<PAGE>
PAINEWEBBER P A C E-SM-
Personalized Asset Consulting and Evaluation
Going The
Distance
To Meet Your
Financial Needs
Annual Report
July 31, 1997
This material is intended for use only by current PACE investors and must be
preceded or accompanied by the current PACE prospectus.
<PAGE>
Dear PaineWebber PACE-SM- Shareholder:
The PACE program was developed as an investment program that enables you and
your PaineWebber Investment Executive to work together to define your financial
objectives and then build a portfolio to match your goals and risk tolerance. As
you know, the PACE program is implemented through four basic steps: 1) defining
your investor profile, 2) determining your asset allocation, 3) diversifying
your portfolio across professionally managed investment styles and 4) ongoing
portfolio review and recommended adjustments.
After almost two years since the PACE program's inception on August 24,
1995, we believe the program remains an important component of a well-planned,
well-diversified, investment portfolio. Going forward, the ability to take
advantage of the ever-changing investment environment should assist you in
maintaining a viable investment program. For example, the PACE program allows
you to continually review your investment objectives and risk tolerances and, if
necessary, adjust your financial program. Also, the program's asset allocation
mechanism allows you to maintain a well-diversified portfolio as global market
cycles change, thereby allowing you to participate in a variety of markets while
seeking to reduce overall portfolio fluctuation.
We are pleased to provide our annual report to you on the PACE Portfolios
comprising the Managed Accounts Services Portfolio Trust. It is worth noting
that we have changed the comparative indices for the PACE domestic equity
portfolios from the Wilshire to the Russell series of indices. This change was
made so that we could better compare each portfolio's performance relative to
its comparative index; the Russell indices allow us to measure the performance
of the portfolio relative to its comparative index at the security level,
whereas the Wilshire indices do not. As part of this transition, the performance
of each of these portfolios is measured against both the index used last year
and the new index, which are represented in the graphs contained in this report.
On the following pages you will find Mitchell Hutchins' summary of the
domestic and international market environments for the annual report period
August 1, 1996 to July 31, 1997, information regarding the performance of each
PACE portfolio over the reporting period and brief commentaries from each of the
PACE investment managers. Please note that the opinions of the managers do not
necessarily represent the opinions of PaineWebber Incorporated or Mitchell
Hutchins Asset Management Inc.
We appreciate the opportunity to help you achieve your financial goals. If
you have any questions regarding the PACE Program, please contact your
Investment Executive.
Sincerely,
<TABLE>
<CAPTION>
[SIG] [SIG]
<S> <C>
Margo Alexander Bruce A. Bursey
President Senior Vice President
Mitchell Hutchins Asset Management Inc. Managed Accounts Consulting Services
PaineWebber Incorporated
</TABLE>
September 26, 1997
This letter is intended to assist shareholders in understanding how the
portfolios performed during the fiscal year ended July 31, 1997, and reflects
views at the time this report was prepared. Of course, these views may change in
response to changing circumstances. We encourage you to consult your Investment
Executive regarding your specific investment objectives.
1
<PAGE>
INVESTMENT OVERVIEW--DOMESTIC
The time period covered by this annual report--August 1, 1996 through July
31, 1997--saw continued new highs for the stock market and persistent
uncertainty in the bond market. This period was marked by low inflation and
moderate economic growth--an overall positive environment for corporate earnings
and profit growth--as well as strong cash flows into equity mutual funds. At the
beginning of the period, investor confidence helped the market continually gain
ground. In November, investors perceived the re-election of a Republican
Congress and a Democratic White House as positive for budget and fiscal
responsibility, which, in turn, propelled the Standard & Poor's 500 Index, a
commonly used measure of stock market performance, to set record highs. Though
Federal Reserve Chairman Alan Greenspan's comments in December implying
overstated stock valuations caused volatility to return to the market, the
market quickly recovered. Inflation fears grew again in the first quarter of
1997 in the wake of stronger-than-expected economic growth and rising
employment, which caused the Federal Reserve (the "Fed") to raise interest rates
by 0.25%. Volatility returned once again to the stock market, with stocks giving
back almost all of their early gains in the quarter. However, during the spring
and into the summer of 1997, stocks rallied on signs that economic growth was
slowing from the first quarter's strong pace, and the Fed continued to hold a
steady course--with Greenspan even declaring that the state of the economy was
exceptional--which eased concern about rising interest rates. From August 1,
1996 through July 31, 1997, the S&P 500 Index was up 52.1%.
Overall, the bond market was quite volatile due to ongoing uncertainty over
the direction of interest rates, but ultimately rallied at the end of the
period. Throughout the year, renewed fears of a stronger-than-anticipated
economy alternated with economic data that affirmed moderation in economic
activity. In the first quarter of 1997, the Fed's decision to raise short-term
interest rates to 5.5% resulted in negative performance from almost every bond
sector, with corporate and mortgage-backed securities performing better than
Treasuries. By the spring and into the summer of 1997, bonds rebounded due to
slowing economic growth (and encouraging economic data) and a continuation of
low inflation.
INVESTMENT OVERVIEW--GLOBAL
The equity markets worldwide continued to perform strongly, largely driven
by optimism about the U.S. economy and financial markets. Outside the U.S., many
global markets finished the period up substantially as well. Germany and France
rose 39.4% and 25.2%* respectively, through the period. European prices were
driven higher by progress toward the European Economic and Monetary Union (EMU),
historically low interest rates, and a strengthening dollar. Though Japan was
the world's major underperformer for most of this period, its equity market rose
in the second quarter of 1997, due to encouraging signs of an economic
turnaround at that time. Japan has been plagued by a banking crisis driven by
depressed real estate prices and related bad loans, anemic economic growth, and
financial scandals. Asian markets outside of Japan, including Hong Kong,
Indonesia, and Thailand, underperformed other world markets as they experienced
a slowdown in earnings growth while valuations remained high.
Foreign bond markets performed strongly during the first half of this
period. In an environment characterized by ample liquidity, low short-term
interest rates, moderate growth and low inflation, most markets rose to, or
close to, historically high valuations. Higher yielding markets, in particular,
did well. During the first quarter of 1997, the U.S. dollar continued to rise
against many foreign currencies, and the world's bond markets were mixed
performers in local currency terms. The combination of stronger U.S. growth with
more tepid growth overseas--and favorable interest rate differentials--boosted
the dollar to cyclical highs versus many major currencies. In the second quarter
of 1997, global bond performance, ignoring currency movements, improved while
the U.S. economy slowed and economies in Europe and Japan continued to languish.
The period ended with broadly stable monetary policies in major countries, with
the exception of the U.K. and Canada, where policies were tightened, and
Australia, Italy, and Spain, where policies were eased. While the yen
experienced a sharp upward correction during the second quarter of 1997, most
European currencies weakened as uncertainties surrounding the EMU weighed
heavily on market sentiment.
* Source: Frank Russell Company: MSCI Germany and MSCI France, in U.S. dollar
terms with dividends reinvested.
2
<PAGE>
PACE MONEY MARKET INVESTMENTS
MANAGED BY MITCHELL HUTCHINS ASSET MANAGEMENT INC., THE PORTFOLIO'S
INVESTMENT OBJECTIVE IS CURRENT INCOME CONSISTENT WITH PRESERVATION OF CAPITAL
AND LIQUIDITY. THE PORTFOLIO INVESTS IN HIGH-QUALITY, U.S. DOLLAR-DENOMINATED
MONEY MARKET INSTRUMENTS WITH MATURITIES OF 13 MONTHS OR LESS. THE PORTFOLIO
MAINTAINS A DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY OF 90 DAYS OR LESS.
INVESTMENT PROCESS
MITCHELL HUTCHINS' FOCUS IS ON QUALITY, DIVERSITY, AND LIQUIDITY. INVESTMENT
CONSIDERATIONS INCLUDE A REVIEW OF INTEREST RATES VIS-A-VIS THE ECONOMIC
ENVIRONMENT, CURRENT SUPPLY AND DEMAND OF MONEY MARKET PRODUCTS, AND A REVIEW OF
CREDIT RISK. SECURITIES SELECTION FOLLOWS AN APPROVED LIST OF TOP-TIER RATED
SECURITIES REVIEWED BY THE FIRM'S CREDIT ANALYSTS.
COMMENTS FROM MITCHELL HUTCHINS ASSET MANAGEMENT INC.
For the one-year period covered by this report--August 1, 1996 through July
31, 1997--the Portfolio provided investors with a return of 5.13% (exclusive of
the PACE Program Fee), in line with the 5.15% average return of 90-Day U.S.
Treasury Bills over this period. As of July 31, 1997, the Portfolio's 7-day
yield was 5.20%, and net assets of the Portfolio totaled $16.1 million.
During the period, we maintained the Portfolio's average weighted maturity
approximately 5 to 10 longer than its peer group.* Due to our continued belief
that short-term rates would not rise too dramatically, we continued to keep the
Portfolio's average maturity slightly longer than the money market fund average
of 62 days.* This benefited the Portfolio, as did the fact that, as always, we
were well diversified among issuers and industries.
Going forward, we expect to continue our current strategy. Also, we will
continue to attempt to enhance the Portfolio's yield by taking advantage of
opportunities caused by market volatility without sacrificing credit quality and
liquidity.
* Source: IBC Financial Data
3
<PAGE>
PACE GOVERNMENT SECURITIES FIXED INCOME INVESTMENTS
MANAGED BY PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO), THE PORTFOLIO'S
INVESTMENT OBJECTIVE IS CURRENT INCOME. THE PORTFOLIO INVESTS PRIMARILY IN U.S.
GOVERNMENT AND AGENCY SECURITIES OF VARYING MATURITIES, AS WELL AS
MORTGAGE-BACKED SECURITIES, WITH A DOLLAR-WEIGHTED AVERAGE PORTFOLIO DURATION OF
BETWEEN TWO AND SEVEN YEARS.
INVESTMENT PROCESS
PIMCO'S INVESTMENT PROCESS BEGINS WITH A MACROECONOMIC ANALYSIS OF SECULAR
AND CYCLICAL INTEREST RATE TRENDS. THE PORTFOLIO'S DURATION IS ESTABLISHED BASED
ON PIMCO'S EXPECTATIONS FOR CHANGES IN INTEREST RATES. THEN, PIMCO EVALUATES THE
YIELD CURVE'S POTENTIAL FOR STEEPENING OR FLATTENING. INDIVIDUAL ISSUES ARE
CHOSEN FOR THEIR RELATIVE VALUE.
COMMENTS FROM PACIFIC INVESTMENT MANAGEMENT COMPANY
For the one-year period covered by this report--August 1, 1996 through July
31, 1997--the Portfolio's return of 10.42% (exclusive of the PACE Program Fee)
slightly underperformed the Lehman Brothers Mortgage Backed Securities Index
(the "Index") return of 10.75%. As of July 31, 1997, net assets of the Portfolio
had increased to $101.6 million.
The Portfolio's performance relative to the Index was a result of duration
strategy and security selection, particularly in the mortgage sector. The
Portfolio's longer-than-Index duration (4.1 years for the Portfolio vs. 3.8
years for the Index) benefited relative returns as interest rates declined over
this time period. Mortgage-backed securities also aided performance because of
their yield premiums and relative price gains over Treasuries. Within the
mortgage sector, fixed-rate pass-throughs continued to benefit from the
range-bound movement of Treasury yields, which drives borrowing rates for
mortgage loans underlying these securities. Adjustable rate mortgage issues
remained contributors to performance as their higher yields and tightening
spreads led them to outperform other short-duration instruments. However, a
concentration in discount securities, used to protect the Portfolio against
prepayment risk, hurt performance as higher coupon securities outperformed
during this time period.
Going forward, while there is evidence of slightly accelerated economic
activity, we believe that the U.S. economy should grow somewhat less quickly
than market expectations. This, together with a benign inflation outlook, could
create a backdrop for potentially attractive returns over the next year.
4
<PAGE>
PACE GOVERNMENT SECURITIES FIXED INCOME INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE PORTFOLIO AND THE
LEHMAN BROTHERS MORTGAGE BACKED SECURITIES INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- LEHMAN MORTGAGE
WITHOUT FEE* WITH FEE* BACKED SECURITIES INDEX
<S> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000
8/31/95 $10,008 $10,005 $10,000
9/95 $10,050 $10,034 $10,088
10/95 $10,211 $10,182 $10,178
11/95 $10,343 $10,301 $10,294
12/95 $10,493 $10,437 $10,423
1/96 $10,552 $10,482 $10,501
2/96 $10,402 $10,321 $10,413
3/96 $10,354 $10,260 $10,376
4/96 $10,297 $10,191 $10,347
5/96 $10,301 $10,182 $10,316
6/96 $10,427 $10,294 $10,458
7/96 $10,435 $10,294 $10,497
8/96 $10,460 $10,301 $10,497
9/96 $10,627 $10,452 $10,673
10/96 $10,837 $10,645 $10,882
11/96 $11,012 $10,804 $11,038
12/96 $10,940 $10,720 $10,980
1/97 $10,993 $10,758 $11,062
2/97 $11,019 $10,770 $11,099
3/97 $10,927 $10,667 $10,994
4/97 $11,090 $10,813 $11,169
5/97 $11,185 $10,891 $11,279
6/97 $11,310 $11,000 $11,410
7/97 $11,522 $11,192 $11,625
</TABLE>
The graph depicts the performance of PACE Government Securities Fixed Income
Investments versus the Lehman Brothers Mortgage Backed Securities Index. It is
important to note that PACE Government Securities Fixed Income Investments is a
professionally managed portfolio while the Lehman Brothers Mortgage Backed
Securities Index is unmanaged. The comparison is shown for illustrative purposes
only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ---------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 10.42% 8.78%
Commencement of operations (August 24, 1995) through July 31, 1997................. 7.59% 5.99%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
5
<PAGE>
PACE INTERMEDIATE FIXED INCOME INVESTMENTS
MANAGED BY PACIFIC INCOME ADVISERS, INC., THE PORTFOLIO'S INVESTMENT
OBJECTIVE IS CURRENT INCOME, CONSISTENT WITH REASONABLE STABILITY OF PRINCIPAL.
THE PORTFOLIO INVESTS IN FIXED INCOME SECURITIES WITH A DOLLAR-WEIGHTED AVERAGE
PORTFOLIO DURATION OF BETWEEN TWO AND FOUR AND ONE-HALF YEARS.
INVESTMENT PROCESS
PACIFIC INCOME ADVISERS, INC. FOCUSES ON YIELD CURVE ANALYSIS AND ACTIVE
SECTOR ROTATION, OVERWEIGHTING OR UNDERWEIGHTING SECTORS BASED ON A RISK/REWARD
ASSESSMENT AND ANTICIPATION OF CHANGING YIELD CURVE SHAPES. THE MANAGER UTILIZES
A PROPRIETARY MODEL TO IDENTIFY SECURITIES THAT ARE UNDERVALUED ON A
RISK-ADJUSTED BASIS.
COMMENTS FROM PACIFIC INCOME ADVISERS, INC.
For the one-year period covered by this report--August 1, 1996 through July
31, 1997--the Portfolio provided investors with a total return of 8.14%
(exclusive of the PACE Program Fee), which underperformed the Lehman Brothers
Intermediate-Term Government/Corporate Index (the "Index") return of 9.07%. As
of July 31, 1997, net assets of the Portfolio were $66.8 million.
The Portfolio's duration range during this one-year period (2.7 to 3.7
years) was broader than that of the benchmark Index range of 3.2 to 3.3 years.
The Portfolio benefited from its duration strategy during the months of December
1996, and March and June 1997 by maintaining a duration shorter than the
benchmark during the interest rate increases in December and March, and longer
than the benchmark during the interest rate decline in June. (When interest
rates increase and duration is shorter than the Index, the value of the
Portfolio generally declines less than the Index. Conversely, when interest
rates decline and the Portfolio's duration is longer than the Index, the value
of the Portfolio generally rises more than the Index.) The Portfolio's duration
strategy detracted from results during the months of October and November 1996
due to a duration shorter than the benchmark Index while interest rates declined
during those months.
During the year, the Portfolio benefited overall from its overweighting in
mortgage-backed securities, as declining interest rate volatility contributed to
mortgage spread tightening. Throughout the year, our belief that corporate bonds
were overvalued on a risk-adjusted basis caused us to remain underweighted in
this sector. However, this underweighting detracted from Portfolio results as
corporate spreads generally tightened to Treasuries throughout the year.
Going forward, we believe that the positive fundamentals of the bond market
remain intact. There appear to be minimal inflationary pressures as global
competition and productivity increases have lessened wage increases, despite the
tight labor markets. The balanced budget agreement is a long-term positive for
the bond market, since the supply of U.S. Treasuries should continue to
decrease. However, concerns about the U.S. dollar and foreign investment in U.S.
bond holdings could cause pressure on interest rates over the short term.
Given our positive longer-term outlook, the Portfolio's present duration
(3.7 years as of July 31, 1997) is longer than that of the benchmark Index (3.3
years). We currently believe that corporate bonds are overvalued on a
risk-adjusted basis and, therefore, we remain underweighted in this sector. We
also remain overweighted in mortgage-backed securities due to our belief that
they continue to offer relative value. As always, we will employ short-term
tactical asset allocation decisions to capitalize on projected shifts in the
shape of the yield curve.
6
<PAGE>
PACE INTERMEDIATE FIXED INCOME INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE PORTFOLIO AND THE
LEHMAN BROTHERS INTERMEDIATE-TERM GOVERNMENT/CORPORATE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- LEHMAN INTERMEDIATE
WITHOUT FEE* WITH FEE* GOV'T/CORP. INDEX
<S> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000
8/31/95 $10,108 $10,105 $10,000
9/95 $10,175 $10,159 $10,072
10/95 $10,232 $10,203 $10,184
11/95 $10,281 $10,240 $10,318
12/95 $10,396 $10,340 $10,426
1/96 $10,413 $10,344 $10,516
2/96 $10,340 $10,259 $10,393
3/96 $10,279 $10,185 $10,339
4/96 $10,227 $10,122 $10,303
5/96 $10,226 $10,108 $10,295
6/96 $10,314 $10,182 $10,404
7/96 $10,359 $10,214 $10,435
8/96 $10,381 $10,223 $10,444
9/96 $10,508 $10,335 $10,589
10/96 $10,662 $10,474 $10,776
11/96 $10,782 $10,579 $10,919
12/96 $10,722 $10,506 $10,849
1/97 $10,758 $10,528 $10,891
2/97 $10,779 $10,536 $10,912
3/97 $10,720 $10,464 $10,836
4/97 $10,825 $10,554 $10,964
5/97 $10,910 $10,624 $11,055
6/97 $11,006 $10,704 $11,155
7/97 $11,202 $10,881 $11,382
</TABLE>
The graph depicts the performance of PACE Intermediate Fixed Income
Investments versus the Lehman Brothers Intermediate-Term Government/Corporate
Index. It is important to note that PACE Intermediate Fixed Income Investments
is a professionally managed portfolio while the Lehman Brothers
Intermediate-Term Government/Corporate Index is unmanaged. The comparison is
shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ----------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 8.14% 6.53%
Commencement of operations (August 24, 1995) through July 31, 1997................. 6.04% 4.46%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
7
<PAGE>
PACE STRATEGIC FIXED INCOME INVESTMENTS
MANAGED BY PACIFIC INVESTMENT MANAGEMENT COMPANY (PIMCO), THE PORTFOLIO'S
INVESTMENT OBJECTIVE IS TOTAL RETURN CONSISTING OF INCOME AND CAPITAL
APPRECIATION. THE PORTFOLIO INVESTS IN FIXED INCOME SECURITIES OF VARYING
MATURITIES WITH A DOLLAR-WEIGHTED AVERAGE PORTFOLIO DURATION OF BETWEEN THREE
AND EIGHT YEARS. PORTFOLIO HOLDINGS WILL BE INVESTED IN AREAS OF THE BOND MARKET
(BASED ON QUALITY, SECTOR, COUPON, OR MATURITY) WHICH PIMCO BELIEVES TO BE
RELATIVELY UNDERVALUED.
INVESTMENT PROCESS
PIMCO'S INVESTMENT PROCESS BEGINS WITH A MACROECONOMIC ANALYSIS OF SECULAR
AND CYCLICAL INTEREST RATE TRENDS. THE PORTFOLIO'S DURATION IS ESTABLISHED BASED
ON PIMCO'S EXPECTATIONS FOR CHANGES IN INTEREST RATES. THEN, PIMCO EVALUATES THE
YIELD CURVE'S POTENTIAL FOR STEEPENING OR FLATTENING. INDIVIDUAL ISSUES ARE
CHOSEN FOR THEIR RELATIVE VALUE.
COMMENTS FROM PACIFIC INVESTMENT MANAGEMENT COMPANY
For the one-year period covered by this report--August 1, 1996 through July
31, 1997--the Portfolio's 11.35% return (exclusive of the PACE Program Fee)
outperformed the Lehman Brothers Government/ Corporate Bond Index (the "Index")
return of 10.79%. As of July 31, 1997, net assets of the Portfolio had increased
to $75.2 million.
Interest rate declines were beneficial to the Portfolio during the period
due to its longer-than-Index duration (5.5 years for the Portfolio vs. 5.1 years
for the Index). Exposure to fixed-rate and Adjustable-Rate Mortgage (ARM)
pass-through securities as well as Collateralized Mortgage Obligations (CMOs)
benefitted performance. The Portfolio also saw gains from investing in cash
equivalent securities.
Mortgage-backed securities continued to outperform the broader debt markets
because of their yield premiums and relative price gains over Treasuries. Within
the mortgage sector, fixed-rate pass-throughs continued to benefit from the
range-bound movement of Treasury yields, which drive borrowing rates for
mortgage loans underlying these securities. Also, ARMs continued to perform
strongly during the period as their higher yields and tightening spreads led
them to outperform other short duration instruments.
The Portfolio remained underweighted in the corporate sector throughout the
period, which was a slight drag on relative performance as yield spreads to
Treasuries continued to contract. We, however, continue to believe that yield
differentials in the corporate market do not offer adequate compensation for
credit risk.
Despite recently stronger GDP growth, we believe that coming quarters should
see the U.S. economy grow less quickly than market expectations. This, together
with a benign inflation outlook, could create a backdrop for potentially
attractive returns over the next year.
8
<PAGE>
PACE STRATEGIC FIXED INCOME INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- LEHMAN
WITHOUT FEE* WITH FEE* GOV'T/CORP. INDEX
<S> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000
8/31/95 $10,067 $10,063 $10,000
9/95 $10,425 $10,409 $10,101
10/95 $10,644 $10,614 $10,249
11/95 $10,859 $10,815 $10,418
12/95 $11,023 $10,964 $10,572
1/96 $11,099 $11,026 $10,637
2/96 $10,808 $10,724 $10,412
3/96 $10,779 $10,681 $10,324
4/96 $10,679 $10,569 $10,254
5/96 $10,665 $10,542 $10,236
6/96 $10,820 $10,681 $10,373
7/96 $10,815 $10,663 $10,397
8/96 $10,775 $10,611 $10,372
9/96 $11,009 $10,828 $10,556
10/96 $11,278 $11,079 $10,803
11/96 $11,519 $11,301 $11,002
12/96 $11,377 $11,148 $10,879
1/97 $11,413 $11,169 $10,892
2/97 $11,443 $11,185 $10,915
3/97 $11,264 $10,996 $10,785
4/97 $11,459 $11,172 $10,943
5/97 $11,564 $11,261 $11,045
6/97 $11,697 $11,376 $11,178
7/97 $12,042 $11,697 $11,520
</TABLE>
The graph depicts the performance of PACE Strategic Fixed Income Investments
versus the Lehman Brothers Government/Corporate Index. It is important to note
that PACE Strategic Fixed Income Investments is a professionally managed
portfolio while the Lehman Brothers Government/Corporate Index is unmanaged. The
comparison is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ---------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 11.35% 9.69%
Commencement of operations (August 24, 1995) through July 31, 1997................. 10.07% 8.43%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
9
<PAGE>
PACE MUNICIPAL FIXED INCOME INVESTMENTS
MANAGED BY MORGAN GRENFELL CAPITAL MANAGEMENT, INC., THE PORTFOLIO'S
INVESTMENT OBJECTIVE IS HIGH CURRENT INCOME EXEMPT FROM FEDERAL INCOME TAX. THE
PORTFOLIO INVESTS IN GENERAL OBLIGATION, REVENUE, AND PRIVATE ACTIVITY BONDS AND
NOTES, THE INTEREST ON WHICH IS EXEMPT FROM FEDERAL INCOME TAX, WITH A
DOLLAR-WEIGHTED AVERAGE PORTFOLIO DURATION OF BETWEEN THREE AND SEVEN YEARS.
INVESTMENT PROCESS
MORGAN GRENFELL SEEKS TO PROVIDE CONSISTENT RETURNS WITH LOW VOLATILITY BY
FOCUSING ON OPTIMAL ISSUE SELECTION AND NOT ATTEMPTING TO FORECAST INTEREST RATE
MOVES. THE PORTFOLIO IS CONSTRUCTED OF HIGH-QUALITY SECURITIES ACROSS ALL
MATURITIES SO THAT ITS AVERAGE DURATION IS CLOSE TO THAT OF ITS BENCHMARK INDEX.
ISSUES WITH FEDERAL GOVERNMENT BACKING, MORTGAGE COLLATERAL, AND OTHER CREDIT
ENHANCEMENTS ARE PREFERRED, WITH A LIMITED INVESTMENT IN REVENUE AND GENERAL
OBLIGATION ISSUES. ISSUE SIZE IS NOT AS IMPORTANT AS THE ISSUER'S ABILITY TO PAY
PRINCIPAL AND INTEREST.
COMMENTS FROM MORGAN GRENFELL CAPITAL MANAGEMENT, INC.
For the one-year period covered by this report--August 1, 1996 through July
31, 1997--the Portfolio had a total return of 8.30% (exclusive of the PACE
Program Fee), which significantly outperformed the Lehman Brothers Municipal
Five-Year Index (the "Index") return of 7.25%. As of July 31, 1997, net assets
of the Portfolio had grown to $34.3 million.
The past year was a very unusual period for the municipal markets due to
investors' overriding interest in the equity markets. Because of pressure to be
competitive with the equity markets, a persistently rosy economic outlook over
the past few years, and a shortage of maturities, many investors in the
municipal markets displayed aggressive investment tactics by preferring
securities with both lower credit quality and the potential for higher yields.
By contrast, the Portfolio remained concentrated in higher-quality municipal
credits (mainly pre-refunded AAA securities) despite the market's penchant for
lower-quality securities. We believe most lower-quality securities inadequately
compensate investors for the increased likelihood of default. Our intent is to
continue to offer a high investment grade credit product and, therefore, to
forego an aggressive municipal bond investment strategy based on a relaxation of
credit restraints. In addition, the duration of the Portfolio continued to
slightly exceed the Index duration (4.6 years for the Portfolio vs. 4.2 years
for the Index), reflecting an allowance for the cushioning effect of the
prepayment dynamics of housing bonds.
Looking ahead, we believe that continued improvement on the inflation
outlook could result in further interest rate declines and increases in early
bond retirements. Our continued emphasis on relative valuation duly recognizes
and attempts to assess the impact of interest rate fluctuations on all callable
securities. We also believe that investors' current emphasis on equities will
strengthen the relative value of municipal securities over the next few years.
10
<PAGE>
PACE MUNICIPAL FIXED INCOME INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE LEHMAN BROTHERS MUNICIPAL FIVE-YEAR INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- LEHMAN MUNI
WITHOUT FEE* WITH FEE* 5-YEAR INDEX
<S> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000
8/31/95 $10,042 $10,038 $10,000
9/95 $10,092 $10,076 $10,025
10/95 $10,183 $10,154 $10,087
11/95 $10,355 $10,313 $10,179
12/95 $10,505 $10,449 $10,231
1/96 $10,513 $10,444 $10,334
2/96 $10,519 $10,437 $10,305
3/96 $10,386 $10,292 $10,233
4/96 $10,381 $10,274 $10,232
5/96 $10,453 $10,332 $10,227
6/96 $10,552 $10,417 $10,287
7/96 $10,638 $10,489 $10,362
8/96 $10,690 $10,527 $10,372
9/96 $10,811 $10,633 $10,457
10/96 $10,899 $10,706 $10,548
11/96 $11,050 $10,841 $10,685
12/96 $11,015 $10,793 $10,665
1/97 $11,068 $10,831 $10,701
2/97 $11,181 $10,929 $10,779
3/97 $11,047 $10,784 $10,661
4/97 $11,092 $10,815 $10,707
5/97 $11,184 $10,891 $10,839
6/97 $11,277 $10,967 $10,921
7/97 $11,522 $11,191 $11,114
</TABLE>
The graph depicts the performance of PACE Municipal Fixed Income Investments
versus the Lehman Brothers Municipal Five-Year Index. It is important to note
that PACE Municipal Fixed Income Investments is a professionally managed
portfolio while the Lehman Brothers Municipal Five-Year Index is unmanaged. The
comparison is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ---------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 8.30% 6.69%
Commencement of operations (August 24, 1995) through July 31, 1997................. 7.59% 5.98%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
11
<PAGE>
PACE GLOBAL FIXED INCOME INVESTMENTS
MANAGED BY ROGGE GLOBAL PARTNERS PLC, THE PORTFOLIO'S INVESTMENT OBJECTIVE
IS HIGH TOTAL RETURN. THE PORTFOLIO INVESTS IN HIGH-GRADE FIXED INCOME
SECURITIES ISSUED BY DOMESTIC AND FOREIGN GOVERNMENTS AND SUPRANATIONAL ENTITIES
AND PRIVATE ISSUERS LOCATED OVERSEAS, WITH A DOLLAR-WEIGHTED AVERAGE PORTFOLIO
DURATION OF BETWEEN FOUR AND EIGHT YEARS.
INVESTMENT PROCESS
ROGGE GLOBAL PARTNERS BELIEVES THAT, OVER TIME, FINANCIALLY HEALTHY
COUNTRIES PRODUCE THE HIGHEST BOND AND CURRENCY RETURNS. THEY USE A TOP-DOWN
FUNDAMENTAL APPROACH TO IDENTIFY RELATIVE VALUE ACROSS COUNTRIES. RATINGS BASED
ON THIS ANALYSIS ALLOW THEM TO FORECAST EXPECTED CHANGES IN INTEREST AND
EXCHANGE RATES OVER A 12-MONTH HORIZON. AN OPTIMIZATION MODEL IS THEN USED TO AS
A TOOL TO HELP DETERMINE COUNTRY/CURRENCY AND DURATION POSITIONS.
COMMENTS FROM ROGGE GLOBAL PARTNERS PLC
For the one-year period covered by this report--August 1, 1996 through July
31, 1997--the Portfolio's total return of 3.54% (excluding the PACE Program Fee)
significantly outperformed the Salomon Brothers World Government Index (the
"Index") return of 1.13%. The Portfolio's net assets as of July 31, 1997 had
increased to $60.3 million.
The environment for global bond markets has generally been favorable over
the past year, bolstered by tight fiscal policies, falling global inflation
expectations, and moderate economic growth; however, returns have been reduced
by the relative strength of the dollar. During this period, the majority of our
"value added" resulted from our country/currency decisions. Throughout 1997, we
chose to underweight the Core European markets, which became more volatile due
to uncertainties surrounding European Economic and Monetary Union ("EMU").
Instead, we preferred non-EMU entrants such as the United Kingdom, Sweden,
Denmark, and Norway. Our Portfolio also benefited from our overweighted position
in the Dollar Bloc, particularly Canada and the United States. In addition, we
maintained an underweighted position in Japan because of an economic environment
there in which real interest rates are low, debt is rising, and savings are
falling.
Due to the overall positive environment, the average duration of our
Portfolio (5.5 years) tended to be longer than the average duration of the Index
(5.1 years) over the past year. Generally this stance had a positive impact,
although it did detract from performance in December 1996, when Federal Reserve
Board Chairman Alan Greenspan's comments about the surprisingly strong U.S.
economic growth prompted profit-taking, and then in March 1997, when U.S.
inflationary fears resulted in the Federal Reserve's preemptive rate increase.
Looking forward, we believe that global bond markets offer value,
particularly compared with some of the more expensive equity markets, such as
those in the U.S. Worldwide excess money growth has been stable, which indicates
that inflation is unlikely to rise quickly. With the exception of Japan, fiscal
policies remain tight throughout most of the industrialized world. We expect to
continue to hold long duration positions in those markets where monetary and
fiscal policies are tight, and where real interest rates remain attractive.
12
<PAGE>
PACE GLOBAL FIXED INCOME INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- SB WORLD GOV'T
WITHOUT FEE* WITH FEE* BOND INDEX
<S> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000
8/31/95 $9,950 $9,947 $10,000
9/95 $10,242 $10,226 $10,223
10/95 $10,360 $10,331 $10,299
11/95 $10,460 $10,417 $10,416
12/95 $10,643 $10,586 $10,525
1/96 $10,583 $10,514 $10,395
2/96 $10,439 $10,358 $10,342
3/96 $10,346 $10,252 $10,328
4/96 $10,482 $10,374 $10,286
5/96 $10,421 $10,301 $10,288
6/96 $10,487 $10,353 $10,370
7/96 $10,668 $10,518 $10,569
8/96 $10,685 $10,523 $10,610
9/96 $10,798 $10,621 $10,653
10/96 $11,042 $10,847 $10,853
11/96 $11,252 $11,039 $10,996
12/96 $11,131 $10,907 $10,907
1/97 $10,828 $10,597 $10,616
2/97 $10,819 $10,575 $10,536
3/97 $10,694 $10,440 $10,456
4/97 $10,551 $10,287 $10,364
5/97 $10,821 $10,537 $10,646
6/97 $10,974 $10,672 $10,772
7/97 $11,046 $10,729 $10,688
</TABLE>
The graph depicts the performance of PACE Global Fixed Income Investments
versus the Salomon Brothers World Government Bond Index. It is important to note
that PACE Global Fixed Income Investments is a professionally managed portfolio
while the Salomon Brothers World Government Bond Index is unmanaged. The
comparison is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
----------------- ----------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 3.54% 2.00%
Commencement of operations (August 24, 1995) through July 31, 1997................. 5.27% 3.70%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
13
<PAGE>
PACE LARGE COMPANY VALUE EQUITY INVESTMENTS
MANAGED BY BRINSON PARTNERS, INC., THE PORTFOLIO'S INVESTMENT OBJECTIVE IS
CAPITAL APPRECIATION AND DIVIDEND INCOME. THE PORTFOLIO INVESTS IN EQUITY
SECURITIES THAT, IN BRINSON'S OPINION, ARE UNDERVALUED. UNDER NORMAL CONDITIONS,
AT LEAST 65% OF THE PORTFOLIO'S TOTAL ASSETS WILL BE INVESTED IN COMMON STOCKS
OF COMPANIES WITH TOTAL MARKET CAPITALIZATION OF $2.5 BILLION OR GREATER.
INVESTMENT PROCESS
BRINSON PARTNERS' PHILOSOPHY INCORPORATES BOTH TOP-DOWN AND BOTTOM-UP
ELEMENTS. BRINSON PARTNERS LOOKS FOR UNDERVALUED ISSUES IN THE CONTEXT OF AN
OVERALL MACROECONOMIC AND MARKET OUTLOOK. FUNDAMENTAL ANALYSIS IS CONDUCTED BY
THE FIRM'S INDUSTRY ANALYSTS ON A UNIVERSE OF 700 STOCKS. THE RESULTS OF THEIR
GROWTH AND CASH FLOW PROJECTIONS ARE INCORPORATED INTO A PROPRIETARY VALUATION
MODEL. THIS MODEL AIDS IN THE CALCULATION AND RANKING OF SECURITIES. THESE
QUANTITATIVE TOOLS, IN COMBINATION WITH THE JUDGMENT OF SENIOR INVESTMENT
PROFESSIONALS, DETERMINE WHICH SECURITIES ARE INCLUDED IN THE PORTFOLIO.
COMMENTS FROM BRINSON PARTNERS, INC.
For the one-year period covered by this report--August 1, 1996 through July
31, 1997--the Portfolio returned 49.13% (exclusive of the PACE Program Fee),
which outperformed the Russell 1000 Value Index return of 48.83%. During this
time period, the Portfolio's net assets grew to $180.8 million. Its top five
sector allocations as of July 31, 1997 were health care (11.5% of the
Portfolio), consumer non-durables (10.7%), technology (10.3%), financial banks
and thrifts (8.4%), and services (8.2%)*.
The Portfolio's performance over the past year was positively impacted by a
number of factors and industry exposures, including overweighted exposures to
stocks and high measures of book-to-price and earnings-to-price ratios versus
its benchmark. The largest contributor to performance was our underweighted
positions in both telephone and electric utilities, while our underweighted
position in companies providing foreign earnings exposure detracted from
performance. Our industry weightings, which helped the Portfolio outperform the
market, included an overweighted exposure to the banking and pharmaceutical
sectors, and underweighted positions in chemicals, autos, beverages, and the
miscellaneous finance group, (which includes brokerage and investment firms).
Xerox Corporation, the largest holding in the Portfolio (4.9% of the
Portfolio's net assets as of July 31, 1997), contributed significantly to
performance, as did holdings in Corning Inc. (2.3%) and EMC Corp. (2.9%). New
product initiatives for these companies, coupled with ongoing restructuring
efforts, produced solid earnings growth. Mattel Inc. (1.0%) has also been a
strong performer, and we recently trimmed our position in order to take profits
in this holding. Individual investments that lagged market returns include
Pharmacia & Upjohn Inc. (2.1%) and Allergan Inc. (1.0%).
Looking ahead, we continue to believe that a combination of new technology,
intensifying competition, and the easing of regulatory barriers will
meaningfully pressure future profitability of the traditional telephone
companies. We have recently increased our holdings in electric utilities. While
these securities still face considerable competitive pressures, we believe this
is already reflected in prices at this time, and believe that, in general, this
industry is attractively valued. Finally, we have reduced the Portfolio's
position in banks--reversing a long-standing and successful overweighting in
this industry-- because price appreciation appears to have reduced the relative
attractiveness of bank issues.
* Services include: software, advertising, data processing and rental services
companies.
14
<PAGE>
PACE LARGE COMPANY VALUE EQUITY INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE RUSSELL 1000 VALUE INDEX AND THE WILSHIRE LARGE COMPANY VALUE
INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- WILSHIRE LG. RUSSELL 1000
WITHOUT FEE* WITH FEE* CO. VALUE INDEX VALUE INDEX
<S> <C> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000 $10,000
8/31/95 $10,117 $10,113 $10,000 $10,000
9/95 $10,442 $10,425 $10,521 $10,362
10/95 $10,425 $10,396 $10,510 $10,259
11/95 $10,975 $10,930 $10,952 $10,778
12/95 $11,169 $11,110 $11,282 $11,049
1/96 $11,622 $11,545 $11,640 $11,393
2/96 $11,798 $11,706 $11,716 $11,480
3/96 $12,016 $11,907 $11,827 $11,675
4/96 $12,242 $12,116 $11,839 $11,720
5/96 $12,426 $12,283 $11,953 $11,866
6/96 $12,384 $12,226 $11,891 $11,876
7/96 $11,790 $11,625 $11,540 $11,427
8/96 $12,250 $12,064 $11,846 $11,754
9/96 $12,795 $12,585 $12,194 $12,221
10/96 $13,072 $12,840 $12,837 $12,694
11/96 $13,968 $13,704 $13,743 $13,614
12/96 $13,974 $13,693 $13,434 $13,440
1/97 $14,483 $14,174 $13,888 $14,092
2/97 $14,580 $14,250 $14,247 $14,299
3/97 $14,106 $13,770 $13,632 $13,785
4/97 $14,527 $14,163 $14,048 $14,364
5/97 $15,598 $15,188 $14,720 $15,166
6/97 $16,326 $15,878 $15,252 $15,817
7/97 $17,581 $17,077 $16,554 $17,007
</TABLE>
The graph depicts the performance of PACE Large Company Value Equity
Investments versus the Russell 1000 Value Index and the Wilshire Large Company
Value Index. It is important to note that PACE Large Company Value Equity
Investments is a professionally managed portfolio while the Russell 1000 Value
Index and the Wilshire Large Company Value Index are unmanaged. The comparison
is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ---------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 49.13% 46.91%
Commencement of operations (August 24, 1995) through July 31, 1997................. 33.82% 31.82%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
15
<PAGE>
PACE LARGE COMPANY GROWTH EQUITY INVESTMENTS
MANAGED BY CHANCELLOR LGT ASSET MANAGEMENT, INC., THE PORTFOLIO'S OBJECTIVE
IS CAPITAL APPRECIATION. THE PORTFOLIO INVESTS IN EQUITY SECURITIES OF COMPANIES
THAT, IN CHANCELLOR'S OPINION, ARE CHARACTERIZED BY AN EARNINGS GROWTH RATE
FASTER THAN THAT OF THE S&P 500 INDEX. UNDER NORMAL CONDITIONS, AT LEAST 65% OF
TOTAL ASSETS WILL BE INVESTED IN COMMON STOCKS OF COMPANIES WITH TOTAL MARKET
CAPITALIZATION OF $2.5 BILLION OR GREATER.
