<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. __)
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a- 6(e)(2)
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
(Name of Registrant as Specified In Its Charter)
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(j)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a- 6(i)(3).
/ / Fee computed on table below per Exchange Act
Rules 14(a)-6(i)(4) and 0- 11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee previously paid with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, NY 10019
212 731-2000
MITCHELL HUTCHINS
Dear Shareholders of Mitchell Hutchins/Kidder, Peabody Global Equity Fund:
As you know from our past correspondence, the recent sale of assets of
Kidder, Peabody & Co. Incorporated to Paine Webber Group Inc. and certain of
its subsidiaries has resulted in new management and advisory arrangements for
Mitchell Hutchins/Kidder, Peabody Global Equity Fund (the "Fund"), a series of
Mitchell Hutchins/Kidder, Peabody Investment Trust. The Board of Trustees has
called a Special Meeting of Shareholders to be held on July 21, 1995 to
consider a number of proposals, including the approval of a new investment
advisory and administration agreement and a new sub-advisory agreement for the
Fund. The enclosed proxy statement describes the proposals and the background
regarding these proposals in detail.
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), the
investment management subsidiary of PaineWebber Incorporated, is serving as
the investment adviser to your Fund and GE Investment Management Incorporated
("GEIM") is serving as the Fund's sub-adviser. You are being asked to approve
a proposed new investment advisory and administration agreement into which
your Fund would enter with Mitchell Hutchins and a proposed new sub-advisory
agreement among the Fund, Mitchell Hutchins and GEIM.
THE NEW AGREEMENTS CALLS FOR A REDUCTION IN ADVISORY FEES PAID BY
YOUR FUND, RESULTING IN A DECREASE IN THE ADVISORY FEES YOU BEAR
AS THE FUND'S SHAREHOLDERS. AFTER CAREFUL CONSIDERATION, THE BOARD OF
TRUSTEES OF THE FUND RECOMMENDS THAT SHAREHOLDERS COTE "FOR" ALL THE
PROPOSALS TO BE CONSIDERED AT THE SPECIAL MEETING.
Your vote is important regardless of the number of shares you own. If
you do not vote promptly, a representative of Shareholder Communications
Corporation, our proxy solicitor, may call to urge you to vote. In order to
spare the expense of follow-up solicitations, please complete, sign and date
the enclosed proxy card and return the card as soon as possible in the
postage-paid envelope.
Very truly yours,
/s/ Frank P.L. Minard
Frank P.L. Minard
President of Mitchell Hutchins/
Kidder, Peabody Investment Trust
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PRELIMINARY COPY
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
Mitchell Hutchins/Kidder, Peabody Global Equity Fund
Notice of Special Meeting of Shareholders
To the Shareholders of
Mitchell Hutchins/Kidder, Peabody Global Equity Fund:
A Special Meeting of Shareholders of Mitchell Hutchins/Kidder, Peabody
Investment Trust (the "Trust"), as to matters regarding the series of the
Trust designated as Mitchell Hutchins/Kidder, Peabody Global Equity Fund (the
"Fund"), will be held at 1285 Avenue of the Americas, 38th Floor, Room __, New
York, New York 10019 on July 21, 1995 at 11:00 a.m., New York time, for the
following purposes:
1. Approval or disapproval of a new investment advisory agreement
and administration agreement between the Trust in respect of the Fund and
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins");
2. Approval or disapproval of a new sub-investment advisory
agreement among the Trust in respect of the Fund, Mitchell Hutchins and
GE Investment Management Incorporated; and
3. The transaction of such other business as may properly come
before the meeting or any adjournments thereof.
Shareholders of record at the close of business on May 26, 1995 will be
entitled to receive notice of and to vote at the meeting.
By Order of the Trustees
Dianne E. O'Donnell
Secretary
New York, New York
___________, 1995
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES.
INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXY CARDS ARE SET FORTH ON
THE FOLLOWING PAGE. IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY.
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MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL EQUITY FUND
Proxy Statement
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 21, 1995
This Proxy Statement is furnished in connection with a solicitation of
proxies by the Trustees of Mitchell Hutchins/Kidder, Peabody Investment Trust
(the "Trust"), as to matters regarding the series of the Trust designated as
Mitchell Hutchins/Kidder, Peabody Global Equity Fund (the "Fund"), to be used
at the special meeting of shareholders of the Trust, to be held on July 21,
1995 at 11:00 a.m., New York time, at 1285 Avenue of the Americas, 38th Floor,
Room __, New York, New York 10019 (the "Meeting"), for the purposes
set forth in the accompanying Notice of Special Meeting of
Shareholders. Shareholders of record of the Fund at the close of
business on May 26, 1995 (the "Record Date") will be entitled to be
present and to vote at the Meeting. The principal executive offices of
the Trust are located at 1285 Avenue of the Americas, New York, New
York 10019.
