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Previous: CORNERSTONE INTERNET SOLUTIONS CO /DE/, NT 10-Q, 2001-01-16 |
Next: PAINEWEBBER PACE SELECT ADVISORS TRUST, 497, 2001-01-16 |
<PAGE>
PAINEWEBBER PACE SELECT ADVISORS TRUST
(on behalf of PACE INTERMEDIATE FIXED INCOME INVESTMENTS)
PAINEWEBBER MANAGED INVESTMENTS TRUST
(on behalf of PAINEWEBBER INVESTMENT GRADE INCOME FUND)
51 West 52nd Street
New York, New York 10019-6114
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information relates specifically to the
proposed Reorganization whereby PACE Intermediate Fixed Income Investments
("PACE Intermediate Fixed Income Fund"), a series of PaineWebber PACE Select
Advisors Trust ("PACE Trust"), would acquire all of the assets of PaineWebber
Investment Grade Income Fund ("Investment Grade Income Fund"), a series of
PaineWebber Managed Investments Trust ("Managed Investments Trust"), in exchange
solely for shares of PACE Intermediate Fixed Income Fund and the assumption by
PACE Intermediate Fixed Income Fund of all of Investment Grade Income Fund's
stated liabilities. This Statement of Additional Information consists of this
cover page, the PRO FORMA financial statements of PACE Intermediate Fixed Income
Fund (giving effect to the Reorganization) for the year ended July 31, 2000, and
the following described documents, each of which is incorporated by reference
herein and accompanies this Statement of Additional Information:
(1) The combined Statement of Additional Information of PACE Trust, dated
November 27, 2000, which includes information relating to PACE Intermediate
Fixed Income Fund and is incorporated by reference from PACE Trust's Statement
of Additional Information filed on January 8, 2001 under Rule 497, SEC File
Numbers 033-87254 and 811-08764, accession number 0000898432-01-000012;
(2) The combined Annual Report to Shareholders of PACE Trust for the
fiscal year ended July 31, 2000, which includes information relating to PACE
Intermediate Fixed Income Fund and is incorporated by reference from PACE
Trust's Form N-30D, SEC File Number 811-08764, filed on October 6, 2000,
accession number 0000912057-00-043979;
(3) The Semi-Annual Report to Shareholders of Investment Grade Income
Fund, dated May 31, 2000, which is incorporated by reference from Managed
Investments Trust's Form N-30D, SEC File Number 811-04040, filed on August 7,
2000, accession number 0000912057-00-034897; and
(4) The Annual Report to Shareholders of Investment Grade Income Fund for
the fiscal year ended November 30, 1999, which is incorporated by reference from
Managed Investments Trust's Form N-30D, SEC File Number 811-04040, filed on
February 10, 2000, accession number 0000912057-00-005117.
<PAGE>
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the Combined Proxy Statement/Prospectus dated
December 11, 2000 relating to the proposed Reorganization. A copy of the
Combined Proxy Statement/Prospectus may be obtained without charge by calling
toll-free 1-800-647-1568. This Statement of Additional Information is dated
December 11, 2000.
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
The following tables set forth the unaudited PRO FORMA condensed Statement
of Assets and Liabilities as of July 31, 2000, the unaudited PRO FORMA condensed
Statement of Operations for the twelve month period ended July 31, 2000 and the
unaudited PRO FORMA Portfolio of Investments as of July 31, 2000 for Investment
Grade Income Fund and PACE Intermediate Fixed Income Fund as adjusted giving
effect to the Reorganization.
The PRO FORMA Portfolio of Investments contains information about the
securities holdings of the Funds as of July 31, 2000. The holdings of both Funds
have changed significantly since that date, primarily because each Fund's
portfolio was realigned by its new sub-adviser after October 10, 2000 to reflect
its proprietary investment style and strategies. That realignment was not
complete as of November 30, 2000. Other changes in the two Funds' holdings are
due to normal portfolio turnover in response to changes in market conditions.
If Investment Grade Income Fund's shareholders approve the Reorganization,
any of its holdings that are not compatible with PACE Intermediate Fixed Income
Fund's holdings will be sold in an orderly manner and the proceeds of these
sales held in temporary investments pending reinvestment in assets that are
consistent with the holdings of PACE Intermediate Fixed Income Fund. As of
November 30, 2000, these assets represented less than 5% of Investment Grade
Income Fund's portfolio and, to the extent they were held by Investment Grade
Income Fund on July 31, 2000, are marked on the PRO FORMA Portfolio of
Investments.
The portion of Investment Grade Income Fund's assets that will be sold in
connection with the Reorganization will depend on market conditions and on the
sub-adviser's continuing assessment of the compatibility of Investment Grade
Income Fund's holdings with PACE Intermediate Fixed Income Fund's portfolio
composition and its investment objective and policies at the approximate time of
the Reorganization. The need for Investment Grade Income Fund to dispose of
investments in connection with the Reorganization may result in its selling
securities at a disadvantageous time and could result in its realizing gains (or
losses) that would not otherwise have been realized.
