<PAGE>
As filed with the Securities and Exchange Commission on June 14, 1995
Registration No. 33-59381
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 [ X ]
-
Post-Effective Amendment No.___ [ ]
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
1285 Avenue of the Americas
New York, New York 10019
(Address of Principal Executive Offices)
(212) 713-2000
(Registrant's Area Code and Telephone Number)
DIANNE E. O'DONNELL, ESQ.
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
(Name and Address of Agent for Service)
Copies to:
JON S. RAND, ESQ. ARTHUR J. BROWN, ESQ.
Willkie Farr & Gallagher BRIAN F. MCNALLY, ESQ.
One Citicorp Center Kirkpatrick & Lockhart LLP
153 East 53rd Street 1800 M Street, N.W.
New York, New York 10022-4669 Washington, D.C. 20036-5891
Telephone: (212) 821-8000 Telephone: (202) 778-9000
Approximate Date of Proposed Public Offering: as soon as practicable
after this Registration Statement becomes effective.
The Registrant has filed a declaration registering an indefinite
amount of securities pursuant to Rule 24f-2 under the Investment Company Act of
1940, as amended. Accordingly, no filing fee is payable herewith. The
Registrant filed on October 28, 1994, the notice required by Rule 24f-2 for its
fiscal year ended August 31, 1994.
THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE
<PAGE>
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, BY ACTION PURSUANT TO SECTION 8(A), MAY DETERMINE.
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Letters to Shareholders
Notices of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Pages
Exhibits
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
FORM N-14 CROSS REFERENCE SHEET
Part A Item No. Prospectus/Proxy
and Caption Statement Caption
--------------- -----------------
1. Beginning of Registration Cover Page
Statement and Outside Front Cover
Page of Prospectus
2. Beginning and Outside Back Cover Table of Contents
Page of Prospectus
3. Synopsis Information and Risk Synopsis; Comparison of Principal
Factors Risk Factors
4. Information About the Transaction Synopsis; The Proposed Transactions
5. Information About the Registrant Synopsis; Comparison of Principal
Risk Factors; Additional Information
About Mitchell Hutchins/Kidder,
Peabody Global Equity Fund;
Miscellaneous; Prospectus of Mitchell
Hutchins/Kidder, Peabody Global
Equity Fund*
6. Information About the Company Synopsis; Comparison of Principal
Being Acquired Risk Factors; Miscellaneous;
Prospectuses of PaineWebber Atlas
Global Growth Fund, PaineWebber
Europe Growth Fund and PaineWebber
Global Growth and Income Fund*
7. Voting Information Voting Information
8. Interest of Certain Persons and Not Applicable
Experts
9. Additional Information Required Not Applicable
for Reoffering by Persons Deemed
to be Underwriters
- ----------
* Previously filed in registration statement on Form N-14, SEC
File No. 33-59381, filed on Edgar on May 16, 1995, and incorporated
herein by reference.
<PAGE>
Part B Item No. Statement of Additional
and Caption Information Caption
--------------- ------------------------
10. Cover Page Cover Page*
11. Table of Contents Table of Contents*
12. Additional Information About the Management of the Fund; Redemption of
Registrant Shares; Exchange Privilege; Statement
of Additional Information of Mitchell
Hutchins/Kidder, Peabody Global
Equity Fund*
13. Additional Information About the Statements of Additional Information
Company Being Acquired of PaineWebber Atlas Global Growth
Fund, PaineWebber Europe Growth Fund
and PaineWebber Global Growth and
Income Fund*
14. Financial Statements Annual Reports of Mitchell
Hutchins/Kidder, Peabody Global
Equity Fund, for Fiscal Year Ended
August 31, 1994; PaineWebber Atlas
Global Growth Fund for Fiscal Year
Ended August 31, 1994; and
PaineWebber Europe Growth Fund and
PaineWebber Global Growth and Income
Fund for Fiscal Year Ended October
31, 1994*
Semi-Annual Reports of Mitchell
Hutchins/Kidder, Peabody Global
Equity Fund and PaineWebber Atlas
Global Growth Fund, each for Six
Months Ended February 28, 1995*
Pro Forma financial statements for
the year ended February 28, 1995*
- ----------
* Previously filed in registration statement on Form N-14, SEC
File No. 33-59381, filed on Edgar on May 16, 1995, and incorporated
herein by reference.
<PAGE>
PAINEWEBBER ATLAS GLOBAL GROWTH FUND
(a series of PaineWebber Atlas Fund)
June __, 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 automatically would become a shareholder of MH/KP Global
Equity Fund. Atlas Global Growth Fund is a series of PaineWebber Atlas Fund.
MH/KP Global Equity Fund is a series of Mitchell Hutchins/Kidder, Peabody
Investment Trust, an open-end management investment company organized as a
Massachusetts business trust.
YOUR BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE REORGANIZATION PROPOSAL.
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.
In addition, the attached proxy materials describe a proposal to approve a
new sub-advisory agreement ("Sub-Advisory Agreement") for Atlas Global Growth
Fund. Your board of trustees 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 __, 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
automatically would become a shareholder of MH/KP Global Equity Fund. Europe
Growth Fund is a series of PaineWebber Investment Series. MH/KP Global Equity
Fund is a series of Mitchell Hutchins/Kidder, Peabody Investment Trust, an open-
end management investment company organized as a Massachusetts business trust.
YOUR BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE REORGANIZATION PROPOSAL.
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.
In addition, the attached proxy materials describe a proposal to approve a
new sub-advisory agreement ("Sub-Advisory Agreement") for Europe Growth Fund.
Your board of trustees 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 __, 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 automatically would become a shareholder of MH/KP
Global Equity Fund. Global Growth and Income Fund is a series of PaineWebber
Investment Series. MH/KP Global Equity Fund is a series of Mitchell
Hutchins/Kidder, Peabody Investment Trust, an open-end management investment
company organized as a Massachusetts business trust.
YOUR BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE REORGANIZATION PROPOSAL.
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.
In addition, the attached proxy materials describe a proposal to approve a
new sub-advisory agreement ("Sub-Advisory Agreement") for Global Growth and
Income Fund. Your board of trustees 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 __, 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 __, 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 __, 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 __, 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 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 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.
<PAGE>
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 __, 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>
<CAPTION>
<S> <C>
VOTING INFORMATION.......................................................... 1
PROPOSAL 1. APPROVAL OF THE REORGANIZATIONS................................. 3
SYNOPSIS.................................................................... 3
COMPARISON OF PRINCIPAL RISK FACTORS........................................ 23
THE PROPOSED TRANSACTIONS................................................... 25
ADDITIONAL INFORMATION ABOUT MH/KP GLOBAL EQUITY FUND....................... 37
PROPOSAL 2. APPROVAL OF THE SUB-ADVISORY AGREEMENTS......................... 39
MISCELLANEOUS............................................................... 44
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 __, 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.
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.
<PAGE>
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:
Fund Proposal
---- --------
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.
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 4.
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.
2
<PAGE>
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 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 MH/KP Global Equity Fund
------------------------ ------------------------
Class A Class A
Class B Class E
Class C Class C
Class D Class B
Europe Growth Fund MH/KP Global Equity Fund
------------------ ------------------------
Class A Class A
3
<PAGE>
Class B Class E
Class D Class B
Global Growth and Income Fund MH/KP Global Equity Fund
----------------------------- ------------------------
Class A Class A
Class B Class E
Class D 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.
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 by 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 by 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 will be reduced to 4.5% of the initial
offering price effective June _, 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 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.
REORGANIZATION OF ATLAS GLOBAL GROWTH FUND INTO MH/KP GLOBAL EQUITY FUND
4
<PAGE>
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.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
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 NONE 5% NONE NONE NONE 5% NONE NONE
(as a percentage of redemption proceeds)
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<CAPTION>
Atlas Global Growth Fund MH/KP Global Equity Fund
(fiscal year ended 8/31/94) (fiscal year ended 8/31/94) Combined Fund (Estimated)
---------------------------------- --------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B/(1)/ C D/(2)/ A B C A E C B
Manage-
ment 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 charge of 5.75% of
the public offering price (4.5% of the public offering price effective June _,
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
5
<PAGE>
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 redemp-
tion 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 redemp-
tion 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.
6
<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.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
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>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
EUROPE GROWTH FUND MH/KP GLOBAL EQUITY
(FISCAL YEAR ENDED FUND (FISCAL YEAR
10/31/94) ENDED 8/31/94) COMBINED FUND (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>
Manage-
ment 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.
7
<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 June _,
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 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 redemp-
tion 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 redemp-
tion at end of period...... $72 $ 99 $138 $217
Assuming no redemption..... $22 $ 69 $118 $217
Class C shares............... $12 $ 37 $ 63 $140
Class B shares............... $23 $ 70 $120 $257
- ----------------------------------------------------------------------------------
</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.
8
<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.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
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>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
GLOBAL GROWTH AND
INCOME FUND (FISCAL YEAR MH/KP GLOBAL EQUITY FUND
ENDED 10/31/94) (FISCAL YEAR ENDED 8/31/94) COMBINED FUND (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>
Manage-
ment 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
9
<PAGE>
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 June _,
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 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 redemp-
tion 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 redemp-
tion 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 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
10
<PAGE>
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.
SHAREHOLDER TRANSACTION EXPENSES
<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>
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
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
</TABLE>
<TABLE>
<CAPTION>
ATLAS GLOBAL GROWTH FUND MH/KP GLOBAL EQUITY FUND EUROPE GROWTH FUND
(FISCAL YEAR ENDED 8/31/94) (FISCAL YEAR ENDED (FISCAL YEAR ENDED
8/31/94) 10/31/94) COMBINED FUND (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>
Manage-
ment Fees 0.75% 0.75% 0.75% 0.75% 1.00% 1.00% 1.00% 0.85% 0.85% 0.85% 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% 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% 1.41% 2.19% 1.12% 2.17%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</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 June _,
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 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.
11
<PAGE>
<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 redemp-
tion 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 redemp-
tion 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 $ 88 $119 $206
Class E shares:
Assuming complete redemp-
tion at end of period...... $72 $ 99 $137 $252
Assuming no redemption..... $22 $ 69 $117 $252
Class C shares............... $11 $ 36 $ 62 $136
Class B shares............... $22 $ 68 $116 $213
</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 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.
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
12
<PAGE>
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 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.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
GLOBAL GROWTH AND
EUROPE GROWTH FUND INCOME FUND COMBINED 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>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
GLOBAL GROWTH MH/KP GLOBAL
EUROPE GROWTH FUND AND INCOME EQUITY FUND
(FISCAL YEAR ENDED FUND (FISCAL YEAR (FISCAL YEAR
10/31/94) ENDED 10/31/94) ENDED 8/31/94) COMBINED FUND (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>
Manage-
ment 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.
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 June _,
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
13
<PAGE>
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 redemp-
tion 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 redemp-
tion 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 $119 $209
Class E shares:
Assuming complete redemp-
tion 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.
