SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934.
Filed by the Registrant[x]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
----------------------------------------
PAINEWEBBER GLOBAL SMALL CAP FUND INC.
----------------------------------------
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
_______________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: 1/
_______________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________
1/ Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
_________________________
2) Form, Schedule or Registration Statement No.:
_________________________
3) Filing Party:
_________________________
4) Date Filed:
_________________________
<PAGE>
Preliminary copy for
the information of
the Securities and
Exchange Commission;
File No. 33-64808;
File No. 811-7814;
Rule 14a-6
GLOBAL SMALL CAP FUND INC.
---------------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
July ___, 1995
---------------------
To the Shareholders:
A special meeting of the holders of shares of common stock
("Shares") of Global Small Cap Fund Inc. ("Fund") will be held on July
___, 1995 at ______ a.m., eastern standard time, at 1285 Avenue of the
Americas, 38th Floor, Room ___, New York, New York 10019, for the
following purposes:
1. To consider a Sub-Advisory Agreement between Mitchell
Hutchins Asset Management Inc. and GE Investment
Management Incorporated, a wholly owned subsidiary of
General Electric Company, with respect to the Fund;
2. To elect two directors to serve until the annual meeting
of shareholders in 1995, or until their successors are
elected and qualified; and
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Shareholders of record at the close of business on April ___,
1995 are entitled to notice of, and to vote at, the meeting. Your
attention is called to the accompanying Proxy Statement. Regardless of
whether you plan to attend the meeting, PLEASE COMPLETE, DATE AND SIGN THE
PROXY CARD IN THE ENCLOSED PREPAID envelope so that a quorum will be
present and a maximum number of Shares may be voted. If you attend the
meeting, you may change your vote, if desired, at that time.
By order of the board of directors,
Dianne E. O'Donnell
Secretary
<PAGE>
May ___, 1995
1285 Avenue of the Americas
New York, New York 10019
2
<PAGE>
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy
card, date and sign the card, and return it in the envelope provided. If
you sign, date and return the proxy card but give no voting instructions,
your Shares will be voted "FOR" each of the proposals noticed above. In
order to avoid the additional expense of further solicitation, we ask your
cooperation in mailing in your proxy card promptly. Unless proxy cards
submitted by corporations and partnerships are signed by the appropriate
persons as indicated in the voting instructions on the proxy card, they
will not be voted.
GLOBAL SMALL CAP FUND INC.
1285 Avenue of the Americas
New York, New York 10019
_____________
PROXY STATEMENT
Special Meeting of Shareholders
to Be Held on July ___, 1995
_____________ May __, 1995
This Proxy Statement is being furnished to shareholders of Global
Small Cap Fund Inc. ("Fund") in connection with the solicitation of
proxies by the Fund's board of directors ("Board") for use at a special
meeting of shareholders of the Fund to be held on July ___, 1995, and at
any adjournments thereof ("Meeting").
A majority of the shares of common stock of the Fund ("Shares")
outstanding on April ___, 1995, represented in person or by proxy, must be
present for the transaction of business at the Meeting. In the absence of
a quorum or in the event that a quorum is present at the Meeting but
sufficient votes to approve any of the proposals are not received, the
persons named as proxies may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those Shares
represented at the Meeting in person or by proxy. If a quorum is present,
the persons named as proxies will vote those proxies which they are
entitled to vote FOR any such proposal in favor of such an adjournment,
and will vote those proxies required to be voted AGAINST any such proposal
against such adjournment. A shareholder vote may be taken on one or more
of the proposals in this Proxy Statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
3
<PAGE>
Broker non-votes are shares held in street name for which the
broker indicates that instructions have not been received from the
beneficial owners or other persons entitled to vote and the broker does
not have discretionary voting authority. Abstentions and broker non-votes
will be counted as Shares present for purposes of determining whether a
quorum is present but will not be voted for or against any adjournment.
Accordingly, abstentions and broker non-votes effectively will be a vote
against adjournment or against any proposal where the required vote is a
percentage of the Shares present. Abstentions and broker non-votes will
not be counted, however, as votes cast for purposes of determining whether
sufficient votes have been received to approve a proposal.
The individuals named as proxies on the enclosed proxy card will
vote in accordance with your directions as indicated thereon if your proxy
card is received properly executed by you or by your duly appointed agent
or attorney-in-fact. If you give no voting instructions, your Shares will
be voted in favor of each of the proposals described in this Proxy
Statement. The proxy card may be revoked by giving another proxy, or by
letter or telegram revoking your proxy. To be effective, such revocation
must be received by the Fund prior to the Meeting and must indicate your
name and account number. In addition, if you attend the Meeting in person
you may, if you wish, vote by ballot at the Meeting, thereby canceling any
proxy previously given. The Proxy Statement will first be mailed to
shareholders on or about May __, 1995.
As of the record date, April ___, 1995, the Fund had _________
Shares outstanding. All costs associated with the Meeting, including the
solicitation of proxies, will be borne by the Fund. The solicitation of
proxies will be made primarily by mail but also may include telephone or
oral communications by regular employees of the Fund's investment adviser
and administrator, Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins") or PaineWebber Incorporated ("PaineWebber"), none of whom will
receive any compensation therefor from the Fund [or by Shareholder
Communications Corporation, professional proxy solicitors retained by the
Fund, who will be paid fees and expenses of up to approximately $_________
for soliciting services].
