<PAGE>
PAINEWEBBER ATLAS GLOBAL GROWTH FUND
(A SERIES OF PAINEWEBBER ATLAS FUND)
June 21, 1995
Dear Shareholder:
The attached proxy materials describe a proposal that PaineWebber Atlas
Global Growth Fund ("Atlas Global Growth Fund") reorganize and become part of
Mitchell Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP Global Equity
Fund"). If the proposal is approved and implemented, each shareholder of Atlas
Global Growth Fund will automatically become a shareholder of MH/KP Global
Equity Fund. In addition, the attached proxy materials present a proposal to
approve a new sub-advisory agreement ("Sub-Advisory Agreement") for Atlas
Global Growth Fund.
Mitchell Hutchins' recommendation to the Board of Trustees of Atlas Global
Growth Fund that GEIM be retained as sub-adviser to the Fund stemmed from a
number of factors. First, Mitchell Hutchins has 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. Second, in
connection with Mitchell Hutchins' appointment as investment adviser and
administrator to certain mutual funds formerly offered by Kidder Peabody &
Co., Inc., Mitchell Hutchins became knowledgeable about the abilities and
expertise of GEIM, the portfolio management team responsible for MH/KP Global
Equity Fund. After extensive analysis and due diligence, Mitchell Hutchins
determined that it would be in the best interests of Atlas Global Growth Fund
shareholders to recommend to the Board of Trustees of the Fund that they
approve a sub-advisory agreement with GEIM and authorize the submission of the
sub-advisory agreement to the shareholders of the Fund for approval.
YOUR BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE REORGANIZATION PROPOSAL AND
FOR THE SUB-ADVISORY AGREEMENT. The Board believes that combining the two
Funds will benefit Atlas Global Growth Fund's shareholders by providing them
with a portfolio that has an investment objective similar to the investment
objective of Atlas Global Growth Fund and that will have lower or comparable
operating expenses as a percentage of net assets. The attached materials
provide more information about the proposed reorganization and the two Funds.
Your Board of Trustees also recommends that the Fund's shareholders approve
the proposed Sub-Advisory Agreement, as the current interim sub-advisory
agreement will terminate on July 22, 1995.
Your vote is important no matter how many shares you own. Voting your shares
early will permit the Atlas Global Growth Fund to avoid costly follow-up mail
and telephone solicitation. After reviewing the attached materials, please
complete, date and sign your proxy card and mail it in the enclosed return
envelope today.
Very truly yours,
Margo N. Alexander
President, PaineWebber Atlas Fund
<PAGE>
PAINEWEBBER EUROPE GROWTH FUND
(A SERIES OF PAINEWEBBER INVESTMENT SERIES)
June 21, 1995
Dear Shareholder:
The attached proxy materials describe a proposal that PaineWebber Europe
Growth Fund ("Europe Growth Fund") reorganize and become part of Mitchell
Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP Global Equity Fund"). If
the proposal is approved and implemented, each shareholder of Europe Growth
Fund will automatically become a shareholder of MH/KP Global Equity Fund. In
addition, the attached proxy materials present a proposal to approve a new
sub-advisory agreement ("Sub-Advisory Agreement") for Europe Growth Fund.
Mitchell Hutchins' recommendation to the Board of Trustees of Europe Growth
Fund that GEIM be retained as sub-advisor to the Fund stemmed from a number of
factors. First, 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. Second, in connection with
Mitchell Hutchins' appointment as investment adviser and administrator to
certain mutual funds formerly offered by Kidder Peabody & Co., Inc., Mitchell
Hutchins became knowledgeable about the abilities and expertise of GEIM, the
portfolio management team responsible for MH/KP Global Equity Fund. After
extensive analysis and due diligence, Mitchell Hutchins determined that it
would be in the best interests of Europe Growth Fund shareholders to recommend
to the Board of Trustees of the Fund that they approve a sub-advisory
agreement with GEIM and authorize the submission of the sub-advisory agreement
to the shareholders of the Fund for approval.
YOUR BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE REORGANIZATION PROPOSAL AND
FOR THE SUB-ADVISORY AGREEMENT. The Board believes that combining the two
Funds will benefit Europe Growth Fund's shareholders by providing them with a
portfolio that has an investment objective similar to the investment objective
of Europe Growth Fund and that will have lower operating expenses as a
percentage of net assets. The attached materials provide more information
about the proposed reorganization and the two Funds. Your Board of Trustees
also recommends that the Fund's shareholders approve the proposed Sub-Advisory
Agreement, as the current interim sub-advisory agreement will terminate on
July 22, 1995.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your shares
early will permit Europe Growth Fund to avoid costly follow-up mail and
telephone solicitation. After reviewing the attached materials, please
complete, date and sign your proxy card and mail it in the enclosed return
envelope today.
Very truly yours,
Margo N. Alexander
President, PaineWebber Investment
Series
<PAGE>
PAINEWEBBER GLOBAL GROWTH AND INCOME FUND
(A SERIES OF PAINEWEBBER INVESTMENT SERIES)
June 21, 1995
Dear Shareholder:
The attached proxy materials describe a proposal that PaineWebber Global
Growth and Income Fund ("Global Growth and Income Fund") reorganize and become
part of Mitchell Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP Global
Equity Fund"). If the proposal is approved and implemented, each shareholder
of Global Growth and Income Fund will automatically become a shareholder of
MH/KP Global Equity Fund. In addition, the attached proxy materials present a
proposal to approve a new sub-advisory agreement ("Sub-Advisory Agreement")
for Global Growth and Income Fund.
Mitchell Hutchins' recommendation to the Board of Trustees of Global Growth
and Income Fund that GEIM be retained as sub-advisor to the Fund stemmed from
a number of factors. First, 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. Second, in
connection with Mitchell Hutchins' appointment as investment adviser and
administrator to certain mutual funds formerly offered by Kidder Peabody &
Co., Inc., Mitchell Hutchins became knowledgeable about the abilities and
expertise of GEIM, the portfolio management team responsible for MH/KP Global
Equity Fund. After extensive analysis and due diligence, Mitchell Hutchins
determined that it would be in the best interests of Global Growth and Income
Fund shareholders to recommend to the Board of Trustees of the Fund that they
approve a sub-advisory agreement with GEIM and authorize the submission of the
sub-advisory agreement to the shareholders of the Fund for approval.
YOUR BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE REORGANIZATION PROPOSAL AND
FOR THE SUB-ADVISORY AGREEMENT. The Board believes that combining the two
Funds will benefit Global Growth and Income Fund's shareholders by providing
them with a portfolio that has an investment objective similar to the
investment objective of Global Growth and Income Fund and that will have lower
operating expenses as a percentage of net assets. The attached materials
provide more information about the proposed reorganization and the two Funds.
Your Board of Trustees also recommends that the Fund's shareholders approve
the proposed Sub-Advisory Agreement, as the current interim sub-advisory
agreement will terminate on July 22, 1995.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your shares
early will permit Global Growth and Income Fund to avoid costly follow-up mail
and telephone solicitation. After reviewing the attached materials, please
complete, date and sign your proxy card and mail it in the enclosed return
envelope today.
Very truly yours,
Margo N. Alexander
President, PaineWebber Investment
Series
<PAGE>
PAINEWEBBER ATLAS GLOBAL GROWTH FUND
(A SERIES OF PAINEWEBBER ATLAS FUND)
----------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
JULY 21, 1995
----------------
To The Shareholders:
A special meeting of shareholders ("Meeting") of PaineWebber Atlas Global
Growth Fund ("Atlas Global Growth Fund"), a series of PaineWebber Atlas Fund,
will be held on July 21, 1995, at 10:00 a.m., eastern time, at 1285 Avenue of
the Americas, 38th Floor, New York, New York 10019, for the following
purposes:
(1) To consider an Agreement and Plan of Reorganization and Termination
under which Mitchell Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP
Global Equity Fund"), a series of Mitchell Hutchins/Kidder, Peabody
Investment Trust, would acquire the assets of Atlas Global Growth Fund in
exchange solely for shares of beneficial interest in MH/KP Global Equity
Fund and the assumption by MH/KP Global Equity Fund of Atlas Global Growth
Fund's liabilities, followed by the distribution of those shares to the
shareholders of Atlas Global Growth Fund, all as described in the
accompanying prospectus/proxy statement;
(2) To consider a Sub-Advisory Agreement between Mitchell Hutchins Asset
Management Inc. and GE Investment Management Incorporated; and
(3) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
You are entitled to vote at the Meeting and any adjournment thereof if you
owned shares of Atlas Global Growth Fund at the close of business on May 24,
1995. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON. IF YOU DO
NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the board of trustees,
Dianne E. O'Donnell
Secretary
June 21, 1995
1285 Avenue of the Americas
New York, New York 10019
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" THE PROPOSALS NOTICED ABOVE. IN ORDER TO AVOID
THE ADDITIONAL EXPENSE TO ATLAS GLOBAL GROWTH FUND 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.
<PAGE>
PAINEWEBBER EUROPE GROWTH FUND
(A SERIES OF PAINEWEBBER INVESTMENT SERIES)
----------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
JULY 21, 1995
----------------
To The Shareholders:
A special meeting of shareholders ("Meeting") of PaineWebber Europe Growth
Fund ("Europe Growth Fund"), a series of PaineWebber Investment Series, will
be held on July 21, 1995, at 10:00 a.m., eastern time, at 1285 Avenue of the
Americas, 38th Floor, New York, New York 10019, for the following purposes:
(1) To consider an Agreement and Plan of Reorganization and Termination
under which Mitchell Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP
Global Equity Fund"), a series of Mitchell Hutchins/Kidder, Peabody
Investment Trust, would acquire the assets of Europe Growth Fund in
exchange solely for shares of beneficial interest in MH/KP Global Equity
Fund and the assumption by MH/KP Global Equity Fund of Europe Growth Fund's
liabilities, followed by the distribution of those shares to the
shareholders of Europe Growth Fund, all as described in the accompanying
prospectus/proxy statement;
(2) To consider a Sub-Advisory Agreement between Mitchell Hutchins Asset
Management Inc. and GE Investment Management Incorporated; and
(3) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
You are entitled to vote at the Meeting and any adjournment thereof if you
owned shares of Europe Growth Fund at the close of business on May 24, 1995.
IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON. IF YOU DO NOT
EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the board of trustees,
Dianne E. O'Donnell
Secretary
June 21, 1995
1285 Avenue of the Americas
New York, New York 10019
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" THE PROPOSALS NOTICED ABOVE. IN ORDER TO AVOID
THE ADDITIONAL EXPENSE TO EUROPE GROWTH FUND 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.
<PAGE>
PAINEWEBBER GLOBAL GROWTH AND INCOME FUND
(A SERIES OF PAINEWEBBER INVESTMENT SERIES)
----------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
JULY 21, 1995
----------------
To The Shareholders:
A special meeting of shareholders ("Meeting") of PaineWebber Global Growth
and Income Fund ("Global Growth and Income Fund"), a series of PaineWebber
Investment Series, will be held on July 21, 1995, at 10:00 a.m., eastern time,
at 1285 Avenue of the Americas, 38th Floor, New York, New York 10019, for the
following purposes:
(1) To consider an Agreement and Plan of Reorganization and Termination
under which Mitchell Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP
Global Equity Fund"), a series of Mitchell Hutchins/Kidder, Peabody
Investment Trust, would acquire the assets of Global Growth and Income Fund
in exchange solely for shares of beneficial interest in MH/KP Global Equity
Fund and the assumption by MH/KP Global Equity Fund of Global Growth and
Income Fund's liabilities, followed by the distribution of those shares to
the shareholders of Global Growth and Income Fund, all as described in the
accompanying prospectus/proxy statement;
(2) To consider a Sub-Advisory Agreement between Mitchell Hutchins Asset
Management Inc. and GE Investment Management Incorporated; and
(3) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
You are entitled to vote at the Meeting and any adjournment thereof if you
owned shares of Global Growth and Income Fund at the close of business on May
24, 1995. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON. IF
YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the board of trustees,
Dianne E. O'Donnell
Secretary
June 21, 1995
1285 Avenue of the Americas
New York, New York 10019
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" THE PROPOSALS NOTICED ABOVE. IN ORDER TO AVOID
THE ADDITIONAL EXPENSE TO GLOBAL GROWTH AND INCOME FUND 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.
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY
GLOBAL EQUITY FUND
(A SERIES OF MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST)
PAINEWEBBER ATLAS GLOBAL GROWTH FUND
(A SERIES OF PAINEWEBBER ATLAS FUND)
PAINEWEBBER EUROPE GROWTH FUND
PAINEWEBBER GLOBAL GROWTH AND INCOME FUND
(EACH A SERIES OF PAINEWEBBER INVESTMENT SERIES)
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(TOLL-FREE) 1-800-647-1568
----------------
PROSPECTUS/PROXY STATEMENT
JUNE 21, 1995
----------------
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished to
shareholders of PaineWebber Atlas Global Growth Fund ("Atlas Global Growth
Fund"), a series of PaineWebber Atlas Fund ("Atlas Trust"), PaineWebber Europe
Growth Fund ("Europe Growth Fund"), a series of PaineWebber Investment Series
("Investment Series"), and PaineWebber Global Growth and Income Fund ("Global
Growth and Income Fund"), also a series of Investment Series (each an
"Acquired Fund" and collectively, the "Acquired Funds"), in connection with
the solicitation of proxies by Atlas Trust's and Investment Series' boards of
trustees for use at a combined special meeting of shareholders of the Acquired
Funds, to be held on July 21, 1995, at 10:00 a.m., eastern time, and at any
adjournment thereof ("Meeting").
As more fully described in this Proxy Statement, the primary purpose of the
Meeting is to vote on three proposed reorganizations (each a "Reorganization"
and collectively, the "Reorganizations"). Under each Reorganization, Mitchell
Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP Global Equity Fund"), a
series of Mitchell Hutchins/Kidder, Peabody Investment Trust ("MH/KP
Investment Trust"), would acquire the assets of an Acquired Fund in exchange
solely for shares of beneficial interest in MH/KP Global Equity Fund and the
assumption by MH/KP Global Equity Fund of that Acquired Fund's liabilities.
Those MH/KP Global Equity Fund shares then would be distributed to that
Acquired Fund's shareholders, by class, so that each such shareholder would
receive a number of full and fractional shares of the applicable class of
MH/KP Global Equity Fund having an aggregate value that, on the effective date
of the Reorganization, is equal to the aggregate net asset value of the
shareholder's shares of the corresponding class in the Acquired Fund. As soon
as practicable following those distributions, each Acquired Fund will be
terminated. In addition, the name of MH/KP Global Equity Fund will be changed
to "PaineWebber Global Equity Fund."
MH/KP Global Equity Fund is a diversified series of MH/KP Investment Trust,
which is an open-end management investment company currently comprised of five
series. MH/KP Global Equity Fund's investment objective is long-term growth of
capital, which it seeks to achieve by investing principally in foreign equity
securities.
At the Meeting, the shareholders of the Acquired Funds also will be asked to
approve proposed sub-advisory agreements between Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins"), the
<PAGE>
investment adviser of each Acquired Fund, and GE Investment Management
Incorporated ("GEIM"), a wholly owned subsidiary of General Electric Company,
pursuant to which GEIM would continue to serve as investment sub-adviser to
each Acquired Fund. GEIM is currently serving as investment sub-adviser to
each Acquired Fund pursuant to interim sub-advisory agreements with Mitchell
Hutchins. If the Reorganization proposal and the proposed sub-advisory
agreement are both approved with respect to an Acquired Fund, the Sub-Advisory
Agreement with respect to that Acquired Fund would remain in effect until the
Reorganization is implemented. If the Reorganization proposal is not approved
but the proposed sub-advisory agreement is approved with respect to an
Acquired Fund, the proposed sub-advisory agreement will remain in effect for
two years after its effective date.
This Proxy Statement, which should be retained for future reference, sets
forth concisely the information about the proposed transactions and MH/KP
Global Equity Fund that a shareholder should know before voting. This Proxy
Statement is accompanied by the Prospectus of MH/KP Global Equity Fund, dated
December 29, 1994, and by its Annual Report to Shareholders for the fiscal
year ended August 31, 1994, which are incorporated by this reference into this
Proxy Statement. A Statement of Additional Information dated June 21, 1995,
including historical financial statements, has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated herein by this reference.
Prospectuses of Atlas Global Growth Fund, dated January 1, 1995, and Europe
Growth Fund and Global Growth and Income Fund, each dated March 1, 1995, and
Statements of Additional Information of MH/KP Global Equity Fund, dated
December 29, 1994, Atlas Global Growth Fund, dated January 1, 1995, and Europe
Growth Fund and Global Growth and Income Fund, each dated March 1, 1995, have
been filed with the SEC and are incorporated herein by this reference. Copies
of these documents, as well as each Acquired Fund's annual report, or semi-
annual report, if applicable, may be obtained without charge and further
inquiries may be made by contacting your PaineWebber Incorporated investment
executive or its correspondent firms or by calling toll-free 1-800-647-1568.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
VOTING INFORMATION.......................................................... 1
PROPOSAL 1. APPROVAL OF THE REORGANIZATIONS................................. 3
SYNOPSIS.................................................................... 3
COMPARISON OF PRINCIPAL RISK FACTORS........................................ 24
THE PROPOSED TRANSACTIONS................................................... 27
ADDITIONAL INFORMATION ABOUT MH/KP GLOBAL EQUITY FUND....................... 39
PROPOSAL 2. APPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENTS................ 42
MISCELLANEOUS............................................................... 48
APPENDIX A--FORM OF AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION.... A-1
APPENDIX B--FORM OF SUB-ADVISORY AGREEMENT.................................. B-1
</TABLE>
<PAGE>
PAINEWEBBER ATLAS GLOBAL GROWTH FUND
(A SERIES OF PAINEWEBBER ATLAS FUND)
PAINEWEBBER EUROPE GROWTH FUND
PAINEWEBBER GLOBAL GROWTH AND INCOME FUND
(EACH A SERIES OF PAINEWEBBER INVESTMENT SERIES)
----------------
PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JULY 21, 1995
----------------
VOTING INFORMATION
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished to
shareholders of PaineWebber Atlas Global Growth Fund ("Atlas Global Growth
Fund"), a series of PaineWebber Atlas Fund ("Atlas Trust"), PaineWebber Europe
Growth Fund ("Europe Growth Fund"), a series of PaineWebber Investment Series
("Investment Series"), and PaineWebber Global Growth and Income Fund ("Global
Growth and Income Fund"), a series of Investment Series (each an "Acquired
Fund" and collectively, the "Acquired Funds"), in connection with the
solicitation of proxies by Atlas Trust's and Investment Series' boards of
trustees for use at a combined special meeting of shareholders of the Acquired
Funds to be held on July 21, 1995, and at any adjournment thereof ("Meeting").
This Proxy Statement will first be mailed to shareholders on or about June 21,
1995.
A majority of shares of an Acquired Fund outstanding on May 24, 1995,
represented in person or by proxy, must be present for the transaction of
business by that Acquired Fund at the Meeting. If, with respect to any
Acquired Fund, a quorum is not present at the Meeting or a quorum is present
but sufficient votes to approve the proposal are not received, the persons
named as proxies may propose one or more adjournments of the Meeting with
respect to that Acquired Fund to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those
shares of the Acquired Fund 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 any such proposal in favor of such an adjournment and will vote those
proxies required to be voted AGAINST any such proposal 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 the broker does not have discretionary
voting authority. Abstentions and broker non-votes will be counted as shares
present for purposes of determining whether a quorum is present but will not
be voted for or against any adjournment or proposal. Accordingly, abstentions
and broker non-votes effectively will be a vote against adjournment or against
any proposal where the required vote is a percentage of the shares present.
Abstentions and broker non-votes will not be counted, however, as votes cast
for purposes of determining whether sufficient votes have been received to
approve a proposal.
<PAGE>
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed by you or by your duly appointed agent or attorney-
in-fact. If you sign, date and return the proxy card, but give no voting
instructions, your shares will be voted in favor of approval of the Agreement
and Plan of Reorganization and Termination, dated as of May 12, 1995 (each a
"Reorganization Plan") that involves your Acquired Fund. A form of the
Reorganization Plans is attached to this Proxy Statement as Appendix A. Under
each Reorganization Plan, Mitchell Hutchins/Kidder, Peabody Global Equity Fund
("MH/KP Global Equity Fund"), a series of Mitchell Hutchins/Kidder, Peabody
Investment Trust ("MH/KP Investment Trust"), would acquire the assets of an
Acquired Fund in exchange solely for shares of beneficial interest in MH/KP
Global Equity Fund and the assumption by MH/KP Global Equity Fund of that
Acquired Fund's liabilities; those shares then would be distributed to that
Acquired Fund's shareholders. (Each of these transactions is referred to
herein as a "Reorganization.") After completion of a Reorganization, the
participating Acquired Fund will be terminated.
In addition, if you sign, date and return the proxy card, but give no voting
instructions, the duly appointed proxies will vote your shares in favor of the
applicable sub-advisory agreement between Mitchell Hutchins Asset Management
Inc. ("Mitchell Hutchins") and GE Investment Management Incorporated ("GEIM"),
and they may, in their discretion, vote upon such other matters as may come
before the Meeting. The proxy card may be revoked by giving another proxy or
by letter or telegram revoking the initial proxy. To be effective, such
revocation must be received by Atlas Trust or Investment Series, as
applicable, prior to the Meeting and must indicate your name and account
number. In addition, if you attend the Meeting in person you may, if you wish,
vote by ballot at the Meeting thereby canceling any proxy previously given.
As of the record date, May 24, 1995 ("Record Date"), Atlas Global Growth
Fund had 24,439,609.9 shares of beneficial interest outstanding; Europe Growth
Fund had 10,534,611.5 shares of beneficial interest outstanding; and Global
Growth and Income Fund had 7,631,176.9 shares of beneficial interest
outstanding. The solicitation of proxies, the cost of which will be borne by
MH/KP Global Equity Fund, Atlas Global Growth Fund, Europe Growth Fund and
Global Growth and Income Fund (each a "Fund" and collectively, the "Funds") in
proportion to their respective net assets, will be made primarily by mail but
also may include telephone or oral communications by representatives of
Mitchell Hutchins, who will not receive any compensation therefor from the
Funds, or by Shareholder Communications Corporation, professional proxy
solicitors retained by the Acquired Funds, who will be paid fees and expenses
of up to approximately $75,000 for soliciting services. Management does not
know of any person who owns beneficially 5% or more of the shares of any
Acquired Fund. Trustees and officers of Atlas Trust and Investment Series own
in the aggregate less than 1% of the shares of their respective Funds.
Summarized below are the proposals the shareholders of each Acquired Fund
are being asked to consider:
<TABLE>
<CAPTION>
FUND PROPOSAL
---- --------
<S> <C>
Atlas Global Growth 1. To approve a Reorganization Plan.
2. To approve a Sub-Advisory Agreement between
Mitchell Hutchins and GEIM.
Europe Growth 1. To approve a Reorganization Plan.
2. To approve a Sub-Advisory Agreement between
Mitchell Hutchins and GEIM.
Global Growth and Income 1. To approve a Reorganization Plan.
2. To approve a Sub-Advisory Agreement between
Mitchell Hutchins and GEIM.
</TABLE>
2
<PAGE>
For voting purposes, the shareholders of each Acquired Fund will vote only
on the Reorganization Plan and the Sub-Advisory Agreement applicable to it.
