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Previous: PAINEWEBBER PACE SELECT ADVISORS TRUST, 497, 2001-01-17 |
Next: WESTERN WIRELESS CORP, 424B3, 2001-01-17 |
<PAGE>
PAINEWEBBER PACE SELECT ADVISORS TRUST
(ON BEHALF OF PACE SMALL/MEDIUM COMPANY GROWTH
EQUITY INVESTMENTS)
PAINEWEBBER MANAGED ASSETS TRUST
(ON BEHALF OF PAINEWEBBER MID CAP 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 Small/Medium Company Growth Equity
Investments ("PACE Small/Medium Company Growth Equity Fund"), a series of
PaineWebber PACE Select Advisors Trust ("PACE Trust"), would acquire all of the
assets of PaineWebber Mid Cap Fund ("Mid Cap Fund"), the sole series of
PaineWebber Managed Assets Trust ("Managed Assets Trust"), in exchange solely
for shares of PACE Small/Medium Company Growth Equity Fund and the assumption by
PACE Small/Medium Company Growth Equity Fund of all of Mid Cap Fund's stated
liabilities. This Statement of Additional Information consists of this cover
page, the PRO FORMA financial statements of PACE Small/Medium Company Growth
Equity 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
Small/Medium Company Growth Equity 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
Small/Medium Company Growth Equity 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; and
(3) The Annual Report to Shareholders of Mid Cap Fund for the fiscal
year ended August 31, 2000, which is incorporated by reference from Managed
Assets Trust Form N-30D, SEC File Number 811-06376, filed on November 3, 2000,
accession number 0000912057-00-047148.
This Statement of Additional Information is not a prospectus and should
be read only in conjunction with the Combined Proxy Statement/Prospectus dated
December 28, 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 28, 2000.
<PAGE>
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 Mid Cap Fund and PACE Small/Medium Company Growth Equity 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 Mid Cap
Fund have changed significantly since that date, primarily because the Fund's
portfolio was realigned by its new sub-adviser after October 10, 2000 to reflect
its proprietary investment style and strategies. Other changes in the two Funds'
holdings are due to normal portfolio turnover in response to changes in market
conditions.
As of December 22, 2000, none of Mid Cap Fund's portfolio holdings were
incompatible with PACE Small/Medium Company Growth Fund's holdings or would have
to be sold if Mid Cap Fund's shareholders approve the Reorganization. It is
expected, however, that some of Mid Cap Fund's holdings may not remain at the
time of the Reorganization due to normal portfolio turnover.
2
<PAGE>
<TABLE>
<CAPTION>
PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
PAINEWEBBER MID CAP FUND COMBINED PACE
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES SMALL/MEDIUM
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED) COMPANY
PACE SMALL/MEDIUM GROWTH EQUITY
COMPANY GROWTH PW MID CAP INVESTMENTS
EQUITY INVESTMENTS FUND ADJUSTMENTS PRO FORMA
------------------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost - $202,529,663, $155,857,446 and
$358,387,109, respectively) $ 316,589,197 $ 223,104,152 $ - $ 539,693,349
Investment of cash collateral for securities
loaned (cost - $47,973,850, $35,432,700 and
$83,406,550, respectively) 47,973,850 35,432,700 - 83,406,550
Cash 423 678 - 1,101
Receivable for investments sold 7,202,034 932,719 - 8,134,753
