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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
The Brinson Funds
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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THE BRISON FUNDS
IMPORTANT SHAREHOLDER INFORMATION
These materials are for a special meeting of shareholders of certain series of
The Brinson Funds (the "Trust"). The special meeting (the "Special Meeting") is
scheduled to be held on October 30, 2000 at 4:00 p.m., Central time. This
information will provide you with details of the proposals to be voted on at the
Special Meeting, and includes your Proxy Statement and proxy card. A proxy card
is, in essence, a ballot. When you vote your proxy, it tells us how you wish to
vote on important issues relating to your Fund(s). If you complete and sign the
proxy, we'll vote it exactly as you tell us. If you simply sign the proxy,
we'll vote it in accordance with the recommendations of the Board of Trustees of
the Trust on page [2] of the Proxy Statement.
We urge you to spend a few minutes reviewing the proposals in the Proxy
Statement. Then, fill out the proxy card and return it to us either in the
enclosed envelope or by faxing both sides of the card to 1-888-796-9932 so that
we know how you would like to vote. When shareholders return their proxies
promptly, the Trust may be able to save money by not having to conduct
additional mailings.
We welcome your comments. If you have any questions, call 1-800-448-2430.
<PAGE>
THE BRINSON FUNDS
Dear Shareholder:
I am writing to request that you consider a number of important matters relating
to your investment in The Brinson Funds (the "Trust"). The Trust will be
holding a special meeting of shareholders (the "Special Meeting") of certain
series of the Trust (the "Funds"). The Special Meeting will be held on October
30, 2000 at 4:00 p.m., Central time, at the offices of the Trust's investment
advisor and manager, Brinson Partners, Inc. ("Brinson"), at The Rookery
Building, 209 South LaSalle Street, Chicago, IL 60604. The materials that we
have included discuss the proposals to be voted on at the Special Meeting that
will affect the future of the Trust and the Funds.
The Board of Trustees (the "Board") of the Trust recommends that shareholders of
the Funds (the "shareholders") cast their votes in favor of:
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1. Approving amendments to the Investment Advisory Agreements between the
Trust, on behalf of the Funds, and Brinson;
2. Approving the Sub-Advisory Agreements (the "Sub-Advisory Agreements")
between Brinson and UBS Asset Management (New York), Inc. ("UBS New
York"), with respect to the Funds;
3. Amending certain of the Funds' fundamental investment restrictions;
and
4. Eliminating certain of the Funds' fundamental investment restrictions.
Please take a moment to review this document and fill out, sign and return the
enclosed proxy card.
The Board has proposed implementing the Sub-Advisory Agreements as a consequence
of the consolidation of investment management functions among various
subsidiaries of UBS AG, the corporate parent of Brinson and UBS New York. In
order to put the Sub-Advisory Agreements into place, it is first necessary to
amend the current Investment Advisory Agreements with Brinson.
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If approved by shareholders, these proposed changes will not result in any
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additional fees being paid by shareholders.
The Board has also proposed amending and/or eliminating certain of the Funds'
fundamental investment policies. We believe that the recommended changes will
provide additional investment opportunities to the Funds, as further described
in the attached Proxy Statement. We urge you to approve these proposals that
are designed to benefit all shareholders by providing the Funds with greater
flexibility in pursuing their investment objectives.
The Proxy Statement includes a question and answer format designed to provide
you with a simpler and more concise explanation of certain issues. Although
much of the information in the Proxy Statement is technical and is required by
the various regulations that govern the Trust and the Funds, we hope that this
format will be helpful to you.
Sincerely,
Thomas J. Digenan
President
The Brinson Funds
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<PAGE>
THE BRINSON FUNDS
209 South LaSalle Street
Chicago, Illinois 60604
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
of certain series of
THE BRINSON FUNDS
To be held October 30, 2000
TO THE SHAREHOLDERS OF THE BRINSON FUNDS
NOTICE IS HEREBY GIVEN THAT A SPECIAL MEETING OF SHAREHOLDERS of certain series
of the Brinson Funds (the "Trust") will be held on October 30, 2000 at the
offices of the Trust's investment advisor and manager, Brinson Partners, Inc.
("Brinson"), at The Rookery Building, 209 South LaSalle Street, Chicago, IL
60604. (The special meeting is referred to as the "Special Meeting.")
Shareholders of the U.S. Small Cap Growth Fund, U.S. Large Cap Growth Fund, High
Yield Fund, Global Biotech Fund and Global Technology Fund series of the Trust
(collectively, the "Funds" or the "Funds") will be eligible to vote at the
Special Meeting. The Special Meeting will convene at 4:00 p.m., Central time.
The Trust proposes to mail this notice of the Special Meeting, the proxy card,
and the Proxy Statement to shareholders of record on or about September 29,
2000.
The following proposals will be presented to the shareholders:
1. To approve or disapprove amendments to the Investment Advisory Agreements
between the Trust, on behalf of the Funds, and Brinson;
2. To approve or disapprove the Sub-Advisory Agreements between Brinson and
UBS Asset Management (New York), Inc., with respect to the Funds;
3. To approve or disapprove amendments to certain of the Funds' fundamental
investment restrictions:
(a) To amend the Funds' fundamental investment restrictions regarding
borrowing;
(b) To amend the Funds' fundamental investment restrictions regarding
underwriting;
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(c) To amend the Funds' fundamental investment restrictions regarding
lending;
(d) To amend the Funds' fundamental investment restrictions regarding
investments in real estate;
(e) To amend the Funds' fundamental investment restrictions regarding
investments in commodities;
(f) To amend the Funds' fundamental investment restrictions regarding
issuing senior securities and making short sales;
(g) To amend the Funds' fundamental investment restrictions regarding
industry concentration (applies to each Fund except the Global Biotech
Fund and Global Technology Fund); and
(h) To amend the Funds' fundamental investment restriction regarding
diversification (applies to the U.S. Small Cap Growth Fund and High
Yield Fund only).
4. To approve the elimination of certain of the Funds' fundamental investment
restrictions:
(a) To eliminate the Funds' fundamental investment restrictions regarding
purchasing securities on margin;
(b) To eliminate the Funds' fundamental investment restrictions regarding
investments in other investment companies; and
(c) To eliminate the Funds' fundamental investment restrictions regarding
investments in oil, gas and/or mineral exploration or development
programs or leases (applies to each Fund except the Global Biotech
Fund and Global Technology Fund).
The transfer books of the Trust will not be closed, but only those shareholders
of record of the Funds at the close of business on September 18, 2000 will be
entitled to notice of, and to vote on, the proposals at the Special Meeting, or
at any adjournments thereof.
Shareholders may attend in person. If you plan to attend the Special Meeting,
please indicate so on the enclosed proxy card and return it promptly in the
enclosed envelope. No postage is required if mailed in the United States.
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Whether you will able to attend or not, PLEASE VOTE, SIGN AND DATE THE PROXY AND
RETURN IT PROMPTLY.
September 29, 2000 By Order of the Board of
Trustees
Carolyn M. Burke
Secretary
The Brinson Funds
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PLEASE RETURN YOUR PROXY IMMEDIATELY
TO PREVENT ADDITIONAL SOLICITATION EXPENSE
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Questions and Answers: About the Special Meeting and the
Proxy Statement.................................................. 1
Proposal 1: Approval of Amendments to the Investment Advisory
Agreements between the Trust, on behalf of the Funds,
and Brinson...................................................... 6
Proposal 2: Approval of the Sub-Advisory Agreements between
Brinson and UBS Asset Management (New York), Inc., with
respect to the Funds............................................. 11
Proposal 3: Approval of Amendments to Certain of the Funds'
Fundamental Investment Restrictions.............................. 18
3(a): Borrowing Money...................................... 18
3(b): Underwriting Securities.............................. 20
3(c): Lending.............................................. 21
3(d): Investments in Real Estate........................... 22
3(e): Investments in Commodities........................... 23
3(f): Issuing Senior Securities and Making Short Sales..... 24
3(g): Concentration of Investments......................... 27
3(h): Diversification of Investments....................... 28
Proposal 4: Approval of the Elimination of Certain of the Funds'
Fundamental Investment Restrictions.............................. 30
4(a): Purchasing Securities on Margin...................... 30
4(b): Investments in Other Investment Companies............ 31
4(c): Investments in Oil, Gas and/or Mineral
Exploration or Development Programs or Lease................ 32
Other Business.............................................. 33
Information about the Trust................................. 33
Further Information about Voting and the Special Meeting.... 37
</TABLE>
(i)
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THE BRINSON FUNDS
209 South LaSalle Street
Chicago, Illinois 60604
PROXY STATEMENT
QUESTIONS AND ANSWERS: ABOUT THE SPECIAL
MEETING AND THE PROXY STATEMENT
INFORMATION ABOUT VOTING
Q. Who is asking for my vote?
A. The Board of Trustees (the "Board" or the "Trustees") of The Brinson Funds
(the "Trust") has requested your vote on several matters in connection with
the special meeting of shareholders of certain series of the Trust. The
special meeting (the "Special Meeting") will be held at 4:00 p.m., Central
time, on October 30, 2000, at the offices of the Trust's investment advisor
and manager, Brinson Partners, Inc. ("Brinson"), at The Rookery Building,
209 South LaSalle Street, Chicago, IL 60604. The Trust proposes to mail the
Notice of the Special Meeting, the proxy card and the Proxy Statement to
shareholders of record on or about September 29, 2000.
The Trust was established as a Delaware business trust on December 1, 1993.
This Proxy Statement relates to the following five (5) series of the Trust
(each a "Funds," and together, the "Funds"):
. U.S. Small Cap Growth Fund
. U.S. Large Cap Growth Fund
. High Yield Fund
. Global Biotech Fund
. Global Technology Fund
A Funds may be referred to in this Proxy Statement as a "Fund," and the
Funds are collectively called the "Funds."
<PAGE>
Q. Who is eligible to vote?
A. Shareholders of record of the Funds at the close of business on September
18, 2000 (the "Record Date") are entitled to notice of and to vote at the
Special Meeting or at any adjournment of the Special Meeting. Shareholders
of record will be entitled to one vote for each full share and a fractional
vote for each fractional share that they hold on each matter presented at
the Special Meeting.
GENERAL INFORMATION ABOUT THE PROPOSALS
Q. What is being voted on at the Special Meeting?
A. The Board is asking shareholders of the Funds (the "shareholders") to vote
on the following proposals affecting the Funds:
1. To amend the Investment Advisory Agreements between the Trust, on behalf of
the Funds, and Brinson (Proposal 1);
2. To approve the Sub-Advisory Agreements between Brinson and UBS Asset
Management (New York), Inc. ("UBS New York"), with respect to the Funds
(Proposal 2);
3. To amend certain of the Funds' fundamental investment restrictions
(Proposals 3(a)-3(h)); and
4. To eliminate certain of the Funds' fundamental investment restrictions
(Proposals 4(a)-4(c)).
At its meeting on August 21, 2000, the Board considered (i) amending the
Trust's Investment Advisory Agreements and (ii) implementing the Sub-
Advisory Agreements. The Board approved each of the amended and proposed
Agreements, and recommended that the Agreements be submitted for
shareholder approval. At the meeting, the Board also reviewed and approved
the proposed changes to the fundamental investment restrictions of the
Funds. Each of the proposed Agreements and changes are subject to
shareholder approval. The purposes of the Special Meeting are set forth in
the accompanying Notice.
Q. How do the Trustees recommend that I vote on these proposals?
A. The Trustees recommend that shareholders vote FOR each proposal.
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INFORMATION REGARDING PROPOSALS 1 AND 2
Q. Why is management proposing changes to the Trust's investment advisory
agreements?
A. The Trust's current Investment Advisory Agreements do not permit the use of
sub-advisers to manage the Funds. By amending the current Investment
Advisory Agreements, Brinson will have greater flexibility to engage sub-
advisers, including UBS New York, to assist in managing certain assets of
the Funds.
Q. Why is management proposing that Brinson enter into the Sub-Advisory
Agreements with UBS New York for the Series?
A. As a result of the consolidation by UBS AG of investment management
activities among its various subsidiaries, including Brinson and UBS New
York, following UBS AG's merger with Swiss Bank Corporation in 1998,
management has determined to centralize certain investment management
expertise in various locations and subsidiaries of UBS AG. Because the
management expertise in the specific investment disciplines relating to
portions of the Funds is concentrated in UBS New York, the determination
has been made to have certain investment decisions made at UBS New York.
In the event that the Sub-Advisory Agreements are approved by shareholders,
UBS New York will be responsible for managing a portion of the Funds, while
being subject to the continuing oversight and direction of Brinson, and
ultimately, the Board.
Q. Will these changes effect the fees charged to shareholders?
A. THERE WILL BE NO INCREASES IN THE FEES THAT YOU, AS A SHAREHOLDER, WILL
BEAR IF THESE AGREEMENTS ARE APPROVED. The amended Investment Advisory
Agreements for the Funds will not increase the fees payable to Brinson -
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the Agreements provide for the same fees as currently charged. The Sub-
Advisory Agreements provide that UBS New York's sub-advisory fees for
managing the Funds will be paid by Brinson, not by the Funds.
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INFORMATION REGARDING PROPOSALS 3 AND 4
Q. Are there any proposals that will impact the Funds' investment policies or
limitations?
A. Yes. Although none of the proposed changes to the Funds' investment
restrictions is expected to materially impact the day-to-day management of
the Funds, it is proposed that certain of the Funds' investment
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<PAGE>
restrictions that are "fundamental" (that is, those that cannot be changed
without shareholder approval) be amended, reclassified as non-fundamental,
or eliminated. If these proposals are approved by shareholders, the Board
of the Trust will have more flexibility to respond to future developments
by changing the Funds' investment policies in a manner intended to achieve
the Funds' investment goals without obtaining shareholder approval.
Shareholders, of course, will be informed of any significant changes to the
Funds' investment restrictions before such changes are implemented, and any
additional amendments to the fundamental investment restrictions will have
to be submitted to shareholders, for their approval. These proposals are
intended only to eliminate the cost and delay of seeking shareholder
approval for changes in investment restrictions that would not otherwise
require convening a shareholder meeting. Given the minimal impact of these
changes on the day-to-day management of the Funds, shareholder approval of
these proposals is not expected to increase the Funds' overall level of
risk.
Q. Why am I being asked to approve amendments to certain of the Funds'
fundamental investment restrictions?
A. Certain of the Funds' fundamental investment restrictions were adopted in
response to state laws that are no longer applicable, or to market
conditions that no longer exist, and thus may be overly restrictive.
Approval of the proposed amendment of these fundamental restrictions will
provide the Funds with greater investment flexibility within the boundaries
imposed by applicable law. The proposed changes are not expected to have
any immediate effect on the manner in which the Funds are managed.
Q. Why am I being asked to approve the elimination of certain of the Funds'
fundamental investment restrictions?
A. Several of the Funds' current fundamental investment restrictions reflect
past regulatory, business or industry conditions, and practices or
requirements that are outdated, unnecessary or potentially burdensome.
Approval of the proposals to eliminate certain investment restrictions
initially will not result in any immediate changes to the management of the
Funds, but will provide the Funds with greater flexibility to pursue their
investment goals.
Q. When will the proposals take effect if they are approved?
A. If approved, each of the proposals will become effective on or about
November 1, 2000.
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<PAGE>
ADDITIONAL INFORMATION REGARDING THE PROPOSALS
Q. How do I vote my shares?
A. You may vote your shares (i) in person, by attending the Special Meeting,
(ii) by mail or (iii) by fax. To vote by mail, sign, date and send us the
enclosed proxy in the envelope provided. You can fax your vote by signing
and dating the proxy and faxing both sides of the card to
1-888-796-9932.
