<PAGE>
PAINEWEBBER PACE SELECT ADVISORS TRUST
(ON BEHALF OF PACE GLOBAL FIXED INCOME INVESTMENTS)
PAINEWEBBER INVESTMENT SERIES
(ON BEHALF OF PAINEWEBBER GLOBAL 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 Global Fixed Income Investments ("PACE
Global Fixed Income Fund"), a series of PaineWebber PACE Select Advisors Trust
("PACE Trust"), would acquire all of the assets of PaineWebber Global Income
Fund ("Global Income Fund"), a series of PaineWebber Investment Series
("Investment Series"), in exchange solely for shares of PACE Global Fixed Income
Fund and the assumption by PACE Global Fixed Income Fund of all of Global Income
Fund's stated liabilities. This Statement of Additional Information consists of
this cover page, the PRO FORMA financial statements of PACE Global 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 Global Fixed
Income Fund and is incorporated by reference from PACE Trust's Statement of
Additional Information as 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 Global
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 Global Income Fund, dated
April 30, 2000, which is incorporated by reference from Investment Series' Form
N-30D, SEC File Number 811-05259, filed on July 10, 2000, accession number
0000950130-00-003805; and
(4) The Annual Report to Shareholders of Global Income Fund for the fiscal
year ended October 31, 1999, which is incorporated by reference from Investment
Series' Form N-30D, SEC File Number 811-05259, filed on January 5, 2000,
accession number 0000889812-00-000025.
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the Combined Proxy Statement/Prospectus dated
December 20, 2000 relating to the proposed Reorganization. A copy of the
Combined Proxy Statement/Prospectus may be
<PAGE>
obtained without charge by calling toll-free 1-800-647-1568. This Statement of
Additional Information is dated December 20, 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 Global
Income Fund and PACE Global 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 one or more
new sub-advisers have realigned their portion of each Fund's portfolio to
reflect their proprietary investment strategies. These changes are greater for
Global Income Fund because all its assets were allocated between two new sub-
advisers on October 10, 2000. On that date, PACE Global Fixed Income Fund
appointed a second sub-adviser. Other changes in the two Funds' holdings are
due to normal portfolio turnover in response to changes in market conditions.
As of November 30, 2000, none of Global Income Fund's holdings were
incompatible with PACE Global Fixed Income Fund's holdings or would have to be
sold if Global Income Fund's shareholders approve the Reorganization.
2
<PAGE>
PACE GLOBAL FIXED INCOME INVESTMENTS
PAINEWEBBER GLOBAL INCOME FUND
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
PACE GLOBAL
PACE GLOBAL FIXED PW GLOBAL FIXED INCOME
INCOME INVESTMENTS INCOME FUND ADJUSTMENTS INVESTMENTS
------------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost - $105,539,516,
$291,405,264 and $396,944,780, respectively) $ 99,518,950 $274,851,675 $ - $374,370,625
Investment of cash collateral for securities loaned (cost -
$9,073,875, $11,566,890 and $20,640,765, respectively) 9,073,875 11,566,890 - 20,640,765