2
<PAGE>
PACE INTERMEDIATE FIXED INCOME INVESTMENTS
PAINEWEBBER INVESTMENT GRADE INCOME FUND
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PACE INTERMEDIATE
FIXED INCOME PW INVESTMENT GRADE
INVESTMENTS INCOME FUND
--------------------------- ------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at value (cost - $134,552,671, $272,892,590,
and $407,445,261, respectively) $ 131,946,358 $ 256,680,628
Investment of cash collateral for securities loaned
(cost - $33,624,373, $12,911,250 and $46,535,623, respectively) 33,624,373 12,911,250
Cash 731 987
Receivable for investments sold 110 -
Receivable for shares of beneficial interest sold 107,910 27,306
Dividends and interest receivable 2,179,984 4,424,379
Deferred organizational expenses 1,025 -
Other assets 32,366 26,604
--------------------------- ------------------------------
Total assets 167,892,857 274,071,154
--------------------------- ------------------------------
LIABILITIES
Payable for cash collateral for securities loaned 33,624,373 12,911,250
Payable for investments purchased - 28,283,080
Payable for shares of beneficial interest repurchased 34,364 447,853
Payable to affiliates 69,710 103,132
Accrued expenses and other liabilities 62,051 472,660
--------------------------- ------------------------------
Total liabilities 33,790,498 42,217,975
--------------------------- ------------------------------
NET ASSETS
Beneficial interest shares of $0.001 par value
outstanding - 11,347,462, 24,010,777 and 30,966,394, respectively 138,976,270 273,707,523
Accumulated undistributed (distributions in excess of) net investment
income (loss) 642,137 (322,981)
Accumulated net realized losses from investment transactions (2,909,735) (25,319,405)
Net unrealized depreciation of investments (2,606,313) (16,211,958)
--------------------------- ------------------------------
Net assets applicable to shares outstanding $ 134,102,359 $ 231,853,179
=========================== ==============================
CLASS P:
Net assets $ 134,102,359 $ -
--------------------------- ------------------------------
Shares outstanding 11,347,462 -
--------------------------- ------------------------------
Net asset value and offering price per share $ 11.82 $ -
=========================== ==============================
CLASS A:
Net assets $ - $ 185,821,997
--------------------------- ------------------------------
Shares outstanding - 19,243,570
--------------------------- ------------------------------
Net asset and redemption value per share $ - $ 9.66
=========================== ==============================
Maximum offering price per share (net asset value plus sales charge $ - $ 10.06
of 4% of offering price) =========================== ==============================
CLASS B:
Net assets $ - $ 18,712,729
--------------------------- ------------------------------
Shares outstanding - 1,938,265
--------------------------- ------------------------------
Net asset value and offering price per share $ - $ 9.65
=========================== ==============================
CLASS C:
Net assets $ - $ 23,915,200
--------------------------- ------------------------------
Shares outstanding - 2,476,680
--------------------------- ------------------------------
Net asset value and offering price per share $ - $ 9.66
=========================== ==============================
CLASS Y:
Net assets $ - $ 3,403,249
--------------------------- ------------------------------
Shares outstanding - 352,262
--------------------------- ------------------------------
Net asset value and offering price per share $ - $ 9.66
=========================== ==============================
<CAPTION>
PRO FORMA
COMBINED
PACE INTERMEDIATE
FIXED INCOME
ADJUSTMENTS INVESTMENTS
------------------------ --------------------------
<S> <C> <C>
ASSETS
Investments in securities, at value (cost - $134,552,671, $272,892,590,
and $407,445,261, respectively) $ - $ 388,626,986
Investment of cash collateral for securities loaned
(cost - $33,624,373, $12,911,250 and $46,535,623, respectively) - 46,535,623
Cash - 1,718
Receivable for investments sold - 110
Receivable for shares of beneficial interest sold - 135,216
Dividends and interest receivable - 6,604,363
Deferred organizational expenses - 1,025
Other assets - 58,970
------------------------ --------------------------
Total assets - 441,964,011
------------------------ --------------------------
LIABILITIES
Payable for cash collateral for securities loaned - 46,535,623
Payable for investments purchased - 28,283,080
Payable for shares of beneficial interest repurchased - 482,217
Payable to affiliates - 172,842
Accrued expenses and other liabilities - 534,711
------------------------ --------------------------
Total liabilities - 76,008,473
------------------------ --------------------------
NET ASSETS
Common Stock/Beneficial interest shares of $0.001 par value
outstanding - 11,347,462, 24,010,777 and 30,966,394, respectively - 412,683,793
Accumulated undistributed (distributions in excess of) net investment
income (loss) - 319,156
Accumulated net realized losses from investment transactions - (28,229,140)
Net unrealized depreciation of investments (18,818,271)
------------------------ --------------------------
Net assets applicable to shares outstanding $ - $ 365,955,538
======================== ==========================
CLASS P:
Net assets $ - $ 134,102,359
------------------------ --------------------------
Shares outstanding - 11,347,462
------------------------ --------------------------
Net asset value and offering price per share $ - $ 11.82
======================== ==========================
CLASS A:
Net assets $ - $ 185,821,997
------------------------ --------------------------
Shares outstanding (3,519,700) 15,723,870
------------------------ --------------------------
Net asset and redemption value per share $ - $ 11.82
------------------------ --------------------------
Maximum offering price per share (net asset value plus sales charge $ - $ 12.31
of 4% of offering price) ======================== ==========================
CLASS B:
Net assets $ - $ 18,712,729
------------------------ --------------------------
Shares outstanding (354,833) 1,583,432
------------------------ --------------------------
Net asset value and offering price per share $ - $ 11.82
======================== ==========================
CLASS C:
Net assets $ - $ 23,915,200
------------------------ --------------------------
Shares outstanding (453,026) 2,023,654
------------------------ --------------------------
Net asset value and offering price per share $ - $ 11.82