INVESTMENT PROCESS
CHANCELLOR LGT ASSET MANAGEMENT, INC. SEEKS TO INVEST IN LARGE
CAPITALIZATION COMPANIES THAT HAVE SECURE, ABOVE-AVERAGE SECULAR GROWTH PROFILES
AND POTENTIAL FOR IMPROVING NEAR-TERM EARNINGS MOMENTUM. STOCK SELECTION IS
BASED ON A RANKING SYSTEM THAT WEIGHS FUNDAMENTAL RESEARCH AND QUANTITATIVE AND
VALUATION INPUTS IN 40/40/20 PROPORTIONS. CHANCELLOR PURCHASES STOCKS FOR THE
PORTFOLIO RANKED IN THE TOP 30% OF THE COMBINED STOCK RANKING AND BUILDS THE
PORTFOLIO REFLECTING THE ESTABLISHED INDUSTRY WEIGHTS.
COMMENTS FROM CHANCELLOR LGT ASSET MANAGEMENT, INC.
For the time period covered by the report--August 1, 1996 through July 31,
1997--the Portfolio returned 45.61% (exclusive of the PACE Program Fee),
underperforming the Russell 1000 Growth Index (the "Index") return of 51.85%. As
of July 31, 1997, the Portfolio's net assets had increased to $160.3 million,
and its top five sector allocations were in health care (19% of the Portfolio),
information processing (15%), electronics (9%), retail (9%), and
finance/insurance (8%).
While the Portfolio's performance was strong at the beginning and end of the
period, it lagged during the middle (November 1996 through March 1997) relative
to the benchmark Index. In the earliest three month period, August through
October, the Portfolio benefited from holding stocks across the market
capitalization spectrum, across industry groups, and across those showing
positive earnings revisions. Between November 1996 and the end of March 1997,
the overall market's performance was heavily skewed toward liquid, mega-large
cap issues--those with market capitalizations above the $10 billion range--and
away from several high technology-related areas, specifically networking and
software, which were overweighted groups for this Portfolio. Due to our
equal-weighting of portfolio holdings, the largest cap issues are generally
underweighted compared to the largest cap issues in the Russell 1000 Growth
Index, which is the reason for the relative underperformance in returns.
Regarding the technology exposure, networking and software stocks typically have
high earnings growth, support high price-to-earnings ratios, and have lower
market caps. All of these factors led to the stocks' relatively poor performance
in the first several months of 1997, when some surprisingly strong economic data
fueled fears that the Federal Reserve would raise interest rates in a preemptive
strike against inflation. From April through July, the market once again
advanced and, in contrast to the trend established in November through March,
left very few stocks behind. Growth stocks continued their record of
outperforming their value counterparts, as earnings continued to fuel the market
overall in an environment of low inflation and strong economic growth.
Over the course of the past year there have been several areas in the
Portfolio that continued to be appropriate to overweight due to their superior
profitability potential. These include health care, retail, finance/banks and
finance/insurance, and electronics. At various points we have also had large
positions in the aerospace and consumer-related sectors. However, many of the
stocks have neared valuation extremes or become over-owned in the marketplace as
the potential for earnings surprise has been recognized. We are no longer as
heavily weighted in these sectors as we were one year ago.
Our portfolio holdings as of July 31, 1997 reflect stocks within industries
promising strong growth over the next 12 to 18 months. Health care holdings
embrace both pharmaceuticals and medical devices. We believe that these
industries will benefit from new product pipelines, an accelerating pace of
approvals from the FDA, a growing demographic base into which to sell their
products, and an expanding global market. Specific holdings included Merck &
Co., Inc. (3.9% of the Portfolio's net assets as of July 31, 1997), Eli Lilly &
Co. (2.6%), and Guidant Corp. (2.2%).
Technology holdings are diversified across hardware, software/systems,
networking and semiconductors, and related equipment manufacturers. We believe
that common factors across these disparate groups include
16
<PAGE>
strong order growth, new product momentum, and above-consensus earnings
expectations from our analysts. Portfolio holdings included Microsoft Corp.
(3.6% of the Portfolio's net assets as of July 31, 1997), Intel Corp. (2.9%),
Compaq Computer Corp. (2.6%), HBO & Co. (2.2%), and Applied Materials, Inc.
(2.1%).
Our commitment to the financial services sector--including banks, insurance
and various specialty companies--is based on our belief that fundamentals
relating to balance sheet quality, earnings predictability, and ongoing strength
are improving. Portfolio holdings within these groups include BankAmerica Corp.
(2.1% of the Portfolio's net assets as of July 31, 1997), The Travelers Group,
Inc. (3.7%), and Student Loan Marketing Association (2.4%).
Our expectations for the equity market remain positive for the remainder of
1997; however, we recognize that the pace going forward is not likely to match
that of the past three months. In order for the market's positive momentum to
continue, the current economic environment of moderate growth coupled with low
inflation must be maintained. Also, there are several supply and demand factors
that point to continued positive long-term trends for the financial markets,
namely favorable demographics leading to rising savings rates and solid inflows
into mutual funds, as well as strong corporate profit growth leading to
excellent cash flows which can be used to finance mergers and acquisitions and
stock buyouts. A market correction is likely if any signs of increasing
inflationary pressure emerge and the Federal Reserve moves to tighten monetary
policy, or if a bout of profit-taking should hit, particularly in light of the
recent three-year rise in the equity market.
17
<PAGE>
PACE LARGE COMPANY GROWTH EQUITY INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE RUSSELL 1000 GROWTH INDEX AND THE WILSHIRE LARGE COMPANY
GROWTH INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- WILSHIRE LG. RUSSELL 1000
WITHOUT FEE* WITH FEE* CO. GROWTH INDEX GROWTH INDEX
<S> <C> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000 $10,000
8/31/95 $10,000 $9,997 $10,000 $10,000
9/95 $10,367 $10,351 $10,554 $10,461
10/95 $10,483 $10,454 $10,623 $10,468
11/95 $10,675 $10,632 $11,033 $10,875
12/95 $10,667 $10,610 $11,023 $10,937
1/96 $10,967 $10,895 $11,444 $11,303
2/96 $11,234 $11,147 $11,633 $11,510
3/96 $11,284 $11,182 $11,671 $11,525
4/96 $11,485 $11,367 $11,949 $11,828
5/96 $11,810 $11,674 $12,482 $12,241
6/96 $11,819 $11,667 $12,552 $12,258
7/96 $11,076 $10,935 $11,918 $11,540
8/96 $11,485 $11,310 $12,273 $11,837
9/96 $12,520 $12,314 $13,147 $12,699
10/96 $12,662 $12,438 $13,264 $12,776
11/96 $13,338 $13,085 $14,347 $13,735
12/96 $12,932 $12,672 $13,992 $13,466
1/97 $13,660 $13,368 $15,104 $14,411
2/97 $13,267 $12,967 $15,049 $14,313
3/97 $12,313 $12,020 $14,353 $13,539
4/97 $13,208 $12,878 $15,527 $14,438
5/97 $13,944 $13,578 $16,505 $15,480
6/97 $14,605 $14,204 $17,210 $16,099
7/97 $16,128 $15,665 $18,722 $17,523
</TABLE>
The graph depicts the performance of PACE Large Company Growth Equity
Investments versus the Russell 1000 Growth Index and the Wilshire Large Company
Growth Index. It is important to note that PACE Large Company Growth Equity
Investments is a professionally managed portfolio while the Russell 1000 Growth
Index and the Wilshire Large Company Growth Index are unmanaged. The comparison
is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ---------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 45.61% 43.44%
Commencement of operations (August 24, 1995) through July 31, 1997................. 27.99% 26.08%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
18
<PAGE>
PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
MANAGED BY BRANDYWINE ASSET MANAGEMENT, INC., THE PORTFOLIO'S INVESTMENT
OBJECTIVE IS CAPITAL APPRECIATION. THE PORTFOLIO INVESTS IN EQUITY SECURITIES
THAT, IN BRANDYWINE'S OPINION, ARE UNDERVALUED OR OVERLOOKED IN THE MARKETPLACE
AT THE TIME OF PURCHASE, WHICH GENERALLY HAVE BELOW-MARKET AVERAGE PRICE-TO-
EARNINGS RATIOS. UNDER NORMAL CONDITIONS, AT LEAST 65% OF THE PORTFOLIO'S TOTAL
ASSETS WILL BE INVESTED IN COMPANIES WITH TOTAL MARKET CAPITALIZATION OF LESS
THAN $2.5 BILLION.
INVESTMENT PROCESS
BRANDYWINE FIRST NARROWS THE SMALL COMPANY UNIVERSE TO APPROXIMATELY 650
SMALL CAPITALIZATION VALUE STOCKS THROUGH THE USE OF THREE QUANTITATIVE
SCREENING CRITERIA: POSITIVE TRAILING 12-MONTH OPERATING EARNINGS; THE LOWEST
PRICE-TO-EARNINGS QUARTILE BASED ON THE TRAILING 12-MONTH OPERATING EARNINGS;
AND MARKET CAP GREATER THAN $10 MILLION BUT LOWER THAN THE MEDIAN CAPITALIZATION
OF THE NEW YORK STOCK EXCHANGE. A HANDS-ON FUNDAMENTAL REVIEW OF EACH STOCK
FURTHER NARROWS THE LIST BY EXCLUDING STOCKS FOR THE FOLLOWING: ADJUSTMENTS TO
EARNINGS THAT ELIMINATE NON-OPERATING GAINS, THUS RAISING THE STOCK'S PRICE TO
EARNINGS RATIO ABOVE THE LOWER QUARTILE; STRONG RECENT PRICE GAINS; OR SEVERE OR
SUDDEN FUNDAMENTAL DETERIORATION.
COMMENTS FROM BRANDYWINE ASSET MANAGEMENT, INC.
For the time period covered by this report--August 1, 1996 through July 31,
1997--the Portfolio's 46.99% return (exclusive of the PACE Program Fee)
significantly outperformed the Russell 2500 Value Index Return of 44.61%. As of
July 31, 1997, the Portfolio's net assets had increased to $135.0 million. The
top five sector allocations as of that date were in financials (29.1% of the
Portfolio), consumer cyclicals (26.9%), basic materials (11.7%), utilities
(10.3%), and capital goods (9.5%).
The stock market produced extraordinary returns during the period covered by
this report, with the Standard & Poor's 500 Index, a commonly used measure of
stock market performance, rising 52.1%. Except for a brief downturn this spring,
the market was powered by the belief that moderate economic growth and
increasing corporate profits could continue without igniting inflation. However,
skepticism remains about how long this unusual combination can continue. As a
result, investors have funneled much of their purchases into large stocks that
are perceived to have very stable growth. Smaller cap stocks, particularly
GROWTH stocks with their volatile earnings, lagged the markets as is shown by
the Russell 2500 Index return of 37.2% (overall smaller cap index including both
growth and value stocks) for this period. Smaller cap VALUE stocks, which
entered this period at low valuations, did relatively well compared to the
overall small cap market.
The Portfolio's strong relative performance versus the Russell 2500 Value
Index is attributable to several sectors. In the first half of 1996, we
increased our weightings in technology and financials as poor performance for
these sectors during that timeframe produced attractive valuations for many
stocks. These sectors performed well over the last twelve months: the financials
benefited from strong investment markets, lower interest rates, and continued
consolidation in the bank and insurance fields. The Portfolio's holdings in the
semiconductor and semiconductor equipment industries rallied as the
semiconductor cycle bottomed out in the second half of 1996. The Portfolio also
benefited from our low weighting in utilities, a sector that significantly
lagged the market.
As a result of overall strong performance of the technology sector, we
significantly reduced our technology holdings within the Portfolio since fewer
of these stocks trade at low valuations. We are also in the process of lowering
our financial sector weighting by selling the growing number of these stocks
that have reached our sell targets. To replace these holdings, we have been
adding to our utility, consumer, and health care weightings, all sectors that
underperformed the small cap market.
The largest U.S. stocks led the market's extraordinary rise over the last
two years. Many of these stocks have reached extreme valuations, while the
smaller cap value companies remain attractively priced. Therefore, looking
ahead, we believe that small cap value stocks provide a strong potential for
above-market returns.
19
<PAGE>
PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE RUSSELL 2500 VALUE INDEX AND THE WILSHIRE SMALL COMPANY VALUE
INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- WILSHIRE SMALL RUSSELL 2500
WITHOUT FEE* WITH FEE* CO. VALUE INDEX VALUE INDEX
<S> <C> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000 $10,000
8/31/95 $10,017 $10,013 $10,000 $10,000
9/95 $10,025 $10,009 $10,316 $10,158
10/95 $9,625 $9,598 $10,257 $9,886
11/95 $9,867 $9,827 $10,633 $10,328
12/95 $9,992 $9,939 $10,800 $10,548
1/96 $10,034 $9,967 $10,885 $10,669
2/96 $10,142 $10,063 $10,974 $10,822
3/96 $10,376 $10,282 $11,146 $11,025
4/96 $10,711 $10,601 $11,112 $11,244
5/96 $10,953 $10,827 $11,274 $11,428
6/96 $10,786 $10,648 $11,305 $11,363
7/96 $10,276 $10,132 $10,781 $10,818
8/96 $10,795 $10,630 $11,188 $11,328
9/96 $11,096 $10,913 $11,512 $11,716
10/96 $11,246 $11,047 $11,655 $11,913
11/96 $11,948 $11,722 $12,384 $12,617
12/96 $12,225 $11,979 $12,466 $12,891
1/97 $12,656 $12,386 $12,651 $13,221
2/97 $12,777 $12,488 $12,942 $13,368
3/97 $12,406 $12,111 $12,593 $12,995
4/97 $12,389 $12,079 $12,824 $13,246
5/97 $13,432 $13,080 $13,722 $14,170
6/97 $14,346 $13,952 $14,222 $14,837
7/97 $15,105 $14,672 $14,990 $15,647
</TABLE>
The graph depicts the performance of PACE Small/Medium Company Value Equity
Investments versus the Russell 2500 Value Index and the Wilshire Small Company
Value Index. It is important to note that PACE Small/Medium Company Value Equity
Investments is a professionally managed portfolio while the Russell 2500 Value
Index and the Wilshire Small Company Value Index are unmanaged. The comparison
is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ---------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 46.99% 44.80%
Commencement of operations (August 24, 1995) through July 31, 1997................. 23.73% 21.88%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
20
<PAGE>
PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
MANAGED BY DELAWARE INVESTMENT ADVISERS, THE PORTFOLIO'S INVESTMENT
OBJECTIVE IS CAPITAL APPRECIATION. THE PORTFOLIO INVESTS PRIMARILY IN THE COMMON
STOCK OF "EMERGING GROWTH" COMPANIES, COMPANIES CHARACTERIZED BY ABOVE-AVERAGE
GROWTH OF EARNINGS RATES. UNDER NORMAL CONDITIONS, AT LEAST 80% OF THE
PORTFOLIO'S TOTAL ASSETS WILL BE INVESTED IN COMMON STOCK OF ISSUERS WITH A
TOTAL MARKET CAPITALIZATION OF LESS THAN $2.5 BILLION.
INVESTMENT PROCESS
DELAWARE INVESTMENT ADVISERS LOOKS FOR COMPANIES EXHIBITING ANNUAL EARNINGS
GROWTH OF 25% OR MORE BUT PRICED AT A MODEST PREMIUM TO THE S&P'S MULTIPLE.
OTHER IMPORTANT FACTORS IN THE INVESTMENT PROCESS INCLUDE FREE CASH FLOW, STRONG
MANAGEMENT WITH INSIDER OWNERSHIP, AND POTENTIAL FOR UPSIDE EARNINGS SURPRISES.
COMPANIES ARE IDENTIFIED USING IN-DEPTH FUNDAMENTAL, BOTTOM-UP ANALYSIS.
COMMENTS FROM DELAWARE INVESTMENT ADVISERS
For the time period covered by this report--August 1, 1996 through July 31,
1997--the Portfolio's total return was 28.93% (exclusive of the PACE Program
Fee), which slightly underperformed the Russell 2500 Growth Index return (the
"Index") of 29.25%. As of July 31, 1997, the Portfolio's net assets had
increased to $125.6 million. The top four sector allocations as of that date
were in technology (20.4% of the Portfolio), business services (14.2%), consumer
services (12.9%), and health care (11.06%). Since Delaware Investment Advisers
took over the Portfolio, it has outperformed the Index by 2.71% (16.45% for the
Portfolio vs. 13.74% for the Index) for the period from December 17, 1996
through July 31, 1997.
Though the Portfolio did well against the Index, divergence in performance
between large-cap and small-cap issues continued through the period. Slower cash
flows into aggressive growth mutual funds, and a record number of new offerings,
impacted small-cap performance a great deal. By the end of the period, however,
the number of new offerings coming to market had somewhat dissipated.
Significant portfolio changes were made during this reporting period due to
a management change. On December 17, 1996, Delaware Investment Advisers assumed
management of the Portfolio, replacing Westfield Capital Management Company,
Inc. At the start of the period, the Portfolio had been heavily weighted in
technology, which was the worst performing sector in the Index, and cyclicals,
which impaired relative performance as premium retailers underperformed
discounters in their industry. Changes in the Portfolio included shifting to a
moderate overweighting in the technology, business services, and consumer
services sectors.
Given our outlook for moderate economic growth and stable interest rates,
plus the relative undervaluation of small-company growth stocks, we are
cautiously optimistic for the rest of 1997. Fundamentals appear attractive for a
broad range of companies within our universe as smaller companies have rebounded
as of late and appear to be well-positioned to take advantage of the current
benign economic outlook and improved fundamentals. For the seven months ended
July 31, 1997, the energy sector was the best performer, up 68.3%, with consumer
nondurables finishing second, up 31.9%. Technology has been weak for the
year-to-date period so far, but we are finding some companies that appear poised
to take advantage of the developing industry dynamics.
21
<PAGE>
PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE RUSSELL 2500 GROWTH INDEX AND THE WILSHIRE SMALL COMPANY
GROWTH INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- WILSHIRE SMALL CO. RUSSELL 2500
WITHOUT FEE* WITH FEE* GROWTH INDEX GROWTH INDEX
<S> <C> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000 $10,000
8/31/95 $9,942 $9,938 $10,000 $10,000
9/95 $9,967 $9,951 $10,203 $10,214
10/95 $9,567 $9,540 $9,592 $9,853
11/95 $9,758 $9,719 $10,217 $10,256
12/95 $9,863 $9,810 $10,240 $10,392
1/96 $9,470 $9,408 $10,508 $10,425
2/96 $10,004 $9,927 $10,765 $10,883
3/96 $10,013 $9,922 $10,920 $11,120
4/96 $10,881 $10,769 $11,220 $11,881
5/96 $11,348 $11,217 $11,370 $12,305
6/96 $10,764 $10,626 $11,029 $11,688
7/96 $9,345 $9,215 $10,292 $10,526
8/96 $9,821 $9,671 $10,970 $11,251
9/96 $10,463 $10,291 $11,510 $11,848
10/96 $10,088 $9,910 $11,627 $11,480
11/96 $10,463 $10,266 $12,391 $11,900
12/96 $10,589 $10,375 $12,370 $11,959
1/97 $10,989 $10,754 $13,032 $12,316
2/97 $10,572 $10,333 $12,974 $11,777
3/97 $9,804 $9,571 $12,524 $11,002
4/97 $9,571 $9,331 $13,160 $11,051
5/97 $10,697 $10,416 $14,062 $12,376
6/97 $11,198 $10,890 $14,574 $12,790
7/97 $12,049 $11,703 $16,019 $13,602
</TABLE>
The graph depicts the performance of PACE Small/Medium Company Growth Equity
Investments versus the Russell 2500 Growth Index and the Wilshire Small Company
Growth Index. It is important to note that PACE Small/Medium Company Growth
Equity Investments is a professionally managed portfolio while the Russell 2500
Growth Index and the Wilshire Small Company Value Index are unmanaged. The
comparison is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
------------- -------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 28.93% 27.01%
Commencement of operations (August 24, 1995) through July 31, 1997................. 10.10% 8.46%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
22
<PAGE>
PACE INTERNATIONAL EQUITY INVESTMENTS
MANAGED BY MARTIN CURRIE INC., THE PORTFOLIO'S INVESTMENT OBJECTIVE IS
CAPITAL APPRECIATION. THE PORTFOLIO INVESTS IN EQUITY SECURITIES OF COMPANIES
DOMICILED OUTSIDE THE UNITED STATES. UNDER NORMAL CONDITIONS, AT LEAST 65% OF
THE PORTFOLIO'S TOTAL ASSETS WILL BE INVESTED IN EQUITY SECURITIES OF COMPANIES
DOMICILED IN THREE OR MORE COUNTRIES OUTSIDE THE U.S. UP TO 10% OF THE
PORTFOLIO'S TOTAL ASSETS MAY BE INVESTED IN EMERGING MARKETS.
INVESTMENT PROCESS
MARTIN CURRIE LOOKS FOR COMPANIES THAT EXHIBIT STRONG FUNDAMENTALS AND
ATTRACTIVE VALUATIONS BASED ON ESTIMATES OF FUTURE EARNINGS. COUNTRY ALLOCATION
DECISIONS ARE BASED ON CRITERIA THAT INCLUDE ECONOMIC AND POLITICAL STABILITY,
THE BREADTH AND LIQUIDITY OF THE MARKET, THE NATURE OF THE LOCAL INVESTOR,
CURRENCY OUTLOOK, SETTLEMENT SYSTEM, AND VALUATION. A SIGNIFICANT PERCENTAGE OF
THE PORTFOLIO'S FOREIGN CURRENCY EXPOSURE MAY BE HEDGED BACK TO THE U.S. DOLLAR.
COMMENTS FROM MARTIN CURRIE INC.
For the time period covered by this report--August 1, 1996 through July 31,
1997--the Portfolio's return of 24.30% (exclusive of the PACE Program Fee)
significantly outperformed the Morgan Stanley Capital International's Europe,
Australia, and Far East (MSCI EAFE) Index (the "Index") return of 18.11%. The
Portfolio's performance was helped by strong stock selection in Japan as well as
an underweighting in that market, which fell by 7.4% over the period. Increased
exposure to Latin American markets was also a major positive contributor,
although being underweighted in the Continental European markets was a less
favorable decision.
As of July 31, 1997, the Portfolio's net assets had grown to $103.0 million.
The top five country allocations as of that date were Japan (20.0% of the
Portfolio's net assets), United Kingdom (17.8%), Germany (11.0%), Hong Kong
(6.7%), and France (5.8%). The top five sector allocations were in finance
(22.8% of the Portfolio), consumer goods (19.6%), capital goods (18.8%),
utilities (7.9%), and basic industries (6.2%).
The twelve months ended July 31, 1997 witnessed extraordinary polarization
in international equity markets, as well as extreme volatility from quarter to
quarter. Currencies were very volatile, with the British Pound Sterling and the
U.S. Dollar emerging as the strongest of the major currencies.
Of the investment regions, Latin America was the strongest performer, but
even in these markets there was a marked divergence between the weakest and
strongest performing countries. At the other end of the scale, Japan's market
actually had a negative year. To illustrate the volatility, however, Japan
equities rose 23.7% in the second quarter 1997. Apart from Japan, the most
disappointing region was the Pacific Basin, which, while it performed roughly in
line with the Index, grossly underperformed U.S. equities, despite the historic
correlation between the two areas.
In the Pacific region, only Hong Kong and India, heavily weighted in our
Portfolio, were strong performers. Many of the other countries were very poor
performers, in U.S. dollar terms. Starting with Thailand, which we sold due to
concerns about the banking system and the currency, many of the countries saw a
collapse in the value of their currencies vs. the U.S. dollar.
Over the year, the percentage invested in United Kingdom and Continental
Europe equities rose at the expense of Japan and the Pacific Basin. This was
broadly correct, with the most significant mistake not being more heavily
weighted towards Continental Europe.
Looking ahead, we expect the bull market in international equities to
continue. Japan, as ever, will involve the most critical allocation decision. We
anticipate increasing exposure to that market if the economy recovers, but are
currently content with the Portfolio's distribution.
23
<PAGE>
PACE INTERNATIONAL EQUITY INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE MSCI EAFE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- MSCI
WITHOUT FEE* WITH FEE* EAFE INDEX
<S> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000
8/31/95 $9,942 $9,938 $10,000
9/95 $10,008 $9,993 $10,198
10/95 $9,842 $9,814 $9,926
11/95 $9,967 $9,926 $10,205
12/95 $10,356 $10,301 $10,619
1/96 $10,691 $10,621 $10,665
2/96 $10,658 $10,575 $10,704
3/96 $10,901 $10,802 $10,934
4/96 $11,118 $11,004 $11,254
5/96 $11,009 $10,882 $11,050
6/96 $11,127 $10,984 $11,115
7/96 $10,708 $10,558 $10,792
8/96 $10,767 $10,603 $10,819
9/96 $11,060 $10,878 $11,109
10/96 $10,884 $10,691 $10,999
11/96 $11,336 $11,122 $11,439
12/96 $11,423 $11,193 $11,295
1/97 $11,236 $10,996 $10,902
2/97 $11,465 $11,206 $11,083
3/97 $11,440 $11,167 $11,126
4/97 $11,542 $11,253 $11,187
5/97 $12,375 $12,050 $11,918
6/97 $12,944 $12,589 $12,578
7/97 $13,310 $12,928 $12,784
</TABLE>
The graph depicts the performance of PACE International Equity Investments
versus the MSCI EAFE Index. It is important to note that PACE International
Equity Investments is a professionally managed portfolio while the MSCI EAFE
Index is unmanaged. The comparison is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ---------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 24.30% 22.44%
Commencement of operations (August 24, 1995) through July 31, 1997................. 15.90% 14.18%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
24
<PAGE>
PACE INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
MANAGED BY SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC., THE PORTFOLIO'S
INVESTMENT OBJECTIVE IS CAPITAL APPRECIATION. THE PORTFOLIO PRIMARILY INVESTS,
UNDER NORMAL CONDITIONS, AT LEAST 65% OF ITS TOTAL ASSETS IN EQUITY SECURITIES
OF ISSUERS IN THREE OR MORE EMERGING MARKETS.
INVESTMENT PROCESS
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. ("SCHRODER") UTILIZES AN
EXTENSIVE NETWORK OF REGIONAL SPECIALISTS AND ANALYSTS IN 11 COUNTRIES. THIS
LOCAL PRESENCE SUPPORTS AN INTENSIVE COMPANY RESEARCH PROGRAM THAT IS ESSENTIAL
IN EMERGING MARKETS. THE PROPRIETARY RESEARCH COMPILED IS THEN USED TO IDENTIFY
COMPANIES WHOSE CHARACTERISTICS FALL WITHIN SCHRODER'S CRITERIA, INCLUDING
PROFESSIONAL MANAGEMENT, SUSTAINABLE EARNINGS GROWTH, A HIGH DOMESTIC MARKET
SHARE, AND CREDIBLE ACCOUNTING STANDARDS.
COMMENTS FROM SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC.
For the time period covered by this report--August 1, 1996 through July 31,
1997--the Portfolio returned 25.31% (exclusive of the PACE Program Fee), which
significantly outperformed the MSCI Emerging Markets Free Index return of
20.49%. Stock selection in the Philippines, China, and South Africa was a main
reason for this outperformance. As of July 31, 1997, the Portfolio's net assets
had increased to $54.8 million. The major regional allocations as of the same
date were: Latin America (37.8% of the Portfolio's net assets), South Asia
(19.7%), Europe/Africa (15.7%), East Asia (18.2%) and the Middle East (3.8%).
The top five sector allocations were in energy (18.7% of the Portfolio), finance
(16.7%), telecommunications (14.3%), capital equipment (12.5%), and services
(12.3%).*
The emerging equity markets generally performed well over the last year,
benefiting from strong liquidity and an improving economic environment, with a
few exceptions. Over this time period the overweighted position in Asia was
reduced, while the Latin American weighting increased. Elsewhere, we maintained
our overweight position in Eastern Europe and added to new countries such as
Russia, Israel and Egypt.
Asian performance was very mixed over the last year. The Fund had a high
weighting in China, which was very strong, as the outlook for earnings improved
with economic recovery. While Taiwan and India both performed well, the South
East Asian markets were affected by currency turmoil. The forced devaluation in
Thailand had repercussions through the region, most notably in the Philippines,
Indonesia and Malaysia. (The Portfolio is currently not permitted to invest in
Malaysia.)
Latin American markets saw consistently strong market performance. Of the
major regional markets, Brazil and Mexico were the best performers, which were
the Portfolio's two largest country weightings. The region benefited from
continued economic recovery as well as Brazil's privatization of various
utilities.
Eastern Europe had a mixed performance, with Poland affected by the Czech
Republic's devaluation. At the same time, Hungary more than doubled over the
year, driven by an improved economic outlook and strong earnings growth. Russia
was also very strong due to an influx of foreign liquidity. The Mediterranean
markets of Portugal, Greece and Turkey benefited from falling interest rates and
an improved political environment. Israel, where we made our first investment
last year, benefited from an improved economic environment despite problems with
the peace process. Finally, South Africa, very weak in 1996 as the currency
devalued, recovered as the market anticipated falling interest rates.
Going forward, we continue to remain cautious about the Southeast Asian
market, waiting to see evidence of currency stability that will allow interest
rates to fall. After the very strong performance from our Chinese stocks, we
have been taking some profits that have been offset by additions to Korea, which
we believe should see a cyclical recovery. In Latin America, we are continuing
to reduce Brazil, the Portfolio's largest weighting, after its strong
performance and some increasing economic concerns. We are adding to Mexico,
where we are overweighted, to gain exposure to an anticipated consumer recovery.
* Services include: air transport, communications, restaurants, business
services, land transportation, leisure and hotels, media, printing,
retailers, shipping, telecommunications, transportation, warehousing and
wholesale.
25
<PAGE>
PACE INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
PORTFOLIO AND THE MSCI EMERGING MARKETS FREE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO-- PORTFOLIO-- MSCI EMERG.
WITHOUT FEE* WITH FEE* MKT. FREE INDEX
<S> <C> <C> <C>
8/24/95 $10,000 $10,000 $10,000
8/31/95 $10,017 $10,013 $10,000
9/95 $9,900 $9,885 $9,939
10/95 $9,500 $9,473 $9,549
11/95 $9,475 $9,437 $9,370
12/95 $9,814 $9,761 $9,768
1/96 $10,765 $10,694 $10,453
2/96 $10,481 $10,400 $10,270
3/96 $10,623 $10,527 $10,332
4/96 $10,965 $10,852 $10,708
5/96 $11,057 $10,929 $10,634
6/96 $11,074 $10,932 $10,677
7/96 $10,423 $10,282 $9,928
8/96 $10,581 $10,420 $10,168
9/96 $10,581 $10,407 $10,242
10/96 $10,106 $9,927 $9,962
11/96 $10,348 $10,152 $10,117
12/96 $10,649 $10,435 $10,151
1/97 $11,202 $10,963 $10,836
2/97 $11,629 $11,366 $11,293
3/97 $11,478 $11,205 $10,968
4/97 $11,629 $11,338 $10,948
5/97 $12,190 $11,870 $11,231
6/97 $12,826 $12,474 $11,809
7/97 $13,061 $12,686 $11,962
</TABLE>
The graph depicts the performance of PACE International Emerging Markets
Equity Investments versus the MSCI Emerging Markets Free Index. It is important
to note that PACE International Emerging Markets Equity Investments is a
professionally managed portfolio while the MSCI Emerging Markets Free Index is
unmanaged. The comparison is shown for illustrative purposes only.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
WITHOUT PACE WITH PACE
PROGRAM FEE* PROGRAM FEE*
--------------- ---------------
<S> <C> <C>
One year ended July 31, 1997....................................................... 25.31% 23.44%
Commencement of operations (August 24, 1995) through July 31, 1997................. 14.78% 13.07%
</TABLE>
Past performance is not indicative of future results. A Portfolio's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be more or less than original cost.
* The maximum annual PACE program Fee is 1.50% of the value of PACE assets.
26
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Portfolios of Investments
July 31, 1997
- --------------------------------------------------------------------------------
PACE MONEY MARKET INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ ------------------ ---------------- ----------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--6.87%
$805 Federal Home Loan Bank........................... 10/16/97 to 5.820 to 5.900% $ 805,000
08/04/98
300 Student Loan Marketing Association............... 12/24/97 to 5.630 to 5.750 300,000
01/08/98
----------
Total U.S. Government and Agency Obligations
(cost--$1,105,000)............................................. 1,105,000
----------
BANK NOTES--6.22%
DOMESTIC--6.22%
400 Bank of America National Trust & Savings
Association.................................... 11/21/97 to 5.520 to 6.150 399,949
05/05/98
200 FCC National Bank................................ 03/25/98 6.000 199,877
400 FCC National Bank*............................... 08/01/97 5.610 399,807
----------
Total Bank Notes (cost--$999,633).............................. 999,633
----------
CERTIFICATES OF DEPOSIT--27.69%
DOMESTIC--4.05%
250 Bankers Trust Co.*............................... 8/05/97 5.570 250,000
400 Bankers Trust Co................................. 04/30/98 to 6.160 to 6.280 399,987
06/02/98
----------
649,987
----------
YANKEE--23.64%
700 American Express Centurion Bank.................. 08/11/97 5.550 700,000
550 Canadian Imperial Holdings Inc................... 08/19/97 to 5.680 to 5.760 549,885
02/27/98
400 Commerzbank AG................................... 08/11/97 5.480 400,003
200 Creditanstalt Bankverein......................... 06/04/98 6.080 200,114
200 National Westminster Bancorp Inc................. 07/30/98 5.790 199,981
600 Royal Bank of Canada............................. 08/22/97 to 5.670 to 5.875 599,864
03/10/98
300 Skandinaviska Enskilda Banken Funding............ 08/11/97 5.580 300,001
650 Societe Generale................................. 10/21/97 to 5.720 to 6.350 650,153
07/24/98
200 Suntrust Bank.................................... 07/14/98 5.830 199,880
----------
3,799,881
----------
Total Certificates of Deposit (cost--$4,449,868)............... 4,449,868
----------
COMMERCIAL [email protected]%
ASSET-BACKED--11.68%
300 Enterprise Funding Corp.......................... 08/14/97 5.580 299,395
333 Falcon Asset Securitization Corp................. 08/20/97 5.510 332,032
258 New Center Asset Trust........................... 08/01/97 5.850 258,000
600 Preferred Receivables Funding Corp............... 08/04/97 to 5.540 to 5.580 599,475
08/20/97
389 Triple-A One Funding Corp........................ 08/12/97 5.530 388,343
----------
1,877,245
----------
BANKING--4.02%
100 Bankers Trust New York Corp...................... 03/30/98 5.580 96,264
250 BBL North America Inc............................ 10/08/97 5.540 247,384
100 BCI Funding Corp................................. 08/22/97 5.610 99,673
203 Unifunding....................................... 08/22/97 5.500 202,349
----------
645,670
----------
BROKER-DEALER--9.19%
300 Goldman Sachs & Co............................... 08/22/97 5.540 299,030
688 Lehman Brothers Holdings Inc..................... 10/14/97 to 5.570 to 5.600 678,271
11/07/97
500 Merrill Lynch & Co., Inc......................... 08/06/97 5.600 499,611
----------
1,476,912
----------
BUSINESS SERVICES--2.67%
300 Block Financial Corp............................. 08/18/97 5.520 299,218
130 PHH Corp......................................... 08/11/97 5.550 129,800
----------
429,018
----------
</TABLE>
27
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE MONEY MARKET INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ ------------------ ---------------- ----------
COMMERCIAL PAPER@--(CONCLUDED)
<C> <S> <C> <C> <C>
CHEMICALS--3.45%
$555 Henkel Corp...................................... 08/14/97 5.500% $ 553,898
----------
FINANCE-CONDUIT--3.97%
639 UBS Finance (DE) Inc............................. 08/08/97 5.500 638,317
----------
FINANCE-CONSUMER--5.91%
700 Household Finance Corp........................... 08/01/97 5.850 700,000
250 Transamerica Finance Corp........................ 08/14/97 5.510 249,502
----------
949,502
----------
FOOD, BEVERAGE & TOBACCO--4.10%
662 B.A.T. Capital Corp.............................. 08/27/97 5.500 659,370
----------
INSURANCE-PROPERTY/CASUALTY--1.96%
316 AIG Funding Inc.................................. 08/13/97 5.500 315,421
----------
TELECOMMUNICATIONS--3.85%
112 Bell Atlantic Financial Services Inc............. 08/01/97 5.500 112,000
507 Nynex Corp....................................... 08/15/97 5.550 505,906
----------
617,906
----------
Total Commercial Paper (cost--$8,163,259)...................... 8,163,259
----------
SHORT-TERM CORPORATE OBLIGATIONS--8.72%
BROKER-DEALER--5.60%
150 Bear Stearns Companies Inc....................... 06/22/98 6.000 150,000
450 Bear Stearns Companies Inc.*..................... 08/05/97 to 5.590 to 5.652 450,000
08/21/97
100 Merrill Lynch & Co., Inc.*....................... 08/01/97 5.680 99,995
200 Morgan Stanley Group Inc.*....................... 08/14/97 5.763 200,000
----------
899,995
----------
FINANCE-DIVERSIFIED--1.24%
200 CIT Group Holdings Inc.*......................... 08/01/97 5.580 199,951
----------
FOOD, BEVERAGE & TOBACCO--0.63%
100 Philip Morris Companies Inc...................... 12/01/97 9.250 101,147
----------
INSURANCE--1.25%
200 Prudential Funding Corp.......................... 01/06/98 5.660 200,000
----------
Total Short-Term Corporate Obligations (cost--$1,401,093)...... 1,401,093
----------
Total Investments (cost--$16,118,853)--100.30%................. 16,118,853
Liabilities in excess of other assets--(0.30)%................. (48,795)
----------
Net Assets--100.00%............................................ $16,070,058
----------
----------
</TABLE>
- ---------------
* Variable rate securities--maturity date reflects earlier of reset date or
maturity date. The interest rates shown are the current rates as of July 31,
1997 and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity-- 76 days
See accompanying notes to financial statements
28
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE GOVERNMENT SECURITIES FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------- -------------------- --------------- -------------
<C> <S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--42.26%
$ 2,607 GNMA II ARM............................................ 01/20/18 to 09/20/26 6.875 to 7.375% $ 2,676,385
12,100 GNMA TBA............................................... TBA 7.000 to 7.500 12,259,250
27,510 GNMA................................................... 08/15/21 to 04/15/27 7.500 28,000,124
-------------
Total Government National Mortgage Association Certificates
(cost--$42,081,621)................................................. 42,935,759
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION CERTIFICATES--5.64%
3,918 FHLMC ARM.............................................. 02/01/26 6.481 to 6.917 4,009,051
1,675 FHLMC.................................................. 04/01/04 8.500 1,722,638
-------------
Total Federal Home Loan Mortgage Corporation Certificates
(cost--$5,672,535).................................................. 5,731,689
-------------
FEDERAL HOUSING ADMINISTRATION CERTIFICATES--1.70%
1,685 FHA Project Notes (cost--$1,748,381)................... 05/01/17 to 08/01/20 7.430 to 7.880 1,730,320
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--4.89%
5,000 FNMA TBA (cost--$4,952,188)............................ TBA 6.070 4,971,875
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS--44.16%
112 FHLMC GNMA REMIC Series 23, Class KZ................... 11/25/23 6.500 99,749
4,000 FHLMC GNMA REMIC Series 21, Class C.................... 12/25/11 5.150 3,973,360
887 FHLMC REMIC Series 80 Class E.......................... 06/15/19 8.600 889,891
650 FHLMC REMIC Series 159, Class H........................ 09/15/21 4.500 569,407
316 FHLMC REMIC Series 1347, Class HC...................... 12/15/21 4.250 259,218
217 FHLMC REMIC Series 1502, Class PXZ..................... 04/15/23 7.000 207,971
490 FHLMC REMIC Series 1534, Class Z....................... 06/15/23 5.000 344,805
112 FHLMC REMIC Series 1573, Class PZ...................... 09/15/23 7.000 111,184
300 FHLMC REMIC Series 1576, Class PD...................... 09/15/02 5.500 299,220
58 FHLMC REMIC Series 1585, Class C....................... 08/15/10 4.500 57,914
806 FHLMC REMIC Series 1602, Class PD...................... 01/15/15 5.200 802,010
860 FHLMC REMIC Series 1609, Class C....................... 02/15/11 5.000 857,425
609 FHLMC REMIC Series 1628, Class KZ...................... 12/15/23 6.250 550,365
443 FHLMC REMIC Series 1628, Class LZ...................... 12/15/23 6.500 396,359
849 FHLMC REMIC Series 1640, Class F....................... 10/15/07 6.088* 851,306
121 FHLMC REMIC Series 1658, Class GZ...................... 01/15/24 7.000 115,905
500 FHLMC REMIC Series 1693, Class D....................... 12/15/04 5.350 497,040
364 FHLMC REMIC Series 1694, Class Z....................... 03/15/24 6.500 333,531
1,537 FHLMC REMIC Series 1708, Class A....................... 04/15/06 6.000 1,536,011
85 FHLMC REMIC Series 1775, Class Z....................... 03/15/25 8.500 95,652
5,368 FHLMC REMIC Series 1927, Class PA...................... 11/15/04 6.500 5,379,204
1,034 FHLMC REMIC Series 1933, Class ZA...................... 02/15/27 8.000 1,097,100
299 FNMA REMIC Trust 1990 - 76, Class E.................... 02/25/19 7.000 299,847
165 FNMA REMIC Trust 1992 - 129, Class L................... 07/25/22 6.000 150,752
77 FNMA REMIC Trust 1992 - 48, Class E.................... 04/25/03 7.300 76,769
</TABLE>
29
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE GOVERNMENT SECURITIES FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------- -------------------- --------------- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS--(CONCLUDED)
<C> <S> <C> <C> <C>
$ 1,015 FNMA REMIC Trust 1993 - 37, Class PXZ.................. 03/25/23 7.000% $ 943,513
926 FNMA REMIC Trust 1993 - 38, Class G.................... 01/25/15 5.000 918,388
5,466 FNMA REMIC Trust 1993 - 53, Class K.................... 04/25/23 5.750 4,914,218
1,898 FNMA REMIC Trust 1993 - 59, Class D.................... 11/25/03 5.000 1,888,547
1,887 FNMA REMIC Trust 1993 - 171, Class C................... 08/25/11 5.600 1,877,565
510 FNMA REMIC Trust 1993 - 175, Class PB.................. 12/25/01 5.250 508,176
4,000 FNMA REMIC Trust 1993 - 188, Class X-188A E............ 07/25/03 5.400 3,980,360
1,000 FNMA REMIC Trust 1993 - 192, Class C................... 01/25/04 5.750 997,300
3,000 FNMA REMIC Trust 1993 - 214, Class D................... 08/25/04 5.250 2,979,570
58 FNMA REMIC Series 1993 - 250, Class Z.................. 12/25/23 7.000 56,886
351 FNMA REMIC Trust G1993 - 40, Class ZA.................. 12/25/23 6.500 307,344
64 FNMA REMIC Trust 1994 - 27, Class CZ................... 02/25/24 6.500 56,744
1,377 FNMA REMIC Trust 1994 - 75, Class C.................... 01/25/13 6.000 1,374,050
615 FNMA REMIC Series 1994 - 90, Class PC.................. 07/25/01 6.500 615,595
270 Prudential Home Mortgage REMIC 1993 - 13, Class A6..... 04/25/08 5.500 268,593
463 Prudential Home Mortgage REMIC 1993 - 29, Class A8..... 08/25/08 6.750 450,841
147 Prudential Home Mortgage REMIC 1993 - 43, Class A1..... 10/25/23 5.400 145,560
546 Prudential Home Mortgage REMIC Pass Thru Series 1992 -
39, Class A14........................................ 12/25/07 7.000 543,861
1,160 Prudential Home Mortgage REMIC Pass Thru Series 1993 -
54, Class A19........................................ 01/25/24 6.500 1,003,098
693 Resolution Trust Corporation REMIC Series 1992-3, Class
A2................................................... 09/25/19 6.783 686,724
408 Resolution Trust Corporation REMIC Series 1995 C1,
Class A3............................................. 02/25/27 6.138 408,265
87 Smith Barney Mortgage Capital Trust Series 6-E REMIC... 02/01/19 9.800 88,403
-------------
Total Collateralized Mortgage Obligations (cost--$44,116,332)......... 44,865,596
-------------
STRIPPED MORTGAGE-BACKED SECURITIES--1.53%
1,752 FHLMC REMIC Series 1583, Class IB***(3)................ 11/15/13 7.000(1) 49,839
325 FHLMC REMIC Series 1700, Class D**(3).................. 02/15/24 9.491+ 287,063
552 FHLMC REMIC Series 173-F**(3).......................... 06/15/21 5.620+ 517,504
8,327 FNMA REMIC Trust 1993 - 131, Class JB***(3)............ 05/25/05 7.000(2) 588,261
195 FNMA REMIC Trust 1993 - 161, Class GC**(3)............. 02/25/23 5.780+ 107,546
-------------
Total Stripped Mortgage-Backed Securities (cost--$1,495,370).......... 1,550,213
-------------
COMMERCIAL [email protected]%
500 General Motors Acceptance Corp......................... 11/05/97 5.580 492,496
800 Ford Motor Credit Co................................... 10/06/97 5.490 791,826
-------------
Total Commercial Paper (cost--$1,284,508)............................. 1,284,322
-------------
LONG-TERM U.S. GOVERNMENT OBLIGATIONS--11.40%
11,500 U.S. Treasury Notes (cost--$11,417,115)................ 02/28/99 to 01/31/02 5.875 to 6.250 11,577,342
-------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--1.37%
1,400 Federal Home Loan Mortgage Association Discount Notes
(cost--$1,394,941)................................... 08/25/97 5.420 1,394,941
-------------
</TABLE>
30
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE GOVERNMENT SECURITIES FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- ------------- -------------------- --------------- -------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT--0.33%
$ 337 Repurchase Agreement dated 07/31/97 with State Street
Bank & Trust Company, collateralized by $348,912 U.S.