Cash (including cash denominated in foreign currencies, at value) 172,970 118 - 173,088
Receivable for investments sold 859,552 5,589,002 - 6,448,554
Receivable for shares of beneficial interest sold 88,317 1,015,418 - 1,103,735
Unrealized appreciation of forward foreign currency contracts 404,023 - - 404,023
Dividends and interest receivable 1,603,698 5,654,620 - 7,258,318
Deferred organizational expenses 1,025 - - 1,025
Other assets 17,958 75,936 - 93,894
------------ ------------ ---------- ------------
Total assets 111,740,368 298,753,659 - 410,494,027
------------ ------------ ---------- ------------
LIABILITIES
Payable for cash collateral for securities loaned 9,073,875 11,566,890 - 20,640,765
Payable for investments purchased 1,306,383 6,237,000 - 7,543,383
Payable for shares of beneficial interest repurchased 47,038 1,039,677 - 1,086,715
Unrealized depreciation of forward foreign currency contracts 396,458 439,697 - 836,155
Payable to affiliates 45,469 177,649 - 223,118
Accrued expenses and other liabilities 40,163 410,160 - 450,323
------------ ------------ ---------- ------------
Total liabilities 10,909,386 19,871,073 - 30,780,459
------------ ------------ ---------- ------------
NET ASSETS
Beneficial interest shares of $0.001 par value outstanding -
9,445,090, 29,782,332 and 35,568,719 respectively 115,720,172 324,744,899 - 40,465,071
Accumulated distributions in excess of net investment income (loss) (1,527,019) (171,420) - (1,698,439)
Accumulated net realized losses from investment transactions (7,321,538) (29,137,304) - (36,458,842)
Net unrealized depreciation of investments (6,040,633) (16,553,589) - (22,594,222)
------------ ------------ ---------- ------------
Net assets applicable to shares outstanding $100,830,982 $278,882,586 $ - $379,713,568
============ ============ ========== ============
CLASS P:
Net assets $100,830,982 $ - $ - $100,830,982
------------ ------------ ---------- ------------
Shares outstanding 9,445,090 - - 9,445,090
------------ ------------ ---------- ------------
Net asset value and offering price per share $ 10.68 $ - $ - $ 10.68
============ ============ ========== ============
CLASS A:
Net assets $ - $249,722,305 $ - $249,722,305
------------ ------------ ---------- ------------
Shares outstanding - 26,663,816 (3,271,704) 23,392,112
------------ ------------ ---------- ------------
Net asset and redemption value per share $ - $ 9.37 $ - $ 10.68
============ ============ ========== ============
Maximum offering price per share (net asset value plus sales
charge of 4% of offering price) $ - $ 9.76 $ - $ 11.12
============ ============ ========== ============
CLASS B:
Net assets $ - $ 5,306,625 $ - $ 5,306,625
------------ ------------ ---------- ------------
Shares outstanding - 570,316 (73,231) 497,085
------------ ------------ ---------- ------------
Net asset value and offering price per share $ - $ 9.30 $ - $ 10.68
============ ============ ========== ============
CLASS C:
Net assets $ - $ 17,439,735 $ - $ 17,439,735
------------ ------------ ---------- ------------
Shares outstanding - 1,862,962 (229,338) 1,633,624
------------ ------------ ---------- ------------
Net asset value and offering price per share $ - $ 9.36 $ - $ 10.68
============ ============ ========== ============
CLASS Y:
Net assets $ - $ 6,413,921 $ - $ 6,413,921
------------ ------------ ---------- ------------