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 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
14
<PAGE>
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 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
ATLAS GLOBAL GROWTH FUND GLOBAL GROWTH AND INCOME FUND COMBINED FUND
-------------------------------- ---------------------------------- -----------------------------
Class Class Class Class Class A Class Class D/(2)/ Class Class Class Class
A B/(1)/ C D/(2)/ B/(1)/ 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>
15
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
GLOBAL GROWTH AND INCOME
ATLAS GLOBAL GROWTH FUND FUND FISCAL YEAR ENDED MH/KP GLOBAL EQUITY FUND
(FISCAL YEAR ENDED 08/31/94) 10/31/94) (FISCAL YEAR ENDED 8/31/94)
------------------------------- ------------------------ ------------------------------
CLASS Class CLASS Class CLASS CLASS CLASS CLASS CLASS CLASS
A B/(1)/ C D/(2)/ A B/(1)/ D/(2)/ A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Manage-
ment Fees 0.75% 0.75% 0.75% 0.75% 0.90% 0.90% 0.90% 0.85% 0.85% 1.00%
12b-1 Fees 0.20% 1.00% 0.00% 1.00% 0.25% 1.00% 1.00% 0.25% 1.00% 0.00%
Other
Expenses 0.44% 0.44% 0.38% 0.45% 0.61% 0.64% 0.65% 0.33% 0.33% 0.33%
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
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%
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
<CAPTION>
COMBINED FUND
(ESTIMATED)
----------------------------
Class CLASS CLASS CLASS
A E C B
----- ----- ----- -----
<S> <C> <C> <C> <C>
Manage-
ment Fees 0.85% 0.85% 0.85% .85%
12b-1 Fees 0.25% 1.00% 0.00% 1.00%
Other
Expenses 0.31% 0.34% 0.27% .32%
---- ---- ---- ---
Total Fund
Operating
Expenses/(3)/ 1.41% 2.19% 1.12% .17%
==== ==== ==== ===
</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.
/(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 June _,
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)/
-------- ----------- ---------- --------------
ATLAS GLOBAL GROWTH FUND
<S> <C> <C> <C> <C>
Class A shares............... $59 $ 87 $118 $204
Class B shares:
Assuming complete redemp-
tion 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
</TABLE>
16
<PAGE>
<TABLE>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS/(1)/
-------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Class B shares:
Assuming complete redemp-
tion 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 $119 $206
Class E shares:
Assuming complete redemp-
tion at end of period...... $22 $ 69 $117 $215
Assuming no redemption..... $72 $ 99 $137 $215
Class C shares............... $11 $ 36 $ 62 $136
Class B shares............... $22 $ 68 $116 $215
</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.
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 the
Reorganizations.
17
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
COMBINED FUND (ESTIMATED)
------------------------------
CLASS CLASS CLASS CLASS
A E C B
<S> <C> <C> <C> <C>
Management Fees 0.85% 0.85% 0.85% 0.85%
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 1.36% 2.13% 1.06% 2.15%
==== ==== ==== ====
</TABLE>
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 June _,
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 redemp-
tion 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 redemp-
tion 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 redemp-
tion 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
</TABLE>
18
<PAGE>
<TABLE>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS/(1)/
-------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
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............... $71 $ 98 $128 $212
Class E shares:
Assuming complete redemp-
tion at end of period...... $72 $ 97 $134 $208
Assuming no redemption..... $22 $ 67 $114 $209
Class C shares............... $11 $ 34 $ 58 $129
Class B shares............... $22 $ 67 $115 $248
</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.
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.
The above examples and tables assume all three of the Acquired Funds will
participate in the Reorganizations. If at least one, but not all, of the
Acquired Funds participate in the Reorganizations, the estimated annual fund
operating expense ratios for any such combination will not differ significantly
from those set forth in the above examples and tables.
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.
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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.
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 U.S. 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 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
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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 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 June _, 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 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
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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.
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, each 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 28. 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.
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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 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
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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 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.
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
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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 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
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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
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.
26
<PAGE>
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 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.
27
<PAGE>
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 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;
(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;
28
<PAGE>
(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.
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.
29
<PAGE>
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.
30
<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.
31
<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.
32
<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.
33
<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.
34
<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.
35
<PAGE>
If all Acquired Funds participate in the Reorganizations:
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
------------
Net Assets
<S> <C>
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.
36
<PAGE>
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.
Selected data for a share of beneficial interest outstanding throughout
each period is presented below:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------
FOR THE SIX FOR THE YEARS ENDED FOR THE PERIOD
MONTHS ENDED AUGUST 31, 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.
37
<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.
38
<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 ("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.
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
39
<PAGE>
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 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 & Co. Inc. 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
40
<PAGE>
(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 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:
Approximate Annual Rate of Investment
Net Assets as of Advisory Fee as a
Name of Portfolio March 31, 1995 Percentage of Net Assets
----------------- ---------------- -------------------------
Mitchell Hutchins/Kidder, $200,600,000 .70% of average daily net
Peabody Global Equity Fund assets up to $200 million;
.50% over $200 million*
GE Global Equity Fund (a $ 31,500,000 .75%**
series of GE Funds)
Global Growth Portfolio $ 35,400,000 .29%*
Global Small Cap Fund Inc. $ 42,196,969 .50% of average
weekly net assets*
* 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
41
<PAGE>
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.
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
42
<PAGE>
executive officers and directors of GEIM are identified in the table below:
CHIEF EXECUTIVE OFFICER AND DIRECTORS OF GEIM
---------------------------------------------
Name Principal Occupation Address
---- -------------------- -------
[S] [C] [C]
Dale F. Frey Chairman, President 3003 Summer Street
and Chief Executive Stamford, Connecticut
Officer of GEIM 06905
Eugene K. Bolton Director and 3003 Summer Street
Executive Vice Stamford, Connecticut
President of GEIM 06905
Michael J. Cosgrove Director and 3003 Summer Street
Executive Vice Stamford, Connecticut
President of GEIM 06905
Ralph R. Layman Director and 3003 Summer Street
Executive Vice Stamford, Connecticut
President of GEIM 06905
Alan M. Lewis Director, Executive 3003 Summer Street
Vice President, Stamford, Connecticut
General Counsel and 06905
Secretary of GEIM
John H. Myers Director and 3003 Summer Street
Executive Vice Stamford,Connecticut
President of GEIM 06905
Geoffrey R. Norman Director and 3003 Summer Street
Executive Vice Stamford, Connecticut
President of GEIM 06905
Donald W. Torey Director, Executive 3003 Summer Street
Vice President and Stamford, Connecticut
Chief Financial 06905
Officer of GEIM
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
43
<PAGE>
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
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 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.
44
<PAGE>
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.
45
<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 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
A-1
<PAGE>
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.
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
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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 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.
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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;
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
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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 (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;
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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;
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
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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 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;
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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 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.
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
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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.
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;
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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.
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;
A-10
<PAGE>
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 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
A-11
<PAGE>
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 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
-------------
A-12
<PAGE>
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.
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-13
<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 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
B-1
<PAGE>
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.
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
B-2
<PAGE>
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 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
B-3
<PAGE>
of any regulatory or industry self-regulatory agency, necessary to be met in
order to perform the services contemplated by the Management Agreement; (iv) has
the authority to enter into and perform the services contemplated by the
Management Agreement; and (v) will promptly notify the Sub-Adviser of the
occurrence of any event that would disqualify Mitchell Hutchins from serving as
an investment adviser of an investment company pursuant to Section 9(a) of the
1940 Act or otherwise.
(b) Mitchell Hutchins agrees that it will notify GEIM, to the extent
possible, within a reasonable period of time prior to any termination of this
Agreement by Mitchell Hutchins pursuant to Section 11(c) (including any
termination by assignment resulting from a foreseeable change in control of
Mitchell Hutchins that is a matter of public information), and that it will
notify GEIM promptly following any other termination of this Agreement pursuant
to Section 11(c).
11. Duration and Termination.
-------------------------
(a) This Agreement shall become effective upon the date first above written,
provided that this Agreement shall not take effect unless it has first been
approved (i) by a vote of a majority of those trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by a vote of a majority of outstanding voting securities of the Portfolio.
(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
B-4
<PAGE>
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.
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-5
<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 0.29% of average daily net assets attributable to
Global Growth and Income Fund equity portion of portfolio]
</TABLE>
<PAGE>
PAINEWEBBER ATLAS GLOBAL GROWTH FUND
Supplement to Prospectus Dated January 1, 1995
The board of trustees of PaineWebber Atlas Fund ("Trust") has approved a
Plan of Reorganization and Termination ("Reorganization") for submission to
the shareholders of its sole series, PaineWebber Atlas Global Growth Fund
("Fund"), at a special meeting to be held July 14, 1995. If the proposed
Reorganization is approved and implemented, all the Fund's assets will be
acquired and its liabilities assumed by Mitchell Hutchins/Kidder, Peabody
Global Equity Fund ("MH/KP Global Equity Fund") in a tax-free reorganization.
As a result of the Reorganization, the two funds' assets would be combined and
each Fund shareholder would, on the closing date of the transaction, receive a
number of full and fractional shares of the corresponding Class of shares of
MH/KP Global Equity Fund having an aggregate value equal to the value of the
shareholder's holdings in the Fund. MH/KP Global Equity Fund is a series of
Mitchell Hutchins/Kidder, Peabody Investment Trust, an open-end management
investment company organized as a Massachusetts business trust. There can be
no assurance that the Fund's shareholders will approve the Reorganization.
In addition, the Trust's board of trustees has approved the submission to
the Fund's shareholders of a proposal to approve a new sub-advisory agreement
with GE Investment Management Incorporated for the Fund.
The meeting of Fund shareholders to consider the proposed Reorganization
and sub-advisory agreement will be held on July 14, 1995. If the
Reorganization is approved, sales of all Classes of Fund shares will cease on
July 28, 1995, so that Fund shares will no longer be available for purchase or
exchange starting on July 28, 1995 through the closing date of the
Reorganization. Redemptions of Fund shares and exchanges of
Fund shares for shares of another PaineWebber or Mitchell Hutchins/Kidder,
Peabody mutual fund ("exchange redemptions") may be effected through the
closing date of the Reorganization. Effective immediately, the $5.00 service
fee on exchanges will be waived on all exchange redemptions.
Dated: May 16, 1995
<PAGE>
PAINEWEBBER EUROPE GROWTH FUND
Supplement to Prospectus Dated March 1, 1995
The board of trustees of PaineWebber Investment Series ("Trust") has
approved a Plan of Reorganization and Termination ("Reorganization") for
submission to the shareholders of PaineWebber Europe Growth Fund (the "Fund"),
a series of the Trust, at a special meeting to be held on July 14, 1995. If
the proposed Reorganization is approved and implemented, all of the Fund's
assets will be acquired and its liabilities assumed by Mitchell
Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP Global Equity Fund") in a
tax-free reorganization. As a result of the Reorganization, the two funds'
assets would be combined and each Fund shareholder would, on the closing date
of the transaction, receive a number of full and fractional shares of the
corresponding Class of shares of MH/KP Global Equity Fund having an aggregate
value equal to the value of the shareholder's holdings in the Fund.
In addition, the Trust's board of trustees has approved the submission to
the Fund's shareholders of a proposal to approve a new sub-advisory agreement
with GE Investment Management Incorporated for the Fund.
The meeting of Fund shareholders to consider the proposed reorganization
and sub-advisory agreement will be held on July 14, 1995. There can be no
assurance that the Fund's shareholders will approve the Reorganization. If the
Reorganization is approved, sales of all Classes of Fund shares will cease on
July 28, 1995, so that Fund shares will no longer be available for purchase or
exchange starting on July 28, 1995 through the closing date of the
Reorganization. Redemptions of Fund shares and exchanges of Fund shares for
shares of another PaineWebber mutual fund ("exchange redemptions") may be
effected through the closing date of the Reorganization. Effective
immediately, the $5.00 service fee on exchanges will be waived on all exchange
redemptions.