As of the Record Date, the Fund had outstanding ___ shares of beneficial
interest, par value $.001 per share. Each share is entitled to one vote and
any fractional share is entitled to a fractional vote. Although the Fund
currently issues three classes of shares, for purposes of the matters to be
considered at the Meeting, all shares of the Fund will vote as a single class.
[Except as set forth in Annex 1,] no single shareholder or "group" (as
that term is used in Section 13(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")), beneficially owned more than 5% of the outstanding shares of
the Fund. As of the Record Date, the executive officers and members of the
Board of Trustees of the Trust (the "Board") beneficially owned less than 1%
of each class of shares of the Fund. The executive officers of the Fund are
set forth on Annex 2. For additional information concerning the share
ownership of the Board and the chief executive officer of the Fund, see Annex
3.
Under the By-Laws of the Trust, the holders of record of 30% of the
outstanding shares of the Fund present in person or by proxy shall constitute
a quorum at any meeting of the Shareholders of the Fund. In the event that a
quorum is not present at a meeting of shareholders, the holders of a majority
of the shares present in person or by proxy shall have the power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until the requisite number of shares entitled to vote at such meeting
shall be present. A shareholder vote may be taken on any one of the proposals
in this proxy statement for the Fund prior to any adjournment if sufficient
votes with respect to
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that proposal have been received for approval. In determining whether to
adjourn the Meeting, the following factors may be considered: the nature of
the proposals that are the subject of the Meeting, the percentage of votes
actually cast, the percentage of negative votes actually cast, the nature of
any further solicitation and the information to be provided with respect to
the reasons for the solicitation.
In order that a shareholder's shares may be represented at the Meeting,
shareholders are required to allow sufficient time for the proxy to be
received on or before 11:00 a.m. on July 21, 1995. Any shareholder who has
given a proxy has the right to revoke it at any time prior to its exercise
either by attending the relevant Meeting and voting his or her shares in
person or by submitting a letter of revocation or a later-dated proxy to the
Fund at 1285 Avenue of the Americas, New York, New York 10019, the address of
the Fund, prior to the date of the Meeting.
Approval of the new investment advisory and administration agreement
(Proposal 1) and the new sub-investment advisory agreement (Proposal 2) each
requires a vote of a majority of the outstanding voting securities of the Fund
(a "Majority Vote") which, under the Investment Company Act of 1940, as
amended (the "1940 Act"), is defined as the vote of (a) 67% of the Fund's
voting securities present at the meeting, if the holders of more than 50% of
the Fund's outstanding voting securities are present or represented by proxy,
or (b) more than 50% of the Fund's outstanding voting securities, whichever is
less.
If a proxy is properly executed and returned in time to be voted at the
Meeting, the shares represented thereby will be voted in accordance with the
instructions marked thereon. Unless instructions to the contrary are marked
thereon, a proxy will be voted "for" the matters listed in the accompanying
Notice of Special Meeting of Shareholders and "for" any other matters deemed
appropriate. If a proxy that is properly executed and returned accompanied by
instructions to withhold authority to vote, represents a broker "non-vote"
(that is, a proxy from a broker or nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to
vote shares on a particular matter with respect to which the broker or nominee
does not have discretionary power) or is marked with an abstention
(collectively, "abstentions"), the shares represented thereby will be
considered to be present at the Meeting for purposes of determining the
existence of a quorum for the transaction of business. Abstentions will not
constitute a vote "for" or "against" a matter and will be disregarded in
determining the
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"votes cast" on an issue; accordingly, abstentions will have the effect of a
vote "against" Proposal 1 or Proposal 2, as applicable.
It is estimated that proxy materials will be mailed to shareholders of
record on or about ______,___, 1995. Proxy solicitations will be
made primarily by mail, but proxy solicitations also may be made by
telephone, telegraph or personal interviews conducted by officers and
employees of the Trust; Mitchell Hutchins Asset Management Inc.