Proxy cards that are properly signed, dated and received at or prior to the
Special Meeting will be voted as specified. If you specify a vote for any
of the Proposals 1 through 4, your proxy will be voted as you indicate. If
you simply sign, date and return the proxy card, but do not specify a vote
for any of the Proposals 1 through 4, your shares will be voted by the
proxies as follows:
. IN FAVOR of amending the Investment Advisory Agreements between the
Trust, on behalf of the Funds, and Brinson (Proposal 1);
. IN FAVOR of approving the Sub-Advisory Agreements between Brinson and
UBS New York relating to the Funds (Proposal 2);
. IN FAVOR of amending the fundamental investment restrictions that apply
to your Fund(s) (Proposals 3(a)-3(h)); and
. IN FAVOR of eliminating the fundamental investment restrictions that
apply to your Fund(s) (Proposals 4(a)-4(c)).
Q. If I send my proxy in now as requested, can I change my vote later?
A. You may revoke your proxy at any time before it is voted by: (1) sending to
the Secretary of the Trust a written revocation, or (2) forwarding a later-
dated proxy that is received by the Trust at or prior to the Special
Meeting, or (3) attending the Special Meeting and voting in person. Even
if you plan to attend the Special Meeting, we ask that you return the
enclosed proxy. This will help us ensure that an adequate number of shares
are present for the Special Meeting to be held.
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<PAGE>
THE PROPOSALS
PROPOSAL 1: APPROVAL OF AMENDMENTS TO THE TRUST'S
INVESTMENT ADVISORY AGREEMENTS, ON BEHALF OF
THE BRINSON SERIES, WITH BRINSON
Introduction to the Proposal
Brinson provides portfolio management, research and analysis for the Funds
pursuant to separate Investment Advisory Agreements (collectively the "Current
Brinson Agreements," and individually, a "Current Brinson Agreement") dated
December 18, 1998 (in the case of the U.S. Large Cap Growth Fund, U.S. Small Cap
Growth Fund and High Yield Fund) and May 23, 2000 (in the case of the Global
Technology Fund and Global Biotech Fund), respectively. The Current Brinson
Agreement relating to the U.S. Small Cap Growth Fund is attached to this Proxy
Statement as Exhibit A. Each of the Current Brinson Agreements is identical,
with the exception of (i) the identification of the relevant Funds, (ii) the
effective dates and termination dates of the Current Brinson Agreements and
(iii) the fees payable by the various Funds to Brinson (as described further
below)./1/
The Board of the Trust, at its meeting on August 21, 2000, at the recommendation
of Brinson, considered the proposal to amend the Current Brinson Agreements to
explicitly permit Brinson to engage the services of sub-advisers in order to
assist in managing the assets of the Funds. In order to accomplish these
changes for the Funds, it is necessary for shareholders of each Funds to approve
an amended Investment Advisory Agreement (each an "Amended Brinson Agreement"
and collectively, the "Amended Brinson Agreements") between the Funds and
Brinson. Attached as Exhibit B to this Proxy Statement is the Amended Brinson
Agreement for the U.S. Small Cap Growth Fund. As in the case of the Current
Brinson Agreements, each of the Amended Brinson Agreements is identical, except
as noted in the paragraph above.
What factors did the Board consider in approving the Amended Brinson Agreements?
______________________
/1/ The Current Brinson Agreements for the Global Technology Fund and the Global
Biotech Fund (together, the "Global Brinson Agreements") contain a provision
relating to expense waiver reimbursements that is not contained in the Current
Brinson Agreements for the other Funds. This provision of the Global Brinson
Agreements states that Brinson may recapture any amounts waived or reimbursed
with respect to the Global Technology Fund and the Global Biotech Fund, subject
to the following conditions: (1) Brinson must request reimbursement within five
years from the date on which the waiver and/or reimbursement was made, and (2) a
Fund must be able to reimburse Brinson and remain within the operating expense
limits applicable to the Fund. This provision is not relevant to the proposed
amendments to the Current Brinson Agreements.
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<PAGE>
The Board noted that the Current Brinson Agreements are silent on the issue of
engaging sub-advisers to assist in managing the Funds. Additionally, the Board
considered that, with respect to foreign securities, while Brinson is permitted,
under the Current Brinson Agreements, to obtain statistical and other factual
information and advice regarding economic factors and trends from foreign
subsidiaries, the Current Brinson Agreements do not permit Brinson to obtain
general advice and recommendations regarding the purchase or sale of securities
from such subsidiaries. Finally, the Board noted that the Amended Brinson
Agreements are otherwise identical to the Current Brinson Agreements.
How do the provisions of the Amended Brinson Agreements differ from the terms of
the Current Brinson Agreements?
The terms of the Amended Brinson Agreements are identical to the Current Brinson
Agreements as the Agreements relate to (i) the duties of Brinson as investment
advisor to the Funds, (ii) the placement of portfolio transactions by Brinson
for the Funds, (iii) the reports that Brinson must furnish to the Funds, (iv)
the standard of care that governs Brinson in serving as advisor to the Funds,
(v) the duration of the Agreements, and (vi) certain other provisions that are
not material to the present purposes. Significantly, the provisions for the
compensation of Brinson for its advisory services are also identical in the
Amended Brinson Agreements and the Current Brinson Agreements. The approval of
the Amended Brinson Agreements will not result in any increase in any fees
---
payable to Brinson, or in the charging of any additional fees to shareholders of
the Funds.
The Amended Brinson Agreements differ from the Current Brinson Agreements in two
ways. First, as discussed above, the Current Brinson Agreements are silent on
the issue of engaging sub-advisers. The Amended Brinson Agreements specifically
authorize Brinson to utilize sub-advisers by stating, in their Section 7, that:
Delegation of Responsibilities to Sub-Advisers. [Brinson] may, at
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its expense, select and contract with one or more investment
advisers registered under the Investment Advisers Act of 1940, as
amended ("Sub-Advisers"), to perform some or all of the services
for the Series for which it is responsible under this Agreement.
[Brinson] will compensate any Sub-Adviser for its services to the
Series. [Brinson] may terminate the services of any Sub-Adviser
at any time in its sole discretion, and shall at such time assume
the responsibility of such Sub-Adviser unless and until a
successor Sub-Adviser is selected and the requisite approval of
all of the Series' shareholders is obtained. [Brinson] will
continue to have responsibility for all advisory services
furnished by any Sub-Adviser.
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<PAGE>
Second, the Current Brinson Agreements allow for only a limited exchange of
information between Brinson and foreign subsidiaries of UBS AG in managing the
assets of the Funds. To enhance the Funds' flexibility, it is proposed that
this provision be deleted from the Amended Brinson Agreements. If approved by
shareholders, Brinson would be permitted to engage foreign subsidiaries as sub-
advisers, subject to the provisions cited above, should Brinson determine to do
so.
What are the other material provisions of the Current Brinson Agreements and the
Amended Brinson Agreements?
As discussed above, the overwhelming majority of the material provisions of the
Current Brinson Agreements and the Amended Brinson Agreements (collectively, the
"Brinson Agreements") are identical. The Brinson Agreements provide that
Brinson will manage the investment and reinvestment of the assets of each Funds,
and will continuously review, supervise and administer the investment programs
of each Funds, to determine, in Brinson's discretion, the assets to be held
uninvested. Brinson is responsible for providing the Trust with records
regarding its investment advisory activities that the Trust is required to
maintain, and for rendering regular reports to the Trust's officers and Trustees
concerning Brinson's discharge of its responsibilities under the Brinson
Agreements.
Brinson will, at its own expense, provide office space, furnishings, equipment
and personnel required for managing the corporate affairs and conducting the
business of the Funds, including complying with corporate reporting
requirements. Brinson also furnishes all necessary advisory and research
facilities and prepares reports to comply with the reporting requirements of
various federal and state regulatory authorities. Each Fund pays all of its
respective expenses other than those expressly assumed by Brinson.
The Brinson Agreements provide that decisions regarding the placement of
portfolio brokerage are made by Brinson, with the primary considerations being
to obtain efficiency in execution of orders and the most favorable net prices
for each of the Funds. Consistent with those objectives, transactions may be
allocated to brokers and dealers who furnish certain research services to
Brinson. Such research services supplement Brinson's own research activities and
provide a benefit to Brinson that is not easily evaluated in terms of a dollar
amount and is not reflected in a direct monetary benefit to any of the Funds.
Such research may be used to benefit other investment companies advised by
Brinson, as well as each of the Funds. Transactions may also be executed through
brokers and dealers who sell shares of a Fund, but such sales will not be either
a qualifying or disqualifying factor in the selection of executing broker-
dealers. The Brinson Agreements authorize Brinson to place portfolio
transactions for the Funds with broker-dealers for commissions that are greater
than another broker or dealer
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<PAGE>
might charge if Brinson determines in good faith that the commission paid was
reasonable in relation to the brokerage or research services provided by such
member, broker or dealer, viewed in terms of that particular transaction or
Brinson's overall responsibilities with respect to its accounts, including the
Funds, as to which it exercises investment discretion.
The Brinson Agreements are effective for two years from the date on which they
are executed. The Brinson Agreements are renewable for successive one year
periods if such continuance is approved at least annually by: (i) the Board of
Trustees of the Trust or by the vote of a majority of the respective Funds'
outstanding voting securities as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"); and (ii) by the vote of a majority of Trustees who
are not parties to the Brinson Agreements or interested persons as defined in
the 1940 Act of any such party ("Non-Interested Trustees"), cast in person at a
meeting called for the purpose of voting on such approval.
Each Brinson Agreement may be terminated, without penalty, at any time by the
respective Funds or by Brinson on 60 days' written notice. Each Brinson
Agreement will automatically terminate in the event of its assignment.
Under the Brinson Agreements, Brinson receives monthly fees based on the average
daily net assets of each Funds at the following annual rates:
Funds Advisory Fee
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High Yield Fund 0.60%
U.S. Large Cap Growth Fund 0.70%
U.S. Small Cap Growth Fund 1.00%
Global Biotech Fund 1.15%
Global Technology Fund 1.40%
The fees paid by the U.S. Small Cap Growth Fund, Global Biotech Fund and Global
Technology Fund are higher than those paid by most other investment companies,
but are comparable to those paid by other similarly situated investment
companies with similar investment objectives and policies. Brinson has
irrevocably agreed to waive all or a portion of its advisory fees and to
reimburse certain expenses to the extent that (but not in excess of Brinson's
fees paid or payable for the particular year) the aggregate annual expenses,
including the advisory fee but excluding interest, taxes, broker fees,
commissions and ordinary expenses, exceed the following percentage limitations
of each Funds' average annual net assets:
High Yield Fund 0.70%
U.S. Large Cap Growth Fund 0.80%
U.S. Small Cap Growth Fund 1.15%
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<PAGE>
Global Biotech Fund 1.30%
Global Technology Fund 1.55%
As stated above, neither the fees payable to Brinson, nor the expense
limitations applicable to the Funds, will change if the Amended Brinson
Agreements are approved by shareholders.
What fees did Brinson receive last year under the Current Brinson Agreements?
For the fiscal year ended June 30, 2000, the gross advisory fees earned by
Brinson, the net advisory fees paid after Brinson's fee waivers and the expenses
of each Funds paid by Brinson, were as follows:
Gross Advisory Net Advisory
Fees Earned by Fees Paid After Series Expenses
Funds Brinson Fee Waiver Paid by Brinson
----- ------- ---------- ----------------
High Yield Fund $336,440 $248,712 $ 87,728
U.S. Large Cap $ 71,140 $ 0 $101,585
Growth Fund
U.S. Small Cap $445,220 $375,907 $ 69,313
Growth Fund
Global Biotech $ 480 $ 0 $ 3,737
Fund
Global Technology $ 549 $ 0 $ 4,639
Fund
For the fiscal year ended June 30, 2000, the Funds paid the following brokerage
commissions to Warburg Dillon Read ("Warburg"), an affiliated broker-dealer of
Brinson:
Aggregate Dollar Percentage of Percentage of
Amount of Aggregate Aggregate Dollar
Commissions Commissions Amount Paid to
Funds Paid to Warburg Paid to Warburg Warburg
----- --------------- --------------- -------
U.S. Small Cap $9,675 3.57% 11.07%
Growth Fund
U.S. Large Cap $2,133 13.65% 32.34%
Growth Fund
The Current Brinson Agreements between the Trust, on behalf of each of the High
Yield Fund, U.S. Large Cap Growth Fund and U.S. Small Cap Growth Fund, and
Brinson, respectively, were initially approved by the Trustees of the
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<PAGE>
Trust on December 18, 1998. The Current Brinson Agreements between the Trust, on
behalf of each of the Global Biotech Fund and Global Technology Fund, and
Brinson, respectively, were approved by the Trustees of the Trust on May 23,
2000. The Board most recently approved and continued the Current Brinson
Agreements for the Funds at its meeting held on February 28, 2000. Each of the
five Current Brinson Agreements were approved by the sole initial shareholder of
the respective Funds on the following dates: December 18, 1998 (the High Yield
Fund, U.S. Large Cap Growth Fund and U.S. Small Cap Growth Fund), May 25, 2000
(the Global Technology Fund) and June 1, 2000 (the Global Biotech Fund).
If the Amended Brinson Agreements are not approved by shareholders of the Funds,
the Current Brinson Agreements will remain in place, and the Board will consider
what additional action, if any, should be taken.
What approvals are required to implement the Amended Brinson Agreements?
The approval of the Amended Brinson Agreements for each Funds requires the
approval of a majority of the outstanding voting securities of each Series. The
vote of a majority of the outstanding voting securities of a Series means the
vote of the lesser of (A) 67% or more of the voting securities of the Series
present at a meeting, if the holders of more than 50% of the outstanding voting
securities of the Series are present or represented by proxy; or (B) more than
50% of the outstanding voting securities of the Series.
THE BOARD OF TRUSTEES RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THE AMENDMENT OF THE
CURRENT BRINSON AGREEMENTS AS DESCRIBED IN PROPOSAL 1
PROPOSAL 2: APPROVAL OF THE SUB-ADVISORY AGREEMENTS
BETWEEN BRINSON AND UBS ASSET MANAGEMENT (NEW YORK),
INC. WITH RESPECT TO THE BRINSON SERIES
Introduction to the Proposal
At its meeting on August 21, 2000, the Board of the Trust, at the request of
Brinson, considered entering into the Sub-Advisory Agreements. It was pointed
out, that as a consequence of the consolidation of investment management
functions among various subsidiaries of UBS AG, including Brinson and UBS New
York, following the merger of UBS AG with Swiss Bank Corporation in 1998,
management has determined to centralize certain investment management expertise
in various locations and subsidiaries of UBS AG. Because the investment
management expertise in the specific investment disciplines relating to portions
of the Funds is concentrated at UBS New York, management proposed certain
investment decisions for the Funds be made by UBS New York.
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<PAGE>
The Board, in determining to approve the proposed Sub-Advisory Agreements and
the contemplated arrangements between Brinson and UBS New York, noted that (i)
UBS New York will be subject to continuing oversight and direction of Brinson,
and ultimately, the Board; (ii) the Sub-Advisory Agreements, if implemented,
will not result in any additional fees being paid by the shareholders of the
Series, as Brinson is responsible for paying UBS New York from the fees that
Brinson receives for serving as advisor to the Funds; and (iii) UBS New York is
familiar with the Funds and their operations, having in the past, informally and
without compensation, assisted Brinson in managing the Funds.
The Board unanimously voted to approve the Sub-Advisory Agreements and to
recommend their approval to shareholders. Attached to this Proxy Statement, as
Exhibit C, is the form of proposed Sub-Advisory Agreement for the Trust.
What are the provisions of the Sub-Advisory Agreements?
The Sub-Advisory Agreements provide that UBS New York will be responsible for
managing a portion of the portfolios of the Funds, as determined from time to
time, by Brinson. In all cases, UBS New York will be subject to the direction
of Brinson and, ultimately, the Board of Trustees of the Trust. UBS New York
will be responsible for managing specific portions of the Funds' assets, but is
also permitted to furnish Brinson with investment recommendations, asset
allocation advice, research and other investment services. UBS New York will
also be responsible for placing all portfolio transactions.
