract are substantially similar. Some of the differences between the two
Contracts stem from the provisional nature of the Interim Sub-Advisory Contract
and the requirements of Rule 15a-4 of the 1940 Act. The Interim Sub-Advisory
Contract is only effective for 150 days from the termination date of the Old
Advisory Contract, not for two years from the date of adoption as under the
Proposed Sub-Advisory Contract, and only 10 days' written notice is required for
termination of the Interim Sub-Advisory Contract by the Fund, rather than the 60
days' written notice required under the Proposed Sub-Advisory Contract. Another
difference is an additional provision in the Proposed Sub-Advisory Contract that
reflects the Board's ability to amend the Contract without shareholder approval
in accordance with the SEC exemptive order discussed in Proposal 3 (if such
Proposal is approved by shareholders). In addition, the Proposed Sub-Advisory
Contract specifically states that the Contract will terminate upon its
assignment or the termination of the Proposed Management Contract.
8
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EVALUATION BY BOARD
In determining to approve the Proposed Sub-Advisory Contract, the Board
analyzed the factors it deemed relevant, particularly Mitchell Hutchins'
decision to refocus its business to the exclusion of providing portfolio
advisory services to bond funds, MFS' particular experience in managing fixed
income assets and high yield assets, its reputation, the past performance of
other funds managed by MFS that invest in high income securities, its overall
capabilities to perform the services under the Proposed Sub-Advisory Contract
and its willingness to perform those services for the Fund. The Board also
considered the sub-advisory fees that would be payable to MFS. The Board
reviewed the services provided by MFS to its other investment company clients,
the ability of MFS to provide these services to the Fund, including its
personnel, operations and financial condition, and other factors that would
affect the provision of those services. After full consideration of these and
other factors, the Board of Trustees, including a majority of the Independent
Trustees, approved the Proposed Sub-Advisory Contract and recommended that it be
submitted to the shareholders for approval.
REQUIRED VOTE
Approval of Proposal 2 requires the affirmative vote of the lesser of
(1) 67% or more of the shares of the Fund present at the Meeting, if more than
50% of the outstanding shares are represented at the Meeting in person or by
proxy, or (2) more than 50% of the outstanding shares entitled to vote at the
Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 2.
---------------
PROPOSAL 3: TO APPROVE A POLICY TO PERMIT MITCHELL HUTCHINS AND THE
BOARD TO APPOINT AND REPLACE SUB-ADVISERS, TO ENTER INTO SUB-ADVISORY
CONTRACTS AND TO APPROVE AMENDMENTS TO SUB-ADVISORY CONTRACTS ON BEHALF
OF THE FUND WITHOUT FURTHER SHAREHOLDER APPROVAL.
At its meeting on November 8, 2000, the Board approved, and recommended
that the shareholders of the Fund also be asked to approve, a policy to permit
Mitchell Hutchins, subject to the approval of the Board, to appoint and replace
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"). Shareholders are being asked to approve this
policy at the meeting to permit Mitchell Hutchins to make changes in the
sub-advisory arrangements for the Fund in the future without having to incur the
expense of another shareholder meeting. If approved by the Fund's shareholders,
the policy would apply only to sub-advisers that are not affiliated with
Mitchell Hutchins and thus would not permit Mitchell Hutchins and the Board to
appoint any Mitchell Hutchins affiliate to serve as sub-adviser to the Fund
without shareholder approval.
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THE EXEMPTIVE ORDER
On January 19, 1999, the Fund and Mitchell Hutchins received an
exemptive order from the SEC that permits Mitchell Hutchins and the Fund's Board
of Trustees to appoint and replace sub-advisers that are not affiliated with
Mitchell Hutchins and to amend sub-advisory contracts with these sub-advisers
without obtaining shareholder approval. The Fund's shareholders must approve the
Sub-Adviser Approval Policy before Mitchell Hutchins and the Board may implement
it. Without the exemptive order, the provisions of the 1940 Act require that the
Fund's shareholders approve all new sub-advisory contracts as well as material
amendments to any existing sub-advisory contract. If shareholders approve this
proposal, Mitchell Hutchins will be authorized, subject to approval by the
Board, including a majority of the Independent Trustees, to evaluate, select and
retain unaffiliated sub-advisers for the Fund and to modify the sub-advisory
contracts without obtaining further approval of the Fund's shareholders whenever
Mitchell Hutchins and the Board believe these actions would benefit the Fund and
its shareholders. As explained below, shareholders would receive detailed
information regarding any new sub-adviser.
CURRENT SUB-ADVISER APPROVAL PROCESS
Currently, the holders of a majority of the Fund's outstanding shares
must approve any sub-advisory contract between Mitchell Hutchins and another
investment adviser pursuant to which the other adviser provides the Fund with
investment management services. Shareholder approval is required in addition to
approval by the Board and a majority of the Independent Trustees.
PROPOSED SUB-ADVISER APPROVAL POLICY
The proposed Sub-Adviser Approval Policy would permit Mitchell
Hutchins, subject to the approval of the Board of Trustees, including a majority
of the Independent Trustees, to appoint and replace sub-advisers and to amend
sub-advisory contracts without obtaining shareholder approval. The Sub-Adviser
Approval Policy thus would permit 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
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; or (5) there is a change in
investment style of the Fund. 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.
Approval of the Sub-Adviser Approval Policy will not affect any of the
requirements under the federal securities laws that govern 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 Fund and Mitchell Hutchins
will be subject to several conditions imposed by the SEC to ensure that the
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interests of the Fund's shareholders are adequately protected whenever Mitchell
Hutchins acts under the Sub-Adviser Approval Policy. Finally, within 90 days of
the appointment of a new sub-adviser, the Fund will provide its 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 the Fund's shareholders would receive in a proxy
statement. If the Fund's shareholders are not satisfied with the sub-advisory
arrangements that Mitchell Hutchins and the Board implement under the
Sub-Adviser Approval Policy, they would, of course, be able to exchange or sell
their shares.
Shareholder approval of this Proposal 3 will not change the total
amount of management fees paid by the Fund to Mitchell Hutchins or Mitchell
Hutchins' duties and responsibilities toward the Fund under the Proposed
Management Contract.