Treasury Notes, 7.250% due 02/15/98; proceeds:
$337,047 (cost--$337,000)............................ 08/01/97 5.000% $ 337,000
-------------
Total Investments (cost--$114,499,991)--114.54%....................... 116,379,057
Liabilities in excess of other assets--(14.54)%....................... (14,773,188)
-------------
Net Assets--100.00%................................................... $ 101,605,869
-------------
-------------
</TABLE>
- ---------------
* Floating rate instrument--The interest rate shown is current rate as of
July 31, 1997.
** Principal Only Security--This security entitles the holder to receive
principal payments from an underlying pool of mortgages. High
prepayments return principal faster than expected and cause the yield to
increase. Low prepayments return principal more slowly than expected and
cause the yield to decrease.
*** Interest Only Security--This security entitles the holder to receive
interest payments from an underlying pool of mortgages. The risk
associated with this security is related to the speed of principal
paydowns. High prepayments would result in a smaller amount of interest
being received and cause the yield to decrease. Low prepayments would
result in a greater amount of interest being received and cause the
yield to increase.
+ Estimated yield to maturity at July 31, 1997.
@ Interest rates shown are discount rates at date of purchase.
ARM Adjustable Rate Mortgage--The interest rate shown is the current rate as
of July 31, 1997.
FRN Floating Rate Note--The interest rate shown is as of July 31, 1997.
REMIC Real Estate Mortgage Investment Conduit
TBA To Be Assigned--Securities are purchased on a forward commitment with an
approximate (generally +/-1.0%) principal amount and no definite maturity
date. The actual principal amount and maturity date will be determined
upon settlement when the specific mortgage pools are assigned.
(1) Annualized Yield at date of purchase was 7.16%.
(2) Annualized Yield at date of purchase was 6.82%.
(3) Illiquid securities represent 1.53% of Net Assets.
See accompanying notes to financial statements
31
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERMEDIATE FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ ------------------ --------------- ----------
<C> <S> <C> <C> <C>
U. S. GOVERNMENT OBLIGATIONS--57.50%
$ 1,500 U.S. Treasury Bonds................................ 08/15/27 6.375% $1,493,956
35,760 U.S. Treasury Notes (1)............................ 08/15/98 to 5.500 to 7.500 36,884,633
05/15/07
----------
Total U. S. Government Obligations (cost--$37,747,648)........... 38,378,589
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--6.12%
1,852 GNMA............................................... 10/20/25 to 6.500 to 6.875 1,890,847
07/20/26
935 GNMA............................................... 02/15/24 to 7.500 951,902
12/15/25
114 GNMA............................................... 11/20/01 8.500 115,926
703 GNMA............................................... 12/15/01 to 9.000 730,107
01/15/02
376 GNMA............................................... 07/15/04 to 9.500 396,155
09/15/04
----------
Total Government National Mortgage Association Certificates
(cost--$4,071,775)............................................. 4,084,937
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION CERTIFICATES--0.52%
346 FHLMC (cost--$341,646)............................. 12/01/99 5.500 345,645
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--1.54%
1,006 FNMA (cost--$1,026,845)............................ 06/01/10 to 7.500 1,028,935
09/01/10
----------
COLLATERALIZED MORTGAGE OBLIGATIONS--13.37%
1,135 Aetna Commercial Mortgage Corp..................... 12/26/30 6.590 1,135,709
149 American Southwest Financial Co.................... 03/01/18 9.000 152,929
342 FDIC REMIC Trust Series 1994 Class A............... 09/25/25 7.850 347,082
927 FDIC REMIC Trust Series 1996 Class 1A.............. 05/25/26 6.750 935,023
9 FHLMC REMIC Series 171 Class G..................... 04/15/04 9.000 9,395
60 FHLMC REMIC Series 1180 Class H.................... 08/15/20 8.400 61,130
500 FHLMC REMIC Series 1497 Class O.................... 10/15/22 7.000 505,155
194 FHLMC REMIC Series 1588 Class TB................... 06/15/23 6.500 191,215
451 FHLMC REMIC Series 1865 Class VA................... 12/15/10 7.500 460,136
129 FNMA REMIC Trust 1990-9, Class D................... 08/25/18 8.500 129,629
150 FNMA REMIC Trust 1991-04, Class E.................. 09/25/05 8.250 152,618
441 FNMA REMIC Trust 1993-233, Class C................. 11/25/02 4.850 438,916
675 FNMA REMIC Trust 1993-70, Class C.................. 03/25/18 6.900 680,239
170 FNMA REMIC Trust 1993-241, Class PC***............. 08/25/19 5.900+ 168,042
301 FNMA REMIC Trust 1996-41, Class A.................. 06/25/20 7.750 303,874
689 LB Mortgage Trust Series 1992-M1, Class A1B........ 03/25/12 8.000 696,909
400 Merrill Lynch Trust Series 32, Class H............. 08/01/18 9.450 419,053
1,017 Resolution Trust Corp. Series 1995-C1, Class A2C... 02/25/27 6.900 1,018,503
81 Structured Asset Securities Corp. Series 1996-CFL,
Class A1B........................................ 02/25/28 5.751 81,138
1,000 Westam Mortgage Financial Corp. Series 7, Class
G................................................ 12/01/18 9.400 1,039,458
----------
Total Collateralized Mortgage Obligations (cost--$8,862,849)..... 8,926,153
----------
ASSET-BACKED SECURITIES--0.96%
600 UCFC Loan Trust (cost--$599,437)................... 11/15/27 8.200 640,875
----------
CORPORATE NOTES--16.96%
870 Beneficial Corp.................................... 12/15/04 6.810 881,701
300 Chubb Corp......................................... 11/15/99 8.750 306,039
383 Continental Bank NA................................ 04/01/01 to 11.250 to 419,093
07/01/01 12.500
535 Countrywide Funding Corp. MTN...................... 09/16/03 7.450 558,007
1,000 First Union Corp................................... 11/15/04 8.770 1,052,459
810 First USA Bank..................................... 02/22/01 5.850 800,596
</TABLE>
32
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERMEDIATE FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ ------------------ --------------- ----------
<C> <S> <C> <C> <C>
CORPORATE NOTES--(CONCLUDED)
$ 1,150 Ford Motor Credit Corp............................. 11/19/99 to 6.500 to 7.500% $1,168,028
02/28/02
250 Health Care Properties Investments Inc............. 02/15/06 6.500 244,058
1,200 Household Finance Corp............................. 06/30/00 6.375 1,204,912
200 ITT Corp........................................... 03/01/06 8.750 205,548
625 K Mart Corp. MTN................................... 08/01/97 to 7.240 to 8.700 623,654
07/06/99
575 Kimco Realty Corp.................................. 10/01/03 to 6.500 to 6.830 571,773
11/14/05
305 Lucent Technologies Inc............................ 07/15/06 7.250 321,348
490 Mellon Bank........................................ 06/01/03 6.750 496,175
229 Mobil Oil Corp..................................... 02/29/00 9.170 238,412
245 New Plan Realty Trust Corp......................... 04/06/05 7.750 260,151
700 New York State Electric & Gas Corp................. 05/01/20 9.875 762,294
1,125 PNC Bank NA........................................ 04/15/05 7.875 1,209,355
----------
Total Corporate Notes (cost--$11,145,578)........................ 11,323,603
----------
FOREIGN CURRENCY DENOMINATED ISSUES--1.27%
DEM 1,500 Federal Republic of Germany (cost--$1,025,003)..... 01/05/06 6.000 847,043
----------
REPURCHASE AGREEMENT--2.52%
1,679 Repurchase Agreement dated 07/31/97 with State
Street Bank & Trust Company, collateralized by
$1,712,628 U.S. Treasury Notes, 7.250% due
02/15/98; proceeds: $1,679,233
(cost--$1,679,000)............................... 08/01/97 5.000 1,679,000
----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
- ------------
<C> <C> <C> <C>
MONEY MARKET FUNDS--2.43%
1,545,614 Liquid Assets Portfolio*................... 1,545,614
49,607 TempCash Portfolio*........................ 49,607
27,467 TempFund Portfolio*........................ 27,467
----------
Total Money Market Funds (cost--$1,622,688)............ 1,622,688
----------
Total Investments (cost--$68,122,469)--103.19%......... 68,877,468
Liabilities in excess of other assets--(3.19)%......... (2,126,863)
----------
Net Assets--100.00%.................................... $66,750,605
----------
----------
</TABLE>
- ---------------
* Entire or partial amount represents investments of cash collateral for
securities loaned.
*** Principal Only Security--This security entitles the holder to receive
principal payments from an underlying pool of mortgages. High
prepayments return principal faster than expected and cause the yield to
increase. Low prepayments return principal more slowly than expected and
cause the yield to decrease.
+ Estimated yield to maturity at July 31, 1997
DEM German Deutschemarks
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
(1) Security, or portion thereof, was on loan at July 31, 1997.
See accompanying notes to financial statements
33
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE STRATEGIC FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- -------------------- ----------------- -----------
<C> <S> <C> <C> <C>
LONG-TERM U. S. GOVERNMENT OBLIGATIONS--8.05%
$6,000 U.S. Treasury Notes..................... 07/15/02 to 11/15/05 3.625 to 5.875% $ 5,947,874
100 U.S. Treasury Bonds..................... 11/15/26 6.500 102,219
-----------
Total Long-Term U.S. Government Obligations
(cost--$5,855,818)................................ 6,050,093
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--5.57%
1,858 GNMA ARM................................ 01/20/26 6.500 1,892,963
1,383 GNMA ARM................................ 10/20/24 6.875 1,417,487
363 GNMA ARM................................ 11/20/23 6.875 372,202
500 GNMA TBA................................ TBA 7.500 507,189
-----------
Total Government National Mortgage Association
Certificates
(cost--$4,125,198)................................
4,189,841
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION CERTIFICATES--0.66%
500 FHLMC Gold 30 Year TBA
(cost--$495,156)...................... TBA 7.000 498,594
-----------
FEDERAL HOUSING ADMINISTRATION CERTIFICATES--4.23%
3,101 FHA Project Notes (cost--$3,167,029).... 08/01/20 to 12/01/21 7.430 3,181,344
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--11.31%
988 FNMA.................................... 03/01/26 to 05/01/27 6.500 966,857
1,913 FNMA ARM................................ 12/01/26 4.822 1,773,119
420 FNMA ARM................................ 03/01/27 6.072 418,589
462 FNMA ARM................................ 08/01/28 6.072 460,087
40 FNMA ARM................................ 12/01/17 7.375 41,547
2,000 FNMA TBA................................ TBA 6.070 1,988,750
3,000 FNMA TBA................................ TBA 6.000 2,856,567
-----------
Total Federal National Mortgage Association
Certificates (cost--$8,542,457)................... 8,505,516
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--15.38%
254 FHLMC REMIC Series 23 Class KZ.......... 11/25/23 6.500 226,701
1,000 FHLMC REMIC Series 1278 Class K......... 05/15/22 7.000 1,004,476
100 FHLMC REMIC Series 1366 Class H......... 08/15/07 6.000 96,875
29 FHLMC REMIC Series 1367 Class KA........ 09/15/22 6.500 27,840
137 FHLMC REMIC Series 1502 Class PX-Z...... 04/15/23 7.000 131,758
710 FHLMC REMIC Series 1503 Class PZ........ 05/15/23 7.000 705,312
417 FHLMC REMIC Series 1534 Class Z......... 06/15/23 5.000 293,084
636 FHLMC REMIC Series 1548 Class Z......... 07/15/23 7.000 609,079
927 FHLMC REMIC Series 1562 Class Z......... 07/15/23 7.000 877,693
68 FHLMC REMIC Series 1614 Class QZ........ 11/15/23 6.500 61,765
136 FHLMC REMIC Series 1611 Class I......... 02/15/23 6.000 132,384
658 FHLMC REMIC Series 1628 Class KZ........ 12/15/23 6.250 594,440
486 FHLMC REMIC Series 1628 Class LZ........ 12/15/23 6.500 434,753
251 FHLMC REMIC Series 1694 Class Z......... 03/15/24 6.500 229,943
255 FHLMC GNMA REMIC Series 15 Class PZ..... 07/25/23 7.000 233,193
169 FNMA REMIC Trust 1991-65 Class Z........ 06/25/21 6.500 157,325
75 FNMA REMIC Trust 1992-118 Class K....... 09/25/08 7.500 78,530
160 FNMA REMIC Trust 1992-129 Class L....... 07/25/22 6.000 146,184
488 FNMA REMIC Trust G1992-40 Class ZC...... 07/25/22 7.000 485,376
70 FNMA REMIC Trust 1993-37 Class PXZ...... 03/25/23 7.000 65,417
110 FNMA REMIC Trust 1993-56 Class PZ....... 05/25/23 7.000 107,422
68 FNMA REMIC Trust 1993-60 Class Z........ 05/25/23 7.000 63,630
618 FNMA REMIC Trust 1993-65 Class ZZ....... 06/25/13 7.000 614,279
113 FNMA REMIC Trust 1993-70 Class Z........ 05/25/23 6.900 104,824
326 FNMA REMIC Trust 1993-96 Class PZ....... 06/25/23 7.000 322,015
</TABLE>
34
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE STRATEGIC FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- -------------------- ----------------- -----------
<C> <S> <C> <C> <C>
</TABLE>
COLLATERALIZED MORTGAGE OBLIGATIONS--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 279 FNMA REMIC Trust 1993-122 Class L....... 01/25/23 6.500% $ 265,649
76 FNMA REMIC Trust 1993-149 Class L....... 08/25/23 6.000 73,000
124 FNMA REMIC Trust 1993-160 Class ZB...... 09/25/23 6.500 116,194
119 FNMA REMIC Trust 1993-163 Class ZA...... 09/25/23 7.000 115,394
84 FNMA REMIC Trust 1993-199 Class Z....... 10/25/23 7.000 79,131
500 FNMA REMIC Trust G1993-10 Class G....... 05/25/22 5.000 457,386
126 FNMA REMIC Trust G1993-40 Class Z....... 12/25/23 6.500 110,556
123 FNMA REMIC Trust 1994-23 Class PXZ...... 08/25/23 6.000 105,627
543 Bear Stearns Mortgage Securities Inc.
REMIC Series 94-1 Class 3A ARM........ 05/25/23 7.245 548,401
423 California Federal Bank REMIC Series
1990 BN1, Class A-ARM................. 08/25/30 6.529 420,558
150 Residential Funding Mortgage REMIC
Series 1993-S30, Class A9............. 08/25/23 7.500 149,765
1,000 Resolution Trust Corporation Mortgage
REMIC Series 92-C1 Class B ARM........ 08/25/23 7.689 1,018,801
321 U.S. Department of Veteran Affairs
Vendee Mortgage REMIC Trust Series
1993-3, Class 2ZA..................... 06/15/20 6.500 299,690
-----------
Total Collateralized Mortgage Obligations
(cost--$10,651,052)............................... 11,564,450
-----------
STRIPPED MORTGAGE-BACKED SECURITIES--2.75%
709 FHLMC REMIC Series 1625 Class
GA***(5).............................. 01/15/08 6.000(1) 55,520
1,105 FHLMC REMIC Series 173-F**(5)........... 06/15/21 5.620+ 1,035,008
5 FNMA REMIC Trust 1993 134 Class
EA***(5).............................. 11/25/05 1159.74(2) 82,775
1,066 FNMA REMIC Trust 1993 201 Class
JA***(5).............................. 09/25/21 6.500(3) 160,034
3,227 FNMA REMIC Trust 1993 201 Class
JC***(5).............................. 05/25/19 6.500(4) 734,571
-----------
Total Stripped Mortgage-Backed Securities
(cost--$2,019,546)................................ 2,067,908
-----------
AGENCY-BACKED OBLIGATIONS--10.77%
8,000 FNMA MTN (cost--$8,069,978)............. 07/19/04 6.360 8,093,600
-----------
CORPORATE BONDS--9.59%
500 AMR Corp................................ 02/01/01 10.000 556,936
450 Continental Cablevision Inc............. 06/01/07 11.000 507,892
100 Gulf States Utilities Co. .............. 07/01/98 9.720 103,105
500 Niagara Mohawk Power Co................. 04/01/24 7.875 496,755
1,500 Philip Morris Co........................ 07/15/05 7.000 1,517,781
3,300 RJR Nabisco Inc......................... 12/01/02 to 09/15/03 7.625 to 8.625 3,399,928
500 United Air Lines Inc.................... 11/27/12 10.360 624,140
-----------
Total Corporate Bonds (cost--$6,988,879)............ 7,206,537
-----------
COMMERCIAL PAPER@ ++--37.36%
3,400 American Express Credit Corp............ 09/12/97 5.520 3,378,104
1,000 Ameritech Corp.......................... 08/15/97 5.510 997,857
1,400 Bellsouth Telecommunications Inc........ 08/11/97 5.480 1,397,869
1,400 Caisse D'Amortissement.................. 08/11/97 5.470 1,397,873
1,500 Canadian Wheat Board.................... 09/25/97 5.540 1,487,304
400 Ford Motor Credit Co. FRN............... 10/07/97 5.520 395,730
3,500 General Motors Acceptance Corp.......... 11/05/97 5.580 3,447,471
1,800 Gillette Co............................. 08/06/97 5.470 1,798,633
200 KFW International Finance Inc........... 08/29/97 5.490 199,146
1,600 Minnesota Mining & Manufacturing Co..... 08/19/97 5.510 1,595,592
3,200 National Rural Utilities Co-op Finance
Corp.................................. 08/25/97 to 10/23/97 5.470 to 5.545 3,175,177
1,600 New Center Asset Trust.................. 08/06/97 to 10/03/97 5.520 to 5.580 1,590,903
</TABLE>
35
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE STRATEGIC FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- -------------------- ----------------- -----------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ ++--(CONCLUDED)
$3,000 Oesterreichische Kontrollbank AG........ 10/16/97 5.550% $ 2,964,259
800 Pitney Bowes Credit Corp................ 09/18/97 5.550 794,080
3,500 Wool International...................... 10/10/97 5.500 3,461,552
-----------
Total Commercial Paper (cost--$28,084,077).......... 28,081,550
-----------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.33%
250 U. S. Treasury Bills++
(cost--$248,014)...................... 08/21/97 to 11/13/97 4.920 to 5.150 247,781
-----------
REPURCHASE AGREEMENT--1.01%
756 Repurchase Agreement dated 07/31/97 with
State Street Bank & Trust Company,
collateralized by $775,938 U.S.
Treasury Notes, 7.250% due 02/15/98;
proceeds $756,105 (cost--$756,000).... 08/01/97 5.000 756,000
-----------
Total Investments (cost--$79,003,204)--107.01%...... 80,443,214
Liabilities in excess of other assets--(7.01)%...... (5,268,730)
-----------
Net Assets--100.00%................................. $75,174,484
-----------
-----------
</TABLE>
- ---------------
** Principal Only Security--This security entitles the holder to receive
principal payments from an underlying pool of mortgages. High
prepayments return principal faster than expected and cause the yield to
increase. Low prepayments return principal more slowly than expected and
cause the yield to decrease.
*** Interest Only Security--This security entitles the holder to receive
interest payments from an underlying pool of mortgages. The risk
associated with this security is related to the speed of the principal
paydowns. High prepayments would result in a smaller amount of interest
being received and cause the yield to decrease. Low prepayments would
result in a greater amount of interest being received and cause the
yield to increase.
+ Estimated yield to maturity at July 31, 1997.
++ Entire or partial amount pledged as collateral for futures transactions.
@ Interests rate shown are discount rates at date of purchase.
ARM Adjustable Rate Mortgage--The interest rate shown is the current rate as
of July 31, 1997.
FRN Floating Rate Note--The interest rate shown is the current rate as of July
31, 1997.
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
TBA To Be Assigned--Securities are purchased on a forward commitment with an
approximate (generally +/- 1.0%) principal amount and no definite maturity
date. The actual principal amount and maturity date will be determined
upon settlement when the specific mortgage pools are assigned.
(1) Annualized yield at date of purchase was 7.70%.
(2) Annualized yield at date of purchase was 10.48%.
(3) Annualized yield at date of purchase was 8.31%.
(4) Annualized yield at date of purchase was 8.00%.
(5) Illiquid securities represent 2.75% of Net Assets.
<TABLE>
<S> <C> <C> <C> <C> <C>
WRITTEN OPTIONS OPEN
NUMBER OF UNDERLYING EXPIRATION EXERCISE
OPTIONS CONTRACT DATE PRICE VALUE
---------- ---------- ---------- ---------- -----
Put............ 10 Eurodollar March 1998 $ 93.50 $875
-----
-----
</TABLE>
FUTURES CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF IN EXPIRATION UNREALIZED
CONTRACTS CONTRACTS EXCHANGE FOR DATE APPRECIATION
- --------------- --------------------------------------------------------- ------------ -------------- ------------
<C> <S> <C> <C> <C>
153 10 year U.S. Treasury Notes.............................. $16,609,719 September 1997 $ 373,281
34 30 year U.S. Treasury Bonds.............................. $3,795,250 September 1997 174,250
------------
$ 547,531
------------
------------
</TABLE>
See accompanying notes to financial statements
36
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE MUNICIPAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<C> <S> <C> <C> <C>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- ---------------- ----------- -----------
MUNICIPAL BONDS AND NOTES--91.44%
ALABAMA--0.45%
$ 155 Pell City Alabama Industrial Development
Board Revenue Shelby Steel Fabricators
(Letter of Credit--South Trust Bank)*.... 09/01/01 7.700% $ 155,459
-----------
ARIZONA--0.24%
70 Pima County Arizona Hospital Revenue St.
Joseph Hospital Project (Escrow to
Maturity)................................ 01/01/09 7.500 81,425
-----------
ARKANSAS--1.11%
100 Arkansas State Development Finance
Authority (MBIA Insured)................. 10/01/16 5.100 102,901
25 Pulaski County Arkansas Residental Housing
Single Family (Escrow to Maturity)....... 06/01/10 7.250 28,849
227 Springdale Arkansas Residential Housing
Mortgage Series A (FNMA
Collateralized).......................... 09/01/11 7.650 248,301
-----------
380,051
-----------
CALIFORNIA--11.57%
90 California Pollution Control Financing
Kaiser Steel Corporation Project (Escrow
to Maturity)............................. 10/01/08 7.250 101,470
185 California Statewide Community Housing
Senior Lien (FHA Insured)................ 09/01/00 5.000 188,267
140 Inglewood California Residential
Rehabilitation (Escrow to Maturity)...... 08/01/10 7.500 161,326
480 Lancaster California Redevelopment Agency
Multi Family Housing Refunding FHA High
Valley Apartments Project Series A (FHA
Insured)................................. 12/01/05 5.250 486,106
700 Los Angeles California Community
Redevelopment Agency Refunding Monterey
Hills Redevelopment Project B............ 12/01/22 8.650 802,550
300 Los Angeles California Multi Family Revenue
Housing Earthquake Rehabilitation Project
Series C (FNMA Collateralized)*.......... 07/01/07 5.150 302,073
40 Palmdale California Residential Mortgage
(Escrow to Maturity)..................... 11/01/12 9.250 53,100
385 Sacramento California Utility District
Electric (Escrow to Maturity)............ 03/01/10 6.750 433,052
310 Sacramento California Utility District
Electric White Rock Project (Escrow to
Maturity)................................ 05/01/10 6.800 349,438
1,040 Vista California Multi Family Housing
Pepperwood Apartments (Mandatory put
06/01/05 @ 100) (FNMA Collateralized).... 06/01/25 5.700 1,090,752
-----------
3,968,134
-----------
COLORADO--2.19%
125 Colorado Health Facilities Authority Rose
Medical Center (Escrow to Maturity)...... 09/01/08 7.125 139,960
600 Colorado Housing Finance Authority Single
Family Progam Subordinated*.............. 11/01/04 5.750 610,248
-----------
750,208
-----------
FLORIDA--3.94%
190 Altamonte Springs Florida Health Facilities
Authority Revenue (Escrow to Maturity)... 10/01/09 8.750 237,139
190 Clearwater Florida Housing Development
Corporation Revenue Refunding FHA Insured
Clearwater Apartments Series A (FHA
Insured)................................. 07/01/01 6.200 197,666
</TABLE>
37
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE MUNICIPAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- ---------------- ----------- -----------
<C> <S> <C> <C> <C>
</TABLE>
MUNICIPAL BONDS AND NOTES--(CONTINUED)
<TABLE>
<C> <S> <C> <C> <C>
FLORIDA--(CONCLUDED)
$ 100 Dade County Florida Educational Facilities
Authority Revenue (Letter of Credit-Sun
Bank).................................... 01/01/02 5.150% $ 103,139
155 Lee County Florida Capital Bonds (Escrow to
Maturity)
(MBIA Insured)........................... 10/01/05 9.500 188,871
140 Lee County Florida Southwest Florida
(Escrow to Maturity) (MBIA Insured)...... 10/01/09 8.625 177,628
65 Orange County Florida Health Facilities
Authority Southern Adv Hosp--Adv Health
Systems (Escrow to Maturity)............. 10/01/09 8.750 81,107
160 Pasco County Florida MBIA West Pasco Water
and Sewer Unit (Escrow to Maturity) (MBIA
Insured)................................. 08/01/08 6.375 177,227
160 Plantation Florida Health Facilities
(Escrow to Maturity)..................... 06/01/09 8.000 188,941
-----------
1,351,718
-----------
GEORGIA--1.82%
600 Marietta Georgia Housing Authority Multi
Family Housing Refunding Ridge Part
Apartments Project A (Mandatory put
06/01/05 @ 100) (FNMA Collateralized).... 06/01/25 5.700 625,716
-----------
ILLINOIS--5.52%
85 Belleville Illinois St. Clair County
(Escrow to Maturity)..................... 11/01/09 7.250 97,368
250 Granite City Illinois Hospital Facility
Revenue (Escrow to Maturity)............. 01/01/08 7.000 281,132
350 Greater Peoria Illinois Airport Authority
(AMBAC Insured)*......................... 12/01/07 6.700 397,614
325 Illinois Health Facilities Authority
Revenue Methodist Medical Center (Escrow
to Maturity)............................. 10/01/10 9.000 403,754
630 Illinois Health Facilities Authority
Revenue Ravenswood Hospital (Escrow to
Maturity)................................ 08/01/06 7.250 714,861
-----------
1,894,729
-----------
INDIANA--5.70%
50 Fort Wayne Indiana Hospital Authority
Revenue Parkview Memorial Hospital
(Escrow to Maturity)..................... 01/01/02 6.875 53,971
450 Fort Wayne Indiana Hospital Authority
Revenue Parkview Memorial Hospital
(Escrow to Maturity)..................... 01/01/05 6.500 491,931
345 Indiana Health Facility Hospital Revenue
Kings Daughters Hospital (Asset
Guaranteed Insured)...................... 02/15/04 5.000 349,792
205 Indiana Health Facility Hospital Revenue
Kings Daughters Hospital (Asset
Guaranteed Insured)...................... 08/15/04 5.000 208,032
365 Indiana Health Facility Hospital Revenue
Kings Daughters Hospital (Asset
Guaranteed Insured)...................... 02/15/05 5.000 369,332
435 Indianapolis Indiana Economic Development
Revenue Knob In The Woods Project
(Mandatory put 12/01/04 @ 100) (FNMA
Collateralized).......................... 12/01/24 6.375 480,858
-----------
1,953,916
-----------
KENTUCKY--0.22%
55 Kentucky State Revenue Turnpike Authority
Resources Recovery Road Revenue (Escrow
to Maturity)............................. 07/01/09 7.200 64,398
10 Kentucky State Revenue Turnpike Authority
Toll Road (Escrow to Maturity)........... 07/01/08 5.875 10,746
-----------
75,144
-----------
LOUISIANA--7.00%
110 East Baton Rouge Louisiana Single Family
Mortgage (Escrow to Maturity)............ 03/01/10 7.375 128,568
</TABLE>
38
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE MUNICIPAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- ---------------- ----------- -----------
<C> <S> <C> <C> <C>
</TABLE>
MUNICIPAL BONDS AND NOTES--(CONTINUED)
<TABLE>
<C> <S> <C> <C> <C>
LOUISIANA--(CONCLUDED)
$ 140 East Baton Rouge Louisiana Single Family
Mortgage Series C........................ 04/01/32 7.000% $ 147,161
310 East Baton Rouge Parish Louisiana Womans
Hospital Foundation (Escrow to
Maturity)................................ 10/01/08 7.200 355,043
385 Jefferson Parish Louisiana Hospital Service
District No. 001 Hospital Revenue (Escrow
to Maturity)............................. 01/01/09 7.250 450,076
800 Louisiana Public Facilities Authority
Revenue Cp Pg Health and Education A1 Rmk
(Mandatory Put 6/1/02 @ 100) (AMBAC
Insured)................................. 12/01/15 5.000 818,200
430 Louisiana State Health Education Authority
Alton Ochsner Medical Foundation (Escrow
to Maturity)............................. 05/01/05 8.750 502,894
-----------
2,401,942
-----------
MAINE--0.10%
30 Maine Health & High Educational Facilities
Hospital St. Marys General Hospital
(Pre-Refunded 07/01/99 @ 102)............ 07/01/09 8.500 32,782
-----------
MICHIGAN--5.58%
735 Detroit Michigan Water Supply Systems
Revenue (Escrow to Maturity)............. 01/01/05 8.875 874,540
235 Michigan Municipal Bond Authority Revenue
Wayne County Project (Escrow to Maturity)
(MBIA Insured)........................... 12/01/02 7.400 263,675
100 Michigan State Hospital Finance Authority
Revenue Harper Grace Hospital (Escrow to
Maturity)................................ 05/01/09 7.125 117,190
205 Michigan State Hospital Finance Authority
Revenue Mount Carmel Mercy Hospital
(Escrow to Maturity)..................... 08/01/05 7.500 229,182
245 Michigan State Housing Development
Authority*............................... 12/01/12 7.650 255,251
40 Michigan State Strategic Limited
Obligation............................... 08/15/05 7.875 46,403
115 Petoskey Michigan Hospital Finance
Authority (Escrow to Maturity)........... 03/01/07 6.700 125,910
-----------
1,912,151
-----------
MINNESOTA--1.57%
270 Coon Rapids Minnesota Hospital Revenue
Health Central Incorporated (Escrow to
Maturity)................................ 08/01/08 7.625 310,492
176 Eden Prairie Minnesota Multi Family Housing
(GNMA Collateralized).................... 01/20/06 5.500 182,998
40 Moorhead Minnesota Residential Mortgage
(Escrow to Maturity)..................... 08/01/11 7.100 45,397
-----------
538,887
-----------
MISSOURI--0.84%
270 St. Louis County Missouri Single Family
Housing (AMBAC Insured).................. 10/01/16 9.250 287,339
-----------
NEBRASKA--3.07%
1,000 Nebraska Higher Education Loan Program*.... 12/01/02 6.700 1,051,890
-----------
NEW JERSEY--7.44%
125 New Jersey Health Care Facilities Financing
St. Barnabas Medical Center (Escrow to
Maturity)................................ 07/01/11 7.000 141,260
155 New Jersey State Highway Garden State
Parkway (Escrow to Maturity)............. 01/01/11 6.600 172,929
400 New Jersey State Highway Garden State
Parkway (Escrow to Maturity)............. 01/01/11 6.500 449,056
1,500 New Jersey State Housing Mortgage Multi
Family Housing Revenue (FHA Insured)..... 05/01/13 6.950 1,628,655
</TABLE>
39
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE MUNICIPAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- ---------------- ----------- -----------
<C> <S> <C> <C> <C>
</TABLE>
MUNICIPAL BONDS AND NOTES--(CONTINUED)
<TABLE>
<C> <S> <C> <C> <C>
NEW JERSEY--(CONCLUDED)
$ 65 Secaucus New Jersey Municipal Utilities
Authority Sewer Revenue (Escrow to
Maturity)................................ 12/01/08 6.875% $ 73,514
75 South Jersey Port Corporation (Escrow to
Maturity)................................ 01/01/11 6.625 84,598
-----------
2,550,012
-----------
NEW MEXICO--0.93%
65 Albuquerque New Mexico Residental Mortgage
Revenue (Escrow to Maturity)............. 03/01/04 7.000 71,734
245 Taos County New Mexico Hospital (Asset
Guaranty Insurance)...................... 05/15/02 5.000 246,257
-----------
317,991
-----------
NORTH CAROLINA--0.45%
130 North Carolina Medical Care Facility
Stanley County Hospital (Escrow to
Maturity)................................ 10/01/09 7.600 154,149
-----------
OHIO--1.25%
45 Franklin County Ohio Hospital Revenue
(Escrow to Maturity)..................... 12/01/08 7.400 52,098
100 Ohio Housing Finance Agency Single Family
Mortgage (GNMA Collateralized)*.......... 09/01/21 7.850 106,680
210 Ohio State Water Development Authority
Revenue (Escrow to Maturity)............. 12/01/10 9.375 268,680
-----------
427,458
-----------
OKLAHOMA--2.49%
335 Comanche County Oklahoma Hospital Authority
Revenue Series A (Connie Lee Insured).... 07/01/06 5.100 342,206
425 McAlester Oklahoma Public Works Authority
Revenue (FSA Insured).................... 12/01/04 8.250 512,945
-----------
855,151
-----------
PENNSYLVANIA--2.04%
140 Allegheny County Pennsylvania Industrial
Commercial Development MPB Association... 12/01/04 6.750 143,276
25 Bethlehem Center School District
Pennsylvania (Escrow to Maturity)........ 11/01/00 6.200 25,837
35 Caln Township Pennsylvania Municipal Sewer
Revenue (Escrow to Maturity)............. 01/01/09 5.700 37,113
25 Chester County Pennsylvania Hospital
Authority Revenue (Escrow to Maturity)... 07/01/09 7.500 29,212
95 Conneaut Pennsylvania School District
(Escrow to Maturity) (AMBAC Insured)..... 05/01/02 9.250 109,081
115 Montgomery County Pennsylvania Higher
Education Beaver College (Escrow to
Maturity)................................ 10/01/00 6.750 120,265
210 Unity Township Pennsylvania Municipal
Authority (Escrow to Maturity)........... 05/01/08 6.600 234,765
-----------
699,549
-----------
RHODE ISLAND--2.15%
700 Rhode Island Housing and Mortgage
Finance*................................. 04/01/22 8.050 738,850
-----------
SOUTH CAROLINA--0.68%
205 Charleston County South Carolina Hospital
Facility Roper Hospital (Escrow to
Maturity)................................ 10/01/11 7.000 232,640
-----------
</TABLE>
40
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE MUNICIPAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- ---------------- ----------- -----------
<C> <S> <C> <C> <C>
</TABLE>
MUNICIPAL BONDS AND NOTES--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
TENNESSEE--5.75%
$ 1,000 Bristol Tennessee Industrial Development
Board Refunding Shelby Heights Apartments
Project.................................. 03/01/22 6.200% $ 1,021,730
395 Knox County Tennessee Health Educational &
Hospital Facility St. Mary's Medical
Center (Escrow to Maturity).............. 08/01/03 7.250 438,857
255 La Follette Tennessee Housing Development
Corp. (FHA/MBIA Insured)................. 01/01/05 5.400 262,997
200 Metropolitan Government Nashville Tennessee
Health and Education Southern Adv
Hospital Adv Health Systems (Escrow to
Maturity)................................ 10/01/09 8.700 247,688
-----------
1,971,272
-----------
TEXAS--9.26%
410 Galveston County Texas Housing Finance
Corp. Single Family Mortgage Revenue..... 04/01/15 9.750 448,003
105 Hidalgo County Texas Health Services
Corporation Mission Hospital Project
(Pre-Refunded 08/01/00 @ 103)............ 02/01/25 10.250 126,017
245 Houston Texas Airport Systems Revenue
(Escrow to Maturity)..................... 07/01/10 7.600 288,664
1,500 Southeast Texas Housing Finance Corp....... 12/01/16 7.625# 376,155
1,100 Tarrant County Texas Housing Finance
Corporation Refunding Multi Family
Housing Summit Project (FNMA
Collateralized).......................... 09/01/27 5.080 1,100,000
800 Texas State Department Housing and
Community Housing Senior Dallas/Fort
Worth Series A........................... 07/01/06 6.000 835,296
-----------
3,174,135
-----------
UTAH--5.97%
280 Salt Lake City Utah Hospital Revenue
(Escrow to Maturity)..................... 06/01/09 7.350 325,682
645 Salt Lake County Utah Multi Family Housing
James Pointe Apartment (Mandatory put
10/01/05 @ 100) (Asset Guaranty
Insurance)............................... 10/01/25 5.500 665,485
190 Salt Lake County Utah Water Conservation
(Escrow to Maturity) (MBIA Insured)...... 10/01/02 10.875 227,067
255 Utah State Housing Finance Agency (AMBAC
Insured)................................. 07/01/07 5.650 263,451
550 Utah State Housing Finance Agency (AMBAC
Insured)................................. 07/01/08 5.900 566,797
-----------
2,048,482
-----------
VIRGINIA--0.73%
250 King George County Virginia Industrial
Development Elementary School Project.... 08/01/98 4.875 250,182
-----------
WEST VIRGINIA--1.38%
390 Kanawha County West Virginia Building
Commission Revenue St. Francis Hospital
(Escrow to Maturity)..................... 12/01/07 7.500 445,224
25 Kanawha County West Virginia Residential
Mortgage Revenue (Escrow to Maturity).... 09/01/10 7.375 28,740
-----------
473,964
-----------
Total Municipal Bonds and Notes (cost--$30,433,790).... 31,355,326
-----------
TAX EXEMPT COLLATERALIZED MORTGAGE OBLIGATIONS--1.22%
418 FHA Insured Trust 1996-01, Class A1 (FHA
Insured)(1) (cost--$417,646)............. 11/01/06 6.100 416,602
-----------
</TABLE>
41
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE MUNICIPAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
TAX-FREE MONEY MARKET FUNDS--5.39%
<C> <S> <C> <C> <C>
1,850,000 SSGA Tax-Free Fund* (cost--$1,850,000)..... $ 1,850,000
-----------
Total Investments (cost--$32,701,436)--98.05%.......... 33,621,928
Other assets in excess of liabilities--1.95%........... 670,212
-----------
Net Assets--100.00%.................................... $ 34,292,140
-----------
-----------
</TABLE>
- ---------------
# Zero coupon bond--Annualized yield at date of purchase
* Security subject to Alternative Minimum Tax
(1) Illiquid security represents 1.22% of Net Assets.