To the knowledge of the Fund's management, as of April ___, 1995,
no current director of the Fund owned 1% or more of the outstanding Shares
of the Fund. To the knowledge of the Fund's management, as of April
_____, 1995, the directors and officers of the Fund owned in the aggregate
less than 1% of the outstanding Shares of the Fund. To the knowledge of
the Fund's management, as of April __, 1995, there are no persons owning
beneficially more than 5% of the outstanding Shares of the Fund. Each
full Share of the Fund outstanding is entitled to one vote, and each
fractional Share thereof is entitled to a proportionate share of one vote
with respect to each matter to be voted upon by the shareholders of the
Fund.
Mitchell Hutchins currently serves as the Fund's investment
manager and administrator. GE Investment Management Incorporated ("GEIM")
serves as the Fund's investment sub-adviser ("Sub-Adviser"). Mitchell
4
<PAGE>
Hutchins is a wholly owned subsidiary of PaineWebber, which is a wholly
owned subsidiary of Paine Webber Group Inc. ("PW Group"). Mitchell
Hutchins, PaineWebber and PW Group are each located at 1285 Avenue of the
Americas, New York, New York 10019. The principal business address of
GEIM is 3003 Summer Street, Stamford, Connecticut 06905.
PROPOSAL 1. APPROVAL OR DISAPPROVAL OF THE SUB-ADVISORY AGREEMENT
Background
Until March 23, 1995, Mitchell Hutchins functioned as the
administrator and investment adviser of the Fund pursuant to a contract
with the Fund dated October 6, 1993 ("Advisory Agreement"). The Advisory
Agreement was approved by the then sole shareholder of the Fund on ___,
1993, and its continuance was approved by the Board on November 9, 1994.
Under the Advisory Agreement between the Fund and Mitchell Hutchins,
Mitchell Hutchins receives a fee at the annual rate of 1.00% of the Fund's
average weekly net assets. For the fiscal period October 15, 1993
(commencement of operations) to July 31, 1994, the Fund paid fees under
the Investment Advisory Agreement to Mitchell Hutchins of $443,907.
At a meeting held on March 22, 1995, the Board, including a
majority of the directors who are not interested persons of Mitchell
Hutchins or GEIM, as defined in the Investment Company Act of 1940 ("1940
Act") ("Independent Directors"), considered a recommendation by Mitchell
Hutchins that GEIM be appointed as investment sub-adviser for the Fund.
After considering Mitchell Hutchins' recommendation and other information,
the Board approved an interim sub-advisory agreement ("Interim Agreement")
with GEIM, pursuant to which GEIM currently acts as Sub-Adviser to the
Fund. At that meeting, the Board approved submission of the proposed sub-
advisory agreement ("Sub-Advisory Agreement") (which is substantially
similar to the Interim Agreement) to the Fund's shareholders at the
meeting, and determined to recommend that the Fund's shareholders approve
the proposed Sub-Advisory Agreement.
Mitchell Hutchins' recommendation to the Board that GEIM be
retained as Sub-Adviser stemmed from a number of factors. First, in the
months prior to the Board meeting, Mitchell Hutchins had been engaged in
an extensive review of the long-term needs of its clients and of its own
structure and deployment of resources. As a result of this review,
Mitchell Hutchins determined to concentrate its equity management
resources on domestic equity securities and to rely on independent
management firms with extensive experience in global and international
securities for the day-to-day portfolio management of the global equity
funds managed by Mitchell Hutchins. During this same period, Mitchell
Hutchins became familiar with the abilities and expertise of GEIM. GEIM
functions as the sub-adviser for certain funds formerly advised by Kidder
Peabody Asset Management Inc. Mitchell Hutchins has been managing those
funds since February 13, 1995 in connection with an Asset Purchase
Agreement among PW Group, Kidder, Peabody & Co. Inc. and General Electric
5
<PAGE>
Company ("GE"). After consideration, Mitchell Hutchins determined that it
would be in the best interest of the Fund and certain other global equity
funds advised by Mitchell Hutchins to recommend to the boards of
trustees/directors (including the Board) that they approve sub-advisory
agreements with GEIM and authorize the submission of such sub-advisory
agreements to the shareholders of the global equity funds for approval.
The Interim Agreement with respect to the Fund provides that
GEIM, subject to the supervision of Mitchell Hutchins and the Board, shall
provide a continuous investment program and strategy with respect to the
investments of the Fund, including investment research and management, and
will make decisions with respect to and place orders for all purchases and
sales of the Fund's securities. Under the Interim Agreement, Mitchell
Hutchins (not the Fund) pays GEIM a monthly fee for its investment
advisory services at an annual rate of .50% of the Fund's average weekly
net assets. Because the Interim Agreement became effective on March 23,
1995, Mitchell Hutchins paid no sub-advisory fees to GEIM during the
fiscal period ended July 31, 1994.
