Securities and Exchange Commission (“Commission”)
Notice of application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”) to amend a prior order that granted an exemption from section 15(a) of the Act and rule 18f-2 under the Act.
Summary of Application: Applicants request an order amending a prior order (“Prior Order”) that permits them to enter into and materially amend investment sub-advisory contracts without receiving shareholder approval.
Applicants: PaineWebber PACE Select Advisors Trust (formerly, Managed Accounts Services Portfolio Trust) (the “Trust”) and Mitchell Hutchins Asset Management Inc. (“Mitchell Hutchins”).
Filing Date: The application was filed on November 30, 1999 and amended on January 5, 2001.
Hearing or Notification of Hearing: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving Start Printed Page 4871applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on February 5, 2001, and should be accompanied by proof of service on applicants, in the form of an affidavit, or for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary.
Secretary, Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Applicants: 1285 Avenue of the Americas, New York, New York 10019.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Sara P. Crovitz, Senior Counsel, at (202) 942-0667 or Nadya Roytblat, Assistant Director, at (202) 942-0564 (Division of Investment Management, Office of Investment Company Regulation).End Further Info End Preamble Start Supplemental Information
The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549-0101, (202) 942-8090.
1. The Trust is an open-end management investment company currently composed of twelve investment portfolios (“Portfolios”). Mitchell Hutchins, a wholly owned subsidiary of PaineWebber, acts as investment manager and administrator to the Trust and is responsible, subject to oversight by the Board of Trustees of the Trust (“Board”) for the selection of investment sub-advisers (“Sub-Advisers”) and the ongoing review of the Sub-Advisers' performance.
2. On January 11, 1996, applicants received the Prior Order permitting the Trust and Mitchell Hutchins to enter into sub-advisory agreements (“Sub-Advisory Agreements”) for the Portfolios without obtaining shareholder approval. Among other things, the Prior Order is subject to a condition that requires a notice, in the form of an information statement, be sent to shareholders following the hiring of a new Sub-Adviser or the implementation of a material change to a Sub-Advisory Agreement. Applicants seek to amend the Prior Order to preserve the requirement to provide notice to shareholders regarding the hiring of a new Sub-Adviser, but to eliminate the requirement to provide a notice in the form of an information statement of other material changes to a Sub-Advisory Agreement. Applicants state that supplements to the Trust's prospectus or statements of additional information serve as a more appropriate and less costly alternative to the latter requirement. Applicants also seek to amend the Prior Order to eliminate the requirement that shares of the Trust be offered exclusively to participants in the PaineWebber PACE Program (the “Pace Program”) or other asset allocation services.
Applicants' Legal Analysis
1. Section 6(c) of the Act authorizes the Commission to exempt persons or transactions from any provisions of the Act to the extent that such exemptions are necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants submit that amending the Prior Order as requested would be consistent with the standards of section 6(c) of the Act.
Applicants agree that the order granting the requested relief will be subject to the following conditions:
1. Before a Portfolio may rely on the order, the operation of the Portfolio in the manner described in the application will be approved by a majority of the outstanding voting securities of the Portfolio, as defined in the Act, or in the case of a Portfolio whose public shareholders purchased shares on the basis of a prospectus containing the disclosure contemplated by condition 2 below, by the sole initial shareholder before offering shares of such Portfolio to the public.
2. The Trust will disclose in all prospectuses relating to any Portfolio the existence, substance and effect of any order granted pursuant to the application. In addition, each Portfolio relying on the requested order will hold itself out to the public as employing the management structure described in the application. The prospectus will prominently disclose that Mitchell Hutchins has the ultimate responsibility (subject to oversight by the Board) to oversee the Sub-Advisers and recommend their hiring, termination and replacement.
3. At all times, a majority of the trustees of the Trust will be persons each of whom is not an “interested person” of the Trust (as defined in section 2(a)(19) of the Act) (the “Independent Trustees”), and the nomination of new or additional Independent Trustees will be placed within the discretion of the then existing Independent Trustees.
4. Mitchell Hutchins will not enter into a Sub-Advisory Agreement with any Sub-Adviser that is an affiliated person (as defined in section 2(a)(3) of the Act) of the Trust, Mitchell Hutchins or the Portfolios, other than by reason of serving as a Sub-Adviser to one or more of the Portfolios (the “Affiliated Sub-Adviser”) without such agreement, including the compensation to be paid thereunder, being approved by the shareholders of the applicable Portfolio.
5. When a Sub-Adviser change is proposed for a Portfolio with an Affiliated Sub-Adviser, the trustees of the Trust, including a majority of the Independent Trustees, will make a separate finding, reflected in the Board minutes, that the change is in the best interests of the Portfolio and its shareholders and does not involve a conflict of interest from which Mitchell Hutchins or the Affiliated sub-Adviser derives an inappropriate advantage.
6. Within 90 days of the hiring of any new SubAdviser, the Trust will furnish shareholders of the applicable Portfolio all information about a new Sub-Adviser that would be included in a proxy statement. Such information will include any change in such disclosure caused by the addition of a new Sub-Adviser. The Trust will meet this condition by providing shareholders with an information statement meeting the requirements of Regulation 14C and Schedule 14C and Item 22 of Schedule 14A under the Securities Exchange Act of 1934.
7. Mitchell Hutchins will provide general management and administrative services to the Trust, and, subject to review and approval by the Board, will: (a) Set the Portfolios' overall investment strategies; (b) evaluate, select and recommend Sub-Advisers to manage all or a part of the Portfolio's assets; (c) allocate and, when appropriate, reallocate the Portfolios' assets among Sub-Advisers; (d) monitor and evaluate the investment performance of Sub-Advisers; and (e) implement procedures reasonably designed to ensure that the Sub-Advisers comply with the relevant Portfolio's investment objectives, policies and restrictions.
8. No Trustee or officer of the Trust or director or office of Mitchell Hutchins will own directly or indirectly (other than through a polled investment vehicle that is not controlled by any such Trustee, director or officer) any interest in a Sub-Adviser except for: (a) Ownership of interest in Mitchell Hutchins or in any entity that controls, is controlled by, or is under common control with Mitchell Hutchins; or (b) ownership of less than 1% of the outstanding securities of any class of Start Printed Page 4872equity or debt of a publicly traded company that is either a Sub-Adviser or an entity that controls, is controlled by, or is under common control with a Sub-Adviser.Start Signature
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland,
1. Managed Accounts Services Portfolio Trust and Mitchell Hutchins Asset Management, Inc., Investment Company Act Release Nos. 21590 (Dec. 15, 1995) (notice) and 21666 (Jan. 11, 1996) (order).Back to Citation
[FR Doc. 01-1405 Filed 1-17-01; 8:45 am]
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