AMBAC American Municipal Bond Assurance Corporation
FHA Federal Housing Authority
FNMA Federal National Mortgage Association
FSA Financial Security Assurance
GNMA Government National Mortgage Association
MBIA Municipal Bond Investors Assurance
See accompanying notes to financial statements
42
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE GLOBAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000)* DATES RATES VALUE
- --------- -------------------- --------------- -----------
<C> <S> <C> <C> <C>
LONG-TERM GLOBAL DEBT SECURITIES--92.34%
ARGENTINA--2.93%
USD 2,100 Republic of Argentina............................. 07/10/02 to 03/31/23 5.500 to 8.750% $ 1,768,875
-----------
AUSTRALIA--1.91%
730 Commonwealth of Australia......................... 10/15/07 10.000 688,098
610 Federal National Mortgage Association............. 07/10/02 6.500 462,885
-----------
1,150,983
-----------
CANADA--5.35%
3,654 Government of Canada.............................. 06/01/23 to 06/01/27 8.000 3,225,720
-----------
DENMARK--4.91%
18,820 Kingdom of Denmark................................ 11/15/00 to 11/15/07 7.000 to 9.000 2,957,021
-----------
ITALY--6.12%
6,265,000 Republic of Italy................................. 02/01/99 to 02/01/07 6.750 to 10.500 3,691,891
-----------
KOREA--0.35%
USD 200 Korea Telecom..................................... 04/15/07 7.625 209,075
-----------
MEXICO--1.71%
USD 1,250 United Mexican States............................. 12/31/19 6.250 1,031,595
-----------
NORWAY--1.66%
7,200 Kingdom of Norway................................. 01/15/07 6.750 998,312
-----------
SWEDEN--7.55%
34,300 Kingdom of Sweden................................. 10/25/06 to 08/15/07 6.500 to 8.000 4,550,337
-----------
SWITZERLAND--0.44%
USD 250 Swiss Bank Corp................................... 07/15/25 7.500 262,674
-----------
UNITED KINGDOM--15.13%
4,957 United Kingdom Gilt............................... 09/27/13 to 06/07/21 8.000 9,123,211
-----------
UNITED STATES--43.59%
220 African Development Bank (2)...................... 10/15/15 6.875 223,520
300 American Re Corp.................................. 12/15/26 7.450 315,527
350 Cajun Electrical Power Corp....................... 03/15/19 9.520 373,943
500 Rowan Companies Inc............................... 07/01/10 6.940 512,145
350 Salomon Inc....................................... 11/30/00 6.625 352,955
300 Statoil........................................... 05/01/06 6.875 308,256
4,127 U.S. Treasury Bonds............................... 02/15/21 to 11/15/26 6.500 to 7.875 4,425,169
16,906 U.S. Treasury Notes (1)........................... 05/15/00 to 07/15/06 6.375 to 7.000 17,175,315
3,045 U.S. Treasury Strips.............................. 05/15/04 5.970+ 2,031,453
550 Xerox Corp. MTN................................... 06/15/37 5.875 554,061
-----------
26,272,344
-----------
VENEZUELA--0.69%
500 Republic of Venezuela............................. 03/31/20 6.750 418,125
-----------
Total Long-Term Global Debt Securities (cost--$55,303,479)... 55,660,163
-----------
<CAPTION>
</TABLE>
43
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE GLOBAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- --------------- -----------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--19.42%
$ 2,200 Repurchase Agreement dated 07/31/97 with Deutsche
Bank, collateralized by $2,244,220 U.S. Treasury
Notes, 12.000% due 05/15/05; proceeds:
$2,200,351**..................................... 08/01/97 5.750% $ 2,200,000
2,295 Repurchase Agreement dated 07/31/97 with Dresdner
Bank AG, collateralized by $2,341,839 U.S.
Treasury Notes, 7.000% due 04/15/99; proceeds:
$2,295,367**..................................... 08/01/97 5.750 2,295,000
2,812 Repurchase Agreement dated 07/31/97 with State
Street Bank & Trust Company, collateralized by
$2,868,321 U.S. Treasury Notes, 7.250% due
02/15/98; proceeds: $2,812,391................... 08/01/97 5.000 2,812,000
2,200 Repurchase Agreement dated 07/31/97 with Union Bank
of Switzerland, collateralized by $2,245,100 U.S.
Treasury Notes, 11.250% due 02/15/15; proceeds:
$2,200,352**..................................... 08/01/97 5.760 2,200,000
2,200 Repurchase Agreement dated 07/31/97 with Citibank,
collateralized by $2,250,219 U.S. Treasury Notes,
7.625% due 02/15/25; proceeds: $2,200,351**...... 08/01/97 5.750 2,200,000
------------
Total Repurchase Agreements (cost--$11,707,000)............... 11,707,000
------------
<CAPTION>
NUMBER OF
SHARES
- ---------
<C> <S> <C> <C> <C>
MONEY MARKET FUNDS--9.16%
2,544,473 Liquid Assets Portfolio**................................................................. 2,544,473
2,512,319 TempCash Portfolio**...................................................................... 2,512,319
462,939 TempFund Portfolio**...................................................................... 462,939
------------
Total Money Market Funds (cost--$5,519,731).......................................................... 5,519,731
------------
Total Investments (cost--$72,530,210)--120.92%....................................................... 72,886,894
Liabilities in excess of other assets--(20.92)%...................................................... (12,607,682)
------------
Net Assets--100.00%.................................................................................. $ 60,279,212
------------
------------
</TABLE>
- ---------------
* In local currency unless otherwise indicated
** Entire or partial amount represents investments of cash collateral for
securities loaned.
+ Estimated yield to maturity at July 31, 1997
MTN Medium Term Note
USD U.S. Dollars
(1) Security, or portion thereof, was on loan at July 31, 1997.
(2) "Supranational" security denominated in U.S. Dollars
44
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE GLOBAL FIXED INCOME INVESTMENTS
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--19.42%--(CONTINUED)
<TABLE>
<CAPTION>
FOREIGN CURRENCY CONTRACTS
UNREALIZED
CONTRACT TO IN EXCHANGE MATURITY APPRECIATION
DELIVER FOR DATES (DEPRECIATION)
------------ ------------------ ------- -------------
<S> <C> <C> <C> <C>
British Pounds.............................. 7,506 U.S.$ 12,307 08/19/97 $ 80
Canadian Dollars............................ 2,410,860 U.S.$ 1,744,598 08/05/97 1,413
German Deutschemarks........................ 9,143,383 U.S.$ 4,971,235 08/19/97 (378,883 )
German Deutschemarks........................ 4,615,678 U.S.$ 2,509,532 08/19/97 (174,001 )
Danish Kronas............................... 5,747,004 U.S.$ 819,943 08/19/97 (54,525 )
Japanese Yen................................ 862,379,267 U.S.$ 7,306,666 08/19/97 (183,166 )
Japanese Yen................................ 157,070,244 U.S.$ 1,330,806 08/19/97 (57,194 )
Japanese Yen................................ 620,275,700 U.S.$ 5,255,399 08/19/97 (284,601 )
Japanese Yen................................ 168,450,000 U.S.$ 1,427,223 08/19/97 (72,777 )
Norwegian Kroner............................ 11,521,370 U.S.$ 1,509,290 08/19/97 (113,918 )
U.S. Dollars................................ 1,506,382 DEM 2,770,625 08/19/97 116,826
U.S. Dollars................................ 2,111,691 DEM 3,883,945 08/19/97 73,463
U.S. Dollars................................ 3,951,301 DEM 7,267,461 08/19/97 245,589
U.S. Dollars................................ 452,812 DKK 3,173,771 08/19/97 39,475
U.S. Dollars................................ 2,926,039 GBP 1,784,501 08/19/97 (45,921 )
U.S. Dollars................................ 1,110,204 GBP 677,079 08/19/97 30,674
U.S. Dollars................................ 1,163,446 ITL 2,091,648,960 08/19/97 81,791
U.S. Dollars................................ 2,625,234 ITL 4,719,658,625 08/19/97 126,930
U.S. Dollars................................ 2,845,059 JPY 335,791,988 08/19/97 164,941
U.S. Dollars................................ 1,322,880 JPY 156,134,732 08/19/97 65,120
U.S. Dollars................................ 2,937,089 JPY 346,654,000 08/19/97 102,909
-------------
$ (315,775 )
-------------
-------------
</TABLE>
CURRENCY TYPE ABBREVIATIONS:
DEM - German Deutschemarks
DKK - Danish Kronas
GBP - British Pounds
ITL - Italian Lira
JPY - Japanese Yen
See accompanying notes to financial statements
45
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE LARGE COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -------------
<C> <S> <C>
COMMON STOCKS--95.61%
AGRICULTURE, FOOD & BEVERAGE--4.49%
23,200 CPC International, Inc. ..................... $ 2,225,750
42,700 Coca-Cola Enterprises Inc. .................. 1,326,369
54,000 Nabisco Holdings Corp. (1) .................. 2,295,000
108,000 Tyson Foods Inc. ............................ 2,268,000
-------------
8,115,119
-------------
BANKS--7.98%
33,400 Chase Manhattan Corp......................... 3,792,988
24,700 Citicorp .................................... 3,353,025
14,600 Comerica Inc. ............................... 1,104,125
13,900 First American Corp. ........................ 590,750
16,600 First Bank System, Inc. ..................... 1,477,400
10,200 First of America Bank Corp................... 566,100
17,550 First Security Corp.......................... 471,656
29,500 Hibernia Corp................................ 446,188
13,600 Regions Financial Corp....................... 473,450
32,300 U.S. Bancorp................................. 2,156,025
-------------
14,431,707
-------------
CHEMICALS--2.39%
36,300 Eastman Chemical Co.......................... 2,196,150
14,700 Geon Co...................................... 282,975
58,000 Lyondell Petrochemical Co. (1)............... 1,526,125
7,200 Witco Corp................................... 328,500
-------------
4,333,750
-------------
COMPUTER HARDWARE--8.86%
104,300 EMC Corp.*................................... 5,267,150
47,400 Seagate Technology Inc.*..................... 1,946,362
107,000 Xerox Corp................................... 8,800,750
-------------
16,014,262
-------------
COMPUTER SOFTWARE--0.28%
10,900 Filenet Corp.*............................... 193,475
28,200 Informix Corp.*.............................. 319,013
-------------
512,488
-------------
DEFENSE/AEROSPACE--4.70%
64,766 Lockheed Martin Corp. ....................... 6,897,579
28,500 Raytheon Co.................................. 1,592,437
-------------
8,490,016
-------------
DIVERSIFIED RETAIL--0.74%
30,400 Federated Department Stores Inc.*............ 1,331,900
-------------
DRUGS & MEDICINE--8.04%
54,400 Allergan Inc................................. 1,737,400
53,000 Alza Corp.*.................................. 1,712,563
26,775 Covance Inc.*................................ 547,214
24,400 Forest Labs Inc.*............................ 1,110,200
22,021 Genzyme Corp.*............................... 589,903
99,700 Pharmacia & Upjohn Inc. (1).................. 3,763,675
93,000 Schering Plough Corp......................... 5,074,312
-------------
14,535,267
-------------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -------------
<C> <S> <C>
ELECTRIC UTILITIES--4.05%
65,700 CMS Energy Corp.............................. $ 2,430,900
56,900 Centerior Energy Corp. ...................... 643,681
34,200 Entergy Corp. ............................... 934,088
141,200 PECO Energy Co............................... 3,318,200
-------------
7,326,869
-------------
ELECTRICAL EQUIPMENT--0.68%
18,200 Boston Technology Inc.*...................... 483,438
5,000 Comverse Technology Inc.*.................... 243,750
16,400 Octel Communications Corp.*.................. 496,100
-------------
1,223,288
-------------
ELECTRONIC COMPONENTS--0.61%
40,300 Commscope Inc.*.............................. 644,800
30,225 General Semiconductor Inc.*.................. 460,931
-------------
1,105,731
-------------
ENVIRONMENTAL SERVICES--0.82%
40,200 Browning Ferris Industries, Inc.............. 1,487,400
-------------
FINANCIAL SERVICES--3.30%
106,550 Aon Corp. (1)................................ 5,966,800
-------------
FOREST PRODUCTS, PAPER--2.16%
10,000 Champion International Corp.................. 620,000
41,800 James River Corp. (1)........................ 1,721,638
22,400 Kimberly Clark Corp.......................... 1,135,400
12,650 Westvaco Corp. .............................. 422,984
-------------
3,900,022
-------------
FOOD RETAIL--0.86%
97,200 Food Lion Inc................................ 698,625
28,900 Kroger Co.*.................................. 854,356
-------------
1,552,981
-------------
FREIGHT, AIR, SEA, LAND--2.82%
78,900 Federal Express Corp.*....................... 5,093,981
-------------
HEAVY MACHINERY--0.84%
35,200 Harnischfeger Industries Inc................. 1,518,000
-------------
HOUSEHOLD PRODUCTS--1.08%
26,300 Dial Corp. .................................. 452,031
10,400 National Services Industries, Inc. .......... 512,850
52,000 Viad Corp.................................... 984,750
-------------
1,949,631
-------------
INDUSTRIAL SERVICES/SUPPLIES--0.88%
33,000 York International Corp. .................... 1,594,313
-------------
INFORMATION & COMPUTER SERVICES--5.37%
51,800 Automatic Data Processing Inc................ 2,564,100
112,020 First Data Corp.............................. 4,886,872
34,550 Interpublic Group Companies Inc. ............ 1,546,113
37,000 Reynolds & Reynolds Co....................... 716,875
-------------
9,713,960
-------------
</TABLE>
46
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE LARGE COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -------------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
LEISURE--0.95%
49,625 Mattel Inc. ................................. $ 1,724,469
-------------
MANUFACTURING-GENERAL--1.05%
28,100 Pentair Inc.................................. 1,020,382
24,700 Timken Co.................................... 869,131
-------------
1,889,513
-------------
MEDICAL PRODUCTS--1.14%
23,000 Baxter International Inc..................... 1,329,688
15,100 Beckman Instruments Inc. New................. 733,294
-------------
2,062,982
-------------
MEDICAL PROVIDERS--4.42%
67,800 Corning Inc.................................. 4,190,888
31,500 Health Care & Retirement Corp.*.............. 1,126,125
47,300 Manor Care Inc............................... 1,560,900
27,700 Vencor Inc.*................................. 1,116,656
-------------
7,994,569
-------------
MINING & METALS--0.51%
21,300 Birmingham Steel Corp........................ 387,394
15,560 Martin Marietta Inc.......................... 537,792
-------------
925,186
-------------
MOTOR VEHICLES--2.80%
78,300 Goodyear Tire & Rubber Co. .................. 5,055,244
-------------
OIL REFINING--3.10%
94,700 Enron Corp. (1).............................. 3,592,681
60,316 Ultramar Diamond Shamrock.................... 2,005,507
-------------
5,598,188
-------------
OTHER INSURANCE--4.44%
10,900 Aetna Inc.................................... 1,241,919
30,700 CIGNA Corp................................... 6,124,650
19,100 Old Republic International Corp. ............ 668,500
-------------
8,035,069
-------------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -------------
<C> <S> <C>
PUBLISHING--1.91%
34,800 Gannett Inc. ................................ $ 3,456,075
-------------
RAILROADS--3.22%
55,700 Burlington Northern Santa Fe Inc............. 5,378,531
11,500 Trinity Industries Inc....................... 447,063
-------------
5,825,594
-------------
REAL PROPERTY--2.18%
35,500 Champion Enterprise Inc...................... 583,531
13,800 Fleetwood Enterprises Inc. .................. 447,638
61,900 Masco Corp................................... 2,901,562
-------------
3,932,731
-------------
SPECIALTY RETAIL--2.63%
78,400 Circuit City Stores, Inc. ................... 2,842,000
33,700 CVS Corp. ................................... 1,916,687
-------------
4,758,687
-------------
TOBACCO--3.74%
149,700 Phillip Morris Companies Inc................. 6,755,212
-------------
WIRELESS TELECOMMUNICATIONS--2.57%
15,800 360 Communications Co. *..................... 291,312
201,800 Nextlevel Systems Inc.*...................... 4,362,156
-------------
4,653,468
-------------
Total Common Stocks (cost--$133,806,308)................ 172,864,472
-------------
<CAPTION>
<C> <S> <C>
MONEY MARKET FUNDS--7.37%
7,966,411 Liquid Assets Portfolio**.................... 7,966,411
1,060,402 Prime Portfolio**............................ 1,060,402
3,749,289 TempCash Portfolio**......................... 3,749,289
552,898 TempFund Portfolio**......................... 552,898
-------------
Total Money Market Funds
(cost--$13,329,000)................................... 13,329,000
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- ----------- --------------- ---------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--0.16%
$ 295 U.S. Treasury Bills + (cost--$290,469)................. 11/13/97 5.030 to 5.430% 290,628
------------
Repurchase
Agreement--4.17%
7,537 Repurchase Agreement dated 07/31/97 with State Street
Bank & Trust Company, collateralized by $7,687,826
U.S. Treasury Notes, 7.250% due 02/15/98; proceeds:
$7,538,047 (cost--$7,537,000).......................... 08/01/97 5.000 7,537,000
------------
Total Investments (cost--$154,962,777)--107.31%.................... 194,021,100
Liabilities in excess of other assets--(7.31)%..................... (13,214,540)
------------
Net Assets--100.00%................................................ $180,806,560
------------
------------
</TABLE>
- ---------------
* Non-income producing security
** Entire or partial amount represents investments of cash collateral for
securities loaned.
+ Entire or partial amount pledged as collateral for futures transactions.
(1) Security, or portion thereof, was on loan at July 31, 1997.
47
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE LARGE COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
FUTURES CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF IN EXPIRATION UNREALIZED
CONTRACTS CONTRACTS EXCHANGE FOR DATE APPRECIATION
- ---------- ---------------------------------------------------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
15 S&P 500................................................... $7,184,625 September 1997 $203,874
------------
------------
</TABLE>
See accompanying notes to financial statements
48
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE LARGE COMPANY GROWTH EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<C> <S> <C>
COMMON STOCKS--97.52%
AGRICULTURE, FOOD & BEVERAGE--3.03%
15,900 CPC International, Inc. ..................... $ 1,525,406
48,000 The Coca-Cola Co. ........................... 3,324,000
------------
4,849,406
------------
APPAREL, RETAIL--1.24%
66,700 TJX Companies Inc. New....................... 1,992,663
------------
APPAREL, TEXTILES--0.53%
17,800 Liz Claiborne, Inc. ......................... 852,175
------------
BANKS--6.25%
44,400 BankAmerica Corp. ........................... 3,352,200
14,900 Chase Manhattan Corp......................... 1,692,081
13,100 Citicorp..................................... 1,778,325
44,900 NationsBank Corp............................. 3,196,319
------------
10,018,925
------------
CHEMICALS--5.17%
34,700 Imperial Chemical Industries PLC............. 2,337,912
79,500 Monsanto Co. ................................ 3,960,094
36,200 Praxair Inc.................................. 1,995,525
------------
8,293,531
------------
COMPUTER HARDWARE--6.33%
40,600 3Com Corp.*.................................. 2,220,312
43,000 Adaptec Inc.* (1)............................ 1,811,375
34,700 Ascend Communications Inc.*.................. 1,886,813
74,000 Compaq Computer Corp.*....................... 4,227,250
------------
10,145,750
------------
COMPUTER SOFTWARE--6.99%
34,800 Computer Associates International Inc........ 2,368,575
40,500 Microsoft Corp.*............................. 5,730,750
53,000 Peoplesoft Inc.*............................. 3,100,500
------------
11,199,825
------------
DEFENSE/AEROSPACE--4.29%
24,600 Allied-Signal, Inc........................... 2,269,350
26,500 Sundstrand Corp.............................. 1,643,000
42,400 Textron Inc. ................................ 2,970,650
------------
6,883,000
------------
DIVERSIFIED RETAIL--3.56%
64,500 Dayton Hudson Corp. ......................... 4,168,313
24,300 Kohls Corp.*................................. 1,530,900
------------
5,699,213
------------
DRUGS & MEDICINE--12.85%
41,000 Bristol-Myers Squibb Co. .................... 3,215,938
37,100 Eli Lilly & Co. ............................. 4,192,300
60,700 Merck & Co., Inc. ........................... 6,309,006
57,700 Pfizer, Inc. ................................ 3,440,362
63,200 Schering Plough Corp......................... 3,448,350
------------
20,605,956
------------
ELECTRICAL EQUIPMENT--1.40%
30,000 Honeywell, Inc. ............................. 2,240,625
------------
ENTERTAINMENT--1.80%
52,800 Time Warner Inc.............................. 2,880,900
------------
FINANCIAL SERVICES--2.42%
25,900 Student Loan Marketing
Assoc...................................... 3,883,381
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<C> <S> <C>
HOTELS--4.26%
90,600 Hilton Hotels Corp........................... $ 2,848,237
38,500 Hospitality Franchise System, Inc.*.......... 2,242,625
65,100 Mirage Resorts Inc.*......................... 1,741,425
------------
6,832,287
------------
HOUSEHOLD PRODUCTS--6.35%
43,900 Avon Products Inc............................ 3,185,494
33,300 Colgate-Palmolive Co. (1).................... 2,522,475
45,200 Gillette Co. (1)............................. 4,474,800
------------
10,182,769
------------
INDUSTRIAL PARTS--1.84%
34,800 United Technologies Corp. ................... 2,942,775
------------
INDUSTRIAL SERVICES/SUPPLIES--1.48%
96,250 CUC International, Inc.* (1)................. 2,370,156
------------
INFORMATION & COMPUTER SERVICES--2.21%
45,800 HBO & Co. ................................... 3,543,775
------------
LIFE INSURANCE--5.14%
58,400 Conseco Inc.................................. 2,379,800
81,366 The Travelers Group, Inc..................... 5,853,267
------------
8,233,067
------------
LONG DISTANCE & PHONE COMPANIES--0.90%
41,500 WorldCom Inc.*............................... 1,449,906
------------
MEDIA--0.22%
20,800 Tele-Communications, Inc. Class A*........... 356,200
------------
MEDICAL PRODUCTS--5.71%
36,900 Boston Scientific Corp.* (1)................. 2,647,575
38,100 Guidant Corp................................. 3,476,625
34,800 Medtronic, Inc. ............................. 3,036,300
------------
9,160,500
------------
MEDICAL PROVIDERS--1.58%
74,500 Service Corp. International.................. 2,533,000
------------
SEMICONDUCTOR--7.63%
36,000 Applied Materials, Inc.*..................... 3,307,500
50,000 Intel Corp. ................................. 4,590,625
61,100 National Semiconductor Corp.*................ 1,924,650
21,000 Texas Instruments, Inc. ..................... 2,415,000
------------
12,237,775
------------
SPECIALTY RETAIL--3.31%
12,700 CVS Corp. ................................... 722,312
92,050 Home Depot Inc............................... 4,590,994
------------
5,313,306
------------
TOBACCO--1.03%
36,700 Phillip Morris Companies Inc................. 1,656,088
------------
Total Common Stocks (cost--$115,563,380)................ 156,356,954
------------
<CAPTION>
<C> <S> <C>
MONEY MARKET FUNDS--5.10%
5,307,940 Liquid Assets Portfolio**.................... 5,307,940
11,038 Prime Portfolio**............................ 11,038
1,901,070 TempCash Portfolio**......................... 1,901,070
954,269 TempFund Portfolio**......................... 954,269
------------
Total Money Market Funds
(cost--$8,174,317).................................... 8,174,317
------------
</TABLE>
49
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- --------------------------------------------------------------------------------
PACE LARGE COMPANY GROWTH EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- --------------- ---------- -----------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--4.32%
$2,981 Repurchase Agreement dated 07/31/97 with Deutsche Bank,
collateralized by $3,041,363 U.S. Treasury Bonds, 12.000%
due 05/15/05; proceeds: $2,981,476**...................... 08/01/97 5.750% $ 2,981,000
3,952 Repurchase Agreement dated 07/31/97 with State Street Bank &
Trust Company, collateralized by $4,031,153 U.S. Treasury
Bills, 7.250% due 02/15/98; proceeds: $3,952,549.......... 08/01/97 5.000 3,952,000
-----------
Total Repurchase Agreements (cost--$6,933,000).......................... 6,933,000
-----------
Total Investments (cost--$130,670,697)--106.94%......................... 171,464,271
Liabilities in excess of other assets--(6.94)%.......................... (11,130,409)
-----------
Net Assets--100.00%..................................................... $160,333,862
-----------
-----------
</TABLE>
- ---------------
* Non-income producing security
** Entire or partial amount represents investments of cash collateral for
securities loaned.
(1) Security, or a portion thereof, was on loan at July 31, 1997.