GEIM acts as the investment sub-adviser to Mitchell
Hutchins/Kidder Peabody Intermediate Fixed Income Fund, Mitchell
Hutchins/Kidder Peabody Global Equity Fund, and also acts as investment
adviser and administrator of the GE Funds and the Variable Investment
Trust, open-end management investment companies, each with multiple
investment portfolios, and as investment adviser to other accounts. In
addition, GEIM's principal officers and directors serve in similar
capacities with respect to General Electric Investment Corporation
("GEIC"), which, like GEIM, is a wholly owned subsidiary of GE, and which
currently serves as the investment adviser to the Elfun group of funds and
other GE pension and benefit plan accounts. Since March 23, 1995, GEIM
has served as investment sub-adviser to the Fund, PaineWebber Europe
Growth Fund and PaineWebber Global Growth and Income Fund (two series of
PaineWebber Investment Series), PaineWebber Atlas Global Growth Fund (the
sole series of PaineWebber Atlas Fund) and the Global Growth Portfolio of
PaineWebber Series Trust pursuant to interim agreements. The table below
sets forth certain information with respect to such investment funds that
have an investment objective similar to that of the Fund:
<TABLE>
<CAPTION>
Approximate Annual Rate of Investment
Net Assets as of Advisory Fee as a Percentage
Name of Fund March 31, 1995 of Net Assets
<S> <C> <C>
Mitchell Hutchins/Kidder, $200,600,000 .70% of average daily net
Peabody Global Equity Fund assets up to $200 million;
.50% over $200 million*
GE Global Equity Fund (a $31,500,000 .75%**
series of GE Funds)
6
<PAGE>
PaineWebber Atlas Global $344,960,000 .31% of average daily net
Growth Fund assets up to $500 million;
.29% over $500 million and
up to $1 billion;
.265% over $1 billion*
PaineWebber Europe Growth Fund $100,594,000 .31% of average daily net
assets up to $500 million;
.29% over $500 million and
up to $1 billion;
.265% over $1 billion*
PaineWebber Global Growth and $79,728,000 .29% of average daily net
Income Fund assets attributable to
equity portion of
portfolio***
</TABLE>
* Fee to GEIM for investment sub-advisory services only.
** Fee to GEIM includes investment advisory and administration services.
*** Fee to GEIM includes investment sub-advisory services for the equity
securities portion of the portfolio only.
Description of the Proposed Sub-Advisory Agreement
The terms and conditions of the proposed Sub-Advisory Agreement,
which provide for the same sub-advisory fee as is currently in effect for
the Interim Agreement and are otherwise substantially similar to those of
the Interim Agreement except for different effective and termination
dates, are summarized below. A copy of the proposed Sub-Advisory
Agreement is attached to this Proxy Statement as Exhibit A.
If approved by the Shareholders at the Meeting, the Sub-Advisory
Agreement will remain in effect for two years after its effective date and
thereafter will continue from year to year, provided that such continuance
is approved annually (i) by the vote of a majority of the Independent
Directors and (ii) by the Board or the vote of the holders of a majority
of the outstanding Shares of the Fund. The Sub-Advisory Agreement
automatically terminates upon its assignment and is terminable at any time
without penalty, by the Board or by the holders of a majority of the
outstanding Shares of the Fund on 60 days' written notice. Either
Mitchell Hutchins or GEIM may terminate the Sub-Advisory Agreement on 120
7
<PAGE>
days' written notice without penalty. Mitchell Hutchins may also
terminate the Sub-Advisory Agreement (i) upon material breach by GEIM of
certain of its representations under the Sub-Advisory Agreement or (ii) in
the event that GEIM is unable to discharge its duties under the
Sub-Advisory Agreement.
Like the Interim Agreement, the Sub-Advisory Agreement provides
that GEIM will pay for all expenses incurred by it in connection with its
investment advisory services under the Sub-Advisory Agreement. The Sub-
Advisory Agreement also provides that GEIM, subject to the supervision of
Mitchell Hutchins and the Board, shall provide a continuous investment
program and strategy for the investments of the Fund, including investment
research and management with respect to all securities and investments,
and shall make decisions with respect to and place orders for all
purchases and sales of portfolio securities. Under the Sub-Advisory
Agreement, Mitchell Hutchins will pay to GEIM, a monthly fee of .50% of
the Fund's average weekly net assets. This rate is the same as that
applied in the Interim Agreement.
The Sub-Advisory Agreement provides that GEIM will not be liable
for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of the agreement, except a
loss resulting from willful misfeasance, bad faith, or gross negligence on
the part of GEIM in the performance of its duties or from reckless
disregard of its obligations and duties under the Sub-Advisory Agreement.
GEIM makes various representations and warranties in the Sub-
Advisory Agreement, including (i) that it has adopted a written code of
ethics which complies with Rule 17j-1 under the 1940 Act and will certify
its compliance with such code of ethics to Mitchell Hutchins on an annual
basis, and (ii) that it is in compliance with various federal and state
laws, including the Investment Advisers Act of 1940 ("Advisers Act"), as
amended.