Shares outstanding - 685,238 (84,430) 600,808
------------ ------------ ---------- ------------
Net asset value and offering price per share $ - $ 9.36 $ - $ 10.68
============ ============ ========== ============
</TABLE>
See accompanying notes to pro forma financial statements
<PAGE>
PACE GLOBAL FIXED INCOME INVESTMENTS
PAINEWEBBER GLOBAL INCOME FUND
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
PACE GLOBAL PACE GLOBAL
FIXED INCOME PW GLOBAL FIXED INCOME
INVESTMENTS INCOME FUND ADJUSTMENTS INVESTMENTS
------------ ------------- ----------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes, if any) $ 5,703,986 $ 22,825,776 $ - $ 28,529,762
------------ ------------ ------------ ------------
5,703,986 22,825,776 - 28,529,762
------------ ------------ ------------ ------------
EXPENSES:
Investment advisory and administration 821,382 2,545,116 169,674 (a) 3,536,172
Shareholder distribution and servicing fees - 966,752 - 966,752
Transfer agency fees and expenses 96,771 264,528 - 361,299
Reports and notices to shareholders 24,921 129,596 (103,677)(b) 50,840
Legal and audit 37,266 76,860 (76,860)(b) 37,266
Trustees' fees 26,250 13,500 (13,500)(b) 26,250
Federal and state registration fees 23,239 36,654 (29,323)(b) 30,570
Amortization of organizational expenses 19,032 - - 19,032
Custody and accounting 155,144 191,822 - 346,966
Other expenses 10,533 99,144 - 109,677
------------ ------------ ------------ ------------
1,214,538 4,323,972 (53,686) 5,484,824
Less: fee waivers from adviser (240,342) (23,453) - (263,795)
------------ ------------ ------------ ------------
Net expenses 974,196 4,300,519 (53,686) 5,221,029
------------ ------------ ------------ ------------
Net investment income 4,729,790 18,525,257 53,686 23,308,733
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED LOSSES FROM INVESTMENT ACTIVITIES:
Net realized losses from investment transactions (7,432,581) (17,030,667) - (24,463,248)
Net change in unrealized depreciation of investments (2,604,355) (32,468,704) - (35,073,059)
------------ ------------ ------------ ------------
Net realized and unrealized losses from investment activities (10,036,936) (49,499,371) - (59,536,307)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting from operations $ (5,307,146) $(30,974,114) $ 53,686 $(36,227,574)
============ ============ ============ ============
</TABLE>
-------------------------
(a) Reflects increase in fees resulting from the higher fee schedule of PACE
Global Fixed Income Investments.
(b) Reflects the anticipated savings of the merger.
See accompanying notes to pro forma financial statements
<PAGE>
PACE GLOBAL FIXED INCOME INVESTMENTS
PAINEWEBBER GLOBAL INCOME FUND
PRO FORMA PORTFOLIO OF INVESTMENTS
FOR THE YEAR ENDED JULY 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
COMBINED PACE GLOBAL PACE GLOBAL
PRINCIPAL MATURITY INTEREST FIXED INCOME PW GLOBAL FIXED INCOME
AMOUNT (000)** DATES RATES INVESTMENTS INCOME FUND INVESTMENTS
--------------- --------- --------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM GLOBAL DEBT SECURITIES - 85.83%
BRAZIL - 1.24%
$ 2,326 Federal Republic of Brazil, DCB 04/15/12 7.438+ $ - $ 1,731,416 $ 1,731,416
1,437 Federal Republic of Brazil 01/15/20 12.750 - 1,402,512 1,402,512
1,970 Federal Republic of Brazil 05/15/27 10.125 - 1,556,300 1,556,300
