SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934.
Filed by the Registrant[x]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
----------------------------------------
PAINEWEBBER SERIES TRUST
----------------------------------------
GLOBAL GROWTH PORTFOLIO
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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: 1/
_______________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________
1/ Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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:
_________________________
<PAGE>
Preliminary copy for
the information of
the Securities and
Exchange Commission;
File No. 33-10438;
File No. 811-4919;
Rule 14a-6
GLOBAL GROWTH PORTFOLIO
OF
PAINEWEBBER SERIES TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
May ___, 1995
To the Shareholders:
A special meeting of the holders of shares of beneficial interest
("Shares") of the Global Growth Portfolio ("Portfolio") series of
PaineWebber Series Trust will be held on July ___, 1995 at ______ a.m.,
Eastern time, at 1285 Avenue of the Americas, 38th Floor, Room ___, New
York, New York 10019, for the following purposes:
1. To consider a Sub-Advisory Agreement between Mitchell
Hutchins Asset Management Inc. and GE Investment
Management Incorporated, a wholly owned subsidiary of
General Electric Company, with respect to the assets of
the Portfolio; and
2. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Shareholders of record at the close of business on March __, 1995
are entitled to notice of, and to vote at, the meeting. Your attention is
called to the accompanying Proxy Statement. Regardless of whether you
plan to attend the meeting, PLEASE COMPLETE, DATE AND SIGN THE PROXY CARD
IN THE ENCLOSED PREPAID ENVELOPE so that a quorum will be present and a
maximum number of Shares may be voted. If you attend the meeting, you may
change your vote, if desired, at that time.
By Order of the Board of Trustees,
Dianne E. O'Donnell
Secretary
April ___, 1995
1285 Avenue of the Americas
New York, New York 10019
<PAGE>
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy
card, date and sign 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" each of the proposals noticed above. In
order to avoid the additional expense of further solicitation, we ask your
cooperation in mailing in your proxy card promptly. Unless proxy cards
submitted by corporations and partnerships are signed by the appropriate
persons as indicated in the voting instructions on the proxy card, they
will not be voted.
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<PAGE>
GLOBAL GROWTH PORTFOLIO
OF
PAINEWEBBER SERIES TRUST
1285 Avenue of the Americas, New York, New York 10019
-----------------
PROXY STATEMENT
-----------------
Special Meeting of Shareholders
to Be Held on July ___, 1995
April __, 1995
This Proxy Statement is furnished in connection with the
solicitation of proxies by the board of trustees ("Board") of the
PaineWebber Series Trust ("Trust") for use at the special meeting of
shareholders of the Global Growth Portfolio ("Portfolio") to be held on
July ___, 1995, or any adjournments thereof ("Meeting").
The shares ("Shares") of the Portfolio are currently sold only to
the separate accounts ("Separate Accounts") of PaineWebber Life Insurance
Company, American Republic Insurance Company and American Benefit Life
Insurance Company (collectively, the Companies) to fund the benefits under
variable annuity contracts ("Contracts") issued by the Companies. In
accordance with their view of applicable law, the Companies will solicit
voting instructions from the owners of Contracts relating to the Portfolio
("Contract Owners") with respect to the matters set forth in this Proxy
Statement. In connection with the solicitation of voting instructions,
the Companies will furnish a copy of this Proxy Statement to all Contract
Owners. The solicitation of proxies will be made primarily by mail but
also may include telephone or oral communications by regular employees of
the Companies, Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins") or PaineWebber Incorporated ("PaineWebber"), none of whom will
receive any compensation therefor from the Portfolio. The costs
associated with such solicitation and the Meeting will be borne by the
Portfolio.
Contract Owners at the close of business on March __, 1995 will
be entitled to be present and give voting instructions for the Portfolio
at the Meeting, with respect to their Shares owned as of such record date.
There were _______ Shares of the Portfolio outstanding and entitled to
vote as such record date, representing total net assets of approximately
$_________. All Shares of the Portfolio held by the Separate Accounts
will be voted by the Companies in accordance with voting instructions
received from Contract Owners. The Companies will vote Shares of the
Portfolio for which no instructions are received in the same proportion as
Shares of the Portfolio for which instructions have been received.