======================== ==========================
CLASS Y:
Net assets $ - $ 3,403,249
------------------------ --------------------------
Shares outstanding (64,286) 287,976
------------------------ --------------------------
Net asset value and offering price per share $ - $ 11.82
======================== ==========================
</TABLE>
See accompanying notes to pro forma financial statements
<PAGE>
PACE INTERMEDIATE FIXED INCOME INVESTMENTS
PAINEWEBBER INVESTMENT GRADE INCOME FUND
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PACE
INTERMEDIATE PW INVESTMENT
FIXED INCOME GRADE INCOME
INVESTMENTS FUND
------------------- ---------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 9,289,251 $ 19,824,878
Dividends - 632,052
------------------- ---------------------
9,289,251 20,456,930
------------------- ---------------------
EXPENSES:
Investment advisory and administration 828,218 1,265,852
Shareholder distribution and servicing fees - 940,309
Legal and audit 47,894 73,200
Transfer agency and service 44,344 216,599
Trustees' fees 26,250 13,500
Reports and notices to shareholders 22,325 55,632
Amortization of organizational expenses 19,032 -
Federal and state registration fees 17,274 36,157
Custody and accounting 84,658 126,586
Other expenses 2,438 35,390
------------------- ---------------------
1,092,433 2,763,225
Less: fee waivers and reimbursements from investment adviser (13,758) (4,636)
------------------- ---------------------
Net expenses 1,078,675 2,758,589
------------------- ---------------------
Net investment income 8,210,576 17,698,341
------------------- ---------------------
REALIZED AND UNREALIZED LOSSES FROM INVESTMENT TRANSACTIONS:
Net realized losses from investment transactions (2,315,802) (5,417,167)
Net change in unrealized appreciation (depreciation) of investments 387,836 (18,856,578)
------------------- ---------------------
Net realized and unrealized losses from investment activities (1,927,966) (24,273,745)
------------------- ---------------------
Net increase (decrease) in net assets resulting from operations $ 6,282,610 $ (6,575,404)
=================== =====================
<CAPTION>
PRO FORMA
COMBINED PACE
INTERMEDIATE
FIXED INCOME
ADJUSTMENTS INVESTMENTS
-------------------- ------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ - $ 29,114,129
Dividends - 632,052
-------------------- ------------------
- 29,746,181
-------------------- ------------------
EXPENSES:
Investment advisory and administration 253,170 (a) 2,347,240
Shareholder distribution and servicing fees - 940,309
Legal and audit (73,200) (b) 47,894
Transfer agency and service - 260,943
Trustees' fees (13,500) (b) 26,250
Reports and notices to shareholders (44,506) (b) 33,451
Amortization of organizational expenses - 19,032
Federal and state registration fees (28,926) (b) 24,505
Custody and accounting - 211,244
Other expenses - 37,828
-------------------- ------------------
93,039 3,948,697
Less: fee waivers and reimbursements from investment adviser (234,724) (c) (253,118)
-------------------- ------------------
Net expenses (141,685) 3,695,579
-------------------- ------------------
Net investment income 141,685 26,050,602
-------------------- ------------------
REALIZED AND UNREALIZED LOSSES FROM INVESTMENT TRANSACTIONS:
Net realized losses from investment transactions - (7,732,969)
Net change in unrealized appreciation (depreciation) of investments - (18,468,742)
-------------------- ------------------
Net realized and unrealized losses from investment activities - (26,201,711)
-------------------- ------------------
Net increase (decrease) in net assets resulting from operations $ 141,685 $ (151,109)
==================== ==================
</TABLE>
--------------
(a) Reflects increase in fees resulting from higher fee schedule, before
waivers, of PACE Intermediate Fixed Income Investments.
(b) Reflects the anticipated savings of the merger.
(c) Reflects decrease in fees resulting from lower fee schedule, net of waivers,
of PACE Intermediate Fixed Income Investments.
See accompanying notes to pro forma financial statements
<PAGE>
PACE INTERMEDIATE FIXED INCOME INVESTMENTS
PAINEWEBBER INVESTMENT GRADE INCOME FUND
PRO FORMA PORTFOLIO OF INVESTMENTS
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED PACE
PRINCIPAL INTERMEDIATE
AMOUNT FIXED INCOME
(000) MATURITY DATES INTEREST RATES INVESTMENTS
------------- ---------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 14.97%
$1,000 Federal Home Loan Mortgage Corporation 03/15/10 7.000% $ -
6,100 U.S. Treasury Bonds(1) 08/15/13 to 02/15/21 7.875 to 12.000 -
45,710 U.S. Treasury Notes(1) 11/30/01 to 02/15/10 4.250 to 7.875 33,975,552
------------
Total U.S. Government Obligations (cost -- $55,098,805) 33,975,552
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION CERTIFICATES - 1.48%
854 GNMA 11/15/26 to 12/15/26 7.750 852,493
3,407 GNMA 06/15/17 to 11/15/17 8.000 -
19 GNMA 11/20/01 8.500 18,876
95 GNMA 01/15/02 9.000 96,140
142 GNMA 07/15/04 to 09/15/04 9.500 147,400
830 GNMA ARM 10/20/27 to 11/20/27 6.000 831,833
------------
Total Government National Mortgage 1,946,742
Association Certificates (cost--$5,556,406) ------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION CERTIFICATES - 1.22%
79 FHLMC 06/01/02 8.000 79,281
4,535 FHLMC TBA TBA 7.000 -
------------
Total Federal Home Loan Mortgage 79,281
Corporation Certificates (cost--$4,470,104) ------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION CERTIFICATES - 7.79%
18,500 FNMA 12/31/99 6.000 -
1,400 FNMA 09/01/25 7.000 1,355,751
9,658 FNMA 06/01/10 to 09/01/29 7.500 9,541,329
544 FNMA 03/01/04 8.000 544,706
75 FNMA 09/01/07 13.000 84,075
------------
Total Federal National Mortgage 11,525,861
Association Certificates (cost--$12,405,434) ------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.39%
869 FDIC REMIC Trust Series 1996-C1, Class 1A 05/25/26 6.750 863,790
119 FHMLC Series 1497, Class 0 10/15/22 7.000 111,898
67 FHMLC Series 1588, Class TB 06/15/23 6.500 65,915
274 FNMA REMIC Trust 1993-70, Class C 03/25/18 6.900 272,303
540 Amresco Residential Securities Mortgage Loan
Trust Series 1996-3, Class A6 11/25/24 7.875 540,443
1,183 BA Mortgage Securities Inc. Series 1997-2, Class 1A5 10/25/27 7.250 1,150,794
5,000 CS First Boston Mortgage
Securities Corporation, Series
1998-C2, Class A2 11/15/08 6.300 -
600 CWMBS Inc. Series 1997-10, Class A4 02/25/28 6.612 591,843
1,288 DLJ Mortgage Acceptance Corp. Series 1997-CF1, Class A1A 05/15/06 7.400 1,289,524
855 Drexel Burnham Lambert Series H, Class 4 04/01/17 8.500 860,970
1,573 GMAC Commercial Mortgage Security Inc.