REASONS FOR REQUESTING SHAREHOLDER APPROVAL
The Board believes that it is in the best interests of the Fund's
shareholders to give Mitchell Hutchins the maximum flexibility to select,
supervise and evaluate sub-advisers without incurring the expense and potential
delay of seeking specific shareholder approval. While Rule 15a-4 under the 1940
Act provides a limited exception to the shareholder approval requirements for an
interim advisory contract (pursuant to which the Fund's Interim Management
Contract and Interim Sub-Advisory Contract were adopted), a fund's current
advisory contract must be terminated before the Rule can apply and a fund's
shareholders still must approve both the resultant interim advisory and
sub-advisory contracts no later than 150 days after their effective date. Thus,
even when a change in investment management arrangements involving one or more
sub-advisers can be put into place promptly on a temporary basis, the Fund must
still call and hold a meeting of the Fund's shareholders, create and distribute
proxy materials, and arrange for the solicitation of voting instructions from
shareholders. This process is time-intensive, slow and costly. These costs are
generally borne entirely by the Fund (although in the case of this solicitation,
they are being borne by Mitchell Hutchins). If Mitchell Hutchins and the Board
can rely on the Sub-Adviser Approval Policy, the Board would be able to act more
quickly and with less expense to appoint an unaffiliated sub-adviser when the
Board and Mitchell Hutchins believe 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 this area. The Board believes that investors may choose to invest
in the Fund because of Mitchell Hutchins' experience in this respect.
Finally, the Board will oversee 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
11
<PAGE>
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.
REQUIRED VOTE
Approval of Proposal 3 requires the affirmative vote of the lesser of
(1) 67% or more of the shares of the Fund present at the Meeting, if more than
50% of the outstanding shares are represented at the Meeting in person or by
proxy, or (2) more than 50% of the outstanding shares entitled to vote at the
Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 3.
---------------
INFORMATION ABOUT CERTAIN TRUSTEES AND OFFICERS OF THE TRUST
Officers are appointed by the Trustees and serve at the pleasure of the
Board. Information regarding officers and Trustees of the Fund who are employees
or directors of Mitchell Hutchins, PaineWebber or UBS AG ("UBS") is provided
below.
MARGO N. ALEXANDER: age 53, trustee. Mrs. Alexander is chairman (since
March 1999) and a director (since January 1995) of Mitchell Hutchins, and an
executive vice president and a director of PaineWebber (since March 1984). She
was chief executive officer of Mitchell Hutchins from January 1995 to October
2000. Mrs. Alexander is a director or trustee of 30 investment companies for
which Mitchell Hutchins, PaineWebber or one of their affiliates serves as
investment adviser.
E. GARRETT BEWKES JR.: age 74, trustee and chairman of the Board of
Trustees. Mr. Bewkes serves as a consultant to PaineWebber (since May 1999).
Prior to November 2000, he was a director of Paine Webber Group Inc. ("PW
Group"), formerly the holding company of PaineWebber and Mitchell Hutchins, and
prior to 1996, he was a consultant to PW Group. Prior to 1988, he was chairman
of the board, president and chief executive officer of American Bakeries
Company. Mr. Bewkes is a director of Interstate Bakeries Corporation. Mr. Bewkes
is a director or trustee of 40 investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as investment adviser.
BRIAN M. STORMS: age 46, president and trustee. Mr. Storms is chief
executive officer (since October 2000) and president (since March 1999) of
Mitchell Hutchins. He was president of Prudential Investments (1996-1999). Prior
to joining Prudential, he was a managing director at Fidelity Investments. Mr.
Storms is president and a director or trustee of 30 investment companies for
which Mitchell Hutchins, PaineWebber or one of their affiliates serves as
investment adviser.
T. KIRKHAM BARNEBY: age 54, vice president. Mr. Barneby is a managing
director and chief investment officer--quantitative investments of Mitchell
Hutchins. Mr. Barneby is a vice president of 14 investment companies for which
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Mitchell Hutchins, PaineWebber or one of their affiliates services as investment
adviser.
AMY R. DOBERMAN: age 38, vice president. Ms. Doberman is senior vice
president and general counsel of Mitchell Hutchins. From December 1996 through
July 2000, she was general counsel of Aeltus Investment Management, Inc. Prior
to working at Aeltus, Ms. Doberman was a Division of Investment Management
Assistant Chief Counsel at the SEC. Ms. Doberman is a vice president of 29
investment companies and a vice president and secretary of one investment
company for which Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
ELBRIDGE T. GERRY: age 43, vice president. Mr. Gerry is a managing
director and a portfolio manager of Mitchell Hutchins. Prior to January 1996, he
was with J.P. Morgan Private Banking where he was responsible for managing
municipal assets, including several municipal bond funds. Mr. Gerry is a vice
president of 20 investment companies for which Mitchell Hutchins, PaineWebber or
one of their affiliates serves as investment adviser.
JOHN J. LEE: age 32, vice president and assistant treasurer. Mr. Lee is
a vice president and a manager of the mutual fund finance department of Mitchell
Hutchins. Prior to September 1997, he was an audit manager in the financial
services practice of Ernst & Young LLP. Mr. Lee is a vice president and
assistant treasurer of 30 investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as investment adviser.
KEVIN J. MAHONEY: age 35, vice president and assistant treasurer. Mr.
Mahoney is a first vice president and a senior manager of the mutual fund
finance department of Mitchell Hutchins. From August 1996 through March 1999, he
was the manager of the mutual fund internal control group of Salomon Smith
Barney. Prior to August 1996, he was an associate and assistant treasurer for
BlackRock Financial Management L.P. Mr. Mahoney is a vice president and
assistant treasurer of 30 investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as investment adviser.
ANN E. MORAN: age 43, vice president and assistant treasurer. Ms. Moran
is a vice president and a manager of the mutual fund finance department of
Mitchell Hutchins. Ms. Moran is a vice president and assistant treasurer of 30
investment companies for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
DIANNE E. O'DONNELL: age 48, vice president and secretary. Ms.
O'Donnell is a senior vice president and deputy general counsel of Mitchell
Hutchins. Ms. O'Donnell is a vice president and secretary of 29 investment
companies and vice president and assistant secretary of one investment company
for which Mitchell Hutchins, PaineWebber or one of their affiliates serves as
investment adviser.
PAUL H. SCHUBERT: age 37, vice president and treasurer. Mr. Schubert is
a senior vice president and the director of the mutual fund finance department
of Mitchell Hutchins. Mr. Schubert is a vice president and treasurer of 30
investment companies for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
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<PAGE>
BARNEY A. TAGLIALATELA: age 39, vice president and assistant treasurer.
Mr. Taglialatela is a vice president and a manager of the mutual fund finance
department of Mitchell Hutchins. Mr. Taglialatela is a vice president and
assistant treasurer of 30 investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as investment adviser.
KEITH A. WELLER: age 39, vice president and assistant secretary. Mr.
Weller is a first vice president and senior associate general counsel of
Mitchell Hutchins. Mr. Weller is a vice president and assistant secretary of 30
investment companies for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
OTHER INFORMATION
SHAREHOLDER PROPOSALS. As a general matter, the Fund 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.