Under the Sub-Advisory Agreements, with respect to the portion of each Fund's
assets managed by UBS New York, UBS New York will be responsible for placing
orders for the purchase and sale of portfolio securities with broker/dealers who
provide statistical, factual and financial information and services to the
Funds, to Brinson, to UBS New York (as the sub-adviser), or to any other funds
for which Brinson or UBS New York provides investment advisory services and/or
with broker/dealers who sell shares of the Funds or who sell shares of any other
fund for which Brinson or UBS New York provides investment advisory services.
In addition, consistent with SEC rules and regulations, and subject to any
policies and procedures as may be adopted by the Board of Trustees and officers
of the Trust, UBS New York may cause the Funds to pay a member of an exchange,
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction. This may be done in
such instances where the Trust, on behalf of the Funds, and UBS New York have
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or the sub-adviser's overall responsibilities with
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<PAGE>
respect to the Fund, and to other funds and other advisory accounts for which
Brinson or the sub-adviser exercises investment discretion.
Will shareholders be subject to additional management fees under the proposed
Sub-Advisory Agreements?
No additional fees will be imposed on shareholders of the Funds as a result of
the approval of the proposed Sub-Advisory Agreements. Brinson will pay to UBS
New York a monthly fee equal to 0.10 of 1% of the fee Brinson receives under the
Amended Brinson Agreements.
What approvals by shareholders are required to implement the Sub-Advisory
Agreements?
The approval of the Sub-Advisory Agreement for each Fund requires the approval
of a majority of the outstanding voting securities of each Fund. The vote of a
majority of the outstanding voting securities of a Fund means the vote of the
lesser of (A) 67% or more of the voting securities of the Fund present at a
meeting, if the holders of more than 50% of the outstanding voting securities of
the Fund are present or represented by proxy; or (B) more than 50% of the
outstanding voting securities of the Fund.
What are the terms of the proposed Sub-Advisory Agreements, and when may they be
terminated?
A sub-advisory agreement is treated like an investment advisory agreement for
purposes of the 1940 Act. Thus, the proposed Sub-Advisory Agreements contain
the same statutorily required provisions relating to their terms and termination
as do the Current Brinson Agreements. The Sub-Advisory Agreements provide that
they will continue for a period longer than two years, only so long as such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust, on behalf of a Fund, or by a vote of a majority of the outstanding
voting securities of the specific Fund, but in any event, provided the
continuance has been approved by the vote of a majority of Non-Interested
Trustees.
The proposed Sub-Advisory Agreements also provide that they will terminate in
the event of their assignment, and that they may be terminated by Brinson or the
Trust, on behalf of a Fund, at any time, without the payment of any penalty, on
not more than sixty (60) days' written notice to UBS New York, of Brinson's or
the Trust's intention to do so. In the case of a Series, termination must be
accomplished by action of the Trust's Board or by vote of a majority of the
outstanding voting securities of the affected Fund. UBS New York may also
terminate the sub-advisory agreement at any time, without the payment of any
penalty, on not more than sixty (60) days' written notice to Brinson and the
Trust on behalf of a Fund, of its intention to do so. The Sub-Advisory
Agreements also
-13-
<PAGE>
provide that they will terminate upon termination of the investment advisory
agreement between the Trust, on behalf of the specific Fund, and Brinson.
Information Concerning UBS New York
UBS New York is an investment advisor registered with the SEC. The address of
UBS New York is 10 East 50th Street, New York, New York 10022. UBS New York is
a wholly-owned subsidiary of UBS AG. (For additional information regarding UBS
AG, see "Information About the Trust" in this Proxy Statement.) As of June 30,
2000, UBS New York had approximately $14.98 billion in assets under management.
UBS New York has not previously served as an investment advisor to a registered
investment company.
The President and Chief Executive Officer of UBS New York is Benjamin F.
Lenhardt, Jr., whose address is 209 South LaSalle Street, Chicago, IL 60604.
Mr. Lenhardt's principal occupations are Director, President, Chief Executive
Officer and Managing Director of Brinson. The directors of UBS New York are:
Gary P. Brinson, Jeffrey J. Diermeier, Benjamin F. Lenhardt, Jr. and Carlos
Penny. The address of each of the directors of UBS New York, except Mr. Penny,
is 209 South LaSalle Street, Chicago, IL 60604. The address of Mr. Penny is
the offices of UBS New York at 10 East 50th Street, New York, New York 10022.
The principal occupation of each of the directors of UBS New York is as follows:
Mr. Brinson, Director, Chairman of the Board of Directors and Managing Director,
Brinson; Mr. Diermeier, Director, Chief Investment Officer and Managing
Director, Brinson; Mr. Lenhardt, Director, President, Chief Executive Officer
and Managing Director, Brinson; and Mr. Penny, Director and Managing Director,
UBS New York.
If the Sub-Advisory Agreements are not approved by the shareholders of the
Funds, the Sub-Advisory Agreements will not be implemented, and the Board will
consider what additional action, if any, should be taken.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
SUB-ADVISORY AGREEMENTS AS DESCRIBED IN PROPOSAL 2
APPROVAL OF CHANGES TO THE FUNDS'
FUNDAMENTAL INVESTMENT RESTRICTIONS
Introduction to Proposals 3(a) through 3(h) and 4(a) through 4(c)
Why are the Funds amending or eliminating certain of their fundamental
investment restrictions?
The Funds are subject to specific investment restrictions that govern their
investment activities. Under the 1940 Act, certain investment restrictions are
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<PAGE>
required to be "fundamental," which means that the investment restrictions can
only be changed by a shareholder vote. An investment company may designate
additional restrictions that are fundamental, and it may also adopt "non-
fundamental" restrictions, which may be changed by the company's trustees
without shareholder approval. These restrictions limit the investment
activities of Brinson as the Funds' investment advisor and manager, and will
limit the investment activities of UBS New York, as the Funds' sub-adviser, in
the event that Proposal 2 in this Proxy Statement is approved by shareholders.
After the Trust was organized in 1993, certain legal and regulatory requirements
applicable to investment companies changed. For example, certain restrictions
that were historically imposed by state laws and regulations were preempted by
the National Securities Markets Improvement Act of 1996 ("NSMIA"), and
therefore, these state requirements no longer apply to investment companies.
Certain of the Funds are currently subject to fundamental investment
restrictions that are either more restrictive than those required under present
law, or are no longer required at all, and that were adopted in response to
regulatory, business and industry conditions that no longer exist.
Accordingly, the Trustees have determined to present to the shareholders certain
proposed changes to the fundamental investment restrictions of the Funds for
their consideration. The proposed amendments would:
. simplify, modernize and standardize the fundamental restrictions that are
required to be stated under the 1940 Act; and
. eliminate those fundamental restrictions that are no longer required by
either the securities laws of the various states or the SEC.
Brinson believes there are several distinct advantages in revising the Funds'
fundamental investment restrictions at this time. First, by reducing the total
number of investment restrictions that can be changed only by a shareholder
vote, Brinson believes that the Funds will be able to minimize the costs and
delays associated with holding future shareholder meetings to revise fundamental
policies that become outdated or inappropriate or are not consistent with the
Funds' investment management techniques. Brinson also believes that its ability
to manage the Funds' assets in a changing investment environment will be
enhanced because the Funds will have greater investment management flexibility
to respond to market, industry, regulatory or technical changes by seeking Board
approval only when necessary to revise certain investment policies. Thus,
investment management opportunities will be increased by these changes.
Furthermore, the standardized investment restrictions are expected to enable the
Funds to more efficiently and more easily monitor portfolio compliance.
The chart that follows briefly describes the differences between fundamental
restrictions and non-fundamental restrictions.
-15-
<PAGE>
<TABLE>
<CAPTION>
Fundamental Non-Fundamental
Restrictions Restrictions
--------------------------- -----------------------
<S> <C> <C>
Who must approve Board of Trustees and Board of Trustees.
changes in the shareholders.
restrictions?
How quickly can a Fairly slowly, since a Fairly quickly, because
change in the vote of shareholders is the change can be
restrictions be required. accomplished by action
made? of the Board of Trustees
alone.
What is the relative Costly to change because Less costly to change
cost to change a a shareholder vote because a change can be
restriction? requires holding a accomplished by action
meeting of shareholders. of the Board of Trustees
alone.
</TABLE>
The recommended changes are specified below. Each of Proposals 3(a) through
3(h) and Proposals 4(a) through 4(c) will be voted on separately by shareholders
of each Fund that is effected by the proposed changes, and the approval of each
Proposal by each Fund will require the approval of a majority of the outstanding
voting securities of the Fund as defined in the 1940 Act. (See "Further
Information About Voting and the Special Meeting" below.)
Description of the Proposed Changes
The proposed standardized fundamental investment restrictions cover those areas
for which the 1940 Act requires the Funds to have fundamental restrictions. They
reflect all current regulatory and legal requirements under the 1940 Act, and
are written to provide flexibility to respond to future legal, regulatory,
market or technical changes. The proposed standardized amendments will not
affect the Funds' investment objectives. Although the proposed amendments to
the fundamental investment restrictions will give the Funds greater flexibility
to respond to future investment opportunities, Brinson does not anticipate that
the changes, individually or in the aggregate, will result at this time in a
material change in the level of investment risk associated with investment in
the Funds. Nor does Brinson anticipate that the proposed changes in fundamental
investment restrictions will, individually or in the aggregate, change
materially the manner in which Funds are managed and operated.
-16-
<PAGE>
Set forth below is a chart that identifies the proposed changes that are
applicable to each Fund:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
U.S. SMALL U.S. LARGE HIGH GLOBAL GLOBAL
CAP GROWTH CAP GROWTH YIELD BIOTECH TECHNOLOGY
PROPOSED CHANGES FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Amend Borrowing A A A A A
Restriction
--------------------------------------------------------------------------------------------
Amend Securities A A A A A
Underwriting
Restriction
--------------------------------------------------------------------------------------------
Amend Lending A A A A A
Restriction
--------------------------------------------------------------------------------------------
Amend Real Estate A A A A A
Investments Restriction
--------------------------------------------------------------------------------------------
Amend Commodities A A A A A
Investing Restriction
--------------------------------------------------------------------------------------------
Amend Senior Securities A A A A A
Restriction
--------------------------------------------------------------------------------------------
Amend Short Selling A A A A A
Restriction
--------------------------------------------------------------------------------------------
Amend Concentration A A A N/A N/A
Restriction
--------------------------------------------------------------------------------------------
Amend Diversification A N/A A N/A N/A
Restriction
--------------------------------------------------------------------------------------------
Eliminate Restriction E E E E E
Regarding Margin
Accounts
--------------------------------------------------------------------------------------------
Eliminate Restriction E E E E E
Regarding Investments
in Other Investment
Companies
--------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
U.S. SMALL U.S. LARGE HIGH GLOBAL GLOBAL
CAP GROWTH CAP GROWTH YIELD BIOTECH TECHNOLOGY
PROPOSED CHANGES FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Eliminate Minerals E E E N/A N/A
Restriction
--------------------------------------------------------------------------------------------
</TABLE>
(A) - Restriction is proposed to be amended.
(E) - Restriction is proposed to be eliminated.
The Funds' existing investment restrictions, together with the proposed
investment restrictions, are presented below. Certain investment restrictions
apply to some, but not to all, of the Funds. Shareholders of the affected Funds
will be requested to vote on each proposed restriction separately. For
convenience of reference, the Funds' current investment restrictions are
presented in bold-faced type below, and the Funds' proposed investment
restrictions are presented in italics. Following the restrictions, the legal
authority for each investment restriction is presented, along with a discussion
of the effect of each proposed change.
PROPOSAL 3: APPROVAL OF AMENDMENTS TO THE FUNDS'
FUNDAMENTAL INVESTMENT RESTRICTIONS
PROPOSAL 3(a): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT
RESTRICTIONS REGARDING BORROWING
Current Restriction: Each Series may not borrow money in excess of 33 1/3% of
-------------------
the value of its assets except as a temporary measure for extraordinary or
emergency purposes to facilitate redemptions. All borrowings will be done from
a bank and to the extent that such borrowing exceeds 5% of the value of a Fund's
assets, asset coverage of at least 300% is required. Except for the Global
Technology Fund and Global Biotech Fund, a Series will not purchase securities
when borrowings exceed 5% of that Series' total assets.
Proposed Restriction: Each Fund may not borrow money, except that the Fund may
--------------------
borrow money from banks to the extent permitted by the 1940 Act, or to the
extent permitted by any exemptions therefrom which may be granted by the SEC, or
for temporary or emergency purposes and then in an amount not exceeding 33 1/3%
of the value of the Fund's total assets (including the amount borrowed).
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<PAGE>
What are the legal requirements governing borrowing by the Funds?
The 1940 Act requires investment companies to impose certain limitations on
borrowing activities. The limitations on borrowing are generally designed to
protect shareholders and their investments by restricting an investment
company's ability to subject its assets to any claims of creditors who might
have a claim to the investment company's assets or rights upon liquidation that
would take precedence over the claims of shareholders. In addition, the 1940
Act limitations reflect a Congressional intent to limit an investment company's
exposure to payments to creditors so that the investment company will not
experience difficulty in managing a portfolio to meet debt payment obligations
while still meeting redemption requests on demand. Under the 1940 Act, an
investment company's borrowing restriction must be fundamental.
Under the 1940 Act, an investment company is permitted to borrow up to 5% of its
total assets from any person for temporary purposes, and may also borrow from
banks, provided that if borrowings exceed 5%, the investment company must have
assets totaling at least 300% of the borrowing when the amount of the borrowing
is added to the company's other assets. Put another way, an investment company
may borrow, in the aggregate, from banks and others, amounts up to one-third (33
1/3%) of its total assets (including those assets represented by the borrowing).
(So, for example, an investment company's borrowing of an amount, from an entity
other than a bank, equal to 5% of its total assets, for temporary purposes,
would serve, while the borrowing is outstanding, to reduce the subsequent bank
borrowings that the company may make to 28 1/3% of its total assets.)
Investment companies may desire to borrow money to meet redemptions while
waiting for cash from sales of new shares without being forced to sell portfolio
securities before they would have otherwise been sold. This technique allows
investment companies greater flexibility to buy and sell portfolio securities
for investment or tax considerations, rather than because of a need for short-
term cash. A previously approved credit facility with The Chase Manhattan Bank
is in place for the Funds and has been used for such borrowings.
What effect will amending the current fundamental borrowing restrictions have on
the Funds?
The proposed restriction would clarify that the Funds may borrow: (1) from banks
to the extent permitted by the 1940 Act or any exemptions therefrom, and (2)
from any person for temporary or emergency purposes, but (3) in any event all
borrowings must not exceed 33 1/3% of total assets. The current restrictions
confine the Funds' permissible borrowing activities to temporary measures for
extraordinary or emergency purposes, and to meeting shareholder redemption
requests. The proposed restriction would expand the circumstances when the
Funds may borrow, to include any situations permitted by the 1940 Act (for
example, if the Funds intended to engage in leverage). The current investment
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<PAGE>
restrictions for the U.S. Small Cap Growth Fund, the U.S. Large Cap Growth Fund
and the High Yield Fund also state that the Funds may not purchase securities
while borrowings exceed 5% of the value of the Funds' total assets. The 1940
Act limits on borrowing historically were interpreted to prohibit investment
companies from making additional investments in securities while borrowings
exceeded 5% of total assets. However, such a 5% limit is not required under the
1940 Act and originated from informal regulatory positions. Accordingly, under
the proposed restriction, the Funds would be permitted to make additional
investments, even if borrowings exceed 5% of total assets.
Since the proposed borrowing restriction would provide the Funds with greater
borrowing flexibility, the Funds may be subject to additional costs, as well as
the risks inherent to borrowing, such as reduced total return and increased
volatility.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 3(a)
PROPOSAL 3(b): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS
REGARDING UNDERWRITING
Current Restriction: Each Fund may not act as an underwriter of securities,
-------------------
except that, in connection with the disposition of a security, a Series may be
deemed to be an "underwriter" as that term is defined in the 1933 Act.
Proposed Restriction: Each Fund may not act as an underwriter except to the
--------------------
extent the Fund may be deemed to be an underwriter when disposing of securities
it owns or when selling its own shares.