See accompanying notes to financial statements
50
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PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
COMMON STOCKS--95.09%
AGRICULTURE, FOOD & BEVERAGE--0.37%
2,100 Alpine Lace Brands Inc.*................ $ 17,063
2,157 ERLY Industries Inc.*................... 25,614
200 International Multifoods Inc............ 5,650
12,800 Nash Finch Co. ......................... 259,200
11,000 Orange Company, Inc. New................ 88,000
4,900 Suprema Specialties Inc.*............... 18,375
7,200 Sylvan, Inc.*........................... 82,800
------------
496,702
------------
AIRLINES--1.61%
21,600 ASA Holdings Inc........................ 610,200
16,500 Alaska Air Group Inc.* (1).............. 487,781
50,400 America West Holding Corp.*............. 696,150
30,200 Mesa Air Group Inc.*.................... 166,100
5,550 Midwest Express Holdings Inc.*.......... 138,403
8,300 World Airways Inc. New*................. 70,550
------------
2,169,184
------------
ALCOHOL--0.04%
5,600 Todhunter International Inc.*........... 49,000
------------
APPAREL, RETAIL--0.34%
22,300 Cato Corp. New.......................... 163,069
2,100 Fuqua Enterprises Inc.*................. 45,150
6,300 Gantos Inc. New*........................ 14,962
5,300 S & K Famous Brands Inc.*............... 66,250
15,800 Syms Corp.*............................. 171,825
------------
461,256
------------
APPAREL, TEXTILES--2.24%
57,100 Collins & Aikman Corp.*................. 620,962
1,125 Conso Products Co.*..................... 13,641
7,600 Culp, Inc............................... 132,050
1,666 Decorator Industries, Inc............... 15,827
11,300 Dyersburg Corp.......................... 120,769
6,400 Finlay Enterprises Inc.*................ 107,200
9,900 Galey & Lord Inc.*...................... 167,062
3,700 Garan Inc. ............................. 73,769
23,400 Guilford Mills, Inc..................... 506,025
3,200 Hampshire Group, Ltd.*.................. 49,600
28,000 Hartmarx Corp.*......................... 211,750
22,000 Justin Industries Inc................... 302,500
7,000 Marisa Christina Inc.*.................. 51,188
5,800 Maxwell Shoe Inc.*...................... 60,900
9,300 Pillowtex Corp.......................... 230,756
4,600 Supreme International Corp.*............ 80,500
18,600 Tultex Corp.*........................... 105,787
1,200 Weyco Group Inc. ....................... 91,800
12,800 Worldtex, Inc.*......................... 88,800
------------
3,030,886
------------
BANKS--7.06%
1,900 Amcore Financial Inc. .................. 55,100
1,500 American Bank Inc....................... 56,813
10,300 Bancorpsouth Inc........................ 309,000
4,600 Banknorth Group Inc. ................... 223,100
4,994 BB & T Corp. ........................... 255,318
8,250 CFX Corp. .............................. 165,000
3,806 CVB Financial Corp...................... 82,543
5,700 Capital Bancorp......................... 250,800
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
BANKS--(CONCLUDED)
5,625 Chittenden Corp. ....................... $ 198,281
15,000 Citizens Banking Corp................... 573,750
22,400 Colonial Bancgroup Inc.................. 618,800
7,665 Commerce Bancorp, Inc................... 286,479
3,200 Community Trust Bancorp Inc............. 84,000
11,600 Corus Bank Shares Inc................... 382,800
2,200 Evergreen Bancorp Inc. ................. 39,600
8,600 F & M National Corp..................... 232,737
4,100 First Citizens Bancshares, Inc. ........ 362,850
21,000 First Financial Corp.................... 661,500
5,000 First Western Bancorp Inc. ............. 196,250
4,700 Firstbank Illinois Co................... 202,688
8,858 HUBCO Inc............................... 286,778
7,015 Hancock Holding Co...................... 341,981
2,587 Interchange Financial Services Inc...... 57,884
4,800 Irwin Financial Corp.................... 144,000
2,300 Magna Group Inc......................... 84,813
7,089 Mid America Bancorp..................... 189,631
3,700 National Bancorp Alaska Inc............. 321,900
1,465 National Penn Banc Shares Inc........... 52,740
9,900 Onbancorp Inc........................... 501,187
13,500 One Valley Bancorp West Virginia Inc.... 581,344
19,400 Riggs National Corp..................... 419,525
4,700 Sterling Bancorp........................ 94,294
10,350 Susquehanna Bank Shares Inc............. 287,212
19,000 Trustmark Corp.......................... 546,250
6,400 United Bank Shares Inc.................. 279,200
1,900 U.S. Bancorp Inc........................ 112,575
------------
9,538,723
------------
CHEMICALS--2.81%
5,710 Aceto Corp.............................. 86,453
3,100 American Biltrite Inc................... 58,900
2,100 American Filtrona Corp.................. 95,287
1,900 American Vanguard Corp.................. 18,050
2,500 Ameron, Inc............................. 142,500
3,300 Atlantis Plastics Inc.*................. 19,800
10,800 Bairnco Corp............................ 98,550
11,200 Congoleum Corp. New*.................... 124,600
27,000 Foamex International Inc.*.............. 310,500
6,000 Furon Co................................ 177,000
31,800 Gencorp Inc............................. 926,175
1,400 General Magnaplate Corp. ............... 8,225
15,700 Gundle/SLT Environmental Inc.*.......... 72,613
9,135 Hawkins Chemical Inc.................... 74,222
3,500 Martin Color-Fi Inc.*................... 26,688
32,109 Mississippi Chemical Corp............... 682,316
4,100 National Picture & Frame Co.*........... 44,075
15,400 Rexene Corp............................. 243,512
11,200 Stepan Chemical Co...................... 290,500
4,700 Sybron Chemicals Inc.*.................. 104,575
3,000 Terra Industries Inc.................... 37,875
6,800 Thomson PBE Inc.*....................... 35,700
3,850 Wynn's International Inc. .............. 115,500
------------
3,793,616
------------
</TABLE>
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PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
COMPUTER HARDWARE--1.37%
4,900 Amplicon Inc. .......................... $ 142,100
21,500 Auspex Systems Inc.*.................... 236,500
18,100 Banctec, Inc.*.......................... 442,319
12,900 Compucom Systems Inc.*.................. 119,325
5,500 DH Technology Inc.*..................... 121,000
3,500 Dataram Corp.*.......................... 35,000
3,900 Equinox Systems Inc.*................... 40,950
8,600 Franklin Electronic Publishers Inc.*.... 110,725
1,500 McRae Industries Inc. .................. 13,125
13,800 Microage Inc.*.......................... 319,125
5,800 Miltope Group Inc.*..................... 20,300
8,200 Rainbow Technologies Inc.*.............. 158,875
6,200 Southern Electronics Corp.*............. 94,550
------------
1,853,894
------------
COMPUTER SOFTWARE--0.27%
38,600 Computervision Corp.*................... 132,688
1,800 GSE Systems Inc.*....................... 9,000
11,000 MacNeal Schwendler Corp.*............... 122,375
9,200 Santa Cruz Operation Inc.*.............. 43,700
13,600 Stac Electronics Inc.*.................. 57,800
------------
365,563
------------
CONSTRUCTION, REAL PROPERTY--0.25%
3,600 American Buildings Co. New*............. 108,000
8,300 Giant Cement Holding, Inc.*............. 184,675
2,333 MYR Group, Inc.......................... 46,077
------------
338,752
------------
CONSUMER DURABLES--1.03%
3,200 Business Resource Group*................ 11,200
4,300 Chromcraft Revington Inc.*.............. 116,100
3,400 Craftmade International Inc............. 30,600
1,000 Flexsteel Industries Inc. .............. 12,875
18,200 Mikasa Inc.............................. 242,287
2,100 Pulaski Furniture Corp. ................ 36,225
2,400 Shelby Williams Industries Inc.......... 36,900
4,100 Stanley Furniture Company,
Inc.*................................. 108,650
3,800 Tab Products Co. ....................... 36,575
10,000 Toro Co................................. 365,000
12,800 United States Can Corp.*................ 205,600
3,740 Virco Manufacturing Corp................ 111,265
6,300 Winsloew Furniture Inc.*................ 78,750
------------
1,392,027
------------
DEFENSE/AEROSPACE--1.01%
13,100 Alliant Techsystems Inc.*............... 682,837
1,800 Allied Research Corp.*.................. 18,000
4,500 Edo Corp................................ 39,375
3,600 Herley Industries Inc.*................. 49,950
7,200 SMC Corp.*.............................. 46,800
5,700 Safety Components International Inc.*... 74,011
11,600 Shiloh Industries Inc.*................. 226,200
20,500 Simpson Industries, Inc................. 221,016
------------
1,358,189
------------
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
DIVERSIFIED RETAIL--1.39%
16,900 Ames Department Stores Inc.*............ $ 247,162
24,200 BJ's Wholesale Club Inc. ............... 716,925
10,300 Carson Pirie Scott & Co.*............... 341,831
24,200 Homebase Inc.*.......................... 211,750
18,200 Shopko Stores Inc. ..................... 167,475
24,100 Value City Department Stores Inc.*...... 195,813
------------
1,880,956
------------
DRUGS & MEDICINE--1.16%
12,400 Bindley Western Industries, Inc......... 290,625
37,300 ICN Pharmaceuticals Inc................. 1,275,194
500 Natural Alternatives International
Inc.*................................. 3,625
------------
1,569,444
------------
ELECTRIC UTILITIES--6.30%
6,100 Bangor Hydro Electric Co.*.............. 35,075
12,500 Black Hills Corp. ...................... 360,156
18,700 Central Hudson Gas & Electric Corp. .... 620,606
25,100 Central Louisiana Electric Co........... 674,562
29,400 Central Maine Power Co.................. 396,900
13,300 Central Vermont Public Service Corp. ... 164,588
24,800 Commonwealth Energy Systems*............ 633,950
21,800 Eastern Utilities Associates............ 419,650
700 Florida Public Utilities Co. ........... 14,700
4,900 Green Mountain Power Corp. ............. 121,581
1,300 Maine Public Service Co. ............... 15,763
10,200 Northwestern Public Service Co.......... 191,250
14,400 Orange & Rockland Utilities
Inc................................... 486,900
4,600 Otter Tail Power Co..................... 146,625
43,700 Public Service Co. of
New Mexico............................ 808,450
45,000 Rochester Gas & Electric Corp........... 1,091,250
8,400 Saint Joseph Light & Power Co........... 137,025
14,200 TNP Enterprises Inc..................... 347,900
35,200 Tucson Electric Power Co.*.............. 589,600
14,800 United Illuminating Co.................. 511,525
4,600 Unitil Corp............................. 100,050
3,400 Upper Peninsula Energy Corp............. 78,200
19,800 WPS Resources Corp. .................... 555,638
------------
8,501,944
------------
ELECTRICAL EQUIPMENT--1.58%
3,600 AML Communications Inc.*................ 16,425
9,900 Aeroflex, Inc.*......................... 55,069
5,900 Bel Fuse Inc.*.......................... 95,138
3,700 CTS Corp. .............................. 304,787
8,400 Ceradyne Inc. .......................... 53,550
10,800 Cherry Corp.*........................... 159,300
13,500 Cidco Inc.*............................. 183,094
2,400 DBA Systems Inc.*....................... 13,050
1,800 Frequency Electronics Inc. ............. 29,025
7,900 Intervoice Inc.*........................ 79,000
8,300 IPC Information Systems Inc.*........... 132,800
2,100 Jaco Electronics Inc.*.................. 16,406
</TABLE>
52
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
ELECTRICAL EQUIPMENT--(CONCLUDED)
2,200 Nortech Systems Inc.*................... $ 10,450
7,900 Park Electrochemical Corp............... 237,987
6,600 Pioneer Standard Electronics,
Inc................................... 93,225
7,000 Richey Electronics Inc.*................ 57,750
1,700 Sigmatron International Inc.*........... 24,225
4,300 Smartflex Systems Inc.*................. 47,569
3,900 Spectrum Control Inc.*.................. 18,769
2,800 Speizman Industries Inc.*............... 14,700
8,035 Sterling Electronics Corp.*............. 95,918
6,900 Teltrend Inc.*.......................... 110,831
10,200 Ultratech Stepper, Inc.*................ 259,462
1,800 Video Display Corp.*.................... 9,000
1,900 Wandel & Goltermann Technologies
Inc.*................................. 18,763
------------
2,136,293
------------
ELECTRICAL POWER--0.15%
6,500 Alpine Group Inc.*...................... 75,563
2,700 Carbide/Graphite Group Inc.*............ 78,300
4,500 Sl Industries Inc....................... 46,125
------------
199,988
------------
ELECTRONIC COMPONENTS--0.10%
5,600 ITI Technologies Inc.*.................. 137,200
------------
ENERGY RESERVES & PRODUCTION--0.43%
11,600 Aquila Gas Pipeline Corp. .............. 152,250
10,100 Benton Oil & Gas Co.*................... 153,394
1,000 Enex Resources Corp. ................... 9,750
2,700 Prima Energy Corp.*..................... 43,875
2,400 Williams Clayton Energy Inc.*........... 26,700
9,400 Wilshire Oil Co......................... 58,162
7,600 Wiser Oil Co. .......................... 136,800
------------
580,931
------------
ENTERTAINMENT--0.19%
12,300 All American Communications Inc.*....... 224,475
3,400 Intrav Inc.............................. 34,000
------------
258,475
------------
ENVIRONMENTAL SERVICES--0.05%
5,200 GNI Group Inc.*......................... 32,500
3,600 MFRI Inc.*.............................. 36,000
------------
68,500
------------
FINANCIAL SERVICES--1.98%
5,000 Arcadia Financial Ltd. (1)*............. 47,813
7,200 Craig Jenny Inc.*....................... 49,050
2,500 Dewolfe Cos Inc.*....................... 11,250
3,000 Frontier Adjusters America Inc.......... 7,313
17,500 Gallagher Arthur J & Co................. 634,375
2,700 KBK Capital Corp.*...................... 14,513
4,000 Kaye Group Inc.......................... 28,500
15,900 North American Mortgage Co.............. 427,312
1,200 Pacific Crest Capital Inc.*............. 17,850
3,800 Refac Technology Development Corp. ..... 38,000
15,800 Resource Bank Shares Mortgage Group
Inc................................... 288,350
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
FINANCIAL SERVICES--(CONCLUDED)
4,300 Strattec Security Corp.*................ $ 84,925
17,800 Student Loan Corp....................... 755,387
3,300 Transport Leasing International Inc. ... 23,925
8,300 WFS Financial Inc.*..................... 169,112
11,000 World Acceptance Corp.*................. 72,875
------------
2,670,550
------------
FOREST PRODUCTS, PAPER--1.55%
12,200 ABT Building Products Corp.*............ 259,250
4,200 Astronics Corp.*........................ 30,450
15,400 Caraustar Inds Inc. .................... 469,700
2,550 Fibermark Inc.*......................... 56,578
33,400 Glatfelter PH Co........................ 624,162
3,200 Mosinee Paper Corp...................... 87,200
12,100 Paragon Trade Brands Inc.*.............. 211,750
7,590 Republic Group Inc. .................... 145,159
8,250 Rock-Tennessee Co....................... 140,250
3,100 Tranzonic Co. .......................... 67,038
------------
2,091,537
------------
FOOD RETAIL--0.44%
22,800 Ingles Markets Inc...................... 313,500
5,500 Marsh Supermarkets Inc.*................ 82,500
5,100 Schultz Sav O Stores Inc. .............. 93,712
2,200 Seaway Food Town Inc.................... 43,450
6,300 Western Beef, Inc.*..................... 62,213
------------
595,375
------------
FREIGHT, AIR, SEA & LAND--0.32%
10,400 Landstar Systems Inc.*.................. 260,000
3,400 MTL Inc.*............................... 82,025
3,300 PAM Transportation Services Inc.*....... 28,875
4,400 Transport Corp. of America*............. 62,975
------------
433,875
------------
GAS UTILITY--3.26%
3,300 Aquarion Co............................. 88,688
3,100 Atrion Corp. ........................... 47,081
5,000 Bay State Gas Co........................ 135,625
1,800 Berkshire Gas Co........................ 30,600
7,900 CTG Resources Inc....................... 174,294
4,700 Chesapeake Utilities Corp. ............. 78,138
7,700 Colonial Gas Co. ....................... 163,625
7,100 Connecticut Energy Corp................. 161,969
2,900 Connecticut Water Service Inc........... 81,925
15,400 Eastern Enterprises..................... 551,512
2,200 Energen Corp............................ 79,750
3,500 Energynorth Inc......................... 79,625
1,100 Essex County Gas Co. ................... 27,775
10,300 Indiana Energy Inc...................... 252,350
18,700 Ladede Gas Co........................... 439,450
2,700 Mobile Gas Service Corp................. 81,675
5,400 North Carolina Natural Gas Corp. ....... 179,887
17,100 Northwest Natural Gas Co................ 444,600
12,000 NUI Corp................................ 276,000
3,900 Providence Energy Corp. ................ 70,200
17,700 Sig Corp Inc............................ 462,412
</TABLE>
53
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- --------------------------------------------------------------------------------
PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
GAS UTILITY--(CONCLUDED)
2,400 SJW Corp. .............................. $ 130,200
2,300 South Jersey Industries Inc............. 52,325
4,800 Southern California Water Co............ 109,500
1,600 Valley Resources Inc.................... 17,500
7,800 Yankee Energy Systems Inc............... 187,200
------------
4,403,906
------------
HEAVY MACHINERY--1.31%
6,100 Allied Products Corp. .................. 220,363
9,900 Cascade Corp............................ 175,106
4,700 Gehl Co.*............................... 91,650
8,769 NACCO Industries Inc.................... 608,349
1,300 Richton International Corp.*............ 6,419
6,900 Tennant Co.............................. 244,950
23,000 Titan International Inc................. 396,750
4,000 Western Power & Equipment Corp.*........ 19,000
------------
1,762,587
------------
HOTELS--0.79%
10,100 Ameristar Casinos Inc.*................. 50,500
2,800 Black Hawk Gaming & Development Inc.*... 14,700
1,300 Buckhead America Corp.*................. 11,050
20,300 Casino America Inc.*.................... 45,675
44,600 Grand Casinos Inc.*..................... 699,662
2,900 John Q. Hammons Hotels, Inc.*........... 27,913
11,800 Players International, Inc.*............ 48,675
8,800 Sholodge, Inc.*......................... 140,800
2,200 Supertel Hospitality*................... 22,000
------------
1,060,975
------------
HOUSEHOLD PRODUCTS--0.73%
3,900 Align Rite International Inc.*.......... 61,425
4,900 Allou Health & Beauty Care, Inc.*....... 36,137
8,800 American Safety Razor Co.*.............. 162,800
5,400 Beauticontrol Cosmetics Inc............. 53,325
8,200 CPAC Inc.*.............................. 92,250
2,800 Dixon Ticonderoga Co.*.................. 38,150
7,400 Jean Phillippe Fragrances Inc.*......... 51,800
7,300 Libbey Inc. ............................ 271,925
13,300 Lifetime Hoan Corp.*.................... 114,712
12,700 Parlux Fragrances Inc.*................. 33,338
10,600 Scotts Liquid Gold Inc.*................ 24,513
4,400 Stephan Co. ............................ 50,875
------------
991,250
------------
INDUSTRIAL PARTS--5.10%
7,300 Amcast Industrial Corp.................. 186,606
2,300 Amistar Corp.*.......................... 10,781
8,700 Ampco Pittsburgh Corp................... 151,706
16,600 Baldwin Technology Inc.*................ 51,875
8,400 Barnes Group Inc. ...................... 238,875
11,200 Blount International Inc................ 501,200
6,600 Bridgeport Machines Inc.*............... 78,375
2,900 Central Sprinkler Corp.*................ 58,725
30,300 Cincinnati Milacron Inc................. 848,400
11,500 Commercial Intertech Corp............... 175,375
7,600 Durakon Industries Inc.*................ 71,250
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
INDUSTRIAL PARTS--(CONCLUDED)
1,200 Engineered Support Systems Inc.......... $ 21,600
8,300 Esterline Technologies Corp.*........... 303,987
3,600 Farr Co.*............................... 57,600
32,400 Fedders USA Inc......................... 196,425
10,600 Genlyte Group Inc.*..................... 159,000
4,800 Gleason Corp. .......................... 233,700
18,600 Global Industrial Technologies Inc.*.... 352,237
11,800 Graco Inc............................... 388,662
1,000 Graham Corp.*........................... 17,625
6,900 Hardinge Brothers Inc................... 229,425
2,200 Hein Werner Corp.*...................... 16,775
7,000 Hurco Co. Inc.*......................... 42,000
2,400 K Tron International Inc.*.............. 31,800
6,100 Kaman Corp.............................. 98,363
4,300 Knape & Vogt Manufacturing Co........... 68,800
2,300 Lawson Inc.............................. 60,375
7,600 Mestek, Inc.*........................... 140,600
4,200 Nortek, Inc.*........................... 103,163
2,500 P & F Industries Inc.*.................. 14,063
3,300 Penn Engineering Manufacturing Corp. ... 67,650
2,800 Portec, Inc............................. 33,600
7,900 Powell Industries Inc.*................. 130,350
14,600 Quanex Corp............................. 454,425
4,600 Scotsman Industries, Inc. .............. 124,775
11,400 Semitool Inc.*.......................... 175,275
4,875 Shelter Components Corp. ............... 68,250
15,300 Specialty Equipment Cos Inc.*........... 231,412
10,200 Standex International Corp.............. 300,900
6,600 Starrett LS Co.......................... 207,900
3,100 Summa Industries*....................... 19,763
4,300 Transtechnology Corp. .................. 107,769
1,800 Twin Disc, Inc.......................... 52,088
------------
6,883,525
------------
INDUSTRIAL SERVICES/SUPPLIES--1.25%
3,400 Astrotech International Corp. New*...... 31,875
3,400 Cruise America Inc.*.................... 24,225
7,700 Daw Technologies*....................... 17,084
18,000 Flowserve Corp.......................... 614,250
6,900 Healthcare Services Group Inc.*......... 82,800
23,150 Interpool, Inc.*........................ 348,697
7,900 McGrath Rentcorp........................ 161,950
24,200 National Auto Credit Inc.*.............. 193,600
7,500 PLM International, Inc.*................ 41,719
8,100 Sunrise Leasing Corp.*.................. 31,387
8,400 Superior Surgical Manufacturing Inc. ... 115,500
5,858 Travel Ports America Inc.*.............. 19,039
680 Zimmerman Sign Co.*..................... 2,465
------------
1,684,591
------------
INFORMATION & COMPUTER SERVICES--0.78%
2,000 Analysis & Technology Inc............... 39,000
4,000 Baker Michael Corp.*.................... 28,250
18,600 Dames & Moore Inc....................... 244,125
5,500 Devon Group Inc. New*................... 221,375
</TABLE>
54
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PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
INFORMATION & COMPUTER SERVICES--(CONCLUDED)
6,100 Genicom Corp.*.......................... $ 55,663
6,200 Gradco Systems Inc.*.................... 37,975
2,000 Isomedix Inc.*.......................... 34,500
4,000 Plasti Line Inc.*....................... 49,000
6,900 Right Management Consultants Inc.*...... 67,275
1,000 Transport Lux Corp. .................... 13,250
4,100 Transpro Inc............................ 38,694
9,300 URS Corp. New*.......................... 133,687
2,300 Value Line Inc.......................... 93,150
------------
1,055,944
------------
LEISURE--2.54%
19,200 Arctic Cat Inc.......................... 201,600
6,200 Cannondale Corp.*....................... 110,050
24,100 Department 56 Inc.*..................... 576,894
4,200 Ellett Brothers Inc..................... 22,575
4,800 First Team Sports Inc.*................. 29,700
9,600 Fossil Inc.*............................ 213,600
10,900 GT Bicycles Inc.*....................... 81,920
3,200 Harveys Casino Resorts.................. 54,000
2,500 Koss Corp.*............................. 22,500
7,400 Marker International*................... 31,450
6,500 Movado Group Inc........................ 188,500
9,700 Oneida Ltd.............................. 286,150
23,500 Polaris Industries Inc.................. 680,031
40,000 Station Casinos Inc.*................... 285,000
13,300 Stanhome Inc. .......................... 438,068
5,400 Stuart Entertainment Inc.*.............. 14,850
8,000 Sturm Ruger & Co. Inc................... 167,000
6,784 Swing 'n Slide Corp.*................... 27,136
------------
3,431,024
------------
LIFE INSURANCE--3.78%
4,100 Allied Life Financial Corp. ............ 76,875
49,900 American Annuity Group Inc. ............ 1,041,662
10,500 American Heritage Life Investment
Corp.................................. 399,000
10,000 Amvestors Financial Corp. .............. 225,000
5,236 Conseco Inc. ........................... 213,367
1,875 Cotton States Life Insurance Co......... 29,063
6,976 Delphi Financial Group, Inc.*........... 266,832
5,800 Independence Holding Co. New............ 55,100
17,500 Liberty Corp............................ 783,125
5,500 Life Re Corp. .......................... 301,125
18,700 Life USA Holdings Inc.*................. 275,825
1,300 National Western Life Insurance Co.*.... 112,775
5,000 PennCorp Financial Group, Inc........... 184,688
19,400 Presidential Life Corp.................. 378,300
5,230 Reliastar Financial Corp................ 401,076
11,000 Washington National Corp................ 316,937
5,200 Westbridge Capital Corp.*............... 48,100
------------
5,108,850
------------
MANUFACTURING-GENERAL--0.00%
2,200 BFX Hospitality Group, Inc.*............ 5,225
------------
MANUFACTURING-HIGH TECHNOLOGY--0.13%
4,500 C&D Technologies........................ 170,719
------------
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
MEDIA--0.55%
20,800 Media General Inc....................... $ 738,400
------------
MEDICAL PRODUCTS--0.76%
12,200 Bio Rad Laboratories Inc.*.............. 346,175
19,600 Figgie International Holdings
Inc.*................................. 279,300
500 Lakeland Industries, Inc.*.............. 2,375
7,100 Maxxim Medical Inc.*.................... 131,350
9,100 Utah Medical Products Inc.*............. 72,800
11,000 Vital Signs Inc......................... 192,500
------------
1,024,500
------------
MEDICAL PROVIDERS--2.31%
13,900 LC of America Inc.*..................... 546,444
5,700 Advocat Services, Inc.*................. 70,537
3,000 Caretenders Healthcorp*................. 21,750
21,000 Integrated Health Services,
Inc. (1).............................. 716,625
25,200 Mariner Health Group Inc.*.............. 338,625
8,613 Medical Assurance Inc.*................. 411,271
18,400 Physicians Resource Group Inc.*......... 154,100
800 Raytel Medical Corp.*................... 8,250
40,200 Sun Healthcare Group Inc.*.............. 851,737
------------
3,119,339
------------
MINING & METALS--5.70%
7,700 Acme Metals Inc.*....................... 117,425
3,800 Atchison Casting Corp.*................. 73,150
17,400 Brush Wellman Inc....................... 396,937
4,400 BWAY Corp.*............................. 108,625
13,800 Carpenter Technology Corp. ............. 655,500
5,700 Castle A M & Co......................... 128,606
22,600 Chaparral Steel Co...................... 343,238
6,800 Chase Industries Inc.*.................. 169,575
14,500 Citation Corp.*......................... 264,625
13,100 Cleveland Cliffs Inc. .................. 569,850
4,700 Cold Metal Products Inc.*............... 27,906
13,900 Commercial Metals Co. .................. 441,325
14,200 Donnelly Corp........................... 276,900
11,500 Foster LB Co.*.......................... 56,063
13,900 Friedmans Industries Inc.*.............. 213,713
6,700 Green AP Industries Inc................. 70,350
29,100 Intermet Corp........................... 491,062
5,500 Lindberg Corp........................... 61,875
3,400 National Standard Co.*.................. 25,075
21,900 National Steel Corp.*................... 335,344
3,900 Northwestern Steel & Wire Co.*.......... 7,556
1,300 Oglebay Norton Co. ..................... 64,350
7,200 Park Ohio Industries Inc.*.............. 108,450
2,850 Pitt Desmoines Inc...................... 94,050
15,700 Pittston Co............................. 388,575
5,800 Roanoke Electric Steel Corp............. 106,575
24,800 Rouge Steel Co.......................... 434,000
10,700 Steel Technologies Inc.................. 136,425
23,700 Texas Industries Inc.................... 770,250
2,500 United States Lime & Minerals, Inc...... 20,625
25,500 UNR Industries Inc. .................... 124,313
6,600 Webco Industries Inc.*.................. 45,375
13,200 Wolverine Tube Inc.*.................... 387,750
</TABLE>
55
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
MINING & METALS--(CONCLUDED)
6,400 Zeigler Coal Holding Co................. $ 174,000
1,022 Zemex Corp.*............................ 8,559
------------
7,697,997
------------
MOTOR VEHICLES--3.26%
17,200 A.O. Smith Corp......................... 615,975
17,300 Arvin Industries Inc. .................. 602,256
4,790 Autocam Corp............................ 55,085
26,200 Breed Technologies, Inc................. 507,625
6,100 Custom Chrome Inc.*..................... 101,413
6,900 Defiance, Inc........................... 51,750
2,900 Edelbrock Corp.*........................ 56,913
11,400 Excel Industries, Inc................... 230,137
4,100 Hilite Industries Inc.*................. 21,013
2,900 JPE Inc.*............................... 18,805
2,300 Lund International Holdings, Inc.*...... 28,175
3,600 McClain Industries Inc.*................ 15,525
16,400 Modine Manufacturing Co................. 512,500
1,800 National R.V. Holdings Inc.*............ 31,050
7,100 Oshkosh Truck Corp...................... 105,612
8,400 R & B Inc.*............................. 74,550
3,000 Republic Automotive Parts Inc.*......... 45,000
3,091 Rexhall Industries, Inc.*............... 17,773
5,500 Standard Motor Products Inc. ........... 97,281
17,700 Standard Products Co.................... 456,881
6,216 Supreme Industries, Inc.*............... 55,556
24,800 TBC Corp.*.............................. 210,800
9,200 Thor Industries, Inc. .................. 230,000
1,350 Valley Forge Corp. ..................... 32,738
4,660 Varlen Corp. ........................... 146,207
9,800 Winnebago Indiana Inc................... 84,525
------------
4,405,145
------------
OIL REFINING--0.63%
2,400 Adams Resources & Energy Inc............ 35,100
4,400 Castle Energy Corp.*.................... 56,100
6,400 Giant Industries Inc.................... 109,600
6,000 Holly Corp.............................. 155,625
6,262 Mercury Air Group, Inc. ................ 38,355
20,700 Tesoro Petroleum Corp.*................. 322,143
6,300 World Fuel Services Corp................ 140,175
------------
857,098
------------
OTHER INSURANCE--8.77%
3,500 ACMAT Corp.*............................ 55,125
16,000 Acceptance Insurance Co.*............... 366,000
13,950 Allied Group Inc.*...................... 653,034
10,200 Atlantic American Corp.*................ 30,919
3,800 Bancinsurance Corp.*.................... 16,031
12,000 Capital Re Corp......................... 637,500
5,250 Capitol Transamerica Corp............... 137,156
4,800 Centris Group Inc....................... 107,400
4,400 Chartwell Re Corp....................... 146,300
23,800 Citizens Corp. ......................... 690,200
38,400 Commerce Group Inc...................... 1,000,800
5,200 Donegal Group Inc....................... 94,900
12,800 EMC Insurance Group Inc................. 168,000
11,300 Enhance Financial Services Group Inc.... 565,000
14,910 Fidelity National Financial Inc. ....... 267,448
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
OTHER INSURANCE--(CONCLUDED)
11,200 First American Financial Corp. ......... $ 474,600
23,145 Gainsco Inc. ........................... 212,645
11,781 Guaranty National Corp. New............. 313,669
15,200 Harleysville Group Inc.................. 571,900
2,200 Investors Title Insurance Co............ 39,325
9,500 Lawyers Title Corp...................... 205,438
11,900 MMI Companies Inc....................... 327,250
6,065 Mobile America Corp..................... 61,408
16,300 Nac Re-Insurance Corp................... 789,531
1,600 National Insurance Group................ 12,400
8,800 Navigators Group Inc.*.................. 162,800
8,600 Nymagic Inc............................. 195,650
6,100 Omni Insurance Group Inc.*.............. 84,638
17,400 Orion Capital Corp. .................... 727,537
750 Penn America Group Inc.................. 13,594
3,080 Professionals Insurance Co. Management
Group*................................ 86,240
12,478 PXRE Corp. ............................. 384,478
8,200 RLI Corp................................ 307,500
8,500 RTW Inc.*............................... 68,000
14,300 Selective Insurance Group Inc........... 761,475
8,300 State Auto Financial Corp. ............. 189,863
7,600 Stewart Information Services Corp. ..... 173,375
8,342 Titan Holdings Inc...................... 204,379
12,550 Trenwick Group Inc...................... 480,037
4,900 UNICO American Healthcare Co............ 54,513
------------
11,838,058
------------
PRECIOUS METALS--0.24%
12,800 Handy & Harman.......................... 232,000
2,000 Lazare Kaplan International Inc.*....... 34,500
3,500 Olympic Steel Inc....................... 60,375
------------
326,875
------------
PUBLISHING--1.49%
22,400 Bowne & Co. Inc......................... 744,800
2,000 Courier Corp. .......................... 38,500
6,500 Data Documents Inc.*.................... 79,625
15,500 Franklin Quest Co.*..................... 410,750
13,600 Graphic Industries, Inc. ............... 181,900
6,400 Merrill Corp............................ 256,000
4,400 Plenum Publishing Corp. ................ 173,800
3,000 Primesource Corp. ...................... 26,250
5,900 Scientific Games Holdings Corp.*........ 105,831
------------
2,017,456
------------
RAILROADS--0.57%
11,800 Greenbrier Companies Inc................ 149,713
31,600 Westinghouse Air Brake Co.
New................................... 616,200
------------
765,913
------------
REAL PROPERTY--6.84%
5,200 American Woodmark Corp.................. 75,400
12,600 BMC West Corp.*......................... 165,375
6,900 Beazer Homes USA Inc*................... 125,494
10,900 Belmont Homes Inc.*..................... 95,375
3,900 Butler Manufacturing Co................. 144,056
</TABLE>
56
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PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
REAL PROPERTY--(CONCLUDED)
10,500 Cameron Ashley Building Products,
Inc.*................................. $ 152,250
25,400 Centex Construction Products
Inc................................... 736,600
7,400 Continental Homes Holding Corp. ........ 168,350
42,500 D.R. Horton Inc.*....................... 510,000
6,100 Dominion Homes Inc. .................... 31,263
1,800 Drew Industries Inc. New*............... 25,313
8,000 Engle Homes Inc......................... 95,000
8,300 Florida Rock Industries, Inc............ 382,319
20,950 Granite Construction Inc.*.............. 434,712
19,900 Griffon Corp.*.......................... 291,037
20,500 Hovnanian Enterprises Inc.*............. 143,500
9,000 Juno Lighting Inc....................... 142,875
3,700 Liberty Homes, Inc...................... 37,925
8,900 Lone Star Industries, Inc............... 471,700
14,800 M.D.C. Holdings, Inc. .................. 148,925
11,900 Medusa Corp. ........................... 550,375
1,400 NCI Building Systems Inc.*.............. 50,575
11,900 NVR Inc.*............................... 206,019
4,100 Patrick Industries Inc.................. 78,413
4,300 Perini Corp.*........................... 35,206
20,700 Pulte Corp.............................. 844,819
7,800 Robertson Ceco Corp.*................... 64,350
6,500 Rottlund Inc.*.......................... 29,250
7,900 Schottenstein Homes Inc.*............... 109,612
3,400 Schult Homes Corp....................... 58,650
8,300 Skyline Corp............................ 211,131
14,700 Southdown, Inc.......................... 750,619
15,800 Southern Energy Homes Inc.*............. 161,950
4,300 Starrett Housing Corp................... 49,988
38,500 Toll Brothers Inc.*..................... 801,281
13,100 United States Home Corp. New*........... 435,575
8,400 Washington Homes Inc. New*.............. 32,025
18,500 Webb Delaware Corp...................... 344,562
5,000 Zaring Homes Inc.*...................... 47,500
------------
9,239,369
------------
RESTAURANTS--1.62%
3,500 Benihana Inc.*.......................... 37,187
2,200 Blimpie International Inc............... 10,450
27,600 Boston Chicken Inc.*.................... 360,525
1,200 Cooker Restaurant Corp. ................ 12,375
6,900 Davco Restaurants Inc.*................. 91,425
5,400 ELXSI Corp.*............................ 37,800
2,700 El Chico Restaurants, Inc.*............. 26,325
1,500 Garden Fresh Restaurant Corp.*.......... 18,188
6,300 IHOP Corp. New*......................... 200,025
26,800 Lubys Cafeterias Inc.................... 527,625
4,400 Max & Ermas Restaurants Inc.*........... 29,700
2,300 Morrison Health Care Inc................ 37,087
6,825 Morrison Restaurants Inc.*.............. 30,713
53,700 Ryan's Family Steak Houses,
Inc.*................................. 463,162
51,100 Shoneys Inc.*........................... 309,794
------------
2,192,381
------------
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
SECURITIES & ASSET MANAGEMENT--2.69%
14,000 Eaton Vance Corp. ...................... $ 435,750
1,000 H D Vest Inc.*.......................... 5,125
7,650 Interra Financial Inc................... 327,994
4,000 Interstate Johnson Lane, Inc............ 90,000
2,000 Jefferies Group, Inc. .................. 130,250
7,000 Legg Mason Inc.......................... 430,062
5,000 McDonald & Co. Investments Inc.......... 242,187
18,700 Morgan Keegan, Inc...................... 410,231
11,500 Piper Jaffray Companies, Inc............ 246,531
6,750 Quick & Reilly Group Inc................ 177,188
28,050 Raymond James Financial, Inc. .......... 808,191
7,500 Sherwood Group Inc.*.................... 114,375
6,900 Southwest Securities Group Inc.......... 156,113
4,200 Stifel Financial Corp................... 40,950
1,000 Ziegler Companies Inc. ................. 21,625
------------
3,636,572
------------
SEMICONDUCTOR--2.02%
10,404 Bell Industries, Inc.*.................. 178,168
8,200 Bell Microproducts Inc.*................ 77,900
1,200 Bowmar Instrument Corp.*................ 2,850
25,300 Chips & Technologies Inc.*.............. 426,937
39,500 Ess Technology Inc.*.................... 570,281
14,400 Marshall Industries*.................... 584,100
4,700 Microsemi Corp.*........................ 64,919
3,600 Nu Horizons Electronics Corp.*.......... 29,250
1,600 Optek Technology Inc.*.................. 24,200
1,000 Richardson Electronics Ltd.............. 8,313
5,400 Taitron Components Inc.*................ 18,225
9,700 Trident Microsystems Inc.*.............. 178,844
11,200 Wyle Electronics*....................... 559,300
------------
2,723,287
------------
SPECIALTY RETAIL--1.34%
5,900 Advanced Marketing Services, Inc.*...... 64,900
7,900 Blair Corp. ............................ 128,869
6,800 Brookstone Inc.*........................ 60,350
6,300 D I Y Home Warehouse Inc.*.............. 17,325
13,800 Discount Auto Parts Inc.*............... 282,900
5,900 Duckwall Alto Stores Inc. New*.......... 77,438
4,210 Friedman Industries, Inc. .............. 33,417
13,600 Haverty Furniture Companies
Inc................................... 187,000
3,300 Holiday RV Superstores Inc.*............ 5,878
6,300 Inacom Corp.*........................... 210,262
8,500 Natural Wonders Inc.*................... 34,000
7,100 Rex Stores Corp.*....................... 67,450
1,200 Roberds Inc.*........................... 5,250
104,900 Service Merchandise Co., Inc.*.......... 354,037
12,500 Tandycrafts Inc.*....................... 57,813
7,400 Tractor Supply Co.*..................... 127,650
6,900 Wolohan Lumber Co. ..................... 89,700
------------
1,804,239
------------
</TABLE>
57
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PACE SMALL/MEDIUM COMPANY VALUE EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
THRIFT--2.53%
750 Anchor Bancorp Wisconsin Inc............ $ 39,750
14,300 Bankers Corp. .......................... 409,337
13,300 Collective Bancorp, Inc.*............... 691,600
3,700 D & N Savings Financial Corp. .......... 71,688
4,400 Eagle Financial Corp. .................. 148,500
3,150 First Liberty Financial Corp............ 74,616
6,200 First Republic Bancorp Inc.*............ 150,350
1,800 Haven Bancorp........................... 66,150
3,500 Keystone Heritage Group Inc............. 112,438
5,250 MAF Bancorp Inc. ....................... 178,500
12,400 Metrowest Bank.......................... 82,925
12,400 New York Bancorp Inc. .................. 385,950
2,125 Parkvale Financial Corp. ............... 58,969
3,300 Saint Francis Capital Corp.............. 118,800
44,432 Sovereign Bancorp, Inc. (1)............. 703,969
1,600 Washington Savings Bank FSB............. 10,000
5,090 York Financial Corp..................... 112,616
------------
3,416,158
------------
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- ------------
<C> <S> <C>
TOBACCO--0.06%
5,000 Standard Commercial Corp.*.............. $ 82,500
------------
128,416,743
Total Common Stocks (cost--$100,712,917)..........
------------
MONEY MARKET FUNDS--1.19%
759,185 Liquid Assets Portfolio**............... 759,185
845,215... TempCash Portfolio**.................... 845,215
------------
1,604,400
Total Money Market Funds
(cost--$1,604,400)................................
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE
- ----------- --------------- ---------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT--5.58%
$ 7,535 Repurchase Agreement dated 07/31/97 with State Street
Bank & Trust Company, collateralized by $7,687,826
U.S. Treasury Bonds, 5.000% due 02/15/98; proceeds:
$7,536,047 (cost--$7,535,000)......................... 08/01/97 5.000% 7,535,000
-----------
Total Investments (cost--$109,852,318)--101.86%..................... 137,556,143
Liabilities in excess of other assets--(1.86)%....................... (2,509,061)
-----------
Net Assets--100.00%.................................................. $135,047,082
-----------
-----------
</TABLE>
- ---------------
* Non-income producing security
** Entire or partial amount represents investments of cash collateral for
securities loaned.
(1) Security, or portion thereof, was on loan at July 31, 1997.
See accompanying notes to financial statements
58
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PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS--88.16%
APPAREL, TEXTILES--0.90%
18,000 Quiksilver Inc.*............................. $ 666,000
28,100 Sport Haley Inc.*............................ 460,138
-----------
1,126,138
-----------
COMPUTER HARDWARE--1.90%
47,300 EMC Corp.*................................... 2,388,650
-----------
COMPUTER SOFTWARE--6.62%
53,200 Aspect Development Inc.* (1)................. 1,748,950
44,100 Credit Management Solutions Inc.*............ 518,175
14,600 Harbinger Corp.*............................. 472,675
4,500 Hyperion Software Corp.*..................... 120,938
24,800 PSW Technologies Inc.*....................... 342,550
85,500 Peerless Systems Corp.*...................... 1,186,312
106,200 Platinum Technology Inc.*.................... 1,646,100
37,800 Puma Technology Inc.*........................ 316,575
31,700 Veritas Software Co.*........................ 1,965,400
-----------
8,317,675
-----------
CONSUMER DURABLES--1.02%
18,500 Home Products International Inc.*............ 252,062
5,200 Novel Denim Holdings Ltd.*................... 117,000
55,400 Racing Champions Corp.*...................... 914,100
-----------
1,283,162
-----------
DEFENSE/AEROSPACE--1.03%
36,200 AAR Corp..................................... 1,294,150
-----------
DIVERSIFIED RETAIL--1.18%
58,200 Cost Plus Inc.*.............................. 1,484,100
-----------
DRUGS & MEDICINE--3.88%
75,900 Ariad Pharmaceuticals Inc.*.................. 441,169
10,300 Arqule Inc.*................................. 169,950
105,700 Capstone Pharmacy Services Inc.*............. 1,228,762
50,300 Depotech Corp.*.............................. 666,475
74,900 Dusa Pharmaceuticals Inc.*................... 383,863
57,100 Guilford Pharmaceuticals Inc.*............... 1,266,906
20,500 Vertex Pharmaceuticals Inc.*................. 720,062
-----------
4,877,187
-----------
ELECTRIC UTILITIES--1.40%
22,186 AES Corp.*................................... 1,752,694
-----------
ELECTRICAL EQUIPMENT--4.41%
43,800 ITI Technologies Inc.*....................... 1,073,100
38,000 Komag Inc.*.................................. 790,875
60,200 P-Com Inc.*.................................. 2,216,112
35,300 Pairgain Technologies Inc.*.................. 758,950
70,600 Telco Systems Inc.*.......................... 697,175
-----------
5,536,212
-----------
ELECTRONIC COMPONENTS--1.67%
8,500 Aavid Thermal Technologies Inc.*............. 175,312
1,500 Gemstar Group Ltd.*.......................... 23,813
40,800 Sipex Corp.*................................. 1,897,200
-----------
2,096,325
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
ENERGY RESERVES & PRODUCTION--0.19%
8,100 Friede Goldman International Inc.*........... $ 232,875
-----------
ENTERTAINMENT--1.24%
18,300 Entertainment Inc.*.......................... 384,300
55,000 Florida Panthers Holdings Inc.*.............. 1,179,062
-----------
1,563,362
-----------
ENVIRONMENTAL SERVICES--2.10%
37,920 Republic Industries Inc.* (1)................ 933,780
31,200 Superior Services Inc.*...................... 819,000
23,500 Tetra Technologies Inc.*..................... 655,062
3,700 Waste Industries Inc.*....................... 67,294
25,700 York Research Corp.*......................... 160,625
-----------
2,635,761
-----------
FINANCIAL SERVICES--4.17%
56,800 INMC Mortgage Holdings Inc................... 1,370,300
105,200 Long Beach Financial Corp.*.................. 1,209,800
45,700 Medallion Financial Corp.*................... 862,587
6,700 Mego Mortgage Corp.*......................... 82,913
69,300 Ocwen Asset Investment Corp.................. 1,706,512
-----------
5,232,112
-----------
FOOD RETAIL--0.89%
19,500 Scheid Vineyards Inc.*....................... 214,500
37,700 United Natural Foods Inc.*................... 904,800
-----------
1,119,300
-----------
HOTELS--4.91%
90,400 Capstar Hotel Co.*........................... 2,887,150
142,464 Extended Stay America Inc.*.................. 2,297,232
36,700 Mirage Resorts Inc.*......................... 981,725
-----------
6,166,107
-----------
INDUSTRIAL PARTS--1.26%
32,000 PRI Automation Inc.*......................... 1,588,000
-----------
INDUSTRIAL SERVICES/SUPPLIES--10.72%
26,000 AHL Services Inc.*........................... 445,250
31,700 Black Box Corp.*............................. 1,157,050
107,100 CUC International Inc. *(1).................. 2,637,337
15,500 Catalina Marketing Corp.*.................... 660,688
88,200 Comfort Systems USA Inc.*.................... 1,576,575
48,200 Norrell Corp................................. 1,524,325
43,400 Nova Corp.*.................................. 1,055,163
13,700 Pierce Leahy Corp.*.......................... 369,900
57,200 Pittston Brinks Group........................ 1,991,275
33,100 Profit Recovery Group International Inc.*.... 546,150
39,900 Protection One Inc.*......................... 723,187
17,400 RCM Technologies Inc.*....................... 191,400
23,100 Wilmar Industries Inc.*...................... 589,050
-----------
13,467,350
-----------
</TABLE>
59
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PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
INFORMATION & COMPUTER SERVICES--3.01%
72,200 Checkfree Corp.*............................. $ 1,299,600
49,700 G Tech Holdings Corp.*....................... 1,512,744
40,500 NFO Research Inc.*........................... 972,000
-----------
3,784,344
-----------
LEISURE--1.01%
49,400 Equity Marketing Inc.*....................... 1,222,650
2,700 Teardrop Golf Co.*........................... 8,775
2,000 Travel Services International Inc.*.......... 41,000
-----------
1,272,425
-----------
LIFE INSURANCE--0.24%
16,200 Life Financial Corp.*........................ 301,725
-----------
LONG DISTANCE & PHONE COMPANIES--2.91%
41,500 ICG Communications Inc.*..................... 892,250
70,200 Teleport Communications Group*............... 2,764,125
-----------
3,656,375
-----------
MANUFACTURING-GENERAL--1.58%
22,900 Kaynar Technologies Inc.*.................... 529,563
39,600 Silgan Holdings Inc.*........................ 1,457,775
-----------
1,987,338
-----------
MANUFACTURING-HIGH TECHNOLOGY--0.93%
4,900 Galileo Technology Ltd.*..................... 119,438
17,300 KLA Instruments Corp.*....................... 1,047,731
-----------
1,167,169
-----------
MEDIA--2.48%
56,300 Ascent Entertainment Group Inc.*............. 682,637
40,500 Evergreen Media Corp.* (1)................... 1,863,000
17,700 Metro Networks Inc.*......................... 573,038
-----------
3,118,675
-----------
MEDICAL PRODUCTS--2.55%
40,400 Cerus Corp.*................................. 565,600
17,400 Cooper Companies Inc.*....................... 487,200
46,400 Physician Sales & Service Inc.*.............. 858,400
44,700 Renal Care Group Inc.*....................... 1,296,300
-----------
3,207,500
-----------
MEDICAL PROVIDERS--6.32%
38,600 Alternative Living Services Inc.* (1)........ 832,313
120,600 American Oncology Resources Inc.*............ 1,854,225
39,900 Atria Communities Inc.*...................... 648,375
13,300 Centennial Healthcare Corp.*................. 238,569
29,700 FPA Medical Management Inc.*................. 788,906
32,100 Medical Resources Inc. ...................... 515,606
30,800 PMR Corp.*................................... 619,850
14,200 Resources Care Inc.*......................... 303,525
59,000 Sunrise Assisted Living Inc.*................ 2,131,375
-----------
7,932,744
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
MINING & METALS--0.33%
42,000 Metals USA Inc.*............................. $ 420,000
-----------
OIL SERVICES--2.49%
38,900 Precision Drilling Corp.*.................... 2,081,150
41,400 Veritas DGC Inc.*............................ 1,040,175
-----------
3,121,325
-----------
PUBLISHING--0.52%
36,600 Journal Register Co.*........................ 649,650
-----------
RESTAURANTS--1.21%
20,100 Cheesecake Factory Inc.*..................... 528,881
11,100 Dave & Busters Inc.*......................... 353,813
26,500 Mortons Restaurant Group Inc.*............... 556,500
7,200 Total Entertainment Restaurant Corp.*........ 74,700
-----------
1,513,894
-----------
SEMICONDUCTOR--1.90%
116,500 Cypress Semiconductor Corp.*................. 1,783,906
9,100 Micrel Inc.*................................. 597,188
-----------
2,381,094
-----------
SPECIALTY RETAIL--9.95%
25,600 Amazon Common Inc.* (1)...................... 736,000
19,800 Concepts Direct Inc.*........................ 398,475
84,600 Duty Free International Inc.................. 2,025,112
51,900 Eagle Hardware & Garden Inc.*................ 1,096,388
92,500 General Nutrition Companies Inc.*............ 2,636,250
34,000 Hollywood Entertainment Corp.*............... 637,500
47,500 Home Shopping Network Inc.*.................. 1,662,500
30,900 Linens 'N Things Inc.*....................... 869,063
40,400 Piercing Pagoda Inc.*........................ 1,171,600
44,900 Staples Inc.* (1)............................ 1,128,112
17,700 Sunglass Hut International Inc.*............. 142,706
-----------
12,503,706
-----------
WIRELESS TELECOMMUNICATIONS--1.24%
3,100 Corsair Communications Inc.*................. 61,419
100,000 Pagemart Wireless Inc.*...................... 1,000,000
66,600 Telespectrum Worldwide Inc.*................. 499,500
-----------
1,560,919
-----------
Total Common Stocks (cost--$93,609,565)................... 110,740,043
-----------
MONEY MARKET FUNDS--5.04%
4,935,047 Liquid Assets Portfolio**.................... 4,935,047
113,822 TempCash Portfolio**......................... 113,822
1,285,831 TempFund Portfolio**......................... 1,285,831
-----------
Total Money Market Funds
(cost--$6,334,700)...................................... 6,334,700
-----------
</TABLE>
60
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- -------- --------------- -------------- -----------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT--9.67%
$12,147 Repurchase Agreement dated 07/31/97 with State Street
Bank & Trust Company, collateralized by $12,390,288
U.S. Treasury Bills, 7.250% due 02/15/98; proceeds:
$12,148,687 (cost--$12,147,000)...................... 08/01/97 5.000% $12,147,000
-----------
Total Investments (cost--$112,091,265)--102.87%.................. 129,221,743
Liabilities in excess of other assets--(2.87)%................... (3,613,118)
-----------
Net Assets--100.00%.............................................. $125,608,625
-----------
-----------
</TABLE>
- ---------------
* Non-income producing security
** Entire or partial amount represents investments of cash collateral for
securities loaned.