OTHER BUSINESS. The Fund's management knows of no other business to be
presented to the Meeting other than the matters set forth in this Proxy
Statement, but should any other matter requiring a vote of the Fund's
shareholders arise, the proxies will vote thereon according to their best
judgment in the interests of the Fund.
By Order of the Board of Trustees,
-----------------------------
Dianne E. O'Donnell
Secretary
December 30, 2000
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APPENDIX A
As of October 31, 2000, the following shareholders are shown on the
Fund's records as owning more than 5% of a class of its shares:
------------------------------------ -------------------------------------------
NUMBER AND PERCENTAGE OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED AS OF OCTOBER 31, 2000
------------------------------------ -------------------------------------------
Jerry M. Zeigler (Class Y) 14.5% 17,562.902
------------------------------------ ------------------- -----------------------
Gertrude A. Tormey (Class Y) 23.11% 27,996.542
------------------------------------ ------------------- -----------------------
Mary Estes (Class Y) 9.73% 11,783.00
------------------------------------ ------------------- -----------------------
---------------
Each shareholder listed may be contacted c/o Mitchell Hutchins Asset Management
Inc., 51 West 52nd Street, New York, NY 10019-6114.
<PAGE>
APPENDIX B
FORM OF INVESTMENT MANAGEMENT AND
ADMINISTRATION CONTRACT
Contract made as of __________, ____, between PAINEWEBBER MANAGED
INVESTMENTS TRUST, a Massachusetts business trust ("Trust"), and MITCHELL
HUTCHINS ASSET MANAGEMENT INC. ("Mitchell Hutchins"), a Delaware corporation
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended ("Advisers Act"), and as a broker-dealer under the Securities
Exchange Act of 1934, as amended ("1934 Act");
WHEREAS the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company, and
is authorized to offer for public sale distinct series of shares of beneficial
interest; and
WHEREAS the Trust desires and intends to have one or more investment
advisers ("Sub-Advisers") provide investment advisory and portfolio management
services with respect to the series of shares of beneficial interest of the
Trust designated as PaineWebber High Income Fund and each such other series as
to which this Contract may apply (each a "Series"); and
WHEREAS the Trust desires to retain Mitchell Hutchins as investment
manager and administrator to furnish certain administrative and portfolio
management services to the Trust with respect to the Series, and Mitchell
Hutchins is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints Mitchell Hutchins as
investment manager and administrator of the Trust and each Series for the period
and on the terms set forth in this Contract. Mitchell Hutchins accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. DUTIES AS INVESTMENT MANAGER; APPOINTMENT OF SUB-ADVISERS
(a) Subject to the oversight and direction of the Trust's Board of Trustees
("Board"), Mitchell Hutchins will provide to the Trust investment management
evaluation services principally by performing initial reviews of prospective
Sub-Advisers for each Series and overseeing and monitoring performance of the
Sub-Advisers thereafter. Mitchell Hutchins agrees to report to the Trust the
results of its evaluation, oversight and monitoring functions and to keep books
and records of the Trust in connection therewith. Upon the request of the Board,
Mitchell Hutchins will provide portfolio management services with respect to any
portion of Series' assets for which no Sub-Adviser is responsible. Mitchell
Hutchins further agrees to communicate performance expectations and evaluations
to the Sub-Advisers, and to recommend to the Trust whether agreements with
Sub-Advisers should be renewed, modified or terminated.
(b) Mitchell Hutchins is responsible for informing the Sub-Advisers of the
investment objective(s), policies and restrictions of the Series for which the
Sub-Adviser is responsible, for informing or ascertaining that it is aware of
<PAGE>
other legal and regulatory responsibilities applicable to the Sub-Adviser with
respect to the Series for which the Sub-Adviser is responsible, and for
monitoring the Sub-Advisers' discharge of their duties; but Mitchell Hutchins is
not responsible for the specific actions (or inactions) of a Sub-Adviser in the
performance of the duties assigned to it.
(c) With respect to each Sub-Adviser for a Series, Mitchell Hutchins shall
enter into an agreement ("Sub-Advisory Agreement") with the Sub-Adviser in
substantially the form previously approved by the Board and shall seek approval
of the Board or a Series' shareholders in a manner consistent with the 1940 Act,
the rules thereunder or any applicable exemptive order.
(d) Mitchell Hutchins shall be responsible for the fees payable to and
shall pay the Sub-Adviser of a Series the fee as specified in the Sub-Advisory
Agreement relating thereto.
(e) In the event that the Board shall request that Mitchell Hutchins
provide any portfolio management services to one or more Series, Mitchell
Hutchins shall comply with this paragraph 2(e). Mitchell Hutchins agrees that in
placing orders with brokers, it will attempt to obtain the best net result in
terms of price and execution; provided that, on behalf of any Series, Mitchell
Hutchins may, in its discretion, use brokers who provide the Series with
research, analysis, advice and similar services to execute portfolio
transactions on behalf of the Series, and Mitchell Hutchins may pay to those
brokers in return for brokerage and research services a higher commission than
may be charged by other brokers, subject to Mitchell Hutchins' determining in
good faith that such commission is reasonable in terms either of the particular
transaction or of the overall responsibility of Mitchell Hutchins to such Series
and its other clients and that the total commissions paid by such Series will be
reasonable in relation to the benefits to the Series over the long term. In no
instance will portfolio securities be purchased from or sold to Mitchell
Hutchins, or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder. Mitchell
Hutchins may aggregate sales and purchase orders with respect to the assets of
the Series with similar orders being made simultaneously for other accounts
advised by Mitchell Hutchins or its affiliates. Whenever Mitchell Hutchins
simultaneously places orders to purchase or sell the same security on behalf of
a Series and one or more other accounts advised by Mitchell Hutchins, such
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; the Trust recognizes
that in some cases this procedure may adversely affect the results obtained for
the Series. In providing any portfolio management services, Mitchell Hutchins
will oversee the maintenance of all books and records with respect to the
securities transactions of each Series, and will furnish the Board with such
periodic and special reports as the Board reasonably may request. In compliance
with the requirements of Rule 31a-3 under the 1940 Act, Mitchell Hutchins hereby
agrees that all records which it maintains for the Trust are the property of the
Trust, agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any records which it maintains for the Trust and which 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 Trust upon request
by the Trust. In providing any portfolio management services, Mitchell Hutchins
will oversee the computation of the net asset value and the net income of each
Series as described in the currently effective registration statement of the
Trust under the Securities Act of 1933, as amended, and the 1940 Act and any
supplements thereto ("Registration Statement") or as more frequently requested
by the Board. The Fund hereby authorizes Mitchell Hutchins and any entity or
2
<PAGE>
persons associated with Mitchell Hutchins which is a member of a national
securities exchange to effect any transaction on such exchange for the account
of the Fund, which transaction is permitted by Section 11(a) of the 1934 Act and
Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of
compensation by Mitchell Hutchins or any entity or persons associated with
Mitchell Hutchins for such transactions.