Receivable for shares of beneficial interest sold 130,664 260,065 - 390,729
Dividends and interest receivable 6,152 221,313 - 227,465
Deferred organizational expenses 1,025 - - 1,025
Other assets 60,023 14,018 - 74,041
------------- ------------- ----------- -------------
Total assets 371,963,368 259,965,645 - 631,929,013
------------- ------------- ----------- -------------
LIABILITIES
Payable for cash collateral for securities loaned 47,973,850 35,432,700 - 83,406,550
Payable for investments purchased 3,956,880 9,228,359 - 13,185,239
Payable for shares of beneficial interest repurchased 118,601 325,241 - 443,842
Payable to affiliates 233,378 204,466 - 437,844
Accrued expenses and other liabilities 109,188 468,009 - 577,197
------------- ------------- ----------- -------------
Total liabilities 52,391,897 45,658,775 - 98,050,672
------------- ------------- ----------- -------------
NET ASSETS
Beneficial interest shares of $0.001 par value outstanding -
10,556,285; 14,996,059 and 17,635,404, respectively 97,573,619 118,668,805 - 216,242,424
Accumulated undistributed (distributions in excess)
of net investment income (loss) 1,131 (2,085,132) - (2,084,001)
Accumulated net realized gains from investment transactions 107,937,187 30,476,491 - 138,413,678
Net unrealized appreciation of investments 114,059,534 67,246,706 - 181,306,240
------------- ------------- ----------- -------------
Net assets applicable to shares outstanding $ 319,571,471 $ 214,306,870 $ - $ 533,878,341
============= ============= =========== =============
CLASS P:
Net assets $ 319,571,471 $ - $ - $ 319,571,471
------------- ------------- ----------- -------------
Shares outstanding 10,556,285 - - 10,556,285
------------- ------------- ----------- -------------
Net asset value and offering price per share $ 30.27 $ - $ - $ 30.27
============= ============= =========== =============
CLASS A:
Net assets $ - $ 158,798,662 $ - $ 158,798,662
------------- ------------- ----------- -------------
Shares outstanding - 10,928,476 (5,682,939) 5,245,537
------------- ------------- ----------- -------------
Net asset and redemption value per share $ - $ 14.53 $ - $ 30.27
============= ============= =========== =============
Maximum offering price per share (net asset value
plus sales charge of 4.5% of offering price) $ - $ 15.22 $ - $ 31.70
============= ============= =========== =============
CLASS B:
Net assets $ - $ 31,207,342 $ - $ 31,207,342
------------- ------------- ----------- -------------
Shares outstanding - 2,180,607 (1,149,747) 1,030,860
------------- ------------- ----------- -------------
Net asset value and offering price per share $ - $ 14.31 $ - $ 30.27
============= ============= =========== =============
CLASS C:
Net assets $ - $ 23,677,770 $ - $ 23,677,770
------------- ------------- ----------- -------------
Shares outstanding - 1,844,318 (1,062,179) 782,139
------------- ------------- ----------- -------------
Net asset value and offering price per share $ - $ 12.84 $ - $ 30.27
============= ============= =========== =============
CLASS Y:
Net assets $ - $ 623,095 $ - $ 623,095
------------- ------------- ----------- -------------
Shares outstanding - 42,658 (22,076) 20,582
------------- ------------- ----------- -------------
Net asset value and offering price per share $ - $ 14.61 $ - $ 30.27
============= ============= =========== =============
</TABLE>