What are the legal requirements governing underwriting by the Funds?
Under the 1940 Act, the Funds' policies concerning underwriting are required to
be fundamental. Under the federal securities laws, a person or company
generally is considered an underwriter if it participates in the public
distribution of securities of other issuers, usually by purchasing the
securities from the issuer with the intention of reselling the securities to the
public. Underwriters are subject to stringent regulatory requirements and are
often exposed to substantial liability. Thus, virtually all investment
companies operate in a manner that allows them to avoid acting as underwriters.
From time to time, however, an investment company may purchase a security for
investment purposes that it later resells or redistributes to institutional
investors or others under circumstances where the investment company could
possibly be considered to be an underwriter under the technical definition of
"underwriter" contained in the securities laws. For example, an investment
company often
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<PAGE>
purchases securities in private securities transactions where a
resale could raise a question relating to whether or not the company is
technically acting as an underwriter. However, recent interpretations of the
SEC Staff clarify that resales of privately-placed securities by institutional
investors do not make the institutional investor an underwriter in these
circumstances. The proposed restriction encompasses these SEC positions.
What effect will amending the current underwriting restrictions have on the
Funds?
The proposed restriction is similar to the Funds' current investment
restrictions. However, the proposed underwriting restriction, in addition to
specifically permitting the Funds to dispose of portfolio securities that they
own, would clarify that the Funds may sell their own shares without being deemed
an underwriter. Under the 1940 Act, an investment company will not be
considered an underwriter if it sells its own shares pursuant to a written
distribution plan that complies with Rule 12b-1 of the 1940 Act. It is not
anticipated that adoption of the proposed restriction would involve any
additional risk as the proposed restriction would not affect the way the Funds
are currently managed.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 3(b)
PROPOSAL 3(c): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT
RESTRICTIONS REGARDING LENDING
Current Restriction: Each Series may not make loans, except that this
-------------------
restriction shall not prohibit: (a) the purchase and holding of a portion of an
issue of publicly distributed or privately placed debt securities, (b) the
lending of portfolio securities, or (c) entry into repurchase agreements with
banks or broker-dealers.
Proposed Restriction: Each Fund may not make loans to other persons except (a)
--------------------
through the lending of its portfolio securities, (b) through the purchase of
debt securities, loan participations and/or engaging in direct corporate loans
in accordance with its investment objectives and policies, and (c) to the extent
the entry into a repurchase agreement is deemed to be a loan. The Fund may also
make loans to affiliated investment companies to the extent permitted by the
1940 Act or any exemptions therefrom that may be granted by the SEC.
What are the legal requirements governing lending by the Funds?
Under the 1940 Act, an investment company's policy regarding lending must be
fundamental. Certain investment techniques could, under certain circumstances,
-21-
<PAGE>
be considered to be loans. For example, if a Fund invests in debt securities,
such investments might be considered to be a loan from the Fund to the issuer of
the debt securities. In order to ensure that the Funds may invest in certain
debt securities or repurchase agreements, which also could technically be
characterized as the making of loans, the Funds' current fundamental investment
restrictions specifically carve out such policies from their prohibitions. In
addition, the Funds' current fundamental restrictions explicitly permit the
Funds to lend their portfolio securities. Securities lending is a practice that
has become common in the investment company industry (the Funds frequently
engage in securities lending transactions), and involves the temporary loan of
portfolio securities to parties that use the securities for the settlement of
other securities transactions. The collateral delivered to a Fund in connection
with such a transaction is then invested to provide the Fund with additional
income it might not otherwise have. Securities lending involves certain risks
if the borrower fails to return the securities.
What effect will amending the current fundamental lending restrictions have on
the Funds?
The proposed restriction is similar to the Funds' current restrictions, but
would provide the Funds with somewhat greater lending flexibility. Although the
proposed restriction retains the carve-outs contained in the existing investment
restrictions, it also would permit the Funds to invest in loan participations
and direct corporate loans that recently have become more common as investments
for investment companies. Furthermore, the proposed restriction contemplates
the possibility of the Funds engaging in interfund lending activities, a
practice that also has recently become more common in the investment company
industry.
It is not anticipated that adoption of the proposed lending restriction would
involve any additional risk as the proposed investment restriction would not
affect the way the Funds are currently managed. In the event that the Funds
invest in loan participations and direct corporate loans, the Funds may be
subject to additional risks, including credit risk, interest rate risk and
liquidity risk.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 3(c)
PROPOSAL 3(d): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS
REGARDING INVESTMENTS IN REAL ESTATE
Current Restriction: Each Series may not invest in real estate or interests in
-------------------
real estate (this will not prevent a Series from investing in publicly-held real
estate investment trusts or marketable securities of companies which may
represent indirect interests in real estate), interests in oil, gas and/or
mineral
-22-
<PAGE>
exploration or development programs or leases (this prohibition, with respect to
interests in oil, gas and/or mineral exploration or development programs or
leases, does not apply to the Global Technology Fund and Global Biotech Fund).
Proposed Restriction: Each Fund may not purchase or sell real estate, except
--------------------
that the Fund may purchase or sell securities of real estate investment trusts.
What effects will amending the current fundamental restrictions on the Funds'
investments in real estate have?
Under the 1940 Act, an investment company's investment restriction regarding
investment in real estate must be fundamental. The proposed real estate
restrictions are substantially the same as the real estate limitation contained
in the Funds' current restrictions. Accordingly, the Funds will continue to be
prohibited from directly investing in real estate, but will be permitted to
purchase or sell securities of real estate investment trusts. Adoption of the
proposed fundamental investment restriction is not expected to materially affect
the way the Funds are managed or operated.
The fundamental investment restrictions of the U.S. Small Cap Growth Fund, U.S.
Large Cap Growth Fund and High Yield Fund prohibiting investments in interests
in oil, gas and/or mineral exploration or development programs or leases, which
currently are grouped within one restriction, are proposed to be eliminated, as
discussed below, in Proposal 4(c) of this Proxy Statement.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 3(d)
PROPOSAL 3(e): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS
REGARDING INVESTMENT IN COMMODITIES
Current Restriction: Each Series may not purchase or sell commodities or
-------------------
commodity contracts, but may enter into futures contracts and options thereon in
accordance with its Prospectus. Additionally, each Series may engage in forward
foreign currency contracts for hedging and non-hedging purposes.
Proposed Restriction: Each Fund may not purchase or sell commodities except
--------------------
that the Fund may purchase or sell currencies, may enter into futures contracts
on securities, currencies and other indices or any other financial instruments,
and may purchase and sell options on such futures contracts.
-23-
<PAGE>
What are the legal requirements governing investments in commodities?
Under the 1940 Act, an investment company's investment restriction regarding its
investments in commodities must be fundamental. The most common types of
commodities are physical commodities, such as wheat, cotton, rice and corn.
However, under federal law, futures contracts are considered to be commodities,
and therefore, financial futures contracts, such as futures contracts related to
stocks, currencies, stock indices or interest rates, are also considered to be
commodities. Investment companies typically invest in financial futures
contracts and options related to such contracts for hedging or other investment
purposes.
What effect will amending the current investment restrictions have on the Funds?
The proposed commodities restriction would clarify that the Funds have the
flexibility to: (i) purchase and sell currencies, (ii) invest in futures
contracts on securities, currencies and various indices and (iii) purchase and
sell related options. Thus, while the current restriction had confined the
Funds' permissible activities to futures contracts, options and forward foreign
currency contracts, the proposed restriction expands the types of instruments
that the Funds may acquire and the types of transactions the Funds may enter
into. The proposed restriction also clarifies that investments may be made in
these instruments for any purpose, including investment or hedging purposes.
The Funds have historically been permitted to invest in options on securities
and options on futures. The Funds intend, in the future, to invest in financial
futures contracts and related options in an amount that will be substantially
similar to their prior investment activity. Therefore, it is not anticipated
that the proposed investment restriction would involve any additional risk.
Using financial futures instruments can involve substantial risks, and will be
utilized only if Brinson believes such investments are advisable. The risks of
financial futures instruments include magnified losses on transactions;
liquidity risk; and the possibility that the price of the futures contract may
not move in the same direction as the price of the underlying security or
currency.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 3(e)
PROPOSAL 3(f): TO AMEND THE FUNDS' FUNDAMENTAL
INVESTMENT RESTRICTIONS REGARDING ISSUING SENIOR
SECURITIES AND MAKING SHORT SALES
The Funds are subject to fundamental investment restrictions on issuing senior
securities that provide:
-24-
<PAGE>
Current Restriction: A Series may not issue senior securities.
-------------------
The Funds are also subject to the following restrictions pertaining to making
short sales:
Current Restriction: No Series may sell securities short or purchase securities
--------------------
on margin, except such short-term credits as are necessary for the clearance of
transactions.
Proposed Restriction: Each Fund may not issue securities senior to the Fund's
--------------------
presently authorized shares of beneficial interest, except that this restriction
shall not be deemed to prohibit a Fund from (a) making any permitted borrowings,
loans, mortgages or pledges, (b) entering into options, futures contracts,
forward contracts, repurchase transactions, or reverse repurchase transactions,
or (c) making short sales of securities to the extent permitted by the 1940 Act
and any rule or order thereunder, or SEC staff interpretations thereof.
What are the legal requirements governing issuing senior securities and making
short sales?
Under the 1940 Act, the Funds must have an investment policy describing their
ability to issue senior securities. A "senior security" is defined under the
1940 Act generally as an obligation of an investment company, with respect to
its earnings or assets, that takes precedence over the claims of the investment
company's shareholders with respect to the same earnings or assets. The 1940
Act generally prohibits an open-end fund from issuing senior securities, in
order to limit the ability of investment companies to use leveraging. In
general, an investment company uses leveraging when it borrows money to enter
into securities transactions, or acquires an asset without being required to
make payment until a later point in time.
SEC staff interpretations allow an investment company to engage in a number of
types of transactions which might otherwise be considered to create "senior
securities" or "leverage," provided certain conditions are met that are designed
to protect investment company shareholders. For example, some transactions that
may create senior security concerns include short sales, certain options and
futures transactions, reverse repurchase agreements and securities transactions
that obligate the investment company to pay money at a future date (such as
when-issued, forward commitment or delayed delivery transactions). According to
regulatory interpretations, when engaging in such transactions, an investment
company must mark on its or its custodian bank's books, or set aside in a
segregated account with its custodian bank, cash or other liquid securities to
meet the SEC staff's collateralization requirements. This procedure limits the
investment company's ability to engage in these types of transactions and
thereby
-25-
<PAGE>
limits the investment company's exposure to risk associated with these
transactions.
What effect will amending the current investment restrictions have on the Funds?
The proposed investment restriction would amend the Funds' current investment
restrictions and would permit the Funds to engage in options, futures contracts
and forward contracts and to make short sales as permitted under the 1940 Act,
and any exemptions available under the 1940 Act. The proposed investment
restriction also would permit the Funds to engage in permissible types of
leveraging transactions. Essentially, the proposed investment restriction
clarifies the Funds' ability to engage in those investment transactions (such as
repurchase and reverse repurchase transactions)/2/ which, while appearing to
raise senior security concerns, have been interpreted as not constituting the
issuance of senior securities under the federal securities laws. The proposed
investment restriction has been drafted to provide flexibility for the Funds to
respond to legal, regulatory and market developments.
The Funds' current investment restrictions relating to short sales are combined
with an investment restriction relating to the maintenance of margin accounts.
The adoption of this revised restriction would result in the separation of the
Funds' short sales investment restrictions from the Funds' fundamental
investment restrictions relating to investments in margin accounts. The
investment restrictions relating to investing in margin accounts are proposed to
be eliminated (see Proposal 4(a) of this Proxy Statement).
---
Brinson does not anticipate that any additional risk to the Funds will occur as
a result of amending the current investment restrictions because the Funds have
no present intention of changing their current investment policies or engaging
in transactions that may be interpreted as issuing senior securities. However,
it should be noted that the risks of these types of transactions include higher-
than-expected losses from magnified market exposure (in the case of leveraging
transactions), counterparty risk (in the case of repurchase agreements and
reverse repurchase agreements), and losses of the amounts invested (in the case
of short sales, when the price of the security sold short rises).
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 3(f)
________________________
/2/ While not explicitly mentioned in the proposed restriction, the Funds
continue to be permitted, under the proposed investment restriction, to engage
in when-issued and delayed delivery transactions.
-26-
<PAGE>
PROPOSAL 3(g): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS
REGARDING INDUSTRY CONCENTRATION
This Proposal Applies to the U.S. Small Cap Growth Fund, U.S. Large Cap Growth
Fund and High Yield Fund only.
Current Restriction: No Series may purchase the securities of issuers
-------------------
conducting their principal business activities in the same industry, other than
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, if immediately after such purchase, the value of a Series'
investments in such industry would exceed 25% of the value of the total assets
of the Series across several countries.
Proposed Restriction: Each Fund may not concentrate (invest more than 25% of
--------------------
its net assets) in securities of issuers in a particular industry (other than
securities issued or guaranteed by the U.S. government or any of its agencies).
What are the legal requirements governing industry concentration by the Funds?
Under the 1940 Act, an investment company's policy of concentrating its
investments in securities of companies in the same industry must be fundamental.
Under the federal securities laws, an investment company "concentrates" its
investments, for SEC purposes, if it invests more than 25% of its "net" assets
(exclusive of certain items such as cash, U.S. government securities and tax-
exempt securities) in a particular industry or group of industries. An
investment company is not permitted to concentrate its investments in a
particular industry unless it so states.
What effect will amending the current concentration restrictions have on the
Funds?
The proposed restriction would amend the Funds' current investment restrictions
by clarifying the concentration policy's application to the Funds' "net" assets,
rather than to the Funds' "total" assets. (This is consistent with the SEC's
revision of its historical position.) The proposed restriction will provide
investment flexibility that will help the Funds respond to future legal,
regulatory, market or technical developments. However, adoption of the proposed
investment restriction is not expected to change materially the way in which the
Funds are currently managed or operated. If the proposed concentration
investment restriction is adopted, the Funds would not be permitted to invest as
large an amount of their assets in a particular industry.
-27-
<PAGE>
In the case of the Global Technology Fund and Global Biotech Fund, these Funds,
which presently are authorized to concentrate their investments in particular
industries or sectors, will continue to be permitted to do so, and these Funds
will not adopt the revised restriction.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 3(g)
PROPOSAL 3(h): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS
REGARDING DIVERSIFICATION
This Proposal Applies to the U.S. Small Cap Growth Fund and High Yield Fund
only.
Current Restriction: Each Fund may not, as to 75% of the total assets of the
-------------------
Series, purchase the securities of any one issuer, other than securities issued
by the U.S. government or its agencies or instrumentalities, if immediately
after such purchase more than 5% of the value of the total assets of the Series
would be invested in securities of such issuer.
Each Fund may not purchase the securities of any one issuer if, immediately
after such purchase, the Series would own more than 10% of the outstanding
voting securities of such issuer.
Proposed Restriction: The Fund may not purchase the securities of any one
--------------------
issuer (other than the U.S. government or any of its agencies or
instrumentalities or securities of other investment companies) if immediately
after such investment (a) more than 5% of the value of the Fund's total assets
would be invested in such issuer or (b) more than 10% of the outstanding voting
securities of such issuer would be owned by the Fund, except that up to 25% of
the value of the Fund's total assets may be invested without regard to such 5%
and 10% limitations.
What are the legal requirements governing diversification by the Funds?
The 1940 Act prohibits a "diversified" investment company from purchasing
securities of any one issuer if, at the time of purchase, as to 75% of the
investment company's total assets, more than 5% of the company's total assets
would be invested in securities of that issuer, or the investment company would
own or hold more than 10% of the outstanding voting securities of that issuer,
except that up to 25% of the investment company's total assets may be invested
without regard to these limitations. Under the 1940 Act, these 5% and 10%
limitations do not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or to the securities of other
investment companies.