Information About GEIM
GEIM is a wholly owned subsidiary of GE and a registered
investment adviser under the Advisers Act. GEIM, located at 3003 Summer
Street, P.O. Box 7900, Stamford, Connecticut 06904, was formed under the
laws of Delaware in 1988. As noted above, GEIM's principal officers serve
in similar capacities with respect to GEIC, which is also a registered
investment adviser principally located in the same address. GEIM and GEIC
together provide investment management services to various institutional
accounts with total assets, as of March 31, 1995, in excess of $47
billion. The chief executive officer and directors of GEIM are identified
in the table below:
<TABLE>
<CAPTION>
8
<PAGE>
CHIEF EXECUTIVE OFFICER AND DIRECTORS OF GEIM
Name Principal Occupation Address
<S> <C> <C>
Dale F. Frey . . . . . . . . . . . . . Chairman, President and Chief Executive 3003 Summer Street
Officer of GEIM Stamford, Connecticut 06905
Eugene K. Bolton . . . . . . . . . . . Director and Executive Vice President 3003 Summer Street
of GEIM Stamford, Connecticut 06905
Michael J. Cosgrove . . . . . . . . . . Director and Executive Vice President 3003 Summer Street
of GEIM Stamford, Connecticut 06905
Ralph R. Layman . . . . . . . . . . . . Director and Executive Vice President 3003 Summer Street
of GEIM Stamford, Connecticut 06905
Alan M. Lewis . . . . . . . . . . . . . Director, Executive Vice President, 3003 Summer Street
General Counsel and Secretary of GEIM Stamford, Connecticut 06905
John H. Myers . . . . . . . . . . . . . Director and Executive Vice President 3003 Summer Street
of GEIM Stamford, Connecticut 06905
Geoffrey R. Norman . . . . . . . . . . Director and Executive Vice President 3003 Summer Street
of GEIM Stamford, Connecticut 06905
Don W. Torey . . . . . . . . . . . . . Director, Executive Vice President and 3003 Summer Street
Chief Financial Officer of GEIM Stamford, Connecticut 06905
</TABLE>
Directors' Considerations and Recommendations
At the meeting held on March 22, 1995, the Board, including the
Independent Directors, after a full evaluation of the matters described
above with the advice and assistance of counsel to the Independent
Directors, approved the Interim Agreement and the proposed Sub-Advisory
Agreement. During their deliberations, the Directors also reviewed
information provided by Mitchell Hutchins and GEIM relating to the
structure and organization of GEIM. The Board considered the quality of
the investment sub-advisory services that had been provided by GEIM to
other funds, and also considered the Fund's performance in relation to a
selected group of other funds with similar investment objectives. The
Board noted, in particular, that the advisory fee paid by the Fund would
remain the same as before, and determined that the terms of the Sub-
Advisory Agreement and the sub-advisory fee were fair.
The Board also considered the fact that consistent with the
interests of the Fund and subject to the review of the Board, the Sub-
Adviser may cause the Fund to purchase and sell portfolio securities
through brokers who provide the Fund with research, analysis, advice and
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<PAGE>
similar services. In return for such services, the Fund may pay to those
brokers a higher commission than may be charged by other brokers, provided
that the Sub-Adviser determines in good faith that such commission is
reasonable in terms either of that particular transaction or of the
overall responsibility of the Sub-Adviser to the Fund and its other
clients and that the total commissions paid by the Fund will be reasonable
in relation to the benefits to the Fund over the long term. The Sub-
Adviser will not enter into any explicit soft dollar arrangements relating
to principal transactions or receive in principal transaction the types of
services which could be purchased for hard dollars. Research services
furnished by brokers through which the Fund effects securities
transactions may be used by the Sub-Adviser in advising other funds or
accounts they advise and, conversely, research services furnished to the
Sub-Adviser in connection with other funds or accounts they advise may be
used by the Sub-Adviser in advising the Fund. Information and research
received from brokers will be in addition to, and not in lieu of, the
services required to be performed by the Sub-Adviser under the Sub-
Advisory Agreement.
Vote Required for Approval of Matters at the Meeting
At the Meeting, shareholders of the Fund will vote on the
proposed Sub-Advisory Agreement. The Board of Directors recommends that
the shareholders approve the Sub-Advisory Agreement. The affirmative vote
of the holders of a majority of the outstanding Shares of the Fund is
required to approve the Sub-Advisory Agreement. "Majority" for this
purpose under the 1940 Act means the lesser of: (i) 67% of the Shares of
the Fund represented at the Meeting if the holders of more than 50% of the
outstanding Shares are represented, or (ii) more than 50% of the
outstanding Shares of the Fund.
If the Sub-Advisory agreement is not approved, the Board of
Directors will take such actions as it deems appropriate to obtain
investment advice for the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL 1.
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<PAGE>
PROPOSAL 2. ELECTION OF DIRECTORS
Background
The second proposal to be considered at the Meeting relates to
the election of two (2) additional members to the Board of Directors of
the Fund. Management proposes the election of the two nominees named in
the table below as directors of the Fund. Each designated nominee is not
an "interested person" of the Fund as that term is defined by the 1940 Act
and has indicated his willingness to serve if elected at the Meeting. If
elected, each nominee will hold office until the next annual meeting of
shareholders or until his successor is elected and qualified. If either
designated nominee declines or otherwise becomes unavailable for election,
however, the proxy confers discretionary power on the persons named
therein to vote in favor of a substitute nominee or nominees. Neither of
the two nominees, Messrs. Richard Q. Armstrong and Richard R. Burt, has
previously served as a director for the Fund. If elected, the two new
directors will serve with the three current directors, Messrs. E. Garrett
Bewkes, Jr., John R. Torell III and William D. White.
Directors shall be elected by the vote of the holders of a
majority of the Shares of the Fund present in person or by proxy and
entitled to vote thereon. Unless you give contrary instructions on the
enclosed proxy card, your shares will be voted in favor of the election,
and your shares will be voted in favor of such other nominee or nominees
as management may recommend.
All nominees, directors and executive officers as a group (__
persons) beneficially owned ______ Shares of the Fund on ________ __,
199_, representing less than 1% of Shares of the Fund outstanding on that
date. The table below lists the name, age and principal occupation during
the past five years of each nominee.
11
<PAGE>
<TABLE>
<CAPTION>
Present Position with the Shares Owned
Fund; Business Experience During Beneficially on
Nominee; Age Past Five Years; Other Directorships March 31, 1995
<S> <C> <C>
Richard Q. Armstrong; 59 Mr. Armstrong is chairman of the board, chief ___
executive officer and co-owner of Adirondack Beverages
(producer and distributor of soft drinks and
sparkling/still waters)(since October 1993). Mr.