(1) Security, or a portion thereof, was on loan at July 31, 1997.
See accompanying notes to financial statements
61
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERNATIONAL EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--89.79%
ARGENTINA--0.73%
ENERGY--0.28%
34,572 Compania Perez Compane S.A................... $ 283,886
-----------
TELECOMMUNICATIONS--0.45%
11,700 Telefonica de Argentina S.A. ADS............. 464,344
-----------
Total Argentina Common Stocks........................... 748,230
-----------
AUSTRALIA--2.07%
BANKS--0.39%
27,900 National Australia Bank...................... 406,285
-----------
CONSUMER DURABLES--0.85%
226,000 News Corporation Ltd. ....................... 875,817
-----------
FINANCE--0.44%
19,700 Lend Lease Corp. (1)......................... 447,490
-----------
TRANSPORTATION--0.39%
70,000 Mayne Nickless Ltd........................... 403,255
-----------
Total Australia Common Stocks........................... 2,132,847
-----------
AUSTRIA--1.12%
CAPITAL GOODS--1.12%
5,500 VA Technologies AG........................... 1,149,669
-----------
BELGIUM--1.20%
BANKS--1.20%
3,200 Generale De Banque........................... 1,240,000
-----------
BRAZIL--1.90%
OIL & GAS--0.68%
23,000 Petroleo Brasileiro S.A. Petro............... 704,605
-----------
TELECOMMUNICATIONS--0.52%
3,600 Telecomunicacones Brasileiras S.A. ADR....... 534,150
-----------
UTILITIES--0.70%
26,500 Centrais Eletricas Brasileiras S.A. ADR
(1)........................................ 715,765
-----------
Total Brazil Common Stocks.............................. 1,954,520
-----------
CHILE--0.64%
TELECOMMUNICATIONS--0.64%
20,000 Compania de Telecomunicaciones de Chile S.A.
ADR........................................ 658,750
-----------
DENMARK--1.25%
HEALTH (NON-DRUG)--1.25%
12,241 Novo Nordisk A.S............................. 1,287,498
-----------
FRANCE--5.84%
BASIC INDUSTRIES--1.87%
4,800 Air Liquide S.A.--Prime
Fide 1999.................................. 763,347
1,100 Air Liquide S.A.............................. 174,757
23,500 Rhone Poulenc S.A. .......................... 988,262
-----------
1,926,366
-----------
CAPITAL GOODS--2.19%
17,770 Michelin..................................... 1,104,335
19,900 Schneider S.A................................ 1,151,416
-----------
2,255,751
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
FRANCE--(CONCLUDED)
FINANCE--1.17%
18,500 AXA.......................................... $ 1,207,529
-----------
UTILITIES--0.61%
4,959 Compania Generale des Eaux................... 625,633
-----------
Total France Common Stocks.............................. 6,015,279
-----------
GERMANY--11.04%
AUTOMOTIVE MANUFACTURING--2.52%
1,500 Bayer Motoren Werk AG........................ 1,220,069
1,800 Volkswagen AG................................ 1,374,165
-----------
2,594,234
-----------
BASIC INDUSTRIES--1.67%
36,600 Hoechst AG................................... 1,716,029
-----------
CAPITAL GOODS--1.72%
3,800 Mannesmann AG................................ 1,771,352
-----------
FINANCE--1.30%
19,800 Deutsche Bank AG............................. 1,338,492
-----------
MACHINERY (DIVERSIFIED)--0.86%
6,700 SGL Carbon AG................................ 889,477
-----------
METALS & MINING--1.21%
4,100 Preussag AG.................................. 1,242,222
-----------
UTILITIES--1.76%
31,300 Veba AG...................................... 1,816,783
-----------
Total Germany Common Stocks............................. 11,368,589
-----------
HONG KONG--6.74%
BANKS--0.58%
17,258 HSBC Holdings PLC............................ 601,829
-----------
FINANCE--5.10%
436,000 Amoy Properties Ltd. ........................ 487,104
125,000 Cheung Kong Holdings Ltd..................... 1,388,440
101,000 Citic Pacific Ltd. .......................... 640,504
125,000 Hutchison Whampoa Ltd. ...................... 1,218,922
122,000 New World Development Ltd.................... 878,463
67,500 Swire Pacific Ltd............................ 640,781
-----------
5,254,214
-----------
HOLDING & OTHER INVESTMENT OFFICES--0.54%
462,000 First Pacific Co............................. 551,953
-----------
UTILITIES--0.52%
94,000 China Light & Power.......................... 539,051
-----------
Total Hong Kong Common Stocks........................... 6,947,047
-----------
INDIA--0.47%
COMPUTER SOFTWARE & SERVICES--0.47%
27,000 Videsh Sanchar Nigam Ltd. ................... 488,700
-----------
INDONESIA--1.32%
BANKS--0.51%
750,000 P.T. Bank Internasional Indonesia............ 523,423
-----------
TELECOMMUNICATIONS--0.81%
545,000 P.T. Telkom Industries....................... 833,652
-----------
Total Indonesia Common Stocks........................... 1,357,075
-----------
</TABLE>
62
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERNATIONAL EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
ITALY--2.16%
ENERGY--0.98%
173,483 ENI.......................................... $ 1,012,468
-----------
RETAIL--1.18%
19,300 Gucci Group N.V. ............................ 1,218,312
-----------
Total Italy Common Stocks............................... 2,230,780
-----------
JAPAN--19.76%
AUTO MANUFACTURER--1.83%
25,000 Honda Motor Co. ............................. 836,502
34,000 Toyota Motor Corp. .......................... 1,042,839
-----------
1,879,341
-----------
BASIC INDUSTRIES--1.00%
36,000 Shin Etsu Chemical Company Ltd............... 1,028,137
-----------
CAPITAL GOODS--11.15%
48,000 Canon Inc.................................... 1,533,080
127 DDI Corp..................................... 873,494
92,000 Hitachi Ltd.................................. 1,041,656
6,000 Kyocera Corp................................. 517,110
7,000 Mabuchi Motor Co. ........................... 445,374
133,000 Mitsubishi Heavy Industry.................... 938,361
27,000 Nitto Denko Corp............................. 556,654
3,000 Riso Kagaku Corp............................. 201,014
16,000 Rohm Company Ltd............................. 2,095,479
8,000 Secom Company Ltd............................ 586,058
17,000 Sony Corp.................................... 1,694,972
60,000 Sumitomo Electric Industries Ltd............. 998,733
-----------
11,481,985
-----------
CONSUMER DURABLES--2.36%
18,000 Ito Yokado Company Ltd....................... 1,026,616
34,000 Marui Company Ltd............................ 574,567
9,000 Shimachu Company Ltd. ....................... 233,460
23,000 Taisho Pharmaceutical Co. ................... 600,507
-----------
2,435,150
-----------
FINANCE--1.64%
51,000 Mitsui Fudosan Company Ltd................... 655,006
37,000 Nomura Securities Company Ltd................ 525,222
40,000 Tokio Marine & Fire Insurance................ 510,351
-----------
1,690,579
-----------
FOREST PRODUCTS--0.42%
27,000 Toppan Printing Co. ......................... 433,460
-----------
HEALTHCARE--0.68%
26,000 Yamanouchi Pharmaceutical Co................. 702,999
-----------
TRANSPORTATION--0.68%
72,000 Kamigumi Company Ltd......................... 357,719
50,000 Nippon Express Corp. Ltd..................... 336,713
-----------
694,432
-----------
Total Japan Common Stocks............................... 20,346,083
-----------
MALAYSIA--0.55%
CONSUMER DURABLES--0.33%
42,000 Edaran Otomobil Nasional..................... 339,185
-----------
FINANCE--0.22%
40,000 AMMB Holdings Berhad......................... 227,488
-----------
Total Malaysia Common Stocks............................ 566,673
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
MEXICO--1.73%
BANKS--0.61%
214,000 Grupo Financiero Banamex..................... $ 629,653
-----------
BASIC INDUSTRIES--0.29%
16,000 Empresas ICA Sociedad Controladora, S.A. de
C.V. ADR (1)............................... 300,000
-----------
DIVERSIFIED INDUSTRIES--0.21%
26,000 Alfa S.A..................................... 212,869
-----------
LEISURE & ENTERTAINMENT--0.62%
330,000 Cifra S.A. de C.V............................ 637,457
-----------
Total Mexico Common Stocks.............................. 1,779,979
-----------
NETHERLANDS--2.84%
CONSUMER DURABLES--1.57%
19,900 Philips Electronic N.V. ..................... 1,612,502
-----------
FINANCE--1.27%
27,000 ING Groep N.V. .............................. 1,312,690
-----------
Total Netherlands Common Stocks......................... 2,925,192
-----------
PHILIPPINES--0.58%
REAL ESTATE--0.58%
2,700,000 Belle Corp................................... 594,915
-----------
SINGAPORE--0.40%
BANKS--0.40%
32,000 Development Bank of Singapore Ltd............ 415,471
-----------
SPAIN--1.99%
FINANCE--1.09%
40,300 Banco de Santander SA........................ 1,124,518
-----------
UTILITIES--0.90%
34,500 Telefonica De Espana SA...................... 923,860
-----------
Total Spain Common Stocks............................... 2,048,378
-----------
SWEDEN--1.41%
CAPITAL GOODS--1.41%
108,500 ABB AB....................................... 1,448,008
-----------
SWITZERLAND--5.47%
CONSUMER DURABLES--3.76%
1,270 Novartis AG.................................. 2,035,724
190 Roche Holdings AG............................ 1,835,249
-----------
3,870,973
-----------
DIVERSIFIED INDUSTRIES--1.71%
13,100 Credit Suisse Group.......................... 1,765,009
-----------
Total Switzerland Common Stocks......................... 5,635,982
-----------
UNITED KINGDOM--17.83%
BANKS--2.82%
112,000 Lloyds TSB Group PLC......................... 1,238,682
40,000 National Westminster......................... 568,407
104,831 Royal Bank of Scotland Group PLC............. 1,100,909
-----------
2,907,998
-----------
BUILDING MATERIALS & PAPER PACKAGING--0.45%
66,000 Wolseley PLC................................. 465,687
-----------
</TABLE>
63
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERNATIONAL EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
UNITED KINGDOM--(CONTINUED)
DIVERSIFIED INDUSTRIES--1.20%
109,071 Wassall PLC.................................. $ 513,657
125,000 General Electric PLC......................... 721,996
-----------
1,235,653
-----------
ENGINEERING SERVICES--2.10%
53,000 GKN PLC...................................... 932,293
49,000 Mckechnie PLC................................ 324,833
68,732 Smiths Industries PLC........................ 907,897
-----------
2,165,023
-----------
HOUSEHOLD GOODS--1.14%
75,600 Reckitt & Colman PLC......................... 1,177,253
-----------
LEISURE & ENTERTAINMENT--1.68%
59,000 Granada Group PLC............................ 813,229
227,000 Ladbroke Group PLC........................... 920,036
-----------
1,733,265
-----------
MANUFACTURER--0.85%
30,000 Unilever PLC................................. 869,841
-----------
OIL, EXPLORATION & PRODUCTION--1.88%
147,000 LASMO PLC.................................... 672,982
170,000 Shell Transportation & Trading Co. .......... 1,258,077
-----------
1,931,059
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
UNITED KINGDOM--(CONCLUDED)
PHARMACEUTICAL--1.03%
50,000 Glaxo Wellcome PLC........................... $ 1,059,200
-----------
RETAIL--0.66%
108,193 Safeway PLC.................................. 684,393
-----------
RETAIL (ALL OTHER)--1.17%
124,000 Marks & Spencer PLC.......................... 1,200,482
-----------
TELECOMMUNICATIONS--1.41%
125,000 British Telecommunications PLC............... 875,830
57,000 Cable & Wireless PLC......................... 574,282
-----------
1,450,112
-----------
TRANSPORTATION--0.49%
229,000 NFC PLC...................................... 501,648
-----------
UTILITIES--0.95%
138,000 Scottish Power PLC........................... 975,974
-----------
Total United Kingdom Common Stocks...................... 18,357,588
-----------
VENEZUELA--0.75%
UTILITIES--0.75%
17,800 Compania Anonima Nacional Telefonica de
Venezuela ADR.............................. 769,850
-----------
Total Common Stocks (cost--$77,773,021)................. 92,467,103
-----------
MONEY MARKET FUNDS--1.29%
1,147,665 Liquid Assets Portfolio*..................... 1,147,665
181,685 TempFund Portfolio*.......................... 181,685
-----------
Total Money Market Funds (cost--$1,329,350)............. 1,329,350
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- ------------ -------------------- ----------------
LONG-TERM GLOBAL DEBT SECURITIES--0.81%
$ 765 MBL International Finance (cost--$803,700)... 11/30/02 3.000% 829,069
------------
CONVERTIBLE BONDS--0.28%
JAPAN--0.28%
ENTERTAINMENT--0.28%
24,000 Namco (cost--$298,446)....................... 09/30/98 4.700 293,434
------------
REPURCHASE AGREEMENT--8.72%
8,978 Repurchase Agreement dated 07/31/97 with
State Street Bank & Trust Company,
collateralized by $9,157,818 U.S. Treasury
Notes, 7.250% due 02/15/98; proceeds:
$8,979,247 (cost--$8,978,000).............. 08/01/97 5.000 8,978,000
------------
Total Investments (cost--$89,182,517)--100.89%............. 103,896,956
Liabilities in excess of other assets--(0.89)%............. (917,910)
------------
Net Assets--100.00%........................................ $102,979,046
------------
------------
</TABLE>
- ---------------
<TABLE>
<S> <C>
* Entire or partial amount represents investments of cash collateral for securities loaned.
ADR American Depositary Receipt
ADS American Depositary Shares
(1) Security, or a portion thereof, was on loan at July 31, 1997.
</TABLE>
See accompanying notes to financial statements
64
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS--81.33%
ARGENTINA--4.49%
BANKS, RETAIL--0.74%
12,900 Banco de Galicia y Buenos Aires S.A. de C.V.
ADR (1).................................... $ 404,738
-----------
DIVERSIFIED INDUSTRIALS--0.41%
27,047 Perez Companc S.A. Class B................... 222,095
-----------
ENGINEERING EQUIPMENT--0.37%
58,440 CIADEA S.A. ................................. 205,160
-----------
OIL & GAS--1.30%
102,500 Astra Cia Argentina de Petroleo S.A. Class
B.......................................... 212,212
15,500 YPF Sociedad Anonima Series D ADR............ 501,813
-----------
714,025
-----------
REAL ESTATE--0.33%
8,000 Cresud S.A. C.I.F.Y.A. ADR................... 182,000
-----------
TELECOMMUNICATIONS--1.34%
61,000 Telecom Argentina S.A. ...................... 352,032
88,500 Telefonica de Argentina S.A.................. 350,787
700 Telefonica de Argentina S.A. Class B ADR..... 27,781
-----------
730,600
-----------
Total Argentina Common Stocks............................. 2,458,618
-----------
BOTSWANA--0.12%
FOOD, BEVERAGE & TOBACCO--0.12%
51,000 Sechaba Breweries............................ 64,632
-----------
BRAZIL--2.93%
TELECOMMUNICATIONS--1.49%
5,500 Telecomunicacones Brasileiras S.A. (Telebras)
ADR........................................ 816,063
-----------
UTILITIES-ELECTRIC, GAS & WATER--1.44%
2,100,000 Companhia Paulista de Forca e Luz............ 428,552
680,000 Light Servicos de Eletricidade S.A. ......... 361,057
-----------
789,609
-----------
Total Brazil Common Stocks................................ 1,605,672
-----------
CHILE--3.95%
BANKS, RETAIL--0.75%
26,200 Banco Santander Chile Series A ADS........... 412,650
-----------
CHEMICALS--0.38%
9,500 Administradora de Fondas de Pensiones
Providia S.A. ADR.......................... 206,031
-----------
EXTRACTIVE INDUSTRIES--0.53%
4,800 Sociedad Quimica Y Minera de Chile S.A.
Series B ADR............................... 291,900
-----------
FOOD, BEVERAGE & TOBACCO--0.25%
6,000 Compania Cervecerias Unidas S.A. ADR......... 139,500
-----------
RETAILERS, GENERAL--0.44%
8,800 Santa Isabel SA ADS*......................... 242,000
-----------
TELECOMMUNICATIONS--1.06%
17,550 Compania de Telecomunicaciones de Chile S.A.
ADR........................................ 578,053
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.54%
9,841 Chilgener S.A. ADR (1)....................... 292,770
-----------
Total Chile Common Stocks................................. 2,162,904
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
CHINA--1.16%
UTILITIES-ELECTRIC, GAS & WATER--1.16%
23,300 Huaneng Power International Incorporated ADR*
(1)........................................ $ 636,381
-----------
CROATIA--0.51%
HEALTH/PERSONAL CARE--0.51%
15,820 Pliva D.D. GDR*.............................. 276,850
-----------
CZECH REPUBLIC--0.46%
HEAVY ENGINEERING/SHIPBUILDING--0.20%
4,050 Skoda Plzen A.S.............................. 111,499
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.26%
1,260 SPT Telecom A.S.*............................ 139,927
-----------
Total Czech Republic Common Stocks........................ 251,426
-----------
EGYPT--0.42%
BANKS, RETAIL--0.42%
10,000 Commercial International Bank GDR*........... 229,500
-----------
GREECE--0.48%
FOOD, BEVERAGE & TOBACCO--0.48%
7,260 Hellenic Bottling Company S.A................ 261,512
-----------
HONG KONG--5.02%
COMMERCE/INDUSTRIAL--0.85%
640,000 Beijing Datang Power Generation Company
Ltd. ...................................... 324,443
20,000 Shanghai Industrial Holdings Ltd. (1)........ 139,490
-----------
463,933
-----------
CONSTRUCTION--0.50%
79,000 Cheung Kong Infrastucture Holdings........... 273,452
-----------
FOOD, BEVERAGE & TOBACCO--0.00%
15,612 Guangdong Brewery Holdings Ltd. ............. 3,630
-----------
OIL--0.11%
120,000 Zhenhai Refining & Chemical Co. Ltd. (1)..... 61,608
-----------
REAL ESTATE--2.62%
636,000 Beijing North Star........................... 297,772
348,000 China OverSeas Land & Investment............. 269,680
622,000 China Resources Beijing (1).................. 494,065
39,000 China Resources Developement Enterprises
Ltd........................................ 194,937
56,000 New World Infrastructure
Ltd.*+ (1)................................. 177,927
-----------
1,434,381
-----------
SERVICES--0.33%
124,900 Guangdong Investments Ltd. .................. 178,256
-----------
SHIPPING--0.61%
148,000 Cosco Pacific Ltd............................ 331,650
-----------
Total Hong Kong Common Stocks............................. 2,746,910
-----------
HUNGARY--1.71%
BUILDING MATERIALS/CONSTRUCTION--0.55%
4,984 Pannonplast RT............................... 302,552
-----------
CHEMICALS--0.49%
7,000 Borsodchem RT GDR............................ 266,000
-----------
</TABLE>
65
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
HUNGARY--(CONCLUDED)
PHARMACEUTICALS--0.67%
3,750 Gedeon Richter RT GDR........................ $ 365,625
-----------
Total Hungary Common Stocks............................... 934,177
-----------
INDIA--7.31%
BANKS--1.24%
75,000 State Bank Of India.......................... 678,666
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT--0.18%
8,000 Bharat Heavy Electricals Ltd................. 95,644
-----------
ENGINEERING--0.14%
116,000 Steel Authority of India Ltd. ............... 77,994
-----------
ENGINEERING, VEHICLES--0.52%
23,000 Mahindra & Mahindra.......................... 283,513
-----------
FOOD, BEVERAGE & TOBACCO--0.47%
18,000 ITC Ltd...................................... 259,700
-----------
OIL--2.01%
20,000 Hindustan Petroleum Corp..................... 275,809
64,000 Bharat Petroleum Corporation Ltd............. 827,007
-----------
1,102,816
-----------
PHARMACEUTICALS--0.26%
8,000 Ranbaxy Laboratories Ltd..................... 142,877
-----------
TELECOMMUNICATIONS--1.61%
97,000 Mahanagar Telephone Nigam Ltd. .............. 794,859
3,000 Videsh Sanchar Nigam Ltd..................... 86,567
-----------
881,426
-----------
TEXTILES & APPAREL--0.48%
26,000 Reliance Industries Ltd. .................... 260,219
-----------
TRANSPORTATION--0.40%
20,000 Tata Engineering & Locomotive Company Ltd.
GDR+....................................... 218,518
-----------
Total India Common Stocks................................. 4,001,373
-----------
INDONESIA--5.28%
BANKS--0.77%
608,674 P.T. Bank Internasional Indonesia............ 424,792
-----------
CONSTRUCTION--0.27%
75,000 P.T. Semen Gresik............................ 146,989
-----------
FOODS, BEVERAGES & TOBACCO--0.92%
46,000 P.T. Gudang Garam............................ 173,709
17,000 P.T. Hanjaya Mandala Sampoerna............... 59,484
130,600 P.T. Indofoods Sukses Makmur................. 272,187
-----------
505,380
-----------
REAL ESTATE--0.32%
130,000 P.T. Jaya Real Property...................... 173,996
-----------
TELECOMMUNICATIONS--1.48%
32,000 P.T. Indosat................................. 97,285
16,000 P.T. Telekomunikasi
Indonesia ADR.............................. 490,000
145,000 P.T. Telekomunikasi Indonesia*............... 221,797
-----------
809,082
-----------
TRANSPORTATION EQUIPMENT--0.91%
130,000 P.T. Astra International..................... 497,132
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
INDONESIA--(CONCLUDED)
UTILITIES-ELECTRIC, GAS & WATER--0.61%
264,000 P.T. London Sumatra.......................... $ 335,679
-----------
Total Indonesia Common Stocks............................. 2,893,050
-----------
ISRAEL--2.67%
BANKS--0.27%
43,800 Bank Leumi Le-Israel......................... 71,726
20,000 Bank Leumi Le-Israel ADR..................... 74,878
-----------
146,604
-----------
PHARMACEUTICALS--0.63%
6,200 Teva Pharmaceutical Industries Ltd., ADR..... 347,587
-----------
RETAIL--0.86%
7,000 Blue Square-Israel Ltd. ADR.................. 108,500
101,600 Supersol Ltd................................. 363,170
-----------
471,670
-----------
TELECOMMUNICATIONS--0.91%
8,700 ECI Telecommunications Ltd................... 283,837
10,000 Tadiran Telecommunications Ltd............... 213,750
-----------
497,587
-----------
Total Israel Common Stocks................................ 1,463,448
-----------
KOREA--5.57%
BANKS--1.44%
14,400 Daewoo Securities............................ 241,078
14,317 Kookmin Bank GDR............................. 268,802
14,920 Shinhan Bank................................. 168,982
6,795 Kookmin Bank................................. 108,048
-----------
786,910
-----------
ELECTRICAL EQUIPMENT--1.39%
16,000 L.G. Electronics Inc. ....................... 316,404
2,456 L.G. Information and Communications Ltd. .... 291,133
1,454 Samsung Electronics Corp. ................... 151,620
-----------
759,157
-----------
METALS & MINING--0.91%
4,650 Pohang Iron & Steel Co. Ltd.................. 383,756
4,000 Pohang Iron & Steel Co. Ltd. ADR............. 114,000
-----------
497,756
-----------
OIL--0.48%
3,000 Ssangyong Oil Refining Co.................... 61,348
8,000 Yukong Ltd................................... 201,348
-----------
262,696
-----------
TELECOMMUNICATIONS--0.66%
491 SK Telecom Company Ltd. ..................... 364,940
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.69%
13,000 Korea Electric Power Corp.................... 379,775
-----------
Total Korea Common Stocks................................. 3,051,234
-----------
MAURITIUS--0.25%
FINANCIAL--0.25%
250,000 State Bank of Mauritius Ltd. ................ 139,567
-----------
MEXICO--11.73%
BUILDING & CONSTRUCTION--1.08%
15,100 Bufete Industrial S.A. ADR*.................. 302,000
74,000 Consorico Ara S.A. de C.V. (1)............... 289,676
-----------
591,676
-----------
BUILDING MATERIALS--1.35%
147,400 Cemex S.A. de C.V............................ 739,168
-----------
</TABLE>
66
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
MEXICO--(CONCLUDED)
DIVERSIFIED INDUSTRIALS--2.12%
55,000 Desc-Sociedad de Fomento Industrial, S.A. de
C.V. Series B.............................. $ 499,552
440 Desc-Sociedad de Fomento Industrial, S.A. de
C.V. Series C.............................. 3,957
47,400 Grupo Carso, S.A. de C.V. (Series A)*........ 378,375
36,000 San Luis Corporacion S.A. de C.V. ........... 279,084
-----------
1,160,968
-----------
FINANCIAL--0.57%
423,000 Grupo Financiero Bancomer S.A. de C.V.*
(1)........................................ 312,772
-----------
FOOD, BEVERAGE & TOBACCO--1.57%
107,700 Fomento Economico Mexicano S.A. de C.V.
Series B*.................................. 856,971
-----------
MATERIALS--0.56%
69,000 Industrias Penoles S.A. de C.V. (1).......... 308,942
-----------
MEDIA--0.49%
8,800 Grupo Televisa, S.A. de C.V. GDS............. 270,050
-----------
METALS--0.69%
20,000 Tubos de Acero de Mexico S.A. de C.V. ADR*... 376,250
-----------
PAPER & RELATED PRODUCTS--0.57%
66,750 Kimberly-Clark de Mexico S.A. de C.V......... 313,384
-----------
RETAILERS--1.21%
34,491 Cifra S.A. de C.V. Series A.................. 64,949
346,000 Cifra S.A. de C.V. Series C*................. 597,544
-----------
662,493
-----------
TELECOMMUNICATIONS--1.52%
15,000 Telefonos de Mexico, S.A. de C.V. ADR........ 832,500
-----------
Total Mexico Common Stocks................................ 6,425,174
-----------
PAKISTAN--0.27%
BANKS--0.03%
17,000 Faysal Bank Ltd.............................. 14,699
-----------
RETAIL--0.04%
1,000 Lever Brothers Pakistan Ltd. ................ 23,222
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.20%
79,000 Hub Power Co. ............................... 110,754
-----------
Total Pakistan Common Stocks.............................. 148,675
-----------
PERU--0.63%
BANKS--0.40%
11,520 Credicorp Limited ADR........................ 221,760
-----------
TELECOMMUNICATIONS--0.23%
5,000 Telefonica Del Peru S.A. Class B ADS......... 123,438
-----------
Total Peru Common Stocks.................................. 345,198
-----------
PHILIPPINES--4.43%
BANKS--0.84%
24,250 Metropolitan Bank & Trust Co................. 460,339
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
PHILIPPINES--(CONCLUDED)
DIVERSIFIED INDUSTRIALS--0.44%
34,000 Benpres Holdings Corp. GDR*.................. $ 238,000
-----------
FOOD, BEVERAGE & TOBACCO--0.19%
44,000 San Miguel Corp. Class B (1)................. 93,966
26,000 Universal Robina Corp. ...................... 8,725
-----------
102,691
-----------
OIL--0.19%
503,000 Petron Corp. ................................ 102,305
-----------
REAL ESTATE--1.15%
744,350 Ayala Land Inc. Class B (1).................. 542,492
233,000 C & P Homes Inc.............................. 73,454
88,000 Fil Estate Land Inc.......................... 15,512
-----------
631,458
-----------
TELECOMMUNICATIONS--1.26%
21,000 Philippine Long Distance Telephone (1)....... 690,508
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.36%
46,520 Manila Electric Co. Class B (1).............. 198,696
-----------
Total Philippines Common Stocks........................... 2,423,997
-----------
POLAND--1.75%
AUTO COMPONENTS--0.30%
20,950 Stomil Olsztyn S.A. ......................... 163,223
-----------
BANKS--0.25%
7,760 Bank Rozwoju Eksportu S.A.................... 137,712
-----------
BUILDING MATERIALS/CONSTRUCTION--0.35%
5,600 Gorazdze S.A. ............................... 193,911
-----------
ELECTRICAL EQUIPMENT--0.43%
30,700 Bydgoska Fabryka Kabli S.A................... 234,757
-----------
FOOD, BEVERAGE & TOBACCO--0.42%
3,390 Zaklady Piwowarskie e Zywiec S.A. (Zywiec)... 228,902
-----------
Total Poland Common Stocks................................ 958,505
-----------
PORTUGAL--3.01%
BUILDING MATERIALS/CONSTRUCTION--0.22%
9,400 Engil Sociedad de Constreao Civil S.A........ 118,921
-----------
FORESTRY/PAPER PRODUCTS--0.92%
20,300 Semapa Sociedade de Investimento e Gestao,
S.A. ...................................... 503,161
-----------
RETAIL--0.67%
6,000 Estabelecimentos Jeronimo Martins & Filho,
Sociedade Gestorade Participacoes Sociais,
S.A. ...................................... 371,020
-----------
TELECOMMUNICATIONS--1.00%
5,400 Portugal Telecom S.A. ....................... 215,141
4,220 Telecel-Comunicacaoes Pessoais, S.A.......... 330,131
-----------
545,272
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.20%
6,600 Electricidade De Portugal.................... 111,816
-----------
Total Portugal Common Stocks.............................. 1,650,190
-----------
</TABLE>
67
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
RUSSIA--1.04%
OIL--0.31%
1,880 Lukoil Oil Co. .............................. $ 170,140
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.73%
12,000 Gazprom ADR* (1)............................. 205,800
4,660 Unified Energy Systems....................... 193,390
-----------
399,190
-----------
Total Russia Common Stocks................................ 569,330
-----------
SOUTH AFRICA--5.60%
BANKS, RETAIL--0.49%
35,500 Amal Bank of South Africa.................... 268,636
-----------
BREWERIES, PUBS, & RESTAURANTS--0.70%
11,840 South African Breweries Ltd.................. 380,590
-----------
DIVERSIFIED INDUSTRIALS--1.71%
7,325 Anglo American Industrial Corp. of South
Africa..................................... 324,003
38,419 Barlow Ltd................................... 495,648
84,700 Malbak Ltd................................... 117,537
-----------
937,188
-----------
MEDIA--0.15%
14,750 Primedia Ltd................................. 80,274
-----------
OIL--0.71%
74,000 Energy Africa Ltd............................ 389,094
-----------
OIL EXPLORATION & PRODUCTION--0.81%
37,060 Sasol Ltd. .................................. 443,965
-----------
PAPER, PACKAGING & PRINTING--0.37%
50,000 Nampak....................................... 202,732
-----------
PHARMACEUTICALS--0.21%
13,967 South African Druggists Ltd. ................ 115,382
-----------
RETAIL--0.09%
7,600 Pepkor Ltd................................... 49,024
-----------
RETAILERS, FOOD--0.19%
15,499 Foodcorp Ltd. ............................... 103,674
-----------
RETAILERS, GENERAL--0.17%
11,815 Ellerine Holdings............................ 96,067
-----------
Total South Africa Common Stocks.......................... 3,066,626
-----------
TAIWAN--5.93%
COMMERCE/INDUSTRIAL--0.53%
15,500 Asustek Computer Inc......................... 287,138
-----------
CONSTRUCTION--0.63%
23,650 Asia Cement Corp. GDR........................ 347,064
-----------
ELECTRICAL APPLIANCES--1.18%
16,000 Acer Inc. ................................... 282,000
16,800 Siliconware Precision Industries Co. GDR*+... 365,400
-----------
647,400
-----------
HOLDING & OTHER INVESTMENT COMPANIES--1.39%
37,000 R.O.C. Taiwan Fund*.......................... 467,125
12,000 Taiwan Fund Inc.............................. 295,500
-----------
762,625
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
TAIWAN--(CONCLUDED)
METALS & MINING--1.11%
26,400 China Steel Corp. GDS*....................... $ 607,200
-----------
MISCELLANEOUS MANUFACTURING--0.85%
24,200 Teco Electric & Machinery Ltd. GDR (1)....... 462,825
-----------
TRANSPORTATION EQUIPMENT--0.24%
8,881 Evergreen Marine Corp. GDR*+................. 129,885
-----------
Total Taiwan Common Stocks................................ 3,244,137
-----------
THAILAND--2.33%
CHEMICALS--0.02%
2,000 Tipco Asphalt Co............................. 8,596
-----------
CONSTRUCTION--0.07%
2,000 Siam Cement PLC ............................. 40,408
-----------
METALS & MINING--0.39%
5,800 Banpu Public Company Ltd..................... 76,424
9,200 PTT Exploration & Production PLC............. 135,655
-----------
212,079
-----------
REAL ESTATE--0.21%
57,000 Land and House Public Company Ltd............ 116,235
-----------
TELECOMMUNICATIONS--0.75%
3,000 Advanced Info Services PLC................... 21,459
80,000 TelecomAsia Corporation PLC.................. 110,431
57,000 Total Access Communication Public Company
Ltd........................................ 279,300
-----------
411,190
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.60%
112,500 Electricity Generating Public Company Ltd.... 330,000
-----------
WHOLESALE--0.29%
61,000 Siam Makro Public Company Ltd................ 158,839
-----------
Total Thailand Common Stocks.............................. 1,277,347
-----------
TURKEY--1.09%
FINANCIAL--0.18%
3,200,000 Eczacibasi Yapi Gerecleri Sanayi ve Ticaret
A.S........................................ 99,025
-----------
RETAIL--0.44%
379,904 Migros Turk T.A.S. .......................... 243,437
-----------
TELECOMMUNICATIONS--0.47%
874,000 Northern Elektrik Telekomvaskayson A.S. ..... 256,802
-----------
Total Turkey Common Stocks................................ 599,264
-----------
VENEZUELA--0.89%
TELECOMMUNICATIONS--0.41%
5,200 Compania Anonima Nacional Telecom de
Venezuela (CANTV) ADR...................... 224,900
-----------
UTILITIES-ELECTRIC, GAS & WATER--0.48%
160,000 Electricidad de Caracas...................... 260,560
-----------
Total Venezuela Common Stocks............................. 485,460
-----------
ZIMBABWE--0.30%
EXTRACTIVE INDUSTRIES--0.30%
64,300 Meikles Africa Ltd........................... 165,572
-----------
Total Common Stocks (cost--$37,121,627)................... 44,536,729
-----------
</TABLE>
68
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PACE INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
PREFERRED STOCKS--13.15%
BRAZIL--13.15%
BANKS--1.15%
36,300,000 Banco Bradesco S.A. ......................... $ 393,855
6,500,000 Unaio de Bancos Brasileiros S.A.
(Unibanco)................................. 240,025
-----------
633,880
-----------
DIVERSIFIED INDUSTRIALS--0.57%
323,000 Itausa Investimentos Itau S.A. .............. 313,172
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT--0.62%
377,885 Multibras S.A. Eletrodomesticos.............. 341,962
-----------
ENGINEERING--0.43%
20,050 Usinas Siderurgicas de Minas Gerais S.A.
(Usiminas)................................. 234,020
-----------
FOOD, BEVERAGE & TOBACCO--0.63%
452,000 Cia Cervejaria Brahma........................ 342,246
-----------
MINING & METALS--0.53%
11,000 Companhia Vale do Rio Doce................... 288,471
-----------
OIL EXPLORATION & PRODUCTION--2.29%
4,125,000 Petroleo Brasileiros S.A. (Petrobras)........ 1,253,174
-----------
PAPER, PACKAGING & PRINTING--0.31%
150,000 Klabin Fabricadora........................... 168,983
-----------
TELECOMMUNICATIONS--3.94%
6,590,000 Telecomunicacoes Brasileiras S.A.
(Telebras)................................. 979,722
2,087,155 Telecomunicacoes de Sao Paulo S.A.
(Telesp)................................... 713,096
2,907,478 Telecomunicacoes do Rio de Janeiro S.A.
(Telerj) .................................. 463,124
-----------
2,155,942
-----------
UTILITIES-ELECTRIC, GAS & WATER--2.68%
1,324,000 Centrais Electricas Brasileiras S.A.
(Electrobras).............................. 782,455
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
BRAZIL--(CONCLUDED)
UTILITIES-ELECTRIC, GAS & WATER--(CONCLUDED)
8,700,000 Companhia Energetica de Minas Gerais
(CEMIG).................................... $ 490,050
10,100 Companhia Paranaense de Energia.............. 194,425
-----------
1,466,930
-----------
Total Brazil Preferred Stocks............................. 7,198,780
-----------
Total Preferred Stocks (cost--$4,675,365)................. 7,198,780
-----------
MONEY MARKET FUNDS--6.92%
1,588,906 Liquid Assets Portfolio**.................... 1,588,906
2,201,498 TempCash Portfolio**......................... 2,201,498
21 TempFund Portfolio**......................... 21
-----------
Total Money Market Funds (cost--$3,790,425)............... 3,790,425
-----------
<CAPTION>
NUMBER OF
WARRANTS
- -----------
<C> <S> <C>
WARRANTS--0.06%
INDONESIA--0.04%
BANKS--0.04%
66,372 P.T. Bank Internasional Indonesia warrants
expiring 01/17/00; exercise price
IDR 800.................................... 20,686
-----------
PORTUGAL--0.02%
RETAIL--0.02%
500 Estabelecimentos Jeronimo Martins & Filho,
Sociedada Gestorade Participacioes Sociais,
S.A., warrant expiring 09/15/03; exercise
price
PTE 8,200.................................. 11,829
-----------
Total Warrants (cost--$13,855)............................ 32,515
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- ------------ --------- -----------
<C> <S> <C> <C> <C>
CONVERTIBLE BOND--0.52%
TAIWAN--0.52%
ELECTRONICS--0.52%
$ 200 Delta Electronic (cost--$200,000)................................. 03/06/04 0.500% 288,000
-----------
REPURCHASE AGREEMENT--5.98%
3,274 Repurchase Agreement dated 07/31/97 with State Street Bank & Trust
Company, collateralized by $3,339,574 U.S. Treasury Bills, 7.250%
due 02/15/98, proceeds: $3,274,455 (cost--$3,274,000)............ 08/01/97 5.000 3,274,000
-----------
Total Investments (cost--$49,075,272)--107.96%.................................. 59,120,449
Liabilities in excess of other assets--(7.96)%.................................. (4,361,116)
-----------
Net Assets--100.00%............................................................. $54,759,333
-----------
-----------
</TABLE>
- ---------------
* Non-income producing securities
** Entire or partial amount represents investments of cash collateral for
securities loaned.