Dated: May 16, 1995
<PAGE>
PAINEWEBBER GLOBAL GROWTH AND INCOME FUND
Supplement to Prospectus Dated March 1, 1995
The board of trustees of PaineWebber Investment Series ("Trust") has
approved a Plan of Reorganization and Termination ("Reorganization") for
submission to the shareholders of PaineWebber Global Growth and Income Fund
(the "Fund"), a series of the Trust, at a special meeting to be held on July
14, 1995. If the proposed Reorganization is approved and implemented, all of
the Fund's assets will be acquired and its liabilities assumed by Mitchell
Hutchins/Kidder, Peabody Global Equity Fund ("MH/KP Global Equity Fund") in a
tax-free reorganization. As a result of the Reorganization, the two funds'
assets would be combined and each Fund shareholder would, on the closing date
of the transaction, receive a number of full and fractional shares of the
corresponding Class of shares of MH/KP Global Equity Fund having an aggregate
value equal to the value of the shareholder's holdings in the Fund.
In addition, the Trust's board of trustees has approved the submission to
the Fund's shareholders of a proposal to approve a new sub-advisory agreement
with GE Investment Management Incorporated for the Fund.
The meeting of Fund shareholders to consider the proposed Reorganization
and sub-advisory agreement will be held on July 14, 1995. There can be no
assurance that the Fund's shareholders will approve the Reorganization. If
the Reorganization is approved, sales of all Classes of Fund shares will cease
on July 28, 1995, so that Fund shares will no longer be available for purchase
or exchange starting on July 28, 1995 through the closing date of the
Reorganization. Redemptions of Fund shares and exchanges of Fund shares for
shares of another PaineWebber mutual fund ("exchange redemptions") may be
effected through the closing date of the Reorganization. Effective
immediately, the $5.00 service fee on exchanges will be waived on all exchange
redemptions.
Dated: May 16, 1995
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
PART B
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Combined
Statement of Operations For the Year Ended February 28, 1995
(Unaudited)
MH/KP Global PaineWebber PaineWebber
Equity Atlas Global Europe Growth Pro Forma
Fund Growth Fund Fund Adjustments Combined
------------ ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest and dividends (net of foreign withholding taxes) $ 4,185,178 $ 7,832,734 $ 2,125,671 $ 0 $ 14,143,583
----------- ----------- ----------- ----------- ------------
EXPENSES:
Investment advisory and administration fees 2,360,484 3,401,760 1,190,642 96,042 7,048,928
Distribution fees 745,950 2,625,720 768,414 151,001 4,291,085
Transfer agency and service fees 149,793 509,698 217,258 (54,747) 822,002
Custody fees 301,230 1,210,013 383,890 (813,589) 1,081,544
Other 301,284 505,979 259,165 (343,481) 722,947
----------- ----------- ----------- ----------- ------------
3,858,741 8,253,170 2,819,369 (964,774) 13,966,506
----------- ----------- ----------- ----------- ------------
NET INVESTMENT INCOME (LOSS) 326,437 (420,436) (693,698) 964,774 177,077
----------- ----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM
INVESTMENT ACTIVITIES:
Net realized gains (losses) from:
Investment transactions 8,609,598 10,443,677 14,287,436 0 33,340,711
Foreign currency transactions 3,108,384 (23,418,623) (22,365,611) 0 (42,675,850)
Net change in unrealized appreciation/depreciation on: 0
Investments (27,952,679) (89,174,819) (13,069,759) 0 (130,197,257)
Other assets and liabilities denominated 0
in foreign currencies (427,878) 2,615,455 (3,466,908) 0 (1,279,331)
----------- ----------- ----------- ----------- ------------
NET REALIZED AND UNREALIZED LOSSES FROM INVESTMENT ACTIVITIES (16,662,575) (99,534,310) (24,614,842) 0 (140,811,727)
----------- ----------- ----------- ----------- ------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($16,336,138) ($99,954,746) ($25,308,540) $ 964,774 (140,634,650)
=========== =========== =========== =========== ============
See Notes to Pro Forma Combined Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Combined
Statement of Operations For the Year Ended February 28, 1995
(Unaudited)
MH/KP Global PaineWebber PaineWebber
Equity Atlas Global Global Growth Pro Forma
Fund Growth Fund & Income Fund Adjustments Combined
------------ ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest and dividends (net of foreign withholding taxes) $ 4,185,178 $ 7,832,734 $ 3,484,017 $ 0 $ 15,501,929
----------- ----------- ----------- ----------- ------------
EXPENSES:
Investment advisory and administration fees 2,360,484 3,401,760 951,655 45,665 6,759,564
Distribution fees 745,950 2,625,720 594,416 150,951 4,117,037
Transfer agency and service fees 149,793 509,698 189,325 (75,240) 773,576
Custody fees 301,230 1,210,013 332,488 (777,569) 1,066,162
Other 301,284 505,979 188,752 (341,067) 654,948
----------- ----------- ----------- ----------- ------------
3,858,741 8,253,170 2,256,636 (997,260) 13,371,287
----------- ----------- ----------- ----------- ------------
NET INVESTMENT INCOME (LOSS) 326,437 (420,436) 1,227,381 997,260 2,130,642
----------- ----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM
INVESTMENT ACTIVITIES:
Net realized gains (losses) from:
Investment transactions 8,609,598 10,443,677 4,372,152 0 23,425,427
Foreign currency transactions 3,108,384 (23,418,623) (3,817,312) 0 (24,127,551)
Net change in unrealized appreciation/depreciation on: 7
Investments (27,952,679) (89,174,819) (17,758,700) 0 (134,886,198)
Other assets and liabilities denominated 0
in foreign currencies (427,878) 2,615,455 36,213 0 2,223,790
----------- ----------- ----------- ----------- ------------
NET REALIZED AND UNREALIZED LOSSES FROM INVESTMENT ACTIVITIES (16,662,575) (99,534,310) (17,167,647) 0 (133,364,532)
----------- ----------- ----------- ----------- ------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($16,336,138) ($99,954,746) ($15,940,266) $ 997,260 ($131,233,890)
=========== =========== =========== =========== ============
</TABLE>
See Notes to Pro Forma Combined Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Combined
Statement of Operations For the Year Ended February 28, 1995
(Unaudited)
MH/KP Global PaineWebber PaineWebber
Equity Europe Global Growth Pro Forma
Fund Growth Fund & Income Fund Adjustments Combined
------------ ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest and dividends (net of foreign withholding taxes) $ 4,185,178 $ 2,125,671 $ 3,484,017 $ 0 $ 9,794,866
----------- ----------- ----------- ----------- ------------
EXPENSES:
Investment advisory and administration fees 2,360,484 1,190,642 951,655 (410,447) 4,092,334
Distribution fees 745,950 768,414 594,416 0 2,108,780
Transfer agency and service fees 149,793 217,258 189,325 (59,120) 497,256
Custody fees 301,230 383,890 332,488 (412,895) 604,713
Other 301,284 259,165 188,752 (250,367) 498,834
----------- ----------- ----------- ----------- ------------
3,858,741 2,819,369 2,256,636 (1,132,829) 7,801,917
----------- ----------- ----------- ----------- ------------
NET INVESTMENT INCOME (LOSS) 326,437 (693,698) 1,227,381 1,132,829 1,992,949
----------- ----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM
INVESTMENT ACTIVITIES:
Net realized gains (losses) from:
Investment transactions 8,609,598 14,287,436 4,372,152 0 27,269,186
Foreign currency transactions 3,108,384 (22,365,611) (3,817,312) 0 (23,074,539)
Net change in unrealized appreciation/depreciation on: 0
Investments (27,952,679) (13,069,759) (17,758,700) 0 (58,781,138)
Other assets and liabilities denominated 0
in foreign currencies (427,878) (3,466,908) 36,213 0 (3,858,573)
----------- ----------- ----------- ----------- ------------
NET REALIZED AND UNREALIZED LOSSES FROM INVESTMENT ACTIVITIES (16,662,575) (24,614,842) (17,167,647) 0 (58,445,064)
----------- ----------- ----------- ----------- ------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($16,336,138) ($25,308,540) ($15,940,266) $ 1,132,829 ($56,452,115)
=========== =========== =========== =========== ============
See Notes to Pro Forma Combined Financial Statements
</TABLE>
<PAGE>
Notes to Pro Forma Combined Financial Statements
(unaudited)
Basis of Presentation:
Subject to approval of the Plan of Reorganization by the shareholders of
PaineWebber Atlas Global Growth Fund ("Atlas Global Growth"), PaineWebber Europe
Growth Fund ("Europe Growth"), and PaineWebber Global Growth and Income Fund
("Growth and Income"), Mitchell Hutchins/Kidder, Peabody Global Equity Fund
("Global Equity") would acquire the assets of Atlas Global Growth, Europe
Growth, and Global Growth and Income in exchange solely for the assumption by
Global Equity of Atlas Global Growth's, Europe Growth's and Global Growth and
Income's liabilities and shares of Global Equity that correspond to the
outstanding shares of Atlas Global Growth, Europe Growth and Global Growth and
Income. The number of shares to be received would be based on the relative net
asset value of the Funds' shares on the effective date of the Reorganization and
Atlas Global Growth, Europe Growth and Global Growth and Income will be
terminated as soon as practicable thereafter. Due to differences in class
structure, the Global Equity Class B is considered to be part of Class D and
Global Equity Class C is considered to be part of Class A for combined pro forma
results.
The pro forma combined financial statements reflect the financial position of
Global Equity, Atlas Global Growth, Europe Growth Fund, and Global Growth and
Income at February 28, 1995 and the combined results of operations of Global
Equity, Atlas Global Growth, Europe Growth and the Global Growth and Income for
the year ended February 28, 1995.
As a result of the Reorganization, the investment advisory and administration
fee will increase due to the higher fee schedule applicable to Global Equity.
Other fixed expenses will be reduced due to duplication of expenses. In
addition, the pro forma combined statement of assets and liabilities has not
been adjusted as a result of the proposed transaction because such adjustment
would not be material. It is estimated that costs of approximately $400,000
associated with the merger will be charged to each Fund based on net assets
based on the date of reorganization.
The pro forma combined financial statements are presented for the information of
the reader and may not necessarily be representative of what the actual combined
financial statements would have been had the Reorganization occurred at February
28, 1995. The pro forma combined financial statements should be read in
conjunction with the historical financial statements of the constituent Funds
included in the statement of additional information.
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
PART C
OTHER INFORMATION
Item 15. Indemnification
---------------
Section 4.2 of Article IV of the Registrant's Declaration of Trust provides
that no Trustee, officer, employee or agent of the Trust shall be liable to the
Trust, its shareholders, or to any shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except for his or her own bad faith, willful misfeasance, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Section 4.3(a) of Article IV of the Registrant's Declaration of Trust
provides that the appropriate series of the Registrant will indemnify its
Trustees and officers to the fullest extent permitted by law against all
liability and against all expenses reasonably incurred or paid by such Trustees
and officers in connection with any claim, action, suit or proceeding in which
such Trustee or officer becomes involved as a party or otherwise by virtue of
his or her being or having been a Trustee or officer and against amounts paid or
incurred by him or her in the settlement thereof. Additionally, Section 4.3(b)
of Article IV provides that no such person shall be indemnified (i) where such
person is liable to the Trust, a series thereof or the shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office, (ii) where such person has
been finally adjudicated not to have acted in good faith in the reasonable
belief that his or her action was in the best interest of the Trust, or a series
thereof, or (iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in (ii) above resulting in a payment
by a Trustee or officer, unless there has been a determination by the court of
other body approving the settlement or other disposition or based upon a review
of readily available facts by vote of a majority of the non-interested Trustees
or written opinion of independent legal counsel, that such Trustee or officer
did not engage in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office. Section
4.3(b) of Article IV further provides that the rights of indemnification may be
insured against by policies maintained by the Trust. Section 4.4
<PAGE>
of Article IV provides that no Trustee shall be obligated to give any bond or
other security for the performance of any of his or her duties hereunder.