("Mitchell Hutchins"), the investment adviser and administrator of the
Fund; and/or PFPC Inc., the transfer agent for the Fund. In addition,
the Fund has retained Shareholder Communications Corporation to assist
in the solicitation of proxies, at an estimated cost in the range of $[
] to $[ ] (depending on the extent of services provided), and
Alamo Direct Mail Services, Inc. to tabulate the proxies. The costs of
the proxy solicitation and expenses incurred in connection with the
preparation of this proxy statement and its enclosures will be borne by
the Fund.
PROPOSAL 1 AND 2:
1 TO APPROVE OR DISAPPROVE A NEW INVESTMENT ADVISORY AND ADMINISTRATION
AGREEMENT BETWEEN THE TRUST IN RESPECT OF THE FUND AND MITCHELL HUTCHINS
2 TO APPROVE OR DISAPPROVE A NEW SUB-INVESTMENT ADVISORY AGREEMENT AMONG
THE TRUST IN RESPECT OF THE FUND, MITCHELL HUTCHINS AND GE INVESTMENT
MANAGEMENT INCORPORATED
Paine Webber Group Inc. ("Paine Webber Group") entered into an Asset
Purchase Agreement with General Electric Company ("General Electric") and
Kidder, Peabody Group Inc. ("Kidder Group") dated as of October 17, 1994 that
provided for the purchase and sale of certain assets of the Kidder Group. On
February 13, 1995, Paine Webber Group closed the phase of the asset purchase
transaction whereby the assets providing investment advisory and
administration services to the Fund were transferred. As a result of this
sale of the Fund's assets to Paine Webber Group, Mitchell Hutchins has assumed
the management of the Fund in the place of Kidder Peabody Asset Management,
Inc. ("KPAM"), while GE Investment Management Incorporated ("GEIM") has
remained the sub-adviser to the Fund. These arrangements were approved by
shareholders of the Fund at a meeting held on April 13, 1995.
In an effort to combine their investment management operations with those
previously conducted by KPAM, Mitchell
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Hutchins and PaineWebber are currently proposing a variety of transactions for
the investment companies under their management. Among other changes,
Mitchell Hutchins has proposed that the Fund acquire all or substantially all
of the assets and liabilities 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 (collectively, the "Acquired
Funds"). The Fund would be the surviving entity of the Fund's merger with any
of the Acquired Funds. In conjunction with these proposed mergers, the Fund,
Mitchell Hutchins and GEIM propose to reduce the compensation paid by the Fund
for the investment management, administrative and advisory services it
receives, which will result in a corresponding decrease in the fees borne by
the Fund's shareholders.
Any of the three proposed mergers would result in an increase in the
Fund's assets. While an increase in the Fund's overall assets would create
economies of scale in the Fund's management, it is contemplated that these
economies would be realized to a lesser degree by Mitchell Hutchins in
providing its management and administrative services than by GEIM in providing
its investment advisory services. Accordingly, Mitchell Hutchins and GEIM
have proposed a reduction in the overall management compensation paid by the
Fund and negotiated a reallocation of that compensation between them. Under
the investment advisory and administration agreement currently in effect
between the Fund and Mitchell Hutchins (the "Current Advisory Agreement"), the
Fund pays Mitchell Hutchins a monthly fee at the annual rate of 1.00% of the
value of the average daily net assets of the Fund. In turn, under the sub-
investment advisory agreement currently in effect among the Fund, Mitchell
Hutchins and GEIM (the "Current Sub-Advisory Agreement" and, together with the
Current Advisory Agreement, the "Current Agreements"), Mitchell Hutchins pays
GEIM a monthly fee at the annual rate of .70% of the Fund's average daily net
assets up to and including $200 million and .50% of the Fund's average daily
net assets over $200 million. The Fund pays no fee to GEIM directly.
Under the fee arrangement proposed by Mitchell Hutchins and GEIM, the
Fund would pay Mitchell Hutchins a monthly fee at the annual rate of .85% of
the value of its average daily net assets up to and including $500 million,
.83% of its average daily net assets over $500 million and up to and including
$1 billion and .805% of its average daily net assets over $1 billion. In
turn, Mitchell Hutchins would pay GEIM a monthly fee at the annual rate
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of .31% of the value of the Fund's average daily net assets up to and
including $500 million, .29% of the Fund's average daily net assets over $500
million and up to and including $1 billion and .265% of the Fund's average
daily net assets over $1 billion. Under this new fee arrangement, the Fund
will continue not to pay any fee directly to GEIM.