Armstrong is also a director of HiLo Automotive Inc.
Mr. Armstrong was a partner of The New England
Consulting Group (management consulting firm)(December
1992-September 1993) and was chairman of RQA
Enterprises (management consulting firm)(1991-1994);
he was managing director of LVMH U.S. Corporation
(U.S. subsidiary of the French luxury goods
conglomerate, Luis Vuitton Moet Hennessey
Corporation)(1987-1991) and chairman of its wine and
spirits subsidiary, Schieffelin & Somerset Company
(1987-1991). Mr. Armstrong is also a director of four
other investment companies for which Mitchell Hutchins
or PaineWebber serves as investment adviser.
Richard R. Burt; 59 Mr. Burt is chairman of International Equity Partners ___
(international investments and consulting firm)(since
March 1994) and a partner of McKinsey & Company
(management consulting firm)(since 1991). He is also
a director of American Publishing Company. He was the
chief negotiator in the Strategic Arms Reduction Talks
with the former Soviet Union (1989-1991) and the U.S.
Ambassador to the Federal Republic of Germany
(1985-1989). Mr. Burt is also a director of four
other investment companies for which Mitchell Hutchins
or PaineWebber serves as investment adviser.
</TABLE>
The Board met five times during the fiscal period from October
15, 1993 (commencement of operations) to July 31, 1994. The Board does
not have a standing nominating or compensation committee, but does have a
standing audit committee, whose Board members currently consist of Messrs.
Torell and White. The duties of the Audit Committee are (a) to review the
financial and accounting policies of the Fund, including internal
accounting control procedures, and to review reports prepared by the
Fund's independent auditors, including reports on the Fund's financial
statements; (b) to review and recommend approval or disapproval of audit
and non-audit services and the fees charged for such services; (c) to
12
<PAGE>
evaluate the independence of the independent auditors and to recommend
whether to retain such independent auditors for the next fiscal year; and
(d) to report to the board and make such recommendations as it deems
necessary. The Audit Committee did not meet during the fiscal period from
October 15, 1993 (commencement of operations) to July 31, 1994. The Fund
pays the Independent Directors of the Fund $1500 annually and an
attendance fee of $250 per meeting of the board of directors or any
committee thereof. Directors also are reimbursed for any expenses
incurred in attending meetings.
The table below describes the compensation paid during the last
fiscal year to each director by the Fund as well as the aggregate
compensation paid during that period to each director for such service for
all PaineWebber funds. Officers of the Fund and its directors who are
also officers or employees of the Fund's manager or adviser or one of
their affiliates receive no remuneration from the Fund or, in the case of
a series fund, the investment company of which it is a series. No
PaineWebber fund or investment company of which a PaineWebber fund is a
series has a bonus, pension, profit-sharing or retirement plan or a
compensation committee for its Board.
<TABLE>
<CAPTION>
COMPENSATION TABLE
Total
Pension or Compensation
Retirement From the Fund
Aggregate Benefits Accrued Estimated Annual and the Fund
Compensation as Part of the Benefits Upon Complex Paid to
Name of Person, Position From the Fund* Fund's Expenses Retirement Directors**
<S> <C> <C> <C> <C>
E. Garrett Bewkes, Jr., Director and
chairman of the board of directors
John R. Torell III, Director
William D. White, Director
</TABLE>
* Represents fees paid to each director during the fiscal period ended
July 31, 1994.
** Represent amounts paid to each director during the calendar year ended
December 31, 1994.
13
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 2.
GENERAL INFORMATION
Brokerage Commissions
PaineWebber is the only affiliated broker of the Fund. For the
fiscal period ended July 31, 1994, the Fund paid no brokerage commissions
to PaineWebber.
Other Matters to Come Before the Meeting
The Fund's management does not know of any matters to be
presented at the Meeting other than those described in this Proxy
Statement. If other business should properly come before the Meeting, the
proxyholders will vote thereon in accordance with their best judgment.
Shareholder Proposals
Any shareholder who wishes to submit proposals to be considered
at the Fund's 1995 annual meeting of shareholders should send such
proposals to the Fund at 1285 Avenue of the Americas, New York, New York
10019, so as to be received by the Fund no later than July 21, 1995.
Shareholder proposals that are submitted in a timely manner will not
necessarily be included in the Fund's proxy materials. Inclusion of such
proposals is subject to limitations under the federal securities laws.
Reports to Shareholders
The Fund will furnish to its shareholders, without charge, a copy
of the most recent Annual Report, and the most recent Semi-Annual Report
succeeding such Annual Report, if any, on request. Requests for such
reports should be made by calling toll free to the Fund's Transfer Agent,
PFPC Inc., at 1-800-647-1568.
Miscellaneous
The Funds's financial statements for the fiscal period ended July
31, 1994 were audited by Ernst & Young LLP, independent auditors.
Representatives of Ernst & Young LLP are not expected to be present at the
Meeting, but have been given the opportunity to make a statement if they
so desire, and will be available should any matter arise requiring their
presence.
14
<PAGE>
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE
ASSURED, PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED.
A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Dianne E. O'Donnell
Secretary
May ___, 1995
New York, New York
15
<PAGE>
PROXY
GLOBAL SMALL CAP FUND INC.
