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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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL EQUITY FUND
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(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
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
.................................................................
2) Aggregate number of securities to which transaction
applies:
.................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it was
determined):
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
5) Total fee paid:
.................................................................
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
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Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, NY 10019
212 731-2000
MITCHELL HUTCHINS
July 24, 1995
Dear Shareholders of Mitchell Hutchins/Kidder, Peabody Global Equity Fund:
As you know from our past correspondence, the recent acquisition of assets
of Kidder, Peabody & Co. Incorporated by Paine Webber Group Inc. and certain of
its subsidiaries has resulted in new management and advisory arrangements for
the Mitchell Hutchins/Kidder, Peabody Global Equity Fund ('Fund'). The Board of
Trustees has called a Special Meeting of Shareholders to be held on August 21,
1995 to consider a number of proposals, including the approval of a new
investment advisory and administration agreement and a new sub-investment
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 the Fund's sub-adviser. You are being asked to approve new
investment advisory, administration and sub-advisory agreements.
THE NEW INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT CALLS FOR A
REDUCTION IN ADVISORY FEES PAID BY YOUR FUND. AFTER CAREFUL CONSIDERATION, THE
BOARD OF TRUSTEES OF THE FUND RECOMMENDS THAT SHAREHOLDERS VOTE '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,
MARGO ALEXANDER
Margo Alexander
President of Mitchell Hutchins/
Kidder, Peabody Investment Trust
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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, New York, New York
10019 on August 21, 1995 at 10:00 a.m., New York time, for the following
purposes:
1. Approval or disapproval of a new investment advisory 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 July 17, 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
July 24, 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.
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL EQUITY FUND
------------------------------------
PROXY STATEMENT
------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 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 August 21, 1995
at 10:00 a.m., New York time, at 1285 Avenue of the Americas, 38th Floor, 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 July 17, 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 12,879,834 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 Trust are set forth
on Annex 2. For additional information concerning the share ownership of the
Board and the chief executive officer of the Trust, 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
prior to any adjournment if sufficient votes with respect to 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 10:00 a.m. on August 21, 1995. Any shareholder who has given a
proxy has the right to revoke it at any time prior to its exercise either by
<PAGE>
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 '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 July 24, 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 $7,300 to
$10,000 (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
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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 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
advisory 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 new 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 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
3
<PAGE>
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. No assurance can be made that any of the proposed
mergers will be effected.
Following the Reorganizations, the Fund will change its name to
'PaineWebber Global Equity Fund.' The trustees and officers of the Trust, and
the Fund's investment adviser, sub-adviser, distributor and other outside
agents, will continue to serve the Fund in their current capacities after the
proposed mergers. Ralph R. Layman, who is currently the portfolio manager for
the Fund and the Acquired Funds, except with respect to the debt and money
market investments of PaineWebber Global Growth and Income Fund, and who has
been primarily responsible for the day-to-day portfolio management of the Fund
since July 1991, will continue as the portfolio manager of the Fund following
the proposed mergers. Mr. Layman is an Executive Vice President of GEIM and has
been employed by GEIM as the Chief Investment Officer of the Fund since July
1991. Prior to July 1991, Mr. Layman served as Executive Vice President, partner
and portfolio manager of Northern Capital Management Co.
Based on the foregoing, at a meeting held on July 20, 1995, the Board
considered, approved and recommended that the shareholders of the Fund approve
the New Agreements.
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;
4
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(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 obtains 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 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 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;
5
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(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 Trust and by those Trustees
of the Board who are interested persons of the Trust.
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, 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, 25.7% 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 June 30, 1995, total
assets under Mitchell Hutchins' management were approximately $43.6 billion. As
of that date, Mitchell Hutchins served as investment adviser or sub-adviser to
40 registered investment companies with 74 separate portfolios having aggregate
assets of approximately $28.0 billion.
The chief executive officer and directors of Mitchell Hutchins, and their
principal occupations, are as follows: Frank P.L. Minard, 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
6
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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 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, 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
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 Mitchell Hutchins 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 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
7
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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, Mitchell Hutchins' predecessor as manager of the
Fund, to GEIM totaled $1,637,409.
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 May 31, 1995, in excess of $48 billion, of which roughly $9
billion is invested in mutual funds. GEIM serves as an investment adviser to the
three Acquired Funds, PaineWebber Atlas Global Growth Fund, PaineWebber Global
Growth and Income Fund and PaineWebber Europe Growth Fund, each with assets, as
of June 30, 1995, of $311.9 million, $74.1 million and $94.8 million,
respectively. With respect to PaineWebber Atlas Global Growth Fund and
PaineWebber Europe Growth Fund, GEIM receives 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. With
respect to PaineWebber Global Growth and Income Fund, GEIM receives a monthly
fee for its investment advisory services at an annual rate of 0.29% of the
fund's average daily net assets attributable to the fund's equity portfolio.
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 $34.8 million, respectively, as of
May 31, 1995 and June 30, 1995, respectively, 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
8
<PAGE>
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.
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
approval. Finally, at least one of the proposed mergers must be consummated
before the New Agreements may be put into effect. If shareholder 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' APPROVAL OF 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.
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 Trust, 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
9
<PAGE>
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.
July 24, 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.
10
<PAGE>
ANNEX 1
BENEFICIAL OWNERSHIP OF SHARES OF THE FUND
<TABLE>
<CAPTION>
NUMBER (AND
PERCENTAGE)
OF SHARES
NAME ADDRESS BENEFICIALLY OWNED
- ---------------------------------- ---------------------------------------------------------- ------------------
<S> <C> <C>
Subaru of New England c/o Mitchell Hutchins Asset Management Inc. 708,955
Global Account 1285 Avenue of the Americas (5.5%)
New York, NY 10019
</TABLE>
11
<PAGE>
ANNEX 2
EXECUTIVE OFFICERS OF THE TRUST
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION
WITH THE FUND AGE DURING PAST 5 YEARS
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Margo N. Alexander ....................... 48 Ms. Alexander is president, chief executive officer and a
President director of Mitchell Hutchins. Prior to January 1995, Ms.