Approval of a proposal and consummation of the transactions contemplated
thereby for one Acquired Fund do not depend on the approval of the
corresponding proposal by either of the other Acquired Funds' shareholders and
consummation of the transactions contemplated thereby. However, consummation
of such transactions for each Acquired Fund is contingent upon the approval by
the board of trustees of MH/KP Investment Trust, on behalf of MH/KP Global
Equity Fund, and by that Fund's shareholders of the proposed changes in the
management and sub-advisory fees. See the introductory paragraph to
"Comparative Fee Tables," page 5.
Approval of a Reorganization Plan or a Sub-Advisory Agreement requires the
affirmative vote of a "majority of the outstanding voting securities" of the
applicable Acquired Fund. As defined in the Investment Company Act of 1940
("1940 Act"), "majority of the outstanding voting securities" means the lesser
of (1) 67% of an Acquired Fund's shares present at a meeting of shareholders
if the owners of more than 50% of that Acquired Fund's shares then outstanding
are present in person or by proxy, or (2) more than 50% of the Acquired Fund's
outstanding shares. Each full outstanding share of each Acquired Fund is
entitled to one vote, and each outstanding fractional share of each Acquired
Fund is entitled to a proportionate fractional share of one vote. Although the
shareholders of the Acquired Funds may exchange or redeem out of a Fund, they
do not have the appraisal rights which may be accorded to shareholders of
corporations that propose similar types of reorganizations under the laws of
some states.
PROPOSAL 1. APPROVAL OF THE REORGANIZATIONS
SYNOPSIS
The following is a summary of certain information contained elsewhere in
this Proxy Statement, the prospectus of each Fund, which are incorporated
herein by reference, and the Reorganization Plans. Shareholders should read
this Proxy Statement and the prospectus of MH/KP Global Equity Fund carefully.
As discussed more fully below, the boards of trustees of Atlas Trust and
Investment Series believe that the Reorganizations will benefit their
respective Acquired Fund's shareholders. MH/KP Global Equity Fund has an
investment objective generally similar to the investment objective of each
Acquired Fund, although its investment strategy may differ from the investment
strategies of the Acquired Funds in some material respects. It is anticipated
that, following the Reorganizations, the shareholders of the Acquired Funds
will, as shareholders of MH/KP Global Equity Fund, be subject to lower total
operating expenses as a percentage of net assets (with the exception of
shareholders of Atlas Global Growth Fund, who, if only Atlas Global Growth
Fund participates in the Reorganizations, would be subject to comparable total
operating expenses).
THE REORGANIZATIONS
The board of trustees of each of Atlas Trust and Investment Series has
approved a Reorganization Plan with respect to its Acquired Fund at a combined
meeting held on April 28, 1995. Each Reorganization Plan provides for the
acquisition by MH/KP Global Equity Fund of the assets of an Acquired Fund in
exchange solely for shares of MH/KP Global Equity Fund and the assumption by
MH/KP Global Equity Fund of the liabilities of the Acquired Fund. Each
Acquired Fund then will distribute the MH/KP Global Equity Fund shares to its
shareholders, by class, so that each shareholder will receive the number of
full and fractional shares of the class of MH/KP Global Equity Fund that
corresponds most closely in terms of fees and other characteristics
("Corresponding Class") and that is equal in value to such shareholder's
holdings in the
3
<PAGE>
Acquired Fund as of the Closing Date (defined below). Each Acquired Fund then
will be terminated as soon as practicable thereafter.
The exchange of each Acquired Fund's assets for MH/KP Global Equity Fund
shares and MH/KP Global Equity Fund's assumption of its liabilities will occur
at or as of 4:00 p.m., eastern time, on August 4, 1995, or such later date as
the conditions to any such closing are satisfied ("Closing Date").
MH/KP Global Equity Fund currently offers for sale three classes of shares
(each a "Class" and collectively, "Classes"), designated as Class A, Class B
and Class C shares. In connection with the Reorganizations, MH/KP Global
Equity Fund will issue Class E shares. Atlas Global Growth Fund has four
Classes of shares, designated as Class A, Class B, Class C and Class D shares.
Europe Growth Fund and Global Growth and Income Fund each has three Classes of
shares, designated as Class A, Class B and Class D shares. In connection with
the Reorganization involving Atlas Global Growth Fund, shareholders of its
Class A, Class B, Class C and Class D shares will receive Class A, Class E,
Class C and Class B shares, respectively, of MH/KP Global Equity Fund. In
connection with the Reorganizations involving Europe Growth Fund and Global
Growth and Income Fund, shareholders of their Class A, Class B and Class D
shares will receive Class A, Class E and Class B shares, respectively, of
MH/KP Global Equity Fund. The following table shows which Class of shares of
MH/KP Global Equity Fund will be received by each Class of shares of an
Acquired Fund:
ATLAS GLOBAL GROWTH FUND
- ------------------------
Class A
Class B
Class C
Class D
MH/KP GLOBAL EQUITY FUND
- ------------------------
Class A
Class E
Class C
Class B
EUROPE GROWTH FUND
- ------------------
Class A
Class B
Class D
MH/KP GLOBAL EQUITY FUND
- ------------------------
Class A
Class E
Class B
GLOBAL GROWTH AND INCOME FUND
- -----------------------------
Class A
Class B
Class D
MH/KP GLOBAL EQUITY FUND
- ------------------------
Class A
Class E
Class B
For the reasons set forth below under "The Proposed Transactions--Reasons
for the Reorganizations," the boards of trustees of each of Atlas Trust and
Investment Series, including the trustees who are not "interested persons," as
that term is defined in the 1940 Act, thereof ("Independent Trustees"), have
determined, in each instance, that the Reorganization involving its
participating Acquired Fund is in the best interests of that Fund, that the
terms of the Reorganization are fair and reasonable and that the interests of
that Fund's shareholders will not be diluted as a result of the
Reorganization. Accordingly, the boards of trustees of Atlas Trust and
Investment Series recommend approval of the Reorganizations. In addition, the
board of trustees of MH/KP Investment Trust, including its Independent
Trustees, has determined that the Reorganizations are in the best interests of
MH/KP Global Equity Fund, that the terms of the Reorganizations are fair and
reasonable and that the interests of MH/KP Global Equity Fund's shareholders
will not be diluted as a result of the Reorganizations.
4
<PAGE>
COMPARATIVE FEE TABLES
Certain fees and expenses of MH/KP Global Equity Fund will change in
connection with the Reorganizations. Mitchell Hutchins, the investment manager
of MH/KP Global Equity Fund, is currently paid a management fee that is
accrued daily and paid monthly at the annual rate of 1.00% of the average
daily net assets of the Fund. The rate of the fee paid to Mitchell Hutchins is
higher than the rate of management fees paid by most other investment
companies registered under the 1940 Act. Following the Reorganizations, MH/KP
Global Equity Fund, subject to the approval of the board of trustees of MH/KP
Investment Trust, on behalf of MH/KP Global Equity Fund, and that Fund's
shareholders, will pay Mitchell Hutchins a management fee of 0.85% of average
daily net assets of the Fund up to $500 million, 0.83% of average daily net
assets in excess of $500 million and up to $1 billion, and 0.805% of average
daily net assets in excess of $1 billion. The rate of the advisory fee paid by
Mitchell Hutchins (not MH/KP Global Equity Fund) to GEIM for its services as
sub-adviser is currently 0.70% of the Fund's average daily net assets up to
$200 million and 0.50% of average daily net assets equal to or in excess of
$200 million. Following the Reorganizations, Mitchell Hutchins, subject to the
approval of the board of trustees of MH/KP Investment Trust, on behalf of
MH/KP Global Equity Fund, and that Fund's shareholders, will pay GEIM an
advisory fee of 0.31% of average daily net assets up to $500 million, 0.29% of
average daily net assets in excess of $500 million, and 0.265% of average
daily net assets in excess of $1 billion. The maximum initial sales charge for
Class A shares of MH/KP Global Equity Fund is currently 5.75% of the initial
offering price. The maximum initial sales charge for Class A shares will be
reduced to 4.5% of the initial offering price effective July 3, 1995.
In addition, certain expenses paid by the Acquired Funds or their
shareholders will not be paid by MH/KP Global Equity Fund or its shareholders
in connection with, or after, the Reorganizations. Each Acquired Fund
currently pays to PaineWebber Incorporated ("PaineWebber") an annual fee of
$4.00 per active shareholder account for certain services not provided by the
Fund's transfer agent. This fee is not, and will not be, charged to
shareholders of MH/KP Global Equity Fund. Prior to June 19, 1995, shareholders
of each Acquired Fund paid a $5.00 fee for each exchange of shares for shares
of a corresponding class of other PaineWebber or Mitchell Hutchins/Kidder,
Peabody ("MH/KP") mutual funds. This fee has been waived. Finally, Atlas
Global Growth Fund Class A shareholders currently pay a 12b-1 service fee of
0.20% of the Fund's average daily net assets, which reflects a blended annual
rate of the Fund's average daily net assets of 0.25% with respect to shares
sold on or after December 2, 1988 and 0.15% with respect to shares sold prior
to that date. After the Reorganizations, those shareholders, as shareholders
of MH/KP Global Equity Fund, will pay a slightly higher 12b-1 service fee of
0.25% of that Fund's average daily net assets.
5
<PAGE>
REORGANIZATION OF ATLAS GLOBAL GROWTH FUND INTO MH/KP GLOBAL EQUITY FUND
The following tables show (i) shareholder transaction expenses currently
incurred by the Class A, Class B, Class C and Class D shares of Atlas Global
Growth Fund and shareholder transaction expenses that each such Class will
incur after giving effect to the Reorganization, and (ii) the current fees and
expenses incurred for the fiscal year ended August 31, 1994 by the Class A,
Class B, Class C and Class D shares of Atlas Global Growth Fund, the current
fees and expenses incurred for the fiscal year ended August 31, 1994 by the
Class A, Class B and Class C shares of MH/KP Global Equity Fund and pro forma
fees for MH/KP Global Equity Fund's Class A, Class E, Class C and Class B
shares after giving effect to the Reorganization.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
ATLAS GLOBAL GROWTH FUND COMBINED FUND
------------------------------------- -------------------------------
CLASS A CLASS B(1) CLASS C CLASS D(2) CLASS A CLASS E CLASS C CLASS B
------- ---------- ------- ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (as
a percentage of public
offering price)........ 4.5% None None None 4.5% None None None
Exchange fee............ $5.00 $5.00 $5.00 $5.00 None None None None
Maximum contingent
deferred sales charge
(as a percentage of
redemption proceeds)... None 5% None None None 5% None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
ATLAS GLOBAL MH/KP GLOBAL
GROWTH FUND EQUITY FUND
(FISCAL YEAR ENDED (FISCAL YEAR ENDED COMBINED FUND
8/31/94) 8/31/94) (ESTIMATED)
-------------------------- ------------------------ --------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B(1) C D(2) A B C A E C B
----- ----- ----- ----- ------ ------ ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... 0.75% 0.75% 0.75% 0.75% 1.00% 1.00% 1.00% 0.85% 0.85% 0.85% 0.85%
12b-1 Fees.............. 0.20% 1.00% 0.00% 1.00% 0.25% 1.00% 0.00% 0.25% 1.00% 0.00% 1.00%
Other Expenses.......... 0.44% 0.44% 0.38% 0.45% 0.33% 0.33% 0.33% 0.34% 0.38% 0.29% 0.36%
---- ---- ---- ---- ------ ------ ------ ---- ---- ---- ----
Total Fund Operating
Expenses(3)............ 1.39% 2.19% 1.13% 2.20% 1.58% 2.33% 1.33% 1.44% 2.23% 1.14% 2.21%
==== ==== ==== ==== ====== ====== ====== ==== ==== ==== ====
</TABLE>
- --------
(1) Class B shares of Atlas Global Growth Fund will be exchanged for Class E
shares of MH/KP Global Equity Fund.
(2) Class D shares of Atlas Global Growth Fund will be exchanged for Class B
shares of MH/KP Global Equity Fund.
(3) For the twelve months ended February 28, 1995 (the period used for
combined fund estimated expenses), the ratios of total operating expenses
as a percentage of average net assets for Atlas Global Growth Fund were
1.44%, 2.25%, 1.15% and 2.25% for Class A, B, C and D shares,
respectively, and for MH/KP Global Equity Fund were 1.57%, 2.34% and 1.26%
for Class A, B and C shares, respectively.
EXAMPLE OF EFFECT ON FUND EXPENSES
The following illustrates the expenses on a $1,000 investment under the
existing and estimated fees and expenses stated above, assuming a 5% annual
return. The fees shown below reflect a maximum initial sales
6
<PAGE>
charge of 5.75% of the public offering price (4.5% of the public offering
price effective July 3, 1995) that is charged in connection with the sale of
MH/KP Global Equity Fund's Class A shares and a maximum initial sales charge
of 4.5% of the public offering price that is charged in connection with the
sale of Atlas Global Growth Fund's Class A shares. No initial sales charge
will be charged in connection with Class A Shares of MH/KP Global Equity Fund
distributed to Class A shareholders of the Acquired Funds as part of the
Reorganizations.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS(1)
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Atlas Global Growth Fund
Class A shares.................. $59 $ 87 $118 $204
Class B shares:
Assuming complete redemption
at end of period............. $72 $ 99 $137 $214
Assuming no redemption........ $22 $ 69 $117 $214
Class C shares.................. $12 $ 36 $ 62 $137
Class D shares.................. $22 $ 69 $118 $253
MH/KP Global Equity Fund
Class A shares.................. $73 $105 $139 $235
Class B shares.................. $24 $ 73 $125 $267
Class C shares.................. $29 $ 88 $149 $316
Combined Fund
Class A shares.................. $59 $ 89 $120 $210
Class E shares:
Assuming complete redemption
at end of period............. $73 $100 $139 $218
Assuming no redemption........ $23 $ 71 $119 $218
Class C shares.................. $12 $ 36 $ 63 $139
Class B shares.................. $22 $ 69 $118 $254
</TABLE>
- --------
(1) Ten-year figures assume conversion of Class B shares of Atlas Global
Growth Fund/Class E shares of MH/KP Global Equity Fund to Class A shares
of MH/KP Global Equity Fund at end of sixth year.
This Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the
assumption in the Example of a 5% annual return are required by regulations of
the Securities and Exchange Commission ("SEC"); the assumed 5% annual return
is not a prediction of, and does not represent, the projected or actual
performance of any Class of the Funds' shares.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND A FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses attributable to each Class of a Fund's shares will
depend upon, among other things, the level of average net assets, and the
extent to which a Fund incurs variable expenses, such as transfer agency
costs.
7
<PAGE>
REORGANIZATION OF EUROPE GROWTH FUND INTO MH/KP GLOBAL EQUITY FUND
The following tables show (i) shareholder transaction expenses currently
incurred by the Class A, Class B and Class D shares of Europe Growth Fund and
shareholder transaction expenses that each such Class will incur after giving
effect to the Reorganization, and (ii) the current fees and expenses incurred
for the fiscal year ended October 31, 1994 by the Class A, Class B and Class D
shares of Europe Growth Fund, the current fees and expenses incurred for the
fiscal year ended August 31, 1994 by the Class A, Class B and Class C shares
of MH/KP Global Equity Fund, and pro forma fees for MH/KP Global Equity Fund's
Class A, Class E, Class C and Class B shares after giving effect to the
Reorganization.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION
EXPENSES
EUROPE GROWTH FUND COMBINED FUND
----------------------------- -------------------------------
CLASS A CLASS B(1) CLASS D(2) CLASS A CLASS E CLASS C CLASS B
------- ---------- ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (as
a percentage of public
offering price)........ 4.5% None None 4.5% None None None
Exchange fee............ $5.00 $5.00 $5.00 None None None None
Maximum contingent
deferred sales charge
(as a percentage of
redemption proceeds)... None 5% None None 5% None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
EUROPE GROWTH FUND MH/KP GLOBAL EQUITY
(FISCAL YEAR ENDED FUND (FISCAL YEAR COMBINED FUND
10/31/94) ENDED 8/31/94) (ESTIMATED)
------------------------ ------------------------ ----------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS B
A B(1) D(2) A B C A E C B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... 0.85% 0.85% 0.85% 1.00% 1.00% 1.00% 0.85% 0.85% 0.85% 0.85%
12b-1 Fees.............. 0.25% 1.00% 1.00% 0.25% 1.00% 0.00% 0.25% 1.00% 0.00% 1.00%
Other Expenses.......... 0.55% 0.55% 0.54% 0.33% 0.33% 0.33% 0.34% 0.39% 0.30% 0.35%
------ ------ ------ ------ ------ ------ ---- ---- ---- ----
Total Fund Operating
Expenses(3)............ 1.65% 2.40% 2.39% 1.58% 2.33% 1.33% 1.44% 2.24% 1.15% 2.20%
====== ====== ====== ====== ====== ====== ==== ==== ==== ====
</TABLE>
- --------
(1) Class B shares of Europe Growth Fund will be exchanged for Class E shares
of MH/KP Global Equity Fund.
(2) Class D shares of Europe Growth Fund will be exchanged for Class B shares
of MH/KP Global Equity Fund.
(3) For the twelve months ended February 28, 1995 (the period used for
combined fund estimated expenses), the ratios of total operating expenses
as a percentage of average net assets for Europe Growth Fund were 1.72%,
2.45% and 2.47% for Class A, B and D shares, respectively, and for MH/KP
Global Equity Fund were 1.57%, 2.34% and 1.26% for Class A, B and C
shares, respectively.
EXAMPLE OF EFFECT ON FUND EXPENSES
The following illustrates the expenses on a $1,000 investment under the
existing and estimated fees and expenses stated above, assuming a 5% annual
return. The fees shown below reflect a maximum initial sales charge of 5.75%
of the public offering price (4.5% of the public offering price effective July
3, 1995) that is charged in connection with the sale of MH/KP Global Equity
Fund's Class A shares and a maximum initial
8
<PAGE>
sales charge of 4.5% of the public offering price that is charged in
connection with the sale of Europe Growth Fund's Class A shares. No initial
sales charge will be charged in connection with Class A Shares of MH/KP Global
Equity Fund distributed to Class A shareholders of the Acquired Funds as part
of the Reorganizations.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS(1)
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Europe Growth Fund
Class A shares.................. $61 $ 95 $131 $232
Class B shares:
Assuming complete redemption
at end of period............. $74 $105 $148 $238
Assuming no redemption........ $24 $ 75 $128 $238
Class D shares.................. $24 $ 75 $128 $273
MH/KP Global Equity Fund
Class A shares.................. $73 $105 $139 $235
Class B shares.................. $24 $ 73 $125 $267
Class C shares.................. $29 $ 88 $149 $316
Combined Fund
Class A shares.................. $59 $ 89 $120 $210
Class E shares:
Assuming complete redemption
at end of period............. $73 $100 $140 $219
Assuming no redemption........ $23 $ 70 $120 $219
Class C shares.................. $12 $ 37 $ 63 $140
Class B shares.................. $22 $ 69 $118 $253
</TABLE>
- --------
(1) Ten-year figures assume conversion of Class B shares of Europe Growth
Fund/Class E shares of MH/KP Global Equity Fund to Class A shares of MH/KP
Global Equity Fund at end of sixth year.
This Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the
assumption in the Example of a 5% annual return are required by regulations of
the SEC; the assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of any Class of the Funds'
shares.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND A FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses attributable to each Class of a Fund's shares will
depend upon, among other things, the level of average net assets, and the
extent to which a Fund incurs variable expenses, such as transfer agency
costs.
9
<PAGE>
REORGANIZATION OF GLOBAL GROWTH AND INCOME FUND INTO MH/KP GLOBAL EQUITY FUND
The following tables show (i) shareholder transaction expenses currently
incurred by the Class A, Class B and Class D shares of Global Growth and
Income Fund and shareholder transaction expenses that each such Class will
incur after giving effect to the Reorganization, and (ii) the current fees and
expenses incurred for the fiscal year ended October 31, 1994 by the Class A,
Class B and Class D shares of Global Growth and Income Fund, the current fees
and expenses incurred for the fiscal year ended August 31, 1994 by the Class
A, Class B and Class C shares of MH/KP Global Equity Fund and pro forma fees
for MH/KP Global Equity Fund's Class A, Class E, Class C and Class B shares
after giving effect to the Reorganization.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION
EXPENSES
GLOBAL GROWTH AND INCOME FUND COMBINED FUND
----------------------------- -------------------------------
CLASS A CLASS B(1) CLASS D(2) CLASS A CLASS E CLASS C CLASS B
------- ---------- ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (as
a percentage of public
offering price)........ 4.5% None None 4.5% None None None
Exchange fee............ $5.00 $5.00 $5.00 None None None None
Maximum contingent
deferred sales charge
(as a percentage of
redemption proceeds)... None 5% None None 5% None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
GLOBAL GROWTH AND MH/KP GLOBAL
INCOME FUND EQUITY FUND
(FISCAL YEAR ENDED (FISCAL YEAR ENDED COMBINED FUND
10/31/94) 8/31/94) (ESTIMATED)
------------------------ ------------------------ --------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B(1) D(2) A B C A E C B
------ ------ ------ ------ ------ ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... 0.90% 0.90% 0.90% 1.00% 1.00% 1.00% 0.85% 0.85% 0.85% 0.85%
12b-1 Fees.............. 0.25% 1.00% 1.00% 0.25% 1.00% 0.00% 0.25% 1.00% 0.00% 1.00%
Other Expenses.......... 0.61% 0.64% 0.65% 0.33% 0.33% 0.33% 0.33% 0.38% 0.30% 0.35%
------ ------ ------ ------ ------ ------ ---- ---- ---- ----
Total Fund Operating
Expenses(3).......... 1.76% 2.54% 2.55% 1.58% 2.33% 1.33% 1.43% 2.23% 1.15% 2.20%
====== ====== ====== ====== ====== ====== ==== ==== ==== ====
</TABLE>
- --------
(1) Class B shares of Global Growth and Income Fund will be exchanged for
Class E shares of MH/KP Global Equity Fund.
(2) Class D shares of Global Growth and Income Fund will be exchanged for
Class B shares of MH/KP Global Equity Fund.
(3) For the twelve months ended February 28, 1995 (the period used for
combined fund estimated expenses), the ratios of total operating expenses
as a percentage of average net assets for the Global Growth and Income
Fund were 1.82%, 2.57% and 2.59% for Class A, B and D shares,
respectively, and for MH/KP Global Equity Fund were 1.57%, 2.34% and 1.26%
for Class A, B and C shares, respectively.
EXAMPLE OF EFFECT ON FUND EXPENSES
The following illustrates the expenses on a $1,000 investment under the
existing and estimated fees and expenses stated above, assuming a 5% annual
return. The fees shown below reflect a maximum initial sales charge of 5.75%
of the public offering price (4.5% of the public offering price effective July
3, 1995) that is
10
<PAGE>
charged in connection with the sale of MH/KP Global Equity Fund's Class A
shares and a maximum initial sales charge of 4.5% of the public offering price
that is charged in connection with the sale of Global Growth and Income Fund's
Class A shares. No initial sales charge will be charged in connection with
Class A Shares of MH/KP Global Equity Fund distributed to Class A shareholders
of the Acquired Funds as part of the Reorganizations.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS(1)
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Global Growth and Income Fund
Class A shares.................. $62 $ 98 $136 $243
Class B shares:
Assuming complete redemption
at end of period............. $76 $109 $155 $251
Assuming no redemption........ $26 $ 79 $135 $251
Class D shares.................. $26 $ 79 $136 $289
MH/KP Global Equity Fund
Class A shares.................. $73 $105 $139 $235
Class B shares.................. $24 $ 73 $125 $267
Class C shares.................. $29 $ 88 $149 $316
Combined Fund
Class A shares.................. $59 $ 88 $120 $209
Class E shares:.................