-28-
<PAGE>
What effect will amending the current restriction have on the Funds?
Although the 1940 Act excludes the securities of other investment companies, as
well as those of the U.S. government and its agencies and instrumentalities, the
Funds' current diversification restriction does not include such a carve-out for
the securities of other investment companies.
Amending each Fund's diversification restriction would make it consistent with
the definition of a diversified investment company under the 1940 Act with
respect to the securities of other investment companies, and would provide each
Fund with greater investment flexibility. However, it is not currently
anticipated that adoption of the proposed restriction would materially change
the way either Fund is managed. While the adoption of the proposed investment
restriction will not increase the risks to which the Fund is exposed, when the
Fund invests in securities of other investment companies, it may be subject to
the fees and expenses charged by such investment companies.
THE BOARD OF TRUSTEES RECOMMENDS
THAT SHAREHOLDERS VOTE FOR PROPOSAL 3(h)
PROPOSAL 4: ELIMINATION OF CERTAIN OF THE FUNDS' FUNDAMENTAL INVESTMENT
RESTRICTIONS
Why is the Board recommending that the fundamental restrictions be eliminated,
and what effect will these eliminations have on the Funds?
Certain of the Funds' fundamental investment restrictions were originally
drafted to comply with state laws and regulations, which, as a consequence of
the enactment of NSMIA, are no longer in accordance with SEC staff positions
(since such positions have either changed or are no longer relevant to the
Funds). Since NSMIA eliminated the states' ability to substantively regulate
investment companies, the Funds are no longer legally required to include
current fundamental investment restrictions pertaining to the three restrictions
discussed below in this Proxy Statement.
Brinson has determined that eliminating the fundamental investment restrictions
described below is consistent with the federal securities laws, and is therefore
recommending that the shareholders approve the recommended eliminations. By
reducing the total number of investment restrictions that can be changed only by
a shareholders vote, Brinson believes that the Funds will be able to minimize
the costs and delays associated with holding future shareholder meetings to
revise fundamental policies that become outdated or inappropriate. Brinson
believes that eliminating the restrictions is in the best interest of the Funds'
shareholders,
-29-
<PAGE>
as it will provide the Funds with increased flexibility to pursue their
investment goals.
What are the risks in eliminating the restrictions?
Brinson does not anticipate that eliminating the investment restrictions will
result in any additional risk to the Funds. Although the Funds' current
investment restrictions, as drafted, are no longer legally required, the Funds'
ability to invest in these three areas will continue to be subject to the
limitations of the 1940 Act, and any exemptive orders granted under the 1940
Act. Further, the Funds have no current intention to change their present
investment practices as a result of eliminating these investment restrictions,
except to the limited extent described below.
PROPOSAL 4(a): TO REMOVE THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS
REGARDING PURCHASING SECURITIES ON MARGIN
As discussed in Proposal 3(f) of this Proxy Statement, the Funds' current
fundamental investment restrictions limit the Funds' ability to purchase
securities on margin. This investment restriction was originally included in
the Funds' list of investment limitations in response to the various state law
requirements to which investment companies were subject, which required a stated
restriction in utilizing margin accounts. As discussed above, under NSMIA, the
Funds are no longer required to retain a fundamental policy regarding these
types of investment activities.
As a general matter, elimination of this fundamental investment restriction
relating to purchasing securities on margin should not have an impact on the day
to day management of the Funds, since the 1940 Act's prohibitions on these types
of transactions would continue to apply to the Funds. The Funds' ability to
purchase securities on margin raises senior security issues and is specifically
prohibited under the 1940 Act, as well as under the Funds' senior securities
investment restrictions. Elimination of the investment restriction, therefore,
would not affect the Funds' inability to purchase securities on margin.
Finally, the Funds have not previously, nor do they currently intend, to engage
in these investment activities.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 4(a)
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<PAGE>
PROPOSAL 4(b): TO REMOVE THE FUNDS' FUNDAMENTAL
INVESTMENT RESTRICTIONS REGARDING INVESTMENTS IN
OTHER INVESTMENT COMPANIES
Current Restriction: No Series may invest in securities of any open-end
-------------------
investment company, except that (i) a Series may purchase securities of money
market mutual funds, (ii) the Global Fund and Global Equity Fund may each invest
in the securities of closed-end investment companies at customary brokerage
commission rates in accordance with the limitations imposed by the [1940] Act
and the rules thereunder, and (iii) in accordance with any exemptive order
obtained from the SEC which permits investment by a Series in other Series or
other investment companies or series thereof advised by the Advisor.
The Funds' current fundamental investment restrictions limit the Funds' ability
to invest in the securities of other open-end investment companies, except where
there is no commission, other than ordinary brokerage commission paid. These
current restrictions, which are more restrictive than the 1940 Act provisions in
this regard, were originally included in the Funds' fundamental investment
restrictions in response to various state law requirements. Under NSMIA,
however, the Funds are no longer legally required to retain such a policy as a
fundamental investment restriction.
Upon elimination of this investment restriction, the Funds would remain subject
to the 1940 Act's restrictions on an investment company's ability to invest in
other open-end funds. The 1940 Act's restrictions state that an investment
company may not purchase more than 3% of another investment company's total
outstanding voting stock, commit more than 5% of its assets to the purchase of
another investment company's securities, or have more than 10% of its total
assets invested in securities of all other investment companies. Additionally,
the Funds would continue to operate in accordance with the exemptive orders (the
"Orders") issued by the SEC that have granted relief to the Funds from the 1940
Act's limitations. The Orders permit, subject to certain conditions, (i) the
Funds to invest in the series of Brinson Relationship Funds, another investment
company advised by Brinson, and (ii) the Funds to invest in unregistered money
market funds advised by Brinson. Other investment companies may charge fees,
which could reduce the returns of investing Funds by subjecting the Funds to the
fees and expenses of the other investment companies.
Elimination of this investment restriction should not have an impact on the day
to day management of the Funds as the Funds do not intend to begin pursuing
their
-31-
<PAGE>
investment objectives through the purchase of other open-end investment company
securities.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 4(b)
PROPOSAL 4(c): TO REMOVE THE FUNDS' FUNDAMENTAL
INVESTMENT RESTRICTIONS REGARDING INVESTMENTS IN OIL,
GAS AND/OR MINERAL EXPLORATION OR DEVELOPMENT
PROGRAMS OR LEASES
This Proposal Applies to the U.S. Small Cap Growth Fund, U.S. Large Cap Growth
Fund and High Yield Fund only.
As discussed in Proposal 3(d) above, the U.S. Small Cap Growth Fund, U.S. Large
Cap Growth Fund and High Yield Fund are subject to restrictions pertaining to
these activities. These investment restrictions were required to be adopted by
certain states prior to the enactment of NSMIA. As these restrictions are no
longer required under present law, Brinson has recommended that they be
eliminated. Notwithstanding the elimination of these fundamental restrictions,
the Funds do not expect to engage in these activities. These activities are
subject to certain risks, including liquidity risk and increased susceptibility
to economic cycles.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 4(c)
-32-
<PAGE>
OTHER BUSINESS
The Trustees know of no other business to be presented at the Special Meeting
other than Proposals 1 through 4, and do not intend to bring any other matters
before the Special Meeting. However, if any additional matters should be
properly presented, proxies will be voted or not voted as specified. Proxies
reflecting no specification will be voted in accordance with the judgment of the
persons named in the proxy.
INFORMATION ABOUT THE TRUST
Who are the service providers to the Trust?
The Investment Advisor. Brinson, a Delaware corporation located in Chicago,
Illinois, is an investment advisor registered with the SEC. As of June 30,
2000, Brinson was managing over USD $199 billion, primarily for institutional
pension and profit sharing funds. Brinson was organized in 1989 when it
acquired the institutional asset management business of The First National Bank
of Chicago and First Chicago Investment Advisors, N.A. Brinson and its
predecessor entities have managed domestic and international investment assets
since 1974 and global investment assets since 1982. Brinson has offices in
Australia, Austria, Bahrain, Brazil, China, France, Germany, Italy, Japan,
Luxembourg, Singapore, Switzerland and the United Kingdom, in addition to its
principal office at 209 South LaSalle Street, Chicago, IL 60604-1295. Brinson
is a wholly owned subsidiary of UBS AG. UBS AG, with headquarters in Zurich,
Switzerland, is an internationally diversified organization with operations in
many aspects of the financial services industry. UBS AG was formed by the
merger of Union Bank of Switzerland and Swiss Bank Corporation in June 1998.
The address of UBS AG is P.O. Box CH-8098, Zurich, Switzerland.
In addition to managing the Trust (which consists of eighteen series), Brinson
also serves as investment advisor to four other investment companies: Brinson
Relationship Funds (the "Relationship Trust," which consists of nineteen
series), Fort Dearborn Income Securities, Inc.; Governor Funds International
Equity Fund and Villanova Mutual Fund Trust - Prestige Large Cap Value Fund.
Brinson acts as the investment advisor to the following series of the Trust (the
"Brinson Portfolios") and of the Relationship Trust (the "Relationship
Portfolios") that have investment objectives similar to the Series:/3/
__________________
/3/ The investment objectives of the Relationship Portfolios, along with the
objectives of the Brinson Portfolios listed herein, is to maximize U.S. dollar
total return, consisting of capital appreciation and current income, while
controlling risk. For those Brinson
-33-
<PAGE>
<TABLE>
<CAPTION>
Expense Cap
Management Fee Applicable
Payable to the Brinson
The Brinson Portfolios Net Assets/4/ to Brinson Portfolios
---------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Global Fund* $ 239.9 0.80% 1.10%
Global Equity Fund* $ 65.2 0.80% 1.00%
Global Bond Fund* $ 37.7 0.75% 0.90%
U.S. Balanced Fund* $ 12.7 0.70% 0.80%
U.S. Equity Fund* $ 163.2 0.70% 0.80%
U.S. Value Equity Fund* $ -- 0.70% 0.85%
U.S. Large Cap Equity $ 6.3 0.70% 0.80%
Fund*
U.S. Small Cap Equity $ -- 1.00% 1.15%
Fund
U.S. Real Estate Equity $ -- 0.90% 1.05%
Fund*
U.S. Bond Fund* $ 66.1 0.50% 0.60%
Emerging Markets Debt $ -- 0.65% 1.15%
Fund
Global (Ex-U.S.) Equity $ 385.6 0.80% 1.00%
Fund
Emerging Markets Equity $ -- 1.10% 1.60%
Fund
</TABLE>
<TABLE>
<CAPTION>
Expense Cap
Management Applicable
Fee to the
Payable to Relationship
The Relationship Portfolios Net Assets/4/ Brinson/5/ Portfolios
--------------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Brinson Global Securities $ 798.3 N/A 0.05%
Fund
Brinson Global Bond Fund $ -- N/A 0.05%
Brinson U.S. Equity Fund $ 75.2 N/A 0.01%
Brinson U.S. Large $ 10.1 N/A 0.01%
Capitalization Equity
Fund
</TABLE>
________________________________________________________________________________
Portfolios marked with an asterisk (*), the
investment objective of each of the Portfolios is to maximize total return,
consisting of capital appreciation and current income, while controlling risk.
/4/ Net assets, in millions, as of August 31, 2000.
/5/ Brinson receives no fees from the Relationship Portfolios or the
Relationship Trust for providing investment advisory services to the
Relationship Portfolios, and Brinson is responsible for paying its own
expenses.
-34-
<PAGE>
<TABLE>
<CAPTION>
Expense Cap
Management Applicable
Fee to the
Payable to Relationship
The Relationship Portfolios Net Assets/4/ Brinson/5/ Portfolios
--------------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Brinson U.S. Intermediate $ -- N/A 0.01%
Capitalization Equity
Fund
Brinson U.S. Value Equity $ 108.0 N/A 0.01%
Fund
Brinson U.S. Small $ 468.7 N/A N/A/6/
Capitalization Equity
Fund
Brinson Global (Ex-U.S.) $ 74.8 N/A 0.06%
Equity Fund
Brinson Emerging Markets $ 284.7 N/A 0.50%
Equity Fund
Brinson Bond Plus Fund $ -- N/A 0.05%
Brinson U.S. Bond Fund $ 10.9 N/A 0.01%
Brinson U.S. Short $ -- N/A 0.01%
Intermediate Fixed Income
Fund
Brinson U.S. Treasury $ -- N/A 0.01%
Inflation Protected
Securities Fund
Brinson Defensive High $ -- N/A 0.01%
Yield Fund
Brinson Emerging Markets $ 182.2 N/A 0.50%
Debt Fund
Brinson Limited Duration $ -- N/A 0.01%
Fund
Brinson Short-Term Fund $ 41.9 N/A 0.05%
</TABLE>
The President and Chief Executive Officer of Brinson is Benjamin F. Lenhardt,
Jr. The directors of Brinson are: Gary P. Brinson, Jeffrey J. Diermeier,
Benjamin F. Lenhardt, Jr. and Nicholas C. Rassas. The address of each of the
directors of Brinson is the offices of Brinson at 209 South LaSalle Street,
Chicago, Illinois, 60604. The principal occupation of each of the directors of
Brinson is as follows: Mr. Brinson, Director, Chairman of the Board of Directors
_____________
/4/ Net assets, in millions, as of August 31, 2000.
/5/ Brinson receives no fees from the Relationship Portfolios or the
Relationship Trust for providing investment advisory services to the
Relationship Portfolios, and Brinson is responsible for paying its own expenses.
/6/ For this Relationship Portfolio, Brinson has agreed to pay all of the
Portfolio's total operating expenses.
-35-
<PAGE>
and Managing Director, Brinson; Mr. Diermeier, Director, Chief Investment
Officer and Managing Director, Brinson; Mr. Lenhardt, Director, President, Chief
Executive Officer and Managing Director, Brinson; and Mr. Rassas, Director, Vice
President and Managing Director, Brinson.
For the fiscal year ended June 30, 2000, pursuant to the distribution plans that
have been adopted by the Board of Trustees of the Trust pursuant to Rule 12b-1
under the 1940 Act, compensation in the amount of $760,833 was paid to employees
of UBS AG, an affiliate of Brinson, in return for services provided in selling
shares of the UBS Investment Funds class of shares of the Funds. It is
anticipated that these payments will continue to be made if the Amended Brinson
Agreements between the Trust, on behalf of the Funds, and Brinson, and the Sub-
Advisory Agreements, are approved by shareholders.
For additional information regarding UBS New York, the proposed sub-adviser to
the Funds, see "Information Concerning UBS New York" on page [14] of this Proxy
Statement.
Underwriter to the Funds. Funds Distributor, Inc. (the "Underwriter") serves as
the underwriter and exclusive agent for the continuous sale of shares of each
series of the Trust pursuant to a Distribution Agreement dated February 24,
1997, which was last approved at a meeting of the Trust's Board of Trustees held
on February 28, 2000. The Underwriter is a broker-dealer registered with the
SEC and a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD"). The Underwriter is located at 60 State Street,
Suite 1300, Boston, MA 02109. There are no sales loads or redemption fees
imposed by the Funds.
The Administrator. Chase Global Funds Services Company ("CGFSC"), a corporate
affiliate of The Chase Manhattan Bank, provides administrative, accounting,
portfolio valuation and transfer agency services to the Funds. The address of
CGFSC is 73 Tremont Street, Boston, MA 02108-3913.
Annual and Semi-Annual Reports. The Funds' most recent audited financial
statements and Annual Report, for the fiscal year ended June 30, 2000, have been
previously mailed to shareholders, and are available free of charge. If you
have not received an Annual Report for the Fund(s) in which you are an investor,
or would like to receive additional copies, free of charge, please write the
Trust at the address on the cover page of this Proxy Statement, or call the
Trust at 1-800-448-2430, and the Reports and financial statements will be sent
to you by first-class mail within three business days.