Section 4.6 of Article IV provides that each Trustee, officer or employee
of the Trust or a series thereof shall, in the performance of his or her duties,
be fully and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of account
or other records of the Trust or a series thereof, upon an opinion of counsel,
or upon reports made to the Trust or a series thereof by any of its officers or
employees or by the Investment Adviser, the Administrator, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
Section 9 of the Investment Advisory and Administration Contract with
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins") provides that
Mitchell Hutchins shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any series of the Registrant in connection with
the matters to which the Contract relates, except for a loss resulting from the
willful misfeasance, bad faith, or gross negligence of Mitchell Hutchins in the
performance of its duties or from its reckless disregard of its obligations and
duties under the Contract. Section 13 of the Contract provides that the
Trustees shall not be liable for any obligations of the Trust or any series
under the Contract and that Mitchell Hutchins shall look only to the assets and
property of the Registrant in settlement of such right or claim and not to the
assets and property of the Trustees.
Section 9 of the Sub-Investment Advisory Agreement between Mitchell
Hutchins and GE Investment Management Incorporated ("GEIM") provides that GEIM
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the matters to which the Agreement
relates, except for a loss resulting from the willful misfeasance, bad faith, or
gross negligence of GEIM in the performance of its duties or from its reckless
disregard of its obligations and duties under the Agreement. Section 9 of the
Agreement also provides that the Trustees shall not be liable for any
obligations of the Trust under the Agreement and that Mitchell Hutchins and GEIM
shall look only to the assets and property of the Trust in settlement of such
right or claim and not to the assets and property of the Trustees.
Section 9 of each Distribution Contract provides that the Trust will
indemnify Mitchell Hutchins and its officers, directors and controlling persons
against all liabilities arising from any alleged untrue statement of material
fact in the Registration Statement or from any alleged omission to state in
<PAGE>
the Registration Statement a material fact required to be stated in it or
necessary to make the statements in it, in light of the circumstances under
which they were made, not misleading, except insofar as liability arises from
untrue statements or omissions made in reliance upon and in conformity with
information furnished by Mitchell Hutchins to the Trust for use in the
Registration Statement; and provided that this indemnity agreement shall not
protect any such persons against liabilities arising by reason of their bad
faith, gross negligence or willful misfeasance; and shall not inure to the
benefit of any such persons unless a court of competent jurisdiction or
controlling precedent determines that such result is not against public policy
as expressed in the Securities Act of 1933. Section 9 of each Distribution
Contract also provides that Mitchell Hutchins agrees to indemnify, defend and
hold the Trust, its officers and Trustees free and harmless of any claims
arising out of any alleged untrue statement or any alleged omission of material
fact contained in information furnished by Mitchell Hutchins for use in the
Registration Statement or arising out of an agreement between Mitchell Hutchins
and any retail dealer, or arising out of supplementary literature or advertising
used by Mitchell Hutchins in connection with the Contract.
Section 10 of each Distribution Contract contains provisions similar
to Section 13 of the Investment Advisory and Administration Contract.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be provided to Trustees, officers and
controlling persons of the Trust, pursuant to the foregoing provisions or
otherwise, the Trust has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Trust of
expenses incurred or paid by a Trustee, officer or controlling person of the
Trust in connection with the successful defense of any action, suit or
proceeding or payment pursuant to any insurance policy) is asserted against the
Trust by such Trustee, officer or controlling person in connection with the
securities being registered, the Trust will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 16. Exhibits:
--------
(1) (a) Declaration of Trust1/
-
(b) Amendment effective September 3, 1991 to Declaration of Trust2/
-
<PAGE>
(c) Amendment effective December 11, 1991 to Declaration of Trust3/
-
(d) Amendment effective February 13, 1995 to Declaration of Trust3/
-
(2) (a) By-Laws of the Trust4/
-
(b) Amendment effective August 28, 1991 to By-Laws5/
-
(3) Voting Trust Agreement - None
(4) Agreement and Plan of Reorganization and Termination
(a) PaineWebber Atlas Global Growth Fund3/
-
(b) PaineWebber Europe Growth Fund3/
-
(c) PaineWebber Global Growth and Income Fund3/
-
(5) Specimen security - None
(6) (a) Investment Advisory and Administration Contract3/
-
(b) Form of Investment Sub-Advisory Contract (filed herewith)
(7) (a) Distribution Contract Class A Shares3/
-
(b) Distribution Contract Class B Shares3/
-
(c) Distribution Contract Class C Shares3/
-
(8) Bonus, Profit-Sharing, Pension or Other Similar Contracts - None
(9) (a) Form of Custody Contract with State Street Bank and
Trust Company6/
-
(10) (a) Distribution Related Services Agreement3/
-
(b) Shareholder Servicing Agreement3/
-
(c) Amendment to Amended and Restated Shareholder Servicing and
Distribution Plan3/
-
(11) Opinion and Consent of Willkie Farr & Gallagher (filed herewith)
(12) (a) Opinion and Consent of Willkie Farr & Gallagher3/
-
(b) Opinion and Consent of Kirkpatrick & Lockhart LLP3/
-
(13) Transfer Agency Agreement (filed herewith)
(14) (a) Consent of Deloitte & Touche LLP (filed herewith)
-
(b) Consent of Price Waterhouse LLP (filed herewith)
-
(c) Consent of Ernst & Young LLP (filed herewith)
-
(15) Financial Statements Omitted from Prospectus - None
(16) Copies of manually signed Powers of Attorney (filed
herewith)
(17) Additional Exhibits
(a) Declaration pursuant to Rule 24f-2 3/
-
(b) Proxy Cards3/
-
- ----------
1/ Incorporated by reference to Registration Statement, filed March 29, 1991,
- - Exhibit #1.
2/ Incorporated by reference to Pre-Effective Amendment No. 2 to registration
- - statement on Form N-1A, filed September 4, 1991.
3/ Incorporated by reference to registration statement on Form N-14, SEC File
- - No. 33-59381, filed on EDGAR on May 16, 1995.
4/ Incorporated by reference to Pre-Effective Amendment No. 2 to registration
- - statement on Form N-1A, filed September 4, 1991, as Exhibit 2.
5/ Incorporated by reference to Pre-Effective Amendment No. 2 to registration
- - statement on Form N-1A, filed September 4, 1991.
<PAGE>
6/ Incorporated by reference to Pre-Effective Amendment No. 1 to registration
- - statement on Form N-1A, filed August 7, 1991, as Exhibit 8.
<PAGE>
Item 17. Undertakings
------------
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of the prospectus which
is a part of this Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933, the reoffering prospectus will contain the
information called for by the applicable registration form for
reoffering by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
Registration Statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this amended registration
statement has been signed on behalf of the registrant, in the City of New York,
State of New York, on the 1st day of June, 1995.
MITCHELL HUTCHINS/KIDDER, PEABODY
INVESTMENT TRUST
By: /s/ Dianne E. O'Donnell
-----------------------------------
Dianne E. O'Donnell, Vice President
As required by the Securities Act of 1933, this amended registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
- --------- ----- ----
/s/ David J. Beaubien* Trustee June 1, 1995
- ----------------------
David J. Beaubien
/s/ William W. Hewitt, Jr.* Trustee June 1, 1995
- --------------------------
William W. Hewitt, Jr.
/s/ Thomas R. Jordan* Trustee June 1, 1995
- ---------------------
Thomas R. Jordan
/s/ Frank P.L. Minard* Trustee and June 1, 1995
- ---------------------- President (Chief
Frank P.L. Minard Executive Officer)
/s/ Carl W. Schafer* Trustee June 1, 1995
- --------------------
Carl W. Schafer
/s/ Julian F. Sluyters Vice President and June 1, 1995
- ---------------------- Treasurer (Principal
Julian F. Sluyters Financial and
Accounting Officer)
__________
* Signatures affixed by Elinor W. Gammon pursuant to powers of attorney dated
April 26, 1995 and incorporated by reference from registration statement on Form
N-14, SEC File No. 33-59381, filed on EDGAR on May 16, 1995.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS FILED WITH
FORM N-14
REGISTRATION STATEMENT UNDER [X]
THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 1
-----
POST-EFFECTIVE AMENDMENT NO. _____
MITCHELL HUTCHINS/KIDDER PEABODY INVESTMENT TRUST
FILE NO. 33-59381
<PAGE>
MITCHELL HUTCHINS/KIDDER PEABODY INVESTMENT TRUST
EXHIBIT INDEX
-------------
Exhibit
Number Page
- ------- ----
(1) (a) Declaration of Trust1/
(b) Amendment effective September 3, 1991 to Declaration of Trust2/
-
(c) Amendment effective December 11, 1991 to Declaration of Trust3/
-
(d) Amendment effective February 13, 1995 to Declaration of Trust3/
-
(2) (a) By-Laws of the Trust4/
-
(b) Amendment effective August 28, 1991 to By-Laws5/
-
(3) Voting Trust Agreement - None
(4) Agreement and Plan of Reorganization and Termination
(a) PaineWebber Atlas Global Growth Fund3/
-
(b) PaineWebber Europe Growth Fund3/
-
(c) PaineWebber Global Growth and Income Fund3/
-
(5) Specimen security - None
(6) (a) Investment Advisory and Administration Contract3/
-
(b) Form of Investment Sub-Advisory Contract (filed herewith)
(7) (a) Distribution Contract Class A Shares3/
-
(b) Distribution Contract Class B Shares3/
-
(c) Distribution Contract Class C Shares3/
-
(8) Bonus, Profit-Sharing, Pension or Other Similar Contracts - None
(9) (a) Form of Custody Contract with State Street Bank and Trust Company6/
(10) (a) Distribution Related Services Agreement3/
-
(b) Shareholder Servicing Agreement3/
-
(c) Amendment to Amended and Restated Shareholder Servicing and
Distribution Plan3/
-
(11) Opinion and Consent of Willkie Farr & Gallagher (filed herewith)
(12) (a) Opinion and Consent of Willkie Farr & Gallagher3/
-
(b) Opinion and Consent of Kirkpatrick & Lockhart LLP3/
-
(13) Transfer Agency Agreement (filed herewith)
(14) (a) Consent of Deloitte & Touche LLP (filed herewith)
-
(b) Consent of Price Waterhouse LLP (filed herewith)
-
(c) Consent of Ernst & Young LLP (filed herewith)
-
(15) Financial Statements Omitted from Prospectus - None
(16) Copies of manually signed Powers of Attorney (filed herewith)
(17) Additional Exhibits
(a) Declaration pursuant to Rule 24f-2 3/
-
(b) Proxy Cards3/
-
__________
1/ Incorporated by reference to Registration Statement, filed March 29, 1991,
- - Exhibit #1.
2/ Incorporated by reference to Pre-Effective Amendment No. 2 to registration
- - statement on Form N-1A, filed September 4, 1991.
3/ Incorporated by reference to registration statement on Form N-14, SEC File
- - No. 33-59381, filed on EDGAR on May 16, 1995.