3. DUTIES AS ADMINISTRATOR. Mitchell Hutchins will administer the
affairs of the Trust and Series subject to the oversight and direction of the
Board and the following understandings:
(a) Mitchell Hutchins will supervise all aspects of the operations
of the Trust and the Series, including oversight of transfer agency, custodial
and accounting services, except as hereinafter set forth; provided, however,
that nothing herein contained shall be deemed to relieve or deprive the Board of
any of its responsibilities with respect to the conduct of the affairs of the
Trust and the Series.
(b) Mitchell Hutchins will provide the Trust and each Series with
such corporate, administrative and clerical personnel (including officers of the
Trust) and services as are reasonably deemed necessary or advisable by the
Board, including the maintenance of certain books and records of the Trust and
Series in connection with the administration of the Trust.
(c) Mitchell Hutchins will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the Trust's
Registration Statement, proxy material, tax returns and required reports to
shareholders of each Series and the Securities and Exchange Commission and other
appropriate federal or state regulatory authorities.
(d) Mitchell Hutchins will provide the Trust and each Series with,
or obtain for it, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities, stationery supplies and
similar items.
(e) Mitchell Hutchins will provide the Board on a regular basis
with economic and investment analyses and reports and make available to the
Board upon request any economic, statistical and investment services normally
available to institutional or other customers of Mitchell Hutchins.
4. FURTHER DUTIES. In all matters relating to the performance of
this Contract, Mitchell Hutchins will act in conformity with the Declaration of
Trust, By-Laws and the currently effective Registration Statement and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the Advisers Act, and the rules under each, and all other
applicable federal and state laws and regulations.
5. SERVICES NOT EXCLUSIVE. The services furnished by Mitchell
Hutchins hereunder are not to be deemed exclusive and Mitchell Hutchins 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 Mitchell Hutchins,
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.
3
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6. EXPENSES.
(a) During the term of this Contract, each Series will bear all
expenses, not specifically assumed by Mitchell Hutchins, incurred in its
operations and the offering of its shares.
(b) Expenses borne by each Series will include but not be limited
to the following (or the Series' proportionate share of the following): (i) the
cost (including brokerage commissions) of securities purchased or sold by the
Series and any losses incurred in connection therewith; (ii) fees payable to and
expenses incurred on behalf of the Series by Mitchell Hutchins under this
Contract; (iii) expenses of organizing the Series; (iv) filing fees and expenses
relating to the registrations and qualification of the Series' shares and the
Trust under federal and/or state securities laws and maintaining such
registration and qualifications; (v) fees and salaries payable to the Trust's
Trustees and officers who are not interested persons of the Trust or Mitchell
Hutchins; (vi) all expenses incurred in connection with the Trustees' services,
including travel expenses; (vii) taxes (including any income or franchise taxes)
and governmental fees; (viii) costs of any liability, uncollectible items of
deposit and other insurance and fidelity bonds; (ix) any costs, expenses or
losses arising out of a liability of or claim for damages or other relief
asserted against the Trust or the Series for violation of any law; (x) legal,
accounting and auditing expenses, including legal fees of special counsel for
those Trustees of the Trust who are not interested persons of the Trust; (xi)
charges of custodians, transfer agents and other agents; (xii) costs of
preparing share certificates; (xiii) expenses of setting in type and printing
prospectuses and supplements thereto, statements of additional information and
supplements thereto, reports and proxy materials for existing shareholders;
(xiv) costs of mailing prospectuses and supplements thereto, statements of
additional information and supplements thereto, reports and proxy materials to
existing shareholders; (xv) any extraordinary expenses (including fees and
disbursements of counsel, costs of actions, suits or proceedings to which the
Trust is a party and the expenses the Trust may incur as a result of its legal
obligation to provide indemnification to its officers, Trustees, agents and
shareholders) incurred by the Trust or the Series; (xvi) fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; (xvii) costs of mailing and tabulating proxies
and costs of meetings of shareholders, the Board and any committees thereof;
(xviii) the cost of investment company literature and other publications
provided by the Trust to its Trustees and officers; (xix) costs of mailing,
stationery and communications equipment; (xx) expenses incident to any dividend,
withdrawal or redemption options; (xxi) charges and expenses of any outside
pricing service used to value portfolio securities; (xxii) interest on
borrowings of the Trust; and (xxiii) any fees or expenses related to license
agreements with respect to securities indices.
(c) The Trust or a Series may pay directly any expenses incurred by
it in its normal operations and, if any such payment is consented to by Mitchell
Hutchins and acknowledged as otherwise payable by Mitchell Hutchins pursuant to
this Contract, a Series may reduce the fee payable to Mitchell Hutchins pursuant
to Paragraph 7 thereof by such amount. To the extent that such deductions exceed
the fee payable to Mitchell Hutchins on any monthly payment date, such excess
shall be carried forward and deducted in the same manner from the fee payable on
succeeding monthly payment dates.
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<PAGE>
(d) Mitchell Hutchins will assume the cost of any compensation for
services provided to the Trust received by the officers of the Trust and by
those Trustees who are interested persons of the Trust.
(e) The payment or assumption by Mitchell Hutchins of any expenses
of the Trust or a Series that Mitchell Hutchins is not required by this Contract
to pay or assume shall not obligate Mitchell Hutchins to pay or assume the same
or any similar expense of the Trust or a Series on any subsequent occasion.
7. COMPENSATION.
(a) For the services provided and the expenses assumed pursuant to
this Contract, the Trust will pay to Mitchell Hutchins a fee with respect to
PaineWebber High Income Fund, computed daily and paid monthly, at an annual rate
of 0.50% of average daily net assets.
(b) For the services provided and the expenses assumed pursuant to
his Contract with respect to any Series hereafter established, the Trust will
pay to Mitchell Hutchins from the assets of such Series a fee in an amount to be
agreed upon in a written fee agreement ("Fee Agreement") executed by the Trust
on behalf of such Series and by Mitchell Hutchins. All such Fee Agreements shall
provide that they are subject to all terms and conditions of this Contract.
(c) The fee shall be computed daily and paid monthly to Mitchell
Hutchins on or before the last business day of the next succeeding calendar
month.