Other Matters Relating to the Trust. The Trust is an open-end, diversified
management investment company, as defined in the 1940 Act. The shares of the
Trust, when issued, will be fully paid and nonassessable, and within each series
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<PAGE>
or class, have no preference as to conversion, exchange, dividends, redemption
or other features. The shares of the Trust, which the Trustees may, from time
to time, establish, shall have no preemptive rights. The shares of the Trust
have non-cumulative voting rights. On any matter submitted to a vote of
shareholders, all shares of the Trust then issued and outstanding and entitled
to vote, irrespective of the series or class and all shares of all series and
classes shall vote as a single class ("Single Class Voting"); provided, however,
that: (i) as to any matter with respect to which a separate vote of any series
or class is required by the 1940 Act or by the law governing Delaware business
trusts, such requirement as to a separate vote by that series or class shall
apply in lieu of Single Class Voting as described above; (ii) in the event that
the separate vote requirements referred to in (i) above apply with respect to
one or more series or classes, then, subject to (iii) below, the shares of all
other series or classes shall vote as a single class; and (iii) as to any matter
which does not affect the interest of a particular series or class, only the
holders of shares of the one or more affected series or classes shall be
entitled to vote.
FURTHER INFORMATION ABOUT VOTING AND THE SPECIAL MEETING
Record Date. Shareholders of record at the close of business on September 18,
2000 (the "Record Date") are entitled to be present and to vote at the Special
Meeting or any adjournment of the Special Meeting. Each share of record is
entitled to one vote on each matter presented at the Special Meeting, with
proportionate votes for fractional shares.
As of the Record Date, there were the following number of shares of beneficial
interest outstanding of each Funds:
Number of Shares Outstanding
----------------------------
U.S. Small Cap Growth Fund 3,588,487.840
U.S. Large Cap Growth Fund 799,996.582
High Yield Fund 5,383,794.203
Global Biotech Fund 155,441.071
Global Technology Fund 240,919.159
From time to time, the number of shares held in "street name" accounts of
various securities dealers for the benefit of their clients may exceed 5% of the
total shares outstanding. To the knowledge of management, as of the Record
Date, the following persons owned of record or beneficially more than 5% of the
outstanding voting shares of the:
-37-
<PAGE>
U.S. SMALL CAP GROWTH FUND
Name & Address of Beneficial Owners Number of Shares Percentage
----------------------------------- ---------------- ----------
Brinson Fund - Class I
UBS AG 2,139,911.700 59.63%
10 E. 50th Street
New York, NY 10022
Island Holdings Inc. 254,662.230 7.10%
P.O. Box 1250
Honolulu, HI 96806-1520
Wilmington Trust Co FBO 179,258.870 5.00%
Brinson Partners Inc. Def Comp Plan
P.O. Box 8882
Wilmington, DE 19899
UBS Investment Funds Class
UBS AG 186,324.070 5.20%
10 E. 50th Street
New York, NY 10022
U.S. LARGE CAP GROWTH FUND
Name & Address of Beneficial Owners Number of Shares Percentage
----------------------------------- ---------------- ----------
Brinson Fund - Class I
Wilmington Trust Co FBO 133,117.720 16.64%
Brinson Partners Inc. Def Comp Plan
P.O. Box 8882
Wilmington, DE 19899
Howard Smith & Levin LLP 91,497.450 11.44%
1330 Avenue of the Americas
New York, NY 10019
UBS AG 87,246.740 10.91%
10 E. 50th Street
New York, NY 10022
UBS Investment Funds Class
UBS AG 204,499.490 25.56%
10 E. 50th Street
New York, NY 10022
Brian Vaughan 55,098.640 6.89%
55 Merrill Circle North
Moraga, CA 94556
-38-
<PAGE>
HIGH YIELD FUND
Name & Address of Beneficial Owners Number of Shares Percentage
----------------------------------- ---------------- ----------
Brinson Fund - Class I
UBS Omnibus Reinvest Account 3,401,850.710 63.19%
10 E. 50/th/ Street
New York, NY 10022
UBS AG 292,399.100 5.40%
10 E. 50/th/ Street
New York, NY 10022
GLOBAL BIOTECH FUND
Name & Address of Beneficial Owners Number of Shares Percentage
----------------------------------- ---------------- ----------
Brinson Fund - Class I
Brinson Partners, Inc. 49,801.000 32.04%
209 S. LaSalle St.
Chicago, IL 60604-1295
Charles Schwab & Co., Inc. 48,396.310 31.13%
101 Montgomery St.
San Francisco, CA 94104
Resources Trust Co. 25,771.700 16.58%
P.O. Box 3865
Englewood, CO 80155-3865
UBS Investment Funds Class
UBS AG 15,689.700 10.09%
10 E. 50/th/ Street
New York, NY 10022
GLOBAL TECHNOLOGY FUND
Name & Address of Beneficial Owners Number of Shares Percentage
----------------------------------- ---------------- ----------
Brinson Fund - Class I
Resources Trust Co. 43,475.610 18.05%
P.O. Box 3865
Englewood, CO 80155-3865
-39-
<PAGE>
UBS Investment Funds Class
RDA International Inc P/S/P 28,813.790 11.96%
P.O. Box 131608
Houston, TX 77219
Blush and Co. 15,754.56 6.54%
P.O. Box 976
New York, NY 10268
Do the Trustees and Officers of the Trust Own Shares of the Series?
As of the Record Date, the Trustees and officers of the Trust owned the
following number of shares of beneficial interest of the Funds and the other
series of the Trust:
Name and Position(s) Ownership of
with the Trust Title of Class Shares
-------------- -------------- ------
Frank K. Reilly Global Fund - Class I 9,012
Chairman and Trustee
Walter E. Auch U.S. Equity Fund - Class I 2,309
Trustee
Andrew J. O'Reilly* N/A 0
Trustee
Edward M. Roob Global Fund - Class I 24,098
Trustee
Thomas J. Digenan Global Fund - Class I 5,629
President Global Equity Fund - Class I 9,459
Global Technology Fund - Class I 1,243
Global Biotech Fund - Class I 408
Global Bond Fund - Class I 6,303
U.S. Small Cap Growth Fund - Class I 957
U.S. Bond Fund - Class I
11,847
Carolyn M. Burke Global Fund - Class I 1,864
Vice President, U.S. Equity Fund - Class I 1,708
Treasurer, Secretary Global Equity Fund - Class I 1,774
and Principal Global (Ex-U.S.) Equity Fund - 1,276
Accounting Officer Class I
-40-
<PAGE>
Name and Position(s) Ownership of
with the Trust Title of Class Shares
-------------- -------------- ------
David E. Floyd N/A 0
Assistant Secretary
Mark F. Kemper Global Fund - Class I 696
Assistant Secretary Global Equity Fund - Class I 5,171
Global Bond Fund - Class I 512
U.S. Equity Fund - Class I 853
Alanna N. Palmer Global Fund - Class I 102
Assistant Secretary Global Equity Fund - Class I 196
U.S. Equity Fund - Class I 3
Global Technology Fund - Class I 9
Global (Ex-U.S.) Equity Fund - 70
Class I
* "Interested person" of the Trust as that term is defined in the 1940 Act.
Mr. O'Reilly is the Treasurer, Chief Financial Officer and Managing Director of
Brinson, the Trust's investment advisor and manager, and, as such, is an
"interested person" (as that term is defined in the 1940 Act) of the Trust. In
addition, Mr. Digenan, Ms. Burke, Mr. Floyd, Mr. Kemper and Ms. Palmer are
officers and/or employees of Brinson. These individuals do not receive any
compensation from the Trust.
As of September 18, 2000, each individual officer and Trustee of the Trust owned
beneficially less than 1% of the outstanding shares of each class of each Fund
and of the Trust. Also, as of September 18, 2000, the officers and Trustees of
the Trust, as a group, owned less than 1% of the outstanding shares of each
class of the Funds and of the Trust.
None of the Trustees or executive officers have familial relationships with any
other Trustee or executive officer.
Voting Methods. You may vote your shares in one of several ways. You can vote
by mail, fax, or in person at the Special Meeting.
To vote by mail, sign, date and send us the enclosed proxy card in the envelope
provided. To vote by fax, sign the proxy and fax both sides of the card to 1-
888-796-9932.
Proxy cards that are properly signed, dated and received at or prior to the
Special Meeting will be voted as specified. If you specify a vote for any of
the
-41-
<PAGE>
Proposals 1 through 4, your proxy card will be voted as you indicated. If you
simply sign and date the proxy card, but do not specify a vote for any of the
Proposals 1 through 4, your shares will be voted IN FAVOR of the Amended Brinson
Agreements (Proposal 1), IN FAVOR of the approval of the Sub-Advisory Agreements
with UBS New York (Proposal 2), IN FAVOR of the amendments to the Funds'
fundamental investment restrictions (Proposals 3(a)-3(h)) and IN FAVOR of the
elimination of certain fundamental investment restrictions of the Funds
(Proposals 4(a)-4(c)).
Revocation of Proxies. You may revoke your proxy at any time by sending to the
Trust a written revocation or a later-dated proxy card that is received at or
before the Special Meeting, or by attending the Special Meeting and voting in
person.
Solicitation of Proxies. Your vote is being solicited by the Board of Trustees
of the Trust. The cost of preparing and mailing the notice of meeting, proxy
cards, this Proxy Statement, and any additional proxy materials, has been or
will be borne by the Trust. The Trust reimburses brokerage firms and others for
their expenses in forwarding proxy material to the beneficial owners and
soliciting them to execute proxies. The Trust does not reimburse Trustees and
officers of the Trust, or regular employees and agents of Brinson or CGFSC
involved in the solicitation of proxies. The Trust intends to pay all costs
associated with the solicitation and the Special Meeting.
Proxy solicitations will be made primarily by mail, but they may also be made by
telephone, telegraph, personal interview or oral solicitations conducted by
certain officers or employees of the Trust, Brinson or CGFSC, or, if necessary,
a commercial firm retained for this purpose. If the Trust engages a
solicitation firm to solicit proxies from brokers, banks, other institutional
holders and individual shareholders, the anticipated cost, including out-of-
pocket expenses, will range between $4,000 and $6,000.
Voting by Broker-Dealers. The Trust expects that, before the Special Meeting,
broker-dealer firms holding shares of the Funds in "street name" for their
customers will request voting instructions from their customers and beneficial
owners. If these instructions are not received by the date specified in the
broker-dealer firms' proxy solicitation materials, the Trust understands that
New York Stock Exchange rules permit the broker-dealers to vote on certain of
the proposals to be considered at the Special Meeting on behalf of their
customers and beneficial owners. Certain broker-dealers may exercise discretion
over shares held in their name for which no instructions are received by voting
these shares in the same proportion as they vote shares for which they received
instructions.
-42-
<PAGE>
Quorum and Required Vote. The presence, in person or by proxy, of the holders
of record of a majority of the shares of the Funds, issued and outstanding and
entitled to vote, shall constitute a quorum for the transaction of business at
the Special Meeting for the Trust. For purposes of determining the presence of
a quorum and counting votes on the matters presented, shares represented by
abstentions and "broker non-votes" likely will be counted as present, but likely
not treated as votes cast, at the Special Meeting. The affirmative vote
necessary to approve a matter under consideration is determined with reference
to a percentage of votes considered to be present at the Special Meeting, which
would have the effect of treating abstentions and broker non-votes as if they
were votes against the proposal.
-------
The approval of each Proposal described in this Proxy Statement for each Fund
will be determined on the basis of a vote of a "majority of the outstanding
voting securities" of the Fund, as defined in and required by the 1940 Act.
This vote requires the lesser of (A) 67% or more of the voting securities of the
Fund present at the Special Meeting, if the holders of more than 50% of the
outstanding voting securities of such Fund are present or represented by proxy;
or (B) more than 50% of the outstanding voting securities of such Fund.
Adjournment. In the event that a quorum is not present at the Special Meeting,
the Special Meeting will be adjourned to permit further solicitation of proxies.
In the event that a quorum is present, but sufficient votes have not been
received to approve one or more of the Proposals, the persons named as proxies
may propose one or more adjournments of the Special Meeting to permit further
solicitation of proxies with respect to those Proposals. The persons named as
proxies will vote in their discretion on questions of adjournment those shares
for which proxies have been received that grant discretionary authority to vote
on matters that may properly come before the Special Meeting.
-43-
<PAGE>
Shareholder Proposals. The Trust is not required, and does not intend, to hold
regular annual meetings of shareholders. Shareholders wishing to submit
proposals for consideration for inclusion in a proxy statement for the next
meeting of shareholders should send their written proposals to the Trust's
offices, 209 South LaSalle Street, Chicago, Illinois 60604, Attn: Secretary, so
they are received within a reasonable time before any such meeting. The
Trustees know of no business, other than the matters mentioned in the Notice and
described above, that is expected to come before the Special Meeting. Should any
other matter requiring a vote of shareholders arise, including any question as
to an adjournment or postponement of the Special Meeting, the persons named as
proxies will vote on such matters according to their best judgment in the
interests of the Trust.
Respectfully,
Carolyn M. Burke
Secretary
The Brinson Funds
September 29, 2000
Chicago, Illinois
-44-
<PAGE>
U.S. SMALL CAP GROWTH FUND
Proxy for Special Meeting of Shareholders - October 30, 2000
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned shareholders of the U.S.
Small Cap Growth Fund (the "Fund"), a series of The Brinson Funds (the "Trust"),
hereby appoint Thomas J. Digenan, Carolyn M. Burke and Alanna N. Palmer, or any
one of them, true and lawful attorneys, with the power of substitution of each,
to vote all shares of the Fund which the undersigned may be entitled to vote at
the Special Meeting of Shareholders (the "Special Meeting") to be held on
October 30, 2000, at The Rookery Building, 209 South LaSalle Street, Chicago, IL
60604, at 4:00 p.m., Central time, and at any adjournment thereof.
The proxies named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. The matters being
considered have been proposed by management. The matters being proposed are
related to, but not conditioned on, the approval of each other, except as noted.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting or any adjournment thereof.
Please sign this proxy exactly as your
name appears on the books of the Trust.
Joint owners should each sign
personally. Directors 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.
________________________________________
Dated
________________________________________
Signature
________________________________________
Signature (Joint Owners)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE BRINSON FUNDS.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO
-1-
<PAGE>
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example:
1. To approve amendments to the Investment Advisory Agreement between the
Trust, on behalf of the Fund, and Brinson Partners, Inc. ("Brinson")
FOR [_]
AGAINST [_]
ABSTAIN [_]
2. To approve the Sub-Advisory Agreement between Brinson and UBS Asset
Management (New York), Inc.
FOR [_]
AGAINST [_]
ABSTAIN [_]
3. To make amendments to the Fund's fundamental investment restrictions:
3a To amend the Fund's fundamental investment restriction regarding
borrowing
FOR [_]
AGAINST [_]
ABSTAIN [_]
3b To amend the Fund's fundamental investment restriction regarding
underwriting
FOR [_]
AGAINST [_]
ABSTAIN [_]
3c To amend the Fund's fundamental investment restriction regarding
lending
FOR [_]
AGAINST [_]
ABSTAIN [_]
-2-
<PAGE>
3d To amend the Fund's fundamental investment restriction regarding
investments in real estate
FOR [_]
AGAINST [_]
ABSTAIN [_]
3e To amend the Fund's fundamental investment restriction regarding
investments in commodities
FOR [_]
AGAINST [_]
ABSTAIN [_]
3f To amend the Fund's fundamental investment restriction regarding
issuing senior securities and making short sales
FOR [_]
AGAINST [_]
ABSTAIN [_]
3g To amend the Fund's fundamental investment restriction regarding
concentration
FOR [_]
AGAINST [_]
ABSTAIN [_]
3h To amend the Fund's fundamental investment restriction regarding
diversification
FOR [_]
AGAINST [_]
ABSTAIN [_]
4. To eliminate certain fundamental investment restrictions of the Fund:
4a To eliminate the Fund's fundamental investment restriction regarding
purchasing securities on margin
-3-
<PAGE>
FOR [_]
AGAINST [_]
ABSTAIN [_]
4b To eliminate the Fund's fundamental investment restriction regarding
investing in other investment companies
FOR [_]
AGAINST [_]
ABSTAIN [_]
4c To eliminate the Fund's fundamental investment restriction regarding
investments in oil, gas and/or mineral exploration or development
programs or leases
FOR [_]
AGAINST [_]
ABSTAIN [_]
-4-
<PAGE>
U.S. LARGE CAP GROWTH FUND
Proxy for Special Meeting of Shareholders - October 30, 2000
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned shareholders of the U.S.