4/ Incorporated by reference to Pre-Effective Amendment No. 2 to registration
- - statement on Form N-1A, filed September 4, 1991, as Exhibit 2.
5/ Incorporated by reference to Pre-Effective Amendment No. 2 to registration
- - statement on Form N-1A, filed September 4, 1991.
6/ Incorporated by reference to Pre-Effective Amendment No. 1 to registration
- - statement on Form N-1A, filed August 7, 1991, as Exhibit 8.
<PAGE>
EXHIBIT 99.6(b)
SUB-INVESTMENT ADVISORY AGREEMENT
---------------------------------
April 13, 1995
GE Investment Management Incorporated
3003 Summer Street
P.O. Box 7900
Stamford, Connecticut 06904
Dear Sirs:
Mitchell Hutchins/Kidder, Peabody Investment Trust, a business trust formed
under the laws of the Commonwealth of Massachusetts (the "Trust") and Mitchell
Hutchins Asset Management Inc. ("Mitchell Hutchins"), the Fund's manager,
confirm their agreement with GE Investment Management Incorporated ("GEIM") with
respect to GEIM's serving as the investment adviser of Mitchell Hutchins/Kidder,
Peabody Global Equity Fund (the "Fund"), a series of the Trust, as follows:
Section 1. Services as Investment Adviser.
(a) The Trust anticipates that the Fund will employ its capital by
investing and reinvesting in investments of the type specified in the Trust's
Declaration of Trust dated March 28, 1991, as amended from time to time (the
"Declaration of Trust"), and in the current Prospectus and Statement of
Additional Information describing the Fund from time to time in effect, and in
the manner and to the extent approved by the Board of Trustees of the Trust.
Copies of the current Prospectus and Statement of Additional Information
describing the Fund have been submitted to GEIM and Mitchell Hutchins.
(b) Under an agreement dated as of April 13, 1995 between the Trust and
Mitchell Hutchins relating to the Fund (the "Management Agreement"), Mitchell
Hutchins serves as the Fund's manager and has the responsibility of selecting
and compensating an investment adviser to the Fund. Acting pursuant to the
authority provided in the Management Agreement, Mitchell Hutchins selects GEIM
to serve as the Fund's investment adviser for the compensation set out in
Section 4 of this Agreement.
<PAGE>
(c) Subject to the supervision and direction of the Trust's Board of
Trustees, and subject to review by Mitchell Hutchins, GEIM, as the Fund's
investment adviser, will manage the Fund's portfolio in accordance with the
investment objective and stated policies of the Fund, will make investment
decisions for the Fund and will place purchase and sale orders for the Fund's
portfolio transactions.
(d) GEIM will, at its own expense, maintain sufficient staff, and employ or
retain sufficient personnel and consult with any other persons that it
determines may be necessary or useful to the performance of its obligations
under this Agreement.
Section 2. Selection of Investments on Behalf of the Fund.
Unless otherwise set forth in the current Prospectus describing the Fund or
directed by Mitchell Hutchins or the Trust, GEIM will, in selecting brokers or
dealers to effect transactions on behalf of the Fund, give primary consideration
to securing the most favorable price and efficient execution. In so doing, GEIM
may consider the financial responsibility, research and investment information
and other services provided by brokers or dealers who may effect or be a party
to any transaction to which the Fund is a party or other transaction to which
other clients of GEIM may be a party. The Trust recognizes the desirability of
GEIM's having access to supplemental investment and market research and security
and economic analyses provided by brokers and that those brokers may execute
brokerage transactions at a higher cost to the Fund than would be the case if
the transactions were executed on the basis of the most favorable price and
efficient execution. The Trust, thus, authorizes GEIM, to the extent permitted
by applicable law and regulations, to pay higher brokerage commissions for the
purchase and sale of securities for the Fund to brokers who provide supplemental
investment and market research and security and economic analyses, subject to
review by the Trustees of the Trust and of Mitchell Hutchins from time to time
with respect to the extent and continuation of this practice. The Trust
understands that the services provided by those brokers may be useful to GEIM in
connection with its services to other clients.
Section 3. Costs and Expenses.
GEIM will bear the cost of rendering the services it is obligated to
provide under this Agreement and will, at its own expense, pay the salaries of
all officers and employees who are employed by both it and the Trust. GEIM will
provide the Fund with investment officers who are authorized by the Trust's
Board of Trustees to execute purchases and sales of securities on behalf of the
Fund and will employ a professional staff of portfolio managers who draw upon a
variety of sources for research information for the Fund. Other expenses to be
incurred in the
2
<PAGE>
operation of the Fund and not specifically borne by Mitchell Hutchins or GEIM
will be borne by the Fund, including: Mitchell Hutchins' fees for services
rendered under the Management Agreement; shareholder servicing fees paid to
Mitchell Hutchins under the terms of the Trust's shareholder servicing plan
adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"); charges and expenses of any registrar, custodian,
transfer and dividend disbursing agent providing services to the Trust in
connection with the Fund; brokerage fees and commissions; taxes; engraving and
printing of the Fund's share certificates, if any; registration costs of the
Fund and its shares under federal and state securities laws; the costs and
expense of printing; including typesetting, and distributing of prospectuses and
statements of additional information describing the Fund and supplements thereto
to regulatory authorities and the Fund's shareholders; all expenses incurred in
conducting meetings of the Fund's shareholders and meetings of the Trust's Board
of Trustees relating to the Fund; all expenses incurred in preparing, printing
and mailing proxy statements and reports to shareholders of the Fund; fees and
travel expenses of members of the Trust's Board of Trustees or members of any
advisory board or committee who are not employees of Mitchell Hutchins, GEIM, or
any of their affiliates; all expenses incident to any dividend, withdrawal or
redemption options provided to Fund shareholders; charges and expenses of any
outside service used for pricing the Fund's portfolio securities and calculating
the net asset value of the Fund's shares; fees and expenses of legal counsel,
including counsel to the members of the Trust's Board of Trustees who are not
interested persons of the Fund, Mitchell Hutchins or GEIM, and independent
auditors; membership dues of industry associations; interest on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Trust that inure to their benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification relating thereto); and all other costs of the
Fund's operations.
Section 4. Compensation.
In consideration of services rendered pursuant to this Agreement, Mitchell
Hutchins will pay GEIM on the Trust's first business day of each month a fee
that is accrued daily at the annual rate of .70% of the value of the Fund's
average daily net assets up to $200 million and .50% thereafter for the previous
month. The fee for the period from the date the Trust's registration statement
describing the Fund (the "Registration Statement") is declared effective by the
Securities and Exchange Commission (the "Commission") to the end of the month
during which the Registration Statement is declared effective by the Commission
will be prorated according to the proportion that the period bears to the full
monthly period. Upon any termination of this Agreement before the end of the
month, the fee for the
3
<PAGE>
portion of the month in which this Agreement is in effect will be prorated
according to the proportion that the portion bears to the full monthly period
and will be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to GEIM under this Agreement, the value of
the Fund's net assets will be computed in the manner described in the Trust's
current Prospectus and/or Statement of Additional Information describing the
Fund.
Section 5. Excess Expense Reimbursement.
If, in any fiscal year of the Fund, the aggregate expenses of the Fund
(including management fees, but excluding interest, taxes, brokerage and, with
the prior written consent of the necessary state securities authorities,
extraordinary expenses) exceed the expense limitation of any state having
jurisdiction over the Trust, GEIM will reimburse Mitchell Hutchins for 70% of
the Fund's average daily net assets up to $200 million and 50% thereafter of the
amount Mitchell Hutchins is required to reimburse the Trust under the Management
Agreement. The expense reimbursement obligation of GEIM is limited to the
amount of fees to which GEIM is entitled under this Agreement. The expense
reimbursement payable under the terms of this Section 5 will be estimated,
reconciled and paid on a monthly basis.
Section 6. Services to Other Companies or Accounts.
(a) The Trust and Mitchell Hutchins understand and acknowledge that GEIM
now acts and will continue to act as investment manager or adviser to various
fiduciary or other managed accounts and the Trust and Mitchell Hutchins have no
objection to GEIM's so acting, so long as that when the Fund and any account
served by GEIM are prepared to invest in, or desire to dispose of the same
security, available investments or opportunities for sales will be allocated in
a manner believed by GEIM to be equitable to the Fund and the account. The
Trust and Mitchell Hutchins recognize that, in some cases, this procedure may
adversely affect the price paid or received by the Fund or the size of the
position obtained or disposed of by the Fund.
(b) The Trust and Mitchell Hutchins understand and acknowledge that the
persons employed by GEIM to assist in the performance of its duties under this
Agreement will not devote their full time to that service: nothing contained in
this Agreement will be deemed to limit or restrict the right of GEIM or any
affiliate of GEIM to engage in and devote time and attention to other businesses
or to render services of whatever kind or nature.
4
<PAGE>
Section 7. Continuance and Termination of the Agreement.
(a) This Agreement will become effective as of April 13, 1995, and will
continue for an initial two-year term and will continue thereafter so long as
the continuance is specifically approved at least annually (a) by the Trustees
of the Trust or (b) by a vote of a majority of the Fund's outstanding voting
securities, as defined in the 1940 Act, provided that in either event the
continuance is also approved by a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on the approval.
(b) This Agreement is terminable without penalty, by the Trust on not more
than 60 nor less than 30 days' notice to Mitchell Hutchins and GEIM, by vote of
holders of a majority of the Fund's outstanding voting securities, as defined in
the 1940 Act, or by Mitchell Hutchins or GEIM on not more than 60 nor less than
30 days' notice to the Trust.
(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act or in rules adopted under the 1940 Act).
Section 8. Filing of Declaration of Trust.
The Trust represents that a copy of the Declaration of Trust is on file
with the Secretary of the Commonwealth of Massachusetts and with the Boston City
Clerk.
Section 9. Limitation of Liability.
(a) GEIM will not be liable for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with the matters to which this
Agreement relates, except for 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 by it of its obligations and duties under this
Agreement. Any person, even though also an officer, director, employee or agent
of GEIM, who may be or become an officer, Trustee, employee or agent of the
Trust, will be deemed, when rendering services to the Trust or acting on any
business of the Trust, to be rendering services to, or acting solely for, the
Trust and not as an officer, director, employee or agent, or one under the
control or direction of, GEIM even though paid by GEIM.
(b) The Trust, Mitchell Hutchins and GEIM agree that the obligations of the
Trust under this Agreement will not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust, individually, but are binding only upon the assets and
property of the Trust, as provided in the Declaration of Trust.
5
<PAGE>
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust, and signed by an authorized officer of the Trust, acting
as such, and neither the authorization by the Trustees nor the execution and
delivery by the officer will be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but will bind
only the trust property of the Trust as provided in the Declaration of Trust.
No series of the Trust, including the Fund, will be liable for any claims
against any other series.
Section 10. Dates.
This Agreement has been executed by the Trust, GEIM and Mitchell Hutchins
as of April 13, 1995 and will become effective as of this date.
If the terms and conditions described above are in accordance with your
understanding, kindly indicate your acceptance of this Agreement by signing and
returning to us the enclosed copy of this Agreement.
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
By:_______________________________
MITCHELL HUTCHINS ASSET MANAGEMENT INC.