To the knowledge of the Trust's management, as of March ___,
1995, no current trustee of the Trust owned 1% or more of the outstanding
Shares of the Portfolio or any other series of the Trust. To the
knowledge of the Trust's management, as of March __, 1995, the officers
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<PAGE>
and trustees of the Trust owned, as a group, less than 1% of the
outstanding Shares of the Portfolio or any other series of the Trust.
On March __, 1995, the Separate Accounts of PaineWebber Life
Insurance Company, American Republic Insurance Company and American
Benefit Life Insurance Company owned of record __%, __% and __%,
respectively, of the outstanding Shares of the Portfolio. To the
knowledge of the Trust's management, as of March __, 1995, there are no
persons owning beneficially more than 5% of the outstanding Shares of the
Portfolio.
Mitchell Hutchins currently serves as the Portfolio's
administrator. GE Investment Management Incorporated ("GEIM") serves as
investment sub-adviser ("Sub-Adviser") to the Portfolio. Mitchell
Hutchins and PaineWebber are located at 1285 Avenue of the Americas, New
York, New York 10019. The Trust has no principal underwriter.
- 4 -
<PAGE>
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENT
Background
----------
Until March 23, 1995, Mitchell Hutchins functioned as the
administrator and investment adviser of the Portfolio pursuant to a
contract with the Trust dated April 21, 1988 ("Advisory Agreement"). The
Advisory Agreement was approved by shareholders of the Trust on April 21,
1988, and its continuance was most recently approved by the Board of
Trustees in May 1994. Under the Advisory Agreement, Mitchell Hutchins
receives a monthly fee at the annual rate of 0.75% of the Portfolio's
average daily net assets. For the fiscal year ended December 31, 1994,
the Portfolio paid fees under the Advisory Agreement to Mitchell Hutchins
of approximately $332,624.
At a meeting held on March 22, 1995, the Board, including a
majority of the trustees who are not "interested persons" of the Trust, as
defined in the Investment Company Act of 1940 ("1940 Act") ("Independent
Trustees"), considered a recommendation by Mitchell Hutchins that GEIM be
appointed as investment sub-adviser for the Portfolio. After considering
Mitchell Hutchins' recommendation and other information, the Board
approved an interim sub-advisory agreement ("Interim Agreement") with
GEIM, pursuant to which GEIM currently acts as Sub-Adviser to the
Portfolio. At that meeting, the Board approved submission of the proposed
sub-advisory agreement ("Sub-Advisory Agreement") (which is substantially
similar to the Interim Agreement) to the Portfolio's shareholders at the
Meeting, and determined to recommend that the Portfolio's shareholders
approve the proposed Sub-Advisory Agreement.
Mitchell Hutchins' recommendation to the Board that GEIM be
retained as Sub-Adviser stemmed from a number of factors. First, in the
months prior to the Board meeting, Mitchell Hutchins had been engaged in
an extensive review of the long-term needs of its clients, and of its own
structure and deployment of resources. As a result of this review,
Mitchell Hutchins determined to concentrate its equity management
resources on domestic equity securities and to rely on independent
management firms with extensive experience in global and international
securities for the day-to-day portfolio management of the global equity
funds managed by Mitchell Hutchins. During this same period, Mitchell
Hutchins became familiar with the abilities and expertise of GEIM. GEIM
serves as the sub-adviser for certain funds formerly advised by Kidder
Peabody Asset Management Inc. Mitchell Hutchins has been managing those
funds since February 13, 1995, in connection with an Asset Purchase
Agreement among Paine Webber Group Inc., Kidder, Peabody & Co. Inc. and
General Electric Company ("GE"). After consideration, Mitchell Hutchins
determined that it would be in the best interest of the Portfolio and
certain other global equity funds advised by Mitchell Hutchins to
recommend to the boards of trustees/directors (including the Board) that
they approve sub-advisory agreements with GEIM and authorize the
submission of the sub-advisory agreements to the shareholders of the
global equity funds for approval.
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<PAGE>
The Interim Agreement with respect to the Portfolio provides that
GEIM, subject to the supervision of Mitchell Hutchins and the Board, shall
provide a continuous investment program and strategy with respect to the
investments of the Portfolio, including investment research and
management, and will make decisions with respect to and place orders for
all purchases and sales of portfolio securities. Under the Interim
Agreement, Mitchell Hutchins (not the Portfolio) pays GEIM a monthly fee
for its investment advisory services at an annual rate of 0.29% of the
Portfolio's average daily net assets. Because the Interim Agreement
became effective on March 23, 1995, during the Portfolio's current fiscal
year, Mitchell Hutchins paid no sub-advisory fees to GEIM during the 1994
fiscal year.