Approval and implementation of the proposed new investment advisory and
administration agreement between the Fund and Mitchell Hutchins (the "New
Advisory Agreement") and the proposed new sub-investment advisory agreement
among the Fund, Mitchell Hutchins and GEIM (the "New Sub-Advisory Agreement"
and, together with the New Advisory Agreement, the "New Agreements") would
involve a reduction in the overall fees paid by the Fund for management,
administrative and investment advisory services. Implementation of the New
Agreements, however, would also involve an increase in the rate of
compensation retained by Mitchell Hutchins after payment of the fee to GEIM.
The fees under both the Current Advisory Agreement and New Advisory Agreement
exceed those paid by most other investment companies but are believed to be
reasonable in light of the additional time and added expense in developing the
specialized resources associated with international investing.
The overall proposed reduction of fees is predicated on a substantial
increase in the Fund's net assets resulting from the consummation of one or
more of the proposed mergers with the Acquired Funds, as well as approval and
implementation of both New Agreements. Therefore, if none of the proposed
mergers with any of the Acquired Funds is consummated, or if either of the New
Agreements is not implemented, then neither of the New Agreements will be
implemented and the Fund's current fee structure will continue in effect in
accordance with the terms of the Current Agreements. For a description of the
Current Agreements, see "--The Current Advisory Agreement" and "--The Current
Sub-Advisory Agreement" below.
Based on the foregoing, at a telephonic meeting held on May 22, 1995, the
Board considered and recommended that the shareholders of the Fund approve the
New Agreements. Implementation of the New Agreements is also predicated on
formal approval by the Board, including a majority of the Trustees of the
Board who are not "interested persons" of the Trust, as that term is defined
in the 1940 Act, at a meeting held in person, called for the purpose of
considering such approval. No assurance can be made that any of the proposed
mergers will be effected or that requisite trustee approval will be obtained.
<PAGE>9
THE CURRENT ADVISORY AGREEMENT
Under the Current Advisory Agreement, Mitchell Hutchins manages and
administers the affairs of the Fund, subject to the supervision of the Board.
Without limiting the generality of the foregoing, Mitchell Hutchins:
(a) provides a continuous investment program for the Fund, including
investment research and management with respect to all securities and
investments and cash equivalents in the Fund, which duties Mitchell Hutchins
may delegate to a sub-investment adviser;
(b) oversees the computation of the net asset value and the net income
of the Fund as described in the currently effective registration statement of
the Fund under the Securities Act of 1933, as amended, and the 1940 Act and
any supplements thereto (the "Registration Statement") or as more frequently
requested by the Board;
(c) oversees the maintenance of all books and records with respect to
the transactions of the Fund, and furnishes the Board with such periodic and
special reports as the Board reasonably may request;
(d) supervises all aspects of the operations of the Fund, including
oversight of transfer agency, custodial and accounting services, except as
otherwise set forth in the Current Advisory Agreement;
(e) provides the Fund with such corporate, administrative and clerical
personnel (including officers of the Fund) and services as are reasonably
deemed necessary or advisable by the Board;
(f) arranges, but does not pay, for the periodic preparation, updating,
filing and dissemination (as applicable) of the Registration Statement, proxy
material, tax returns and required reports to the Fund's shareholders and the
Securities and Exchange Commission and other appropriate federal or state
regulatory authorities;
(g) provides the Fund with, or obtain for it, adequate office space and
all necessary office equipment and services, including telephone service,
heat, utilities, stationery supplies and similar items; and
(h) provides the Board on a regular basis with economic and
<PAGE>10
investment analyses and reports and makes available to the Board upon request
any economic, statistical and investment services normally available to
institutional or other customers of Mitchell Hutchins.
The Fund bears all expenses incurred in its operations and the offering
of its shares, except to the extent specifically assumed by Mitchell Hutchins.