----------- ------------ ------------
- 4,690,228 4,690,228
----------- ------------ ------------
CANADA - 3.80%
13,850 Government of Canada 09/01/01 7.000 - 9,404,999 9,404,999
7,700 Government of Canada 6/01/09 to 06/01/10 5.500% 5,019,613 - 5,019,613
----------- ------------ ------------
5,019,613 9,404,999 14,424,612
----------- ------------ ------------
AUSTRALIA - 1.14%
4,354 National Australia Bank 05/19/10 7.434 - 4,342,310 4,342,310
----------- ------------ ------------
DENMARK - 2.27%
66,170 Kingdom of Denmark 03/15/06 to 11/15/11 6.000 to 8.000 8,612,900 - 8,612,900
----------- ------------ ------------
FRANCE - 1.20%
4,870 Government of France 10/25/07 5.500 - 4,569,647 4,569,647
----------- ------------ ------------
GERMANY - 8.76%
5,100 Federal Republic of Germany 02/17/04 3.250 - 4,438,579 4,438,579
7,545 Federal Republic of Germany 07/04/09 4.000 - 6,381,210 6,381,210
USD 5,750 Deutsche Ausgleichsbank 06/23/05 7.000 - 5,730,427 5,730,427
18,130 Federal Republic of Germany 06/14/02 to 07/04/10 4.500 to 5.375 16,707,743 - 16,707,743
----------- ------------ ------------
16,707,743 16,550,216 33,257,959
----------- ------------ ------------
ITALY - 6.35%
10,647 Republic of Italy 04/01/04 8.500 - 10,858,302 10,858,302
USD 9,744 Republic of Italy 05/02/02 6.750 - 9,707,460 9,707,460
JPY 200,000 Republic of Italy 05/12/02 0.375 726,355 - 726,355
3,120 Republic of Italy 05/01/08 5.000 2,801,572 - 2,801,572
----------- ------------ ------------
3,527,927 20,565,762 24,093,689
----------- ------------ ------------
JAPAN - 2.95%
100,000 Export - Import Bank of Japan 10/01/03 4.375 1,018,052 - 1,018,052
100,000 Inter-American Development Bank 02/05/02 2.250 938,558 - 938,558
900,000 Japan Government Bond 06/22/15 0.900 8,328,395 - 8,328,395
100,000 Primus Financial Services 12/16/02 0.790 910,841 - 910,841
----------- ------------ ------------
11,195,846 - 11,195,846
----------- ------------ ------------
KOREA - 0.63%
USD 1,860 Republic of Korea 04/15/08 8.875 - 1,925,100 1,925,100
JPY 34,000 Korea Development Bank 08/16/02 2.700 311,929 - 311,929
JPY 20,000 Korea Industrial Leasing Corp. 08/07/02 2.200 174,101 - 174,101
----------- ------------ ------------
486,030 1,925,100 2,411,130
----------- ------------ ------------
MALAYSIA - 1.88%
USD 3,025 Government of Malaysia 05/01/09 8.750 - 3,150,538 3,150,538
USD 3,092 Petroliam Nasional Berhad *** 10/15/26 7.625 - 2,759,610 2,759,610
USD 300 Malaysia 06/01/09 8.750 312,765 - 312,765
USD 520 Petroliam Nasional Berhad (Petronas) 08/15/15 7.750 483,600 - 483,600
USD 450 Tenaga Nasional Berhad 04/29/07 7.200 447,043 - 447,043
----------- ------------ ------------
1,243,408 5,910,148 7,153,556
----------- ------------ ------------
MEXICO - 2.92%
USD 5,400 PEMEX Finance Limited 11/15/03 6.125 - 5,227,566 5,227,566
USD 2,820 United Mexican States Series B, DISC 12/31/19 7.603+ - 2,802,375 2,802,375
USD 1,000 PEMEX Petroleum 09/15/27 9.500 1,025,000 - 1,025,000
EUR 2,245 United Mexican States# 03/08/10 7.500 2,049,235 - 2,049,235
----------- ------------ ------------
3,074,235 8,029,941 11,104,176
----------- ------------ ------------
NETHERLANDS - 9.42%
37,542 Government of Netherlands(1) 9/15/01 to 1/15/28 3.750 to 8.750 11,960,550 22,821,900 34,782,450
USD 1,000 Repsol International Finance B.V. 07/15/05 7.450 993,500 - 993,500