See accompanying notes to pro forma financial statements
<PAGE>
<TABLE>
<CAPTION>
PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
PAINEWEBBER MID CAP FUND
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED) COMBINED PACE
SMALL/MEDIUM
PACE COMPANY
SMALL/MEDIUM GROWTH EQUITY
COMPANY GROWTH PW MID CAP INVESTMENTS
EQUITY INVESTMENTS FUND ADJUSTMENTS PRO FORMA
------------------ ---------- ----------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 764,224 $ 677,517 $ - $ 1,441,741
Dividends 200,751 591,760 - 792,511
--------------- ----------- ------------ ------------
964,975 1,269,277 - 2,234,252
--------------- ----------- ------------ ------------
EXPENSES:
Investment advisory and administration 2,495,426 2,017,682 (403,536) (a) 4,109,572
Shareholder distribution and servicing fees - 910,717 - 910,717
Transfer agency fees and expenses 121,245 201,509 - 322,754
Reports and notices to shareholders 42,332 44,808 (35,846) (b) 51,294
Legal and audit 69,680 73,785 (73,785) (b) 69,680
Trustees' fees 26,250 13,500 (13,500) (b) 26,250
Federal and state registration fees 29,682 42,055 (33,644) (b) 38,093
Amortization of organizational expenses 19,032 - - 19,032
Custody and accounting 187,662 121,061 - 308,723
Other expenses 2,530 55,437 - 57,967
--------------- ----------- ------------- ------------
2,993,839 3,480,554 (560,311) 5,914,082
Less: fee waivers from adviser (17,105) (12,285) - (29,390)
--------------- ----------- ------------ ------------
Net expenses 2,976,734 3,468,269 (560,311) 5,884,692
--------------- ----------- ------------ ------------
Net investment income (loss) (2,011,759) (2,198,992) 560,311 (3,650,440)
--------------- ----------- ------------ ------------
REALIZED AND UNREALIZED GAINS FROM
INVESTMENT TRANSACTIONS:
Net realized gains from investment transactions 128,087,825 31,349,212 - 159,437,037
Net change in unrealized appreciation of investments 30,703,199 62,175,842 - 92,879,041
--------------- ----------- ------------ ------------
Net realized and unrealized gains from investment
activities 158,791,024 93,525,054 - 252,316,078
--------------- ----------- ------------ ------------
Net increase in net assets resulting from operations $ 156,779,265 $91,326,062 $ 560,311 $248,665,638
=============== =========== ============ ============
</TABLE>
--------------
(a) Reflects decrease in fees resulting from lower fee schedule of PACE
Small/Medium Company Growth Equity Investments.
(b) Reflects the anticipated savings of the merger.
See accompanying notes to pro forma financial statements
<PAGE>
PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
PAINEWEBBER MID CAP FUND
PRO FORMA PORTFOLIO OF INVESTMENTS
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED PACE
SMALL/MEDIUM
COMPANY
COMBINED PACE GROWTH EQUITY
NUMBER OF SMALL/MEDIUM GROWTH PAINEWEBBER INVESTMENTS
SHARES EQUITY INVESTMENTS MID CAP FUND PRO FORMA
----------------- ------------------- ------------ -------------
<S> <C> <C> <C>
COMMON STOCKS - 93.51%
Airlines - 0.15%
50,000 America West Holding Corp.*(1) $ - $ 803,125 $ 803,125
------------ ------------ ------------
Apparel, Retail - 0.54%
90,000 Hot Topic Inc.* 2,902,500 - 2,902,500
------------ ------------ ------------
Banks - 0.76%
137,200 Doral Financial Corp. 1,783,600 - 1,783,600
102,200 Webster Financial Corp. 2,286,725 - 2,286,725
------------ ------------ ------------
4,070,325 - 4,070,325
------------ ------------ ------------