Expenses borne by the Fund include but are not to be limited to the following
(or its proportionate share of the following): (i) the cost (including
brokerage commissions) of securities purchased or sold by the Fund and any
losses incurred in connection therewith; (ii) fees payable to and expenses
incurred on behalf of the Fund by Mitchell Hutchins under the Current Advisory
Agreement; (iii) expenses of organizing the Fund; (iv) filing fees and
expenses relating to the registration and qualification of the Fund's shares
and the Fund under federal and/or state securities laws and maintaining such
registration and qualification; (v) fees and salaries payable to the Board and
officers who are not interested persons of the Fund or Mitchell Hutchins; (vi)
all expenses incurred in connection with the Trustees' services, including
travel expenses in the case of Trustees who are not interested persons of the
Fund or Mitchell Hutchins; (vii) taxes (including any income or franchise
taxes) and governmental fees; (viii) costs of any liability, uncollectible
items of deposit and other insurance and fidelity bonds; (ix) any costs,
expenses or losses arising out of a liability of or claim for damages or other
relief asserted against the Fund for violation of any law and any
indemnification relating thereto; (x) legal, accounting and auditing expenses,
including legal fees of special counsel for those Trustees who are not
interested persons of the Fund; (xi) charges of custodians, transfer agents
and other agents; (xii) costs of preparing share certificates; (xiii) expenses
of setting in type and printing prospectuses and supplements thereto,
statements of additional information and supplements thereto, reports and
proxy materials for existing shareholders; (xiv) costs of mailing prospectuses
and supplements thereto, statements of additional information and supplements
thereto, reports and proxy materials to existing shareholders; (xv) any
extraordinary expenses (including fees and disbursements of counsel, costs of
actions, suits or proceedings to which the Fund is a party and the expenses
the Fund may incur as a result of its legal obligation to provide
indemnification to its officers, the Board, agents and shareholders or to
Mitchell Hutchins) incurred by the Fund; (xvi) fees, voluntary assessments and
other expenses incurred in connection with membership in investment company
organizations; (xvii) cost of mailing and tabulating proxies and costs of
meetings of shareholders, the
<PAGE>11
Board and any committees thereof; (xviii) the cost of investment company
literature and other publications provided by the Fund to its Trustees and
officers; (xix) costs of mailing, stationery and communications equipment;
(xx) expenses incident to any dividend, withdrawal or redemption options;
(xxi) charges and expenses of any outside pricing service used to value
portfolio securities and (xxii) interest on borrowings of the Fund.
Mitchell Hutchins assumes the cost of any compensation for services
provided to the Fund received by the officers of the Fund and by those
Trustees of the Board who are interested persons of the Fund.
The payment or assumption by Mitchell Hutchins of any expenses of the
Fund that Mitchell Hutchins is not required by the Current Advisory Agreement
to pay or assume shall not obligate Mitchell Hutchins to pay or assume the
same or similar expense of the Fund on any subsequent occasion.
The Current Advisory Agreement provides that Mitchell Hutchins will not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the management of the
Fund, except for a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of Mitchell Hutchins in the performance of its duties
or from reckless disregard by it of its obligations and duties.
At a meeting held on December 16, 1994, the Board approved the Current
Advisory Agreement. The Current Advisory Agreement was approved by the
shareholders of the Fund at a special meeting of shareholders held on April
13, 1995. During the last fiscal year, ending August 31, 1994, the aggregate
remuneration paid to KPAM, Mitchell Hutchins' predecessor as manager of the
Fund, totaled $2,339,156.
MITCHELL HUTCHINS
Mitchell Hutchins, 1285 Avenue of the Americas, New York, New York 10019,
is a wholly owned subsidiary of PaineWebber Incorporated ("PaineWebber"),
which is a wholly owned subsidiary of Paine Webber Group, a publicly held
financial services holding company, __% of the common stock of which is held
by General Electric. Mitchell Hutchins provides investment advisory and
portfolio management services to investment companies, pension funds and other
institutional, corporate and individual clients. As of March 31, 1995, total
assets under Mitchell Hutchins' management were approximately $41.7 billion.
As of that date,
<PAGE>12
Mitchell Hutchins served as investment adviser or sub-adviser to 42 registered
investment companies with 77 separate portfolios having aggregate assets of
approximately $26.9 billion.
The chief executive officer and directors of Mitchell Hutchins, and their
principal occupations, are as follows: Frank P.L. Minard, President of the
Fund, Chairman of Mitchell Hutchins, Chairman of Mitchell Hutchins
Institutional Investors Inc. and Director of PaineWebber; Margo N. Alexander,
President, Chief Executive Officer and Director of Mitchell Hutchins and
Executive Vice President and Director of PaineWebber; Stephen Byers, Chief
Administration and Financial Officer of Mitchell Hutchins; Thomas Eggers,
Managing Director and Head of Mutual Fund Sales and Marketing of Mitchell
Hutchins; Michael Katz, Chief Financial Officer of Mitchell Hutchins; and
Victoria E. Schonfeld, Managing Director and General Counsel of Mitchell
Hutchins. The address of each of these individuals is the same as that of
Mitchell Hutchins set forth above. The fees charged by Mitchell Hutchins to
registered investment companies or series thereof with investment objectives
that are similar to that of the Fund are described on Annex 4.