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
ADR American Depositary Receipt
ADS American Depositary Shares
GDR Global Depositary Receipt
GDS Global Depositary Shares
IDR Indonesia Rupiah
PTE Portuguese Escudo
(1) Security, or a portion thereof, was on loan at July 31, 1997.
See accompanying notes to financial statements
69
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACE
GOVERNMENT PACE PACE
PACE SECURITIES INTERMEDIATE STRATEGIC
MONEY MARKET FIXED INCOME FIXED INCOME FIXED INCOME
INVESTMENTS INVESTMENTS INVESTMENTS INVESTMENTS
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost--$16,118,853;
$114,162,991; $66,443,469; $78,247,204;
$32,701,436; $60,823,210; $147,425,777;
$123,737,697; $102,317,318; $99,944,265;
$80,204,517 and $45,801,272 respectively)...... $16,118,853 $116,042,057 $67,198,468 $79,687,214
Repurchase agreements, at value (cost--$0;
$337,000; $1,679,000; $756,000; $0;
$11,707,000; $7,537,000; $6,933,000;
$7,535,000; $12,147,000; $8,978,000 and
$3,274,000 respectively)....................... -- 337,000 1,679,000 756,000
------------ ------------- ------------ ------------
16,118,853 116,379,057 68,877,468 80,443,214
Cash (including cash denominated in foreign
currencies).................................... 1,947 -- 49,012 1,382
Receivable for investments sold................. -- 10,269,500 -- 2,972,812
Receivable for shares of beneficial interest
sold........................................... 41,768 172,168 92,540 123,016
Receivable from investment adviser.............. 10,741 -- -- --
Unrealized appreciation of forward foreign
currency contracts............................. -- -- -- --
Dividends and interest receivable............... 119,120 721,159 977,653 450,182
Deferred organizational costs................... 58,017 58,017 58,017 58,017
Other assets.................................... 4,633 14,666 12,205 70,213
------------ ------------- ------------ ------------
Total assets.................................... 16,355,079 127,614,567 70,066,895 84,118,836
------------ ------------- ------------ ------------
LIABILITIES
Payable for shares of beneficial interest
repurchased.................................... 63,139 26,626 29,973 12,764
Dividends payable............................... 34,619 -- -- --
Payable for investments purchased............... 100,000 25,882,188 1,516,095 8,785,000
Collateral for securities loaned................ -- -- 1,609,500 --
Outstanding options written..................... -- -- -- 875
Unrealized depreciation of forward foreign
currency contracts............................. -- -- -- --
Payable to investment adviser................... -- 50,607 29,656 34,044
Accrued expenses and other liabilities.......... 87,263 49,277 131,066 111,669
------------ ------------- ------------ ------------
Total liabilities............................... 285,021 26,008,698 3,316,290 8,944,352
------------ ------------- ------------ ------------
NET ASSETS
Beneficial interest shares of $0.001 par value
outstanding-- 16,070,058; 8,054,803; 5,457,914;
5,766,301; 2,706,463; 4,952,869; 9,029,004;
8,316,595; 7,710,181; 8,699,607; 6,575,365 and
3,509,170 respectively (unlimited number
authorized).................................... 16,070,058 98,564,522 66,038,165 72,757,961
Accumulated net investment income (loss)........ -- 494,489 300,192 326,087
Accumulated net realized gains (losses) from
investment, future and option transactions..... -- 667,792 (331,907) 94,999
Net unrealized appreciation (depreciation) of
investments, futures, options and other assets
and liabilities denominated in foreign
currencies..................................... -- 1,879,066 744,155 1,995,437
------------ ------------- ------------ ------------
Net assets...................................... $16,070,058 $101,605,869 $66,750,605 $75,174,484
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
Net asset value, offering price and redemption
value per share.................................. $1.00 $12.61 $12.23 $13.04
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
</TABLE>
70
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACE PACE PACE PACE
MUNICIPAL GLOBAL FIXED LARGE COMPANY LARGE COMPANY
FIXED INCOME INCOME VALUE EQUITY GROWTH EQUITY
INVESTMENTS INVESTMENTS INVESTMENTS INVESTMENTS
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost--$16,118,853;
$114,162,991; $66,443,469; $78,247,204;
$32,701,436; $60,823,210; $147,425,777;
$123,737,697; $102,317,318; $99,944,265;
$80,204,517 and $45,801,272 respectively)...... $ 33,621,928 $ 61,179,894 $186,484,100 $164,531,271
Repurchase agreements, at value (cost--$0;
$337,000; $1,679,000; $756,000; $0;
$11,707,000; $7,537,000; $6,933,000;
$7,535,000; $12,147,000; $8,978,000 and
$3,274,000 respectively)....................... -- 11,707,000 7,537,000 6,933,000
------------- ------------- ------------- -------------
33,621,928 72,886,894 194,021,100 171,464,271
Cash (including cash denominated in foreign
currencies).................................... 1,361,036 3,357,094 -- 803
Receivable for investments sold................. -- 300,159 571,496 2,625,143
Receivable for shares of beneficial interest
sold........................................... 104,983 83,143 240,030 232,191
Receivable from investment adviser.............. -- -- -- --
Unrealized appreciation of forward foreign
currency contracts............................. -- 1,049,211 -- --
Dividends and interest receivable............... 446,472 1,199,273 153,704 78,978
Deferred organizational costs................... 58,017 58,017 58,017 58,017
Other assets.................................... 11,589 65,503 17,259 14,219
------------- ------------- ------------- -------------
Total assets.................................... 35,604,025 78,999,294 195,061,606 174,473,622
------------- ------------- ------------- -------------
LIABILITIES
Payable for shares of beneficial interest
repurchased.................................... 691 14,925 36,368 28,645
Dividends payable............................... -- -- -- --
Payable for investments purchased............... 1,195,507 2,809,399 581,910 2,815,184
Collateral for securities loaned................ -- 14,369,286 13,329,180 11,149,000
Outstanding options written..................... -- -- -- --
Unrealized depreciation of forward foreign
currency contracts............................. -- 1,364,986 -- --
Payable to investment adviser................... 8,867 22,892 115,102 99,215
Accrued expenses and other liabilities.......... 106,820 138,594 192,486 47,716
------------- ------------- ------------- -------------
Total liabilities............................... 1,311,885 18,720,082 14,255,046 14,139,760
------------- ------------- ------------- -------------
NET ASSETS
Beneficial interest shares of $0.001 par value
outstanding--16,070,058; 8,054,803; 5,457,914;
5,766,301; 2,706,463; 4,952,869; 9,029,004;
8,316,595; 7,710,181; 8,699,607; 6,575,365 and
3,509,170 respectively (unlimited number
authorized).................................... 33,408,576 60,806,109 130,939,418 116,986,317
Accumulated net investment income (loss)........ 117,975 (505,861) 650,133 90,317
Accumulated net realized gains (losses) from
investment, future and option transactions..... (154,903) 38,434 9,954,812 2,463,654
Net unrealized appreciation (depreciation) of
investments, futures, options and other assets
and liabilities denominated in foreign
currencies..................................... 920,492 (59,470) 39,262,197 40,793,574
------------- ------------- ------------- -------------
Net assets...................................... $ 34,292,140 $ 60,279,212 $180,806,560 $160,333,862
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net asset value, offering price and redemption
value per share................................... $12.67 $12.17 $20.03 $19.28
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
<CAPTION>
PACE
PACE PACE INTERNATIONAL
SMALL/MEDIUM SMALL/MEDIUM PACE EMERGING
COMPANY VALUE COMPANY INTERNATIONAL MARKETS
EQUITY GROWTH EQUITY EQUITY EQUITY
INVESTMENTS INVESTMENTS INVESTMENTS INVESTMENTS
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost--$16,118,853;
$114,162,991; $66,443,469; $78,247,204;
$32,701,436; $60,823,210; $147,425,777;
$123,737,697; $102,317,318; $99,944,265;
$80,204,517 and $45,801,272 respectively)...... $130,021,143 $117,074,743 $ 94,918,956 $ 55,846,449
Repurchase agreements, at value (cost--$0;
$337,000; $1,679,000; $756,000; $0;
$11,707,000; $7,537,000; $6,933,000;
$7,535,000; $12,147,000; $8,978,000 and
$3,274,000 respectively)....................... 7,535,000 12,147,000 8,978,000 3,274,000
------------- ------------- ------------- -------------
137,556,143 129,221,743 103,896,956 59,120,449
Cash (including cash denominated in foreign
currencies).................................... 168 74,717 190,521 130,938
Receivable for investments sold................. 706,019 4,067,053 514,164 166,591
Receivable for shares of beneficial interest
sold........................................... 173,005 183,185 173,367 84,238
Receivable from investment adviser.............. -- -- -- --
Unrealized appreciation of forward foreign
currency contracts............................. -- -- -- --
Dividends and interest receivable............... 124,719 36,652 145,872 168,101
Deferred organizational costs................... 58,017 58,017 58,017 58,017
Other assets.................................... 11,402 11,785 140,929 6,067
------------- ------------- ------------- -------------
Total assets.................................... 138,629,473 133,653,152 105,119,826 59,734,401
------------- ------------- ------------- -------------
LIABILITIES
Payable for shares of beneficial interest
repurchased.................................... 26,196 25,353 15,150 9,839
Dividends payable............................... -- -- -- --
Payable for investments purchased............... 1,730,086 1,547,265 607,899 801,897
Collateral for securities loaned................ 1,604,400 6,334,700 1,329,350 3,790,425
Outstanding options written..................... -- -- -- --
Unrealized depreciation of forward foreign
currency contracts............................. -- -- -- --
Payable to investment adviser................... 82,632 76,330 75,870 31,032
Accrued expenses and other liabilities.......... 139,077 60,879 112,511 341,875
------------- ------------- ------------- -------------
Total liabilities............................... 3,582,391 8,044,527 2,140,780 4,975,068
------------- ------------- ------------- -------------
NET ASSETS
Beneficial interest shares of $0.001 par value
outstanding--16,070,058; 8,054,803; 5,457,914;
5,766,301; 2,706,463; 4,952,869; 9,029,004;
8,316,595; 7,710,181; 8,699,607; 6,575,365 and
3,509,170 respectively (unlimited number
authorized).................................... 99,100,880 105,611,963 86,022,156 44,940,716
Accumulated net investment income (loss)........ 652,375 1,131 1,151,662 169,054
Accumulated net realized gains (losses) from
investment, future and option transactions..... 7,590,002 2,865,053 1,098,392 (173,642)
Net unrealized appreciation (depreciation) of
investments, futures, options and other assets
and liabilities denominated in foreign
currencies..................................... 27,703,825 17,130,478 14,706,836 9,823,205
------------- ------------- ------------- -------------
Net assets...................................... $135,047,082 $125,608,625 $102,979,046 $ 54,759,333
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net asset value, offering price and redemption
value per share................................... $17.52 $14.44 $15.66 $15.60
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
See accompanying notes to financial statements
71
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended July 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACE
GOVERNMENT PACE PACE
PACE SECURITIES INTERMEDIATE STRATEGIC
MONEY MARKET FIXED INCOME FIXED INCOME FIXED INCOME
INVESTMENTS INVESTMENTS INVESTMENTS INVESTMENTS
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding
taxes, if any)....................... $ 735,352 $5,555,160 $3,477,561 $3,680,541
Dividends (net of foreign withholding
taxes, if any)....................... -- -- -- --
------------- ------------ ------------ ------------
735,352 5,555,160 3,477,561 3,680,541
------------- ------------ ------------ ------------
EXPENSES:
Investment advisory and administration
fees................................. 46,463 555,050 318,727 409,105
Interest expense...................... -- 565,869 -- --
Transfer agency fees and expenses..... 79,395 49,698 33,158 49,503
Trustees' fees........................ 30,000 30,000 30,000 30,000
Federal and state registration fees... 25,420 12,066 23,152 22,445
Legal and audit....................... 23,873 35,957 33,965 35,922
Amortization of organizational
expenses............................. 18,980 18,980 18,980 18,980
Reports and notices to shareholders... 13,895 21,031 26,554 33,580
Custody and accounting................ 1,321 48,562 32,775 35,999
Other expenses........................ 11,597 10,384 10,135 4,982
------------- ------------ ------------ ------------
250,944 1,347,597 527,446 640,516
Less: Fee waivers and expense
reimbursements
from investment adviser......... (184,599) (107,156) (76,200) (143,533)
------------- ------------ ------------ ------------
Net expenses.......................... 66,345 1,240,441 451,246 496,983
------------- ------------ ------------ ------------
Net investment income (loss).......... 669,007 4,314,719 3,026,315 3,183,558
------------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENT TRANSACTIONS:
Net realized gains (losses) from:
Investment, future and option
transactions....................... 360 1,571,072 (272,058) 804,905
Foreign currency transactions....... -- -- (2,307) --
Net change in unrealized
appreciation/depreciation of:
Investments, futures and options.... -- 2,036,731 1,470,929 2,393,323
Other assets, liabilities and
forward contracts denominated in
foreign currencies................. -- (10) (11,478) 47
------------- ------------ ------------ ------------
Net realized and unrealized gains
(losses) from investment
transactions......................... 360 3,607,793 1,185,086 3,198,275
------------- ------------ ------------ ------------
Net increase in net assets resulting
from operations...................... $ 669,367 $7,922,512 $4,211,401 $6,381,833
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
</TABLE>
72
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACE PACE
PACE PACE PACE PACE SMALL/MEDIUM SMALL/MEDIUM
MUNICIPAL GLOBAL FIXED LARGE COMPANY LARGE COMPANY COMPANY VALUE COMPANY
FIXED INCOME INCOME VALUE EQUITY GROWTH EQUITY EQUITY GROWTH EQUITY
INVESTMENTS INVESTMENTS INVESTMENTS INVESTMENTS INVESTMENTS INVESTMENTS
------------ ------------ -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding
taxes, if any)....................... $1,416,734 $3,070,303 $ 178,098 $ 190,141 $ 287,534 $ 551,757
Dividends (net of foreign withholding
taxes, if any)....................... -- -- 2,100,154 1,147,535 1,620,002 160,977
------------ ------------ -------------- -------------- ------------- -------------
1,416,734 3,070,303 2,278,252 1,337,676 1,907,536 712,734
------------ ------------ -------------- -------------- ------------- -------------
EXPENSES:
Investment advisory and administration
fees................................. 143,239 389,067 1,004,307 875,877 765,902 719,564
Interest expense...................... -- -- -- -- -- --
Transfer agency fees and expenses..... 26,685 52,011 77,586 68,636 71,150 66,713
Trustees' fees........................ 30,000 30,000 30,000 30,000 30,000 30,000
Federal and state registration fees... 22,617 11,314 22,174 16,853 23,100 25,011
Legal and audit....................... 46,939 26,865 59,305 37,710 49,030 30,027
Amortization of organizational
expenses............................. 18,980 18,980 18,980 18,980 18,980 18,980
Reports and notices to shareholders... 26,044 16,737 29,712 26,717 36,489 23,927
Custody and accounting................ 15,172 74,051 76,959 67,744 57,472 55,768
Other expenses........................ 4,647 10,566 18,571 3,704 18,300 1,362
------------ ------------ -------------- -------------- ------------- -------------
334,323 629,591 1,337,594 1,146,221 1,070,423 971,352
Less: Fee waivers and expense
reimbursements
from (131,476) (167,565) (82,199) (50,644) (126,324) (71,349)
------------ ------------ -------------- -------------- ------------- -------------
Net expenses.......................... 202,847 462,026 1,255,395 1,095,577 944,099 900,003
------------ ------------ -------------- -------------- ------------- -------------
Net investment income (loss).......... 1,213,887 2,608,277 1,022,857 242,099 963,437 (187,269)
------------ ------------ -------------- -------------- ------------- -------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENT TRANSACTIONS:
Net realized gains (losses) from:
Investment, future and option
transactions....................... (117,168) 477,828 12,582,167 3,415,324 8,345,595 4,458,445
Foreign currency transactions....... -- (987,759) -- -- -- --
Net change in unrealized
appreciation/depreciation of:
Investments, futures and options.... 850,557 1,234 38,091,574 38,776,128 28,544,660 19,755,079
Other assets, liabilities and
forward contracts denominated in
foreign currencies................. -- (444,856) 186 -- -- --
------------ ------------ -------------- -------------- ------------- -------------
Net realized and unrealized gains
(losses) from investment
transactions......................... 733,389 (953,553) 50,673,927 42,191,452 36,890,255 24,213,524
------------ ------------ -------------- -------------- ------------- -------------
Net increase in net assets resulting
from operations...................... $1,947,276 $1,654,724 $ 51,696,784 $ 42,433,551 $37,853,692 $24,026,255
------------ ------------ -------------- -------------- ------------- -------------
------------ ------------ -------------- -------------- ------------- -------------
<CAPTION>
PACE
PACE INTERNATIONAL
INTERNATIONAL EMERGING MARKETS
EQUITY EQUITY
INVESTMENTS INVESTMENTS
------------ -----------------
<S> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding
taxes, if any)....................... $ 301,690 $ 104,213
Dividends (net of foreign withholding
taxes, if any)....................... 1,314,661 706,093
------------ -----------------
1,616,351 810,306
------------ -----------------
EXPENSES:
Investment advisory and administration
fees................................. 632,415 417,803
Interest expense...................... -- --
Transfer agency fees and expenses..... 65,616 62,602
Trustees' fees........................ 30,000 30,000
Federal and state registration fees... 27,226 10,143
Legal and audit....................... 35,621 66,239
Amortization of organizational
expenses............................. 18,980 18,980
Reports and notices to shareholders... 25,409 45,268
Custody and accounting................ 105,937 138,187
Other expenses........................ 6,683 5,574
------------ -----------------
947,887 794,796
Less: Fee waivers and expense
reimbursements
from (1,629) (225,031)
------------ -----------------
Net expenses.......................... 946,258 569,765
------------ -----------------
Net investment income (loss).......... 670,093 240,541
------------ -----------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENT TRANSACTIONS:
Net realized gains (losses) from:
Investment, future and option
transactions....................... 1,296,752 (17,754)
Foreign currency transactions....... 597,617 (46,206)
Net change in unrealized
appreciation/depreciation of:
Investments, futures and options.... 14,945,764 9,730,201
Other assets, liabilities and
forward contracts denominated in
foreign currencies................. (201,997) (209,093)
------------ -----------------
Net realized and unrealized gains
(losses) from investment
transactions......................... 16,638,136 9,457,148
------------ -----------------
Net increase in net assets resulting
from operations...................... $17,308,229 $ 9,697,689
------------ -----------------
------------ -----------------
</TABLE>
See accompanying notes to financial statements
73
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PACE
PACE GOVERNMENT SECURITIES
MONEY MARKET INVESTMENTS FIXED INCOME INVESTMENTS
--------------------------- ----------------------------
FOR THE FOR THE FOR THE
YEAR PERIOD FOR THE PERIOD
ENDED ENDED YEAR ENDED
JULY 31, JULY 31, ENDED JULY 31,
1997 1996+ JULY 31, 1997 1996+
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income........................... $ 669,007 $ 281,529 $ 4,314,719 $ 1,585,960
Net realized gains (losses) from:
Investment, future and option transactions.... 360 259 1,571,072 (544,963)
Foreign currency transactions................. -- -- -- --
Net change in unrealized
appreciation/depreciation of:
Investments, futures and options.............. -- -- 2,036,731 (157,655)
Other assets, liabilities and forward
contracts denominated in foreign
currencies................................... -- -- (10) --
------------ ------------ ------------- ------------
Net increase in net assets resulting from
operations..................................... 669,367 281,788 7,922,512 883,342
------------ ------------ ------------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................... (669,007) (281,529) (4,069,911) (1,336,279)
Net realized gains from investment
transactions................................... (619) -- (336,399) (21,918)
------------ ------------ ------------- ------------
(669,626) (281,529) (4,406,310) (1,358,197)
------------ ------------ ------------- ------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 14,140,218 13,137,911 51,021,900 64,648,903
Cost of shares repurchased...................... (8,937,847) (3,184,468) (16,027,909) (6,772,705)
Proceeds from dividends reinvested.............. 646,822 255,422 4,343,399 1,342,934
------------ ------------ ------------- ------------
Net increase in net assets derived from
beneficial
interest transactions.......................... 5,849,193 10,208,865 39,337,390 59,219,132
------------ ------------ ------------- ------------
Net increase in net assets...................... 5,848,934 10,209,124 42,853,592 58,744,277
NET ASSETS:
Beginning of period............................. 10,221,124 12,000 58,752,277 8,000
------------ ------------ ------------- ------------
End of period................................... $16,070,058 $10,221,124 $101,605,869 $58,752,277
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Undistributed net investment income............. $ -- $ -- $ 494,489 $ 249,681
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
74
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACE PACE
INTERMEDIATE FIXED INCOME STRATEGIC FIXED INCOME
INVESTMENTS INVESTMENTS
--------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1997 1996+ 1997 1996+
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income........................... $ 3,026,315 $ 1,281,154 $ 3,183,558 $ 1,287,189
Net realized gains (losses) from:
Investment, future and option transactions.... (272,058) (59,871) 804,905 (265,689)
Foreign currency transactions................. (2,307) -- -- (101)
Net change in unrealized
appreciation/depreciation of:
Investments, futures and options.............. 1,470,929 (715,930) 2,393,323 (397,886)
Other assets, liabilities and forward
contracts denominated in foreign
currencies................................... (11,478) 634 47 (47)
------------ ------------ ------------ ------------
Net increase in net assets resulting from
operations..................................... 4,211,401 505,987 6,381,833 623,466
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................... (2,918,801) (1,084,542) (3,066,213) (1,073,318)
Net realized gains from investment
transactions................................... -- (1,605) (433,240) (16,005)
------------ ------------ ------------ ------------
(2,918,801) (1,086,147) (3,499,453) (1,089,323)
------------ ------------ ------------ ------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 34,600,315 46,296,354 38,094,747 46,496,942
Cost of shares repurchased...................... (13,278,515) (5,521,723) (11,807,997) (4,565,887)
Proceeds from dividends reinvested.............. 2,863,582 1,070,152 3,455,539 1,076,617
------------ ------------ ------------ ------------
Net increase in net assets derived from
beneficial
interest transactions.......................... 24,185,382 41,844,783 29,742,289 43,007,672
------------ ------------ ------------ ------------
Net increase in net assets...................... 25,477,982 41,264,623 32,624,669 42,541,815
NET ASSETS:
Beginning of period............................. 41,272,623 8,000 42,549,815 8,000
------------ ------------ ------------ ------------
End of period................................... $66,750,605 $41,272,623 $75,174,484 $42,549,815
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Undistributed net investment income............. $ 300,192 $ 195,940 $ 326,087 $ 208,742
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<CAPTION>
PACE PACE
MUNICIPAL FIXED INCOME GLOBAL FIXED INCOME
INVESTMENTS INVESTMENTS
--------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1997 1996+ 1997 1996+
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income........................... $ 1,213,887 $ 475,157 $ 2,608,277 $ 1,159,866
Net realized gains (losses) from:
Investment, future and option transactions.... (117,168) 21,457 990,587 (109,897)
Foreign currency transactions................. -- -- (1,500,518) (333,354)
Net change in unrealized
appreciation/depreciation of:
Investments, futures and options.............. 850,557 69,935 1,235 355,450
Other assets, liabilities and forward
contracts denominated in foreign
currencies................................... -- -- (444,857) 28,702
------------ ------------ ------------ ------------
Net increase in net assets resulting from
operations..................................... 1,947,276 566,549 1,654,724 1,100,767
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................... (1,168,430) (401,342) (2,001,376) (954,517)
Net realized gains from investment
transactions................................... (58,851) (1,638) (320,299) (6,196)
------------ ------------ ------------ ------------
(1,227,281) (402,980) (2,321,675) (960,713)
------------ ------------ ------------ ------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 19,365,469 18,980,590 30,873,266 45,114,536
Cost of shares repurchased...................... (4,749,932) (1,780,463) (10,515,151) (7,920,148)
Proceeds from dividends reinvested.............. 1,191,557 393,355 2,292,365 953,241
------------ ------------ ------------ ------------
Net increase in net assets derived from
beneficial
interest transactions.......................... 15,807,094 17,593,482 22,650,480 38,147,629
------------ ------------ ------------ ------------
Net increase in net assets...................... 16,527,089 17,757,051 21,983,529 38,287,683
NET ASSETS:
Beginning of period............................. 17,765,051 8,000 38,295,683 8,000
------------ ------------ ------------ ------------
End of period................................... $34,292,140 $17,765,051 $60,279,212 $38,295,683
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Undistributed net investment income............. $ 117,975 $ 73,816 $ -- $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements
75
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACE PACE
LARGE COMPANY VALUE LARGE COMPANY GROWTH
EQUITY INVESTMENTS EQUITY INVESTMENTS
----------------------------- -----------------------------
FOR THE FOR THE
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED
ENDED JULY 31, ENDED JULY 31,
JULY 31, 1997 1996+ JULY 31, 1997 1996+
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss).................... $ 1,022,857 $ 534,255 $ 242,099 $ 115,980
Net realized gains (losses) from:
Investment, future and option transactions.... 12,582,167 2,023,865 3,415,324 (951,670)
Foreign currency transactions................. -- -- -- --
Net change in unrealized
appreciation/depreciation of:
Investments, futures and options.............. 38,091,574 1,170,464 38,776,128 2,017,446
Other assets, liabilities and forward
contracts denominated in foreign
currencies................................... 186 (27) -- --
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations................................ 51,696,784 3,728,557 42,433,551 1,181,756
------------- ------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................... (775,005) (131,974) (226,897) (40,865)
Net realized gains from investment
transactions................................... (4,599,545) (51,675) -- --
------------- ------------- ------------- -------------
(5,374,550) (183,649) (226,897) (40,865)
------------- ------------- ------------- -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 76,627,397 86,420,710 71,324,987 74,971,178
Cost of shares repurchased...................... (28,358,191) (9,259,029) (22,670,755) (6,912,342)
Proceeds from dividends reinvested.............. 5,318,346 182,185 224,739 40,510
------------- ------------- ------------- -------------
Net increase in net assets derived from
beneficial
interest transactions.......................... 53,587,552 77,343,866 48,878,971 68,099,346
------------- ------------- ------------- -------------
Net increase in net assets...................... 99,909,786 80,888,774 91,085,625 69,240,237
NET ASSETS:
Beginning of period............................. 80,896,774 8,000 69,248,237 8,000
------------- ------------- ------------- -------------
End of period................................... $180,806,560 $ 80,896,774 $160,333,862 $ 69,248,237
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Undistributed net investment income............. $ 650,133 $ 402,281 $ 90,317 $ 75,115
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
76
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACE PACE
SMALL/MEDIUM COMPANY SMALL/MEDIUM COMPANY GROWTH
VALUE EQUITY INVESTMENTS EQUITY INVESTMENTS
----------------------------- -----------------------------
FOR THE FOR THE
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED
ENDED JULY 31, ENDED JULY 31,
JULY 31, 1997 1996+ JULY 31, 1997 1996+
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss).................... $ 963,437 $ 402,412 $ (187,269) $ (55,641)
Net realized gains (losses) from:
Investment, future and option transactions.... 8,345,595 1,375,163 4,458,445 (1,406,123)
Foreign currency transactions................. -- -- -- --
Net change in unrealized appreciation/
depreciation of:
Investments, futures and options.............. 28,544,660 (840,835) 19,755,079 (2,624,601)
Other assets, liabilities and forward
contracts denominated in foreign
currencies................................... -- -- -- --
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations................................ 37,853,692 936,740 24,026,255 (4,086,365)
------------- ------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................... (607,087) (106,387) -- (43,687)
Net realized gains from investment
transactions................................... (2,130,756) -- -- --
------------- ------------- ------------- -------------
(2,737,843) (106,387) -- (43,687)
------------- ------------- ------------- -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 53,611,026 76,414,917 56,184,647 81,509,326
Cost of shares repurchased...................... (20,290,061) (13,464,534) (17,966,629) (14,066,285)
Proceeds from dividends reinvested.............. 2,715,942 105,590 -- 43,363
------------- ------------- ------------- -------------
Net increase in net assets derived from
beneficial
interest transactions.......................... 36,036,907 63,055,973 38,218,018 67,486,404
------------- ------------- ------------- -------------
Net increase in net assets...................... 71,152,756 63,886,326 62,244,273 63,356,352
NET ASSETS:
Beginning of period............................. 63,894,326 8,000 63,364,352 8,000
------------- ------------- ------------- -------------
End of period................................... $135,047,082 $ 63,894,326 $125,608,625 $ 63,364,352
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Undistributed net investment income............. $ 652,375 $ 296,025 $ 1,131 $ 1,131
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
<CAPTION>
PACE PACE
INTERNATIONAL EQUITY INTERNATIONAL EMERGING
INVESTMENTS MARKETS EQUITY INVESTMENTS
----------------------------- -----------------------------
FOR THE FOR THE
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED
ENDED JULY 31, ENDED JULY 31,
JULY 31, 1997 1996+ JULY 31, 1997 1996+
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss).................... $ 670,093 $ 286,456 $ 240,541 $ 129,072
Net realized gains (losses) from:
Investment, future and option transactions.... 1,296,752 348,907 (17,754) (155,888)
Foreign currency transactions................. 597,617 65,353 (46,206) (33,045)
Net change in unrealized appreciation/
depreciation of:
Investments, futures and options.............. 14,945,764 (231,325) 9,730,201 314,976
Other assets, liabilities and forward
contracts denominated in foreign
currencies................................... (201,997) 194,394 (209,093) (12,879)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations................................ 17,308,229 663,785 9,697,689 242,236
------------- ------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................... (592,454) (66,880) (106,808) (14,500)
Net realized gains from investment
transactions................................... (355,947) -- -- --
------------- ------------- ------------- -------------
(948,401) (66,880) (106,808) (14,500)
------------- ------------- ------------- -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 52,799,774 48,735,143 26,529,694 28,516,539
Cost of shares repurchased...................... (12,452,231) (4,075,938) (6,948,586) (3,285,267)
Proceeds from dividends reinvested.............. 941,111 66,454 105,920 14,416
------------- ------------- ------------- -------------
Net increase in net assets derived from
beneficial
interest transactions.......................... 41,288,654 44,725,659 19,687,028 25,245,688
------------- ------------- ------------- -------------
Net increase in net assets...................... 57,648,482 45,322,564 29,277,909 25,473,424
NET ASSETS:
Beginning of period............................. 45,330,564 8,000 25,481,424 8,000
------------- ------------- ------------- -------------
End of period................................... $102,979,046 $ 45,330,564 $ 54,759,333 $ 25,481,424
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Undistributed net investment income............. $ 1,151,662 $ 284,929 $ 169,054 $ 81,527
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
See accompanying notes to financial statements
77
<PAGE>
Managed Accounts Services Portfolio Trust
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Managed Accounts Services Portfolio Trust (the "Trust") is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, as an open-end management investment company currently composed of
twelve separate investment portfolios and was organized as a Delaware business
trust under the laws of the State of Delaware by Certificate of Trust dated
September 9, 1994, as amended June 9, 1995.
The Trust has twelve Portfolios of shares available for investment, each having
its own investment objectives and policies: PACE Money Market Investments, PACE
Government Securities Fixed Income Investments, PACE Intermediate Fixed Income
Investments, PACE Strategic Fixed Income Investments, PACE Municipal Fixed
Income Investments, PACE Global Fixed Income Investments, PACE Large Company
Value Equity Investments, PACE Large Company Growth Equity Investments, PACE
Small/ Medium Company Value Equity Investments, PACE Small/Medium Company Growth
Equity Investments, PACE International Equity Investments and PACE International
Emerging Markets Equity Investments (collectively referred to as the
"Portfolios").
All Portfolios are diversified with the exception of PACE Intermediate Fixed
Income Investments and PACE Global Fixed Income Investments. Shares of the
Portfolios currently are available only to participants in the PaineWebber
PACE-SM- Program.
ORGANIZATIONAL MATTERS--Prior to June 16, 1995, the Trust had no activities
other than organizational matters and activities related to the initial public
offering and issuance, at net asset value, of 19,337 shares of beneficial
interest of the Trust for a total of $100,000 to Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins"), a wholly owned subsidiary of PaineWebber
Incorporated ("PaineWebber"). The Trust incurred costs of approximately
$1,138,000 in connection with the organization of the Trust and the registration
of its shares. Such costs have been deferred and are being amortized using the
straight-line method over the period of benefit, not to exceed five years,
beginning with the commencement of operations of the Trust.
The preparation of financial statements in accordance with generally accepted
accounting principles requires the Trust's management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies:
VALUATION OF INVESTMENTS--Securities which are listed on U.S. and foreign stock
exchanges are valued at the last sale price on the day the securities are being
valued or, lacking any sales on such day, at the last available bid price. In
cases where securities are traded on more than one exchange, the securities are
generally valued on the exchange designated by Mitchell Hutchins or by the
applicable sub-adviser as the primary market for each Portfolio. Securities
traded in the over-the-counter ("OTC") market and listed on The Nasdaq Stock
Market, Inc. ("Nasdaq") are valued at the last available trade price on Nasdaq
prior to the time of valuation; other OTC securities are valued at the last bid
price available prior to valuation. The amortized cost method of valuation,
which approximates market value, is used to value debt obligations with sixty
days or less remaining to maturity unless the Trust's board of trustees
determines that this does not represent fair value. Securities and assets for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Trust's board of
trustees. Investments of the PACE Money Market Investments are valued at
amortized cost which approximates market value.
78
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Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
All investments quoted in foreign currencies are valued daily in U.S. dollars on
the basis of the foreign currency exchange rates prevailing at the time such
valuation is determined by the Portfolios' custodian. Foreign currency exchange
rates are generally determined prior to the close of trading on the New York
Stock Exchange ("NYSE"). Occasionally, events affecting the value of foreign
investments and such exchange rates occur between the time at which the
valuation of such securities is determined and the close of trading on the NYSE,
which will not be reflected in the computation of the Portfolios' net asset
value. If events materially affecting the value of such investments or currency
exchange rates occur during such time period, the securities will be valued at
their fair value as determined in good faith by or under the direction of the
Trust's board of trustees.
REPURCHASE AGREEMENTS--The Portfolios' custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Portfolios have the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligations. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. Each Portfolio (with the
exception of PACE Municipal Fixed Income Investments) occasionally participates
in joint repurchase agreement transactions with other funds managed by Mitchell
Hutchins.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date. Realized gains and losses from investment
transactions and foreign exchange transactions are calculated using the
identified cost basis. Dividend income is recorded on the ex-dividend date
("ex-date") (except for certain dividends from foreign securities that are
recorded as soon after the ex-date as the respective Portfolio, using reasonable
diligence, becomes aware of such dividends). Interest income is recorded on an
accrual basis. Discounts are accreted and premiums are amortized as adjustments
to interest income and the identified cost of investments.
FOREIGN CURRENCY TRANSLATION--The books and records of the Portfolios are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities and other assets and liabilities stated in foreign
currencies are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the rate
of exchange prevailing on the respective dates of such transactions. The
resulting exchange gains and losses are included in the Statement of Operations.
The Portfolios do not generally isolate the effect of fluctuations in foreign
exchange rates from the effects of fluctuations in the market price of
investment securities. However, the Portfolios do isolate the effect of
fluctuations in foreign exchange rates when determining the realized gain or
loss upon the sale or maturity of foreign currency-denominated debt obligations
pursuant to U.S. federal income tax regulations; such amount is categorized as
foreign exchange gain or loss for both financial reporting and income tax
purposes. Net realized foreign currency gain (loss) is treated as ordinary
income for income tax reporting purposes.
FORWARD FOREIGN CURRENCY CONTRACTS--Certain Portfolios may enter into forward
foreign currency exchange contracts ("forward contracts") in connection with
planned purchases or sales of securities to hedge the U.S. dollar value of
portfolio securities denominated in a particular currency. These Portfolios may
also engage in cross-hedging by using forward contracts in one currency to hedge
fluctuations in the value of securities denominated in a different currency if
Mitchell Hutchins, or the applicable sub-adviser, anticipates that there is a
correlation between the two currencies. Forward contracts may also be used to
shift a Portfolio's exposure to foreign currency fluctuations from one country
to another.
79
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Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Portfolios have no specific limitation on the percentage of assets which may
be committed to such contracts; however, the value of all forward contracts will
not exceed the total market value of a Portfolio's total assets. The Portfolios
may enter into forward contracts or maintain a net exposure to forward contracts
only if (1) the consummation of the contracts would not obligate the Portfolio
to deliver an amount of foreign currency in excess of the value of the positions
being hedged by such contracts or (2) the Portfolios maintain cash or liquid
securities in a segregated account in an amount not less than the value of the
Portfolio's total assets committed to the consummation of the forward contracts
and not covered as provided in (1) above, as marked-to-market daily.
Risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
Fluctuations in the value of open forward contracts are recorded for book
purposes as unrealized gains or losses by the Portfolios. Realized gains and
losses include net gains or losses recognized by the Portfolio on contracts
which have matured.
OPTION WRITING--Certain Portfolios may write (sell) put and call options in
order to gain exposure to or protect against changes in the markets. When a
Portfolio writes a call or a put option, an amount equal to the premium received
by the Portfolio is included in the Portfolio's Statement of Assets and
Liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market value
of the option written. If an option which the Portfolio has written either
expires on its stipulated expiration date or the Portfolio enters into a closing
purchase transaction, the Portfolio realizes a gain (or loss if the cost of a
closing purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a call
option which the Portfolio has written is exercised, the Portfolio realizes a
capital gain or loss (long-term or short-term, depending on the holding period
of the underlying security) from the sale of the underlying security and the
proceeds from the sale are increased by the premium originally received. If a
put option which the Portfolio has written is exercised, the amount of the
premium originally received reduces the cost of the security which the Portfolio
purchases upon exercise of the option.
FUTURES CONTRACTS--Using financial futures contracts involves various market
risks. The maximum amount at risk from the purchase of a futures contract is the
contract value. The Portfolios are subject to a number of guidelines which
reduce the risk by seeking to ensure that financial futures contracts are used
for hedging purposes or to manage the average duration of a portfolio and not
for leverage. However, imperfect correlations between futures contracts and the
portfolio securities being hedged, or market disruptions, do not normally permit
full control of these risks at all times.
Upon entering into a financial futures contract, a Portfolio is required to
pledge to a broker an amount equal to a certain percentage of the contract
amount. This amount is known as the "initial margin." Subsequent payments, known
as "variation margin," are made or received by the Portfolio each day, depending
on the daily fluctuations in the value of the underlying financial futures
contracts. Such variation margin is recorded for financial statement purposes on
a daily basis as an unrealized gain or loss until the financial futures contract
is closed, at which time the net gain or loss is reclassified to realized.
REVERSE REPURCHASE AGREEMENTS--The Trust may enter into reverse repurchase
agreements with qualified third party broker-dealers as determined by, and under
the direction of, the Trust's board of directors. Interest on the value of
reverse repurchase agreements issued and outstanding is based upon competitive
market rates at the time of issuance. At the time the Trust enters into a
reverse repurchase agreement, it establishes and maintains a segregated account
with the Trust's custodian containing liquid securities
80
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Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
having a value not less than the repurchase price, including accrued interest,
of the reverse repurchase agreement.