Series 1997-C2, Class A1 12/15/04 6.451 1,530,519
1,265 LB Commercial Conduit Mortgage Trust
Series 1995-C2, Class A 08/25/04 7.220 1,262,572
169 Norwest Asset Securities Corp. Series 1997-5, Class A2 04/25/12 7.000 168,106
57 PNC Mortgage Securities Corp. Series 1997-2, Class A 03/25/27 7.250 56,336
72 Residential Asset Security Mortgage Series 1997 Class A 03/25/27 7.000 71,501
428 Resolution Trust Corp. Series 1994-C1, Class C 06/25/26 8.000 426,232
1,374 Resolution Trust Corp. Series 1995-C2, Class D 05/25/27 7.000 1,369,516
1,000 Salomon Brothers Mortgage Securities
VII Inc. Series 1997-LB6, Class A4 12/25/27 6.910 989,130
2,299 Sasco Commercial Mortgage Trust,
Series 1998-C3A, Class E 06/25/01 7.400 2,292,638
729 Structured Asset Securities Corp.
Series 1995-C4, Class A2 ARM 06/25/26 7.170 729,026
445 Structured Asset Securities Corp.
Series 1995-C4, Class D 06/25/26 7.000 443,097
------------
Total Collateralized Mortgage 15,086,153
Obligations (cost--$18,778,438) ------------
CORPORATE BONDS/NOTES - 61.64%
Aerospace - 0.14%
500 Lockheed Martin Corp. 12/01/09 8.200 508,001
------------
Airlines - 2.56%
171 Continental Airlines Trust Series 1997-4, Class 4C 01/02/09 6.800 162,985
1,410 Continental Airlines Trust Series 1998-3, Class 2C 11/01/05 7.250 1,348,806
2,500 Delta Air Lines Incorporated 12/15/22 10.375 -
4,935 Northwest Airliness Pass Through Trs 10/01/19 8.072 -
------------
1,511,791
------------
Automotive - 0.55%
750 Ford Motor Credit Corp. 02/28/02 6.500 740,855
1,225 Ford Motor Credit MTN 12/30/14 9.140 1,281,058
------------
2,021,913
------------
<CAPTION>
PRO FORMA
COMBINED COMBINED PACE
PRINCIPAL PW INVESTMENT INTERMEDIATE
AMOUNT GRADE INCOME FIXED INCOME
(000) FUND INVESTMENTS
------------- -------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 14.97%
$1,000 Federal Home Loan Mortgage Corporation
6,100 U.S. Treasury Bonds(1) $ 990,644 $ 990,644
45,710 U.S. Treasury Notes(1) 7,762,730 7,762,730
12,042,317 46,017,869
--------------------------------
Total U.S. Government Obligations (cost -- $55,098,805) 20,795,691 54,771,243
--------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION CERTIFICATES - 1.48%
854 GNMA
3,407 GNMA - 852,493
19 GNMA 3,461,122 3,461,122
95 GNMA - 18,876
142 GNMA - 96,140
830 GNMA ARM - 147,400
- 831,833
Total Government National Mortgage --------------------------------
Association Certificates (cost--$5,556,406) 3,461,122 5,407,864
--------------------------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION CERTIFICATES - 1.22%
79 FHLMC
4,535 FHLMC TBA - 79,281
4,381,944 4,381,944
Total Federal Home Loan Mortgage --------------------------------
Corporation Certificates (cost--$4,470,104) 4,381,944 4,461,225
--------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION CERTIFICATES - 7.79%
18,500 FNMA
1,400 FNMA 16,973,750 16,973,750
9,658 FNMA - 1,355,751
544 FNMA - 9,541,329
75 FNMA - 544,706
- 84,075
Total Federal National Mortgage --------------------------------
Association Certificates (cost--$12,405,434) 16,973,750 28,499,611
--------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.39%
869 FDIC REMIC Trust Series 1996-C1, Class 1A
119 FHMLC Series 1497, Class 0 - 863,790
67 FHMLC Series 1588, Class TB - 111,898
274 FNMA REMIC Trust 1993-70, Class C - 65,915
540 Amresco Residential Securities Mortgage Loan
Trust Series 1996-3, Class A6 - 272,303
1,183 BA Mortgage Securities Inc. Series 1997-2, Class 1A5 - 540,443
5,000 CS First Boston Mortgage
Securities Corporation, Series
1998-C2, Class A2 - 1,150,794
600 CWMBS Inc. Series 1997-10, Class A4 4,624,118 4,624,118
1,288 DLJ Mortgage Acceptance Corp. Series 1997-CF1, Class A1A - 591,843
855 Drexel Burnham Lambert Series H, Class 4 - 1,289,524
1,573 GMAC Commercial Mortgage Security Inc. - 860,970
Series 1997-C2, Class A1
1,265 LB Commercial Conduit Mortgage Trust - 1,530,519
Series 1995-C2, Class A
169 Norwest Asset Securities Corp. Series 1997-5, Class A2 - 1,262,572
57 PNC Mortgage Securities Corp. Series 1997-2, Class A - 168,106
72 Residential Asset Security Mortgage Series 1997 Class A - 56,336
428 Resolution Trust Corp. Series 1994-C1, Class C - 71,501
1,374 Resolution Trust Corp. Series 1995-C2, Class D - 426,232
1,000 Salomon Brothers Mortgage Securities - 1,369,516
VII Inc. Series 1997-LB6, Class A4
2,299 Sasco Commercial Mortgage Trust, - 989,130
Series 1998-C3A, Class E
729 Structured Asset Securities Corp. - 2,292,638
Series 1995-C4, Class A2 ARM
445 Structured Asset Securities Corp. - 729,026
Series 1995-C4, Class D
- 443,097
Total Collateralized Mortgage --------------------------------
Obligations (cost--$18,778,438) 4,624,118 19,710,271
--------------------------------
CORPORATE BONDS/NOTES - 61.64%
Aerospace - 0.14%
500 Lockheed Martin Corp. - 508,001
--------------------------------
Airlines - 2.56%
171 Continental Airlines Trust Series 1997-4, Class 4C - 162,985
1,410 Continental Airlines Trust Series 1998-3, Class 2C - 1,348,806