(d) If this Contract becomes effective or terminates before the end
of any month, the fee for the period from the effective day to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
8. LIMITATION OF LIABILITY OF MITCHELL HUTCHINS. Mitchell Hutchins
and its officers, directors, employees and delegates, including any Sub-Adviser
or Sub-Administrator to a Series, shall not be liable for any error of judgment
or mistake of law or for any loss suffered by any Series, the Trust or any of
its shareholders, in connection with the matters to which this Contract relates,
except to the extent that such a loss results 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. Any
person, even though also an officer, director, employee, or agent of Mitchell
Hutchins, who may be or become an officer, Trustee, employee or agent of the
Trust shall be deemed, when rendering services to a Series or the Trust or
acting with respect to any business of such Series or the Trust, to be rendering
such service to or acting solely for the Series or the Trust and not as an
officer, director, employee, or agent or one under the control or direction of
Mitchell Hutchins even though paid by it.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS OF THE
TRUST. The Trustees of the Trust and the shareholders of any Series shall not be
liable for any obligations of any Series or the Trust under this Agreement and
Mitchell Hutchins agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust in
settlement of such right or claim, and not to such Trustees or shareholders.
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<PAGE>
10. DURATION AND TERMINATION.
(a) This Contract shall become effective for each Series upon the
day and year first written above, provided that, with respect to any Series,
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 that Series' outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract
shall continue in effect for two years from the above written 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, with respect to any given Series, by vote of
a majority of the outstanding voting securities of such Series.
(c) Notwithstanding the foregoing, with respect to a Series, 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 Series on sixty days' written notice to Mitchell Hutchins and
may be terminated by Mitchell Hutchins at any time, without the payment of any
penalty, on sixty days' written notice to the Trust. Termination of this
Contract with respect to a Series shall in no way affect the continued validity
of this Contract or the performance thereunder with respect to any other Series.
This Contract will terminate automatically in the event of its assignment.
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 which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this contract as to a
Series shall be effective until approved by vote of a majority of the Series'
outstanding voting securities.
12. GOVERNING LAW. This Contract shall be construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws principles thereof, and in accordance with the 1940 Act, provided,
however, that section 9 above will be construed in accordance with the laws of
the Commonwealth of Massachusetts. To the extent that the applicable laws of the
State of New York or the Commonwealth of Massachusetts 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," "national
securities exchange," "net assets," "prospectus," "sale," "sell" and "security"
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shall have the same meaning as such terms have in the 1940 Act, subject to such
exemption as may be granted by the Securities and Exchange Commission by any
rule, regulation or order. Where the effect of a requirement of the 1940 Act
reflected in any provision of this contract is relaxed by a rule, regulation or
order of the Securities and Exchange Commission, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
PAINEWEBBER MANAGED INVESTMENTS
TRUST
Attest: By:
MITCHELL HUTCHINS ASSET
MANAGEMENT INC.
Attest: By:
7
<PAGE>
APPENDIX C
MORE INFORMATION ABOUT MITCHELL HUTCHINS
Mitchell Hutchins serves as the Fund's investment adviser and
administrator. Mitchell Hutchins, a Delaware corporation, is a wholly owned
asset management subsidiary of PaineWebber, which is a wholly owned indirect
subsidiary of UBS, an internationally diversified organization, with operations
in many areas of the financial services industry. Mitchell Hutchins is located
at 51 West 52nd Street, New York, New York 10019-6114. The principal business
offices of PaineWebber are located at 1285 Avenue of the Americas, New York, New
York 10019-6028. The principal business address of UBS is Bahnhofstrasse 45,
Zurich, Switzerland. As of October 31, 2000, Mitchell Hutchins was the adviser
or sub-adviser of 31 investment companies with 75 separate portfolios and
aggregate assets of approximately $58.3 billion.
Since November 30, 1999, purchases and sales of the securities of any
parent or subsidiary of Mitchell Hutchins or MFS by the Trustees of the Fund
did not exceed 1% of the outstanding securities of any class of securities of
such entities.
Mitchell Hutchins also serves as the distributor for the Fund's shares
under distribution contracts 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 paid no brokerage commissions to PaineWebber or any other
affiliated broker-dealer.
The following is a list of the directors and principal executive
officer of Mitchell Hutchins:
PRINCIPAL
NAME POSITION(S) WITH MITCHELL HUTCHINS OCCUPATION
---- ---------------------------------- ----------
Margo N. Alexander Chairman and Director Same
Brian M. Storms President and Chief Executive Officer Same
Julian Sluyters Director Same
-------------------
The business address of each person listed above is 51 West 52nd Street, New
York, New York 10019-6114.
<PAGE>
OTHER INVESTMENT COMPANY CLIENTS
Mitchell Hutchins also serves as investment adviser to the following
investment companies, which have investment objectives similar to the Fund's, at
the fee rates set forth below.
APPROXIMATE NET
ASSETS AS
OF
OCTOBER 31, 2000 ANNUAL INVESTMENT
FUND (IN MILLIONS) ADVISORY FEE
---- ---------------- -----------------
Mitchell Hutchins Series Trust-- $6.2 0.75% of average daily
Global Income Portfolio net assets
Mitchell Hutchins Series Trust-- $2.5 0.50% of average daily
High Grade Fixed Income Portfolio net assets
Mitchell Hutchins Series Trust-- $10.7 0.50% of average daily
High Income Portfolio net assets
Mitchell Hutchins Series Trust-- $13.4 0.75% of average daily
Strategic Income Portfolio net assets
Mitchell Hutchins Series Trust-- $4.3 0.50% of average daily
Strategic Fixed Income Portfolio net assets
PACE Global Fixed Income Investments $96.7 0.60% of average daily
net assets (subject to
a waiver of the
advisory fee and/or a
reimbursement to the
extent the Fund's "Net
Expenses" exceed
0.95%)
PACE Government Securities Fixed $202.6 0.50% of average daily
Income Investments net assets (subject to
a waiver of the
advisory fee and/or a
reimbursement to the
extent the Fund's "Net
Expenses" exceed
0.87%)
PACE Intermediate Fixed Income $134.2 0.40% of average daily
Investments net assets
PACE Municipal Fixed Income $53.1 0.40% of average daily
Investments net assets (subject to
a waiver of the
advisory fee and/or a
reimbursement to the
extent the Fund's "Net
Expenses" exceed
0.85%)
PACE Strategic Fixed Income $238.6 0.50% of average daily
Investments net assets (subject to
a waiver of the
advisory fee and/or a
reimbursement to the
extent the Fund's "Net
Expenses" exceed
0.85%)
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<PAGE>
APPROXIMATE NET
ASSETS AS
OF
OCTOBER 31, 2000 ANNUAL INVESTMENT
FUND (IN MILLIONS) ADVISORY FEE
---- ---------------- -----------------
PaineWebber California Tax-Free $123.0 0.50% of average daily
Income Fund net assets (subject to
a waiver of 0.20%)
PaineWebber Global Income Fund $253.3 0.75% of average daily
net assets
PaineWebber Investment Grade $219.0 0.50% of average daily
Income Fund net assets
PaineWebber Municipal High Income Fund $83.5 0.60% of average daily
net assets
PaineWebber National Tax-Free $239.5 0.50% of average daily
Income Fund net assets
PaineWebber New York Tax-Free $35.6 0.60% of average daily
Income Fund net
PaineWebber Low Duration $164.1 0.50% of average daily
U.S. Government Income Fund net assets
PaineWebber Strategic Income Fund $77.7 0.75% of average daily
net assets
PaineWebber U.S. Government $231.2 0.50% of average daily
Income Fund net assets
2002 Target Term Trust Inc. $109.9 0.50% of average
(closed-end fund) weekly net assets
All American Term Trust Inc. $159.4 0.90% of average
(closed-end fund) weekly net assets
Global High Income Dollar Fund Inc. $282.0 1.25% of average
(closed-end fund) weekly net assets
Insured Municipal Income Fund Inc. $455.3 0.90% of average
(closed-end fund) weekly net assets
Investment Grade Municipal Income $244.9 0.90% of average
Fund Inc. (closed-end fund) weekly net assets
3
<PAGE>
APPROXIMATE NET
ASSETS AS
OF
OCTOBER 31, 2000 ANNUAL INVESTMENT
FUND (IN MILLIONS) ADVISORY FEE
---- ---------------- -----------------
Managed High Yield Plus Fund Inc. $311.8 0.70% of average
(closed-end fund) weekly net assets
Strategic Global Income Fund, Inc. $220.4 1.00% of average
(closed-end fund) weekly net assets
4
<PAGE>
APPENDIX D
FORM OF SUB-ADVISORY CONTRACT
Agreement made as of ___________, 2001 ("Contract") between MITCHELL
HUTCHINS ASSET MANAGEMENT INC., a Delaware corporation ("Mitchell Hutchins"),
and Massachusetts Financial Services Company, a Delaware corporation
("Sub-Adviser").