----------- ------------ ------------
12,954,050 22,821,900 35,775,950
----------- ------------ ------------
NORWAY - 1.24%
42,600 Kingdom of Norway 11/30/04 to 05/15/09 5.500 to 6.750 4,703,948 - 4,703,948
----------- ------------ ------------
PANAMA - 0.59%
2,330 Republic of Panama 04/01/29 9.375 - 2,253,110 2,253,110
----------- ------------ ------------
POLAND - 1.50%
14,975 Republic of Poland 06/12/04 10.000 - 2,906,795 2,906,795
USD 3,090 Republic of Poland, PDI 10/27/14 6.000 - 2,796,450 2,796,450
----------- ------------ ------------
- 5,703,245 5,703,245
----------- ------------ ------------
SOUTH KOREA - 0.80%
USD 2,930 Republic of South Korea 04/15/08 8.875 3,055,111 - 3,055,111
----------- ------------ ------------
SPAIN - 0.86%
3,600 Kingdom of Spain 07/30/09 5.150 3,258,388 - 3,258,388
----------- ------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
COMBINED PACE GLOBAL PACE GLOBAL
PRINCIPAL MATURITY INTEREST FIXED INCOME PW GLOBAL FIXED INCOME
AMOUNT (000)** DATES RATES INVESTMENTS INCOME FUND INVESTMENTS
--------------- ---------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
TRINIDAD & TOBAGO - 1.09%
2,000 Republic of Trinidad & Tobago*** 10/01/09 9.875 - 2,080,000 2,080,000
2,000 Republic of Trinidad & Tobago## 07/01/20 9.750 - 2,050,000 2,050,000
------------ ------------ ------------
- 4,130,000 4,130,000
------------ ------------ ------------
TUNISIA - 0.09%
USD 400 Banque Centrale de Tunisie 09/19/27 8.250 346,000 - 346,000
------------ ------------ ------------
TURKEY - 0.47%
1,698 Republic of Turkey 11/05/04 11.875 - 1,801,578 1,801,578
------------ ------------ ------------
QATAR - 0.81%
USD 3,060 State of Qatar 06/15/30 9.750 - 3,078,972 3,078,972
------------ ------------ ------------
UNITED KINGDOM - 8.11%
18,175 United Kingdom Gilt 8/27/02 to 12/07/03 6.500 to 10.000 - 29,530,763 29,530,763
USD 1,300 Diageo PLC 06/24/04 6.625 1,266,714 - 1,266,714
------------ ------------ ------------
1,266,714 29,530,763 30,797,477
------------ ------------ ------------
UNITED STATES - 27.69%
2,921 Abbey National Capital Trust 12/29/49++ 8.963 - 2,920,241 2,920,241
1,100 Amoco Corp. 06/09/08 6.000 1,011,450 - 1,011,450
1,000 AT&T Universal Card Master Trust 09/17/03 6.878 1,000,300 - 1,000,300
JPY 107,000 BMW US Capital Corp. 12/20/02 0.700 974,908 - 974,908
7,050 Clorox Corporation 07/15/01 8.800 - 7,181,426 7,181,426
4,145 FMR Corp. 06/15/29 7.570 - 4,001,152 4,001,152
14,585 FNMA 1/15/02 to 9/15/09 6.625 - 14,297,766 14,297,766
7,050 Ford Motor Capital Corporation BV 07/01/01 9.500 - 7,182,653 7,182,653
1,000 Ford Motor Credit Co. 03/15/05 7.500 995,383 - 995,383
JPY 131,000 General Motors Acceptance Corp. 07/26/02 0.299 1,183,658 - 1,183,658
5,815 General Motors Acceptance
Corporation 11/10/03 5.750 - 5,528,704 5,528,704
2,745 HSBC Capital Funding LP*** 12/31/49++ 10.176 - 2,964,221 2,964,221
JPY 100,000 International Business Machines
Corp. 04/14/03 0.900+ 913,047 - 913,047
500 Israel Electric Corp. Limited MTN 10/15/09 8.250 500,155 - 500,155
4,067 Morgan Stanley Dean Witter 06/15/05 7.750 - 4,102,570 4,102,570
EUR 915 PEMEX Master Trust 08/02/07 7.750 839,451 - 839,451
550 State of Israel 03/15/10 7.750 543,523 - 543,523
JPY 200,000 Toyota Motor Credit Corp. 05/23/03 0.625 1,819,118 - 1,819,118
