[Federal Register Volume 66, Number 12 (Thursday, January 18, 2001)]
[Notices]
[Pages 4870-4872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1405]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-24823 (812-12276)]


PaineWebber PACE Select Advisors Trust and Mitchell Hutchins 
Asset Management, Inc.; Notice of Application

January 11, 2001.
AGENCY: Securities and Exchange Commission (``Commission'')

ACTION: 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.

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    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.\1\
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    \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).
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    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

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applicants 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.

ADDRESSES: Secretary, Commission, 450 Fifth Street, N.W., Washington, 
D.C. 20549-0609. Applicants: 1285 Avenue of the Americas, New York, New 
York 10019.

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).

SUPPLEMENTARY 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.

Applicants' Representations

    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' Conditions

    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

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equity 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-1405 Filed 1-17-01; 8:45 am]
BILLING CODE 8010-01-M