GEIM also acts as the investment sub-adviser to the Mitchell
Hutchins/Kidder, Peabody Intermediate Fixed Income Fund, Mitchell
Hutchins/Kidder, Peabody Global Equity Fund, and as investment adviser and
administrator of the GE Funds and the Variable Investment Trust, open-end
management investment companies, each with multiple investment portfolios,
and as investment adviser to other accounts. In addition, GEIM's
principal officers and directors serve in similar capacities with respect
to General Electric Investment Corporation, which, like GEIM, is a wholly
owned subsidiary of GE, and which currently serves as the investment
adviser to the Elfun group of funds. Since March 23, 1995, GEIM has
served as investment sub-adviser to the Fund, PaineWebber Europe Growth
Fund (a series of PaineWebber Investment Series), PaineWebber Atlas Global
Growth Fund (the sole series of PaineWebber Atlas Fund), PaineWebber
Global Growth and Income Fund (a series of PaineWebber Investment Series),
and Global Small Cap Fund Inc. pursuant to interim agreements. The table
below sets forth certain information with respect to such investment
portfolios that have investment objectives similar to that of the
Portfolio:
<TABLE>
<CAPTION>
<S> <C> <C>
Approximate Annual Rate of Investment
Name of Portfolio Net Assets as of Advisory Fee as a Percentage
March 31, 1995 of Net Assets
Mitchell Hutchins/Kidder, $200,600,000 .70% of average daily net
Peabody Global Equity Fund assets up to $200 million;
.50% over $200 million*
GE Global Equity Fund (a $30,400,000 .75%**
series of GE Funds)
</TABLE>
* Fee to GEIM for investment advisory services only.
** Fee to GEIM includes investment advisory and administration
services.
Description of the Proposed Sub-Advisory Agreement
--------------------------------------------------
The terms and conditions of the proposed Sub-Advisory Agreement
provide for the same sub-advisory fee as currently in effect for the
- 6 -
<PAGE>
Interim Agreement and are otherwise substantially similar to those of the
Interim Agreement except for different effective and termination dates.
If approved by the Shareholders at the Meeting, the Sub-Advisory
Agreement will remain in effect for two years after its effective date and
thereafter will continue from year to year, provided that such continuance
is approved annually (i) by the vote of a majority of the Independent
Trustees and (ii) by the Board or the vote of the holders of a majority of
the outstanding Shares of the Portfolio. The Sub-Advisory Agreement
automatically terminates upon its assignment and is terminable at any time
without penalty, by the Board or by the holders of a majority of the
outstanding Shares of the Portfolio on 60 days' written notice. Either
Mitchell Hutchins or GEIM may terminate the Sub-Advisory Agreement on 60
days' written notice without penalty. Mitchell Hutchins may also
terminate the Sub-Advisory Agreement (i) upon material breach by GEIM of
certain of its representations under the Sub-Advisory Agreement or (ii) in
the event that GEIM is unable to discharge its duties under the Sub-
Advisory Agreement.
Like the Interim Agreement, the Sub-Advisory Agreement provides
that GEIM will pay for all expenses incurred by it in connection with its
investment advisory services under the Sub-Advisory Agreement. The Sub-
Advisory Agreement also provides that GEIM, subject to the supervision of
Mitchell Hutchins and the Board, shall provide a continuous investment
program and strategy for the investments of the Portfolio, including
investment research and management with respect to all such securities and
investments, and make decisions with respect to and place orders for all
purchases and sales of portfolio securities. Under the Sub-Advisory
Agreement, Mitchell Hutchins will pay to GEIM a monthly fee of 0.29% of
average daily net assets. This rate is the same as that applied in the
Interim Agreement.
The Sub-Advisory Agreement provides that GEIM will not be liable
for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with the performance of the agreement, except
a loss resulting from willful misfeasance, bad faith, or gross negligence
on the part of GEIM in the performance of its duties or from reckless
disregard of its obligations and duties under the Sub-Advisory Agreement.