RECITALS
(1) Mitchell Hutchins has entered into an Investment Management
and Administration Agreement, dated _______________, 2001
("Management Agreement"), with PaineWebber Managed Investments
Trust ("Trust"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended
("1940 Act"), with respect to the series of the Trust designated
as PaineWebber High Income Fund ("Series");
(2) Mitchell Hutchins wishes to retain the Sub-Adviser to furnish
certain investment advisory services to Mitchell Hutchins and the
Series; and
(3) 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 Series for the period and on
the terms set forth in this Contract. The Sub-Adviser accepts that 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 and furnished to the Sub-Adviser, the
Sub-Adviser will provide a continuous investment program for all or a designated
portion of the assets ("Segment") of the Series, including investment research
and discretionary management with respect to all securities and investments and
cash equivalents in the Series or Segment. The Sub-Adviser will determine from
time to time what investments will be purchased, retained or sold by the Series
or Segment. The Sub-Adviser will be responsible for placing purchase and sell
orders for investments and for other related transactions for the Series or
Segment. The Sub-Adviser will be responsible for voting proxies of issuers of
securities held by the Series or Segment. The Sub-Adviser understands that the
Series' assets need to be managed so as to permit it 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 Series' investment objective, policies and
restrictions as stated in the Trust's currently effective registration statement
<PAGE>
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 seek to obtain the best net result in terms of price and execution;
provided that, on behalf of the Series, the Sub-Adviser may, in its discretion,
use brokers that provide the Sub-Adviser with research, analysis, advice and
similar services to execute portfolio transactions on behalf of the Series or
Segment, 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 determining 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 Series or its other clients and that
the total commissions paid by the Series or Segment will be reasonable in
relation to the benefits to the Series 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 Series or Segment 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 Series 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 Series or Segment.
(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 transactions by the Sub-Adviser on behalf of the
Series or Segment, 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 Series
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 or copies thereof that it
maintains for the Series 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 as well as quarterly reports
setting forth the performance of the Series or Segment and make available to the
Board and Mitchell Hutchins any economic, statistical and investment services
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 in the Series or Segment, in accordance
with procedures adopted by the Board, as amended from time to time. The
Sub-Adviser will use its reasonable efforts to arrange for the provision of a
price from one or more parties 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.
2
<PAGE>
3. FURTHER DUTIES. In all matters relating to the performance of
this Contract, the Sub-Adviser and Mitchell Hutchins will 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 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, Subchapter M of the Code,
as applicable to regulated investment companies; and all other federal and state
laws and regulations applicable to the Trust and the Series. 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. 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. The Sub-Adviser shall not be responsible for any expenses incurred by
the Trust, the Series or Mitchell Hutchins.
5. COMPENSATION.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Contract, Mitchell Hutchins, not the Series, will
pay to the Sub-Adviser a sub-advisory fee, computed daily and paid monthly, at
an annual rate of 0.45% of the average daily net assets of the Series or Segment
(computed in the manner specified in the Management Agreement) and will provide
the Sub-Adviser with a schedule showing the manner in which the fee was
computed. If the Sub-Adviser is managing a Segment, its fees will be based on
the value of assets of the Series within the Sub-Adviser's Segment.
(b) The fee shall be accrued daily and payable monthly to the
Sub-Adviser on or before the fifteenth 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 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.
6. LIMITATION OF LIABILITY.
(a) The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Series, the Trust, 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.
(b) Mitchell Hutchins shall indemnify, defend and hold harmless the
Sub-Adviser, its affiliates, and each of their respective directors, officers,
employees, shareholders, agents and representatives (collectively, the
"Indemnities") from and against any and all losses, claims, damages,
liabilities, costs and expenses (including reasonable attorney's fees) arising
from or related to the services contemplated under this Agreement, except to the
extent any such losses, claims, damages, liabilities, costs and expenses result
3
<PAGE>
from willful misfeasance, bad faith or gross negligence on the Sub-Adviser's
part in the performance of its duties or from reckless disregard by the
Sub-Adviser of its obligations and duties under this Agreement.
(c) In no event will the Sub-Adviser have any responsibilities for
any other series of the Trust, for any portion of the Series' investments not
managed by the Sub-Adviser or for the acts or omissions of any other sub-adviser
to the Trust or Series.
In particular, in the event the Sub-Adviser shall manage only a portion
of the Series' investments, the Sub-Adviser shall have no responsibility for the
Series' being in violation of any applicable law or regulation or investment
policy or restriction applicable to the Series as a whole or for the Series'
failing to qualify as a regulated investment company under the Code, if the
securities and other holdings of the Segment managed by the Sub-Adviser are such
that such Segment would not be in such violation or fail to so qualify if such
segment were deemed a separate series of the Trust or a separate "regulated
investment company" under the Code.
Nothing in this section shall be deemed a limitation or waiver of any
obligation or duty that may not by law be limited or waived.
7. REPRESENTATIONS.
(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 a sub-investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise.