Assuming complete redemption
at end of period............. $73 $100 $139 $218
Assuming no redemption........ $23 $ 70 $119 $218
Class C shares.................. $12 $ 37 $ 63 $140
Class B shares.................. $22 $ 69 $118 $253
</TABLE>
- --------
(1) Ten-year figures assume conversion of Class B shares of Global Growth and
Income Fund/Class E shares of MH/KP Global Equity Fund to Class A shares
of MH/KP Global Equity Fund at end of sixth year.
This Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the
assumption in the Example of a 5% annual return are required by regulations of
the SEC; the assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of any Class of the Funds'
shares.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND A FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses attributable to each Class of a Fund's shares will
depend upon, among other things, the level of average net assets, and the
extent to which a Fund incurs variable expenses, such as transfer agency
costs.
REORGANIZATIONS OF ATLAS GLOBAL GROWTH FUND AND EUROPE GROWTH FUND INTO MH/KP
GLOBAL EQUITY FUND
The following tables show (i) shareholder transaction expenses currently
incurred by the Class A, Class B, Class C and Class D shares of Atlas Global
Growth Fund, the Class A, Class B and Class D shares of Europe Growth Fund and
shareholder transaction expenses that each such Class will incur after giving
effect
11
<PAGE>
to the Reorganizations, and (ii) the current fees and expenses incurred for
the fiscal year ended August 31, 1994 by the Class A, Class B, Class C and
Class D shares of Atlas Global Growth Fund, the current fees and expenses
incurred for the fiscal year ended October 31, 1994 by the Class A, Class B
and Class D shares of Europe Growth Fund, the current fees and expenses
incurred for the fiscal year ended August 31, 1994 by the Class A, Class B and
Class C shares of MH/KP Global Equity Fund and pro forma fees for MH/KP Global
Equity Fund's Class A, Class E, Class C and Class B shares after giving effect
to the Reorganizations.
<TABLE>
<CAPTION>
ATLAS GLOBAL GROWTH FUND EUROPE GROWTH FUND COMBINED FUND
----------------------------- ---------------------- -------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B(1) C D(2) A B(1) D(2) A E C B
------ ------ ------ ------ ------ ------ ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge (as
a percentage of public
offering price)........ 4.5% None None None 4.5% None None 4.5% None None None
Exchange fee............ $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 None None None None
Maximum contingent
deferred sales charge
(as a percentage of
redemption proceeds)... None 5% None None None 5% None None 5% None None
</TABLE>
<TABLE>
<CAPTION>
ATLAS GLOBAL MH/KP GLOBAL EUROPE
GROWTH FUND EQUITY FUND GROWTH FUND
(FISCAL YEAR (FISCAL YEAR (FISCAL YEAR COMBINED FUND
ENDED 8/31/94) ENDED 8/31/94) ENDED 10/31/94) (ESTIMATED)
-------------------------- ------------------- ------------------- --------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B(1) C D(2) A B C A B(1) D(2) A E C B
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees......... 0.75% 0.75% 0.75% 0.75% 1.00% 1.00% 1.00% 0.85% 0.85% 0.85% 0.84% 0.84% 0.84% 0.84%
12b-1 Fees.............. 0.20% 1.00% 0.00% 1.00% 0.25% 1.00% 0.00% 0.25% 1.00% 1.00% 0.25% 1.00% 0.00% 1.00%
Other Expenses.......... 0.44% 0.44% 0.38% 0.45% 0.33% 0.33% 0.33% 0.55% 0.55% 0.54% 0.31% 0.34% 0.27% 0.32%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses(3)............ 1.39% 2.19% 1.13% 2.20% 1.58% 2.33% 1.33% 1.65% 2.40% 2.39% 1.40% 2.18% 1.11% 2.16%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
- --------
(1) Class B shares of Atlas Global Growth Fund and Europe Growth Fund will be
exchanged for Class E shares of MH/KP Global Equity Fund.
(2) Class D shares of Atlas Global Growth Fund and Europe Growth Fund will be
exchanged for Class B shares of MH/KP Global Equity Fund.
(3) For the twelve months ended February 28, 1995 (the period used for
combined fund estimated expenses), the ratios of total operating expenses
as a percentage of average net assets for Atlas Global Growth Fund were
1.44%, 2.25%, 1.15% and 2.25% for Class A, B, C and D shares,
respectively, for Europe Growth Fund were 1.72%, 2.45% and 2.47% for Class
A, B and D shares, respectively, and for MH/KP Global Equity Fund were
1.57%, 2.34% and 1.26% for Class A, B and C shares, respectively.
EXAMPLE OF EFFECT ON FUND EXPENSES
The following illustrates the expenses on a $1,000 investment under the
existing and estimated fees and expenses stated above, assuming a 5% annual
return. The fees shown below reflect a maximum initial sales charge of 5.75%
of the public offering price (4.5% of the public offering price effective July
3, 1995) that is charged in connection with the sale of MH/KP Global Equity
Fund's Class A shares and a maximum initial sales charge of 4.5% of the public
offering price that is charged in connection with the sale of Atlas Global
12
<PAGE>
Growth Fund's and Europe Growth Fund's Class A shares. No initial sales charge
will be charged in connection with Class A Shares of MH/KP Global Equity Fund
distributed to Class A shareholders of the Acquired Funds as part of the
Reorganizations.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS(1)
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Atlas Global Growth Fund
Class A shares.................. $59 $ 87 $118 $204
Class B shares:
Assuming complete redemption
at end of period............. $72 $ 99 $137 $214
Assuming no redemption........ $22 $ 69 $117 $214
Class C shares.................. $12 $ 36 $ 62 $137
Class D shares.................. $22 $ 69 $118 $253
Europe Growth Fund
Class A shares.................. $61 $ 95 $131 $232
Class B shares:
Assuming complete redemption
at end of period............. $74 $105 $148 $238
Assuming no redemption........ $24 $ 75 $128 $238
Class D shares.................. $24 $ 75 $128 $273
MH/KP Global Equity Fund
Class A shares.................. $73 $105 $139 $235
Class B shares.................. $24 $ 73 $125 $267
Class C shares.................. $29 $ 88 $149 $316
Combined Fund
Class A shares.................. $59 $ 87 $118 $205
Class E shares:
Assuming complete redemption
at end of period............. $72 $ 98 $137 $213
Assuming no redemption........ $22 $ 68 $117 $213
Class C shares.................. $11 $ 35 $ 61 $135
Class B shares.................. $22 $ 68 $116 $249
</TABLE>
- --------
(1) Ten-year figures assume conversion of Class B shares of Atlas Global
Growth Fund and Europe Growth Fund/Class E shares of MH/KP Global Equity
Fund to Class A shares of MH/KP Global Equity Fund at end of sixth year.
This Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the
assumption in the Example of a 5% annual return are required by regulations of
the SEC; the assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of any Class of the Funds'
shares.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND A FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses attributable to each Class of a Fund's shares will
depend upon, among other things, the level of average net assets, and the
extent to which a Fund incurs variable expenses, such as transfer agency
costs.
13
<PAGE>
REORGANIZATIONS OF EUROPE GROWTH FUND AND GLOBAL GROWTH AND INCOME FUND INTO
MH/KP GLOBAL EQUITY FUND
The following tables show (i) shareholder transaction expenses currently
incurred by the Class A, Class B and Class D shares of Europe Growth Fund and
Global Growth and Income Fund and shareholder transaction expenses that each
such Class will incur after giving effect to the Reorganizations, and (ii) the
current fees and expenses incurred for the fiscal year ended October 31, 1994
by the Class A, Class B and Class D shares of Europe Growth Fund and Global
Growth and Income Fund, the current fees and expenses incurred for the fiscal
year ended August 31, 1994 by the Class A, Class B and Class C shares of MH/KP
Global Equity Fund and pro forma fees for MH/KP Global Equity Fund's Class A,
Class E, Class C and Class B shares after giving effect to the Reorganization.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
EUROPE GLOBAL GROWTH AND COMBINED
GROWTH FUND INCOME FUND FUND
----------------------------- ----------------------------- -------------------------------
CLASS A CLASS B(1) CLASS D(2) CLASS A CLASS B(1) CLASS D(2) CLASS A CLASS E CLASS C CLASS B
------- ---------- ---------- ------- ---------- ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (as
a percentage of public
offering price)........ 4.5% None None 4.5% None None 4.5% None None None
Exchange fee............ $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 None None None None
Maximum contingent
deferred sales charge
(as a percentage of
redemption proceeds)... None 5% None None 5% None None 5% None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
GLOBAL GROWTH MH/KP GLOBAL
EUROPE GROWTH FUND AND INCOME EQUITY FUND
(FISCAL YEAR ENDED FUND (FISCAL YEAR (FISCAL YEAR COMBINED FUND
10/31/94) ENDED 10/31/94) ENDED 8/31/94) (ESTIMATED)
------------------------ ------------------- ------------------- --------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B(1) D(2) A B(1) D(2) A B C A E C B
------ ------ ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... 0.85% 0.85% 0.85% 0.90% 0.90% 0.90% 1.00% 1.00% 1.00% 0.85% 0.85% 0.85% 0.85%
12b-1 Fees.............. 0.25% 1.00% 1.00% 0.25% 1.00% 1.00% 0.25% 1.00% 0.00% 0.25% 1.00% 0.00% 1.00%
Other Expenses.......... 0.55% 0.55% 0.54% 0.61% 0.64% 0.65% 0.33% 0.33% 0.33% 0.33% 0.36% 0.29% 0.34%
------ ------ ------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses(3)............ 1.65% 2.40% 2.39% 1.76% 2.54% 2.55% 1.58% 2.33% 1.33% 1.43% 2.21% 1.14% 2.19%
====== ====== ====== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
- --------
(1) Class B shares of Europe Growth Fund and Global Growth and Income Fund
will be exchanged for Class E shares of MH/KP Global Equity Fund.
(2) Class D shares of Europe Growth Fund and Global Growth and Income Fund
will be exchanged for Class B shares of MH/KP Global Equity Fund.
(3) For the twelve months ended February 28, 1995 (the period used for
combined fund estimated expenses), the ratios of total operating expenses
as a percentage of average net assets for Europe Growth Fund were 1.72%,
2.45% and 2.47% for Class A, B and D shares, respectively, for Global
Growth and Income Fund were 1.82%, 2.57% and 2.59% for Class A, B and D
shares, respectively, and for MH/KP Global Equity Fund were 1.57%, 2.34%
and 1.26% for Class A, B and C shares, respectively.
14
<PAGE>
EXAMPLE OF EFFECT ON FUND EXPENSES
The following illustrates the expenses on a $1,000 investment under the
existing and estimated fees and expenses stated above, assuming a 5% annual
return. The fees shown below reflect a maximum initial sales charge of 5.75%
of the public offering price (4.5% of the public offering price effective July
3, 1995) that is charged in connection with the sale of MH/KP Global Equity
Fund's Class A shares and a maximum initial sales charge of 4.5% of the public
offering price that is charged in connection with the sale of Europe Growth
Fund's and Global Growth and Income Fund's Class A shares. No initial sales
charge will be charged in connection with Class A Shares of MH/KP Global
Equity Fund distributed to Class A shareholders of the Acquired Funds as part
of the Reorganizations.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS(1)
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Europe Growth Fund
Class A shares.................. $61 $ 95 $131 $232
Class B shares:
Assuming complete redemption
at end of period............. $74 $105 $148 $238
Assuming no redemption........ $24 $ 75 $128 $238
Class D shares.................. $24 $ 75 $128 $273
Global Growth and Income Fund
Class A shares.................. $62 $ 98 $136 $243
Class B shares:
Assuming complete redemption
at end of period............. $76 $109 $155 $251
Assuming no redemption........ $26 $ 79 $135 $251
Class D shares.................. $26 $ 79 $136 $289
MH/KP Global Equity Fund
Class A shares.................. $73 $105 $139 $235
Class B shares.................. $24 $ 73 $125 $267
Class C shares.................. $29 $ 88 $149 $316
Combined Fund
Class A shares.................. $59 $ 88 $120 $209
Class E shares:
Assuming complete redemption
at end of period............. $72 $ 99 $138 $217
Assuming no redemption........ $22 $ 69 $118 $217
Class C shares.................. $12 $ 36 $ 63 $139
Class B shares.................. $22 $ 69 $117 $252
</TABLE>
- --------
(1) Ten-year figures assume conversion of Class B shares of Europe Growth Fund
and Global Growth and Income Fund/Class E shares of MH/KP Global Equity
Fund to Class A shares of MH/KP Global Equity Fund at end of sixth year.
This Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the
assumption in the Example of a 5% annual return are required by regulations of
the SEC; the assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of any Class of the Funds'
shares.
15
<PAGE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND A FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses attributable to each Class of a Fund's shares will
depend upon, among other things, the level of average net assets, and the
extent to which a Fund incurs variable expenses, such as transfer agency
costs.
REORGANIZATIONS OF ATLAS GLOBAL GROWTH FUND AND GLOBAL GROWTH AND INCOME FUND
INTO MH/KP GLOBAL EQUITY FUND
The following tables show (i) shareholder transaction expenses currently
incurred by the Class A, Class B, Class C and Class D shares of Atlas Global
Growth Fund, the Class A, Class B and Class D shares of Global Growth and
Income Fund and shareholder transaction expenses that each such Class will
incur after giving effect to the Reorganizations, and (ii) the current fees
and expenses incurred for the fiscal year ended August 31, 1994 by the Class
A, Class B, Class C and Class D shares of Atlas Global Growth Fund, the
current fees and expenses incurred for the fiscal year ended October 31, 1994
by the Class A, Class B and Class D shares of Global Growth and Income Fund,
the current fees and expenses incurred for the fiscal year ended August 31,
1994 by the Class A, Class B and Class C shares of MH/KP Global Equity Fund
and pro forma fees for MH/KP Global Equity Fund's Class A, Class E, Class C
and Class B shares after giving effect to the Reorganization.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
ATLAS GLOBAL GLOBAL GROWTH COMBINED
GROWTH FUND AND INCOME FUND FUND
------------------------- ------------------- -------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B(1) C D(2) A B(1) D(2) A E C B
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (as
a percentage of public
offering price)........ 4.5% None None None 4.5% None None 4.5% None None None
Exchange fee............ $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 None None None None
Maximum contingent
deferred sales charge
(as a percentage of
redemption proceeds)... None 5% None None None 5% None None 5% None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
ATLAS GLOBAL GLOBAL GROWTH MH/KP GLOBAL
GROWTH FUND AND INCOME FUND EQUITY FUND
(FISCAL YEAR FISCAL YEAR (FISCAL YEAR COMBINED FUND
ENDED 08/31/94) ENDED 10/31/94) ENDED 8/31/94) (ESTIMATED)
-------------------------- ------------------- ------------------- --------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B(1) C D(2) A B(1) D(2) A B C A E C B
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... 0.75% 0.75% 0.75% 0.75% 0.90% 0.90% 0.90% 1.00% 1.00% 1.00% 0.84% 0.84% 0.84% 0.84%
12b-1 Fees.............. 0.20% 1.00% 0.00% 1.00% 0.25% 1.00% 1.00% 0.25% 1.00% 0.00% 0.25% 1.00% 0.00% 1.00%
Other Expenses.......... 0.44% 0.44% 0.38% 0.45% 0.61% 0.64% 0.65% 0.33% 0.33% 0.33% 0.31% 0.34% 0.27% 0.32%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses(3)............ 1.39% 2.19% 1.13% 2.20% 1.76% 2.54% 2.55% 1.58% 2.33% 1.33% 1.40% 2.18% 1.11% 2.16%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
- --------
(1) Class B shares of Atlas Global Growth Fund and Global Growth and Income
Fund will be exchanged for Class E shares of MH/KP Global Equity Fund.
(2) Class D shares of Atlas Global Growth Fund and Global Growth and Income
Fund will be exchanged for Class B shares of MH/KP Global Equity Fund.
16
<PAGE>
(3) For the twelve months ended February 28, 1995 (the period used for
combined fund estimated expenses), the ratios of total operating expenses
as a percentage of average net assets for Atlas Global Growth Fund were
1.44%, 2.25%, 1.15% and 2.25% for Class A, B, C and D shares,
respectively, for Global Growth and Income Fund were 1.82%, 2.57% and
2.59% for Class A, B and D shares, respectively, and for MH/KP Global
Equity Fund were 1.57%, 2.34% and 1.26% for Class A, B and C shares,
respectively.
EXAMPLE OF EFFECT ON FUND EXPENSES
The following illustrates the expenses on a $1,000 investment under the
existing and estimated fees and expenses stated above, assuming a 5% annual
return. The fees shown below reflect a maximum initial sales charge of 5.75%
of the public offering price (4.5% of the public offering price effective July
3, 1995) that is charged in connection with the sale of MH/KP Global Equity
Fund's Class A shares and a maximum initial sales charge of 4.5% of the public
offering price that is charged in connection with the sale of Atlas Global
Growth Fund's and Global Growth and Income Fund's Class A shares. No initial
sales charge will be charged in connection with Class A Shares of MH/KP Global
Equity Fund distributed to Class A shareholders of the Acquired Funds as part
of the Reorganizations.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS(1)
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Atlas Global Growth Fund
Class A shares.................. $59 $ 87 $118 $204
Class B shares:
Assuming complete redemption
at end of period............. $72 $ 99 $137 $214
Assuming no redemption........ $22 $ 69 $117 $214
Class C shares.................. $12 $ 36 $ 62 $137
Class D shares.................. $22 $ 69 $118 $253
Global Growth and Income Fund
Class A shares.................. $62 $ 98 $136 $243
Class B shares:
Assuming complete redemption
at end of period............. $76 $109 $155 $251
Assuming no redemption........ $26 $ 79 $135 $251
Class D shares.................. $26 $ 79 $136 $289
MH/KP Global Equity Fund
Class A shares.................. $73 $105 $139 $235
Class B shares.................. $24 $ 73 $125 $267
Class C shares.................. $29 $ 88 $149 $316
Combined Fund
Class A shares.................. $59 $ 87 $118 $205
Class E shares:
Assuming complete redemption
at end of period............. $72 $ 98 $137 $213
Assuming no redemption........ $22 $ 68 $117 $213
Class C shares.................. $11 $ 35 $ 61 $135
Class B shares.................. $22 $ 68 $116 $249
</TABLE>
- --------
(1) Ten-year figures assume conversion of Class B shares of Atlas Global
Growth Fund and Global Growth and Income Fund/Class E shares of MH/KP
Global Equity Fund to Class A shares of MH/KP Global Equity Fund at end of
sixth year.
17
<PAGE>
This Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the
assumption in the Example of a 5% annual return are required by regulations of
the SEC; the assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of any Class of the Funds'
shares.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND A FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses attributable to each Class of a Fund's shares will
depend upon, among other things, the level of average net assets, and the
extent to which a Fund incurs variable expenses, such as transfer agency
costs.
IF ALL ACQUIRED FUNDS PARTICIPATE IN THE REORGANIZATIONS
The following table shows the pro forma fees for MH/KP Global Equity Fund's
Class A, Class E, Class C and Class B shares after giving effect to all of the
Reorganizations.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
COMBINED FUND (ESTIMATED)
---------------------------------
CLASS CLASS CLASS CLASS
A E C B
------ ------ ------ ------
<S> <C> <C> <C> <C>
Management Fees............................. 0.84% 0.84% 0.84% 0.84%
12b-1 Fees.................................. 0.25% 1.00% 0.00% 1.00%
Other Expenses.............................. 0.26% 0.28% 0.21% 0.30%
------ ------ ------ ------
Total Fund Operating Expenses............. 1.35% 2.12% 1.05% 2.14%
====== ====== ====== ======
</TABLE>
18
<PAGE>
EXAMPLE OF EFFECT ON FUND EXPENSES
The following illustrates the expenses on a $1,000 investment under the
existing and estimated fees and expenses stated above, assuming a 5% annual
return. The fees shown below reflect a maximum initial sales charge of 5.75%
of the public offering price (4.5% of the public offering price effective July
3, 1995) that is charged in connection with the sale of MH/KP Global Equity
Fund's Class A shares and a maximum initial sales charge of 4.5% of the public
offering price that is charged in connection with the sale of Class A shares
of each Acquired Fund. No initial sales charge will be charged in connection
with Class A Shares of MH/KP Global Equity Fund distributed to Class A
shareholders of the Acquired Funds as part of the Reorganizations.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS(1)
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Atlas Global Growth Fund
Class A shares.................. $58 $ 86 $116 $201
Class B shares:
Assuming complete redemption
at end of period............. $72 $ 99 $137 $214
Assuming no redemption........ $22 $ 69 $117 $214
Class C shares.................. $12 $ 36 $ 62 $137
Class D shares.................. $22 $ 69 $118 $253
Europe Growth Fund
Class A shares.................. $61 $ 95 $131 $232
Class B shares:
Assuming complete redemption
at end of period............. $74 $105 $148 $238
Assuming no redemption........ $24 $ 75 $128 $238
Class D shares.................. $24 $ 75 $128 $273
Global Growth and Income Fund
Class A shares.................. $62 $ 98 $136 $243
Class B shares:
Assuming complete redemption
at end of period............. $76 $109 $155 $251
Assuming no redemption........ $26 $ 79 $135 $251
Class D shares.................. $26 $ 79 $136 $289
MH/KP Global Equity Fund
Class A shares.................. $73 $105 $139 $235
Class B shares.................. $24 $ 73 $125 $267
Class C shares.................. $29 $ 88 $149 $316
Combined Fund
Class A shares.................. $58 $ 86 $116 $200
Class E shares:
Assuming complete redemption
at end of period............. $72 $ 96 $134 $208
Assuming no redemption........ $22 $ 66 $114 $208
Class C shares.................. $11 $ 33 $ 58 $128
Class B shares.................. $22 $ 67 $115 $247
</TABLE>
- --------
(1) Ten-year figures assume conversion of Class B shares of an Acquired
Fund/Class E shares of MH/KP Global Equity Fund to Class A shares of MH/KP
Global Equity Fund at end of sixth year.
19
<PAGE>
These Examples assume that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the
assumption in the Example of a 5% annual return are required by regulations of
the SEC; the assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of any Class of the Funds'
shares.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND A FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses attributable to each Class of a Fund's shares will
depend upon, among other things, the level of average net assets, and the
extent to which a Fund incurs variable expenses, such as transfer agency
costs.
FORMS OF ORGANIZATION
MH/KP Investment Trust, Atlas Trust and Investment Series (each a "Trust"
and collectively, the "Trusts") are open-end management investment companies
organized as Massachusetts business trusts. Each Trust's Declaration of Trust
authorizes its trustees to create separate series, and within each series
separate classes, of an unlimited number of shares of beneficial interest, par
value $.001 per share. The Trusts do not issue share certificates. The Trusts
are also not required to (and do not) hold annual shareholder meetings.
MH/KP Global Equity Fund, a diversified series of MH/KP Investment Trust,
commenced operations on November 14, 1991. Atlas Global Growth Fund, a
diversified series of Atlas Trust, commenced operations on December 30, 1983.