GEIM makes various representations and warranties in the Sub-
Advisory Agreement, including (i) that it has adopted a written code of
ethics which complies with Rule 17j-1 under the 1940 Act and will certify
its compliance with such code of ethics to Mitchell Hutchins on an annual
basis, and (ii) that it is in compliance with various federal and state
laws, including the Investment Advisers Act of 1940 ("Advisers Act"), as
amended.
A copy of the proposed Sub-Advisory Agreement is attached to this
Proxy Statement as Exhibit A.
Information About GEIM
----------------------
GEIM is a wholly owned subsidiary of GE and a registered
investment adviser under the Advisers Act. GEIM, located at 3003 Summer
Street, P.O. Box 7900, Stamford, Connecticut 06904, was formed under the
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<PAGE>
laws of Delaware in 1988. As noted above, GEIM's principal officers serve
in similar capacities with respect to GEIC, which is also a registered
investment adviser principally located at the same address. GEIM and GEIC
together provide investment management services to various institutional
accounts with total assets, as of March 31, 1995, in excess of $46
billion. The chief executive officers and directors of GEIM are
identified in the table below:
CHIEF EXECUTIVE OFFICER AND DIRECTORS OF GEIM
<TABLE>
<CAPTION>
<S> <C> <C>
Name Principal Occupation Address
Dale F. Frey . . . . Chairman, President 3003 Summer Street
and Chief Executive Stamford, Connecticut 06905
Officer of GEIM
Eugene K. Bolton . . Director and Executive 3003 Summer Street
Vice President of GEIM Stamford, Connecticut 06905
Michael J. Cosgrove . Director and Executive 3003 Summer Street
Vice President of GEIM Stamford, Connecticut 06905
Ralph R. Layman . . . Director and Executive 3003 Summer Street
Vice President of GEIM Stamford, Connecticut 06905
Alan M. Lewis . . . . Director, Executive 3003 Summer Street
Vice President, Stamford, Connecticut 06905
General Counsel and
Secretary of GEIM
John H. Myers . . . . Director and Executive 3003 Summer Street
Vice President of GEIM Stamford, Connecticut 06905
Geoffrey R. Norman . Director and Executive 3003 Summer Street
Vice President of GEIM Stamford, Connecticut 06905
Don W. Torey . . . . Director, Executive 3003 Summer Street
Vice President and Stamford, Connecticut 06905
Chief Financial
Officer of GEIM
</TABLE>
Trustees' Considerations and Recommendations
--------------------------------------------
At the meeting held on March 22, 1995, the Board, including the
Independent Trustees, after a full evaluation of the matters described
above and with the advice and assistance of counsel to the Independent
Trustees, approved the Interim Agreement and the proposed Sub-Advisory
Agreement. During their deliberations, the Trustees also reviewed
information provided by Mitchell Hutchins and GEIM relating to the
structure and organization of GEIM. The Board considered the quality of
the investment sub-advisory services that had been provided by GEIM to
other funds, and also considered the Portfolio's performance in relation
to a selected group of other funds with similar investment objectives.
The Board noted, in particular, that the advisory fee paid by the
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<PAGE>
Portfolio would remain the same as before, and determined that the terms
of the Sub-Advisory Agreement and the sub-advisory fee were fair.
The Board also considered the fact that consistent with the
interests of the Portfolio and subject to the review of the Board, the
Sub-Adviser may cause the Portfolio to purchase and sell portfolio
securities through brokers who provide the Sub-Adviser with research,
analysis, advice and similar services. In return for such services, the
Portfolio may pay to those brokers a higher commission than may be charged
by other brokers, provided that the Sub-Adviser determines in good faith
that such commission is reasonable in terms either of that particular
transaction or of the overall responsibility of the Sub-Adviser to the
Portfolio and its other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio
over the long term. The Sub-Adviser will not enter into any explicit soft
dollar arrangements relating to principal transactions or receive in
principal transactions the types of services which could be purchased for
hard dollars. Research services furnished by brokers through which the
Portfolio effects securities transactions may be used by the Sub-Adviser
in advising other funds or accounts it advises and, conversely, research
services furnished to the Sub-Adviser in connection with other funds or
accounts it advises may be used by the Sub-Adviser in advising the
Portfolio. Information and research received from brokers will be in
addition to, and not in lieu of, the services required to be performed by
the Sub-Adviser under the Sub-Advisory Agreement.