Broadcasting & Publishing - 0.31%
46,500 Infinity Broadcasting Corp.* - 1,639,125 1,639,125
------------ ------------ ------------
Business & Public Services - 2.00%
89,700 Bright Horizons Family Solutions* 2,186,438 - 2,186,438
74,900 Corporate Executive Board Co.* 4,793,600 - 4,793,600
20,300 Heidrick & Struggles International, Inc.* 1,360,100 - 1,360,100
99,100 West Teleservices Corp.* 2,341,237 - 2,341,237
------------ ------------ ------------
10,681,375 - 10,681,375
------------ ------------ ------------
Cable - 0.13%
10,600 Adelphi Communications Corp. - 373,650 373,650
24,800 Insight Communications Inc.* 303,800 - 303,800
------------ ------------ ------------
303,800 373,650 677,450
------------ ------------ ------------
Computer-Business Services - 1.69%
69,100 Bisys Group Inc.* 4,387,850 - 4,387,850
47,300 Digital Insight Corp.* 1,481,081 - 1,481,081
52,700 eLoyalty Corp.* 782,266 - 782,266
60,500 Espeed Inc.* 1,852,812 - 1,852,812
4,000 Redback Networks Inc. - 520,000 520,000
------------ ------------ ------------
8,504,009 520,000 9,024,009
------------ ------------ ------------
Computer Hardware - 4.41%
60,000 EMC Corp.* - 5,107,500 6,200,175
184,100 Network Appliance, Inc.* 15,005,244 861,875 15,867,119
40,500 RSA Security Inc.* 2,566,687 - 2,566,687
------------ ------------ ------------
17,571,931 5,969,375 23,541,306
------------ ------------ ------------
Computer Software - 11.45%
35,000 BMC Software, Inc.* - 660,625 660,625
121,200 Broadbase Software Inc.* 2,620,150 235,625 2,855,775
7,800 Cacheflow Inc. - 530,400 530,400
162,000 Cadence Design Systems, Inc.* - 3,381,750 3,381,750
117,700 CareScience, Inc.* 706,200 - 706,200
76,000 Cysive, Inc.* 1,824,000 - 1,824,000
20,000 E. Piphany Inc. - 1,861,250 1,861,250
94,800 Exchange Applications Software* 2,085,600 - 2,085,600
29,700 Extensity Inc.* 480,769 - 480,769
35,000 Foundry Networks Inc. - 2,863,437 2,863,437
76,835 i2 Technologies, Inc.*(1) 7,471,654 2,497,688 9,969,342
90,000 Intuit - 3,060,000 3,060,000
34,500 Manugistics Group, Inc.* 1,914,750 - 1,914,750
10,000 Marimba Inc. - 179,375 179,375
74,900 NetIQ Corp.* 3,613,925 - 3,613,925
176,100 New Era Of Networks, Inc.* 3,402,500 1,000,000 4,402,500
77,000 Onyx Software Corp.* 1,862,437 - 1,862,437
125,000 Peregrine Systems Inc. - 3,117,187 3,117,187
12,000 Priceline Common Inc. - 283,500 283,500
27,000 Siebel Systems Inc.* - 3,915,000 3,915,000
103,275 VERITAS Software Corp.* 10,527,595 - 10,527,595
30,000 Vignette Corp. - 1,016,250 1,016,250
------------ ------------ ------------
36,509,580 24,602,087 61,111,667
------------ ------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMBINED PACE
SMALL/MEDIUM
COMPANY
COMBINED PACE GROWTH EQUITY
NUMBER OF SMALL/MEDIUM GROWTH PAINEWEBBER INVESTMENTS
SHARES EQUITY INVESTMENTS MID CAP FUND PRO FORMA
----------------- ------------------- ------------ -------------
<S> <C> <C> <C>
Construction - 1.43%
179,050 Dycom Industries Inc.* 7,654,388 - 7,654,388
------------ ------------ ------------
Consumer Durables - 0.49%
35,000 Black & Decker Corp. - 1,301,563 1,301,563
30,000 Whirlpool Corp. - 1,295,625 1,295,625
------------ ------------ ------------
- 2,597,188 2,597,188
------------ ------------ ------------
Defense & Aerospace - 0.63%
75,000 TRW Inc. - 3,370,312 3,370,312
------------ ------------ ------------
Diversified Retail - 1.27%
174,700 Cost Plus Inc.* 5,819,694 - 5,819,694