By:_______________________________
Accepted:
GE INVESTMENT MANAGEMENT INCORPORATED
By:________________________________
6
<PAGE>
EXHIBIT 99.11
[LETTERHEAD OF WILLKIE FARR & GALLAGHER]
June 9, 1995
Mitchell Hutchins/Kidder, Peabody
Investment Trust
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
We have acted as counsel to Mitchell Hutchins/Kidder, Peabody Investment Trust,
a business trust organized under the laws of the Commonwealth of Massachusetts
(the "Trust"), in connection with the proposed acquisition by Mitchell
Hutchins/Kidder, Peabody Global Equity Fund, a series of the Trust (the "Fund"),
of all or substantially all of the assets and liabilities of PaineWebber Atlas
Global Growth Fund ("Atlas Fund"), a series of PaineWebber Atlas Fund,
PaineWebber Europe Growth Fund ("Growth Fund"), a series of PaineWebber
Investment Series, and PaineWebber Global Growth and Income Fund ("Growth and
Income Fund," and together with Atlas Fund and Growth Fund, the "Acquired
Funds"), a series of PaineWebber Investment Series, in exchange for shares of
beneficial interest of classes A, B, C, and E of the Fund (the "Shares"),
pursuant, in the case of each of the Acquired Funds, to an Agreement and Plan of
Reorganization and Termination into which the Trust will enter with each of the
Acquired Funds (each an "Agreement," and collectively, the "Agreements").
As counsel for the Trust, we have examined the Trust's Registration Statement on
Form N-14 substantially in the form in which it is to become effective (the
"Registration Statement"), the Trust's Declaration of Trust, as amended (the
"Trust Agreement"), and By-laws, as amended, and a form of the Agreements
attached to the Prospectus/Proxy Statement included in the Registration
Statement.
We have also examined and relied upon such records of the Trust and other
documents and certificates with respect to factual matters as we have deemed
necessary to render the opinion expressed herein. We have assumed, without
independent verification, the genuineness of all signatures, the authenticity of
all documents submitted to
<PAGE>
Mitchell Hutchins/Kidder, Peabody
Investment Trust
June 9, 1995
Page 2
us as originals and the conformity with originals of all documents submitted to
us as copies. We have further assumed that each Agreement has been duly
executed and delivered in substantially the same form as the draft submitted to
us for review and constitutes the legal, valid and binding obligation of each
party thereto.
We are members of the Bar of the State of New York and we express no opinion as
to any matters governed by any laws other than the laws of the State of New York
and the federal laws of the United States of America except as to matters
relating to the laws of the Commonwealth of Massachusetts. As to matters of
Massachusetts law, we have relied solely on the opinion of Messrs. Bingham, Dana
& Gould with respect to the matters addressed therein, which is satisfactory to
us in form and scope, a copy of which is annexed hereto.
Based upon the foregoing, we are of the opinion that:
1. The Trust is duly organized and existing under the Trust Agreement and
the laws of the Commonwealth of Massachusetts as a voluntary association with
transferable shares of beneficial interest commonly referred to as a
"Massachusetts business trust;"
2. The Shares, when issued and sold in accordance with the Registration
Statement and the Trust Agreement and By-Laws and for the consideration
described in the Agreements will be legally issued, fully paid and non-
assessable, except that, as set forth in the Registration Statement,
shareholders of the Fund may under certain circumstances be held personally
liable for the Trust's obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the references to us in the Prospectus/Proxy
Statement included as part of the Registration Statement and to the filing of
this opinion as an exhibit to any application made by or on behalf of the Trust
or any distributor or dealer in connection with the registration or
qualification of the Trust or the Shares under the securities laws of any state
or other jurisdiction.
<PAGE>
Mitchell Hutchins/Kidder, Peabody
Investment Trust
June 9, 1995
Page 3
This opinion is furnished by us as counsel to the Trust, is solely for the
benefit of the Trust and its governing board in connection with the above
described transfer of assets and may not be relied upon for any other purpose or
by any other person.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>
BINGHAM, DANA & GOULD
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110-1726
TEL: 617-951-8000
FAX: 617-951-8736
June 9, 1995
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4677
Re: Mitchell Hutchins/Kidder, Peabody Investment Trust
--------------------------------------------------
Ladies and Gentlemen:
We have acted as special Massachusetts counsel to Mitchell
Hutchins/Kidder, Peabody Investment Trust, a Massachusetts business trust (the
"Trust"), in connection with the Trust's Registration Statement on Form N-14
filed with the Securities and Exchange Commission (the "Commission") on or about
May 16, 1995 (the "Initial Filing") and Pre-Effective Amendment No.1 thereto, to
be filed with the Commission on or about June 11, 1995 (the "Amendment", such
Initial Filing and Amendment referred to herein collectively as the
"Registration Statement"), with respect to an indefinite number of Class A,
Class B, Class C and Class E shares of beneficial interest, par value $.001 per
share (the "Shares"), of Mitchell Hutchins/Kidder, Peabody Global Equity Fund
(the "Fund"), a separate series of the Trust, to be issued in exchange for all
or substantially all of the assets of PaineWebber Atlas Global Growth Fund, a
series of PaineWebber Atlas Fund, PaineWebber Europe Growth Fund, a series of
PaineWebber Investment Series, and PaineWebber Global Growth and Income Fund, a
series of PaineWebber Investment Series (the "Acquired Funds"), pursuant, in
each, to an Agreement and Plan of Reorganization and Termination by and between
the Trust and each of the Acquired Funds (the "Agreements") as described in the
Registration Statement. You have requested that we deliver this opinion to you,
as special counsel to the Trust, for use by you in connection with your opinion
to the Trust with respect to the Shares.
In connection with the furnishing of this opinion, we have examined the
following documents:
(a) a certificate of the Secretary of State of the Commonwealth
of Massachusetts as to the existence of the Trust;
<PAGE>
BINGHAM, DANA & GOULD
Willkie Farr & Gallagher
June 9, 1995
Page 2
(b) copies, certified by the Secretary of State of the
Commonwealth of Massachusetts, of the Trust's Declaration of Trust and
of all amendments thereto on file in the office of the Secretary of
State;
(c) copies, certified by the Secretary of State of the
Commonwealth of Massachusetts, of the Trust's Establishment and
Designation of Classes and of all amendments thereto on file in the
office of the Secretary of State (the "Designation");
(d) a Certificate executed by an appropriate officer of the
Trust, certifying as to, and attaching copies of, the Trust's
Declaration of Trust, Designation and By-Laws, and certain resolutions
adopted by the Trustees of the Trust;
(e) the form of the Initial Filing and a draft dated June 2,
1995 of the Amendment; and
(f) a copy of each of the Agreements in the form included in
the Registration Statement.
In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, including conformed copies, the authenticity and completeness of all
original documents reviewed by us in original or copy form and the legal
competence of each individual executing any document. We have assumed that the
Initial Filing as filed with the Commission was, and the Amendment as filed with
the Commission will be, in substantially the form referred to in paragraph (e)
above, and that each Agreement will be duly executed and delivered in
substantially the form of the copy referred to in paragraph (f) above.
This opinion is based entirely on our review of the documents listed
above and such investigation of law as we have deemed necessary or appropriate.
We have made no other review or investigation of any kind whatsoever, and we
have assumed, without independent inquiry, the accuracy of the information set
forth in such documents.
This opinion is limited solely to the internal substantive laws of the
Commonwealth of Massachusetts as applied by courts located in such commonwealth,
except that we express no opinion as to any Massachusetts securities law.
<PAGE>
BINGHAM, DANA & GOULD
Willkie Farr & Gallagher
June 9, 1995
Page 3
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon and subject to the foregoing, please be advised that it is
our opinion that:
1. The Trust is duly organized and existing under the Trust's
Declaration of Trust and the laws of the Commonwealth of Massachusetts as a
voluntary association with transferable shares of beneficial interest commonly
referred to as a "Massachusetts business trust."
2. The Shares, when issued and sold in accordance with the
Registration Statement and the Trust's Declaration of Trust and By-Laws and for
the consideration described in the Agreements will be legally issued, fully paid
and non-assessable, except that, as set forth in the Registration Statement,
shareholders of the Fund may under certain circumstances be held personally
liable for the Trust's obligations.
We hereby consent to your reliance on this opinion in connection with
your opinion to the Trust with respect to the Shares, to the reference to our
name in the Registration Statement under the heading "Legal Opinions" and to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ Bingham, Dana & Gould
BINGHAM, DANA & GOULD
<PAGE>
EXHIBIT 99.13
TRANSFER AGENCY SERVICES AND SHAREHOLDER SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of January 30, 1995, to be effective as of such
date as is agreed to in writing by the parties, by and between KIDDER, PEABODY
INVESTMENT TRUST (the "Fund"), a Massachusetts business trust and PFPC INC.
("PFPC"), a Delaware corporation, which is an indirect wholly-owned subsidiary
of PNC Bank Corp.
The Fund is registered as an open-end management series investment company
under the Investment Company Act of 1940, as amended ("1940 Act"). The Fund
wishes to retain PFPC to serve as the transfer agent, registrar, dividend
disbursing agent and shareholder servicing agent for such series listed in
Appendix C to this agreement, as amended from time to time (the "Series"), and
PFPC wishes to furnish such services.
In consideration of the promises and mutual covenants herein contained, the
parties agree as follows:
1. Definitions.
-----------
(a) "Authorized Person". The term "Authorized Person" shall mean any
-------------------
officer of the Fund and any other person who is duly authorized by the Fund's
Governing Board to give Oral and Written Instructions on behalf of the Fund.
Such persons are listed in the Certificate attached hereto as the Authorized
Persons Appendix or any amendment thereto as may be received by PFPC from time
to time.
1
<PAGE>
If PFPC provides more than one service hereunder, the Fund's designation of
Authorized Persons may vary by service.
(b) "Governing Board". The term "Governing Board" shall mean the Fund's
-----------------
Board of Directors if the Fund is a corporation or the Fund's Board of Trustees
if the Fund is a trust, or, where duly authorized, a competent committee
thereof.
(c) "Oral Instructions". The term "Oral Instructions" shall mean oral
-------------------
instructions received by PFPC from an Authorized Person by telephone or in
person.
(d) "SEC". The term "SEC" shall mean the Securities and Exchange
-----
Commission.
(e) "Securities Laws". The term "Securities Laws" shall mean the 1933 Act,
-----------------
the 1934 Act and the 1940 Act. The terms the "1933 Act" shall mean the
Securities Act of 1933, a amended, and the "1934 Act" shall mean the Securities
Exchange Act of 1934, a amended.
(f) "Shares". The term "Shares" shall mean the shares of beneficial
--------
interest of any Series or class of the Fund.
(g) "Written Instructions". The term "Written Instructions" shall mean
----------------------
written instructions signed by one Authorized Person and received by PFPC. The
instructions may be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. Appointment. The Fund hereby appoints PFPC to serve as transfer agent,
-----------
registrar, dividend disbursing agent and shareholder servicing agent to each of
its Series, in accordance
2
<PAGE>
with the terms set forth in this Agreement, and PFPC accepts such appointment
and agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or, where applicable,
---------------------
will provide PFPC with the following:
(a) Certified or authenticated copies of the resolutions of the Fund's
Governing Board, approving the appointment of PFPC to provide services to each
Series and approving this agreement;
(b) A copy of the Fund's most recent Post-Effective Amendment to its
Registration Statement on Form N-1A under the 1933 Act and 1940 Act as filed
with the SEC;
(c) A copy of the Fund's investment advisory and administration agreement
or agreements;
(d) A copy of the Fund's distribution agreement or agreements;
(e) Copies of any shareholder servicing agreements made in respect of the
Fund; and
(f) Copies of any and all amendments or supplements to the foregoing.