Large Cap Growth Fund (the "Fund"), a series of The Brinson Funds (the "Trust"),
hereby appoint Thomas J. Digenan, Carolyn M. Burke and Alanna N. Palmer, or any
one of them, true and lawful attorneys, with the power of substitution of each,
to vote all shares of the Fund which the undersigned may be entitled to vote at
the Special Meeting of Shareholders (the "Special Meeting") to be held on
October 30, 2000, at The Rookery Building, 209 South LaSalle Street, Chicago, IL
60604, at 4:00 p.m., Central time, and at any adjournment thereof.
The proxies named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. The matters being
considered have been proposed by management. The matters being proposed are
related to, but not conditioned on, the approval of each other, except as noted.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting or any adjournment thereof.
Please sign this proxy exactly as your
name appears on the books of the Trust.
Joint owners should each sign
personally. Directors 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.
________________________________________
Dated
________________________________________
Signature
________________________________________
Signature (Joint Owners)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE BRINSON FUNDS.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO
-1-
<PAGE>
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example:
1. To approve amendments to the Investment Advisory Agreement between the
Trust, on behalf of the Fund, and Brinson Partners, Inc. ("Brinson")
FOR [_]
AGAINST [_]
ABSTAIN [_]
2. To approve the Sub-Advisory Agreement between Brinson and UBS Asset
Management (New York), Inc.
FOR [_]
AGAINST [_]
ABSTAIN [_]
3. To make amendments to the Fund's fundamental investment restrictions:
3a To amend the Fund's fundamental investment restriction regarding
borrowing
FOR [_]
AGAINST [_]
ABSTAIN [_]
3b To amend the Fund's fundamental investment restriction regarding
underwriting
FOR [_]
AGAINST [_]
ABSTAIN [_]
3c To amend the Fund's fundamental investment restriction regarding
lending
FOR [_]
AGAINST [_]
ABSTAIN [_]
-2-
<PAGE>
3d To amend the Fund's fundamental investment restriction regarding
investments in real estate
FOR [_]
AGAINST [_]
ABSTAIN [_]
3e To amend the Fund's fundamental investment restriction regarding
investments in commodities
FOR [_]
AGAINST [_]
ABSTAIN [_]
3f To amend the Fund's fundamental investment restriction regarding
issuing senior securities and making short sales
FOR [_]
AGAINST [_]
ABSTAIN [_]
3g To amend the Fund's fundamental investment restriction regarding
concentration
FOR [_]
AGAINST [_]
ABSTAIN [_]
Proposal 4 To eliminate certain fundamental investment restrictions of the
Fund:
4a To eliminate the Fund's fundamental investment restriction regarding
purchasing securities on margin
FOR [_]
AGAINST [_]
ABSTAIN [_]
4b To eliminate the Fund's fundamental investment restriction regarding
investing in other investment companies
-3-
<PAGE>
FOR [_]
AGAINST [_]
ABSTAIN [_]
4c To eliminate the Fund's fundamental investment restriction regarding
investments in oil, gas and/or mineral exploration or development
programs or leases
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
-4-
<PAGE>
HIGH YIELD FUND
Proxy for Special Meeting of Shareholders - October 30, 2000
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned shareholders of the High
Yield Fund (the "Fund"), a series of The Brinson Funds (the "Trust"), hereby
appoint Thomas J. Digenan, Carolyn M. Burke and Alanna N. Palmer, or any one of
them, true and lawful attorneys, with the power of substitution of each, to vote
all shares of the Fund which the undersigned may be entitled to vote at the
Special Meeting of Shareholders (the "Special Meeting") to be held on October
30, 2000, at The Rookery Building, 209 South LaSalle Street, Chicago, IL 60604,
at 4:00 p.m., Central time, and at any adjournment thereof.
The proxies named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. The matters being
considered have been proposed by management. The matters being proposed are
related to, but not conditioned on, the approval of each other, except as noted.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting or any adjournment thereof.
Please sign this proxy exactly as your name
appears on the books of the Trust. Joint
owners should each sign personally. Directors
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.
___________________________________________
Dated
___________________________________________
Signature
___________________________________________
Signature (Joint Owners)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE
BRINSON FUNDS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO
-1-
<PAGE>
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example:
1. To approve amendments to the Investment Advisory Agreement between the
Trust, on behalf of the Fund, and Brinson Partners, Inc. ("Brinson")
FOR [_]
AGAINST [_]
ABSTAIN [_]
2. To approve the Sub-Advisory Agreement between Brinson and UBS Asset
Management (New York), Inc.
FOR [_]
AGAINST [_]
ABSTAIN [_]
3. To make amendments to the Fund's fundamental investment restrictions:
3a To amend the Fund's fundamental investment restriction regarding
borrowing
FOR [_]
AGAINST [_]
ABSTAIN [_]
3b To amend the Fund's fundamental investment restriction regarding
underwriting
FOR [_]
AGAINST [_]
ABSTAIN [_]
3c To amend the Fund's fundamental investment restriction regarding
lending
FOR [_]
AGAINST [_]
ABSTAIN [_]
-2-
<PAGE>
3d To amend the Fund's fundamental investment restriction regarding
investments in real estate
FOR [_]
AGAINST [_]
ABSTAIN [_]
3e To amend the Fund's fundamental investment restriction regarding
investments in commodities
FOR [_]
AGAINST [_]
ABSTAIN [_]
3f To amend the Fund's fundamental investment restriction regarding
issuing senior securities and making short sales
FOR [_]
AGAINST [_]
ABSTAIN [_]
3g To amend the Fund's fundamental investment restriction regarding
concentration
FOR [_]
AGAINST [_]
ABSTAIN [_]
3h To amend the Fund's fundamental investment restriction regarding
diversification
FOR [_]
AGAINST [_]
ABSTAIN [_]
4. To eliminate certain fundamental investment restrictions of the Fund:
4a To eliminate the Fund's fundamental investment restriction regarding
purchasing securities on margin
FOR [_]
-3-
<PAGE>
AGAINST [_]
ABSTAIN [_]
4b To eliminate the Fund's fundamental investment restriction regarding
investing in other investment companies
FOR [_]
AGAINST [_]
ABSTAIN [_]
4c To eliminate the Fund's fundamental investment restriction regarding
investments in oil, gas and/or mineral exploration or development
programs or leases
FOR [_]
AGAINST [_]
ABSTAIN [_]
<PAGE>
GLOBAL BIOTECH FUND
Proxy for Special Meeting of Shareholders - October 30, 2000
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned shareholders of the
Global Biotech Fund (the "Fund"), a series of The Brinson Funds (the "Trust"),
hereby appoint Thomas J. Digenan, Carolyn M. Burke and Alanna N. Palmer, or any
one of them, true and lawful attorneys, with the power of substitution of each,
to vote all shares of the Fund which the undersigned may be entitled to vote at
the Special Meeting of Shareholders (the "Special Meeting") to be held on
October 30, 2000, at The Rookery Building, 209 South LaSalle Street, Chicago, IL
60604, at 4:00 p.m., Central time, and at any adjournment thereof.
The proxies named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. The matters being
considered have been proposed by management. The matters being proposed are
related to, but not conditioned on, the approval of each other, except as noted.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting or any adjournment thereof.
Please sign this proxy exactly as your name appears on
the books of the Trust. Joint owners should each sign
personally. Directors 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.
____________________________________
Dated
____________________________________
Signature
____________________________________
Signature (Joint Owners)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE BRINSON FUNDS.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO
57
<PAGE>
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example:
1. To approve amendments to the Investment Advisory Agreement between the
Trust, on behalf of the Fund, and Brinson Partners, Inc. ("Brinson")
FOR [_]
AGAINST [_]
ABSTAIN [_]
2. To approve the Sub-Advisory Agreement between Brinson and UBS Asset
Management (New York), Inc.
FOR [_]
AGAINST [_]
ABSTAIN [_]
3. To make amendments to the Fund's fundamental investment restrictions:
3a To amend the Fund's fundamental investment restriction regarding
borrowing
FOR [_]
AGAINST [_]
ABSTAIN [_]
3b To amend the Fund's fundamental investment restriction regarding
underwriting
FOR [_]
AGAINST [_]
ABSTAIN [_]
3c To amend the Fund's fundamental investment restriction regarding
lending
FOR [_]
AGAINST [_]
ABSTAIN [_]
58
<PAGE>
3d To amend the Fund's fundamental investment restriction regarding
investments in real estate
FOR [_]
AGAINST [_]
ABSTAIN [_]
3e To amend the Fund's fundamental investment restriction regarding
investments in commodities
FOR [_]
AGAINST [_]
ABSTAIN [_]
3f To amend the Fund's fundamental investment restriction regarding
issuing senior securities and making short sales
FOR [_]
AGAINST [_]
ABSTAIN [_]
4. To eliminate certain fundamental investment restrictions of the Fund:
4a To eliminate the Fund's fundamental investment restriction regarding
purchasing securities on margin
FOR [_]
AGAINST [_]
ABSTAIN [_]
4b To eliminate the Fund's fundamental investment restriction regarding
investing in other investment companies
FOR [_]
AGAINST [_]
ABSTAIN [_]
59
<PAGE>
GLOBAL TECHNOLOGY FUND
Proxy for Special Meeting of Shareholders - October 30, 2000
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned shareholders of the
Global Technology Fund (the "Fund"), a series of The Brinson Funds (the
"Trust"), hereby appoint Thomas J. Digenan, Carolyn M. Burke and Alanna N.
Palmer, or any one of them, true and lawful attorneys, with the power of
substitution of each, to vote all shares of the Fund which the undersigned may
be entitled to vote at the Special Meeting of Shareholders (the "Special
Meeting") to be held on October 30, 2000, at The Rookery Building, 209 South
LaSalle Street, Chicago, IL 60604, at 4:00 p.m., Central time, and at any
adjournment thereof.
The proxies named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. The matters being
considered have been proposed by management. The matters being proposed are
related to, but not conditioned on, the approval of each other, except as noted.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting or any adjournment thereof.
Please sign this proxy exactly as your name appears on
the books of the Trust. Joint owners should each sign
personally. Directors 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.
_________________________________
Dated
_________________________________
Signature
_________________________________
Signature (Joint Owners)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE BRINSON FUNDS.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
60
<PAGE>
DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE PROPOSALS.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example:
1. To approve amendments to the Investment Advisory Agreement between the
Trust, on behalf of the Fund, and Brinson Partners, Inc. ("Brinson")
FOR [_]
AGAINST [_]
ABSTAIN [_]
2. To approve the Sub-Advisory Agreement between Brinson and UBS Asset
Management (New York), Inc.
FOR [_]
AGAINST [_]
ABSTAIN [_]
3. To make amendments to the Fund's fundamental investment restrictions:
3a To amend the Fund's fundamental investment restriction regarding
borrowing
FOR [_]
AGAINST [_]
ABSTAIN [_]
3b To amend the Fund's fundamental investment restriction regarding
underwriting
FOR [_]
AGAINST [_]
ABSTAIN [_]
3c To amend the Fund's fundamental investment restriction regarding
lending
61
<PAGE>
FOR [_]
AGAINST [_]
ABSTAIN [_]
3d To amend the Fund's fundamental investment restriction regarding
investments in real estate
FOR [_]
AGAINST [_]
ABSTAIN [_]
3e To amend the Fund's fundamental investment restriction regarding
investments in commodities
FOR [_]
AGAINST [_]
ABSTAIN [_]
3f To amend the Fund's fundamental investment restriction regarding
issuing senior securities and making short sales
FOR [_]
AGAINST [_]
ABSTAIN [_]
4. To eliminate certain fundamental investment restrictions of the Fund:
4a To eliminate the Fund's fundamental investment restriction regarding
purchasing securities on margin
FOR [_]
AGAINST [_]
ABSTAIN [_]
4b To eliminate the Fund's fundamental investment restriction regarding
investing in other investment companies
FOR [_]
AGAINST [_]
ABSTAIN [_]
62
<PAGE>
EXHIBIT A
---------
CURRENT INVESTMENT ADVISORY AGREEMENT FOR
------------------------------------------
U.S. SMALL CAP GROWTH FUND
--------------------------
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 18th day of December, 1998 by and between The Brinson Funds,
a Delaware Business Trust (the "Trust") and Brinson Partners, Inc., a Delaware
corporation (the "Advisor").
1. Duties of the Advisor. The Trust hereby appoints the Advisor to act
---------------------
as investment advisor to the U.S. Small Capitalization Growth Fund for the
period and on such terms set forth in this Agreement. The Trust employs the
Advisor to manage the investment and reinvestment of the assets of the Series,
to continuously review, supervise and administer the investment program of the
Series, to determine in its discretion the assets to be held uninvested, to
provide the Trust with records concerning the Advisor's activities which the
Trust is required to maintain, and to render regular reports to the Trust's
officers and Board of Trustees concerning the Advisor's discharge of the
foregoing responsibilities. The Advisor shall discharge the foregoing
responsibilities subject to the control of the officers and the Board of
Trustees of the Trust, and in compliance with the objectives, policies and
limitations set forth in the Trust's Prospectus and Statement of Additional
Information. The Advisor accepts such employment and agrees to render the
services and to provide, at its own expense, the office space, furnishings,
equipment and the personnel required by it to perform the services on the terms
and for the compensation provided herein. With respect to foreign securities,
at its own expense, the Advisor may obtain statistical and other factual
information and advice regarding economic factors and trends from its foreign
subsidiaries, but it may not generally receive advice or recommendations
regarding the purchase or sale of securities from such subsidiaries.
2. Portfolio Transactions. The Advisor shall provide the Series with a
----------------------
trading department and with respect to foreign securities, the Advisor is
authorized to utilize the trading department of its foreign subsidiaries. The
Advisor shall select, and with respect to its foreign subsidiaries, shall
monitor the selection of, the brokers or dealers that will execute the purchases
and sales of securities for the Series and is directed to use its best efforts
to ensure that the best available price and most favorable execution of
securities transactions for the Series are obtained. Subject to policies
established by the Board of Trustees of the Trust and communicated to the
Advisor, it is understood that the Advisor will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or in respect of
the Series, or be in breach of any obligation owing to the Trust or in respect
of the Series under this Agreement, or otherwise, solely by
A-1
<PAGE>
reason of its having caused the Series to pay a member of a securities exchange,
a broker or a dealer a commission for effecting a securities transaction for the
Series in excess of the amount of commission another member of an exchange,
broker or dealer would have charged if the Advisor determines in good faith that
the commission paid was reasonable in relation to the brokerage or research
services provided by such member, broker or dealer, viewed in terms of that
particular transaction or the Advisor's overall responsibilities with respect to
the accounts, including the Series, as to which it exercises investment
discretion. The Advisor will promptly communicate to the officers and directors
of the Trust such information relating to the Series transactions as they may
reasonably request.
3. Compensation of the Advisor. For the services to be rendered by the
---------------------------
Advisor as provided in Section 1 and 2 of this Agreement, the U.S. Small
Capitalization Growth Fund shall pay to the Advisor annual management fees of
1.00%, calculated on the Series' daily net assets to be paid to the Advisor
within five business days after the end of each month.
In the event of termination of this Agreement, the fee provided in this
Section 3 shall be paid an a pro rata basis, based on the number of days when
this Agreement was in effect.
4. Reports. The Series and the Advisor agree to furnish to each other
-------
such information regarding their operations with regard to their affairs as each
may reasonably request.
5. Status of Advisor. The services of the Advisor to the Series are not
-----------------
to be deemed exclusive, and the Advisor shall be free to render similar services
to others so long as its services to the Series are not impaired thereby.