Votes Required for Approval of Matters at the Meeting
-----------------------------------------------------
At the Meeting, shareholders of the Portfolio will vote on the
proposed Sub-Advisory Agreement, in accordance with voting instructions
received from the Contract Owners. The Board of Trustees recommends that
the shareholders approve the Sub-Advisory Agreement. The affirmative vote
of the holders of a majority of the outstanding Shares of the Portfolio is
required to approve the Sub-Advisory Agreement. "Majority" for this
purpose under the 1940 Act means the lesser of: (i) 67% of the Shares of
the Portfolio represented at the Meeting if the holders of more than 50%
of the outstanding Shares are represented, or (ii) more than 50% of the
outstanding Shares of the Portfolio.
If the Sub-Advisory Agreement is not approved, the Board of
Trustees will take such actions as it deems appropriate to obtain
investment advice for the Portfolio.
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<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE
PORTFOLIO VOTE "FOR" THE SUB-ADVISORY AGREEMENT
GENERAL INFORMATION
Brokerage Commissions
---------------------
PaineWebber is the only affiliated broker of the Portfolio. For
the fiscal year ended December 31, 1994, the Portfolio paid no brokerage
commissions to PaineWebber.
Other Matters to Come Before the Meeting
----------------------------------------
The Trust's management does not know of any matters to be
presented at the Meeting other than those described in this Proxy
Statement. If other business should properly come before the Meeting, the
proxyholders will vote thereon in accordance with their best judgment.
Shareholder Proposals
---------------------
As a general matter, the Trust does not hold regular annual or
other meetings of shareholders. Any shareholder who wishes to submit
proposals to be considered at a special meeting of the Trust's
shareholders should send such proposals, certified mail-return receipt
requested, to the Trust at 1285 Avenue of the Americas, New York, New York
10019, so as to be received a reasonable time before the proxy
solicitation for that meeting is made. Shareholder proposals that are
submitted in a timely manner will not necessarily be included in the
Trust's proxy materials. Inclusion of such proposals is subject to
limitations under the federal securities laws.
Reports to Shareholders
-----------------------
The Trust will furnish to shareholders of the Portfolio and to
Contract Owners, without charge, a copy of the most recent Annual Report,
and the most recent Semi-annual Report succeeding such Annual Report, if
any, on request. Requests for such reports should be directed to
PaineWebber Life Insurance Company, Annuity Administration, 601 6th
Avenue, Des Moines, Iowa or by calling, toll free, 1-800-647-1568.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE
ASSURED, PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED.
A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Dianne E. O'Donnell
Secretary
April ___, 1995
New York, New York
- 10 -
<PAGE>
PROXY
-----
PAINEWEBBER SERIES TRUST -
GLOBAL GROWTH PORTFOLIO
Special Meeting of Shareholders - July __, 1995
The undersigned hereby appoints as proxies Dianne E. O'Donnell and Ilene
Shore and each of them (with the power of substitution), to represent and
direct the voting interest of the undersigned held as of the record date
at the aforesaid meeting and any adjournment thereof with all the power
the undersigned would have if personally present. The shares represented
by this proxy will be voted as instructed. Unless indicated to the
contrary, this proxy shall be deemed to indicate authority to vote FOR the
proposal.
This proxy is solicited on behalf of the board of trustees of PaineWebber
Series Trust ("Trust").
YOUR VOTE IS IMPORTANT
Please date and sign this proxy on the reverse side and return it in the
enclosed envelope to: American Republic Insurance Company, P.O. Box 1,
Des Moines IA 50301-9910.
Please indicate your vote by an "X" in the appropriate box below.
The board of trustees recommends a vote "FOR"
1. Approval of Sub-Advisory Contract between Mitchell Hutchins Asset
Management Inc. and GE Investment Management Incorporated relating to the
Portfolio.
FOR _______ AGAINST _______ ABSTAIN ______
Continued and to be signed on reverse side
<PAGE>
This proxy will not be voted unless it is dated and signed exactly as
instructed below.
If the shareholder is a corporation, the President or Vice President
should sign in his or her own name, indicating title. If the shareholder
is a partnership, a partner should sign in his or her own name, indicating
that he or she is a "Partner." If signing is by attorney, executor,
administrator, trustee, or guardian, please give FULL title. This proxy
will not be voted unless it is dated and signed exactly as instructed
above.