Alexander was an executive vice president of PaineWebber. Ms.
Alexander is also president of 27 other investment companies
for which Mitchell Hutchins or PaineWebber serves as investment
adviser.
Julian F. Sluyters ....................... 35 Senior Vice President and Director of Mutual Fund Finance
Chief Financial Officer of the Division of Mitchell Hutchins; prior to 1991, Audit Senior
Trust since February 13, 1995 Manager with Ernst & Young LLP.
Dianne E. O'Donnell ...................... 43 Senior Vice President and Deputy General Counsel of Mitchell
Secretary of the Trust since Hutchins.
February 13, 1995
</TABLE>
12
<PAGE>
ANNEX 3
NUMBER OF SHARES (AND PERCENTAGE OF SHARES OUTSTANDING(1))
BENEFICIALLY OWNED AT THE RECORD DATE
<TABLE>
<CAPTION>
NAME OF BOARD MEMBER NUMBER OF SHARES
- ----------------------------------------------------------------------------------------------- ----------------
<S> <C>
David J. Beaubien ............................................................................. 0
Yankee Environmental Systems, Inc.
101 Industrial Boulevard
Box 746
Turners Falls, MA 01376
William W. Hewitt, Jr. ........................................................................ 761
P.O. Box 2359
Princeton, NJ 08543
Thomas R. Jordan .............................................................................. 0
The Dilenschneider Group
200 Park Ave.
26th Floor
New York, NY 10166
Frank P.L. Minard ............................................................................. 0
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, NY 10019
Carl W. Schafer ............................................................................... 0
Atlantic Foundation
16 Farber Rd.
Princeton, NJ 08540
<CAPTION>
CHIEF EXECUTIVE OFFICER
<S> <C>
Margo N. Alexander ............................................................................ 0
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, NY 10019
</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.
13
<PAGE>
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
NET ASSETS AS OF DAILY NET ASSETS) AS OF
NAME OF FUND 6/30/95 JUNE 30, 1995
- ------------------------------------------------------------------ ---------------- -----------------------
<S> <C> <C>
PaineWebber Atlas Global Growth Fund.............................. $311.9 million 0.75%
PaineWebber Series Trust -- Global Growth Portfolio............... 34.8 0.75%
PaineWebber Global Energy Fund.................................... 21.2 Up to $250M
0.85%;
in excess of $250M
up to $500M
0.80%;
Over $500M
0.75%
PaineWebber Global Growth and Income Fund......................... 74.1 0.90% up to $500M;
0.875% in excess
of $500M up to
$1.0B;
0.850% in excess
of $1.0B up to
$1.5B;
0.825% in excess of
$1.5B up to $2.0B;
0.80% over $2.0B
Global Small Cap Fund Inc......................................... 42.1 1.00% of Average Weekly
Net Assets
PaineWebber Europe Growth Fund.................................... 94.8 0.90% up to $50M;
0.85% in excess of
$50M up to $100M;
0.80% in excess of
$100M up to $150M;
0.75% in excess of
$150M up to $200M;
0.70% over $200M
</TABLE>
14
APPENDIX 1
PROXY CARD
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL EQUITY FUND, A
SERIES OF MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST
SPECIAL MEETING OF SHAREHOLDERS - AUGUST 21, 1995
The undersigned hereby appoints as proxies Dianne E. O'Donnell and Ilene Shore
and each of them (with power of substitution) to vote for the undersigned all
shares of beneficial interest of the undersigned at the aforesaid meeting and
any adjournment thereof with all the power the undersigned would have if
personally present. The shares represented by this proxy will be voted as
instructed. UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO
GRANT AUTHORITY TO VOTE 'FOR' ALL PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF TRUSTEES OF MITCHELL HUTCHINS/KIDDER, PEABODY INVESTMENT TRUST.
THIS PROXY WILL NOT BE VOTED
UNLESS IT IS DATED AND SIGNED
EXACTLY AS INSTRUCTED BELOW.
If shares are held jointly,
each Shareholder named should
sign. If only one signs, his or
her signature will be binding.
If the Shareholder is a
corporation, the President or a
Vice President should sign in
his or her own name, indicating
title. If the Shareholder is a
partnership, a partner should
sign in his or her own name,
indicating that he or she is a
'Partner'.
Sign exactly as name appears
hereon.
__________________ (L.S.)
__________________ (L.S.)
Dated ________________, 1995
<PAGE>
YOUR VOTE IS IMPORTANT
PROXY PROXY
PLEASE INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOX BELOW. THE BOARD OF
TRUSTEES RECOMMENDS A VOTE 'FOR' EACH PROPOSAL.
Please date and sign this proxy on the reverse side and return it in the
enclosed envelope to Alamo Direct Mail Services, Inc., 10 Lucon Drive, Deer
Park, NY 11729
<TABLE>
<S> <C> <C> <C>
1. Approval of a new Investment Advisory and Administration Agreement between the FOR AGAINST ABSTAIN
Trust in respect of the Fund and Mitchell Hutchins Asset Management Inc. ('Mitchell [ ] [ ] [ ]
Hutchins').
2. Approval of a new Sub-Investment Advisory Agreement among the Trust in respect of FOR AGAINST ABSTAIN
the Fund, Mitchell Hutchins and GE Investment Management Incorporated. [ ] [ ] [ ]
CONTINUED AND TO BE
SIGNED ON REVERSE SIDE
</TABLE>