2,500 Delta Air Lines Incorporated 2,786,633 2,786,633
4,935 Northwest Airliness Pass Through Trs 5,060,053 5,060,053
--------------------------------
7,846,686 9,358,477
--------------------------------
Automotive - 0.55%
750 Ford Motor Credit Corp. - 740,855
1,225 Ford Motor Credit MTN - 1,281,058
--------------------------------
- 2,021,913
--------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED PACE COMBINED PACE
PRINCIPAL INTERMEDIATE PW INVESTMENT INTERMEDIATE
AMOUNT FIXED INCOME GRADE INCOME FIXED INCOME
(000) MATURITY DATES INTEREST RATES INVESTMENTS FUND INVESTMENTS
------------- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Auto Parts - 0.78%
3,000 Lear Corporation 05/15/05 7.960 - 2,863,728 2,863,728
---------------------------------------
Banks - 8.45%
895 ABN Amro Bank NV 05/31/05 7.250 888,531 - 888,531
910 BankBoston NA MTN 03/25/08 6.375 839,772 - 839,772
4,000 Bci Us Funding Trust 1 12/29/49 8.010 - 3,655,164 3,655,164
258 Continental Bank NA 04/01/01 12.500 266,667 - 266,667
740 First Bank Systems Inc. 05/01/05 7.625 742,849 - 742,849
1,430 First Union Corp. 11/01/04 6.950 1,387,642 - 1,387,642
735 First USA Bank MTN 12/03/01 6.625 727,687 - 727,687
3,000 GS Escrow Corporation 08/01/05 7.125 - 2,685,669 2,685,669
3,000 MBNA Corporation 12/01/26 8.278 - 2,483,562 2,483,562
490 Mellon Bank NA 06/01/03 6.750 482,079 - 482,079
1,125 PNC Bank, NA 04/15/05 7.875 1,144,993 - 1,144,993
7,000 Providian Capital I 144A 02/01/27 9.525 - 5,952,989 5,952,989
900 Security Pacific Corp. MT 07/01/03 9.800 947,065 - 947,065
5,000 Southtrust Bank Alabama 05/15/25 7.690 - 5,138,515 5,138,515
500 Sovran Financial Corp. 06/15/06 9.250 527,298 - 527,298
600 United States Bancorp MTN 05/15/04 6.000 569,716 - 569,716
1,050 Washington Mutual Inc. 08/15/06 7.500 1,026,664 - 1,026,664
1,510 Wells Fargo & Co. 07/15/04 6.625 1,472,128 - 1,472,128
----------------------------------------
11,023,091 19,915,899 30,938,990
----------------------------------------
Cable - 2.12%
3,550 CSC Holdings Incorporated 07/15/09 to 07/15/18 7.625 to 8.125 - 3,373,161 3,373,161
4,000 TCI Communications Incorporated 03/31/27 9.650 - 4,372,904 4,372,904
----------------------------------------
- 7,746,065 7,746,065
----------------------------------------
Chemicals - 1.93%
960 Eastman Chemical Co. 01/15/04 6.375 913,597 - 913,597
3,000 Equistar Chemicals 02/15/04 8.500 - 2,965,068 2,965,068
1,145 Huntsman ICI Chemicals LLC 07/01/09 10.125 - 1,165,037 1,165,037
2,000 Lyondell Chemical Company 05/01/07 9.875 - 2,000,000 2,000,000
----------------------------------------
913,597 6,130,105 7,043,702
----------------------------------------
Communications - Fixed - 0.91%
3,500 Williams Communications Group 10/01/09 10.875 - 3,325,000 3,325,000
----------------------------------------
Computer Hardware - 0.27%
1,000 Sun Microsystems Inc. 08/15/04 7.350 997,502 - 997,502
----------------------------------------
Computer Software & Services - 0.44%
900 Computer Associates International Inc. 04/15/03 6.250 847,798 - 847,798
780 Oracle Corp. 02/15/04 6.720 765,863 - 765,863
----------------------------------------
1,613,661 - 1,613,661
----------------------------------------
Electric Companies - 0.33%
1,180 Constellation Energy Group Inc. 04/01/05 7.875 1,191,860 - 1,191,860
----------------------------------------
Energy - 0.28%
1,090 Noram Energy Corp. 11/01/03 6.375 1,040,348 - 1,040,348
----------------------------------------
Engineering Services - 0.62%
2,600 Allied Waste Incorporated NA 08/01/09 10.000 - 2,262,000 2,262,000
----------------------------------------
Financial Services - 6.34%
1,240 American Express Credit Corp. 08/10/05 6.250 1,226,562 - 1,226,562
1,400 Aristar Inc. 09/01/04 7.375 1,365,168 - 1,365,168
625 Associates Corp. NA 11/01/03 5.750 592,026 - 592,026
1,400 Bellsouth Capital Funding Corp. 02/15/30 7.875 1,397,480 - 1,397,480
870 Beneficial Corp. 12/15/04 6.810 849,699 - 849,699
2,355 CIT Finance 03/15/03 7.375 - 2,341,357 2,341,357
635 Countrywide Funding Corp. MTN 09/16/03 7.450 628,605 - 628,605
1,830 FMR Corp. 144A 06/15/29 7.570 - 1,766,492 1,766,492
225 GATX Capital Corp. 11/01/00 6.500 224,362 - 224,362
2,360 Goldman Sachs Group Incorporated 08/17/05 7.625 - 2,358,237 2,358,237
1,420 Heller Financial Inc. MTN 07/22/02 6.500 1,395,861 - 1,395,861
2,000 Household International Netherlands BV 12/01/03 6.200 - 1,906,892 1,906,892
4,600 Lehman Brothers Holdings Incorporated 01/15/05 7.750 - 4,583,063 4,583,063
3,750 Macsaver Financial Services Incorporated 02/15/02 7.400 - 1,950,000 1,950,000
650 Mellon Financial Co. 11/15/03 5.750 618,970 - 618,970
----------------------------------------
8,298,733 14,906,041 23,204,774
----------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED PACE COMBINED PACE
PRINCIPAL INTERMEDIATE PW INVESTMENT INTERMEDIATE
AMOUNT FIXED INCOME GRADE INCOME FIXED INCOME
(000) MATURITY DATES INTEREST RATES INVESTMENTS FUND INVESTMENTS