4. Compliance with Government Rules and Regulations. PFPC undertakes to
------------------------------------------------
comply with all applicable requirements of the Securities Laws, and any laws,
rules and regulations of governmental authorities having jurisdiction with
respect to all duties to be performed by PFPC hereunder. Except as specifically
set forth herein, PFPC assumes no responsibility for such compliance by the
Fund.
3
<PAGE>
5. Instructions. Unless otherwise provided in this Agreement, PFPC shall
------------
act only upon Oral and Written Instructions. PFPC shall be entitled to rely
upon any Oral and Written Instruction it receives from an Authorized Person
pursuant to this Agreement. PFPC may assume that any Oral or Written
Instruction received hereunder is not in any way inconsistent with the
provisions of organizational documents or of any vote, resolution or proceeding
of the Fund's Governing Board or of the Fund's shareholders, unless and until it
receives Written Instructions to the contrary.
The Fund agrees to forward to PFPC Written Instructions confirming Oral
Instructions so that PFPC receives the Written Instructions by the close of
business on the next business day after such Oral Instructions are received. The
fact that such confirming Written Instructions are not received by PFPC shall in
no way invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions. Where Oral or Written Instructions
reasonably appear to have been received from an Authorized Person, PFPC shall
incur no liability to the Fund in acting upon such instructions provided that
PFPC's actions comply with the other provisions of this Agreement.
6. Right to Receive Advice.
-----------------------
(a) Advice of the Fund. If PFPC is in doubt as to any action it should or
------------------
should not take, PFPC will request directions or advice, including Oral or
Written Instructions, from the Fund.
4
<PAGE>
(b) Advice of Counsel. If PFPC shall be in doubt as to any question of law
-----------------
pertaining to any action it should or should not take, PFPC may request advice
at its own cost from such counsel of its own choosing (who may be counsel for
the Fund, the Fund's investment adviser or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between directions,
------------------
advice or Oral or Written Instructions PFPC receives from the Fund and the
advice it receives from counsel, PFPC may rely upon and follow the advice of
counsel. In the event PFPC so relies on the advice of counsel, PFPC remains
liable for any action or omission on the part of PFPC which constitutes willful
misfeasance, bad faith, negligence or reckless disregard by PFPC of any duties,
obligations or responsibilities provided for in this Agreement.
(d) Protection of PFPC. PFPC shall be protected in any action it takes or
------------------
does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel in accordance with this
Agreement and which PFPC believes, in good faith, to be consistent with those
directions, advice or Oral or Written Instructions.
Nothing in this paragraph shall be construed to impose an obligation upon
PFPC (i) to seek such directions, advice or Oral or Written Instructions, or
(ii) to act in accordance with such directions, advice or Oral or Written
Instructions unless, under the terms of other provisions of this Agreement, the
same is a condition of PFPC's properly taking or not taking such action.
5
<PAGE>
Nothing in this subsection shall excuse PFPC when an action or omission on the
part of PFPC constitutes willful misfeasance, bad faith, negligence or reckless
disregard of PFPC of any duties, obligations or responsibilities provided for in
this Agreement.
7. Records and Visits. PFPC shall prepare and maintain in complete and
------------------
accurate form all books and records necessary for it to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to the
Fund, including (a) all those records required to be prepared and maintained by
the Fund under the 1940 Act, by other applicable Securities Laws, rules and
regulations and by state laws and (b) such books and records as are necessary
for PFPC to perform all of the services it agrees to provide in this Agreement
and the appendices attached hereto, including but not limited to the books and
records necessary to effect the conversion of Class B Shares, the calculation of
any contingent deferred sales charges and the calculation of front-end sales
charges. The books and records pertaining to the Fund which are in the
possession, or under the control, of PFPC shall be the property of the Fund.
The Fund or the Fund's Authorized Persons shall have access to such books and
records at all times during PFPC's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided by
PFPC to the Fund or to an Authorized Person of the Fund. Upon reasonable notice
by the Fund, PFPC shall make available during regular business hours its
facilities and premises employed in connection with its performance of this
Agreement for reasonable
6
<PAGE>
visits by the Fund, any agent or person designated by the Fund or any regulatory
agency having authority over the Fund.
8. Confidentiality. PFPC agrees on its own behalf and that of its
---------------
employees to keep confidential all records of the Fund and information relating
to the Fund and its shareholders (past, present and future), its investment
adviser and its principal underwriter, unless the release of such records or
information is otherwise consented to, in writing, by the Fund prior to its
release. The Fund agrees that such consent shall not be unreasonably withheld,
and may not be withheld where PFPC may be exposed to civil or criminal contempt
proceedings or when required to divulge such information or records to duly
constituted authorities.
9. Cooperation with Accountants. PFPC shall cooperate with the Fund's
----------------------------
independent public accountants and shall take all reasonable actions in the
performance of its obligations under this Agreement to ensure that the necessary
information is made available to such accountants for the expression of their
opinion, as required by the Fund.
10. Disaster Recovery. PFPC shall enter into and shall maintain in effect
-----------------
with appropriate parties one or more agreements making reasonable provision for
periodic backup of computer files and data with respect to the Fund and
emergency use of electronic data processing equipment. In the event of
equipment failures, PFPC shall, at no additional expense to the Fund, take all
reasonable steps to minimize service interruptions. PFPC shall
7
<PAGE>
have no liability with respect to the loss of data or service interruptions
caused by equipment failures, provided such loss or interruption is not caused
by the negligence of PFPC and provided further that PFPC has complied with the
provisions of this Paragraph 10.
11. Compensation. As compensation for services rendered by PFPC during
------------
the term of this Agreement, the Fund will pay to PFPC a fee or fees as may be
agreed to, from time to time, in writing by the Fund and PFPC.
12. Indemnification.
---------------
(a) The Fund agrees to indemnify and hold harmless PFPC and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the Securities Laws,
and any state and foreign securities and blue sky laws, and amendments thereto),
and expenses, including, without limitation, reasonable attorneys' fees and
disbursements arising directly or indirectly from any action or omission to act
which PFPC (i) at the request of or on the direction of or in reliance on the
advice of the Fund or (ii) upon Oral or Written Instructions. Neither PFPC, nor
any of its nominees, shall be indemnified against any liability (or any expenses
incident to such liability) arising out of PFPC's or its nominees' own willful
misfeasance, bad faith, negligence or reckless disregard of its duties and
obligations under this Agreement.
8
<PAGE>
(b) PFPC agrees to indemnify and hold harmless the Fund from all taxes,
charges, expenses, assessments, claims and liabilities arising from PFPC's
obligations pursuant to this Agreement (including, without limitation,
liabilities arising under the Securities Laws, and any state and foreign
securities and blue sky laws, and amendments thereto) and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, arising
directly or indirectly out of PFPC's or its nominee's own willful misfeasance,
bad faith, negligence or reckless disregard of its duties and obligations under
this Agreement.
(c) In order that the indemnification provisions contained in this
Paragraph 12 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
13. Insurance. PFPC shall maintain insurance of the types and in the
---------
amounts deemed by it to be appropriate. To the extent that policies of
insurance may provide for coverage of claims for liability or indemnity by the
parties set forth in this Agreement,
9
<PAGE>
the contracts of insurance shall take precedence, and no provision of this
Agreement shall be construed to relieve an insurer of any obligation to pay
claims to the Fund, PFPC or other insured party which would otherwise be a
covered claim in the absence of any provision of this Agreement.
14. Security. PFPC represents and warrants that, to the best of its
--------
knowledge, the various procedures and systems which PFPC has implemented with
regard to the safeguarding from loss or damage attributable to fire, theft or
any other cause (including provision for twenty-four hours a day restricted
access) of the Fund's blank checks, certificates, records and other data and
PFPC's equipment, facilities and other property used in the performance of its
obligations hereunder are adequate, and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. PFPC shall review such systems and procedures on a
periodic basis and the Fund shall have access to review these systems and
procedures.
15. Responsibility of PFPC. PFPC shall be under no duty to take any
----------------------
action on behalf of the Fund except as specifically set forth herein or as may
be specifically agreed to by PFPC in writing. PFPC shall be obligated to
exercise due care and diligence in the performance of its duties hereunder, to
act in good faith and to use its best efforts in performing services provided
for under this Agreement. PFPC shall be liable only for any damages arising out
of or in connection with PFPC's performance of or omission or failure to perform
its duties under this
10
<PAGE>
Agreement to the extent such damages arise out of PFPC's negligence, reckless
disregard of its duties, bad faith or willful misfeasance.
Without limiting the generality of the foregoing or of any other provision
of this Agreement, PFPC, in connection with its duties under this Agreement,
shall not be under any duty or obligation to inquire into and shall not be
liable for (a) the validity or invalidity or authority or lack thereof of any
Oral or Written Instruction, notice or other instrument which conforms to the
applicable requirements of this Agreement, and which PFPC reasonably believes to
be genuine; or (b) subject to the provisions of Paragraph 10, delays or errors
or loss of data occurring by reason of circumstances beyond PFPC's control,
including acts of civil or military authority, national emergencies, labor
difficulties, fire, flood or catastrophe, acts of God, insurrection, war, riots
or failure of the mails, transportation, communication or power supply.
16. Description of Services. PFPC shall perform the duties of the
-----------------------
transfer agent, registrar, dividend disbursing agent and shareholder servicing
agent of the Fund and its specified Series.
(a) Purchase of Shares. PFPC shall issue and credit an account of an
------------------
investor in the manner described in each Series prospectus once it receives:
(i) A purchase order;
(ii) Proper information to establish a shareholder account; and
11
<PAGE>
(iii) Confirmation of receipt or crediting of funds for such order
from the Series' custodian.
(b) Redemption of Shares. PFPC shall redeem a Series' Shares only if
--------------------
that function is properly authorized by the Fund's organizational documents or
resolution of the Fund's Governing Board. Shares shall be redeemed and payment
therefor shall be made in accordance with each Series' prospectus when the
shareholder tenders his or her Shares in proper form and directs the method of
redemption.
(c) Dividends and Distributions. Upon receipt of a resolution of the
---------------------------
Fund's Governing Board authorizing the declaration and payment of dividends and
distributions, PFPC shall issue dividends and distributions declared by the Fund
in Shares, or, upon shareholder election, pay such dividends and distributions
in cash if provided for in each Series' prospectus. Such issuance or payment,
as well as payments upon redemption as described above, shall be made after
deduction and payment of the required amount of funds to be withheld in
accordance with any applicable tax law or other laws, rules or regulations.
PFPC shall mail to each Series' shareholders such tax forms and other
information, or permissible substitute notice, relating to dividends and
distributions paid by the Fund as are required to be filed and mailed by
applicable law, rule or regulation.
PFPC shall prepare, maintain and file with the IRS and other appropriate
taxing authorities reports relating to all dividends above a stipulated amount
paid by the Fund to its shareholders as required by tax or other law, rule or
regulation.
12
<PAGE>
(d) PFPC will provide the services listed on Appendix A and Appendix
B on an ongoing basis. Performance of certain of these services, with
accompanying responsibilities and liabilities, may be delegated and assigned to
PaineWebber Incorporated or Mitchell Hutchins Asset Management Inc. or to an
affiliated person of either.
17. Duration and Termination.
------------------------
(a) This Agreement shall continue until January 30, 1997 and shall
automatically be renewed thereafter on a year-to-year basis and with respect to
the year-to-year renewal, provided that the Fund's Governing Board approves such
renewal; and provided further that this Agreement may be terminated by either
party for cause.