(b) Mitchell Hutchins (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 as investment adviser 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 as
investment adviser contemplated by this Contract; and (iv) will promptly notify
the Sub-Adviser of the occurrence of any event that would disqualify Mitchell
Hutchins from serving as an investment adviser of any investment company
pursuant to Section 9(a) of the 1940 Act or otherwise.
(c) The Sub-Adviser has adopted a written code of ethics and
appropriate procedures complying with the requirements of Rule 17j-1 under the
1940 Act and has provided Mitchell Hutchins and the Board with a copy of such
code of ethics, together with evidence of its adoption. Within thirty days of
the end of the last calendar quarter of each year that this Contract is in
4
<PAGE>
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 material
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
by the Sub-Adviser pursuant to Rule 17j-1, which are relevant to the services
provided under this Contract.
(d) 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.
(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 or 25% limited partners, as applicable, and any changes in the key
personnel who are either the portfolio manager(s) of the Series 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 Series, the Trust, Mitchell Hutchins or any of their respective
affiliates in offering, marketing or other promotional materials without the
prior express written consent of Mitchell Hutchins.
8. SERVICES NOT EXCLUSIVE. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive and the Sub-Adviser shall be free to
furnish similar services to others so long as its services under this Contract
are not impaired thereby or unless otherwise agreed to by the parties hereunder
in writing. Nothing in this Contract shall limit or restrict the right of any
trustee, 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.
9. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the day and year first
written above, provided that this Contract has been approved for the Series by a
vote of: (i) a majority of those Trustees of the Trust who are not parties to
this Contract or interested persons of any such party ("Independent Trustees")
cast in person at a meeting called for the purpose of voting on such approval
and (ii) a majority of the Series' outstanding voting securities unless in the
case of (ii), the Trust complies with the terms of any SEC exemptive order or
rule permitting it to modify to the Contract without such vote.
(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 Independent Trustees, cast in
5
<PAGE>
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 Series.
(c) Notwithstanding the foregoing, with respect to the Series, 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 Series on sixty days' written notice to the Sub-Adviser and
may be terminated by the Sub-Adviser at any time, without the payment of any
penalty, on sixty days' written notice to Mitchell Hutchins. The Contract may
also be terminated, without payment of penalty, by Mitchell Hutchins (i) upon
material breach by the Sub-Adviser of any of the representations and warranties
set forth in Paragraph 7 of this Contract, if such breach shall not have been
cured within a 20 day period after notice of such breach or (ii) 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 Series. This Contract will
terminate automatically in the event of its assignment or upon termination of
the Advisory Contract as it relates to the Series.
10. 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. No amendment of this Contract as to the
Series shall be effective until approved by vote of (i) the Independent Trustees
and (ii) a majority of the Series' outstanding voting securities unless in the
case of (ii), the Trust complies with the terms of any SEC exemptive order or
rule permitting it to modify to the Contract without such vote.
11. GOVERNING LAW. This Contract shall be construed in accordance
with the 1940 Act and the laws of the State of New York, without giving effect
to the conflicts of laws principles thereof. to the extent that the applicable
laws of the State of New York conflict with the applicable provisions of the
1940 Act, the latter shall control.
12. 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.
13. 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
6
<PAGE>
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 Dianne E.
O'Donnell, Deputy General Counsel. All notices provided to the Sub-Adviser will
be sent to the attention of Robert T. Burns, Senior Vice President and Associate
General Counsel.
7
<PAGE>
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.
MITCHELL HUTCHINS ASSET MANAGEMENT INC.
51 West 52nd Street
Attest: New York, New York 10019-6114
By: By:
Name: Keith A. Weller Name: Dianne E. O'Donnell
Title: First Vice President Title: Senior Vice President
MASSACHUSETTS FINANCIAL SERVICES COMPANY
500 Boylston Street
Boston, Massachusetts 02116
Attest:
By: By:
Name: Robert T. Burns Name: Joseph W. Dello Russo
Title: Assistant Secretary Title: Chief Administrative
Officer and Chief Financial
Officer
8
<PAGE>
APPENDIX E
MORE INFORMATION ABOUT MFS
MFS and its predecessor organizations have a history of money
management dating from 1924 and the founding of the first mutual fund,
Massachusetts Investors Trust. As of October 31, 2000, MFS had approximately
$157.71 billion of assets under management, including $3.05 billion in high
income fund assets. MFS is located at 500 Boylston Street, Boston, Massachusetts
02116. MFS is the indirect majority owned subsidiary of Sun Life Financial
Services of Canada, Inc., which is located at 150 King Street West, Toronto,
Ontario, Canada M5H1J9.
The following is a list of the directors and principal executive officer of MFS:
PRINCIPAL
NAME POSITION(S) WITH MFS OCCUPATION
---- -------------------- ----------
Jeffrey L. Shames Chairman and Chief Same
Executive Officer
John W. Ballen Director, Chief Same
Investment Officer and
President
Arnold D. Scott Director and Senior Same
Executive Vice President
Joseph W. Dello Russo Director, Executive Vice Same
President, Chief
Financial Officer and Chief
Administrative Officer
Kevin R. Parke Director, Executive Vice Same
President and Chief
Equity Officer
Thomas J. Cashman, Jr. Director and Executive Same
Vice President
William W. Scott, Jr. Director and Executive Same
Vice President
-------------------
The business address of each person listed above is 500 Boylston Street, Boston,
Massachusetts 02116.
OTHER INVESTMENT COMPANY CLIENTS
MFS also serves as investment adviser or sub-adviser to the following
investment companies, which have investment objectives similar to the Fund's, at
the fee rates set forth below.