Sign exactly as name appears hereon.
________________________________________
________________________________________
__________________________________, 1995
Date
<PAGE>
EXHIBIT A
[FORM OF PROPOSED SUB-ADVISORY AGREEMENT WITH MITCHELL HUTCHINS]
SUB-ADVISORY AGREEMENT
Agreement made as of ,1995, between MITCHELL HUTCHINS
ASSET MANAGEMENT INC. ("Mitchell Hutchins"), a Delaware corporation, and
GE Investment Management Incorporated ("Sub-Adviser"), a Delaware
corporation (the "Agreement").
RECITALS
--------
(1) Mitchell Hutchins has entered into a Investment Advisory
and Administration Contract dated April 21, 1988, ("Management Agreement")
with PaineWebber Series Trust ("Trust"), an open-end management investment
company registered under the Investment Company Act of 1940, as amended
("1940 Act") with respect to the Global Growth Portfolio ("Portfolio")
series of the Trust; and
(2) Mitchell Hutchins wishes to retain the Sub-Adviser to
furnish certain investment advisory services to Mitchell Hutchins and the
Portfolio, and the Sub-Adviser is willing to furnish those services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. Appointment. Mitchell Hutchins hereby appoints the
Sub-Adviser as an investment sub-adviser with respect to the Portfolio for
the period and on the terms set forth in this Agreement. 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 of and any guidelines adopted
by the Trust's Board of Trustees (the "Board"), the Sub-Adviser will
provide a continuous investment program for the Portfolio, including
investment research and management. The Sub-Adviser will determine from
time to time what investments will be purchased, retained or sold by the
Portfolio. The Sub-Adviser will be responsible for placing purchase and
sell orders for investments and for other related transactions. The
Sub-Adviser will provide services under this Agreement in accordance with
the Portfolio's investment objective, policies and restrictions as stated
in the Portfolio's Registration Statement.
(b) The Sub-Adviser agrees that, in placing orders with
brokers, it will obtain the best net result in terms of price and
execution; provided that, on behalf of the Portfolio, the Sub-Adviser may,
in its discretion, use brokers who provide the Portfolio with research,
analysis, advice and similar services to execute portfolio transactions on
behalf of the Portfolio, and the Sub-Adviser may pay to those brokers in
<PAGE>
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
Portfolio and its other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio
over the long term. In no instance will portfolio securities be purchased
from or sold to the Sub-Adviser, or any affiliated person thereof, except
in accordance with the federal securities laws and the rules and
regulations thereunder. Whenever the Sub-Adviser simultaneously places
orders to purchase or sell the same security on behalf of the Portfolio
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 by the Sub-Adviser over time to each account.
Mitchell Hutchins recognizes that in some cases this procedure may
adversely affect the results obtained for the Portfolio.
(c) The Sub-Adviser will maintain all books and records
required to be maintained by the Sub-Adviser pursuant to the 1940 Act and
the rules and regulations promulgated thereunder with respect to
transactions on behalf of the Portfolio, 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 which it maintains for the Portfolio 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.
(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 Portfolio's performance and
make available to the Board and Mitchell Hutchins any economic,
statistical and investment services normally available to institutional or
other customers of the Sub-Adviser.
(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 any illiquid portfolio securities and will assist in
providing independent sources of market value for all other portfolio
securities.
3. Further Duties. In all matters relating to the
performance of this Agreement, the Sub-Adviser will act in conformity with
the Trust's Trust Instrument, By-Laws and currently effective registration
statement under the 1940 Act and any amendments or supplements thereto
("Registration Statement") and with the written instructions and
directions of the Board and Mitchell Hutchins and will comply with the
requirements of the 1940 Act, the Investment Advisers Act of 1940, as
- 2 -
<PAGE>
amended, ("Advisers Act"), the rules under each, and Subchapter M of the
Internal Revenue Code as applicable to regulated investment companies. In
addition, the Sub-Adviser will act in conformity with all other applicable
federal and state laws and regulations either as reflected in the
Registration Statement or otherwise provided in writing to the Sub-Adviser
by Mitchell Hutchins. Mitchell Hutchins agrees to provide to the
Sub-Adviser copies of the Trust's Trust Instrument, 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.