------------- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Forest Products - 0.81%
980 Abitibi Consolidated Incorporated 08/01/05 8.300 - 981,921 981,921
2,000 Tembec Industries Incorporated 06/30/09 8.625 - 1,975,000 1,975,000
------------------------------------------
- 2,956,921 2,956,921
------------------------------------------
Healthcare - 1.55%
3,000 Columbia/HCA Healthcare Corporation 03/30/04 7.150 - 2,853,897 2,853,897
3,000 Tenet Healthcare Corporation 12/01/08 8.125 - 2,827,500 2,827,500
------------------------------------------
- 5,681,397 5,681,397
------------------------------------------
Hotels/Gaming - 2.49%
3,000 HMH Properties Incorporated 12/01/08 8.450 - 2,820,000 2,820,000
2,000 Isle of Capri Casinos Incorporated 04/15/09 8.750 - 1,820,000 1,820,000
4,500 MGM Grand Incorporated 02/01/05 to 06/01/07 6.950 to 9.750 - 4,463,244 4,463,244
------------------------------------------
- 9,103,244 9,103,244
------------------------------------------
Hotels & Lodging - 0.26%
1,000 Marriott International Inc. 11/15/03 6.625 962,583 - 962,583
------------------------------------------
Information & Computer Services - 0.46%
1,400 Comdisco Inc. 04/30/02 5.950 1,333,476 - 1,333,476
371 First Data Corp. 04/01/03 6.625 362,540 - 362,540
------------------------------------------
1,696,016 - 1,696,016
------------------------------------------
Insurance - 4.07%
700 Ace Ina Holding Inc. 08/15/06 8.300 707,298 - 707,298
955 Aetna Services Inc. 08/15/06 7.125 910,584 - 910,584
910 CNA Financial Corp. 04/15/05 6.500 829,762 - 829,762
1,010 Conseco Inc. MTN 06/15/01 6.400 848,400 - 848,400
4,500 Lumbermans Mutual Casualty Company 144A 07/01/26 9.150 - 3,974,368 3,974,368
3,000 Markel Capital Trust 01/01/46 8.710 - 2,431,938 2,431,938
3,300 Principal Financial Group 144A 08/15/09 8.200 - 3,264,159 3,264,159
2,000 Zurich Capital Trust 144A 06/01/37 8.376 - 1,921,138 1,921,138
------------------------------------------
3,296,044 11,591,603 14,887,647
------------------------------------------
Leisure - 0.35%
965 Carnival Corp. 04/15/08 6.150 846,669 - 846,669
430 Time Warner Entertainment Co. LP 09/01/08 7.250 416,857 - 416,857
------------------------------------------
1,263,526 - 1,263,526
------------------------------------------
Media - 2.84%
2,000 Liberty Media Corporation 07/15/09 7.875 - 1,942,182 1,942,182
8,700 News America Holdings Incorporated 10/15/12 to 10/17/96 7.900 to 10.125 - 8,452,737 8,452,737
------------------------------------------
- 10,394,919 10,394,919
------------------------------------------
Metals & Mining - 0.06%
200 BHP Finance USA LTD 12/01/02 7.875 199,928 - 199,928
------------------------------------------
Motor Vehicles - 0.77%
3,000 Ford Motor Company 07/16/31 7.450 - 2,833,740 2,833,740
------------------------------------------
Office Equipment - 0.27%
1,100 Xerox Corp. MTN 12/15/03 5.250 979,239 - 979,239
------------------------------------------
Oil Refining, Distribution - 1.41%
2,150 Chesapeake Energy 05/01/05 9.625 - 2,101,625 2,101,625
3,000 Valero Energy Corporation 06/15/05 8.375 - 3,050,727 3,050,727
------------------------------------------
- 5,152,352 5,152,352
------------------------------------------
Railroads - 0.13%
297 Consolidated Rail Corp. 04/01/05 7.070 292,821 - 292,821
165 CSX Transportation Inc. 03/01/06 8.410 171,054 - 171,054
------------------------------------------
463,875 - 463,875
------------------------------------------
Real Estate - 0.35%
1,245 EOP Operating LP 03/15/06 8.375 - 1,260,952 1,260,952
------------------------------------------
Real Estate Investment Trusts - 2.65%
760 Archstone Communities Trust MTN 10/13/00 6.170 758,237 - 758,237
1,200 Bradley Operating Limited Partnership 03/15/06 8.875 1,145,453 - 1,145,453
1,150 Corporate Property Investment Trust 04/01/03 to 08/15/04 7.050 to 7.750 1,124,922 - 1,124,922
410 Health Care Property Investments Inc. 02/15/06 6.500 358,365 - 358,365
1,645 Kimco Realty Corp. 10/01/03 to 11/14/05 6.500 to 6.830 1,576,587 - 1,576,587
1,000 Nationwide Health Property Inc. 09/18/01 7.000 983,366 - 983,366
950 New Plan Realty Trust Corp. 04/06/05 7.750 946,994 - 946,994
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED PACE COMBINED PACE
PRINCIPAL INTERMEDIATE PW INVESTMENT INTERMEDIATE
AMOUNT FIXED INCOME GRADE INCOME FIXED INCOME
(000) MATURITY DATES INTEREST RATES INVESTMENTS FUND INVESTMENTS
------------- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,355 Prologis Trust 07/15/06 7.050 1,273,890 - 1,273,890
400 Rouse Co. 01/15/03 8.500 405,366 - 405,366
1,125 Summit Properties Partnership LP 10/05/00 6.710 1,122,592 - 1,122,592
------------------------------------------
9,695,772 - 9,695,772
------------------------------------------
Retail - 3.08%
1,370 Dayton Hudson Corp. 03/01/06 9.250 1,370,491 - 1,370,491
885 JC Penney Inc. 04/01/07 7.600 774,197 - 774,197
5,950 May Department Stores Company 06/15/21 9.875 - 6,286,294 6,286,294