Special Meeting of Shareholders - July __, 1995
The undersigned hereby appoints as proxies JENNIFER A. FARRELL and GREGORY
K. TODD and each of them (with power of substitution), to vote for the
undersigned all shares of stock of the undersigned at the aforesaid
meeting and any adjournment thereof with all the power the undersigned
would have if personally present. The shares represented by this proxy
will be voted as instructed. Unless indicated to the contrary, this proxy
shall be deemed to indicate authority to vote "FOR" all proposals. This
proxy is solicited on behalf of the Board of Directors of Global Small Cap
Fund Inc. ("Fund").
YOUR VOTE IS IMPORTANT
Please date and sign this proxy on the reverse side and return it
in the enclosed postage paid envelope to:
PFPC Inc., P.O. Box 9426, Wilmington, DE 19809-9938. PFPC Inc.
has been engaged to forward the enclosed proxy material and to
tabulate proxies returned by mail.
Please indicate your vote by an "X" in the appropriate box below.
The Board of Directors recommends a vote "FOR"
1. Approval of Sub-Advisory Contract between Mitchell Hutchins Asset
Management Inc. and GE Investment Management Incorporated
relating to the Fund.
FOR _______ AGAINST _______ ABSTAIN ______
2. ELECTION OF DIRECTORS
(INSTRUCTION: To withhold authority to vote for either
individual nominee strike a line through the
nominee's name in the list below and mark center
box.)
Richard Q. Armstrong, Richard R. Burt
FOR EACH _______ OR FOR EACH EXCEPT _______ OR WITHHOLD ______
Continued and to be signed on reverse side
<PAGE>
This proxy will not be voted unless it is dated and signed exactly as
instructed below.
If shares are held jointly, each Shareholder named should
sign. If only one signs, his or her signature will be
binding. If the Shareholder is a corporation, the
President or a Vice President should sign in his or her
own name, indicating title. If the Shareholder is a
partnership, a partner should sign in his or her own
name, indicating that he or she is a "Partner." If
signing is by attorney, executor, administrator, trustee,
or guardian, please give FULL title.
Sign exactly as name appears hereon.
______________________________ (L.S.)
______________________________ (L.S.)
Date__________________________, 1995
<PAGE>
EXHIBIT A
[FORM OF PROPOSED SUB-ADVISORY AGREEMENT WITH MITCHELL HUTCHINS]
Agreement made as of ,1995, between MITCHELL HUTCHINS
ASSET MANAGEMENT INC. ("Mitchell Hutchins"), a Delaware corporation, and
GE Investment Management Incorporated ("Sub-Adviser"), a Delaware
corporation (the "Agreement").
RECITALS
--------
(1) Mitchell Hutchins has entered into an Investment Advisory
and Administration Contract dated October 6, 1993, ("Management
Agreement") with Global Small Cap Fund Inc. ("Fund"), a Maryland
corporation that is a closed-end management investment company registered
under the Investment Company Act of 1940, as amended ("1940 Act").
(2) Mitchell Hutchins wishes to retain the Sub-Adviser to
furnish certain investment advisory services to Mitchell Hutchins and the
Fund, and the Sub-Adviser is willing to furnish those services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. Appointment. Mitchell Hutchins hereby appoints the
Sub-Adviser as an investment sub-adviser with respect to the Fund for the
period and on the terms set forth in this Agreement. The Sub-Adviser
accepts that appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of and any guidelines adopted
by the Fund's Board of Directors (the "Board"), the Sub-Adviser will
provide a continuous investment program for the Fund, including investment
research and management. The Sub-Adviser will determine from time to time
what investments will be purchased, retained or sold by the Fund. The
Sub-Adviser will be responsible for placing purchase and sell orders for
investments and for other related transactions. The Sub-Adviser will
provide services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the Fund's
Registration Statement.
(b) The Sub-Adviser agrees that, in placing orders with
brokers, it will obtain the best net result in terms of price and
execution; provided that, on behalf of the Fund, the Sub-Adviser may, in
its discretion, use brokers who provide the Fund with research, analysis,
advice and similar services to execute portfolio transactions on behalf of
the Fund, and the Sub-Adviser may pay to those brokers in return for
brokerage and research services a higher commission than may be charged by
other brokers, subject to the Sub-Adviser's determining in good faith that
<PAGE>
such commission is reasonable in terms either of the particular
transaction or of the overall responsibility of the Sub-Adviser to the
Fund and its other clients and that the total commissions paid by the Fund
will be reasonable in relation to the benefits to the Fund over the long
term. In no instance will portfolio securities be purchased from or sold
to the Sub-Adviser, or any affiliated person thereof, except in accordance
with the federal securities laws and the rules and regulations thereunder.
Whenever the Sub-Adviser simultaneously places orders to purchase or sell
the same security on behalf of the Fund and one or more other accounts
advised by the Sub-Adviser, the orders will be allocated as to price and
amount among all such accounts in a manner believed to be equitable by the
Sub-Adviser over time to each account. Mitchell Hutchins recognizes that
in some cases this procedure may adversely affect the results obtained for
the Fund.
(c) The Sub-Adviser will maintain all books and records
required to be maintained by the Sub-Adviser pursuant to the 1940 Act and
the rules and regulations promulgated thereunder with respect to
transactions on behalf of the Fund, and will furnish the Board and
Mitchell Hutchins with such periodic and special reports as the Board or
Mitchell Hutchins reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby
agrees that all records which it maintains for the Fund are the property
of the Trust, agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any records which it maintains for the Trust and which
are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Trust any records which it
maintains for the Trust upon request by the Trust.