4. Exclusivity. During the term of this Agreement, the Sub-
Adviser agrees that it will not provide investment advice on a
discretionary or non-discretionary basis for any global equity investment
products offered to retail customers in the United States by broker-
dealers listed on Schedule A. The Sub-Adviser shall deliver to Mitchell
Hutchins in writing prompt and regular reports of the Sub-Adviser's
investment advisory activities in sufficient detail to permit Mitchell
Hutchins to monitor the terms of this Agreement.
5. Expenses. During the term of this Agreement, the
Sub-Adviser will bear all expenses incurred by it in connection with its
investment sub-advisory services under this Agreement.
6. Compensation.
------------
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, Mitchell Hutchins, not the
Portfolio, will pay to the Sub-Adviser a fee, computed daily and payable
monthly, as computed in the manner set forth in Schedule B, together with
a schedule showing the manner in which the fee was computed.
(b) The fee shall be computed daily and payable monthly to
the Sub-Adviser on or before the fifteenth business day of the next
succeeding calendar month.
(c) If this Agreement 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 prorated according to the
proportion which such period bears to the full month in which such
effectiveness or termination occurs.
7. Limitation Of Liability. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss
suffered by the Portfolio, the Trust or its shareholders or by Mitchell
Hutchins in connection with the matters to which this Agreement 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 Agreement.
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8. Indemnification.
---------------
(a) Mitchell Hutchins agrees to indemnify GEIM, its officers and
directors, and any person who controls GEIM within the meaning of Section
15 of the Securities Act of 1933 ("1933 Act") for any loss or expense
(including attorneys' fees) arising out of any claim, demand, action or
suit in the event that GEIM has been found to be without fault and
Mitchell Hutchins or its parent company, PaineWebber Incorporated
("PaineWebber"), has been found at fault (i) by the final judgment of a
court of competetent jurisdiction or (ii) in any order of settlement of
any claim, demand, action or suit that has been approved by the Board of
Directors of Mitchell Hutchins or PaineWebber.
(b) GEIM agrees to indemnify Mitchell Hutchins, its officers and
directors, and any person who controls Mitchell Hutchins within the
meaning of Section 15 of the 1933 Act for any loss or expense (including
attorneys' fees) arising out of any claim, demand, action or suit in the
event that Mitchell Hutchins has been found to be without fault and GEIM,
or its parent company, General Electric Company ("GE"), has been found at
fault (i) by the final judgment of a court of competetent jurisdiction or
(ii) in any order of settlement of any claim, demand, action or suit that
has been approved by the Board of Directors of GEIM or GE.
9. Representations of Sub-Adviser. The Sub-Adviser
represents, warrants and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment
adviser under the Advisers Act and will continue to be so registered for
so long as this Agreement remains in effect; (ii) is not prohibited by the
1940 Act or the Advisers Act from performing the services contemplated by
this Agreement; (iii) has met, and will seek to continue to meet for so
long as this Agreement 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 Agreement; (iv) has the authority to
enter into and perform the services contemplated by this Agreement; and
(v) will promptly notify Mitchell Hutchins of the occurrence of any event
that would disqualify the Sub-Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act
or otherwise.
(b) The Sub-Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act and will
provide Mitchell Hutchins and the Board with a copy of that code of
ethics, together with evidence of its adoption. Within fifteen days of
the end of the last calendar quarter of each year that this Agreement is
in effect, the president or a vice-president of the Sub-Adviser shall
certify to Mitchell Hutchins that the Sub-Adviser has complied with the
requirements of Rule 17j-1 during the previous year and that there has
been no violation of the Sub-Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to
such violation. Upon the written request of Mitchell Hutchins, the
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<PAGE>
Sub-Adviser shall permit Mitchell Hutchins, its employees or its agents to
examine the reports required to be made to the Sub-Adviser by Rule 17j-
1(c)(1) and all other records relevant to the Sub-Adviser's code of
ethics.
(c) The Sub-Adviser has provided Mitchell Hutchins with a
copy of its Form ADV as most recently filed with the Securities and
Exchange Commission ("SEC") and promptly will furnish a copy of all
amendments to Mitchell Hutchins at least annually.