PaineWebber, located at 1285 Avenue of the Americas, New York, New York
10019, is a registered investment adviser under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), a registered broker-dealer under the
Securities Exchange Act of 1934, a commodity trading adviser registered with
the CFTC and a member of the New York Stock Exchange, American Stock Exchange
and other principal stock exchanges. PaineWebber is a wholly owned subsidiary
of Paine Webber Group.
THE CURRENT SUB-ADVISORY AGREEMENT
Under the terms of the Current Sub-Advisory Agreement, subject to the
supervision of the Board and Mitchell Hutchins, GEIM manages the Fund's
portfolio in accordance with the investment objective and stated policies of
the Fund, makes investment decisions for the Fund and places purchase and sale
orders for the Fund's portfolio transactions.
Unless otherwise set forth in the current Prospectus describing the Fund
or directed by Mitchell Hutchins or the Trust, GEIM, in selecting brokers or
dealers to effect transactions on behalf of the Fund, gives 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
<PAGE>13
may effect or be a party to any transaction to which the Fund is a party or
other transactions 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 solely on the
basis of the most favorable price and efficient execution. The Current Sub-
Advisory Agreement, thus, authorized 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 Board 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.
GEIM bears the cost of rendering the services it is obligated to provide
under the Current Sub-Advisory Agreement and, at its own expense, pays the
salaries of all officers and employees who are employed by both it and the
Trust. In addition, GEIM, at its own expense, maintains sufficient staff, and
employs or retains sufficient personnel and consults with any other persons
that it determines may be necessary or useful to the performance of its
obligations under the Current Sub-Advisory Agreement. GEIM provides 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 employs
a professional staff of portfolio managers who draw upon a variety of sources
for research information for the Fund.
Under the terms of the Current Sub-Advisory Agreement, other expenses to
be incurred in the operation of the Fund and not specifically borne by
Mitchell Hutchins or GEIM will be borne by the Fund, including: Mitchell
Hutchins's fees for services rendered under the Current Advisory Agreement;
shareholder servicing and distribution fees paid to PaineWebber under the
terms of the Fund's shareholder servicing and distribution plan adopted
pursuant to Rule 12b-1 under 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 cost and expense of printing, including typesetting, and
distributing of prospectuses describing the Fund
<PAGE>14
and supplements to those prospectuses to regulatory authorities and the Fund's
shareholders; all expenses incurred in conducting meetings of the Fund's
shareholders and meetings of the Board 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 Board 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
Board 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 the Board) 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.
At a meeting held on December 16, 1994, the Board approved the Current
Sub-Advisory Agreement. The Current Sub-Advisory Agreement was approved by
the shareholders of the Fund at a special meeting of shareholders held on
April 13, 1995. During the last fiscal year, ending August 31, 1994, the
aggregate remuneration paid by KPAM to GEIM totaled $1,637,409.
<PAGE>15
GE INVESTMENT MANAGEMENT INCORPORATED
GEIM, the current sub-adviser to the Fund, is a wholly owned subsidiary
of General Electric and a registered investment adviser under the Advisers
Act. GEIM was formed under the laws of Delaware in 1988. GEIM's principal
officers and directors serve in similar capacities with General Electric
Investment Corporation ("GEIC"), which like GEIM is a wholly owed subsidiary
of General Electric and a registered investment adviser. GEIM and GEIC
collectively provide investment management services to various institutional
accounts with total assets, as of March 31, 1995, in excess of $47 billion, of
which roughly $9 billion is invested in mutual funds. GEIM also serves as an
investment adviser to GE Global Equity Fund ("GE Global Fund"), a series of GE
Funds, and to Global Growth Portfolio ("Growth Portfolio"), a series of
PaineWebber Series Trust, each of which has an investment objective similar to
that of the Fund. GE Global Fund and Growth Portfolio had net assets of $34.2
million and $34.7 million, respectively, as of May 31, 1995 and pay GEIM an
advisory fee at the annual rate of .75% and .29% of their respective average
daily net assets for GEIM's services. The chief executive officer and
directors of GEIM, and their principal occupations, are as follows: Dale F.
Frey, Chairman, President and Chief Executive Officer of GEIM; Eugene K.