40,000 Federated Department Stores, Inc.* - 962,500 962,500
------------ ------------ ------------
5,819,694 962,500 6,782,194
------------ ------------ ------------
Drugs & Medicine - 4.77%
15,000 Biogen Inc.* - 795,000 795,000
93,200 Cima Labs Inc.* 2,830,950 - 2,830,950
86,200 Cubist Pharmaceuticals Inc.* 3,889,775 - 3,889,775
33,300 Inhale Therapeutic Systems, Inc.* 2,703,544 - 2,703,544
137,100 IntraBiotics Pharmaceuticals, Inc.* 4,095,862 - 4,095,862
129,100 Pharmacopeia Inc.* 4,964,685 - 4,964,685
63,000 United Therapeutics Corp.* 6,174,000 - 6,174,000
------------ ------------ ------------
24,658,816 795,000 25,453,816
------------ ------------ ------------
Electric Utilities - 0.88%
66,000 Calpine Corp. - 4,702,500 4,702,500
------------ ------------ ------------
Electrical Equipment - 6.30%
42,000 Advanced Energy Industries, Inc.* 1,890,000 - 1,890,000
22,000 Ciena Corp. - 3,126,750 3,126,750
49,000 Comverse Technology, Inc.* - 4,299,750 4,299,750
51,270 Flextronics International - 3,629,756 3,629,756
90,000 Jabil Circuit Inc.* - 4,505,625 4,505,625
51,300 LTX Corp.* 1,128,600 - 1,128,600
10,000 Polycom, Inc.* - 948,594 948,594
100,000 SCI Systems Inc.* - 4,587,500 4,587,500
50,000 Solectron Corp.*(1) - 2,015,625 2,015,625
109,900 Teradyne Inc.* 3,796,163 3,168,750 6,964,913
43,000 Western Multiplex Corp. 516,000 - 516,000
------------ ------------ ------------
7,330,763 26,282,350 33,613,113
------------ ------------ ------------
Electronic Components - 0.12%
10,000 Bookham Technology Plc. - 627,500 627,500
------------ ------------ ------------
Electronic Components & Instruments - 1.30%
30,000 Chartered Semiconductor Manufacturing - 2,160,000 2,160,000
8,700 Epcos AG* - 785,175 785,175
75,000 Sawtek Inc. - 3,993,750 3,993,750
------------ ------------ ------------
- 6,938,925 6,938,925
------------ ------------ ------------
Electronical Power - 0.46%
75,000 Helix Technology Corp. - 2,437,500 2,437,500
------------ ------------ ------------
Energy Reserves & Production - 0.20%
40,000 Tosco Corp. - 1,060,000 1,060,000
------------ ------------ ------------
Financial Services - 0.86%
13,000 GATX Corp. 519,188 - 519,188
139,600 Metris Co., Inc. 4,092,025 - 4,092,025
------------ ------------ ------------
4,611,213 - 4,611,213
------------ ------------ ------------
Food Retail - 0.32%
84,300 American Italian Pasta Co.* 1,664,925 - 1,664,925
1,600 Schultz Sav-O Stores, Inc. 19,000 - 19,000
------------ ------------ ------------
1,683,925 - 1,683,925
------------ ------------ ------------
Gas Utility - 0.24%
25,000 Equitable Resources Inc. - 1,301,563 1,301,563
------------ ------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMBINED PACE
SMALL/MEDIUM
COMPANY
COMBINED PACE GROWTH EQUITY
NUMBER OF SMALL/MEDIUM GROWTH PAINEWEBBER INVESTMENTS
SHARES EQUITY INVESTMENTS MID CAP FUND PRO FORMA
----------------- ------------------- ------------ -------------
<S> <C> <C> <C>
Hotels - 0.46%
177,800 Extended Stay America Inc.* 2,444,750 - 2,444,750
------------ ------------ ------------
Human Resources - 0.25%
33,800 Hall, Kinion & Associates, Inc.* 1,322,425 - 1,322,425
------------- ------------ ------------
Industrial Parts - 2.06%
167,600 Mettler Toledo International Inc.* 6,787,800 - 6,787,800
50,000 Mettler Toledo International Inc. ADR* - 2,025,000 2,025,000
48,000 Pri Automation Inc. - 2,190,000 2,190,000
------------ ------------ ------------
6,787,800 4,215,000 11,002,800