For the year ended July 31, 1997, the PACE Government Securities Fixed Income
Portfolio is the only Portfolio which engaged in reverse repurchase agreements.
The average monthly balance of reverse repurchase agreements outstanding during
the year ended July 31, 1997 was $9,510,750, at a weighted average interest rate
of 5.68%. The maximum amount of reverse repurchase agreements outstanding at any
month-end during the year ended July 31, 1997 was $38,043,000.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-date. The amounts of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
CONCENTRATION OF RISK
Investing in securities of foreign issuers and currency transactions may involve
certain considerations and risks not typically associated with investments in
the United States. These risks include revaluation of currencies, adverse
fluctuations in foreign currency values and possible adverse political, social
and economic developments, including those particular to a specific industry,
country or region, which could cause the securities and their markets to be less
liquid and prices more volatile than those of comparable U.S. companies and U.S.
government securities. These risks are greater with respect to securities of
issuers located in emerging market countries in which the PACE Global Fixed
Income Investments, PACE International Equity Investments and PACE International
Emerging Markets Equity Investments Portfolios are authorized to invest.
Small cap companies may be more vulnerable than larger companies to adverse
business or economic developments. Small cap companies may also have limited
product lines, markets or financial resources, and may be dependent on a
relatively small management group. Securities of such companies may be less
liquid and more volatile than securities of larger companies or the market
averages in general and, therefore, may involve greater risk than investing in
larger companies. In addition, small cap companies may not be well-known to the
investing public, may not have institutional ownership and may have only
cyclical, static or moderate growth prospects.
The ability of the issuers of debt securities held by the Portfolios to meet
their obligations may be affected by economic and political developments
particular to a specific industry, country or region.
81
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Managed Accounts Services Portfolio Trust
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- --------------------------------------------------------------------------------
INVESTMENT ADVISER AND ADMINISTRATOR
The Trust has entered into an Investment Advisory and Administration Contract
("Advisory Contract") with Mitchell Hutchins. In accordance with the Advisory
Contract, each Portfolio pays Mitchell Hutchins an investment advisory and
administration fee, which is accrued daily and paid monthly, in accordance with
the following schedule:
<TABLE>
<CAPTION>
ANNUAL RATE
AS A PERCENTAGE
OF EACH PORTFOLIO'S
AVERAGE DAILY
PORTFOLIO NET ASSETS
- ------------------------------------------------------------------------------------------------ -------------------
<S> <C>
PACE Money Market Investments................................................................... 0.35%
PACE Government Securities Fixed Income Investments............................................. 0.70%
PACE Intermediate Fixed Income Investments...................................................... 0.60%
PACE Strategic Fixed Income Investments......................................................... 0.70%
PACE Municipal Fixed Income Investments......................................................... 0.60%
PACE Global Fixed Income Investments............................................................ 0.80%
PACE Large Company Value Equity Investments..................................................... 0.80%
PACE Large Company Growth Equity Investments.................................................... 0.80%
PACE Small/Medium Company Value Equity Investments.............................................. 0.80%
PACE Small/Medium Company Growth Equity Investments............................................. 0.80%
PACE International Equity Investments........................................................... 0.90%
PACE International Emerging Markets Equity Investments.......................................... 1.10%
</TABLE>
Under separate Sub-Advisory Agreements, with the exception of PACE Money Market
Investments, Mitchell Hutchins (not the Portfolios) pays each Sub-Adviser a fee,
which is accrued daily and paid monthly, in accordance with the following
schedule:
<TABLE>
<CAPTION>
ANNUAL RATE
AS A PERCENTAGE
OF EACH PORTFOLIO'S
AVERAGE DAILY
PORTFOLIO SUB-ADVISER NET ASSETS
- ---------------------------------------------------- ----------------------------------------- -------------------
<S> <C> <C>
PACE Government Securities Fixed Income Investments Pacific Investment Management Company 0.25%
PACE Intermediate Fixed Income Investments Pacific Income Advisors, Inc. 0.20%
PACE Strategic Fixed Income Investments Pacific Investment Management Company 0.25%
PACE Municipal Fixed Income Investments Morgan Grenfell Capital Management,
Incorporated 0.20%
PACE Global Fixed Income Investments Rogge Global Partners PLC 0.35%
PACE Large Company Value Equity Investments Brinson Partners, Inc. 0.30%
PACE Large Company Growth Equity Investments Chancellor LGT Asset Management, Inc. 0.30%
PACE Small/Medium Company Value
Equity Investments Brandywine Asset Management, Inc. 0.30%
PACE Small/Medium Company Growth Equity Investments Delaware Investment Advisers 0.40%
PACE International Equity Investments Martin Currie Inc. 0.40%
PACE International Emerging Markets Equity Schroder Capital Management International
Investments Inc. 0.50%
</TABLE>
82
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Managed Accounts Services Portfolio Trust
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Prior to December 17, 1996, Westfield Capital Management Company, Inc. served as
the PACE Small/ Medium Company Growth Equity Investments portfolio's sub-adviser
pursuant to a sub-advisory contract with Mitchell Hutchins. Mitchell Hutchins
(not the Portfolio) paid Westfield Capital Management Company, Inc. a fee,
computed daily and paid monthly, at an annual rate of 0.30% of the Portfolio's
average daily net assets.
Mitchell Hutchins has agreed to voluntarily waive all or a portion of its
investment advisory and administration fee and reimburse certain operating
expenses for the year ended July 31, 1997, which lowered the overall expenses of
each Portfolio.
During the year ended July 31, 1997, PACE Large Company Value Equity Investments
paid $360 in brokerage commissions to PaineWebber for transactions executed on
behalf of the Portfolio.
SECURITIES LENDING
Each Portfolio may lend securities up to 33 1/3% of its total assets to
qualified institutions. The loans are secured at all times by cash or U.S.
government securities in an amount at least equal to the market value of the
securities loaned, plus accrued interest and dividends, determined on a daily
basis and adjusted accordingly. The Portfolios will regain record ownership of
loaned securities to exercise certain beneficial rights, however, the Portfolios
may bear the risk of delay in recovery of, or even loss of rights in, the
securities loaned should the borrower fail financially. The Portfolios receive
compensation, which is included in interest income, for lending their securities
on interest earned on the cash or U.S. government securities held as collateral,
net of fee rebates paid to the borrower plus reasonable administrative and
custody fees. PaineWebber, which is the Portfolio's lending agent, received
compensation from the Portfolios for the year ended July 31, 1997 as follows:
<TABLE>
<CAPTION>
PORTFOLIO COMPENSATION
- --------------------------------------------------------------------------------------------------- -------------
<S> <C>
PACE Intermediate Fixed Income Investments......................................................... $ 722
PACE Global Fixed Income Investments............................................................... $ 1,058
PACE Large Company Value Equity Investments........................................................ $ 1,301
PACE Large Company Growth Equity Investments....................................................... $ 1,586
PACE Small/Medium Company Value Equity Investments................................................. $ 1,113
PACE Small/Medium Company Growth Equity Investments................................................ $ 3,427
PACE International Equity Investments.............................................................. $ 2,919
PACE International Emerging Markets Equity Investments............................................. $ 4,641
</TABLE>
83
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Managed Accounts Services Portfolio Trust
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As of July 31, 1997 the Portfolios held cash as collateral and market values of
securities loaned as follows:
<TABLE>
<CAPTION>
COLLATERAL
FOR MARKET VALUE
SECURITIES OF SECURITIES
PORTFOLIO LOANED LOANED
- ----------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
PACE Intermediate Fixed Income Investments......................................... $ 1,609,500 $ 1,566,563
PACE Global Fixed Income Investments............................................... $ 14,369,286 $ 13,901,212
PACE Large Company Value Equity Investments........................................ $ 13,329,180 $ 12,987,713
PACE Large Company Growth Equity Investments....................................... $ 11,149,000 $ 10,892,750
PACE Small/Medium Company Value Equity Investments................................. $ 1,604,400 $ 1,573,409
PACE Small/Medium Company Growth Equity Investments................................ $ 6,334,700 $ 6,144,806
PACE International Equity Investments.............................................. $ 1,329,350 $ 1,298,993
PACE International Emerging Markets Equity Investments............................. $ 3,790,425 $ 3,531,935
</TABLE>
WRITTEN OPTION ACTIVITY
Written option activity for the year ended July 31, 1997 for PACE Strategic
Fixed Income Investments was as follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
------------- -----------
<S> <C> <C>
Options outstanding at July 31, 1996...................................................... 28 $ 59,850
Options written during the period ended July 31, 1997..................................... 10 8,771
Options terminated in closing purchase transactions....................................... (10) (10,447)
Options expired prior to exercise......................................................... (18) (49,403)
--- -----------
Options outstanding at July 31, 1997...................................................... 10 $ 8,771
--- -----------
--- -----------
</TABLE>
Written option activity for the year ended July 31, 1997 for PACE Global Fixed
Income Investments was as follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
------------- -----------
<S> <C> <C>
Options outstanding at July 31, 1996...................................................... 0 $ 0
Options written during the period ended July 31, 1997..................................... 1 9,222
Options exercised......................................................................... (1) (9,222)
--- -----------
Options outstanding at July 31, 1997...................................................... 0 $ 0
--- -----------
--- -----------
</TABLE>
For the year ended July 31, 1997, realized gains (losses) on written options
were $151,109 and $(15,255) for the PACE Strategic Fixed Income Investments and
PACE Global Fixed Income Investments, respectively.
84
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Managed Accounts Services Portfolio Trust
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INVESTMENTS IN SECURITIES
At July 31, 1997, the components of net unrealized appreciation of investments
were as follows:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
PORTFOLIO APPRECIATION DEPRECIATION APPRECIATION
- -------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
PACE Government Securities Fixed Income Investments................. $ 1,928,109 $ (49,043) $ 1,879,066
PACE Intermediate Fixed Income Investments.......................... $ 996,268 $ (241,269) $ 754,999
PACE Strategic Fixed Income Investments............................. $ 1,564,487 $ (124,477) $ 1,440,010
PACE Municipal Fixed Income Investments............................. $ 928,160 $ (7,668) $ 920,492
PACE Global Fixed Income Investments................................ $ 1,086,634 $ (729,950) $ 356,684
PACE Large Company Value Equity Investments......................... $ 39,855,943 $ (797,620) $39,058,323
PACE Large Company Growth Equity Investments........................ $ 40,905,658 $ (112,084) $40,793,574
PACE Small/Medium Company Value Equity Investments.................. $ 29,640,120 $ (1,936,295) $27,703,825
PACE Small/Medium Company Growth Equity Investments................. $ 20,589,619 $ (3,459,141) $17,130,478
PACE International Equity Investments............................... $ 16,529,009 $ (1,814,570) $14,714,439
PACE International Emerging Markets Equity Investments.............. $ 12,121,163 $ (2,075,986) $10,045,177
</TABLE>
For U.S. federal income tax purposes, the cost of securities owned at July 31,
1997 was substantially the same as the cost of securities for financial
statement purposes.
For the year ended July 31, 1997, aggregate purchases and sales of portfolio
securities, excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
PACE Government Securities Fixed Income Investments.............................. $ 618,223,408 $ 575,077,440
PACE Intermediate Fixed Income Investments....................................... $ 63,477,457 $ 34,901,456
PACE Strategic Fixed Income Investments.......................................... $ 141,149,557 $ 132,193,057
PACE Municipal Fixed Income Investments.......................................... $ 17,242,611 $ 3,468,085
PACE Global Fixed Income Investments............................................. $ 136,246,167 $ 112,029,241
PACE Large Company Value Equity Investments...................................... $ 100,086,294 $ 55,796,249
PACE Large Company Growth Equity Investments..................................... $ 124,223,066 $ 76,976,253
PACE Small/Medium Company Value Equity Investments............................... $ 68,363,571 $ 35,066,536
PACE Small/Medium Company Growth Equity Investments.............................. $ 228,935,112 $ 197,170,805
PACE International Equity Investments............................................ $ 70,927,935 $ 35,395,032
PACE International Emerging Markets Equity Investments........................... $ 33,267,018 $ 14,196,325
</TABLE>
85
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX STATUS
Each of the Portfolios intends to distribute substantially all of its taxable
income and to comply with the other requirements of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision for
federal income taxes is required. In addition, by distributing during each
calendar year substantially all of its net investment income, capital gains and
certain other amounts, if any, each Portfolio intends not to be subject to a
federal excise tax.
At July 31, 1997, PACE Intermediate Fixed Income Investments and PACE
International Emerging Markets Equity Investments had net capital loss
carryforwards of $178,596 and $57,491, respectively. These carryforward losses
are available to reduce future net capital gains to the extent provided in the
regulations, and will expire on July 31, 2005. To the extent that such losses
are used to offset future capital gains, the gains so offset will not be
distributed to shareholders.
In accordance with U.S. Treasury regulations, the following Portfolios have
elected to defer realized capital losses and foreign currency losses arising
after October 31, 1996. Such losses are treated for tax purposes as arising on
August 1, 1997.
<TABLE>
<CAPTION>
FOREIGN
CAPITAL CURRENCY
PORTFOLIO LOSSES LOSSES
- -------------------------------------------------------------------------------------- ---------- ------------
<S> <C> <C>
PACE Government Securities Fixed Income Investments................................... $ 7,474 --
PACE Intermediate Fixed Income Investments............................................ $ 111,527 $ 2,307
PACE Municipal Fixed Income Investments............................................... $ 120,350 --
PACE Global Fixed Income Investments.................................................. -- $ 1,511,426
PACE International Emerging Markets Equity Investments................................ -- $ 40,629
</TABLE>
At July 31, 1997, the effect of permanent "book/tax" reclassifications resulted
in increases(decreases) to the components of net assets as follows:
<TABLE>
<CAPTION>
ACCUMULATED
ACCUMULATED NET REALIZED
NET INVESTMENT GAINS BENEFICIAL
PORTFOLIO INCOME (LOSS) (LOSSES) INTEREST
- ------------------------------------------------------------------------ -------------- ------------ -----------
<S> <C> <C> <C>
PACE Intermediate Fixed Income Investments.............................. $ (3,262) $ 3,262 --
PACE Municipal Fixed Income Investments................................. $ (1,298) $ 1,298 --
PACE Global Fixed Income Investments.................................... $ (987,759) $ 987,759 --
PACE Small/Medium Company Growth Equity Investments..................... $ 187,269 $ (187,269) --
PACE International Equity Investments................................... $ 789,094 $ (788,937) $ (157)
PACE International Emerging Markets Equity Investments.................. $ (46,206) $ 46,206 --
</TABLE>
86
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
For the year ended July 31, 1997, transactions in shares of beneficial interest
for each of the Portfolios were as follows:
<TABLE>
<CAPTION>
DIVIDENDS
REINVESTED
IN NET INCREASE
SHARES ADDITIONAL IN SHARES
PORTFOLIO SHARES SOLD REPURCHASED SHARES OUTSTANDING
- --------------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PACE Money Market Investments............................ 14,140,217 (8,937,846) 646,822 5,849,193
PACE Government Securities Fixed Income Investments...... 4,135,657 (1,300,928) 351,935 3,186,664
PACE Intermediate Fixed Income Investments............... 2,869,680 (1,103,102) 237,803 2,004,381
PACE Strategic Fixed Income Investments.................. 3,007,797 (934,320) 272,753 2,346,230
PACE Municipal Fixed Income Investments.................. 1,551,175 (382,058) 95,813 1,264,930
PACE Global Fixed Income Investments..................... 2,520,920 (861,721) 186,704 1,845,903
PACE Large Company Value Equity Investments.............. 4,630,711 (1,684,274) 334,487 3,280,924
PACE Large Company Growth Equity Investments............. 4,500,306 (1,415,925) 14,388 3,098,769
PACE Small/Medium Company Value Equity Investments....... 3,700,520 (1,383,789) 193,306 2,510,037
PACE Small/Medium Company Growth Equity Investments...... 4,482,088 (1,439,050) -- 3,043,038
PACE International Equity Investments.................... 3,862,639 (903,087) 71,296 3,030,848
PACE International Emerging Markets Equity Investments... 1,968,856 (508,458) 8,535 1,468,933
</TABLE>
For the period August 24, 1995 (commencement of operations) through July 31,
1996, transactions in shares of beneficial interest for each of the Portfolios
were as follows:
<TABLE>
<CAPTION>
DIVIDENDS
REINVESTED
IN NET INCREASE
SHARES ADDITIONAL IN SHARES
PORTFOLIO SHARES SOLD REPURCHASED SHARES OUTSTANDING
- --------------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PACE Money Market Investments............................ 13,137,911 (3,184,468) 255,422 10,208,865
PACE Government Securities Fixed Income Investments...... 5,313,084 (556,221) 110,609 4,867,472
PACE Intermediate Fixed Income Investments............... 3,821,298 (457,307) 88,875 3,452,866
PACE Strategic Fixed Income Investments.................. 3,696,020 (362,210) 85,594 3,419,404
PACE Municipal Fixed Income Investments.................. 1,554,054 (145,285) 32,097 1,440,866
PACE Global Fixed Income Investments..................... 3,677,505 (648,832) 77,626 3,106,299
PACE Large Company Value Equity Investments.............. 6,391,534 (657,955) 13,834 5,747,413
PACE Large Company Growth Equity Investments............. 5,728,398 (514,434) 3,195 5,217,159
PACE Small/Medium Company Value Equity Investments....... 6,270,736 (1,080,132) 8,873 5,199,477
PACE Small/Medium Company Growth Equity Investments...... 6,801,662 (1,149,473) 3,713 5,655,902
PACE International Equity Investments.................... 3,856,472 (318,003) 5,381 3,543,850
PACE International Emerging Markets Equity Investments... 2,296,420 (258,068) 1,218 2,039,570
</TABLE>
87
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
MONEY MARKET INVESTMENTS
--------------------------
FOR THE FOR THE
YEAR PERIOD
ENDED ENDED
JULY 31, JULY 31,
1997 1996+
----------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 1.00 $ 1.00
----------- -------------
Net investment income................... 0.05 0.05
----------- -------------
Dividends from net investment income.... (0.05) (0.05)
----------- -------------
Net asset value, end of period.......... $ 1.00 $ 1.00
----------- -------------
----------- -------------
Total investment return (1)............. 5.13% 4.75%
----------- -------------
----------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 16,070 $ 10,221
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 0.50% 0.50%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.89% 2.40%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 5.04% 4.93%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 3.65% 3.03%*
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends at net
asset value on the payable dates, and a sale at net asset value on the last
day of each period reported. The figures do not include the PACE Program
Fee; results would be lower if this fee was included. Total investment
return for period of less than one year has not been annualized.
88
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
GOVERNMENT SECURITIES
FIXED
INCOME INVESTMENTS
--------------------------
FOR THE FOR THE
YEAR PERIOD
ENDED ENDED
JULY 31, JULY 31,
1997 1996+
----------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 12.07 $ 12.00
----------- -------------
Net investment income................... 0.64 0.49
Net realized and unrealized gains from
investments and futures................ 0.58 0.03
----------- -------------
Net increase from investment
operations............................. 1.22 0.52
----------- -------------
Dividends from net investment income.... (0.63) (0.44)
Distributions from net realized gains
from investments....................... (0.05) (0.01)
----------- -------------
Total dividends and distributions....... (0.68) (0.45)
----------- -------------
Net asset value, end of period.......... $ 12.61 $ 12.07
----------- -------------
----------- -------------
Total investment return (1)............. 10.42% 4.35%
----------- -------------
----------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 101,606 $ 58,752
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 1.57%** 0.85%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.70%** 1.15%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 5.44%** 5.09%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 5.31%** 4.79%*
Portfolio turnover...................... 712% 978%
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
** Includes $565,869 of interest expense related to the reverse repurchase
agreement transactions entered into during the fiscal year.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
89
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
INTERMEDIATE FIXED INCOME
INVESTMENTS
--------------------------
FOR THE FOR THE
YEAR PERIOD
ENDED ENDED
JULY 31, JULY 31,
1997 1996+
----------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 11.95 $ 12.00
----------- -------------
Net investment income................... 0.66 0.53
Net realized and unrealized gains
(losses) from investments.............. 0.28 (0.09)
----------- -------------
Net increase from investment
operations............................. 0.94 0.44
----------- -------------
Dividends from net investment income.... (0.66) (0.48)
Distributions from net realized gains
from investments....................... -- (0.01)
----------- -------------
Total dividends and distributions....... (0.66) (0.49)
----------- -------------
Net asset value, end of period.......... $ 12.23 $ 11.95
----------- -------------
----------- -------------
Total investment return (1)............. 8.14% 3.59%
----------- -------------
----------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 66,751 $ 41,273
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 0.85% 0.85%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 0.99% 1.23%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 5.70% 5.56%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 5.56% 5.18%*
Portfolio turnover...................... 67% 36%
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
90
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
STRATEGIC FIXED INCOME
INVESTMENTS
--------------------------
FOR THE FOR THE
YEAR PERIOD
ENDED ENDED
JULY 31, JULY 31,
1997 1996+
----------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 12.44 $ 12.00
----------- -------------
Net investment income................... 0.67 0.59
Net realized and unrealized gains from
investments, futures and options....... 0.70 0.38
----------- -------------
Net increase from investment
operations............................. 1.37 0.97
----------- -------------
Dividends from net investment income.... (0.67) (0.52)
Distributions from net realized gains
from investments....................... (0.10) (0.01)
----------- -------------
Total dividends and distributions....... (0.77) (0.53)
----------- -------------
Net asset value, end of period.......... $ 13.04 $ 12.44
----------- -------------
----------- -------------
Total investment return (1)............. 11.35% 8.15%
----------- -------------
----------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 75,174 $ 42,550
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 0.85% 0.85%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.10% 1.40%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 5.69% 5.85%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 5.44% 5.30%*
Portfolio turnover...................... 357% 166%
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
91
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
MUNICIPAL FIXED INCOME
INVESTMENTS
----------------------------
FOR THE
PERIOD
FOR THE YEAR ENDED
ENDED JULY 31,
JULY 31, 1997 1996+
------------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 12.32 $ 12.00
------------- -------------
Net investment income................... 0.61 0.49
Net realized and unrealized gains from
investments............................ 0.38 0.27
------------- -------------
Net increase from investment
operations............................. 0.99 0.76
------------- -------------
Dividends from net investment income.... (0.61) (0.43)
Distributions from net realized gains
from investments....................... (0.03) (0.01)
------------- -------------
Total dividends and distributions....... (0.64) (0.44)
------------- -------------
Net asset value, end of period.......... $ 12.67 $ 12.32
------------- -------------
------------- -------------
Total investment return (1)............. 8.30% 6.38%
------------- -------------
------------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $34,292 $ 17,765
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 0.85% 0.85%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.40% 1.74%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 5.08% 4.95%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 4.53% 4.07%*
Portfolio turnover...................... 15% 78%
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
92
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
GLOBAL FIXED INCOME
INVESTMENTS
--------------------------------
FOR THE
FOR THE YEAR PERIOD
ENDED ENDED JULY
JULY 31, 1997 31, 1996+
---------------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 12.33 $ 12.00
------- -------------
Net investment income................... 0.64 0.53
Net realized and unrealized gains
(losses) from investments and foreign
currency............................... (0.21) 0.27
------- -------------
Net increase from investment
operations............................. 0.43 0.80
------- -------------
Dividends from net investment income.... (0.51) (0.46)
Distributions from net realized gains
from investments....................... (0.08) (0.01)
------- -------------
Total dividends and distributions....... (0.59) (0.47)
------- -------------
Net asset value, end of period.......... $ 12.17 $ 12.33
------- -------------
------- -------------
Total investment return (1)............. 3.54% 6.68%
------- -------------
------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $60,279 $38,296
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 0.95% 0.95%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.29% 1.61%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 5.36% 5.24%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 5.02% 4.58%*
Portfolio turnover...................... 270% 197%
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
93
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
LARGE COMPANY VALUE
EQUITY INVESTMENTS
--------------------------
FOR THE FOR THE
YEAR PERIOD
ENDED ENDED
JULY 31, JULY 31,
1997 1996+
----------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 14.07 $ 12.00
----------- -------------
Net investment income................... 0.11 0.12
Net realized and unrealized gains from
investments and futures................ 6.61 2.02
----------- -------------
Net increase from investment
operations............................. 6.72 2.14
----------- -------------
Dividends from net investment income.... (0.11) (0.05)
Distributions from net realized gains
from investments....................... (0.65) (0.02)
----------- -------------
Total dividends and distributions....... (0.76) (0.07)
----------- -------------
Net asset value, end of period.......... $ 20.03 $ 14.07
----------- -------------
----------- -------------
Total investment return (1)............. 49.13% 17.90%
----------- -------------
----------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 180,807 $ 80,897
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 1.00% 1.00%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.06% 1.40%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 0.81% 1.22%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 0.75% 0.82%*
Portfolio turnover...................... 46% 38%
Average commission rate paid (2)........ $ 0.0455 --
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose the average commission rate paid per share
of common stock investments purchased or sold.
94
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
LARGE COMPANY GROWTH
EQUITY INVESTMENTS
--------------------------
FOR THE FOR THE
YEAR PERIOD
ENDED ENDED
JULY 31, JULY 31,
1997 1996+
----------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 13.27 $ 12.00
----------- -------------
Net investment income................... 0.03 0.03
Net realized and unrealized gains from
investments............................ 6.01 1.26
----------- -------------
Net increase from investment
operations............................. 6.04 1.29
----------- -------------
Dividends from net investment income.... (0.03) (0.02)
Distributions from net realized gains
from investments....................... -- --
----------- -------------
Total dividends and distributions....... (0.03) (0.02)
----------- -------------
Net asset value, end of period.......... $ 19.28 $ 13.27
----------- -------------
----------- -------------
Total investment return (1)............. 45.61% 10.76%
----------- -------------
----------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 160,334 $ 69,248
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 1.00% 1.00%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.05% 1.33%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 0.22% 0.33%*
Net investment income (loss) to average
net assets, before fee waivers and
expense reimbursements................. 0.17% (0.01)%*
Portfolio turnover...................... 73% 65%
Average commission rate paid (2)........ $ 0.0498 --
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose the average commission rate paid per share
of common stock investments purchased or sold.
95
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
SMALL/MEDIUM COMPANY
VALUE EQUITY INVESTMENTS
--------------------------
FOR THE FOR THE
YEAR PERIOD
ENDED ENDED
JULY 31, JULY 31,
1997 1996+
----------- -------------
<S> <C> <C>
Net asset value, beginning of period.... $ 12.29 $ 12.00
----------- -------------
Net investment income................... 0.12 0.10
Net realized and unrealized gains from
investments............................ 5.55 0.23
----------- -------------
Net increase from investment
operations............................. 5.67 0.33
----------- -------------
Dividends from net investment income.... (0.10) (0.04)
Distributions from net realized gains
from investments....................... (0.34) --
----------- -------------
Total dividends and distributions....... (0.44) (0.04)
----------- -------------
Net asset value, end of period.......... $ 17.52 $ 12.29
----------- -------------
----------- -------------
Total investment return (1)............. 46.99% 2.76%
----------- -------------
----------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 135,047 $ 63,894
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 1.00% 1.00%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.12% 1.51%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 1.00% 1.07%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 0.88% 0.56%*
Portfolio turnover...................... 39% 30%
Average commission rate paid (2)........ $ 0.0492 --
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose the average commission rate paid per share
of common stock investments purchased or sold.
96
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
SMALL/MEDIUM COMPANY GROWTH
EQUITY INVESTMENTS
---------------------------------
FOR THE YEAR FOR THE PERIOD
ENDED ENDED
JULY 31, 1997# JULY 31, 1996+
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period.... $ 11.20 $ 12.00
-------- -------
Net investment loss..................... (0.02) (0.00)
Net realized and unrealized gains
(losses) from investments.............. 3.26 (0.78)
-------- -------
Net increase (decrease) from investment
operations............................. 3.24 (0.78)
-------- -------
Dividends from net investment income.... -- (0.02)
-------- -------
Net asset value, end of period.......... $ 14.44 $ 11.20
-------- -------
-------- -------
Total investment return (1)............. 28.93% (6.55)%
-------- -------
-------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 125,609 $ 63,364
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 1.00% 1.00% *
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.08% 1.27% *
Net investment loss to average net
assets, net of fee waivers and expense
reimbursements......................... (0.21)% (0.14)%*
Net investment loss to average net
assets, before fee waivers and expense
reimbursements......................... (0.29)% (0.41)%*
Portfolio turnover...................... 247% 115%
Average commission rate paid (2)........ $ 0.0532 --
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
# Investment advisory functions for this portfolio were transferred from
Westfield Capital Management Company, Inc. to Delaware Investment Advisers
on December 17, 1996.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends at net
asset value on the payable dates, and a sale at net asset value on the last
day of each period reported. The figures do not include the PACE Program
Fee; results would be lower if this fee was included. Total investment
return for period of less than one year has not been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose the average commission rate paid per share
of common stock investments purchased or sold.
97
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
INTERNATIONAL EQUITY
INVESTMENTS
--------------------------------
FOR THE YEAR FOR THE PERIOD
ENDED ENDED JULY 31,
JULY 31, 1997 1996+
--------------- ---------------
<S> <C> <C>
Net asset value, beginning of period.... $ 12.79 $ 12.00
--------------- -------
Net investment income................... 0.10 0.12
Net realized and unrealized gains from
investments and foreign currency....... 2.97 0.73
--------------- -------
Net increase from investment
operations............................. 3.07 0.85
--------------- -------
Dividends from net investment income.... (0.13) (0.06)
Distributions from net realized gains
from investments....................... (0.07) --
--------------- -------
Total dividends and distributions....... (0.20) (0.06)
--------------- -------
Net asset value, end of period.......... $ 15.66 $ 12.79
--------------- -------
--------------- -------
Total investment return (1)............. 24.30% 7.08%
--------------- -------
--------------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 102,979 $ 45,331
Ratio of:
Expenses to average net assets, net of
fee waivers and expense
reimbursements......................... 1.35% 1.50%*
Expenses to average net assets, before
fee waivers and expense
reimbursements......................... 1.35% 1.81%*
Net investment income to average net
assets, net of fee waivers and expense
reimbursements......................... 0.95% 1.35%*
Net investment income to average net
assets, before fee waivers and expense
reimbursements......................... 0.95% 1.04%*
Portfolio turnover...................... 55% 25%
Average commission rate paid (2)........ $ 0.0183 --
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose the average commission rate paid per share
of common stock investments purchased or sold.
98
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
PACE
INTERNATIONAL EMERGING
MARKETS EQUITY INVESTMENTS
--------------------------------
FOR THE
FOR THE YEAR PERIOD
ENDED ENDED JULY
JULY 31, 1997 31, 1996+
---------------- -------------
<S> <C> <C>
Net asset value, beginning of period........... $ 12.49 $ 12.00
------- -------------
Net investment income.......................... 0.06 0.07
Net realized and unrealized gains from
investments and foreign currency.............. 3.09 0.44
------- -------------
Net increase from investment operations........ 3.15 0.51
------- -------------
Dividends from net investment income........... (0.04) (0.02)
------- -------------
Net asset value, end of period................. $ 15.60 $ 12.49
------- -------------
------- -------------
Total investment return (1).................... 25.31% 4.23%
------- -------------
------- -------------
Ratios/Supplemental Data:
Net assets, end of period (000's).............. $54,759 $25,481
Ratio of:
Expenses to average net assets, net of fee
waivers and expense reimbursements............ 1.50% 1.50%*
Expenses to average net assets, before fee
waivers and expense reimbursements............ 2.09% 2.35%*
Net investment income to average net assets,
net of fee waivers and expense
reimbursements................................ 0.63% 0.94%*
Net investment income to average net assets,
before fee waivers and expense
reimbursements................................ 0.04% 0.08%*
Portfolio turnover............................. 39% 22%
Average commission rate paid (2)............... $0.0011 --
</TABLE>
- ---------------
+ For the period August 24, 1995 (commencement of operations) through July 31,
1996.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include the PACE Program Fee; results would be lower if this fee was
included. Total investment return for period of less than one year has not
been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose the average commission rate paid per share
of common stock investments purchased or sold.
99
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
REPORT OF ERNST& YOUNG LLP, INDEPENDENT AUDITORS
The Board of Trustees and Shareholders of
Managed Accounts Services Portfolio Trust
We have audited the accompanying statement of assets and liabilities of Managed
Accounts Services Portfolio Trust (comprising, respectively, PACE Money Market
Investments, PACE Government Securities Fixed Income Investments, PACE
Intermediate Fixed Income Investments, PACE Strategic Fixed Income Investments,
PACE Municipal Fixed Income Investments, PACE Global Fixed Income Investments,
PACE Large Company Value Equity Investments, PACE Large Company Growth Equity
Investments, PACE Small/Medium Company Value Equity Investments, PACE
Small/Medium Company Growth Equity Investments, PACE International Equity
Investments and PACE International Emerging Markets Equity Investments) (the
"Trust"), including the portfolios of investments as of July 31, 1997, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two fiscal years in the period then ended,
and the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned at July 31, 1997 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Managed Accounts Services Portfolio
Trust at July 31, 1997, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the indicated periods, in
conformity with generally accepted accounting principles.
[SIG]
New York, New York
September 19, 1997
100
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
We are required by subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of each Portfolio's fiscal year end (July
31, 1997) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that the following
distributions paid during the fiscal year by the Portfolios were derived from
the following sources:
<TABLE>
<CAPTION>
NET SHORT-TERM LONG-TERM DIVIDEND*
INVESTMENT CAPITAL CAPITAL RECEIVED
PER SHARE DATA: INCOME GAINS** GAINS DEDUCTION
- ---------------------------------------------------------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
PACE Money Market Investments................................... $ 0.0503 -- -- --
PACE Government Securities Fixed Income Investments............. $ 0.6291 $ 0.0548 $ 0.0003 --
PACE Intermediate Fixed Income Investments...................... $ 0.6649 -- -- --
PACE Strategic Fixed Income Investments......................... $ 0.6690 $ 0.0421 $ 0.0570 --
PACE Municipal Fixed Income Investments......................... $ 0.6123 $ 0.0331 -- --
PACE Global Fixed Income Investments............................ $ 0.5062 $ 0.0849 -- --
PACE Large Company Value Equity Investments..................... $ 0.1090 $ 0.5196 $ 0.1273 33.34%
PACE Large Company Growth Equity Investments.................... $ 0.0346 -- -- 100.00%
PACE Small/Medium Company Value Equity Investments.............. $ 0.0969 $ 0.3293 $ 0.0108 28.17%
PACE Small/Medium Company Growth Equity Investments............. -- -- -- --
PACE International Equity Investments........................... $ 0.1250 $ 0.0751 -- 5.24%
PACE International Emerging Markets Equity Investments.......... $ 0.0405 -- -- 13.45%
</TABLE>
- ------------
* Percentage of ordinary income dividends qualifying for the dividends
received deduction available to corporate shareholders.
** Taxable as ordinary income.
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not be
reported as taxable income. Some retirement trusts (e.g., corporate, Keogh and
403(b)(7) plans) may need this information for their annual information
reporting.
Since each Portfolio's fiscal year is not the calendar year, another
notification will be sent with respect to calendar year 1997. Such notification,
which will reflect the amount to be used by calendar year taxpayers on their
federal income tax returns, will be made in conjunction with Form 1099 DIV and
will be mailed in January 1998. Shareholders are advised to consult their own
tax advisers with respect to the tax consequences of their investment in each of
the Portfolios.
SPECIAL INFORMATION FOR PACE INTERNATIONAL EQUITY INVESTMENTS AND PACE
INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
The Portfolios intend to make an election under Internal Revenue Code Section
853 to pass through foreign taxes paid by the Portfolios to its shareholders.
The amount of foreign taxes paid for PACE International Equity Investments and
PACE International Emerging Markets Equity Investments for the fiscal year ended
July 31, 1997, on a per share basis, is $0.02427 and $0.01456, respectively.
Accordingly, shareholders would report this amount as an additional income
dividend on a federal income tax return and would be entitled to a foreign tax
credit, or an itemized deduction, at their option, for this amount in computing
their U.S. income tax liability. Generally, is it more advantageous to claim a
credit rather than to take a deduction.
101
<PAGE>
Managed Accounts Services Portfolio Trust
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED) (CONCLUDED)
The following tables identify the foreign source income earned and foreign taxes
paid through July 31, 1997 by its source on a per share basis. Since the
Portfolio's fiscal year is not the calendar year, shareholders should refer to
their Form 1099 DIV mailed in January 1998 to determine the amounts to be
included on their respective tax returns for 1997. Shareholders are advised to
consult their own tax advisers with respect to the tax consequences of their
investments in each of the Portfolios.
PACE INTERNATIONAL EQUITY INVESTMENTS
<TABLE>
<CAPTION>
GROSS FOREIGN NET
COUNTRY AMOUNT TAX AMOUNT
<S> <C> <C> <C>
Argentina 0.00514 0.00000 0.00514
Australia 0.00718 0.00027 0.00692
Austria 0.00211 0.00026 0.00184
Brazil 0.00718 0.00021 0.00697
Chile 0.00126 0.00030 0.00096
Denmark 0.00066 0.00010 0.00056
France 0.02597 0.00389 0.02208
Germany 0.01737 0.00174 0.01563
Hong Kong 0.02827 0.00037 0.02790
Indonesia 0.00205 0.00036 0.00168
Italy 0.00376 0.00056 0.00320
Japan 0.01468 0.00220 0.01248
Malaysia 0.00253 0.00076 0.00177
<CAPTION>
GROSS FOREIGN NET
COUNTRY AMOUNT TAX AMOUNT
<S> <C> <C> <C>
Mexico 0.00754 0.00000 0.00754
Netherlands 0.01063 0.00160 0.00904
New Zealand 0.00046 0.00007 0.00039
Peru 0.00016 0.00000 0.00016
Philippines 0.00013 0.00002 0.00011
Singapore 0.00067 0.00017 0.00049
South Africa 0.00038 0.00000 0.00038
Spain 0.00713 0.00107 0.00606
Sweden 0.00385 0.00058 0.00327
Switzerland 0.00670 0.00100 0.00569
Thailand 0.00184 0.00018 0.00166
United Kingdom 0.06603 0.00856 0.05747
Venezuela 0.00052 0.00000 0.00052
</TABLE>
PACE INTERNATIONAL EMERGING MARKETS EQUITY INVESTMENTS
<TABLE>
<CAPTION>
GROSS FOREIGN NET
COUNTRY AMOUNT TAX AMOUNT
<S> <C> <C> <C>
Argentina 0.01317 0.00000 0.01317
Austria 0.00094 0.00000 0.00094
Brazil 0.05080 0.00173 0.04906
Chile 0.01322 0.00327 0.00995
Croatia 0.00147 0.00000 0.00147
Egypt 0.00168 0.00000 0.00168
Greece 0.00262 0.00000 0.00262
Hong Kong 0.00459 0.00000 0.00459
Hungary 0.00069 0.00013 0.00057
India 0.00914 0.00034 0.00880
Indonesia 0.01357 0.00240 0.01117
Israel 0.00272 0.00064 0.00208
Luxembourg 0.00267 0.00022 0.00245
Mauritius 0.00154 0.00000 0.00154
<CAPTION>
GROSS FOREIGN NET
COUNTRY AMOUNT TAX AMOUNT
<S> <C> <C> <C>
Mexico 0.02796 0.00000 0.02796
Peru 0.00230 0.00000 0.00230
Phillipines 0.00336 0.00084 0.00252
Poland 0.00419 0.00062 0.00357
Portugal 0.00820 0.00131 0.00689
Russia 0.00012 0.00002 0.00010
South Africa 0.01549 0.00000 0.01549
South Korea 0.00767 0.00132 0.00636
Taiwan 0.01617 0.00053 0.01564
Thailand 0.01062 0.00106 0.00956
Turkey 0.00022 0.00000 0.00022
Venezuela 0.00009 0.00000 0.00009
Zimbabwe 0.00071 0.00014 0.00057
</TABLE>
102
<PAGE>
MANAGED ACCOUNTS SERVICES
PAINEWEBBER
-C-1997 PaineWebber Incorporated
Member SIPC