<PAGE>
APPROXIMATE NET
ASSETS AS
OF
OCTOBER 31, 2000 ANNUAL INVESTMENT
FUND (IN MILLIONS) ADVISORY FEE
---- ---------------- -----------------
MFS Bond Fund $1,113.4 0.255% of average
daily net assets on
first $200 million;
0.191% of average
daily net assets over
$200 million; plus
2.75% of the first $20
million of gross
income; 2.34 % of
gross income in excess
of $20 million
MFS High Yield Opportunities $50.7 0.65% of average daily
Fund net assets
MFS Income Fund $1.0 0.60% of average daily
net assets subject to
a waiver of 0.60%
MFS High Yield Fund $1.1 0.60% of average daily
net assets subject to
a waiver of 0.60%
MFS High Quality Bond Fund $1.3 0.50% of average daily
net assets
MFS Intermediate Investment Grade $112.2 0.50% of average daily
Bond Fund net assets subject to
a waiver of 0.50%
MFS Limited Maturity Fund $273.6 0.40% of average daily
net assets subject to
a waiver of 0.05%
MFS Municipal Bond Fund $1,299.6 0.22% of average daily
net assets of the
first $200 million;
0.187% of average
daily net assets from
over $200 million to
$2 billion; 0.168% of
average daily net
assets in excess of $2
billion; plus 4.12% of
the first $16 million
in gross income; 3.51%
of gross income from
over $16 million to
$160 million; 3.16% of
gross income in excess
of $160 million
MFS Municipal High Income Fund $1,342.7 0.30% of average daily
net assets of the
first $1.3 billion;
0.25% of average daily
2
<PAGE>
APPROXIMATE NET
ASSETS AS
OF
OCTOBER 31, 2000 ANNUAL INVESTMENT
FUND (IN MILLIONS) ADVISORY FEE
---- ---------------- -----------------
net assets in excess
of $1.3 billion; plus
4.75% of gross income
subject to a waiver to
the extent the total
advisory fee exceeds
0.55% of average daily
net assets
MFS Municipal Limited Maturity Fund $52.4 0.40% of average daily
net assets subject to
a waiver of 0.10%
MFS Multimarket Income Trust $567.5 0.34% of average daily
(closed-end fund) net assets; plus 5.40%
of gross income
MFS Municipal Income Trust $305.9 0.40% of average daily
(closed-end fund) net assets; plus 6.32%
of gross income
MFS Municipal Income Fund $328.1 0.30% of average daily
net assets; plus 6.43%
of gross income
subject to a waiver to
the extent the total
advisory fee exceeds
0.40%
MFS Strategic Income Fund $294.0 0.50% of average daily
net assets; plus 7.14%
of gross income
subject to a waiver to
the extent the total
advisory fee exceeds
0.50%
MFS Massachusetts High Income $4.8 0.40% of average daily
Tax Free Fund net assets subject to
a waiver of 0.40%
MFS New York High Income $0.5 0.40% of average daily
Tax Free Fund net assets subject to
a waiver of 0.40%
MFS Government Markets Income Trust $416.4 0.32% of average daily
net assets; plus 5.33%
of gross income
MFS Intermediate Income Trust $907.4 0.32% of average daily
(closed-end fund) net assets; plus 5.65%
of gross income
3
<PAGE>
APPROXIMATE NET
ASSETS AS
OF
OCTOBER 31, 2000 ANNUAL INVESTMENT
FUND (IN MILLIONS) ADVISORY FEE
---- ---------------- -----------------
MFS Variable Insurance Trust-- $25.4 0.60% of average daily
Bond Series net assets
MFS Variable Insurance Trust-- $58.7 0.75% of average daily
High Income Series net assets
MFS Variable Insurance Trust-- $0.3 0.55% of average daily
Limited Maturity Series net assets
MFS Institutional High Yield Fund $1.0 0.50% of average daily
net assets
Compass--High Yield Variable Account $100.8 0.75% of average daily
net assets of the
first $300 million;
0.675% of average
daily net assets in
excess of $300 million
MFS/SunLife--Strategic Income Series $28.3 0.75% of average daily
net assets
MFS/SunLife--High Yield Series $324.3 0.75% of average daily
net assets subject to
a waiver of 0.05% of
the advisory fee on
assets in excess of $1
billion
4
<PAGE>
PROXY PROXY
PAINEWEBBER HIGH INCOME FUND
SPECIAL MEETING OF SHAREHOLDERS - FEBRUARY 8, 2001
THIS PROXY IS BEING SOLICITED FOR THE BOARD OF TRUSTEES OF PAINEWEBBER HIGH
INCOME FUND ("FUND"), A SERIES OF PAINEWEBBER MANAGED INVESTMENTS TRUST, AND
RELATES TO THE PROPOSALS INDICATED BELOW. The undersigned hereby appoints as
proxies SCOTT H. GRIFF and VICTORIA DRAKE, and each of them (with the power of
substitution) to vote for the undersigned all shares of common stock of the
undersigned in the Fund at the Special Meeting of Shareholders to be held at
10:00 a.m., Eastern time, on February 8, 2001 at 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 discretionary power to vote upon such other
business as may properly come before the meeting.
VOTE VIA THE INTERNET: HTTP://VOTE.PROXY-DIRECT.COM
VOTE VIA THE TELEPHONE: 1-800-597-7836
----------------------------------------------------
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 card. If
shares are held by a corporation, partnership or similar
account, the name and the capacity of the individual signing
should be indicated, unless it is reflected in the form of
registration. For example: "ABC Corp., John Doe, Treasurer."
____________________________________________________________
SIGNATURE
____________________________________________________________
SIGNATURE (IF HELD JOINTLY)
_____________________________________________________, 200__
DATE 11272HIN
PLEASE MARK YOUR VOTE ON THE REVERSE SIDE OF THIS CARD.
<PAGE>
Please date and sign the reverse side of this proxy and return it promptly in
the enclosed envelope. This proxy will not be voted unless it is dated and
signed exactly as instructed.
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 RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE FOLLOWING PROPOSALS. PLEASE
INDICATE YOUR VOTE BY FILLING IN THE BOX COMPLETELY. EXAMPLE: [ ]
FOR AGAINST ABSTAIN
1. Approve a new investment advisory [ ] [ ] [ ]
and administration contract
between Mitchell Hutchins Asset
Management Inc. ("Mitchell
Hutchins") and the Fund.
2. Approve a new sub-advisory [ ] [ ] [ ]
contract between Mitchell Hutchins
and Massachusetts Financial
Services Company.
3. Approve a policy to permit [ ] [ ] [ ]
Mitchell Hutchins and the Fund's
Board of Trustees to appoint and
replace sub-advisers and to enter
into and amend sub-advisory
contracts without further
shareholder approval.
PLEASE DATE AND SIGN THE REVERSE SIDE OF THIS CARD.
11272HIN
<PAGE>
YOUR PROXY VOTE IS IMPORTANT!
---------
AND NOW YOU CAN VOTE YOUR PROXY
ON THE PHONE OR ON
THE INTERNET.
[graphic] IT SAVES MONEY! Telephone and Internet voting
saves postage costs. Savings which can help to
minimize fund expenses.
IT SAVES TIME! Telephone and Internet voting is
instantaneous - 24 hours a day.
IT'S EASY! Just follow these simple steps:
1. Read your proxy statement and have it
at hand.
2. Call toll-free 1-800-597-7836 for
automated instructions, OR GO TO
WEBSITE: HTTP://VOTE.PROXY-DIRECT.COM.
-----------------------------
3. Enter your 14 digit CONTROL NUMBER from
your Proxy Card.
4. Follow the recorded or on-screen
directions.
5. Do NOT mail your Proxy Card when you
---
vote by phone or internet.
6. If you have any questions regarding the
meeting agenda or the execution of your
proxy, please call. 1-877-748-9131.