------------ ------------ ------------
Industrial Services & Supplies - 0.13%
9,600 CoorsTek, Inc.* 413,400 - 413,400
15,800 MSC Industrial Direct Co., Inc. Class A* 287,363 - 287,363
------------ ------------ ------------
700,763 - 700,763
------------ ------------ ------------
Information & Computer Services - 1.86%
60,000 America Online Inc.* - 3,198,750 3,198,750
20,000 Ariba Inc.(1) - 2,318,750 2,318,750
4,000 Avici Systems Inc.* - 393,500 393,500
50,000 Comdisco Inc. - 1,293,750 1,293,750
24,500 Diamond Technology Partners Inc.* 2,182,031 - 2,182,031
6,000 Ebay Inc. - 300,000 300,000
2,000 Yahoo, Inc.* - 257,375 257,375
------------ ------------ ------------
2,182,031 7,762,125 9,944,156
------------ ------------ ------------
Insurance - 0.47%
40,900 Radian Group Inc. 2,489,788 - 2,489,788
------------ ------------ ------------
Long Distance & Phone Companies - 0.30%
32,749 Global Crossing Ltd.* - 796,210 796,210
20,250 MCI Worldcom Inc.* - 791,016 791,016
------------ ------------ ------------
- 1,587,226 1,587,226
------------ ------------ ------------
Machinery & Engineering Services - 0.15%
40,000 Grant Prideco Inc. - 805,000 805,000
------------ ------------ ------------
Manufacturing - High Technology - 1.34%
105,000 ASM Lithography Holdings N.V.* - 4,173,750 4,173,750
4,300 Avanex Corp. - 545,831 545,831
8,000 Corvis Corporation - 661,251 661,251
14,400 Sycamore Networks Inc. - 1,775,700 1,775,700
------------ ------------ ------------
- 7,156,532 7,156,532
------------ ------------ ------------
Media - 6.39%
37,200 Acme Communications Inc.* 395,250 - 395,250
35,000 AM/FM Inc. - 2,500,313 2,500,313
25,000 Cablevision Systems Corp. - 1,645,313 1,645,313
62,400 Comcast Corp., Class A* - 2,122,575 2,122,575
32,500 Emmis Broadcasting Corp.*(1) - 1,172,031 1,172,031
162,659 Gemstar TV Guide International Inc.* 6,251,525 3,640,175 9,891,700
110,100 Getty Images Inc.* 3,984,244 - 3,984,244
60,000 Penton Media Inc. - 2,077,500 2,077,500
284,700 Radio One, Inc.* 5,877,368 - 5,877,368
49,200 True North Communications, Inc. 2,401,575 - 2,401,575
74,400 Westwood One Inc.* 2,069,250 - 2,069,250
------------ ------------ ------------
20,979,212 13,157,907 34,137,119
------------ ------------ ------------
Medical-Biomedical & Genetics - 1.51%
28,900 Exelixis, Inc.* 1,125,294 - 1,125,294
60,800 Neurocrine Biosciences Inc.* 1,941,800 - 1,941,800
87,000 Trimeris, Inc.* 4,969,875 - 4,969,875
------------ ------------ ------------
8,036,969 - 8,036,969
------------ ------------ ------------
Medical Providers - 0.33%
65,000 Lincare Holdings Inc.* - 1,738,750 1,738,750
------------ ------------ ------------
Motor Vehicles - 0.74%
110,000 Navistar International Corp.* - 3,925,625 3,925,625
------------ ------------ ------------
Oil Refining - 0.62%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMBINED PACE
SMALL/MEDIUM
COMPANY
COMBINED PACE GROWTH EQUITY
NUMBER OF SMALL/MEDIUM GROWTH PAINEWEBBER INVESTMENTS
SHARES EQUITY INVESTMENTS MID CAP FUND PRO FORMA
----------------- ------------------- ------------ -------------
<S> <C> <C> <C>
65,000 Conoco, Inc. - 1,499,062 1,499,062
25,000 Smith International Inc.* - 1,784,375 1,784,375
------------ ------------ ------------
- 3,283,437 3,283,437
------------ ------------ ------------
Oil Services - 2.19%
45,000 Cooper Cameron Corp.* - 2,908,125 2,908,125
65,000 Diamond Offshore Drilling Inc.* - 2,441,563 2,441,563