Bolton, Director and Executive Vice President of GEIM; Michael J. Cosgrove,
Director and Executive Vice President of GEIM; Ralph R. Layman, Director and
Executive Vice President of GEIM; Alan M. Lewis, Director, Executive Vice
President, General Counsel and Secretary of GEIM; John H. Myers, Director and
Executive Vice President of GEIM; Geoffrey R. Norman, Director and Executive
Vice President of GEIM; and Donald W. Torey, Director, Executive Vice
President and Chief Financial Officer of GEIM. The addresses of each of these
individuals, as well as of GEIM, is 3003 Summer Street, P.O. Box 7900,
Stamford, Connecticut 06904.
THE NEW ADVISORY AGREEMENT AND THE NEW SUB-ADVISORY AGREEMENT
The proposed New Agreements are the same as the respective Current
Agreements in all material respects except for their different fee structures,
as described above.
<PAGE>16
REQUIRED VOTE
Approval of the Fund's New Advisory Agreement and New Sub-Advisory
Agreement each requires a Majority Vote of the Fund's outstanding voting
securities. In addition, implementation of each of the New Agreements is
contingent upon both of the New Agreements' obtaining the requisite
shareholder and formal Board approvals, as described above. Finally, at least
one of the proposed mergers must be consummated before the New Agreements may
be put into effect. If either shareholder or Board approval is not obtained
for each of the New Agreements, or if none of the proposed mergers are
consummated, the Current Advisory Agreement and the Current Sub-Advisory
Agreement will remain in effect in accordance with their terms and the
Trustees will consider other appropriate action.
APPROVAL AND IMPLEMENTATION OF EACH OF THESE PROPOSALS WILL RESULT IN A
DECREASE IN THE AGGREGATE ADVISORY FEES BORNE BY SHAREHOLDERS.
THE BOARD, INCLUDING ALL OF ITS INDEPENDENT TRUSTEES, RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE (1) "FOR" APPROVAL OF THE NEW ADVISORY AGREEMENT
AND (2) "FOR" THE NEW SUB-ADVISORY AGREEMENT.
OTHER INFORMATION
BROKERAGE
During the last fiscal year, the Fund engaged in no transactions
involving brokerage commissions with Kidder, Peabody & Co. Incorporated, then
the only broker affiliated with the Fund.
ANNUAL REPORTS
The Fund will furnish, without charge, a copy of its Annual Report, and
any subsequent semi-annual report, upon request to the Fund at 1285 Avenue of
the Americas, New York, New York 10019, telephone (800) 647-1568.
<PAGE>17
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholders' meeting should send their written proposals to the
Secretary of the Fund, c/o Mitchell Hutchins Asset Management Inc., 1285
Avenue of the Americas, New York, New York 10019.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
The Securities and Exchange Commission's staff takes the position that
shareholders holding at least 10% of each investment company's outstanding
voting securities (as defined in the 1940 Act) may require the calling of a
meeting of shareholders for the purpose of voting on the removal of any Board
Member of the Fund.
OTHER MATTERS TO COME BEFORE THE MEETING
The Fund does not intend to present any other business at the Meeting,
nor is it aware that any shareholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying proxy card will vote thereon in accordance with their judgment.
__________ ___, 1995
IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY. SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
<PAGE>18
ANNEX 1
<TABLE> <CAPTION>
BENEFICIAL OWNERSHIP OF SHARES
Number (and
percentage) of
Shares Beneficially
Name and Address Name of Fund Owned
<S> <C> <C> <C>
</TABLE>
<PAGE>19
ANNEX 2
EXECUTIVE OFFICERS OF THE FUND
<TABLE> <CAPTION>
Name and Position with the Fund Age Principal Occupation
During Past 5 Years
<S> <C> <C>
Frank P.L. Minard . . . . . . . . . . . . . . . 49 President of the Fund, Chairman of Mitchell Hutchins,
President of the Fund since Chairman of Mitchell Hutchins Institutional Investors Inc.
February 13, 1995 and Trustee and a Director of PaineWebber. Prior to June 1993,
and Chairman of the Fund since Managing Director of Oppenheimer Capital, an investment
April 13, 1995 advisory firm, and Director of Oppenheimer Capital Ltd. in
London.
Julian F. Sluyters . . . . . . . . . . . . . . 34 Senior Vice President and Director of Mutual Fund Finance
Chief Financial Officer of the Division of Mitchell Hutchins; prior to 1991, Audit Senior
Fund since February 13, 1995 Manager with Ernst & Young LLP.
Dianne E. O'Donnell . . . . . . . . . . . . . . 42 Senior Vice President and Deputy General Counsel of
Secretary of the Fund since Mitchell Hutchins.