8,352 U.S. Treasury Bonds(1) 11/15/27 6.125 - 8,466,840 8,466,840
24,623 U.S. Treasury Inflation Index Notes 7/15/02 to 4/15/28 3.625 - 24,063,441 24,063,441
9,490 U.S. Treasury Notes(1) 01/15/09 to 02/15/10 3.875 to 6.500 9,752,859 - 9,752,859
3,507 Wells Fargo Company 09/03/02 6.500 - 3,465,323 3,465,323
JPY 100,000 Westpac Banking Corp. 09/24/01 0.129+ 910,790 - 910,790
550 Xerox Corp. MTN 06/15/37 5.875 538,188 - 538,188
------------ ------------ ------------
20,982,830 84,174,337 105,157,167
------------ ------------ ------------
Total Long-Term Global Debt
Securities (cost-$347,994,829) 96,434,743 229,482,256 325,916,999
------------ ------------ ------------
SHORT-TERM GLOBAL DEBT SECURITIES -
10.60%
GERMANY - 2.30%
9,459 Federal Republic of Germany 09/15/00 3.250 - 8,749,054 8,749,054
------------ ------------ ------------
HUNGARY - 0.50%
520,000 Government of Hungary 06/12/01 13.500 - 1,902,241 1,902,241
------------ ------------ ------------
ITALY - 0.30%
JPY Republic of Italy 06/20/01 3.500 1,126,207 - 1,126,207
------------ ------------ ------------
SPAIN - 1.94%
7,955 Government of Spain 01/31/01 5.000 - 7,374,449 7,374,449
------------ ------------ ------------
UNITED STATES - 5.56%
9,500 Federal Home Loan Bank 08/09/00 5.710 - 9,497,616 9,497,616
11,656 U.S. Treasury Notes(1) 8/31/00 to 11/30/00 4.625 to 5.125 - 11,609,059 11,609,059
------------ ------------ ------------
- 21,106,675 21,106,675
------------ ------------ ------------
Total Short-Term Global Debt
Securities (cost-$40,754,951) 1,126,207 39,132,419 40,258,626
------------ ------------ ------------
REPURCHASE AGREEMENTS - 2.16%
$ 6,237 Joint repurchase agreement dated
7/31/00 with State Street Bank &
Trust Co. collateralized by
$6,789,000 U.S. Treasury Bonds,
5.250% due 04/15/28 (value --
$6,780,514); proceeds: $6,238,131 08/01/00 6.530 - 6,237,000 6,237,000
1,958 Repurchase Agreement dated 07/31/00
with SG Warburg collateralized by
$1,947,000 U.S. Treasury Bonds,
6.125% due 11/15/27 (value --
$1,998,109); proceeds: $1,958,354 08/01/00 6.500 1,958,000 - 1,958,000
------------ ------------ ------------
Total Repurchase Agreements
(cost-$8,195,000) 1,958,000 6,237,000 8,195,000
------------ ------------ ------------
Total Investments
(cost-$396,944,780) - 98.59% 99,518,950 274,851,675 374,370,625
Other assets in excess of
liabilities - 1.41% 1,312,032 4,030,911 5,342,943
------------ ------------ ------------
Net Assets - 100.00% $100,830,982 $278,882,586 $379,713,568
============ ============ ============
</TABLE>
----------------------------------------------------------
Note: The Portfolio of Investments is listed by the issuer's country of origin.
** In local currency unless otherwise indicated.
# Security represents a unit which is composed of the stated bond with
attached warrants or common stock.
+ Floating rate securities. The interest rates shown are the current rates
as of July 31, 2000.
*** Securities 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.
## Illiquid security valued at fair value pursuant to the Fund's procedures
under the direction of the Board of Trustees.
++ Maturity date shown is the callable date for perpetual rewriting
securities.
(1) Security, or portion thereof, was on loan at July 31, 2000.
EUR Euro Dollars.
JPY Japanese Yen.
MTN Medium Term Notes.
USD U.S. Dollars.