980 Sears Roebuck Acceptance Corp. 03/20/03 6.000 942,744 - 942,744
2,000 Shopko Stores 03/15/22 9.250 - 1,787,818 1,787,818
100 Wal-Mart Stores Inc. 06/29/11 8.875 103,329 - 103,329
------------------------------------------
3,190,761 8,074,112 11,264,873
------------------------------------------
Telecommunications - 2.30%
1,180 AT&T Corp. 03/15/04 5.625 1,113,768 - 1,113,768
450 Carolina Telephone & Telegraph Co. 05/01/03 6.125 436,342 - 436,342
2,000 US West Capital Funding Incorporated 07/15/08 6.375 - 1,817,498 1,817,498
2,210 Vodafone AirTouch PLC 02/15/10 7.750 2,207,702 - 2,207,702
2,805 Worldcom Inc. 04/01/04 to 05/15/06 7.550 to 8.000 1,330,072 1,516,023 2,846,095
------------------------------------------
5,087,884 3,333,521 8,421,405
------------------------------------------
Tobacco - 0.56%
2,365 Phillip Morris Companies Incorporated 01/15/27 7.750 - 2,037,197 2,037,197
------------------------------------------
Transportation Services - 0.20%
2,400 Laidlaw Incorporated 05/15/06 7.650 - 720,000 720,000
------------------------------------------
Utilities - 3.89%
2,440 AES Corporation 06/01/09 9.500 - 2,458,300 2,458,300
5,000 Commonwealth Edison Company 06/15/20 9.875 - 5,416,380 5,416,380
3,276 Marlin Water Tr Marlin Water Capital 12/15/01 7.090 - 3,244,590 3,244,590
700 New York State Electric & Gas Corp. 05/01/20 9.875 730,360 - 730,360
780 Southern Investments PLC 12/01/06 6.800 715,962 - 715,962
1,075 TXU Eastern Funding Co 05/15/05 6.450 1,004,547 - 1,004,547
650 Virginia Electric & Power Co 04/01/21 to 03/01/25 8.250 to 8.750 650,456 - 650,456
------------------------------------------
3,101,325 11,119,270 14,220,595
------------------------------------------
Wireless Telecommunications - 0.83%
3,100 Nextel International Incorporated 08/01/10 12.750 - 3,030,250 3,030,250
------------------------------------------
Yankee - 6.62%
2,318 Abbey National Capital 12/29/49 8.963 - 2,317,397 2,317,397
2,225 HSBC Capital Funding LLP 12/31/49 10.176 - 2,402,693 2,402,693
3,500 Imperial Tobacco Overseas BV(1) 04/01/09 7.125 - 3,109,050 3,109,050
7,300 Loewen Group International Incorporated 10/15/03 to 06/01/08 7.600 to 8.250 - 2,649,000 2,649,000
1,565 Metronet Communications Corporation 08/15/07 12.000 - 1,758,289 1,758,289
3,000 Petroleum Geo Services 07/15/29 8.150 - 2,837,064 2,837,064
2,000 Rogers Cantel Incorporated 06/01/08 9.375 - 2,075,000 2,075,000
2,000 Royal Bank Scotland Group PLC 03/31/49 8.817 - 2,059,726 2,059,726
4,000 Socgen Real Estate LLC 144A 12/29/49 7.640 - 3,673,624 3,673,624
1,285 Trinidad & Tobago Republic 10/01/09 9.875 - 1,336,400 1,336,400
------------------------------------------
- 24,218,243 24,218,243
------------------------------------------
Total Corporate Bonds/Notes (cost--$237,521,994) 59,057,450 166,503,245 225,560,695
------------------------------------------
ASSET BACKED SECURITIES - 2.45%
720 Aames Mortgage Trust Series
1996-D, Class A1G 03/15/29 7.320 700,042 - 700,042
1,970 California Infrastructure
Series 1997-1, Class A5 06/25/04 6.250 1,942,282 - 1,942,282
1,176 EMAC Trust Series 1998-1, Class 1A 07/15/03 6.110 1,150,129 - 1,150,129
525 Green Tree Financial Corp.
Series 1996-3, Class A4 05/15/27 7.100 522,590 - 522,590
1,000 Ikon Receivables LLC Series
1999-1, Class A3 05/15/05 5.990 989,430 - 989,430
165 Money Store Home Equity
Trust Series 1996-D, Class A6 06/15/21 6.830 164,440 - 164,440
240 Money Store Home Equity
Trust Series 1997-A, Class A6 10/15/21 7.210 238,840 - 238,840
191 Money Store Home Equity
Trust Series 1997-C, Class AH5 02/15/15 6.590 190,164 - 190,164
955 Team Fleet Financing Corp.
Series 1998-2, Class A 07/25/02 6.070 943,808 - 943,808
600 UCFC Loan Trust Series 1996-B1, Class A7 11/15/27 8.200 589,594 - 589,594
--------------------------------------------
Total Asset Backed Securities (cost-$9,097,839) 7,431,319 - 7,431,319
--------------------------------------------
PREFERRED STOCK - 1.92%
*160 California Federal Preferred Capital Corporation - 3,480,000 3,480,000
4 Centaur Funding - 3,542,658 3,542,658
--------------------------------------------
Total Preferred Stock (cost-$7,500,000) - 7,022,658 7,022,658
--------------------------------------------
INTERNATIONAL GOVERNMENT AND AGENCY OBLIGATION - 0.27%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED PACE COMBINED PACE
PRINCIPAL INTERMEDIATE PW INVESTMENT INTERMEDIATE
AMOUNT FIXED INCOME GRADE INCOME FIXED INCOME
(000) MATURITY DATES INTEREST RATES INVESTMENTS FUND INVESTMENTS
------------- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1,000 United Mexican States 02/01/06 8.500 - 997,000 997,000
-------------------------------------------
SHORT-TERM U.S. GOVERNMENT
AGENCY OBLIGATION - 4.91%
18,000 Federal Home Loan Bank
Consolidated Discount Note 08/11/00 6.380 - 17,968,100 17,968,100
-------------------------------------------
REPURCHASE AGREEMENTS - 4.59%
10,000 Repurchase Agreement dated
07/31/00 with Dresdner Bank AG
collateralized by $9,710,000 U.S.