(d) At such times as shall be reasonably requested by the
Board or Mitchell Hutchins, the Sub-Adviser will provide the Board and
Mitchell Hutchins with economic and investment analyses and reports as
well as quarterly reports setting forth the Fund's performance and make
available to the Board and Mitchell Hutchins any economic, statistical and
investment services normally available to institutional or other customers
of the Sub-Adviser.
(e) In accordance with procedures adopted by the Board, as
amended from time to time, the Sub-Adviser is responsible for assisting in
the fair valuation of any illiquid portfolio securities and will assist in
providing independent sources of market value for all other portfolio
securities.
3. Further Duties. In all matters relating to the
performance of this Agreement, the Sub-Adviser will act in conformity with
the Trust's Trust Instrument, By-Laws and currently effective registration
statement under the 1940 Act and any amendments or supplements thereto
("Registration Statement") and with the written instructions and
directions of the Board and Mitchell Hutchins and will comply with the
requirements of the 1940 Act, the Investment Advisers Act of 1940, as
amended, ("Advisers Act"), the rules under each, and Subchapter M of the
Internal Revenue Code as applicable to regulated investment companies. In
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<PAGE>
addition, the Sub-Adviser will act in conformity with all other applicable
federal and state laws and regulations either as reflected in the
Registration Statement or otherwise provided in writing to the Sub-Adviser
by Mitchell Hutchins. Mitchell Hutchins agrees to provide to the
Sub-Adviser copies of the Trust's Trust Instrument, By-Laws, Registration
Statement, written instructions and directions of the Board and Mitchell
Hutchins, and any amendments or supplements to any of these materials as
soon as practicable after such materials become available.
4. Exclusivity. During the term of this Agreement, the Sub-
Adviser agrees that it will not provide investment advice on a
discretionary or non-discretionary basis for any global equity investment
products offered to retail customers in the United States by broker-
dealers listed on Schedule A. The Sub-Adviser shall deliver to Mitchell
Hutchins in writing prompt and regular reports of the Sub-Adviser's
investment advisory activities in sufficient detail to permit Mitchell
Hutchins to monitor the terms of this Agreement.
5. Expenses. During the term of this Agreement, the
Sub-Adviser will bear all expenses incurred by it in connection with its
investment sub-advisory services under this Agreement.
6. Compensation.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, Mitchell Hutchins, not the Fund,
will pay to the Sub-Adviser a fee, computed daily and payable monthly, as
computed in the manner set forth in Schedule B, together with a schedule
showing the manner in which the fee was computed.
(b) The fee shall be computed daily and payable monthly to
the Sub-Adviser on or before the fifteenth business day of the next
succeeding calendar month.
(c) If this Agreement becomes effective or terminates before
the end of any month, the fee for the period from the effective date to
the end of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such
effectiveness or termination occurs.
7. Limitation Of Liability. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss
suffered by the Fund, the Trust or its shareholders or by Mitchell
Hutchins in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
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<PAGE>
8. Indemnification.
(a) Mitchell Hutchins agrees to indemnify GEIM, its officers and
directors, and any person who controls GEIM within the meaning of Section
15 of the Securities Act of 1933 ("1933 Act") for any loss or expense
(including attorneys' fees) arising out of any claim, demand, action or
suit in the event that GEIM has been found to be without fault and
Mitchell Hutchins or its parent company, PaineWebber Incorporated
("PaineWebber"), has been found at fault (i) by the final judgment of a
court of competent jurisdiction or (ii) in any order of settlement of any
claim, demand, action or suit that has been approved by the Board of
Directors of Mitchell Hutchins or PaineWebber.
(b) GEIM agrees to indemnify Mitchell Hutchins, its officers and
directors, and any person who controls Mitchell Hutchins within the
meaning of Section 15 of the 1933 Act for any loss or expense (including
attorneys' fees) arising out of any claim, demand, action or suit in the
event that Mitchell Hutchins has been found to be without fault and GEIM,
or its parent company, General Electric Company ("GE"), has been found at
fault (i) by the final judgment of a court of competent jurisdiction or
(ii) in any order of settlement of any claim, demand, action or suit that
has been approved by the Board of Directors of GEIM or GE.
9. Representations of Sub-Adviser. The Sub-Adviser
represents, warrants and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment
adviser under the Advisers Act and will continue to be so registered for
so long as this Agreement remains in effect; (ii) is not prohibited by the
1940 Act or the Advisers Act from performing the services contemplated by
this Agreement; (iii) has met, and will seek to continue to meet for so
long as this Agreement remains in effect, any other applicable federal or
state requirements, or the applicable requirements of any regulatory or
industry self-regulatory agency, necessary to be met in order to perform
the services contemplated by this Agreement; (iv) has the authority to
enter into and perform the services contemplated by this Agreement; and
(v) will promptly notify Mitchell Hutchins of the occurrence of any event
that would disqualify the Sub-Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act
or otherwise.
(b) The Sub-Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act and will
provide Mitchell Hutchins and the Board with a copy of that code of
ethics, together with evidence of its adoption. Within fifteen days of
the end of the last calendar quarter of each year that this Agreement is
in effect, the president or a vice-president of the Sub-Adviser shall
certify to Mitchell Hutchins that the Sub-Adviser has complied with the
requirements of Rule 17j-1 during the previous year and that there has
been no violation of the Sub-Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to
such violation. Upon the written request of Mitchell Hutchins, the
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<PAGE>
Sub-Adviser shall permit Mitchell Hutchins, its employees or its agents to
examine the reports required to be made to the Sub-Adviser by Rule 17j-
1(c)(1) and all other records relevant to the Sub-Adviser's code of
ethics.