Europe Growth Fund, a diversified series of Investment Series, commenced
operations on February 7, 1990. Global Growth and Income Fund, a non-
diversified series of Investment Series, commenced operations on June 9, 1989.
Shareholders of a Massachusetts business trust may, under certain
circumstances, be held personally liable for its obligations. However, the
Declaration of Trust of each Trust expressly disclaims, and provides
indemnification against, such liability. Accordingly, the risk of a
shareholder's incurring financial loss on account of shareholder liability is
limited to circumstances in which a Fund itself would be unable to meet its
obligations, a possibility which Mitchell Hutchins, the investment adviser of
each Fund, believes is remote and, thus, does not pose a material risk.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and policies of each Fund are set forth below.
MH/KP Global Equity Fund has an investment objective generally similar to the
investment objective of each Acquired Fund, although its investment strategy
may differ from the investment strategies of the Acquired Funds in some
material respects. There can be no assurance that any Fund will achieve its
investment objective, and each Fund's net asset value ("NAV") fluctuates based
upon changes in the value of its portfolio securities.
MH/KP GLOBAL EQUITY FUND. The investment objective of MH/KP Global Equity
Fund is long-term growth of capital. The Fund seeks to achieve its objective
by investing principally in foreign equity securities. Under normal
circumstances, it invests at least 65% of its total assets in no fewer than
three different countries and at least 80% of its total assets in countries or
governments represented in the Morgan Stanley Capital International Index. The
Fund may also invest up to 35% of its assets in debt securities rated within
the four highest rating categories established by Standard & Poor's Ratings
Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") that mature in
seven years or less.
20
<PAGE>
ATLAS GLOBAL GROWTH FUND. The investment objective of Atlas Global Growth
Fund is to provide long-term capital appreciation. The Fund seeks to achieve
its objective by investing primarily in common stocks of issuers based in the
United States, Europe, Japan and the Pacific Basin. Normally, at least 80% of
the Fund's assets are invested in common stocks and securities convertible
into common stocks. The Fund may invest up to 20% of its assets in non-
convertible debt securities of both domestic and foreign issuers, as well as
in obligations issued or guaranteed by the U.S. or foreign governments, their
agencies or instrumentalities. The Fund is not subject to limits on the
maturities of such debt securities and may invest up to 5% of its total assets
in non-investment grade debt securities.
EUROPE GROWTH FUND. The investment objective of Europe Growth Fund is long-
term capital appreciation. The Fund seeks to achieve its objective by
investing principally in equity securities of issuers based in Europe.
Normally, at least 65% of the Fund's assets are invested in equity securities
of issuers based in Europe, including Eastern Europe. Up to 35% of its assets
may be invested in equity securities of issuers located in countries outside
of Europe, including the United States. The Fund may also invest up to 20% of
its assets in investment grade non-convertible debt securities of both
domestic and foreign issuers, as well as in obligations issued or guaranteed
by the U.S. or foreign governments, their agencies or instrumentalities. The
Fund is not subject to limits on the maturities of such debt securities.
GLOBAL GROWTH AND INCOME FUND. The investment objective of Global Growth and
Income Fund is high total return. The Fund invests in equity, debt and money
market securities of issuers based primarily in the United States, Europe,
Japan and the Pacific Basin. There is no limit on the portion of the Fund's
assets that may be invested in securities of issuers based in any one country,
and there are no prescribed limits on the allocation of the Fund's investments
among equity, debt and money market securities. Under normal circumstances,
the Fund invests in securities of issuers based in at least three countries,
including the United States. The Fund may also invest in precious metal-
related securities, real-estate related securities and "zero-coupon" U.S.
Treasury securities and up to 10% of its assets in mortgage-backed securities
of private issuers. The Fund has no limit on the amount of its assets that it
may invest in debt securities, and it may invest up to 35% of its total assets
in non-investment grade debt securities. Unlike the other Funds, which are
diversified, Global Growth and Income Fund is a non-diversified fund.
OTHER POLICIES OF THE FUNDS. Each Fund is authorized to use certain options,
futures contracts and forward currency contracts. MH/KP Global Equity Fund,
Atlas Global Growth Fund and Europe Growth Fund employ these instruments for
hedging purposes only. Global Growth and Income Fund employs them for hedging
purposes and may use options and futures contracts to attempt to enhance
income.
OPERATIONS OF MH/KP GLOBAL EQUITY FUND FOLLOWING THE REORGANIZATIONS
There are differences in the investment objectives and policies of the
Funds. It is not expected, however, that MH/KP Global Equity Fund will revise
its investment objective or policies following the Reorganizations to reflect
those of any of the Acquired Funds. Since the investment objective and
policies of MH/KP Global Equity Fund differ in some material respects from
those of the Acquired Funds, certain of the securities currently held by the
Acquired Funds may need to be sold rather than transferred. If the
Reorganizations are implemented, the Acquired Funds will sell any assets that
are inconsistent with the investment objective and policies of MH/KP Global
Equity Fund prior to the effective time of the Reorganizations, and the
proceeds thereof will be held in temporary investments or reinvested in assets
that qualify to be held by MH/KP Global
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Equity Fund. The necessity for the Acquired Funds to dispose of assets prior
to the effective time of the Reorganizations may result in selling securities
at a disadvantageous time and could result in the Acquired Funds' realizing
losses that would not otherwise have been realized.
Following the Reorganizations, MH/KP Global Equity Fund will change its name
to "PaineWebber Global Equity Fund." The trustees and officers of MH/KP
Investment Trust, and MH/KP Global Equity Fund's investment adviser, sub-
adviser, distributor and other outside agents, will continue to serve the Fund
in their current capacities after the Reorganizations. Ralph R. Layman, who is
currently the portfolio manager for the Funds, except with respect to the debt
and money market investments of Global Growth and Income Fund, and who has
been primarily responsible for the day-to-day portfolio management of MH/KP
Global Equity Fund since July 1991, will continue as the portfolio manager of
PaineWebber Global Equity Fund following the Reorganizations. Mr. Layman is an
Executive Vice President of GEIM and has been employed by GEIM as the Chief
Investment Officer of MH/KP Global Equity Fund since July 1991. Prior to July
1991, Mr. Layman served as Executive Vice President, partner and portfolio
manager of Northern Capital Management Co.
PURCHASES AND REDEMPTIONS
Shares of each Fund are available through PaineWebber and its correspondent
firms or, for investors who are not clients of PaineWebber, through each
Fund's transfer agent, PFPC Inc. ("Transfer Agent"). The minimum initial
investment in MH/KP Global Equity Fund is $1,000; each additional investment
must be $50 or more, except that for individual retirement accounts ("IRAs"),
other tax-qualified retirement plans and accounts established pursuant to the
Uniform Gift/Transfer to Minors Act, the minimum initial investment is $250
and the minimum subsequent investment is $1.00. The minimum initial investment
for each Acquired Fund is also $1,000; each subsequent investment must be $100
or more. The minimums may be waived or reduced for investments by employees of
PaineWebber or its affiliates, certain pension plans and retirement accounts
and participants in a Fund's automatic investment plan.
The Class A shares of each Fund are all sold subject to an initial sales
charge that varies with the size of the purchase. The maximum initial sales
charge for Class A shares of MH/KP Global Equity Fund is currently 5.75% of
the public offering price. Effective July 3, 1995, the maximum initial sales
charge will be 4.5% of the public offering price. The maximum initial sales
charge for each Acquired Fund is 4.5% of the public offering price. The Class
A shares of MH/KP Global Equity Fund that will be distributed to Class A
shareholders of the Acquired Funds in connection with the Reorganizations will
not be subject to an initial sales charge.
The Class B shares of MH/KP Global Equity Fund are sold without an initial
sales charge or contingent deferred sales charge ("CDSC"). The Class B shares
of each Acquired Fund are sold subject to a maximum CDSC of 5% of redemption
proceeds, which declines to zero after six years, when such Class B shares
automatically convert into Class A shares of those respective Funds. Class E
shares of MH/KP Global Equity Fund, to be issued as part of the
Reorganizations, will be subject to a CDSC identical to that imposed on Class
B shares of the Acquired Funds and will convert into Class A shares of that
Fund after six years. Accordingly, following the Reorganizations, the former
Class B shareholders of the Acquired Funds would remain subject to the maximum
5% CDSC and six-year schedule of reducing CDSCs in effect prior to the
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Reorganizations with respect to the Class E shares distributed to them in the
Reorganizations. All Class B shareholders of the Acquired Funds will be
credited for the period of time from the original date of purchase of their
shares for purposes of determining the amount of their CDSC, if any, payable
with respect to redemptions of their new Class E shares. As is currently the
case for the Acquired Funds, no CDSC will be applied to redemptions that
represent reinvested dividends or capital gain distributions, nor will Class A
shares so acquired be subject to any initial sales charge.
The Class C shares of MH/KP Global Equity Fund and Atlas Global Growth Fund
are sold without initial sales charges or CDSCs. Class C shares of MH/KP
Global Equity Fund are available exclusively to former employees of Kidder,
Peabody & Co. Inc. ("Kidder, Peabody") and their associated accounts,
directors or trustees of any PaineWebber/Kidder, Peabody or MH/KP fund,
employee benefit plans of Kidder, Peabody and participants in INSIGHT, a
portfolio asset allocation program. Class C shares of Atlas Global Growth Fund
are currently offered for sale only to the trustee of the PaineWebber Savings
Investment Plan on behalf of that Plan.
The Class D shares of each Acquired Fund, which will be exchanged for Class
B shares of MH/KP Global Equity Fund in the Reorganizations, are sold without
initial sales charges or CDSCs.
Clients of PaineWebber or its correspondent firms may redeem shares held in
non-certificate form through PaineWebber or its correspondent firms; all other
shareholders must redeem through the Transfer Agent. Shares of each Class of
each Fund may be redeemed at their particular net asset value (subject to any
applicable CDSC), and redemption proceeds for shares redeemed through
PaineWebber and its correspondent firms will be paid within three days of the
receipt of a redemption request. Redemption proceeds for shares redeemed
through the Transfer Agent will be paid within seven days.
If a Reorganization is approved with respect to an Acquired Fund, purchases
of all Classes of its shares will cease on July 31, 1995, so that its shares
will no longer be available for purchase or exchange starting on that date. If
the Meeting with respect to an Acquired Fund is adjourned and the
Reorganization involving it is approved on a later date, its shares will no
longer be available for purchase or exchange on the business day following the
date on which the Reorganization is approved and all contingencies have been
met. Redemptions of the Acquired Fund's shares and exchanges of such shares
for shares of any other PaineWebber or MH/KP fund may be effected through the
Closing Date.
EXCHANGES
Shares of each Fund may be exchanged for shares of the Corresponding Class
of other PaineWebber and MH/KP funds, and shares of each Fund may be acquired
through an exchange of shares of the Corresponding Class of other PaineWebber
and MH/KP funds, as provided in the prospectus of each Fund. No initial sales
charge is imposed on the shares being acquired, and no CDSC is imposed on the
shares being disposed of, through an exchange. However, a CDSC may apply to
redemptions of Class B or Class E shares acquired through an exchange.
Exchanges may be subject to minimum investment and other requirements of the
fund into which exchanges are made. As noted above, prior to June 19, 1995,
shareholders of each Acquired Fund paid a $5.00 fee for each exchange of
shares for shares of a corresponding class of other PaineWebber or MH/KP
mutual funds. This fee has been waived.
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DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends from each Fund's net investment income, if any, are distributed
annually. Any net capital gain (the excess of net long-term capital gain over
net short-term capital loss) and net short-term capital gain realized from the
sale of portfolio securities, and any net realized gains from foreign currency
transactions, are also distributed annually. Shareholders of each Fund may
reinvest dividends and other distributions in additional shares on the payment
date at those shares' net asset value that day or receive them in cash. Each
Fund may make additional distributions if necessary to avoid a 4% excise tax
on certain undistributed income and capital gain. On or before the Closing
Date, each Acquired Fund will declare as a distribution substantially all of
its net investment income, net capital gain, net short-term capital gain and
net foreign currency gains in order to maintain its tax status as a regulated
investment company.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS
Atlas Trust has received an opinion of Kirkpatrick & Lockhart LLP, its
counsel, with respect to the Reorganization involving Atlas Global Growth
Fund, Investment Series has received opinions of Kirkpatrick & Lockhart LLP,
its counsel, with respect to the Reorganizations involving Europe Growth Fund
and Global Growth and Income Fund, and MH/KP Investment Trust has received an
opinion of Willkie Farr & Gallagher, its counsel, with respect to each
Reorganization, each such opinion to the effect that the Reorganization will
constitute a tax-free reorganization within the meaning of section
368(a)(1)(C) (section 368(a)(1)(D), in the case of the Reorganization
involving Atlas Global Growth Fund) of the Internal Revenue Code of 1986, as
amended ("Code"). Accordingly, no gain or loss will be recognized to any of
the Funds or their shareholders as a result of the Reorganizations. See "The
Proposed Transactions--Federal Income Tax Considerations," page 31. In
addition, each Trust has received an opinion of Willkie Farr & Gallagher to
the effect that the creation of Class E shares of MH/KP Global Equity Fund,
which are to be issued to Class B shareholders of each Acquired Fund, will not
affect the classification of MH/KP Global Equity Fund as a regulated
investment company and that distributions thereon will not be considered
"preferential dividends" for federal income tax purposes.
COMPARISON OF PRINCIPAL RISK FACTORS
Because MH/KP Global Equity Fund's investment objective and policies are
generally similar to those of the Acquired Funds, the investment risks are
generally similar. Such risks are generally those typically associated with
investing in a global equity fund. See the Prospectus of MH/KP Global Equity
Fund, which accompanies this Proxy Statement, for a more detailed discussion
of such risks.
FOREIGN SECURITIES. Each Fund may invest in foreign securities. Investing in
foreign securities involves special risks, which include possible adverse
political and economic developments abroad, differing regulatory systems and
differing characteristics of foreign economies and markets, as well as the
fact that there is often less information publicly available about foreign
issuers. Many of the securities held by each Fund may be denominated in
foreign currencies, and the value of each Fund's investment can be adversely
affected by fluctuations in foreign currency values. Some foreign currencies
can be volatile and may be subject to governmental controls or intervention.
The foreign securities in which the Funds may invest include securities of
issuers located in emerging market countries. The risks of investing in
foreign securities may be greater with respect to securities of issuers in, or
denominated in the currencies of, emerging market countries. The securities
markets of emerging market countries are substantially smaller, less
developed, less liquid and more volatile than the securities
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markets of the United States and other developed countries. Disclosure and
regulatory standards in many respects are less stringent in emerging market
countries than in the United States and other major markets. Investing in
local markets, particularly in emerging market countries, may require the
Funds to adopt special procedures, seek local government approvals or take
other actions, each of which may involve additional costs to the Funds.
Certain emerging market countries may also restrict investment opportunities
in issuers in industries deemed important to national interests.
Because foreign securities ordinarily are denominated in currencies other
than the U.S. dollar (as are some securities of U.S. issuers), changes in
foreign currency exchange rates may affect each Fund's net asset value, the
value of dividends and interest earned, gains and losses realized on the sale
of securities and net investment income and capital gains, if any, to be
distributed to shareholders by a Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of Fund assets denominated in that
currency will increase; correspondingly, if the value of a foreign currency
declines against the U.S. dollar, the value of Fund assets denominated in that
currency will decrease. The exchange rates between the U.S. dollar and other
currencies are determined by supply and demand in the currency exchange
markets, international balances of payments, speculation and other economic
and political conditions. In addition, some foreign currency values may be
volatile and there is the possibility of governmental controls on currency
exchange or governmental intervention in currency markets. Any of these
factors could adversely affect a Fund.
DEBT SECURITIES. Each Fund is permitted to purchase investment grade debt
securities. Securities rated BBB by S&P or Baa by Moody's are investment
grade, but Moody's considers securities rated Baa to have speculative
characteristics. Changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity for such securities to make
principal and interest payments than is the case for higher-rated securities.
Global Growth and Income Fund may invest up to 35% of its net assets in debt
securities rated below investment grade but not lower than B- by S&P, B by
Moody's or comparably rated by another nationally recognized statistical
rating organization ("NRSRO"), and Atlas Growth Fund may invest up to 5% of
its total assets in debt securities rated as low as B+ by S&P, B1 by Moody's
or comparably rated by another NRSRO. These securities are deemed by those
NRSROs to be predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal and may involve major risk exposure to
adverse conditions. Such securities are commonly referred to as "junk bonds."
Each Fund is also permitted to purchase debt securities that are not rated by
an NRSRO but which GEIM determines to be of comparable quality to rated
securities in which the Fund may invest. Such securities are included in the
computation of any percentage limitations applicable to the comparably rated
securities.
The market value of debt securities generally varies inversely with interest
rate changes. Ratings of debt securities represent the NRSROs' opinions
regarding their quality, are not a guarantee of quality and may be lowered
after a Fund has acquired the securities. GEIM would consider such an event in
determining whether the Fund should continue to hold the securities, but is
not required to dispose of them. However, in the event that, due to a
downgrade of one or more debt securities, an amount in excess of 35% of Global
Growth and Income Fund's net assets is held in securities rated below
investment grade and comparable unrated securities, GEIM will engage in an
orderly disposition of such securities to the extent necessary to ensure that
the Fund's holdings of such securities do not exceed 35% of the Fund's net
assets.
Lower-rated debt securities generally offer a higher current yield than that
available for higher grade issues, but they involve higher risks, in that they
are especially subject to adverse changes in general economic conditions and
in the industries in which the issuers are engaged, to changes in the
financial condition of the
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issuers and to price fluctuations in response to changes in interest rates.
During periods of economic downturn or rising interest rates, highly leveraged
issuers may experience financial stress, which could adversely affect their
ability to make payments of interest and principal and increase the
possibility of default. In addition, such issuers may not have more
traditional methods of financing available to them and may be unable to repay
debt at maturity by refinancing. The risk of loss due to default by such
issuers is significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior indebtedness.
The market for lower-rated debt securities has expanded rapidly in recent
years, and its growth paralleled a long economic expansion. In the past, the
prices of many lower-rated debt securities declined substantially, reflecting
an expectation that many issuers of such securities might experience financial
difficulties. As a result, the yields on such securities rose dramatically.
However, such higher yields did not reflect the value of the income stream
that holders of such securities expected, but rather the risk that holders of
such securities could lose a substantial portion of their value as a result of
the issuers' financial restructuring or default. There can be no assurance
that such declines will not recur. The market for lower-rated debt securities
generally is thinner and less active than that for higher-quality securities,
which may limit a Fund's ability to sell such securities at fair value in
response to changes in the economy or financial markets. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower-rated securities, especially in a
thinly traded market.
ADDITIONAL RISKS ASSOCIATED WITH GLOBAL GROWTH AND INCOME FUND. Global
Growth and Income Fund may invest in mortgage-related securities of private
U.S. and foreign issuers, precious metal-related securities and real-estate
related securities. Such securities subject the Fund to certain additional
risks.
While MH/KP Global Equity Fund, Atlas Global Growth Fund and Europe Growth
Fund are "diversified" as that term is defined in the 1940 Act, Global Growth
and Income Fund is "non-diversified" (as defined in the 1940 Act). To the
extent that Global Growth and Income Fund's portfolio at times may include the
securities of a smaller number of issuers than if it were "diversified," the
Fund will at such times be subject to greater risk with respect to its
portfolio securities than an investment company that invests in a broader
range of securities, in that changes in the financial condition or market
assessment of a single issuer may cause greater fluctuation in the Fund's
total return and the price of Fund shares.
HEDGING STRATEGIES. Each Fund may use options, futures contracts and forward
currency contracts. There can be no assurance, however, that any strategy
utilizing these instruments will succeed. If GEIM incorrectly forecasts
interest rates, market values or other economic factors utilizing a strategy
for a Fund, the Fund might have been in a better position had it not hedged at
all. The use of these instruments involves certain special risks, including
(1) the fact that skills needed to use hedging instruments are different from
those needed to select the Funds' securities, (2) possible imperfect
correlation, or even no correlation, between price movements of hedging
instruments and price movements of the investments being hedged, (3) the fact
that, while hedging strategies can reduce the risk of loss, they can also
reduce the opportunity for gain, or even result in losses, by offsetting
favorable price movements in hedged investments, and (4) the possible
inability of a Fund to purchase or sell a portfolio security at a time that
otherwise would be favorable for it to do so, or a possible need for a Fund to
sell a portfolio security at a disadvantageous time, due to the need for the
Fund to maintain "cover" or to segregate securities in connection with hedging
transactions and the possible inability of a Fund to close out or to liquidate
its hedged position.
LENDING PORTFOLIO SECURITIES. Each Fund may lend securities. If a Fund lends
securities, it is subject to risks, which, like those associated with other
extensions of credit, include possible loss of rights in the collateral should
the borrower fail financially.
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REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements. In
entering into such an agreement, a Fund bears a risk of loss in the event that
the other party to the transaction defaults on its obligations and the Fund is
delayed or prevented from exercising its rights to dispose of the underlying
securities, including a risk of a possible decline in the value of the
underlying securities during the period in which the Fund seeks to assert its
rights to them, the risk of incurring expenses associated with asserting those
rights and the risk of losing all or a part of the income from the agreement.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. MH/KP Global Equity Fund,
Europe Growth Fund and Global Growth and Income Fund may purchase securities
on a when-issued or delayed-delivery basis. Securities purchased on this basis
may expose a Fund to risk because the securities may experience fluctuations
in value prior to their actual delivery. A Fund will not accrue income with
respect to a when-issued or delayed-delivery security prior to its stated
delivery date. Purchasing securities on a when-issued or delayed-delivery
basis can involve the additional risk that the yield available in the market
when the delivery takes place may be higher than that obtained in the
transaction itself.
THE PROPOSED TRANSACTIONS
REORGANIZATION PLANS
The terms and conditions under which the proposed transactions may be
consummated are set forth in the Reorganization Plans. Significant provisions
of the Reorganization Plans are summarized below; however, this summary is
qualified in its entirety by reference to the form of the Reorganization Plans
which is attached as Appendix A to this Proxy Statement.
Each Reorganization Plan contemplates (a) MH/KP Global Equity Fund's
acquiring on the Closing Date the assets of an Acquired Fund in exchange
solely for its shares and its assumption of the Acquired Fund's liabilities
and (b) the constructive distribution of such shares to the shareholders of
the Acquired Fund.
The assets of each Acquired Fund to be acquired by MH/KP Global Equity Fund
include all cash, cash equivalents, securities, receivables and other property
owned by the Acquired Fund. MH/KP Global Equity Fund will assume from each
Acquired Fund all debts, liabilities, obligations and duties of such Fund of
whatever kind or nature; provided, however, that each Acquired Fund will use
its best efforts, to the extent practicable, to discharge all of its known
debts, liabilities, obligations and duties prior to the Closing Date. MH/KP
Global Equity Fund also will deliver its shares to each Acquired Fund, which
then will be constructively distributed to the Acquired Fund's shareholders.