<PAGE>
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
PACE GLOBAL PACE GLOBAL
FIXED INCOME PW GLOBAL FIXED INCOME
INVESTMENTS INCOME FUND INVESTMENTS
------------- ------------ --------------
CONTRACT TO MATURITY
DELIVER IN EXCHANGE FOR DATES UNREALIZED APPRECIATION (DEPRECIATION)
----------- ---------------- ---------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
British Pounds 627,021 USD 938,149 09/28/00 $ 2,404 $ - $ 2,404
Euro 11,014,524 USD 10,200,000 09/28/00 43,516 - 43,516
Euro 9,740,849 USD 9,141,787 09/28/00 (82,790) - (82,790)
Euro 5,575,123 USD 5,246,330 09/28/00 (61,462) - (61,462)
Euro 3,552,471 USD 3,336,303 09/28/00 (32,502) - (32,502)
Japanese Yen 832,452,135 USD 7,853,322 09/28/00 (182,590) - (182,590)
Swedish Kronas 12,350,310 USD 1,389,499 09/28/00 (37,094) - (37,094)
Swedish Kronas 36,083 USD 3,972 09/28/00 (20) - (20)
U.S. Dollars 202,624 CAD 136,908 09/28/00 458 - 458
U.S. Dollars 10,350,532 DKK 1,301,626 11/24/00 11,674 - 11,674
U.S. Dollars 17,080,498 DKK 2,146,317 11/24/00 17,632 - 17,632
U.S. Dollars 8,982,031 EUR 8,420,654 09/28/00 67,358 - 67,358
U.S. Dollars 5,660,954 EUR 5,315,976 09/28/00 51,284 - 51,284
U.S. Dollars 939,824 EUR 880,963 09/28/00 6,926 - 6,926
U.S. Dollars 502,493 EUR 467,319 09/28/00 - - -
U.S. Dollars 627,021 GBP 942,589 09/28/00 2,035 - 2,035
U.S. Dollars 4,300,712 JPY 460,176,135 09/28/00 60,362 - 60,362
U.S. Dollars 3,512,038 JPY 372,276,000 09/28/00 81,655 - 81,655
U.S. Dollars 12,234,765 NOK 1,404,496 09/28/00 23,814 - 23,814
U.S. Dollars 12,386,393 SEK 1,391,261 09/28/00 34,905 - 34,905
------------ ------------ ------------
$ 7,565 $ - $ 7,565
============ ============ ============
</TABLE>
CURRENCY TYPE ABBREVIATIONS:
CAD Canadian Dollars.
DKK Danish Krone.
EUR Euro Dollars.
GBP British Pounds.
JPY Japanese Yen.
NOK Norwegian Krone.
SEK Swedish Krona.
USD U.S. Dollars.
See accompanying notes to pro forma financial statements
<PAGE>
PACE Global Fixed Income Investments
PaineWebber Global 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 Global Income Fund
("Global Income"), PACE Global Fixed Income Investments ("Global Fixed Income")
would acquire the assets of Global Income in exchange solely for the assumption
by Global Fixed Income of Global Income's assets and stated liabilities and
shares of Global Fixed Income that correspond to the outstanding shares of
Global Income. The number of shares to be received would be based on the
relative net asset value of Global Fixed Income's shares on the effective date
of the Plan and Global Income will be terminated as soon as practicable
thereafter.
The PRO FORMA financial statements reflect the financial position of Global
Fixed Income and Global Income at July 31, 2000 and the combined results of
operations of Global Fixed Income and Global Income (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 of Global 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 Global Income will not experience an
increase in total expenses. Global Income currently pays Rule 12b-1
distribution or service fees; as of July 31, 2000, Global 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 $216,000 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
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on the exchange designated as the primary market by each Fund's sub-advisers. 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 by 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. All investments quoted in foreign currencies will be 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 Fund's custodian.
Foreign currency exchange rates are generally determined prior to the close of
the New York Stock Exchange ("NYSE"). Occasionally, events affecting the value
of foreign investments and such exchange rates occur between the time at which
they are determined and the close of the NYSE, which will not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of such securities or currency exchange rates occur during such time
periods, the securities will be valued at their value as determined in good
faith by or under the direction of the board.