Treasury Bond, 6.625% due 08/15/23;
(value--$10,248,852); proceeds: $10,001,817 08/01/00 6.540 - 10,000,000 10,000,000
3,953 Repurchase Agreement dated 07/31/00
with SG Cowen Securities Group,
collateralized by $3,859,000 U.S.
Treasury Notes, 6.875% due 05/15/06;
(value--$4,032,655); proceeds: $3,953,714 08/01/00 6.500 - 3,953,000 3,953,000
2,844 Repurchase Agreement dated 07/31/00
with State Street Bank & Trust Co.,
collateralized by $836,636 U.S.
Treasury Notes, 6.625% due 03/31/02;
(value--$857,551) and
$1,589,127 U.S. Treasury Bonds,
8.125% due 08/15/19; (value--$2,044,014);
proceeds: $2,844,415 08/01/00 5.250 2,844,000 - 2,844,000
------------------------------------------
Total Repurchase Agreements (cost-$16,797,000) 2,844,000 13,953,000 16,797,000
------------------------------------------
Total Investments (cost--$407,445,261) -- 106.20% 131,946,358 256,680,628 388,626,986
Other assets (liabilities) in excess
of (liabilities) other assets -- (6.20)% 2,156,001 (24,827,449) (22,671,448)
-----------------------------------------------
Net Assets -- 100.00% $134,102,359 $231,853,179 $365,955,538
===============================================
</TABLE>
-------------
ARM Adjustible Rate Mortgage--The interest rates shown are the
current rate as of July 31, 2000.
FDIC Federal Deposit Insurance Corporation.
MTN Medium Term Notes.
REMIC Real Estate Mortgage Investment Conduit.
(1) Security, or portion thereof, was on loan at July 31, 2000.
* Investment Grade Income Fund still holds the preferred stock
of California Federal Preferred Capital Corporation at
November 30, 2000. These securities are not compatible with
the holdings of PACE Intermediate Fixed Income Fund. If
Investment Grade Income Fund's shareholders approve the
Reorganization, these securities must be sold before the
Reorganization is effected.
See accompanying notes to pro forma financial statements.
<PAGE>
PACE INTERMEDIATE FIXED INCOME INVESTMENTS
PAINEWEBBER INVESTMENT GRADE INCOME FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED)
Basis of Presentation:
Subject to the approval of the Agreement and Plan of Reorganization and
Termination ("Plan") by the shareholders of PaineWebber Investment Grade Income
Fund ("Investment Grade"), PACE Intermediate Fixed Income Investments
("Intermediate Fixed Income") would acquire the assets of Investment Grade in
exchange solely for the assumption by Intermediate Fixed Income of Investment
Grade's assets and stated liabilities and shares of Intermediate Fixed Income
that correspond to the outstanding shares of Investment Grade. The number of
shares to be received would be based on the relative net asset value of
Intermediate Fixed Income's shares on the effective date of the Plan and
Investment Grade will be terminated as soon as practicable thereafter.
The PRO FORMA financial statements reflect the financial position of
Intermediate Fixed Income and Investment Grade at July 31, 2000 and the combined
results of operations of Intermediate Fixed Income and Investment Grade (each a
"Fund" and, together, the "Funds") for the year ended July 31, 2000.
As a result of the Plan, the investment management and administration fee will
increase due to the higher fee schedule, net of waivers, of Intermediate Fixed
Income. However, after anticipated savings in other expenses of the Fund (due to
the elimination of duplicative expenses) and the management fee waiver/expense
reimbursement, shareholders of each class of shares of Investment Grade will not
experience an increase in total expenses. Investment Grade currently pays Rule
12b-1 distribution or service fees; as of July 31, 2000, Intermediate Fixed
Income does not. In addition, the PRO FORMA statement of assets and liabilities
has not been adjusted as a result of the proposed transaction because such
adjustment would not be material. The costs of approximately $185,000 associated
with the Reorganization will be paid by Mitchell Hutchins Asset Management Inc.
("Mitchell Hutchins"), a wholly owned asset management subsidiary of PaineWebber
Incorporated (a wholly owned indirect subsidiary of UBS AG), so that each Fund
bears no expenses in connection with the Reorganization. These costs are not
included in the PRO FORMA statement of operations.
The PRO FORMA financial statements are presented for the information of the
reader and may not necessarily be representative of what the actual combined
financial statements would have been had the Reorganization occurred on August
1, 1999. The PRO FORMA financial statements should be read in conjunction with
the historical financial statements of the constituent Funds included in or
incorporated by reference in the applicable statement of additional information.
Significant Accounting Policies:
The Funds' financial statements are prepared in accordance with generally
accepted accounting principles that require the use of management accruals and
estimates. These unaudited financial statements reflect all adjustments, which
are, in the opinion of management, necessary to a fair statement of the results
for the interim period presented. The following is a summary of significant
accounting policies followed by the Funds.
VALUATION OF INVESTMENTS - Each Fund calculates its net asset value based on the
current market value for its portfolio securities. Each Fund normally obtains
market values for its securities from independent pricing sources. Independent
pricing sources may use reported last sale prices, current market quotations or
valuations from computerized "matrix" systems that derive values based on
comparable securities. Securities traded in the over-the-counter ("OTC") market
and listed on The Nasdaq Stock Market, Inc. ("Nasdaq") normally are valued at
the last sale price on Nasdaq prior to valuation. Other OTC securities are
valued at the last bid price available prior to valuation. Securities which are
listed on U.S. and foreign stock exchanges normally are valued at the last sale
price on the day the securities are valued or, lacking any sales on such day, at
the last
<PAGE>
available bid price. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by each Fund's sub-adviser. If a market value is not available from an
independent pricing source for a particular security, that security is valued
at fair value as determined in good faith or under the direction of the
Fund's board of trustees (the "board"). The amortized cost method of
valuation, which approximates market value, generally is used to value
short-term debt instruments with sixty days or less remaining to maturity,
unless the board determines that this does not represent fair value.
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