6. Liability of Advisor. In the absence of willful misfeasance, bad
--------------------
faith, gross negligence or reckless disregard by the Advisor of its obligations
and duties hereunder, the Advisor shall not be subject to any liability
whatsoever to the Series, or to any shareholder of the Series, for any error of
judgment, mistake of law or any other act or omission in the course of, or
connected with, rendering services hereunder including, without limitation, for
any losses that may be sustained in connection with the purchase, holding,
redemption or sale of any security on behalf of the Series.
7. Duration and Termination. This Agreement shall become effective on
------------------------
December 18, 1998 provided that first it is approved by the Board of Trustees of
-----------------
the Trust, including a majority of those trustees who are not parties to this
Agreement or interested persons of any party hereto, in the manner provided in
Section 15(c) of the Investment Company Act of 1940, and by the holders of a
majority of the outstanding voting securities of the Series; and shall continue
in
A-2
<PAGE>
effect until December 18, 2000. Thereafter, this Agreement may continue in
-----------------
effect only if such continuance is approved at least annually by: (i) the
Trust's Board of Trustees or, (ii) by the vote of a majority of the outstanding
voting securities of the Series; and in either event by a vote of a majority of
those trustees of the Trust who are not parties to this Agreement or interested
persons of any such party in the manner provided in Section 15(c) of the
Investment Company Act of 1940. This Agreement may be terminated by the Trust
at any time, without the payment of any penalty, by the Board of Trustees of the
Trust or by vote of the holders of a majority of the outstanding voting
securities of the Series on 60 days' written notice to the Advisor. This
Agreement may be terminated by the Advisor at any time, without the payment of
any penalty, upon 60 days' written notice to the Trust. This Agreement will
automatically terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered or mailed postpaid,
to the other party at the principal office of such party.
As used in this Section 8, the terms "assignment," "interested person," and
"a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act and Rule 18f-2 thereunder.
8. Name of Advisor. The parties agree that the Advisor has a proprietary
---------------
interest in the name "Brinson," and the Trust agrees to promptly take such
action as may be necessary to delete from its corporate name and/or the name of
the Series any reference to the name of the Advisor promptly after receipt from
the Advisor of a written request therefore.
9. Severability. If any provisions of this Agreement shall be held or
------------
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
A-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this 18th of December, 1998.
ATTEST: THE BRINSON FUNDS
By: /s/ David E. Floyd By: /s/ E. Thomas McFarlan
------------------ -----------------------
David E. Floyd E. Thomas McFarlan
Assistant Secretary President
ATTEST: BRINSON PARTNERS, INC.
By: /s/ Mark F. Kemper By: /s/ Henry Doorn, Jr.
------------------ --------------------
Mark F. Kemper Henry Doorn, Jr.
Assistant Secretary President
A-4
<PAGE>
EXHIBIT B
---------
PROPOSED INVESTMENT ADVISORY AGREEMENT FOR
-------------------------------------------
U.S. SMALL CAP GROWTH FUND
--------------------------
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of _________, 2000 by and between The Brinson
Funds, a Delaware business trust (the "Trust"), and Brinson Partners, Inc., a
Delaware corporation (the "Advisor").
1. Duties of the Advisor. The Trust hereby appoints the Advisor to act as
---------------------
investment adviser to the U.S. Small Cap Growth Fund (the "Series") for the
period and on such terms as are set forth in this Agreement. The Trust employs
the Advisor to manage the investment and reinvestment of the assets of the
Series, to continuously review, supervise and administer the investment program
of the Series, to determine in its discretion the assets to be held uninvested,
to provide the Trust with records concerning the Advisor's activities that the
Trust is required to maintain, and to render regular reports to the Trust's
officers and Board of Trustees concerning the Advisor's discharge of the
foregoing responsibilities. The Advisor shall discharge the foregoing
responsibilities subject to the control of the officers and the Board of
Trustees of the Trust, and in compliance with the objectives, policies and
limitations set forth in the Trust's prospectuses and statement of additional
information. The Advisor accepts such employment and agrees to render the
services and to provide, at its own expense, the office space, furnishings,
equipment and the personnel required by it to perform the services on the terms
and for the compensation provided herein.
2. Portfolio Transactions. The Advisor shall provide the Series with a
----------------------
trading department. The Advisor shall select, and with respect to the use of any
sub-advisers, shall monitor the selection of, the brokers or dealers that will
execute the purchases and sales of securities for the Series and is directed to
use its best efforts to ensure that the best available price and most favorable
execution of securities transactions for the Series are obtained. Subject to
policies established by the Board of Trustees of the Trust and communicated to
the Advisor, it is understood that the Advisor will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or in respect of
the Series, or be in breach of any obligation owing to the Trust or in respect
of the Series under this Agreement, or otherwise, solely by reason of its having
caused the Series to pay a member of a securities exchange, a broker or a dealer
a commission for effecting a securities transaction for the Series in excess of
the amount of commission another member of an exchange, broker or dealer would
have charged if the Advisor determines in good faith that the commission paid
B-1
<PAGE>
was reasonable in relation to the brokerage or research services provided by
such member, broker or dealer, viewed in terms of that particular transaction or
the Advisor's overall responsibilities with respect to the Series and to other
funds and advisory accounts for which the Advisor, or any Sub-Adviser, as
defined in Section 7 hereof, exercises investment discretion. The Advisor will
promptly communicate to the officers and Trustees of the Trust such information
relating to the Series transactions as they may reasonably request.
3. Compensation of the Advisor. For the services to be rendered by the
---------------------------
Advisor as provided in Sections 1 and 2 of this Agreement, the Series shall pay
to the Advisor, within five business days after the end of each calendar month,
a monthly fee of one twelfth of 1.00% of the Series' average daily net assets
for the month.
In the event of termination of this Agreement, the fee provided in this
Section 3 shall be paid on a pro rata basis, based on the number of days when
this Agreement was in effect.
4. Reports. The Series and the Advisor agree to furnish to each other
-------
such information regarding their operations with regard to their affairs as each
may reasonably request.
5. Status of Advisor. The services of the Advisor to the Series are not
-----------------
to be deemed exclusive, and the Advisor shall be free to render similar services
to others so long as its services to the Series are not impaired thereby.
6. Liability of Advisor. In the absence of willful misfeasance, bad
--------------------
faith, gross negligence or reckless disregard by the Advisor of its obligations
and duties hereunder, the Advisor shall not be subject to any liability
whatsoever to the Series, or to any shareholder of the Series, for any error of
judgment, mistake of law or any other act or omission in the course of, or
connected with, rendering services hereunder including, without limitation, for
any losses that may be sustained in connection with the purchase, holding,
redemption or sale of any security on behalf of the Series.
7. Delegation of Responsibilities to Sub-Advisers. The Advisor may, at
----------------------------------------------
its expense, select and contract with one or more investment advisers registered
under the Investment Advisers Act of 1940, as amended ("Sub-Advisers") to
perform some or all of the services for the Series for which it is responsible
under this Agreement. The Advisor will compensate any Sub-Adviser for its
services to the Series. The Advisor may terminate the services of any Sub-
Adviser at any time in its sole discretion, and shall at such time assume the
responsibility of such Sub-Adviser unless and until a successor Sub-Adviser is
selected and the requisite approval of the Series' shareholders is obtained. The
B-2
<PAGE>
Advisor shall continue to have responsibility for all advisory services
furnished by any Sub-Adviser.
8. Duration and Termination. This Agreement shall become effective on
------------------------
___________, 2000, provided that first it is approved by the Board of Trustees
of the Trust, including a majority of those Trustees who are not parties to this
Agreement or interested persons of any party hereto, in the manner provided in
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), and by the holders of a majority of the outstanding voting securities of
the Series; and shall continue in effect until ____________, 2002. Thereafter,
this Agreement may continue in effect only if such continuance is approved at
least annually by: (i) the Trust's Board of Trustees, or (ii) the vote of a
majority of the outstanding voting securities of the Series; and in either event
by a vote of a majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party in the manner provided in
Section 15(c) of the 1940 Act. This Agreement may be terminated by the Trust at
any time, without the payment of any penalty, by the Board of Trustees of the
Trust or by vote of the holders of a majority of the outstanding voting
securities of the Series on 60 days' written notice to the Advisor. This
Agreement may be terminated by the Advisor at any time, without the payment of
any penalty, upon 60 days' written notice to the Trust. This Agreement will
automatically terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered or mailed postpaid,
to the other party at the principal office of such party.
As used in this Section 8, the terms "assignment," "interested person," and
"a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act and Rule 18f-2 thereunder.
9. Name of Advisor. The parties agree that the Advisor has a proprietary
---------------
interest in the name "Brinson," and the Trust agrees to promptly take such
action as may be necessary to delete from its corporate name and/or the name of
the Series any reference to the name of the Advisor promptly after receipt from
the Advisor of a written request therefor.
10. Severability. If any provisions of this Agreement shall be held or
------------
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
B-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of this ____ day of _________, 2000.
Attest: THE BRINSON FUNDS
By:__________________ By:___________________
Name: Name:
Title: Title:
Attest: BRINSON PARTNERS, INC.
By:__________________ By:___________________
Name: Name:
Title: Title:
B-4
<PAGE>
EXHIBIT C
---------
PROPOSED SUB-ADVISORY AGREEMENT BETWEEN BRINSON
-----------------------------------------------
PARTNERS, INC. AND UBS ASSET MANAGEMENT
---------------------------------------
(NEW YORK), INC.
----------------
THE BRINSON FUNDS
____________________________FUND
SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between BRINSON PARTNERS, INC., a Delaware
corporation (the "Investment Manager"), and UBS ASSET MANAGEMENT (NEW YORK),
INC., a New York corporation (the "Sub-Adviser").
WITNESSETH:
WHEREAS, THE BRINSON FUNDS, a Delaware business trust (the "Trust"), has
been organized and operates as an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and engages in the
business of investing and reinvesting its assets in securities; and
WHEREAS, the Investment Manager and the Sub-Adviser are registered
investment advisers under the Investment Advisers Act of 1940, as amended, and
engage in the business of providing investment management services; and
WHEREAS, the Investment Manager and the Trust, on behalf of the __________
Fund series (the "Series"), have entered into an agreement dated as of
____________, 2000 (the "Investment Management Agreement"), whereby the
Investment Manager provides investment advisory services to the Trust on behalf
of the Series; and
WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Series;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Investment Manager hereby employs the Sub-Adviser, subject always
to the Investment Manager's control and supervision, to manage
<PAGE>
the investment and reinvestment of that portion of the Series' portfolio as the
Investment Manager shall designate from time to time, and to furnish the
Investment Manager with investment recommendations, asset allocation advice,
research and other investment services, subject to the direction of the Board of
Trustees and officers of the Trust for the period and on the terms hereinafter
set forth. The Sub-Adviser hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth for
the compensation herein provided. The Sub-Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Trust in any way, or in any way be deemed an agent of the Trust. The Sub-Adviser
shall regularly make decisions as to what securities to purchase and sell on
behalf of the Series, shall effect the purchase and sale of investments in
furtherance of the Series' investment objectives and policies by placing
transactions through its trading department or the Investment Manager's trading
department, and shall furnish the Board of Trustees of the Trust with such
information and reports regarding the Series' investments as the Investment
Manager deems appropriate or as the Trustees of the Trust may reasonably
request. The Sub-Adviser shall act in conformity with the Agreement and
Declaration of Trust and By-Laws of the Trust, and the Series' prospectus and
with the instructions and directions of the Investment Manager and of the Board
of Trustees of the Trust, and shall conform to and comply with the requirements
of the 1940 Act, the Internal Revenue Code of 1986, as amended, and all other
applicable federal and state laws and regulations consistent with the provisions
of Section 15(c) of the 1940 Act.
2. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Sub-Adviser will place orders for the
purchase and sale of portfolio securities with such broker/dealers who provide
statistical, factual and financial information and services to the Trust, to the
Investment Manager, to the Sub-Adviser or to any other fund for which the
Investment Manager or Sub-Adviser provides investment advisory services and/or
with broker/dealers who sell shares of the Series or who sell shares of any
other fund for which the Investment Manager or Sub-Adviser provides investment
advisory services. Broker/dealers who sell shares of the funds for which the
Investment Manager or Sub-Adviser provides advisory services shall only receive
orders for the purchase or sale of portfolio securities to the extent that the
placing of such orders is in compliance with the Rules of the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers,
Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Trust, the Sub-Adviser may ask the Trust, on behalf
of the Series, and the Trust, on behalf of the Series, may agree to pay a
C-2
<PAGE>
member of an exchange, broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
in such instances where the Trust and the Sub-Adviser have determined in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Sub-Adviser's
overall responsibilities with respect to the Series and to other funds and other
advisory accounts for which the Investment Manager or the Sub-Adviser exercises
investment discretion.
3. As compensation for the services to be rendered to the Series by the
Sub-Adviser under the provisions of this Agreement, the Investment Manager shall
pay to the Sub-Adviser a monthly fee equal to one twelfth of 0.10% of the fee
paid to the Investment Manager under the terms of the Investment Management
Agreement.
If this Agreement is terminated prior to the end of any calendar month, the
sub-advisory fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of calendar
days during which the Agreement is in effect bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.
4. The services to be rendered by the Sub-Adviser to the Series under
the provisions of this Agreement are not to be deemed to be exclusive, and the
Sub-Adviser shall be free to render similar or different services to others so
long as its ability to render the services provided for in this Agreement shall
not be impaired thereby.
5. The Sub-Adviser, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Series or to any other investment company, corporation, association, firm or
individual.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of duties of the Sub-Adviser to the
Series, the Sub-Adviser shall not be subject to liability to the Series or to
any shareholder of the Series for any action or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
C-3
<PAGE>
7. (a) This Agreement shall be executed and become effective as of the
date written below. It shall continue in effect for a period of two years and
may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees of the Trust or
by vote of a majority of the outstanding voting securities of the Series and
only if the terms and the renewal hereof have been approved by the vote of a
majority of the Trustees of the Trust who are not parties hereto or interested
persons of any such party ("Independent Trustees"), cast in person at a meeting
called for the purpose of voting on such approval.
(b) No amendment to this Agreement shall be effective for the Series
unless approved by: (i) a majority of the Trustees; and (ii) a majority of the
outstanding voting securities of the Series. Notwithstanding the foregoing,
this Agreement may be amended as to the Series without the approval of a
majority of the outstanding voting securities of the Series if the amendment
relates solely to a change that is permitted or not prohibited under federal
law, rule, regulation or SEC staff interpretation thereof to be made without
shareholder approval.
Notwithstanding the foregoing, this Agreement may be terminated as to the
Series by the Investment Manager or the Trust at any time, without the payment
of a penalty, on not more than sixty days' written notice to the Sub-Adviser, of
the Investment Manager's or the Trust's intention to do so, in the case of the
Trust pursuant to action by the Board of Trustees of the Trust or pursuant to
vote of a majority of the outstanding voting securities of the Series. The Sub-
Adviser may terminate this Agreement at any time, without the payment of a
penalty, on not more than sixty days' written notice to the Investment Manager
and the Trust of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach of
this Agreement committed prior to such termination. This Agreement shall
automatically terminate in the event of its assignment. This Agreement shall
automatically terminate upon the termination of the Investment Management
Agreement.
8. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
9. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities;" "interested person;" and "assignment" shall
have the respective meanings set forth in the 1940 Act.
C-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
having it signed by their duly authorized officers as of the ____ day of
____________, 2000.
BRINSON PARTNERS, INC.
Attest:____________________ By:____________________
Name: Name:
Title: Title:
UBS ASSET MANAGEMENT
(NEW YORK), INC.
Attest:____________________ By:____________________
Name: Name:
Title: Title:
Agreed to and accepted as of the day and year first above written:
THE BRINSON FUNDS
for the__________________FUND
Attest:____________________ By:____________________
Name: Name:
Title: Title:
C-5
<PAGE>
THANK YOU
For Voting Your Proxy Promptly!
We appreciate your continuing support
and look forward to helping you meet your
long-term investment objectives.