(c) The Sub-Adviser has provided Mitchell Hutchins with a
copy of its Form ADV as most recently filed with the Securities and
Exchange Commission ("SEC") and promptly will furnish a copy of all
amendments to Mitchell Hutchins at least annually.
(d) The Sub-Adviser will notify Mitchell Hutchins of any
change of control of the Sub-Adviser, including any change of its general
partners or 25% shareholders, as applicable, and any changes in the key
personnel of the Sub-Adviser, in each case prior to or promptly after such
change.
10. Representations and Warranties of Mitchell Hutchins.
Mitchell Hutchins represents, warrants and agrees as follows:
(a) Mitchell Hutchins (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long
as this Agreement remains in effect; (ii) is not prohibited by the 1940
Act from performing the services contemplated by the Management Agreement;
(iii) has met, and will seek to continue to meet for so long as this
Agreement remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform the
services contemplated by the Management Agreement; (iv) has the authority
to enter into and perform the services contemplated by the Management
Agreement; and (v) will promptly notify the Sub-Adviser of the occurrence
of any event that would disqualify Mitchell Hutchins from serving as an
investment adviser of an investment company pursuant to Section 9(a) of
the 1940 Act or otherwise.
(b) Mitchell Hutchins agrees that it will notify GEIM, to the
extent possible, within a reasonable period of time prior to any
termination of this Agreement by Mitchell Hutchins pursuant to Section
11(c) (including any termination by assignment resulting from a
foreseeable change in control of Mitchell Hutchins that is a matter of
public information), and that it will notify GEIM promptly following any
other termination of this Agreement pursuant to Section 11(c).
11. Duration and Termination.
(a) This Agreement shall become effective upon the date first
above written, provided that this Agreement shall not take effect unless
it has first been approved (i) by a vote of a majority of those trustees
of the Trust who are not parties to this Agreement or interested persons
of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by a vote of a majority of outstanding
voting securities of the Fund.
- 5 -
<PAGE>
(b) Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from the above written
date. Thereafter, if not terminated, this Agreement will continue
automatically for successive periods of twelve months each, provided that
such continuance is specifically approved at least annually (i) by a vote
of a majority of those trustees of the Trust who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the
Board or by the holders of a vote of a majority of the outstanding voting
securities of the Fund.
(c) Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by vote of the
Board or by a vote of a majority of the outstanding voting securities of
the Fund on 60 days' written notice to the Sub-Adviser. This Agreement may
also be terminated, without the payment of any penalty, by Mitchell
Hutchins: (i) upon 120 days' written notice to the Sub-Adviser; (ii) upon
material breach by the Sub-Adviser of any of the representations and
warranties set forth in Paragraph 9 of this Agreement; or (iii) if the
Sub-Adviser becomes unable to discharge its duties and obligations under
this Agreement, including circumstances such as financial insolvency of
the Sub-Adviser or other circumstances that could adversely affect the
Fund. The Sub-Adviser may terminate this Agreement at any time, without
the payment of any penalty, on 120 days' written notice to Mitchell
Hutchins. This Agreement will terminate automatically in the event of its
assignment or upon termination of the Management Agreement.
12. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and
no amendment to the terms of this Agreement shall be effective until
approved by vote of a majority of the Fund's outstanding voting securities
(unless the Trust receives an SEC order permitting it to modify the
Agreement without such vote).
13. Governing Law. This Agreement shall be construed in
accordance with the 1940 Act and the laws of the State of Delaware,
without giving effect to the conflicts of laws principles thereof. To the
extent that the applicable laws of the State of Delaware conflict with the
applicable provisions of the 1940 Act, the latter shall control.
14. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their construction or
effect. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors. As used in this Agreement, the terms "majority of
the outstanding voting securities," "affiliated person," "interested
person," "assignment," "broker," "investment adviser," "net assets,"
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<PAGE>
"sale," "sell" and "security" shall have the same meaning as such terms
have in the 1940 Act, subject to such exemption as may be granted by the
SEC by any rule, regulation or order. Where the effect of a requirement of
the federal securities laws reflected in any provision of this Agreement
is made less restrictive by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. This
Agreement may be signed in counterpart.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their duly authorized signatories as of the
date and year first above written.
Attest: MITCHELL HUTCHINS ASSET MANAGEMENT INC.
By:____________________________________
Name:
Title:
Attest: GE INVESTMENT MANAGEMENT INCORPORATED
By:_______________________________
Name:
Title:
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<PAGE>
SCHEDULE A
Retail Broker Dealers
---------------------
Alex. Brown & Sons Incorporated
A.G. Edwards & Sons, Inc.
Dean Witter Reynolds, Inc.
E.D. Jones
Kemper Financial Services, Kemper Securities Group, Inc.
Legg Mason Wood Walker Incorporated
Merrill Lynch Pierce Fenner & Smith Incorporated
Prudential Securities Incorporated
Raymond James & Associates, Inc.
Smith Barney Inc.
<PAGE>
SCHEDULE B
Fund Annual Fee Rate
---- --------------
Global Small Cap Fund Inc. 0.50% of average weekly net
assets
<PAGE>