The value of an Acquired Fund's assets to be acquired, and the amount of its
liabilities to be assumed, by MH/KP Global Equity Fund and the net asset value
of a Class A, a Class B, a Class C and a Class E share of MH/KP Global Equity
Fund will be determined as of the close of regular trading on the New York
Stock Exchange, Inc. ("NYSE") on the Closing Date. Where market quotations are
readily available, portfolio securities will be valued based upon such market
quotations, provided such quotations adequately reflect, in Mitchell Hutchins'
or GEIM's judgment, the fair value of the security. Where such market
quotations are not readily available, such securities will be valued based
upon appraisals received from a pricing service using a computerized matrix
system or based upon appraisals derived from information concerning the
security or similar securities received from recognized dealers in those
securities. The amortized cost method of valuation generally will be used to
value debt instruments with 60 days or less remaining to maturity, unless
MH/KP
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Investment Trust's board of trustees (with respect to MH/KP Global Equity
Fund), Atlas Trust's board of trustees (with respect to Atlas Global Growth
Fund), or Investment Series' board of trustees (with respect to Europe Growth
Fund and Global Growth and Income Fund) determines that this does not
represent fair value. All other securities and assets will be valued at fair
value as determined in good faith by or under the direction of each Trust's
board of trustees, as applicable. All investments quoted in foreign currencies
will be valued in U.S. dollars on the basis of the foreign currency exchange
rates prevailing at the time such valuation is determined by each Fund's
custodian.
On, or as soon as practicable after, the Closing Date, each Acquired Fund
will distribute to its shareholders of record the shares of MH/KP Global
Equity Fund it received, by Class, so that each Acquired Fund shareholder will
receive a number of full and fractional shares of the Corresponding Class or
Classes of MH/KP Global Equity Fund equal in value to the shareholder's
holdings in the Acquired Fund; each Acquired Fund will be terminated as soon
as practicable thereafter. Such distribution will be accomplished by opening
accounts on the books of MH/KP Global Equity Fund in the names of Acquired
Fund shareholders and by transferring thereto the shares of each Class
previously credited to the account of each Acquired Fund on those books.
Fractional shares in each Class of MH/KP Global Equity Fund will be rounded to
the third decimal place.
Accordingly, immediately after each Reorganization, each former shareholder
of the participating Acquired Fund will own shares of the Class of MH/KP
Global Equity Fund that will equal the value of that shareholder's shares of
the Corresponding Class of the Acquired Fund immediately prior to the
Reorganization. Moreover, because shares of each Class of MH/KP Global Equity
Fund will be issued at net asset value in exchange for the net assets
applicable to the Corresponding Class of each Acquired Fund, the aggregate
value of shares of each Class of MH/KP Global Equity Fund so issued will equal
the aggregate value of shares of the Corresponding Class of the Acquired Fund.
The net asset value per share of MH/KP Global Equity Fund will be unchanged by
the transactions. Thus, the Reorganizations will not result in a dilution of
any shareholder interest.
Any transfer taxes payable upon issuance of shares of MH/KP Global Equity
Fund in a name other than that of the registered holder of the shares on the
books of an Acquired Fund shall be paid by the person to whom such shares are
to be issued as a condition of such transfer. Any reporting responsibility of
an Acquired Fund will continue to be its responsibility up to and including
the Closing Date and such later date on which such Fund is terminated.
The cost of the Reorganizations, including professional fees and the cost of
soliciting proxies for the Meeting, consisting principally of printing and
mailing expenses, together with the cost of any supplementary solicitation,
will be borne by the Funds in proportion to their respective net assets.
Mitchell Hutchins recommended this method of expense allocation to the
trustees of the Trusts. Mitchell Hutchins based its recommendations on its
belief that the method is fair because, for the reasons discussed under
"Reasons for the Reorganizations," the Reorganizations have the potential to
benefit all Funds. The trustees of each Trust considered the expense
allocation method in approving the Reorganizations and in finding that the
Reorganizations are in the best interests of each Fund.
The consummation of each Reorganization is subject to a number of conditions
set forth in the Reorganization Plans, some of which may be waived by a Trust.
In addition, each Reorganization will not be consummated unless the board of
trustees of MH/KP Investment Trust, on behalf of MH/KP Global Equity
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Fund, and that Fund's shareholders approve of the decrease in the rate of the
investment advisory fee and the sub-advisory fee paid to GEIM by Mitchell
Hutchins. Each Reorganization Plan may be amended in any mutually agreeable
manner, except that no amendment may be made subsequent to the Meeting that
has a material adverse effect on the shareholders' interests.
REASONS FOR THE REORGANIZATIONS
The board of trustees of each of Atlas Trust and Investment Series,
including a majority of its Independent Trustees, has determined, in each
instance, that the Reorganization involving its participating Acquired Fund is
in the best interests of that Fund, that the terms of the Reorganization are
fair and reasonable and that the interests of that Fund's shareholders will
not be diluted as a result of the Reorganization. The board of trustees of
MH/KP Investment Trust, including a majority of its Independent Trustees, has
determined that each Reorganization is in the best interests of MH/KP Global
Equity Fund, that the terms of the Reorganization are fair and reasonable and
that the interests of MH/KP Global Equity Fund's shareholders will not be
diluted as a result of the Reorganization.
In considering the Reorganizations, the boards of trustees made an extensive
inquiry into a number of factors, including the following:
(1) the compatibility of the investment objectives, policies and
restrictions of the Funds;
(2) the investment performance of the Funds;
(3) the effect of the Reorganizations on the expense ratio of MH/KP
Global Equity Fund relative to each Fund's current expense ratio;
(4) the costs to be incurred by each Fund as a result of the
Reorganizations;
(5) the tax consequences of the Reorganizations;
(6) possible alternatives to the Reorganizations, including continuing to
operate on a stand-alone basis or liquidation; and
(7) the potential benefits of the Reorganizations to other persons,
especially Mitchell Hutchins and PaineWebber.
The Reorganizations were recommended by Mitchell Hutchins to the board of
trustees of MH/KP Investment Trust at a meeting of that board held on April
26, 1995 and to the boards of trustees of Atlas Trust and Investment Series at
a combined meeting of those boards held on April 28, 1995. The trustees were
advised by Mitchell Hutchins that the Funds have generally similar investment
objectives and policies, with the material differences noted. In approving the
proposed transactions, the trustees took account of Mitchell Hutchins' opinion
that MH/KP Global Equity Fund's objective of long-term growth of capital by
investing principally in foreign equity securities remains an appropriate one
to offer to investors as part of an overall investment strategy. Mitchell
Hutchins further advised the trustees that, while past performance is no
guarantee of future results, MH/KP Global Equity Fund had experienced better
investment performance than each Acquired Fund during the recent time period.
Mitchell Hutchins further noted that the investment policies of MH/KP Global
Equity Fund differ from those of Europe Growth Fund in that MH/KP Equity Fund
does not invest primarily in Europe and further that, unlike Global Growth and
Income Fund, MH/KP Global Equity Fund may not invest without limitation in
debt and money market securities.
In considering the proposed transactions, the trustees were advised by
Mitchell Hutchins that combining the Funds would result in lower expenses
borne by the shareholders of each Acquired Fund as a percentage
29
<PAGE>
of net assets (with the exception of shareholders of Atlas Global Growth Fund,
who, if only Atlas Global Growth participates in the Reorganizations, would be
subject to comparable total operating expenses). The trustees were further
advised that the expenses of MH/KP Global Equity Fund would be likely to
decrease as a result of the Reorganizations because of the increased size of
the combined Fund. In recommending the Reorganizations, Mitchell Hutchins
advised the boards of trustees that the proposed investment advisory fee
following the Reorganizations, subject to approval by the board of trustees of
MH/KP Investment Trust, on behalf of MH/KP Global Equity Fund, and by the
Fund's shareholders, would be lower than that currently in effect for MH/KP
Global Equity Fund and Global Growth and Income Fund, the same as that
currently in effect for Europe Growth Fund and higher than that currently in
effect for Atlas Global Growth Fund. In considering the fee increase for Atlas
Global Growth Fund, Mitchell Hutchins advised the board of Atlas Trust that
since the adoption of Atlas Global Growth Fund's current fee structure nearly
twelve years ago, the cost and complexity of managing global funds have
increased in the face of a rapidly changing world economy. Because of
international currency changes and the volatility of global markets,
integrating tax, pricing and accounting functions of global funds has become
more complex and time-consuming. These changes necessitate increases in
staffing, the addition of more sophisticated equipment and technology and
higher travel costs.
In addition, the boards of trustees were advised that Atlas Global Growth
Fund Class A shareholders will pay a slightly higher 12b-1 service fee, equal
to 0.25% of MH/KP Global Equity Fund's average daily net assets, following the
Reorganizations. Those shareholders currently pay a 12b-1 service fee of 0.20%
of Atlas Global Growth Fund's average daily net assets attributable to Class
A, which reflects a blended annual rate of 0.25% and 0.15% of those assets
with respect to shares sold on or after December 2, 1988 and shares sold prior
to that date, respectively. In considering the slightly higher 12b-1 service
fee assessed on MH/KP Global Equity Fund's Class A shares, Mitchell Hutchins
noted that the 12b-1 service fee currently assessed on Atlas Global Growth
Fund's Class A shares is expected to increase over time, absent any
Reorganization, and further noted the overall lower or comparable expense
ratio expected to result from the Reorganizations.
THE BOARDS OF TRUSTEES RECOMMEND THAT THE
SHAREHOLDERS OF THE ACQUIRED FUNDS VOTE "FOR"
THE REORGANIZATIONS
DESCRIPTION OF SECURITIES TO BE ISSUED
MH/KP Investment Trust is registered with the SEC as an open-end management
investment company. Its trustees are authorized to issue an unlimited number
of shares of beneficial interest of separate series (par value $.001 per
share). The trustees have established MH/KP Global Equity Fund as one of MH/KP
Investment Trust's five series and have authorized the public offering of four
Classes of shares of MH/KP Global Equity Fund. Class E shares were created for
the purpose of facilitating the Reorganizations. A separate filing will be
made prior to the Closing Date for the purpose of registering additional Class
E shares with the SEC. Each share in a Class represents an equal proportionate
interest in MH/KP Global Equity Fund with each other share in that Class.
Shares of MH/KP Global Equity Growth Fund entitle their holders to one vote
per full share and fractional votes for fractional shares held, except that
each Class of shares has exclusive voting rights on matters pertaining to its
plan of distribution.
On the Closing Date, MH/KP Global Equity Fund will have outstanding four
Classes of shares, designated Class A, Class B, Class C and Class E shares.
Each Class represents interests in the same assets of
30
<PAGE>
the Fund. The Classes differ as follows: (1) each Class has exclusive voting
rights on matters pertaining to its plan of distribution; (2) Class A shares
are subject to an initial sales charge; (3) Class B shares bear ongoing
distribution expenses; (4) Class C shares have no initial sales charge, bear
no distribution fees, but may be purchased only by certain categories of
purchasers; (5) Class E shares bear ongoing distribution fees, are subject to
a CDSC upon certain redemptions and automatically convert to Class A shares
approximately six years after issuance; and (6) each Class may bear differing
amounts of certain Class-specific expenses. Each share of each Class of MH/KP
Global Equity Fund is entitled to participate equally in dividends and other
distributions and the proceeds of any liquidation, except that because of the
higher expenses resulting from the distribution fees borne by the Class B and
Class E shares, dividends on those shares are expected to be lower than those
on Class A and Class C shares of the Fund. Dividends on each Class also might
be affected differently by the allocation of other Class-specific expenses.
Class C shares, which may be offered only to a limited class of investors, are
subject to neither an initial or contingent deferred sales charge nor ongoing
service or distribution fees. However, Class C shareholders who are
participants in the INSIGHT program pay an advisory fee to PaineWebber at the
maximum annual rate of 1.50% of average daily value of assets held through the
program.
MH/KP Investment Trust does not hold annual meetings of shareholders. There
will normally be no meetings of shareholders for the purpose of electing
trustees unless fewer than a majority of the trustees holding office have been
elected by shareholders, at which time the trustees then in office will call a
shareholders' meeting for the election of trustees. Under the 1940 Act,
shareholders of record of at least two-thirds of the outstanding shares of an
investment company may remove a trustee by votes cast in person or by proxy at
a meeting called for that purpose. The trustees are required to call a meeting
of shareholders for the purpose of voting upon the question of removal of any
trustee when requested in writing to do so by the shareholders of record
holding at least 10% of the Trust's outstanding shares.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of an Acquired Fund's assets for shares of MH/KP Global Equity
Fund and MH/KP Global Equity Fund's assumption of that Acquired Fund's
liabilities is intended to qualify for federal income tax purposes as a tax-
free reorganization under section 368(a)(1)(C) (section 368(a)(1)(D), in the
case of the Reorganization involving Atlas Global Growth Fund) of the Code.
With respect to each Reorganization, Atlas Trust or Investment Series, as
applicable, has received an opinion of Kirkpatrick & Lockhart LLP, its
counsel, and MH/KP Investment Trust has received an opinion of Willkie Farr &
Gallagher, its counsel, each substantially to the effect that--
(i) MH/KP Global Equity Fund's acquisition of the Acquired Fund's assets
in exchange solely for MH/KP Global Equity Fund shares and MH/KP Global
Equity Fund's assumption of the Acquired Fund's liabilities, followed by
the Acquired Fund's distribution of those shares to its shareholders
constructively in exchange for their Acquired Fund shares, will constitute
a "reorganization" within the meaning of section 368(a)(1)(C) (or, if
applicable, section 368(a)(1)(D)) of the Code, and each Fund will be "a
party to a reorganization" within the meaning of section 368(b) of the
Code;
(ii) No gain or loss will be recognized to the Acquired Fund on the
transfer to MH/KP Global Equity Fund of its assets in exchange solely for
MH/KP Global Equity Fund shares and MH/KP Global Equity Fund's assumption
of the Acquired Fund's liabilities or on the subsequent distribution of
those shares to the Acquired Fund's shareholders in constructive exchange
for their Acquired Fund shares;
31
<PAGE>
(iii) No gain or loss will be recognized to MH/KP Global Equity Fund on
its receipt of the transferred assets in exchange solely for MH/KP Global
Equity Fund shares and its assumption of the Acquired Fund's liabilities;
(iv) MH/KP Global Equity Fund's basis for the transferred assets will be
the same as the basis thereof in the Acquired Fund's hands immediately
prior to the Reorganization, and MH/KP Global Equity Fund's holding period
for those assets will include the Acquired Fund's holding period therefor;
(v) An Acquired Fund shareholder will recognize no gain or loss on the
constructive exchange of all its Acquired Fund shares solely for MH/KP
Global Equity Fund shares pursuant to the Reorganization; and
(vi) An Acquired Fund shareholder's basis for the MH/KP Global Equity
Fund shares to be received by it in the Reorganization will be the same as
the basis for its Acquired Fund shares to be constructively surrendered in
exchange for those MH/KP Global Equity Fund shares, and its holding period
for those MH/KP Global Equity Fund shares will include its holding period
for those Acquired Fund shares, provided they are held as capital assets by
the shareholder on the Closing Date.
Each such opinion may state that no opinion is expressed as to the effect of
the Reorganization on the Funds or any shareholder (regarding the recognition
of gain or loss and/or the determination of the basis or holding period) with
respect to any asset (including certain options, futures and forward
contracts) as to which any unrealized gain or loss is required to be
recognized for federal income tax purposes at the end of a taxable year (or on
the termination or transfer thereof) under a mark-to-market system of
accounting.
Utilization by MH/KP Global Equity Fund after the Reorganizations of pre-
Reorganization capital losses realized by an Acquired Fund could be subject to
limitation in future years under the Code.
Shareholders of an Acquired Fund should consult their tax advisers regarding
the effect, if any, of the Reorganizations in light of their individual
circumstances. Because the foregoing discussion only relates to the federal
income tax consequences of the Reorganizations, those shareholders also should
consult their tax advisers as to state and local tax consequences, if any, of
the Reorganizations.
32
<PAGE>
PRO FORMA FINANCIAL INFORMATION AND RATIOS
The following tables show the capitalization of each Fund as of February 28,
1995 and on a pro forma combined basis (unaudited) as of that date giving
effect to the Reorganizations, and assuming that the Acquired Funds indicated
participate in the Reorganizations.
If only Atlas Global Growth Fund participates in a Reorganization:
<TABLE>
<CAPTION>
MH/KP GLOBAL ATLAS GLOBAL PRO FORMA
EQUITY FUND GROWTH FUND COMBINED
------------ ------------ ------------
<S> <C> <C> <C>
Net Assets
Class A................................ $145,103,774 $155,965,070 $301,068,844
Class B(1)............................. $ 27,483,775 $119,843,249 $ 80,787,291
Class C................................ $ 28,047,070 $ 32,992,059 $ 61,039,129
Class D(2)............................. -- $ 53,303,516 --
Class E................................ -- -- $119,843,249
------------ ------------ ------------
$200,634,619 $362,103,894 $562,738,513
NAV Per Share
Class A................................ $ 14.26 $ 13.24 $ 14.26
Class B(1)............................. $ 14.05 $ 12.92 $ 14.05
Class C................................ $ 14.33 $ 13.34 $ 14.33
Class D(2)............................. -- $ 13.00 --
Class E................................ -- -- $ 14.05
Shares Outstanding
Class A................................ 10,173,570 11,780,515 21,111,439
Class B(1)............................. 1,955,883 9,276,567 5,750,220
Class C................................ 1,956,969 2,474,091 4,260,135
Class D(2)............................. -- 4,100,803 --
Class E................................ -- -- 8,530,480
------------ ------------ ------------
14,086,422 27,631,976 39,652,274
</TABLE>
- --------
(1) Class B shares of Atlas Global Growth Fund will be exchanged for Class E
shares of MH/KP Global Equity Fund.
(2) Class D shares of Atlas Global Growth Fund will be exchanged for Class B
shares of MH/KP Global Equity Fund.
33
<PAGE>
If only Europe Growth Fund participates in a Reorganization:
<TABLE>
<CAPTION>
MH/KP GLOBAL EUROPE PRO FORMA
EQUITY FUND GROWTH FUND COMBINED
------------ ------------ ------------
<S> <C> <C> <C>
Net Assets
Class A................................ $145,103,774 $ 64,289,551 $209,393,325
Class B(1)............................. $ 27,483,775 $ 30,787,402 $ 37,908,739
Class C................................ $ 28,047,070 -- $ 28,047,070
Class D(2)............................. -- $ 10,424,964 --
Class E................................ -- -- $ 30,787,402
------------ ------------ ------------
$200,634,619 $105,501,917 $306,136,536
NAV Per Share
Class A................................ $ 14.26 $ 8.78 $ 14.26
Class B(1)............................. $ 14.05 $ 8.58 $ 14.05
Class C................................ $ 14.33 -- $ 14.33
Class D(2)............................. -- $ 8.63 --
Class E................................ -- -- $ 14.05
Shares Outstanding
Class A................................ 10,173,570 7,323,860 14,682,931
Class B(1)............................. 1,955,883 3,589,075 2,698,010
Class C................................ 1,956,969 -- 1,956,969
Class D(2)............................. -- 1,208,214 --
Class E................................ -- -- 2,191,763
------------ ------------ ------------
14,086,422 12,121,149 21,529,673
</TABLE>
- --------
(1) Class B shares of Europe Growth Fund will be exchanged for Class E shares
of MH/KP Global Equity Fund.
(2) Class D shares of Europe Growth Fund will be exchanged for Class B shares
of MH/KP Global Equity Fund.
34
<PAGE>
If only Global Growth and Income Fund participates in a Reorganization:
<TABLE>
<CAPTION>
MH/KP GLOBAL GLOBAL GROWTH PRO FORMA
EQUITY FUND AND INCOME FUND COMBINED
------------ --------------- ------------
<S> <C> <C> <C>
Net Assets
Class A............................. $145,103,774 $47,193,793 $192,297,567
Class B(1).......................... $ 27,483,775 $26,834,856 $ 35,982,264
Class C............................. $ 28,047,070 -- $ 28,047,070
Class D(2).......................... -- $ 8,498,489 --
Class E............................. -- -- $ 26,834,856
------------ ----------- ------------
$200,634,619 $82,527,138 $283,161,757
NAV Per Share
Class A............................. $ 14.26 $ 9.62 $ 14.26
Class B(1).......................... $ 14.05 $ 9.44 $ 14.05
Class C............................. $ 14.33 -- $ 14.33
Class D(2).......................... -- $ 9.45 --
Class E............................. -- -- $ 14.05
Shares Outstanding
Class A............................. 10,173,570 4,907,103 13,483,972
Class B(1).......................... 1,955,883 2,842,894 2,560,764
Class C............................. 1,956,969 -- 1,956,969
Class D(2).......................... -- 899,321 --
Class E............................. -- -- 1,910,101
------------ ----------- ------------
14,086,422 8,649,318 19,911,806
</TABLE>
- --------
(1) Class B shares of Global Growth and Income Fund will be exchanged for Class
E shares of MH/KP Global Equity Fund.
(2) Class D shares of Global Growth and Income Fund will be exchanged for Class
B shares of MH/KP Global Equity Fund.
35
<PAGE>
If Atlas Global Growth Fund and Europe Growth Fund participate in
Reorganizations:
<TABLE>
<CAPTION>
MH/KP GLOBAL ATLAS GLOBAL EUROPE PRO FORMA
EQUITY FUND GROWTH FUND GROWTH FUND COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Assets
Class A................... $145,103,774 $155,965,070 $ 64,289,551 $365,358,395
Class B(1)................ $ 27,483,775 $119,843,249 $ 30,787,402 $ 91,212,255
Class C................... $ 28,047,070 $ 32,992,059 -- $ 61,039,129
Class D(2)................ -- $ 53,303,516 $ 10,424,964 --
Class E................... -- -- -- $150,630,651
------------ ------------ ------------ ------------
$200,634,619 $362,103,894 $105,501,917 $668,240,430
NAV Per Share
Class A................... $ 14.26 $ 13.24 $ 8.78 $ 14.26
Class B(1)................ $ 14.05 $ 12.92 $ 8.58 $ 14.05
Class C................... $ 14.33 $ 13.34 -- $ 14.33
Class D(2)................ -- $ 13.00 $ 8.63 --
Class E................... -- -- -- $ 14.05
Shares Outstanding
Class A................... 10,173,570 11,780,515 7,323,860 25,620,800
Class B(1)................ 1,955,883 9,276,567 3,589,075 6,492,347
Class C................... 1,956,969 2,474,091 -- 4,260,135
Class D(2)................ -- 4,100,803 1,208,214 --
Class E................... -- -- -- 10,722,243
------------ ------------ ------------ ------------
14,086,422 27,631,976 12,121,149 50,923,595
</TABLE>
- --------
(1) Class B shares of Atlas Global Growth Fund and Europe Growth Fund will be
exchanged for Class E shares of MH/KP Global Equity Fund.
(2) Class D shares of Atlas Global Growth Fund and Europe Growth Fund will be
exchanged for Class B shares of MH/KP Global Equity Fund.