(b) With respect to the Fund, cause includes, but is not limited to:
(i) PFPC's material breach of this Agreement causing it to fail to substantially
perform its duties under this Agreement. In order for such material breach to
constitute "cause" under this Paragraph, PFPC must receive written notice from
the Fund specifying the material breach and PFPC shall not have corrected such
breach within a 15-day period; (ii) financial difficulties of PFPC evidenced by
the authorization or commencement of a voluntary or involuntary bankruptcy under
the U.S. Bankruptcy Code or any applicable bankruptcy or similar law, or under
any applicable law of any jurisdiction relating to the liquidation or
reorganization of debt, the appointment of a receiver or to the modification or
alleviation of the rights of creditors; and (iii)
13
<PAGE>
issuance of an administrative or court order against PFPC with regard to the
material violation or alleged material violation of the Securities Laws or other
applicable laws related to its business of performing transfer agency services.
(c) With respect to PFPC, cause includes, but is not limited to, the
failure of the Fund to pay the compensation set forth in writing pursuant to
Paragraph 11 of this Agreement.
(d) Any notice of termination for cause in conformity with
subparagraphs (a), (b) and (c) of this Paragraph by the Fund shall be effective
thirty (30) days from the date of such notice. Any notice of termination for
cause by PFPC shall be effective 90 days from the date of such notice.
(e) Upon the termination hereof, the Fund shall pay to PFPC such
compensation as may be due for the period prior to the date of such termination.
In the event that the Fund designates a successor to any of PFPC's obligations
under this Agreement, PFPC shall, at the direction and expense of the Fund,
transfer to such successor all relevant books, records and other data
established or maintained by PFPC hereunder including a certified list of the
shareholders of each Series of the Fund with name, address, and if provided
taxpayer identification or Social Security number, and a complete record of the
account of each shareholder. To the extent that PFPC incurs expenses related to
a transfer of responsibilities to a successor, other than expenses involved in
PFPC's providing the Fund's books and records to the successor, PFPC shall be
entitled to be reimbursed for such expenses, including any
14
<PAGE>
out-of-pocket expenses reasonably incurred by PFPC in connection with the
transfer.
(f) Any termination effected pursuant to this Paragraph shall not
affect the rights and obligations of the parties under Paragraph 12 hereof.
(g) Notwithstanding the foregoing, this Agreement shall terminate with
respect to the Fund and any Series thereof upon the liquidation, merger or
other dissolution of the Fund or Series or upon the Fund's ceasing to be
registered investment company.
19. Registration as a Transfer Agent. PFPC represents that it is
--------------------------------
currently registered with the appropriate federal agency for the registration of
transfer agents, or is otherwise permitted to lawfully conduct its activities
without such registration and that it will remain so registered for the duration
of this Agreement. PFPC agrees that it will promptly notify the Fund in the
event of any material change in its status as a registered transfer agent.
Should PFPC fail to be registered with the SEC as a transfer agent at any time
during this Agreement, and such failure to register does not permit PFPC to
lawfully conduct its activities, the Fund may terminate this Agreement upon five
days written notice to PFPC.
20. Notices. All notices and other communications, other than Oral or
-------
Written Instructions, shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notice shall be addressed (a) if to PFPC at
PFPC's address, 400 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the
Fund, at 20 Exchange Place, New York, N.Y. 10005; or (c) if to neither of
15
<PAGE>
the foregoing, at such other address as shall have been notified to the sender
of any such notice or other communication. If the notice is sent by confirming
telegram, cable telex or facsimile sending device during regular business hours,
it shall be deemed to have been given immediately. If sent during a time other
than regular business hours, such notice shall be deemed to have been given at
the opening of the next business day. If notice is sent by first-class mail, it
shall be deemed to have been given three business days after it has been mailed.
If notice is sent by messenger, it shall be deemed to have been given on the day
it is delivered. All postage, cable, telegram, telex and facsimile sending
device charges arising from the sending of a notice hereunder shall be paid by
the sender.
21. Amendments. This Agreement, or any term thereof, may be changed or
----------
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
22. Additional Series. In the event that the Fund establishes one or more
-----------------
investment Series in addition to and with respect to which it desires to have
PFPC render services as transfer agent, registrar, dividend disbursing agent and
shareholder servicing agent under the terms set forth in this Agreement, it
shall so notify PFPC in writing, and PFPC shall agree in writing to provide such
services, and such investment Series shall become a Series hereunder, subject to
such additional terms, fees and conditions as are agreed to by the parties.
23. Assignment and Delegation.
-------------------------
16
<PAGE>
(a) PFPC may, at its owns expense, assign its rights and delegate its
duties hereunder to any wholly-owned direct or indirect subsidiary of PNC Bank,
National Association or PNC Bank Corp., provided that (i) PFPC gives the Fund
thirty (30) days' prior written notice; (ii) the delegate agrees with PFPC to
comply with all relevant provisions of the Securities Laws; and (iii) PFPC and
such delegate promptly provide such information as the Fund may request and
respond to such questions as the Fund may ask relating to the delegation,
including, without limitation, the capabilities of the delegate. The assignment
and delegation of any of PFPC's duties under this subparagraph (a) shall not
relieve PFPC of any of its responsibilities or liabilities under this Agreement.
(b) PFPC may assign its rights and delegate its duties hereunder to
PaineWebber Incorporated or Mitchell Hutchins Asset Management Inc. or
affiliated person of either provided that (i) PFPC gives the Fund thirty (30)
days' prior written notice; (ii) the delegate agrees to comply with all relevant
provisions of the Securities Laws; and (iii) PFPC and such delegate promptly
provide such information as the Fund may request and respond to such questions
as the Fund may ask relative to the delegation, including, without limitation,
the capabilities of the delegate. In assigning its rights and delegating its
duties under this paragraph, PFPC may impose such conditions or limitations as
it determines appropriate including the condition that PFPC be retained as a
sub-transfer agent.
17
<PAGE>
(c) In the event that PFPC assigns its rights and delegates its duties
under this section, no amendment of the terms of this Agreement shall become
effective without the written consent of PFPC.
24. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
25. Further Actions. Each party agrees to perform such further acts and
---------------
execute such further documents as are necessary to effectuate the purposes
hereof.
26. Limitation of Liability. The Trust and PFPC agree that the
-----------------------
obligations of the Trust under this Agreement will not be binding upon any of
the Trustees, shareholders, nominees, officers, employees or agents, whether
past, present or future, of the Trust, individually, but are binding only upon
the assets and property of the Trust, as provided in the Declaration of Trust.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust, and signed by an authorized officer of the Trust, acting
as such, and neither the authorization by the Trustees nor the execution and
delivery by the officer will be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but will bind
only the trust property of the Trust as provided in the Declaration of Trust.
No Series of the Trust will be liable for any claims against any other Series.
27. Miscellaneous. This Agreement embodies the entire agreement and
-------------
understanding between the parties and supersedes all
18
<PAGE>
prior agreements and understandings relating to the subject matter hereof,
provided that the parties may embody in one or more separate documents their
agreement, if any, with respect to services to be performed and compensation to
be paid under this Agreement.
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.
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware Law, except that, to the extent provision of the Securities
Laws govern the subject matter of this Agreement, such Securities Laws will
controlling. 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 and inure to the
benefit of the parties hereto and their respective successors and assigns.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
PFPC INC.
By: /s/ George W. Garvey
____________________
KIDDER, PEABODY INVESTMENT TRUST
By: /s/ Robert S. Jones
___________________
20
<PAGE>
EXHIBIT 99.14(A)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
and to the incorporation by reference of our report dated October 26,
1994 on PaineWebber Atlas Global Growth Fund (a series of PaineWebber
Atlas Fund), in this Registration Statement (Form N-14) of Mitchell
Hutchins/Kidder Peabody Investment Trust.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
June 13, 1995
<PAGE>
EXHIBIT 99.14(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus/Proxy
Statement constituting part of this registration statement on Form N-14 (the
"N-14 Registration Statement") of our report dated December 13, 1994, relating
to the financial statements and financial highlights of PaineWebber Europe
Growth Fund appearing in the October 31, 1994 Annual Report to Shareholders,
which is incorporated by reference in the Statement of Additional Information
constituting part of Post-Effective Amendment No. 29 to the Registration
Statement on Form N-1A of such, which is incorporated by reference in such
Prospectus/Proxy Statement. We also consent to the incorporation by reference
in the Prospectus/Proxy Statement of the N-14 Registration Statement of our
report dated December 13, 1994 relating to the financial statements and
financial highlights of PaineWebber Global Growth and Income Fund appearing in
the October 31, 1994 Annual Report to Shareholders, which is incorporated by
reference in the Statement of Additional Information constituting part of Post-
Effective Amendment No. 29 to the Registration Statement on Form N-1A of such
Fund, which is incorporated by reference in such Prospectus/Proxy Statement. We
also consent to the references to us under the heading "Miscellaneous - Experts"
in such Prospectus/Proxy Statement of the N-14 Registration Statement.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
June 14, 1995
<PAGE>
EXHIBIT 99.14(C)
CONSENT OF INDEPENDENT AUDITORS
Mitchell Hutchins/Kidder, Peabody Global Equity Fund
(one of the portfolios constituting the Mitchell Hutchins/
Kidder, Peabody Investment Trust):
We consent to the incorporation by reference in this Registration Statement on
Form N-14 of our report dated October 14, 1994, appearing in the annual report
to shareholders for the year ended August 31, 1994, our report dated April 21,
1995, appearing in the semi-annual report to shareholders for the six month
period ended February 28, 1995, and to the references to us under the captions
"Experts" and "Financial Highlights" appearing in the Prospectus/Proxy
Statement, which also is a part of such Registration Statement.
Deloitte & Touche LLP
New York, New York
June 14, 1995
<PAGE>
EXHIBIT 99.16
-------------
SIGNATURES
As required by the Securities Act of 1933, this registration statement has
been signed on behalf of the registrant, in the City of New York, State of New
York, on the 26th day of April, 1995.
MITCHELL HUTCHINS/KIDDER, PEABODY
INVESTMENT TRUST
By: ____________________________
Frank P.L. Minard, President
Each of the undersigned trustees and officers of Mitchell Hutchins/Kidder,
Peabody Investment Trust ("Fund") hereby severally constitutes and appoints
Victoria E. Schonfeld, Dianne E. O'Donnell, Gregory K. Todd, Elinor W. Gammon
and Robert A. Wittie, and each of them singly, our true and lawful attorneys,
with full power to them to sign for each of us, and in each of our names and in
the capacities indicated below, any and all amendments to the registration
statement of the Fund, and all instruments necessary or desirable in connection
therewith, filed with the Securities and Exchange Commission, hereby ratifying
and confirming our signatures as they may be signed by said attorneys to any and
all amendments to said registration statement.
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
- --------- ----- ----
/s/ David J. Beaubien Trustee April 26, 1995
- --------------------------
David J. Beaubien
/s/ William W. Hewitt, Jr. Trustee April 26, 1995
- --------------------------
William W. Hewitt, Jr.
/s/ Thomas R. Jordan Trustee April 26, 1995
- --------------------------
Thomas R. Jordan
/s/ Frank P.L. Minard Trustee and April 26, 1995
- -------------------------- President (Chief
Frank P.L. Minard Executive Officer)
/s/ Carl W. Schafer Trustee April 26, 1995
- --------------------------
Carl W. Schafer
Vice President and April 26, 1995
- -------------------------- Treasurer (Principal
Julian F. Sluyters Financial and
Accounting Officer)