110,000 Ensco International Inc. - 3,712,500 3,712,500
65,000 Weatherford International Inc. - 2,604,062 2,604,062
------------ ------------ ------------
- 11,666,250 11,666,250
------------ ------------ ------------
Optical - 0.20%
29,500 Wesley Jessen Visioncare Inc.* 1,091,500 - 1,091,500
------------ ------------ ------------
Other Insurance - 0.39%
32,000 AMBAC Financial Group Inc. - 2,062,000 2,062,000
------------ ------------ ------------
Restaurants - 3.45%
194,800 CEC Entertainment Inc.* 5,430,050 - 5,430,050
170,625 Cheesecake Factory Inc.* 5,172,070 - 5,172,070
34,100 Morrison Management Specialists Inc. 982,506 - 982,506
189,400 Ruby Tuesday Inc. 2,331,988 - 2,331,988
147,050 Sonic Corp.* 4,475,834 - 4,475,834
------------ ------------ ------------
18,392,448 - 18,392,448
------------ ------------ ------------
Semiconductor - 16.87%
2,700 Akamai Technologies Inc. - 212,920 212,920
39,000 Alpha Industries, Inc.* - 1,328,438 1,328,438
12,500 Altera Corp.* - 1,227,344 1,227,344
119,600 Applied Micro Circuits Corp.* 15,760,800 2,089,500 17,850,300
35,000 Atmel Corp.* - 1,047,813 1,047,813
50,000 Fairchild Semiconductor International* - 1,768,750 1,768,750
70,000 JDS Uniphase Corp.* - 8,268,750 8,268,750
140,000 Lam Research Corp.* - 4,095,000 4,095,000
52,600 Maxim Integrated Productions Inc.* - 3,474,887 3,474,887
325,200 Micrel Inc.* 16,280,325 - 16,280,325
60,000 Novellus Systems Inc.* - 3,236,250 3,236,250
71,100 PMC Sierra, Inc.* 13,784,512 - 13,784,512
13,000 RF Micro Devices Inc. - 979,875 979,875
42,000 SDL Inc. - 14,576,625 14,576,625
32,700 Vitesse Semiconductor Corp.*(1) - 1,949,737 1,949,737
------------ ------------ ------------
45,825,637 44,255,889 90,081,526
------------ ------------ ------------
Software - 1.42%
168,700 Jack Henry & Associates Inc. 7,570,413 - 7,570,413
------------ ------------ ------------
Specialty Retail - 5.81%
45,000 Bed, Bath & Beyond, Inc.* - 1,656,562 1,656,562
264,375 Dollar Tree Stores Inc.* 11,252,461 - 11,252,461
153,200 Duane Reade Inc.* 3,504,450 - 3,504,450
165,100 Linens 'N Things Inc.* 4,942,681 - 4,942,681
30,000 Lowe's Companies, Inc. - 1,265,625 1,265,625
129,600 Too Inc.* 2,907,900 - 2,907,900
152,000 Tweeter Home Entertainment Group Inc.* 5,491,000 - 5,491,000
------------ ------------ ------------
28,098,492 2,922,187 31,020,679
------------ ------------ ------------
Technology-Software - 0.56%
56,900 Concord Communications Inc.* 1,564,750 - 1,564,750
53,200 Register.com, Inc.* 1,441,388 - 1,441,388
------------ ------------ ------------
3,006,138 - 3,006,138
------------ ------------ ------------
Wireless Telecommunications - 5.34%
65,000 Advanced Fibre Communications - 2,786,875 2,786,875
180,000 Aspect Communications Inc. - 3,307,500 3,307,500
400 Leap Wireless International, Inc.* 25,400 - 25,400
255,200 Nextlink Communications Inc.* 8,437,550 - 8,437,550
146,800 Pinnacle Holdings Inc.* 8,248,325 - 8,248,325
125,900 SBA Communications Corp.* 5,681,237 - 5,681,237
------------ ------------ ------------
22,392,512 6,094,375 28,486,887
------------ ------------ ------------
Total Common Stocks (cost-$317,931,960) 303,623,197 195,615,003 499,238,200
------------ ------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMBINED PACE
SMALL/MEDIUM
COMPANY
PRINCIPAL PACE GROWTH EQUITY
AMOUNT MATURITY INTEREST SMALL/MEDIUM GROWTH PAINEWEBBER INVESTMENTS
(000) DATES RATES EQUITY INVESTMENTS MID CAP FUND PRO FORMA