36
<PAGE>
If Atlas Global Growth Fund and Global Growth and Income Fund participate in
Reorganizations:
<TABLE>
<CAPTION>
MH/KP GLOBAL ATLAS GLOBAL GLOBAL GROWTH PRO FORMA
EQUITY FUND GROWTH FUND AND INCOME FUND COMBINED
------------ ------------ --------------- ------------
<S> <C> <C> <C> <C>
Net Assets
Class A............... $145,103,774 $155,965,070 $47,193,793 $348,262,637
Class B(1)............ $ 27,483,775 $119,843,249 $26,834,856 $ 89,285,780
Class C............... $ 28,047,070 $ 32,992,059 -- $ 61,039,129
Class D(2)............ -- $ 53,303,516 $ 8,498,489 --
Class E............... -- -- -- $146,678,105
------------ ------------ ----------- ------------
$200,634,619 $362,103,894 $82,527,138 $645,265,651
NAV Per Share
Class A............... $ 14.26 $ 13.24 $ 9.62 $ 14.26
Class B(1)............ $ 14.05 $ 12.92 $ 9.44 $ 14.05
Class C............... $ 14.33 $ 13.34 -- $ 14.33
Class D(2)............ -- $ 13.00 $ 9.45 --
Class E............... -- -- -- $ 14.05
Shares Outstanding
Class A............... 10,173,570 11,780,515 4,907,103 24,421,841
Class B(1)............ 1,955,883 9,276,567 2,842,894 6,355,101
Class C............... 1,956,969 2,474,091 -- 4,260,135
Class D(2)............ -- 4,100,803 899,321 --
Class E............... -- -- -- 10,440,581
------------ ------------ ----------- ------------
14,086,422 27,631,976 8,649,318 45,477,658
</TABLE>
- --------
(1) Class B shares of Atlas Global Growth Fund and Global Growth and Income
Fund will be exchanged for Class E shares of MH/KP Global Equity Fund.
(2) Class D shares of Atlas Global Growth Fund and Global Growth and Income
Fund will be exchanged for Class B shares of MH/KP Global Equity Fund.
37
<PAGE>
If Europe Growth Fund and Global Growth and Income Fund participate in
Reorganizations:
<TABLE>
<CAPTION>
MH/KP GLOBAL GLOBAL GROWTH EUROPE PRO FORMA
EQUITY FUND AND INCOME FUND GROWTH FUND COMBINED
------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
Net Assets
Class A............... $145,103,774 $47,193,793 $ 64,289,551 $256,587,118
Class B(1)............ $ 27,483,775 $26,834,856 $ 30,787,402 $ 46,407,228
Class C............... $ 28,047,070 -- -- $ 28,047,070
Class D(2)............ -- $ 8,498,489 $ 10,424,964 --
Class E............... -- -- -- $ 57,622,258
------------ ----------- ------------ ------------
$200,634,619 $82,527,138 $105,501,917 $388,663,674
NAV Per Share
Class A............... $ 14.26 $ 9.62 $ 8.78 $ 14.26
Class B(1)............ $ 14.05 $ 9.44 $ 8.58 $ 14.05
Class C............... $ 14.33 -- -- $ 14.33
Class D(2)............ -- $ 9.45 $ 8.63 --
Class E............... -- -- -- $ 14.05
Shares Outstanding
Class A............... 10,173,570 4,907,103 7,323,860 17,993,333
Class B(1)............ 1,955,883 2,842,894 3,589,075 3,302,891
Class C............... 1,956,969 -- -- 1,956,969
Class D(2)............ -- 899,321 1,208,214 --
Class E............... -- -- -- 4,101,864
------------ ----------- ------------ ------------
14,086,422 8,649,318 12,121,149 27,355,057
</TABLE>
- --------
(1) Class B shares of Europe Growth Fund and Global Growth and Income Fund
will be exchanged for Class E shares of MH/KP Global Equity Fund.
(2) Class D shares of Europe Growth Fund and Global Growth and Income Fund
will be exchanged for Class B shares of MH/KP Global Equity Fund.
38
<PAGE>
If all Acquired Funds participate in the Reorganizations:
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
------------
<S> <C>
Net Assets
Class A.......................................................... $412,552,188
Class B(1)....................................................... $ 99,710,744
Class C.......................................................... $ 61,039,129
Class D(2)....................................................... --
Class E.......................................................... $177,465,507
------------
$750,767,568
NAV Per Share
Class A.......................................................... $ 14.26
Class B(1)....................................................... $ 14.05
Class C.......................................................... $ 14.33
Class D(2)....................................................... --
Class E.......................................................... $ 14.05
Shares Outstanding
Class A.......................................................... 28,931,202
Class B(1)....................................................... 7,097,228
Class C.......................................................... 4,260,135
Class D(2)....................................................... --
Class E.......................................................... 12,632,344
------------
52,920,909
</TABLE>
- --------
(1) Class B shares of each Acquired Fund will be exchanged for Class E shares
of MH/KP Global Equity Fund.
(2) Class D shares of each Acquired Fund will be exchanged for Class B shares
of MH/KP Global Equity Fund.
ADDITIONAL INFORMATION ABOUT MH/KP GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
The financial statements and notes and the financial information in the
tables below have been audited in conjunction with the annual audits of the
financial statements of MH/KP Global Equity Fund, and the semi-annual report
to shareholders for the six-month period ended February 28, 1995 with respect
to the Fund, by Deloitte & Touche LLP. Financial statements for the fiscal
year ended August 31, 1994 and the report of independent auditors are included
in that Fund's Statement of Additional Information.
39
<PAGE>
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------
FOR THE YEARS ENDED
FOR THE SIX AUGUST 31, FOR THE PERIOD
MONTHS ENDED -------------------- NOVEMBER 14, 1991+
FEBRUARY 28, 1995 1994 1993 TO AUGUST 31, 1992
----------------- --------- --------- ------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 16.98 $ 14.55 $ 12.87 $ 12.00
Income (loss) from
investment operations:
Net investment income
(loss)............... (0.02) 0.01 0.03 0.09
Net realized and
unrealized gains
(losses) from
investment and
foreign currency
activities........... (1.44) 2.63 1.89 0.78
-------- --------- --------- --------
Total income (loss) from
investment operations.. (1.46) 2.64 1.92 0.87
-------- --------- --------- --------
Dividends and other
distributions:
Dividends from net
investment income.... -- -- (0.08) --
Distributions from net
realized gains....... (1.26) (0.21) (0.16) --
-------- --------- --------- --------
Total dividends and
other distributions.. (1.26) (0.21) (0.24) --
-------- --------- --------- --------
Net asset value, end of
period................. $ 14.26 $ 16.98 $ 14.55 $ 12.87
======== ========= ========= ========
Total return (1)........ (8.67)% 18.23% 15.24% 7.25%
======== ========= ========= ========
Ratios/Supplemental
data:
Net assets, end of
period (000's)......... $145,104 $ 185,493 $ 156,451 $113,070
Ratio of expenses to
average net assets..... 1.65%* 1.58% 1.53% 1.68%*
Ratio of net investment
income (loss) to
average net assets..... (0.28)%* 0.07% 0.22% 0.93%*
Portfolio turnover...... 32.45% 50.73% 56.35% 30.32%
</TABLE>
- --------
* Annualized
+ Commencement of offering of shares.
(1) Total return is calculated assuming a $1,000 investment in Fund shares on
the first day of each period reported, reinvestment of all dividends and
other distributions at net asset value on the payable date, and a sale at
net asset value on the last day of each period reported. The figures do
not include sales charges; results of Class A would be lower if sales
charges were included. Total returns for periods less than one year are
not annualized.
40
<PAGE>
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------
FOR THE SIX FOR THE FOR THE PERIOD
MONTHS ENDED YEAR ENDED MAY 10, 1993+ TO
FEBRUARY 28, 1995 AUGUST 31, 1994 AUGUST 31, 1993
----------------- --------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning
of period.................. $ 16.81 $ 14.52 $ 13.80
Income (loss) from
investment operations:
Net investment income
(loss)................... 0.04 (0.07) (0.02)
Net realized and
unrealized gains (losses)
from investment and
foreign currency
activities............... (1.55) 2.57 0.74
------- ------- -------
Total income (loss) from
investment operations...... (1.51) 2.50 0.72
------- ------- -------
Dividends and other
distributions:
Dividends from net
investment income........ -- -- --
Distributions from net
realized gains........... (1.25) (0.21) --
------- ------- -------
Total dividends and other
distributions............ (1.25) (0.21) --
------- ------- -------
Net asset value, end of
period..................... $ 14.05 $ 16.81 $ 14.52
======= ======= =======
Total return (1)............ (9.01)% 17.29% 5.22%
======= ======= =======
Ratios/Supplemental data:
Net assets, end of period
(000's).................... $27,484 $31,837 $10,807
Ratio of expenses to average
net assets................. 2.40%* 2.33% 2.28%*
Ratio of net investment
income (loss) to average
net assets................. (1.03)%* (0.68)% (0.53)%*
Portfolio turnover.......... 32.45% 50.73% 56.35%
</TABLE>
- --------
* Annualized
+ Commencement of offering of shares.
(1) Total return is calculated assuming a $1,000 investment in Fund shares on
the first day of each period reported, reinvestment of all dividends and
other distributions at net asset value on the payable date, and a sale at
net asset value on the last day of each period reported. The figures do
not include sales charges; results of Class A would be lower if sales
charges were included. Total returns for periods less than one year are
not annualized.
41
<PAGE>
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------
FOR THE SIX FOR THE FOR THE PERIOD
MONTHS ENDED YEAR ENDED MAY 10, 1993+ TO
FEBRUARY 28, 1995 AUGUST 31, 1994 AUGUST 31, 1993
----------------- --------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning
of period.................. $ 17.03 $ 14.56 $ 13.80
Income (loss) from
investment operations:
Net investment income
(loss)................... -- 0.05 0.02
Net realized and
unrealized gains (losses)
from investment and
foreign currency
activities............... (1.45) 2.63 0.74
------- ------- -------
Total income (loss) from
investment operations.... (1.45) 2.68 0.76
------- ------- -------
Dividends and other
distributions:
Dividends from net
investment income........ -- -- --
Distributions from net
realized gains........... (1.25) (0.21) --
------- ------- -------
Total dividends and other
distributions............ (1.25) (0.21) --
------- ------- -------
Net asset value, end of
period..................... $ 14.33 $ 17.03 $ 14.56
======= ======= =======
Total return (1)............ (8.52)% 18.49% 5.51%
======= ======= =======
Ratios/Supplemental data:
Net assets, end of period
(000's).................... $28,047 $28,390 $19,098
Ratio of expenses to average
net assets................. 1.40%* 1.33% 1.28%*
Ratio of net investment
income (loss) to average
net assets................. (0.03)%* 0.32% 0.47%*
Portfolio turnover.......... 32.45% 50.73% 56.35%
</TABLE>
- --------
* Annualized
+ Commencement of offering of shares.
(1) Total return is calculated assuming a $1,000 investment in Fund shares on
the first day of each period reported, reinvestment of all dividends and
other distributions at net asset value on the payable date, and a sale at
net asset value on the last day of each period reported. The figures do
not include sales charges; results of Class A would be lower if sales
charges were included. Total returns for periods less than one year are
not annualized.
PROPOSAL 2. APPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENTS
Proposal 2 relates to the approval of proposed sub-advisory agreements (each
a "Sub-Advisory Agreement" and collectively, "Sub-Advisory Agreements")
pursuant to which GEIM would continue to serve as sub-adviser to the Acquired
Funds. If Proposal 1 (relating to the proposed Reorganizations) as well as
Proposal 2 are approved with respect to an Acquired Fund, the Sub-Advisory
Agreement with respect to that Fund would remain in effect until the Closing
Date. If Proposal 1 is not approved with respect to an Acquired Fund but
Proposal 2 is approved, the Sub-Advisory Agreement with respect to that Fund
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 applicable board of trustees or the vote of the holders of a majority of
the outstanding shares of the Acquired Fund.
42
<PAGE>
BACKGROUND
Mitchell Hutchins is the administrator and investment adviser of the
Acquired Funds, pursuant to contracts with Atlas Trust, dated March 1, 1989
(with respect to Atlas Global Growth Fund), and Investment Series, dated April
21, 1988 (with respect to Europe Growth Fund and Global Growth and Income
Fund), as supplemented by Fee Agreements, dated January 29, 1990, for Europe
Growth Fund, and dated May 19, 1989, for Global Growth and Income Fund (each
an "Advisory Agreement" and collectively, the "Advisory Agreements").
The Advisory Agreement with respect to Atlas Global Growth Fund was approved
by shareholders on February 23, 1989, and its continuance was most recently
approved by the board of trustees of Atlas Trust on November 9, 1994. Under
that Advisory Agreement, Mitchell Hutchins receives a fee, computed daily and
paid monthly, at the annual rate of 0.75% of Atlas Global Growth Fund's
average daily net assets. For the fiscal year ended August 31, 1994, Atlas
Global Growth Fund paid fees under the Advisory Agreement to Mitchell Hutchins
of approximately $3,143,778.
The Advisory Agreement with respect to Europe Growth Fund was approved by
shareholders on May 24, 1990, and its continuance was most recently approved
by the board of trustees of Investment Series on February 15, 1995. Under that
Advisory Agreement, Mitchell Hutchins receives a fee, computed daily and paid
monthly, at the annual rate of 0.90% of Europe Growth Fund's average daily net
assets up to $50 million, 0.85% of average daily net assets in excess of $50
million and up to $100 million, 0.80% of average daily net assets in excess of
$100 million and up to $150 million, 0.75% of average daily net assets in
excess of $150 million and up to $200 million, and 0.70% in excess of $200
million. For the fiscal year ended October 31, 1994, Europe Growth Fund paid
fees under the Advisory Agreement to Mitchell Hutchins of approximately
$1,281,874.
The Advisory Agreement with respect to Global Growth and Income Fund was
approved by shareholders of Investment Series on May 24, 1990, and its
continuance was most recently approved by the board of trustees of Investment
Series on February 15, 1995. Under that Advisory Agreement, Mitchell Hutchins
receives a monthly fee at the annual rate of 0.90% of Global Growth and Income
Fund's average daily net assets up to $500 million, 0.875% of average daily
net assets in excess of $500 million and up to $1 billion, 0.850% of average
daily net assets in excess of $1 billion and up to $1.5 billion, 0.825% of
average daily net assets in excess of $1.5 billion and up to $2 billion, and
0.80% in excess of $2 billion. For the fiscal year ended October 31, 1994,
Global Growth and Income Fund paid fees under the Advisory Agreement to
Mitchell Hutchins of approximately $986,716. The Advisory Agreement for each
Acquired Fund permits Mitchell Hutchins to delegate all or part of its
investment advisory responsibility to a sub-adviser.
At a meeting held on March 22, 1995, the boards of trustees of Atlas Fund
and Investment Series (the "Boards"), including a majority of the Independent
Trustees, considered recommendations by Mitchell Hutchins that GEIM be
appointed as investment sub-adviser for Atlas Global Growth Fund and Europe
Growth Fund with respect to all of the Funds' investments, and that GEIM be
appointed as investment sub-adviser for Global Growth and Income Fund with
respect to that Fund's equity investments. After considering Mitchell
Hutchins' recommendation and other information, the Boards approved interim
sub-advisory agreements (each an "Interim Agreement" and collectively, the
"Interim Agreements") with GEIM, pursuant to which GEIM currently acts as Sub-
Adviser to each Acquired Fund with respect to the investments noted. At the
meeting held on April 28, 1995, the Boards approved the submission of the
proposed Sub-Advisory Agreements (which are substantially identical to the
Interim Agreements) to the shareholders of each
43
<PAGE>
Acquired Fund at the Meeting, and determined to recommend that the
shareholders of each Acquired Fund approve the proposed Sub-Advisory
Agreements.
Mitchell Hutchins' recommendation to the Boards that GEIM be retained as
Sub-Adviser to each Acquired Fund stemmed from a number of factors. First, in
the months prior to the meetings of the Boards, 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 and General
Electric Company ("GE"). After consideration, Mitchell Hutchins determined
that it would be in the best interests of the Acquired Funds and certain other
global equity funds advised by Mitchell Hutchins to recommend to the boards of
trustees/directors (including the Boards) 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.
The Interim Agreements each provide that GEIM, subject to the supervision of
Mitchell Hutchins and the applicable board of trustees, shall provide a
continuous investment program and strategy with respect to the investments of
the Acquired Funds, including investment research and management, and will
make decisions with respect to and place orders for all purchases and sales of
portfolio securities. For Global Growth and Income Fund, GEIM's services are
provided only with respect to that Fund's investments in equity securities.
Under the Interim Agreements for Atlas Global Growth Fund and Europe Growth
Fund, Mitchell Hutchins (not the Fund) pays GEIM a monthly fee for its
investment advisory services at an annual rate of 0.31% of each Fund's average
daily net assets up to $500 million, 0.29% of average daily net assets in
excess of $500 million, and 0.265% of average daily net assets in excess of $1
billion. As of February 28, 1995, Atlas Global Growth Fund and Europe Growth
Fund had net assets of approximately $362,103,894 and $105,501,917,
respectively. Under the Interim Agreement with respect to Global Growth and
Income Fund, Mitchell Hutchins (not the Fund) pays GEIM a monthly fee for its
investment advisory services at an annual rate of 0.29% of Global Growth and
Income Fund's average daily net assets attributable to the Fund's equity
portfolio. As of February 28, 1995, Global Growth and Income Fund had net
assets of approximately $79,558,579, of which approximately $55,532,575 were
attributable to equity securities.
Because the Interim Agreement for each Acquired Fund became effective on
March 23, 1995, Mitchell Hutchins paid no sub-advisory fees to GEIM during the
1994 fiscal year with respect to any Acquired Fund.
GEIM also acts as the investment sub-adviser to the MH/KP Global Equity
Fund, as investment sub-adviser to Mitchell Hutchins/Kidder, Peabody
Intermediate Fixed Income 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
("GEIC"), which, like GEIM, is a wholly owned subsidiary of GE, and which
currently serves as
44
<PAGE>
the investment adviser to the Elfun group of funds and other GE pension and
benefit plan accounts. Since March 23, 1995, GEIM has also served as
investment sub-adviser to Global Small Cap Fund Inc. and to Global Growth
Portfolio (a series of PaineWebber Series Trust) 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 Funds:
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL RATE OF INVESTMENT
NET ASSETS AS OF ADVISORY FEE AS A
NAME OF PORTFOLIO MARCH 31, 1995 PERCENTAGE OF NET ASSETS
----------------- ---------------- -------------------------
<S> <C> <C>
Mitchell Hutchins/Kidder,
Peabody Global Equity Fund......... $200,600,000 .70% of average daily net
assets up to $200 million;
.50% over $200 million*
GE Global Equity Fund
(a series of GE Funds)............. $ 31,500,000 .75%**
Global Growth Portfolio............. $ 35,400,000 .29%*
Global Small Cap Fund Inc........... $ 42,196,969 .50% of average
weekly net assets*
</TABLE>
- --------
* Fee to GEIM for investment sub-advisory services only.
**Fee to GEIM includes investment advisory and administration services.
DESCRIPTION OF THE PROPOSED SUB-ADVISORY AGREEMENTS
The terms and conditions of the proposed Sub-Advisory Agreements provide for
the same sub-advisory fees as currently in effect for the Interim Agreements
and are identical to those of the Interim Agreements except for different
effective and termination dates and an increase from 60 to 120 days in the
amount of written notice Mitchell Hutchins or GEIM must give in order to
terminate the Sub-Advisory Agreements. Approval of the proposed Sub-Advisory
Agreements by the shareholders at the Meeting will also serve to ratify the
Interim Agreements.
The Sub-Advisory Agreements automatically terminate upon their assignment
and are terminable at any time, without penalty, by the respective boards of
trustees or by the holders of a majority of the outstanding shares of an
Acquired Fund on 60 days' written notice. Either Mitchell Hutchins or GEIM may
terminate a Sub-Advisory Agreement on 120 days' written notice without
penalty. Mitchell Hutchins may also terminate a 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 Agreements, the Sub-Advisory Agreements provide that GEIM
will pay for all expenses incurred by it in connection with its investment
advisory services under the Sub-Advisory Agreements. The Sub-Advisory
Agreements also provide that GEIM, subject to the supervision of Mitchell
Hutchins and the respective boards of trustees, shall provide a continuous
investment program and strategy for the investments of Atlas Global Growth
Fund and Europe Growth Fund, and for the equity investments of Global Growth
and Income Fund, 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 such portfolio securities. The
Sub-Advisory Agreements provide for fee rates identical to those in the
Interim Agreements.
45
<PAGE>
The Sub-Advisory Agreements provide that GEIM will not be liable for any
error of judgment or mistake of law or for any loss suffered by the Acquired
Funds in connection with the performance of the agreements, 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 Agreements.
GEIM makes various representations and warranties in the Sub-Advisory
Agreements, 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 form of the proposed Sub-Advisory Agreement is attached to this Proxy
Statement as Appendix B.
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 laws of Delaware in 1988. GE
is located at 3135 Easton Turnpike, Fairfield, Connecticut 06431. 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 $47 billion. The chief executive officers and directors of GEIM are
identified in the table below:
CHIEF EXECUTIVE OFFICER AND DIRECTORS OF GEIM
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION ADDRESS
---- ---------------------------- ---------------------------
<S> <C> <C>
Dale F. Frey Chairman, President and 3003 Summer Street
Chief Executive Officer of Stamford, Connecticut 06905
GEIM
Eugene K. Bolton Director and Executive Vice 3003 Summer Street
President of GEIM Stamford, Connecticut 06905
Michael J. Cosgrove Director and Executive Vice 3003 Summer Street
President of GEIM Stamford, Connecticut 06905
Ralph R. Layman Director and Executive Vice 3003 Summer Street
President of GEIM Stamford, Connecticut 06905
Alan M. Lewis Director, Executive Vice 3003 Summer Street
President, General Counsel Stamford, Connecticut 06905
and Secretary of GEIM
John H. Myers Director and Executive Vice 3003 Summer Street
President of GEIM Stamford,Connecticut 06905
Geoffrey R. Norman Director and Executive Vice 3003 Summer Street
President of GEIM Stamford, Connecticut 06905
Donald W. Torey Director, Executive Vice 3003 Summer Street
President and Chief Stamford, Connecticut 06905
Financial Officer of GEIM
</TABLE>
46
<PAGE>
TRUSTEES' CONSIDERATIONS AND RECOMMENDATIONS
At the meeting held on March 22, 1995, the Boards, 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 Agreements and the proposed Sub-Advisory Agreements with respect to
each Acquired Fund. During their deliberations, the Boards also reviewed
information provided by Mitchell Hutchins and GEIM relating to the structure
and organization of GEIM. The Boards considered the quality of the investment
sub-advisory services that had been provided by GEIM to other funds, and also
considered the Funds' performance in relation to a selected group of other
funds with similar investment objectives. The Boards noted, in particular,
that the advisory fees paid by the Funds would remain the same as before, and
determined that the terms of the Sub-Advisory Agreements and the sub-advisory
fees were fair.
The Boards also considered the fact that, consistent with the interests of
the Funds and subject to their review, the Sub-Adviser may cause the Funds 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 Funds 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 Funds
and its other clients and that the total commissions paid by the Funds will be
reasonable in relation to the benefits to the Funds over the long term. For
purchases or sales with broker-dealer firms which act as principal, the Sub-
Adviser seeks best execution. Although the Sub-Adviser may receive certain
research or execution services in connection with these transactions, the Sub-
Adviser will not purchase securities at a higher price or sell securities at a
lower price than would otherwise be paid if no weight were attributed to the
services provided by the executing dealer. The Sub-Adviser will not enter into
any 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 Funds effect
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 Funds. 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 Agreements.
THE BOARDS OF TRUSTEES RECOMMEND THAT THE
SHAREHOLDERS OF THE ACQUIRED FUNDS VOTE "FOR" THE
PROPOSED SUB-ADVISORY AGREEMENTS
GENERAL INFORMATION
Brokerage Commissions
PaineWebber is the only affiliated broker of the Acquired Funds. For the
fiscal year ended August 31, 1994, Atlas Global Growth Fund paid no brokerage
commissions to PaineWebber. For the fiscal year ended October 31, 1994, Europe
Growth Fund and Global Growth and Income Fund, respectively, paid no brokerage
commissions to PaineWebber.