February 13, 1995
</TABLE>
<PAGE>20
ANNEX 3
NUMBER OF SHARES (AND PERCENTAGE OF SHARES OUTSTANDING'pp'(1))
BENEFICIALLY OWNED AT THE RECORD DATE
<TABLE> <CAPTION>
Name of Board Member Number of Shares
<S> <C> <C>
</TABLE>
___________________________
(1) None of the persons listed in the table beneficially owns
in excess of one percent of the outstanding shares of any
class of the Fund's shares; and, as a group, they do not
beneficially own in excess of one percent of any of such class.
<PAGE>21
ANNEX 4
INVESTMENT COMPANIES OR SERIES THEREOF MANAGED BY
MITCHELL HUTCHINS WITH INVESTMENT OBJECTIVES
SIMILAR TO THOSE OF THE FUND
<TABLE> <CAPTION>
Contractual Annual
Investment Advisory Fee Rate
(Unless Otherwise Noted,
Expressed as a Percentage of
Average Daily Net Assets) as
of June 30, 1995
Name of Fund Net Assets as of 6/30/95 <C>
<S> <C>
PaineWebber Atlas [ ] 0.75%
Global Growth Fund
PaineWebber Growth Fund [ ] 0.75%
PaineWebber Series Trust - Global [ ] 0.75%
Growth Portfolio
PaineWebber Global Energy Fund [ ] Up to $250m
0.85%;
in excess of $250m
up to $500m
0.80%;
Over $500m
0.75%
PaineWebber Global [ ] 0.90% up to $500m;
Growth and Income Fund 0.875% in excess of
$500 m up to $1.0 billion;
0.850% in excess of
$1.0 b up to $1.5 b;
0.825% in excess of $1.5 b
up to $2.0 b; 0.80% over $2.0 b
Global Small Cap [ ] 1.00% of Average Weekly
Fund Inc. Net Assets
PaineWebber Europe [ ] 0.90% up to $50 m;
Growth Fund 0.85% in excess of $50 m up
to $100 m; 0.80% in
excess of $100 m up to
$150 m; 0.75% in excess of
$150 m up to $200 m;
0.70% over $200 m
</TABLE>
<PAGE>22
PRELIMINARY COPY
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL
EQUITY FUND, A SERIES OF MITCHELL
HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
THIS PROXY IS SOLICITATED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Dianne E. O'Donnell and Ilene Shore, and each
of them, attorneys and proxies of the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on
behalf of the undersigned all shares of Mitchell Hutchins/Kidder, Peabody
Global Equity Fund (the "Fund"), a series of Mitchell Hutchins/Kidder, Peabody
Investment Trust (the "Trust"), which the undersigned is entitled to vote at a
Special Meeting of Shareholders of the Fund (the "Meeting") to be held at 1285
Avenue of the Americas, New York, New York 10019 on July 21, 1995 at 11:00
a.m., and at any adjournments thereof. The undersigned hereby acknowledges
receipt of the Notice of Meeting and Proxy Statement and hereby instructs said
attorneys and proxies to vote said shares as indicated herein and upon such
other business as may properly come before the Meeting.
A majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2. Please refer to the Proxy Statement for
a discussion of each of these Proposals.
PLEASE VOTE, DATE, AND SIGN BELOW AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAME APPEARS ON THE BOOKS OF THE
FUND. JOINT OWNERS SHOULD EACH SIGN PERSONALLY. TRUSTEES AND OTHER
FIDUCIARIES SHOULD INDICATE THE CAPACITY IN WHICH THEY SIGN, AND WHERE
MORE THAN ONE NAME APPEARS, A MAJORITY MUST SIGN. IF A CORPORATION,
THIS SIGNATURE SHOULD BE THAT OF AN AUTHORIZED OFFICER WHO SHOULD STATE
HIS OR HER TITLE.
<PAGE>23
PLEASE MARK VOTES AS RECORD DATE SHARES:
IN THIS EXAMPLE X
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL EQUITY
FUND (THE "FUND")
1. To approve or disapprove a new investment advisory and administration
agreement between the Trust in respect of the Fund and Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins").
_________ _________ _________
For Against Abstain
2. To approve or disapprove a new Sub-Investment Advisory Agreement among
the Trust in respect of the Fund, Mitchell Hutchins and GE Investment
Management Incorporated.
_________ _________ _________
For Against Abstain
3. To consider and vote upon such other business as may properly come before
the meeting or any adjournments thereof.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
_____________ _____________________ ____________________
Date Shareholder Signature Co-Owner Signature