(d) The Sub-Adviser will notify Mitchell Hutchins of any
change of control of the Sub-Adviser, including any change of its general
partners or 25% shareholders, as applicable, and any changes in the key
personnel of the Sub-Adviser, in each case prior to or promptly after such
change.
10. Representations and Warranties of Mitchell Hutchins.
Mitchell Hutchins represents, warrants and agrees as follows:
(a) 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 Agreement remains in effect; (ii) is not prohibited by the 1940
Act from performing the services contemplated by the Management Agreement;
(iii) has met, and will seek to continue to meet for so long as this
Agreement 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 the Management Agreement; (iv) has the authority
to enter into and perform the services contemplated by the Management
Agreement; and (v) will promptly notify the Sub-Adviser of the occurrence
of any event that would disqualify Mitchell Hutchins from serving as an
investment adviser of an investment company pursuant to Section 9(a) of
the 1940 Act or otherwise.
(b) Mitchell Hutchins agrees that it will notify GEIM, to the
extent possible, within a reasonable period of time prior to any
termination of this Agreement by Mitchell Hutchins pursuant to Section
11(c) (including any termination by assignment resulting from a
foreseeable change in control of Mitchell Hutchins that is a matter of
public information), and that it will notify GEIM promptly following any
other termination of this Agreement pursuant to Section 11(c).
11. Duration and Termination.
------------------------
(a) This Agreement shall become effective upon the date first
above written, provided that this Agreement 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 Agreement 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 a vote of a majority of outstanding
voting securities of the Portfolio.
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<PAGE>
(b) Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from the above written
date. Thereafter, if not terminated, this Agreement will 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
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the
Board or by the holders of a vote of a majority of the outstanding voting
securities of the Portfolio.
(c) Notwithstanding the foregoing, this Agreement 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 Portfolio on 60 days' written notice to the Sub-Adviser. This
Agreement may also be terminated, without the payment of any penalty, by
Mitchell Hutchins: (i) upon 60 days' written notice to the Sub-Adviser;
(ii) upon material breach by the Sub-Adviser of any of the representations
and warranties set forth in Paragraph 9 of this Agreement; or (iii) if the
Sub-Adviser becomes unable to discharge its duties and obligations under
this Agreement, including circumstances such as financial insolvency of
the Sub-Adviser or other circumstances that could adversely affect the
Portfolio. The Sub-Adviser may terminate this Agreement at any time,
without the payment of any penalty, on 60 days' written notice to Mitchell
Hutchins. This Agreement will terminate automatically in the event of its
assignment or upon termination of the Management Agreement.
12. Amendment of this Agreement. No provision of this
Agreement 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 to the terms of this Agreement shall be effective until
approved by vote of a majority of the Portfolio's outstanding voting
securities (unless the Trust receives an SEC order permitting it to modify
the Agreement without such vote).
13. Governing Law. This Agreement shall be construed in
accordance with the 1940 Act and the laws of the State of Delaware,
without giving effect to the conflicts of laws principles thereof. To the
extent that the applicable laws of the State of Delaware conflict with the
applicable provisions of the 1940 Act, the latter shall control.
14. Miscellaneous. The captions in this Agreement 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 Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors. As used in this Agreement, the terms "majority of
the outstanding voting securities," "affiliated person," "interested
person," "assignment," "broker," "investment adviser," "net assets,"
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<PAGE>
"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 Agreement
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
Agreement may be signed in counterpart.
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<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.
Attest: MITCHELL HUTCHINS ASSET MANAGEMENT INC.
By:____________________________________
Name:
Title:
Attest: GE INVESTMENT MANAGEMENT INCORPORATED
By:_______________________________
Name:
Title:
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<PAGE>
SCHEDULE A
Retail Broker Dealers
---------------------
Alex. Brown & Sons Incorporated
A.G. Edwards & Sons, Inc.
Dean Witter Reynolds, Inc.
E.D. Jones
Kemper Financial Services, Kemper Securities Group, Inc.
Legg Mason Wood Walker Incorporated
Merrill Lynch Pierce Fenner & Smith Incorporated
Prudential Securities Incorporated
Raymond James & Associates, Inc.
Smith Barney Inc.
<PAGE>
SCHEDULE B
Fund Annual Fee Rate
---- --------------
PaineWebber Series Trust - 0.29% of average daily net
Global Growth Portfolio assets
<PAGE>