Shareholder Proposals
As a general matter, Atlas Trust and Investment Series do 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
47
<PAGE>
Atlas Trust's or Investment Series' shareholders should send such proposals,
certified mail-return receipt requested, to each respective 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
Atlas Trust and Investment Series will furnish to shareholders, 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 made by contacting the Acquired Fund's Transfer Agent,
PFPC, Inc., P.O. Box 9426, Wilmington, DE 19809-9938, or by calling toll-free
1-800- 647-1568.
MISCELLANEOUS
AVAILABLE INFORMATION
Atlas Trust, Investment Series and MH/KP Investment Trust are subject to the
informational requirements of the Securities Exchange Act of 1934 and the 1940
Act and in accordance therewith file reports, proxy materials and other
information with the SEC. Such reports, proxy materials and other information
can be inspected and copied at the Public Reference Room maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such materials
can also be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549 at prescribed rates.
LEGAL MATTERS
Certain legal matters in connection with the issuance of MH/KP Global Equity
Fund shares will be passed upon by Willkie Farr & Gallagher, counsel to MH/KP
Investment Trust.
EXPERTS
The audited financial statements of MH/KP Global Equity Fund, Atlas Global
Growth Fund, Europe Growth Fund and Global Growth and Income Fund,
incorporated herein by reference and in each Fund's Statement of Additional
Information, have been examined by Deloitte & Touche LLP, independent
auditors, Ernst & Young LLP, independent auditors, Price Waterhouse LLP,
independent accountants, and Price Waterhouse LLP, independent accountants,
respectively, whose reports thereon are included in the Funds' Annual Reports
to Shareholders for the fiscal years ended August 31, 1994, August 31, 1994,
October 31, 1994, and October 31, 1994, respectively, and in MH/KP Global
Equity Fund's semi-annual report to shareholders for the six-month period
ended February 28, 1995. The financial statements audited by Deloitte & Touche
LLP, Ernst & Young LLP and Price Waterhouse LLP have been incorporated herein
by reference in reliance on their reports given on their authority as experts
in auditing and accounting.
48
<PAGE>
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION ("Agreement") is
made as of May 12, 1995, between Mitchell Hutchins/Kidder, Peabody Investment
Trust, a Massachusetts business trust ("MHKP Trust"), on behalf of Mitchell
Hutchins/Kidder, Peabody Global Equity Fund, a segregated portfolio of assets
("series") thereof ("Acquiring Fund"), and PaineWebber [Atlas Fund]
[Investment Series], a Massachusetts business trust ("PW Trust"), on behalf of
its PaineWebber [Atlas Global Growth] [Europe Growth] [Global Growth and
Income] Fund series ("Target"). (Acquiring Fund and Target are sometimes
referred to herein individually as a "Fund" and collectively as the "Funds,"
and MHKP Trust and PW Trust are sometimes referred to herein collectively as
the "Investment Companies.")
This Agreement is intended to be, and is adopted as, a plan of a
reorganization described in section 368(a)(1)[(D)][(C)] of the Internal
Revenue Code of 1986, as amended ("Code"). The reorganization will involve the
transfer to Acquiring Fund of Target's assets solely in exchange for voting
shares of beneficial interest in Acquiring Fund ("Acquiring Fund Shares") and
the assumption by Acquiring Fund of Target's liabilities, followed by the
constructive distribution of the Acquiring Fund Shares to the holders of
shares of beneficial interest in Target ("Target Shares") in exchange
therefor, all upon the terms and conditions set forth herein. The foregoing
transactions are referred to herein as the "Reorganization." All agreements,
representations, actions, and obligations described herein made or to be taken
or undertaken by either Fund are made and shall be taken or undertaken by MHKP
Trust on behalf of Acquiring Fund and by PW Trust on behalf of Target.
Acquiring Fund's shares are divided into four classes, designated Class A,
Class B, Class C, and Class E shares ("Class A Acquiring Fund Shares," "Class
B Acquiring Fund Shares," "Class C Acquiring Fund Shares," and "Class E
Acquiring Fund Shares", respectively). Apart from differences in certain
ancillary class- specific expenses, these classes differ only with respect to
the sales charges imposed on the purchase of shares and the fees ("12b-1
fees") payable by each class pursuant to plans adopted under Rule 12b-1
promulgated under the Investment Company Act of 1940 ("1940 Act"), as follows:
(1) Class A Acquiring Fund Shares are offered at net asset value ("NAV") plus
a sales charge, if applicable, and are subject to a 12b-1 service fee at the
annual rate of 0.25% of the average daily net assets attributable to the class
("class assets"); (2) Class B Acquiring Fund Shares are offered at NAV without
imposition of any sales charge and are subject to 12b-1 service and
distribution fees at the respective annual rates of 0.25% and 0.75% of class
assets; (3) Class C Acquiring Fund Shares are offered, currently to a limited
group of investors (consisting of former employees of Kidder, Peabody & Co.
Incorporated ("Kidder") and their associated accounts, directors and trustees
of mutual funds formerly distributed by Kidder (now known as Mitchell
Hutchins/Kidder, Peabody Funds and PaineWebber/Kidder, Peabody Funds),
Kidder's employee benefit plans, and participants in a certain portfolio asset
allocation program), at NAV without imposition of any sales charge and are not
subject to any 12b-1 fee; and (4) Class E Acquiring Fund Shares are offered at
NAV without imposition of any sales charge and are subject to a contingent
deferred sales charge and 12b-1 service and distribution fees at the
respective annual rates of 0.25% and 0.75% of class assets. [Only Classes A,
B, and E Acquiring Fund Shares are involved in the Reorganization.]
Target's shares are divided into [four] [three] classes, designated Class A,
Class B, [Class C,] and Class D shares ("Class A Target Shares," "Class B
Target Shares," ["Class C Target Shares,"] and "Class D Target Shares,"
respectively). Except as noted in the following sentence, these classes differ
only with respect to the
A-1
<PAGE>
sales charges imposed on the purchase of shares and the 12b-1 fees payable by
each class, as follows: (1) Class A Target Shares are offered at NAV plus a
sales charge, if applicable, and are subject to a 12b-1 service fee at the
annual rate of [0.20%] [0.25%] of class assets; (2) Class B Target Shares are
offered at NAV without imposition of any sales charge and are subject to a
contingent deferred sales charge and 12b-1 service and distribution fees at
the respective annual rates of 0.25% and 0.75% of class assets; [(3) Class C
Target Shares are offered, currently only to the trustee of the PaineWebber
Savings Investment Plan on behalf of that plan, at NAV without imposition of
any sales charge and are not subject to any 12b-1 fee;] and [(3)] [(4)] Class
D Target Shares are offered at NAV without imposition of any sales charge and
are subject to 12b-1 service and distribution fees at the respective annual
rates of 0.25% and 0.75% of class assets. These classes also may differ from
one another with respect to the allocation of certain class-specific expenses
other than 12b-1 fees.
In consideration of the mutual promises herein, the parties covenant and
agree as follows:
1. PLAN OF REORGANIZATION AND TERMINATION OF TARGET
1.1. Target agrees to assign, sell, convey, transfer, and deliver all of its
assets described in paragraph 1.2 ("Assets") to Acquiring Fund. Acquiring Fund
agrees in exchange therefor--
(a) to issue and deliver to Target the number of full and fractional (i)
Class A Acquiring Fund Shares determined by dividing the net value of
Target (computed as set forth in paragraph 2.1) ("Target Value")
attributable to the Class A Target Shares by the NAV (computed as set forth
in paragraph 2.2) of a Class A Acquiring Fund Share, (ii) Class B Acquiring
Fund Shares determined by dividing the Target Value attributable to the
Class D Target Shares by the NAV (as so computed) of a Class B Acquiring
Fund Share, [(iii) Class C Acquiring Fund Shares determined by dividing the
Target Value attributable to the Class C Target Shares by the NAV (as so
computed) of a Class C Acquiring Fund Share,] and [(iii)] [(iv)] Class E
Acquiring Fund Shares determined by dividing the Target Value attributable
to the Class B Target Shares by the NAV (as so computed) of a Class E
Acquiring Fund Share; and
(b) to assume all of Target's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph
3.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Target's books, and other property owned by Target at the
Effective Time (as defined in paragraph 3.1).
1.3. The Liabilities shall include (except as otherwise provided herein) all
of Target's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this Agreement,
including without limitation Target's share of the expenses described in
paragraph 7.2. Notwithstanding the foregoing, Target agrees to use its best
efforts to discharge all of its known Liabilities prior to the Effective Time.
1.4. At or immediately before the Effective Time, Target shall declare and
pay to its shareholders a dividend and/or other distribution in an amount
large enough so that it will have distributed substantially all (and in any
event not less than 90%) of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Effective Time.
A-2
<PAGE>
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall constructively distribute the Acquiring Fund Shares
received by it pursuant to paragraph 1.1 to Target's shareholders of record,
determined as of the Effective Time (collectively "Shareholders" and
individually a "Shareholder"), in exchange for their Target Shares. Such
distribution shall be accomplished by the Funds' transfer agent ("Transfer
Agent") opening accounts on Acquiring Fund's share transfer books in the
Shareholders' names and transferring such Acquiring Fund Shares thereto. Each
Shareholder's account shall be credited with the respective pro rata number of
full and fractional (rounded to the third decimal place) Acquiring Fund Shares
due that Shareholder, by class (i.e., the account for a Shareholder of Class A
Target Shares shall be credited with the respective pro rata number of Class A
Acquiring Fund Shares due that Shareholder, the account for a Shareholder of
Class B Target Shares shall be credited with the respective pro rata number of
Class E Acquiring Fund Shares due that Shareholder, [the account for a
Shareholder of Class C Target Shares shall be credited with the respective pro
rata number of Class C Acquiring Fund Shares due that Shareholder,] and the
account for a Shareholder of Class D Target Shares shall be credited with the
respective pro rata number of Class B Acquiring Fund Shares due that
Shareholder). All outstanding Target Shares, including any represented by
certificates, shall simultaneously be canceled on Target's share transfer
records. Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with the Reorganization.
1.6. As soon as reasonably practicable after distribution of the Acquiring
Fund Shares pursuant to paragraph 1.5, Target shall be terminated as a series
of PW Trust and any further actions shall be taken in connection therewith as
required by applicable law.
1.7. Any reporting responsibility of Target to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.8. Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than that of the registered holder on Target's books of the Target
Shares constructively exchanged therefor shall be paid by the person to whom
such Acquiring Fund Shares are to be issued, as a condition of such transfer.
2. VALUATION
2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a) the
value of the Assets computed as of the close of regular trading on the New
York Stock Exchange, Inc. ("NYSE") on the date of the Closing ("Valuation
Time"), using the valuation procedures set forth in Target's then-current
prospectus and statement of additional information less (b) the amount of the
Liabilities as of the Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of a Class A Acquiring Fund
Share, a Class B Acquiring Fund Share, [a Class C Acquiring Fund Share,] and a
Class E Acquiring Fund Share shall be computed as of the Valuation Time, using
the valuation procedures set forth in Acquiring Fund's then-current prospectus
and statement of additional information.
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by or
under the direction of Mitchell Hutchins Asset Management Inc.
3. CLOSING AND EFFECTIVE TIME
3.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the Funds' principal office on August 11,
1995, or at such other place and/or on such other date
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as the parties may agree. All acts taking place at the Closing shall be deemed
to take place simultaneously as of the close of business on the date thereof
or at such other time as the parties may agree ("Effective Time"). If,
immediately before the Valuation Time, (a) the NYSE is closed to trading or
trading thereon is restricted or (b) trading or the reporting of trading on
the NYSE or elsewhere is disrupted, so that accurate appraisal of the net
value of Target and the NAV per Acquiring Fund Share is impracticable, the
Effective Time shall be postponed until the first business day after the day
when such trading shall have been fully resumed and such reporting shall have
been restored.
3.2. PW Trust shall deliver to MHKP Trust at the Closing a schedule of the
Assets as of the Effective Time, which shall set forth for all portfolio
securities included therein their adjusted tax basis and holding period by
lot. Target's custodian shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Assets held by the custodian will be
transferred to Acquiring Fund at the Effective Time and (b) all necessary
taxes in conjunction with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or provision
for payment has been made.
3.3. PW Trust shall deliver to MHKP Trust at the Closing a list of the names
and addresses of the Shareholders and the number (by class) of outstanding
Target Shares owned by each Shareholder, all as of the Effective Time,
certified by the Secretary or Assistant Secretary of Target. The Transfer
Agent shall deliver at the Closing a certificate as to the opening on
Acquiring Fund's share transfer books of accounts in the Shareholders' names.
MHKP Trust shall issue and deliver a confirmation to PW Trust evidencing the
Acquiring Fund Shares (by class) to be credited to Target at the Effective
Time or provide evidence satisfactory to PW Trust that such Acquiring Fund
Shares have been credited to Target's account on Acquiring Fund's books. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts, or other documents as the other
party or its counsel may reasonably request.
3.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to
the effect that the representations and warranties it made in this Agreement
are true and correct at the Effective Time except as they may be affected by
the transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1. Target represents and warrants as follows:
4.1.1. PW Trust is an unincorporated voluntary association with
transferable shares organized as a business trust under a written
instrument ("Business Trust"); it is duly organized, validly existing, and
in good standing under the laws of the Commonwealth of Massachusetts; and a
copy of its Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts;
4.1.2. PW Trust is duly registered as an open-end management investment
company under the 1940 Act, and such registration will be in full force and
effect at the Effective Time;
4.1.3. Target is a duly established and designated series of PW Trust;
4.1.4. At the Closing, Target will have good and marketable title to the
Assets and full right, power, and authority to sell, assign, transfer, and
deliver the Assets free of any liens or other encumbrances; and upon
delivery and payment for the Assets, Acquiring Fund will acquire good and
marketable title thereto;
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4.1.5. Target's current prospectus and statement of additional
information conform in all material respects to the applicable requirements
of the Securities Act of 1933 ("1933 Act") and the 1940 Act and the rules
and regulations thereunder and does not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
4.1.6. Target is not in violation of, and the execution and delivery of
this Agreement and consummation of the transactions contemplated hereby
will not conflict with or violate, Massachusetts law or any provision of PW
Trust's Declaration of Trust or By-Laws or of any agreement, instrument,
lease, or other undertaking to which Target is a party or by which it is
bound or result in the acceleration of any obligation, or the imposition of
any penalty, under any agreement, judgment, or decree to which Target is a
party or by which it is bound, except as previously disclosed in writing to
and accepted by MHKP Trust;
4.1.7. Except as disclosed in writing to and accepted by MHKP Trust, all
material contracts and other commitments of or applicable to Target (other
than this Agreement and investment contracts, including options, futures,
and forward contracts) will be terminated, or provision for discharge of
any liabilities of Target thereunder will be made, at or prior to the
Effective Time, without either Fund's incurring any liability or penalty
with respect thereto and without diminishing or releasing any rights Target
may have had with respect to actions taken or omitted to be taken by any
other party thereto prior to the Closing;
4.1.8. Except as otherwise disclosed in writing to and accepted by MHKP
Trust, no litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or (to Target's
knowledge) threatened against PW Trust with respect to Target or any of its
properties or assets that, if adversely determined, would materially and
adversely affect Target's financial condition or the conduct of its
business; Target knows of no facts that might form the basis for the
institution of any such litigation, proceeding, or investigation and is not
a party to or subject to the provisions of any order, decree, or judgment
of any court or governmental body that materially or adversely affects its
business or its ability to consummate the transactions contemplated hereby;
4.1.9. The execution, delivery, and performance of this Agreement has
been duly authorized as of the date hereof by all necessary action on the
part of PW Trust's board of trustees, which has made the determinations
required by Rule 17a-8(a) under the 1940 Act; and, subject to approval by
Target's shareholders and receipt of any necessary exemptive relief or no-
action assurances requested from the Securities and Exchange Commission
("SEC") or its staff with respect to sections 17(a) and 17(d) of the 1940
Act, this Agreement will constitute a valid and legally binding obligation
of Target, enforceable in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting creditors' rights and
by general principles of equity;
4.1.10. At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by Target's shareholders;
4.1.11. No governmental consents, approvals, authorizations, or filings
are required under the 1933 Act, the Securities Exchange Act of 1934 ("1934
Act"), or the 1940 Act for the execution or performance of this Agreement
by PW Trust, except for (a) the filing with the SEC of a registration
statement by MHKP Trust on Form N-14 relating to the Acquiring Fund Shares
issuable hereunder, and any supplement or amendment thereto ("Registration
Statement"), including therein a prospectus/proxy statement ("Proxy
Statement"), (b) receipt of the exemptive relief referenced in subparagraph
4.1.9, and
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(c) such consents, approvals, authorizations, and filings as have been made
or received or as may be required subsequent to the Effective Time;
4.1.12. On the effective date of the Registration Statement, at the time
of the shareholders' meeting referred to in paragraph 5.2, and at the
Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act, and
the 1940 Act and the regulations thereunder and (b) not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which such statements were made, not misleading;
provided that the foregoing shall not apply to statements in or omissions
from the Proxy Statement made in reliance on and in conformity with
information furnished by MHKP Trust for use therein;
4.1.13. The Liabilities were incurred by Target in the ordinary course of
its business;
4.1.14. Target is a "fund" as defined in section 851(h)(2) of the Code;
it qualified for treatment as a regulated investment company ("RIC") under
Subchapter M of the Code for each past taxable year since it commenced
operations and will continue to meet all the requirements for such
qualification for its current taxable year; and it has no earnings and
profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it. The Assets shall be invested at all times
through the Effective Time in a manner that ensures compliance with the
foregoing;
4.1.15. Target is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the meaning
of section 368(a)(3)(A) of the Code;
4.1.16. Not more than 25% of the value of Target's total assets
(excluding cash, cash items, and U.S. government securities) is invested in
the stock or securities of any one issuer, and not more than 50% of the
value of such assets is invested in the stock or securities of five or
fewer issuers; and
4.1.17. Target will be terminated as soon as reasonably practicable after
the Reorganization, but in all events within six months after the Effective
Time.
4.2. Acquiring Fund represents and warrants as follows:
4.2.1. MHKP Trust is a Business Trust; it is duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Massachusetts; and a copy of its Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts;
4.2.2. MHKP Trust is duly registered as an open-end management investment
company under the 1940 Act, and such registration will be in full force and
effect at the Effective Time;
4.2.3. Acquiring Fund is a duly established and designated series of MHKP
Trust;
4.2.4. No consideration other than Acquiring Fund Shares (and Acquiring
Fund's assumption of the Liabilities) will be issued in exchange for the
Assets in the Reorganization;
4.2.5. Class E Acquiring Fund Shares were only recently authorized for
purposes of facilitating the Reorganization, and only one share of that
class will be outstanding immediately before the Effective Time. The
Acquiring Fund Shares to be issued and delivered to Target hereunder will,
at the Effective Time, have been duly authorized and, when issued and
delivered as provided herein, will be duly and validly issued and
outstanding shares of Acquiring Fund, fully paid and non-assessable, except
to the extent that under Massachusetts law shareholders of a Business Trust
may, under certain circumstances, be held personally liable for its
obligations. Except as contemplated by this Agreement, Acquiring Fund does
not have outstanding any options, warrants, or other rights to subscribe
for or purchase any of its shares, nor is there outstanding any security
convertible into any of its shares;
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4.2.6. Acquiring Fund's current prospectus and statement of additional
information conform in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the rules and regulations thereunder
and does not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
4.2.7. Acquiring Fund is not in violation of, and the execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby will not conflict with or violate, Massachusetts law or
any provision of MHKP Trust's Declaration of Trust or By-Laws or of any
provision of any agreement, instrument, lease, or other undertaking to
which Acquiring Fund is a party or by which it is bound or result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, judgment, or decree to which Acquiring Fund is a party or by
which it is bound, except as previously disclosed in writing to and
accepted by PW Trust;
4.2.8. Except as otherwise disclosed in writing to and accepted by PW
Trust, no litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or (to Acquiring
Fund's knowledge) threatened against MHKP Trust with respect to Acquiring
Fund or any of its properties or assets that, if adversely determined,
would materially and adversely affect Acquiring Fund's financial condition
or the conduct of its business; Acquiring Fund knows of no facts that might
form the basis for the institution of any such litigation, proceeding, or
investigation and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially or adversely affects its business or its ability to consummate
the transactions contemplated hereby;
4.2.9. The execution, delivery, and performance of this Agreement has
been duly authorized as of the date hereof by all necessary action on the
part of MHKP Trust's board of trustees, which has made the determinations
required by Rule 17a-8(a) under the 1940 Act; and, subject to receipt of
any necessary exemptive relief or no-action assurances requested from the
SEC or its staff with respect to sections 17(a) and 17(d) of the 1940 Act,
this Agreement will constitute a valid and legally binding obligation of
Acquiring Fund, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity;
4.2.10. No governmental consents, approvals, authorizations, or filings
are required under the 1933 Act, the 1934 Act, or the 1940 Act for the
execution or performance of this Agreement by MHKP Trust, except for (a)
the filing with the SEC of the Registration Statement, (b) receipt of the
exemptive relief referenced in subparagraph 4.2.9, and (c) such consents,
approvals, authorizations, and filings as have been made or received or as
may be required subsequent to the Effective Time;
4.2.11. On the effective date of the Registration Statement, at the time
of the shareholders' meeting referred to in paragraph 5.2, and at the
Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act, and
the 1940 Act and the regulations thereunder and (b) not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which such statements were made, not misleading;
provided that the foregoing shall not apply to statements in or omissions
from the Proxy Statement made in reliance on and in conformity with
information furnished by PW Trust for use therein;
4.2.12. Acquiring Fund is a "fund" as defined in section 851(h)(2) of the
Code; it qualified for treatment as a RIC under Subchapter M of the Code
for each past taxable year since it commenced
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operations and will continue to meet all the requirements for such
qualification for its current taxable year; Acquiring Fund intends to
continue to meet all such requirements for the next taxable year; and it
has no earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it;
4.2.13. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares issued
in the ordinary course of its business as a series of an open-end
investment company; nor does Acquiring Fund have any plan or intention to
redeem or otherwise reacquire any Acquiring Fund Shares issued to the
Shareholders pursuant to the Reorganization, other than through redemptions
arising in the ordinary course of that business;
4.2.14. Acquiring Fund (a) will actively continue Target's business in
substantially the same manner that Target conducted that business
immediately before the Reorganization, (b) has no plan or intention to sell
or otherwise dispose of any of the Assets, except for dispositions made in
the ordinary course of that business and dispositions necessary to maintain
its status as a RIC under Subchapter M of the Code, and (c) expects to
retain substantially all the Assets in the same form as it receives them in
the Reorganization, unless and until subsequent investment circumstances
suggest the desirability of change or it becomes necessary to make
dispositions thereof to maintain such status;
4.2.15. There is no plan or intention for Acquiring Fund to be dissolved
or merged with another corporation or business trust or any "fund" thereof
(within the meaning of section 851(h)(2) of the Code) following the
Reorganization;
4.2.16. Immediately after the Reorganization, (a) not more than 25% of
the value of Acquiring Fund's total assets (excluding cash, cash items, and
U.S. government securities) will be invested in the stock or securities of
any one issuer and (b) not more than 50% of the value of such assets will
be invested in the stock or securities of five or fewer issuers; and
4.2.17. Acquiring fund does not own, directly or indirectly, nor at the
Effective Time will it own, directly or indirectly, nor has it owned,
directly or indirectly, at any time during the past five years, any shares
of Target.