-------------- -------- -------- ------------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
SHORT TERM INVESTMENTS - 3.32%
Money Market Funds - 1.07%
$ 723 Scudder Institutional Fund $ - 723,41 $ 723,416
5,000 TempCash Portfolio - 5,000,000 5,000,000
-------------- ------------ -------------
- 5,723,416 5,723,416
-------------- ------------ -------------
U.S. Government Agency Obligation - 2.24%
12,000 Federal Home Loan Bank Consolidated Dsc Note 08/11/00 6.380% - 11,978,733 11,978,733
-------------- ------------ -------------
Total Short Term Investments (cost-$17,702,149) - 17,702,149 17,702,149
-------------- ------------ -------------
REPURCHASE AGREEMENTS - 4.26%
12,996 Repurchase Agreement dated 07/31/00 with State
Street Bank & Trust Co. collateralized by
$3,814,282 U.S. Treasury Notes, 6.625% due
03/31/02; (value-$3,909,639) and
$7,244,943 U.S. Treasury Bonds, 8.125%
due 8/15/19; (value-$9,318,808);
proceeds: $12,967,891 08/01/00 5.250 12,966,000 - 12,966,000
9,787 Repurchase Agreement dated 07/31/00 with
Dresdner Bank AG collateralized by
$9,872,000 U.S. Treasury Notes, 5.750%
due 08/15/03 (value-$9,983,191);
proceeds: $9,788,778 08/01/00 6.540 - 9,787,000 9,787,000
-------------- ------------ -------------
Total Repurchase Agreements (cost-$22,753,000) 12,966,000 9,787,000 22,753,000
-------------- ------------ -------------
Total Investments (cost - $358,387,109) -- 101.09% 316,589,197 223,104,152 539,693,349
Other assets (liabilities) in excess of (liabilities)
other assets -- (1.09)% 2,982,274 (8,797,282) (5,815,008)
-------------- ------------ -------------
Net Assets -- 100.00% $ 319,571,471 $214,306,870 $ 533,878,341
============== ============ =============
</TABLE>
----------------
* Non-income producing security.
(1) Security, or portion thereof, was on loan at July 31, 2000.
ADR American Depositary Receipt
See accompanying notes to pro forma financial statements.
<PAGE>
PACE Small/Medium Company Growth Equity Investments
PaineWebber Mid Cap 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 Mid Cap Fund ("Mid
Cap"), PACE Small/Medium Company Growth Equity Investments ("Small/Medium
Company Growth") would acquire the assets of Mid Cap in exchange solely for the
assumption by Small/Medium Company Growth of Mid Cap's assets and stated
liabilities and shares of Small/Medium Company Growth that correspond to the
outstanding shares of Mid Cap. The number of shares to be received would be
based on the relative net asset value of Small/Medium Company Growth's shares on
the effective date of the Plan and Mid Cap will be terminated as soon as
practicable thereafter.
The PRO FORMA financial statements reflect the financial position of
Small/Medium Company Growth and Mid Cap at July 31, 2000 and the combined
results of operations of Small/Medium Company Growth and Mid Cap (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
decrease due to the lower fee schedule of Small/Medium Company Growth. Mid Cap
currently pays Rule 12b-1 distribution or service fees; as of July 31, 2000,
Small/Medium Company Growth does not. Other fixed expenses will be reduced due
to the elimination of duplicative expenses. 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 $190,000 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 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
<PAGE>
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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