4.3. Each Fund represents and warrants as follows:
4.3.1. The fair market value of the Acquiring Fund Shares, when received
by the Shareholders, will be approximately equal to the fair market value
of their Target Shares constructively surrendered in exchange therefor;
4.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem or otherwise dispose of any portion of the Acquiring
Fund Shares to be received by them in the Reorganization and (b) does not
anticipate dispositions of those Acquiring Fund Shares at the time of or
soon after the Reorganization to exceed the usual rate and frequency of
dispositions of shares of Target as a series of an open-end investment
company. Consequently, its management expects that the percentage of
Shareholder interests, if any, that will be disposed of as a result of or
at the time of the Reorganization will be de minimis. Nor does its
management anticipate that there will be extraordinary redemptions of
Acquiring Fund Shares immediately following the Reorganization;
4.3.3. The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
4.3.4. Immediately following consummation of the Reorganization,
Acquiring Fund will hold substantially the same assets and be subject to
substantially the same liabilities that Target held or was
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subject to immediately prior thereto, plus any liabilities and expenses of
the parties incurred in connection with the Reorganization;
4.3.5. The fair market value on a going concern basis[, and the total
adjusted basis,] of the Assets will equal or exceed the Liabilities to be
assumed by Acquiring Fund and those to which the Assets are subject;
4.3.6. There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount;
4.3.7. Pursuant to the Reorganization, Target will transfer to Acquiring
Fund, and Acquiring Fund will acquire, at least 90% of the fair market
value of the net assets, and at least 70% of the fair market value of the
gross assets, held by Target immediately before the Reorganization. For the
purposes of this representation, any amounts used by Target to pay its
Reorganization expenses and redemptions and distributions made by it
immediately before the Reorganization (except for (a) distributions made to
conform to its policy of distributing all or substantially all of its
income and gains to avoid the obligation to pay federal income tax and/or
the excise tax under section 4982 of the Code and (b) redemptions not made
as part of the Reorganization) will be included as assets thereof held
immediately before the Reorganization;
4.3.8. None of the compensation received by any Shareholder who is an
employee of Target will be separate consideration for, or allocable to, any
of the Target Shares held by such Shareholder-employee; none of the
Acquiring Fund Shares received by any such Shareholder-employee will be
separate consideration for, or allocable to, any employment agreement; and
the consideration paid to any such Shareholder-employee will be for
services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services; and
4.3.9. Immediately after the Reorganization, the Shareholders will [be
in] [not own shares constituting] "control" of Acquiring Fund within the
meaning of section 304(c) of the Code.
5. COVENANTS
5.1. Each Fund covenants to operate its respective business in the ordinary
course between the date hereof and the Closing, it being understood that (a)
such ordinary course will include declaring and paying customary dividends and
other distributions and such changes in operations as are contemplated by each
Fund's normal business activities and (b) each Fund will retain exclusive
control of the composition of its portfolio until the Closing; provided that
Target shall not dispose of more than an insignificant portion of its historic
business assets during such period without Acquiring Fund's prior consent.
5.2. Target covenants to call a shareholders' meeting to consider and act
upon this Agreement and to take all other action necessary to obtain approval
of the transactions contemplated hereby.
5.3. Target covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
5.4. Target covenants that it will assist MHKP Trust in obtaining such
information as MHKP Trust reasonably requests concerning the beneficial
ownership of Target Shares.
5.5. Target covenants that Target's books and records (including all books
and records required to be maintained under the 1940 Act and the rules and
regulations thereunder) will be turned over to MHKP Trust at the Closing.
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5.6. Each Fund covenants to cooperate in preparing the Proxy Statement in
compliance with applicable federal securities laws.
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other Fund, execute and deliver or cause to be executed and
delivered all such assignments and other instruments, and will take or cause
to be taken such further action, as the other Fund may deem necessary or
desirable in order to vest in, and confirm to, (a) Acquiring Fund, title to
and possession of all the Assets, and (b) Target, title to and possession of
the Acquiring Fund Shares to be delivered hereunder, and otherwise to carry
out the intent and purpose hereof.
5.8. MHKP Trust covenants to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act, and such
state securities laws it may deem appropriate in order to continue its
operations after the Effective Time.
5.9. Subject to this Agreement, each Fund covenants to take or cause to be
taken all actions, and to do or cause to be done all things, reasonably
necessary, proper, or advisable to consummate and effectuate the transactions
contemplated hereby.
6. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance by the
other Fund of all the obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated hereby, as of the Effective Time, with the same force and effect
as if made at and as of the Effective Time, and (c) the following further
conditions that, at or before the Effective Time:
6.1. This Agreement and the transactions contemplated hereby shall have been
duly adopted and approved by PW Trust's board of trustees and shall have been
approved by Target's shareholders in accordance with applicable law.
6.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received
that any other or further action is required to permit the parties to carry
out the transactions contemplated hereby. The Registration Statement shall
have become effective under the 1933 Act, no stop orders suspending the
effectiveness thereof shall have been issued, and the SEC shall not have
issued an unfavorable report with respect to the Reorganization under section
25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin
consummation of the transactions contemplated hereby under section 25(c) of
the 1940 Act. All consents, orders, and permits of federal, state, and local
regulatory authorities (including the SEC and state securities authorities)
deemed necessary by either Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on the assets or properties of either Fund, provided that
either Fund may for itself waive any of such conditions.
6.3. At the Effective Time, no action, suit, or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or to obtain damages or other relief in connection with,
the transactions contemplated hereby.
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6.4. PW Trust shall have received an opinion of Willkie Farr & Gallagher,
counsel to MHKP Trust, substantially to the effect that:
6.4.1. Acquiring Fund is a duly established series of MHKP Trust, a
Business Trust duly organized and validly existing under the laws of the
Commonwealth of Massachusetts with power under its Declaration of Trust to
own all of its properties and assets and, to the knowledge of such counsel,
to carry on its business as presently conducted;
6.4.2. This Agreement (a) has been duly authorized, executed, and
delivered by MHKP Trust on behalf of Acquiring Fund and (b) assuming due
authorization, execution, and delivery of this Agreement by PW Trust on
behalf of Target, is a valid and legally binding obligation of MHKP Trust
with respect to Acquiring Fund, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of equity;
6.4.3. Only one Class E Acquiring Fund Share currently is outstanding.
The Acquiring Fund Shares to be issued and distributed to the Shareholders
under this Agreement, assuming their due delivery as contemplated by this
Agreement, will be duly authorized and validly issued and outstanding and
fully paid and non-assessable, except to the extent that under
Massachusetts law shareholders of a Business Trust may, under certain
circumstances, be held personally liable for its obligations, and no
shareholder of Acquiring Fund has any preemptive right to subscribe for or
purchase such shares;
6.4.4. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, materially
violate MHKP Trust's Declaration of Trust or By-Laws or any provision of
any agreement (known to such counsel) to which MHKP Trust (with respect to
Acquiring Fund) is a party or by which it is bound or, to the knowledge of
such counsel, result in the acceleration of any obligation, or the
imposition of any penalty, under any agreement, judgment, or decree to
which MHKP Trust (with respect to Acquiring Fund) is a party or by which it
is bound, except as set forth in such opinion or as previously disclosed in
writing to and accepted by PW Trust;
6.4.5. To the knowledge of such counsel, no consent, approval,
authorization, or order of any court or governmental authority is required
for the consummation by MHKP Trust on behalf of Acquiring Fund of the
transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act, and the 1940 Act and such as may be required
under state securities laws;
6.4.6. MHKP Trust is registered with the SEC as an investment company,
and to the knowledge of such counsel no order has been issued or proceeding
instituted to suspend such registration; and
6.4.7. To the knowledge of such counsel, (a) no litigation,
administrative proceeding, or investigation of or before any court or
governmental body is pending or threatened as to MHKP Trust (with respect
to Acquiring Fund) or any of its properties or assets attributable or
allocable to Acquiring Fund and (b) MHKP Trust (with respect to Acquiring
Fund) is not a party to or subject to the provisions of any order, decree,
or judgment of any court or governmental body that materially and adversely
affects Acquiring Fund's business, except as set forth in such opinion or
as otherwise disclosed in writing to and accepted by PW Trust.
In rendering such opinion, such counsel may rely, as to matters governed by
the laws of the Commonwealth of Massachusetts, on an opinion of competent
Massachusetts counsel.
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6.5. MHKP Trust shall have received an opinion of Kirkpatrick & Lockhart
LLP, counsel to PW Trust, substantially to the effect that:
6.5.1. Target is a duly established series of PW Trust, a Business Trust
duly organized and validly existing under the laws of the Commonwealth of
Massachusetts with power under its Declaration of Trust to own all of its
properties and assets and, to the knowledge of such counsel, to carry on
its business as presently conducted;
6.5.2. This Agreement (a) has been duly authorized, executed, and
delivered by PW Trust on behalf of Target and (b) assuming due
authorization, execution, and delivery of this Agreement by MHKP Trust on
behalf of Acquiring Fund, is a valid and legally binding obligation of PW
Trust with respect to Target, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of equity;
6.5.3. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, materially
violate PW Trust's Declaration of Trust or By-Laws or any provision of any
agreement (known to such counsel) to which PW Trust (with respect to
Target) is a party or by which it is bound or, to the knowledge of such
counsel, result in the acceleration of any obligation, or the imposition of
any penalty, under any agreement, judgment, or decree to which PW Trust
(with respect to Target) is a party or by which it is bound, except as set
forth in such opinion or as previously disclosed in writing to and accepted
by MHKP Trust;
6.5.4. To the knowledge of such counsel, no consent, approval,
authorization, or order of any court or governmental authority is required
for the consummation by PW Trust on behalf of Target of the transactions
contemplated herein, except such as have been obtained under the 1933 Act,
the 1934 Act, and the 1940 Act and such as may be required under state
securities laws;
6.5.5. PW Trust is registered with the SEC as an investment company, and
to the knowledge of such counsel no order has been issued or proceeding
instituted to suspend such registration; and
6.5.6. To the knowledge of such counsel, (a) no litigation,
administrative proceeding, or investigation of or before any court or
governmental body is pending or threatened as to PW Trust (with respect to
Target) or any of its properties or assets attributable or allocable to
Target and (b) PW Trust (with respect to Target) is not a party to or
subject to the provisions of any order, decree, or judgment of any court or
governmental body that materially and adversely affects its business,
except as set forth in such opinion or as otherwise disclosed in writing to
and accepted by MHKP Trust.
In rendering such opinion, such counsel may rely, as to matters governed by
the laws of the Commonwealth of Massachusetts, on an opinion of competent
Massachusetts counsel.
6.6. PW Trust shall have received an opinion of Kirkpatrick & Lockhart LLP,
its counsel, addressed to and in form and substance satisfactory to PW Trust,
and MHKP Trust shall have received an opinion of Willkie Farr & Gallagher, its
counsel, addressed to and in form and substance satisfactory to MHKP Trust,
each as to the federal income tax consequences mentioned below (each a "Tax
Opinion"). In rendering its Tax Opinion, each such counsel may rely as to
factual matters, exclusively and without independent verification, on the
representations made in this Agreement (or in separate letters addressed to
such counsel) and the certificates delivered pursuant to paragraph 3.4. Each
Tax Opinion shall be substantially to the effect that, based on the facts and
assumptions stated therein, for federal income tax purposes:
6.6.1. Acquiring Fund's acquisition of the Assets in exchange solely for
Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities,
followed by Target's distribution of those shares to
A-12
<PAGE>
the Shareholders constructively in exchange for the Shareholders' Target
Shares, will constitute a reorganization within the meaning of section
368(a)(1)[(D)][(C)] of the Code, and each Fund will be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
6.6.2. No gain or loss will be recognized to Target on the transfer to
Acquiring Fund of the Assets in exchange solely for Acquiring Fund Shares
and Acquiring Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders in constructive exchange
for their TargetShares;
6.6.3. No gain or loss will be recognized to Acquiring Fund on its
receipt of the Assets in exchange solely for Acquiring Fund Shares and its
assumption of the Liabilities;
6.6.4. Acquiring Fund's basis for the Assets will be the same as the
basis thereof in Target's hands immediately before the Reorganization, and
Acquiring Fund's holding period for the Assets will include Target's
holding period therefor;
6.6.5. A Shareholder will recognize no gain or loss on the constructive
exchange of all its Target Shares solely for Acquiring Fund Shares pursuant
to the Reorganization; and
6.6.6. A Shareholder's basis for the Acquiring Fund Shares to be received
by it in the Reorganization will be the same as the basis for its Target
Shares to be constructively surrendered in exchange for those Acquiring
Fund Shares, and its holding period for those Acquiring Fund Shares will
include its holding period for those Target Shares, provided they are held
as capital assets by the Shareholder at the Effective Time.
Notwithstanding paragraphs 6.6.2 and 6.6.4, each Tax Opinion may state that
no opinion is expressed as to the effect of the Reorganization on the Funds or
any Shareholder (regarding the recognition of gain or loss and/or the
determination of the basis or holding period) with respect to any asset
(including certain options, futures, and forward contracts included in the
Assets) as to which any unrealized gain or loss is required to be recognized
for federal income tax purposes at the end of a taxable year (or on the
termination or transfer thereof) under a mark-to-market system of accounting.
At any time before the Closing, (a) Acquiring Fund may waive any of the
foregoing conditions if, in the judgment of MHKP Trust's board of trustees,
such waiver will not have a material adverse effect on its shareholders'
interests, and (b) Target may waive any of the foregoing conditions if, in the
judgment of PW Trust's board of trustees, such waiver will not have a material
adverse effect on the Shareholders' interests.
7. BROKERAGE FEES AND EXPENSES
7.1. Each Investment Company represents and warrants to the other that there
are no brokers or finders entitled to receive any payments in connection with
the transactions provided for herein.
7.2. Except as otherwise provided herein, all expenses incurred in
connection with the transactions contemplated by this Agreement (whether or
not they are consummated) will be borne by the Funds proportionately, as
follows: each such expense will be borne by the Funds in proportion to their
respective net assets as of the close of business on the last business day of
the month in which such expense was incurred. Such expenses include: (a)
expenses incurred in connection with entering into and carrying out the
provisions of this Agreement; (b) expenses associated with the preparation and
filing of the Registration Statement; (c) registration or qualification fees
and expenses of preparing and filing such forms as are necessary under
applicable state securities laws to qualify the Acquiring Fund Shares to be
issued in connection herewith in
A-13
<PAGE>
each state in which Target's shareholders are resident as of the date of the
mailing of the Proxy Statement to such shareholders; (d) printing and postage
expenses; (e) legal and accounting fees; and (f) solicitation costs.
8. ENTIRE AGREEMENT; SURVIVAL
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall survive
the Closing.
9. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Target's shareholders:
9.1. By either Fund (a) in the event of the other Fund's material breach of
any representation, warranty, or covenant contained herein to be performed at
or prior to the Effective Time, (b) if a condition to its obligations has not
been met and it reasonably appears that such condition will not or cannot be
met, or (c) if the Closing has not occurred on or before December 31, 1995; or
9.2. By the parties' mutual agreement.
In the event of termination under paragraphs 9.1.(c) or 9.2, there shall be
no liability for damages on the part of either Fund, or the trustees or
officers of either Investment Company, to the other Fund.
10. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
11. MISCELLANEOUS
11.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the Commonwealth of Massachusetts; provided that, in the
case of any conflict between such laws and the federal securities laws, the
latter shall govern.
11.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies
under or by reason of this Agreement.
11.3. The parties acknowledge that each Investment Company is a Business
Trust. Notice is hereby given that this instrument is executed on behalf of
each Investment Company's trustees solely in their capacity as trustees, and
not individually, and that each Investment Company's obligations under this
instrument are not binding on or enforceable against any of its trustees,
officers, or shareholders, but are only binding on and enforceable against the
respective Funds' assets and property. Each Fund agrees that, in asserting any
rights or claims under this Agreement, it shall look only to the other Fund's
assets and property in settlement of such rights or claims and not to such
trustees or shareholders.
A-14
<PAGE>
IN WITNESS WHEREOF, each party has caused this Agreement to be executed by
its duly authorized officer.
ATTEST: MITCHELL HUTCHINS/KIDDER, PEABODY
INVESTMENT TRUST,on behalf of its
series, MITCHELL HUTCHINS/KIDDER,
PEABODY GLOBAL EQUITY FUND
By: _________________________________ ______________________________________
Secretary Vice President
ATTEST: PAINEWEBBER [ATLAS FUND] [INVESTMENT
SERIES], on behalf of its series,
PAINEWEBBER [ATLAS GLOBAL GROWTH]
[EUROPE GROWTH] [GLOBAL GROWTH AND
INCOME] FUND
By: _________________________________ ______________________________________
Secretary Vice President
A-15
<PAGE>
APPENDIX B
FORM OF PROPOSED SUB-ADVISORY AGREEMENT
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 an [Investment Advisory and
Administration Contract dated April 21, 1988, as supplemented May 19, 1989
("Management Agreement")], with [PaineWebber Investment Series ("Trust")], an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act") with respect to the [PaineWebber Global
Growth and Income Fund ("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 [equity securities portion of the
Portfolio's assets] 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 [equity securities portion of the Portfolio's
assets], including investment research and management. The Sub-Adviser will
determine from time to time what [equity securities investments] will be
purchased, retained or sold by the Portfolio. The Sub-Adviser will be
responsible for placing purchase and sell orders for [equity securities
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 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
B-1
<PAGE>
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 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.
B-2
<PAGE>
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.
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
B-3
<PAGE>
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 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
B-4
<PAGE>
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.
(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 120 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 120 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," "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.
B-5
<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:
B-6
<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
<TABLE>
<CAPTION>
FUND ANNUAL FEE RATE
---- ---------------
<S> <C>
[PaineWebber Investment Series--
PaineWebber Global Growth and 0.29% of average daily net assets
Income Fund attributable to equity portion of portfolio]
</TABLE>
<PAGE>
PROXY STATEMENT
--------------------------
ATLAS GLOBAL GROWTH FUND
EUROPE GROWTH FUND
GLOBAL GROWTH AND
INCOME FUND
--------------------------
----------------------------------
ATLAS GLOBAL GROWTH FUND
EUROPE GROWTH FUND
GLOBAL GROWTH AND
INCOME FUND
----------------------------------
---------------------
NOTICE OF
SPECIAL MEETING
TO BE HELD ON
JULY 21, 1995
AND
PROXY STATEMENT
---------------------
<PAGE>
PROXY
-----
PAINEWEBBER ATLAS FUND - PAINEWEBBER ATLAS GLOBAL GROWTH FUND
Special Meeting of Shareholders - July 21, 1995
The undersigned hereby appoints as proxies Dianne E. O'Donnell and Giovanni A.
Urena and each of them (with power of substitution) to vote for the undersigned
all shares of beneficial interest of the undersigned 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" all proposals. This proxy is solicited on
behalf of the Board of Trustees of PaineWebber Atlas Fund.
YOUR VOTE IS IMPORTANT
Please date and sign this proxy on the reverse side and return it in the
enclosed envelope to Alamo Direct Mail Services, Inc., 10 Lucon Drive, Deer
Park, NY 11729.
This proxy will not be voted unless it is dated and signed exactly as
instructed below.
Sign exactly as name appears hereon.
__________________________________(L.S.)
__________________________________(L.S.) Date ____________, 1995
If the shares are held jointly, each Shareholder named should sign. If only one
signs, his or her signature will be binding. 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."
<PAGE>
Please indicate your vote by an "X" in the appropriate box below.
The board of trustees recommends a vote "FOR"
1. Approval of an Agreement and Plan of Reorganization and Termination between
Mitchell Hutchins/Kidder Peabody Global Equity Fund and PaineWebber Atlas Global
Growth Fund ("Fund").
FOR _______ AGAINST _______ ABSTAIN ______
2. Approval of Sub-Advisory Agreement between Mitchell Hutchins Asset Management
Inc. and GE Investment Management Incorporated relating to the Fund.
FOR _______ AGAINST _______ ABSTAIN ______
Please sign and date the reverse side of this card
<PAGE>
PAINEWEBBER INVESTMENT SERIES - PAINEWEBBER EUROPE FUND
Special Meeting of Shareholders - July 21, 1995
The undersigned hereby appoints as proxies Dianne E. O'Donnell and Giovanni A.
Urena and each of them (with power of substitution) to vote for the undersigned
all shares of beneficial interest of the undersigned 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" all proposals. This proxy is solicited on
behalf of the Board of Trustees of PaineWebber Investment Series.
YOUR VOTE IS IMPORTANT
Please date and sign this proxy on the reverse side and return it in the
enclosed envelope to Alamo Direct Mail Services, Inc., 10 Lucon Drive, Deer
Park, NY 11729.
This proxy will not be voted unless it is dated and signed exactly as
instructed below.
Sign exactly as name appears hereon.
__________________________________(L.S.)
__________________________________(L.S.) Date ____________, 1995
If the shares are held jointly, each Shareholder named should sign. If only one
signs, his or her signature will be binding. 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."
<PAGE>
Please indicate your vote by an "X" in the appropriate box below.
The board of trustees recommends a vote "FOR"
1. Approval of an Agreement and Plan of Reorganization and Termination between
Mitchell Hutchins/Kidder Peabody Global Equity Fund and PaineWebber Europe Fund
("Fund").
FOR _______ AGAINST _______ ABSTAIN ______
2. Approval of Sub-Advisory Agreement between Mitchell Hutchins Asset Management
Inc. and GE Investment Management Incorporated relating to the Fund.
FOR _______ AGAINST _______ ABSTAIN ______
Please sign and date the reverse side of this card
<PAGE>
PAINEWEBBER INVESTMENT SERIES - PAINEWEBBER GLOBAL GROWTH AND INCOME FUND
Special Meeting of Shareholders - July 21, 1995
The undersigned hereby appoints as proxies Dianne E. O'Donnell and Giovanni A.
Urena and each of them (with power of substitution) to vote for the undersigned
all shares of beneficial interest of the undersigned 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" all proposals. This proxy is solicited on
behalf of the Board of Trustees of PaineWebber Investment Series.
YOUR VOTE IS IMPORTANT
Please date and sign this proxy on the reverse side and return it in the
enclosed envelope to Alamo Direct Mail Services, Inc., 10 Lucon Drive, Deer
Park, NY 11729.
This proxy will not be voted unless it is dated and signed exactly as
instructed below.
Sign exactly as name appears hereon.
__________________________________(L.S.)
__________________________________(L.S.) Date ____________, 1995
If the shares are held jointly, each Shareholder named should sign. If only one
signs, his or her signature will be binding. 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."
<PAGE>
Please indicate your vote by an "X" in the appropriate box below.
The board of trustees recommends a vote "FOR"
1. Approval of an Agreement and Plan of Reorganization and Termination between
Mitchell Hutchins/Kidder Peabody Global Equity Fund and PaineWebber Global
Growth and Income Fund ("Fund").
FOR _______ AGAINST _______ ABSTAIN ______
2. Approval of Sub-Advisory Agreement between Mitchell Hutchins Asset Management
Inc. and GE Investment Management Incorporated relating to the Fund.
FOR _______ AGAINST _______ ABSTAIN ______
Please sign and date the reverse side of this card
