497 1 0001.txt 497 PAINEWEBBER PACE SELECT ADVISORS TRUST (ON BEHALF OF PACE LARGE COMPANY GROWTH EQUITY INVESTMENTS) PAINEWEBBER INVESTMENT SERIES (ON BEHALF OF PAINEWEBBER GROWTH FUND) 51 WEST 52/ND/ STREET NEW YORK, NEW YORK 10019-6114 STATEMENT OF ADDITIONAL INFORMATION This Statement of Additional Information relates specifically to the proposed Reorganization whereby PACE Large Company Growth Equity Investments ("PACE Large Company Growth Fund"), a series of PaineWebber PACE Select Advisors Trust ("PACE Trust"), would acquire all of the assets of PaineWebber Growth Fund ("Growth Fund"), the sole series of PaineWebber Olympus Fund ("Olympus Fund"), in exchange solely for shares of PACE Large Company Growth Fund and the assumption by PACE Large Company Growth Fund of all of Growth Fund's stated liabilities. This Statement of Additional Information consists of this cover page, the PRO FORMA financial statements of PACE Large Company Growth 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 Large Company Growth 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 Large Company Growth 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 Growth Fund for the fiscal year ended August 31, 2000, which is incorporated by reference from Olympus Fund's Form N-30D, SEC File Number 811-04180, 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 27, 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 27, 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 Growth Fund and PACE Large Company Growth 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. For PACE Large Company Growth Fund, approximately 40% of its portfolio was realigned after October 10, 2000 to reflect the proprietary investment style and strategies of a second sub-adviser. Growth Fund's entire portfolio was realigned after that date to reflect the proprietary investment style and strategies of its two new sub-advisers. Other changes in the two Funds' holdings are due to normal portfolio turnover in response to changes in market conditions. If Growth Fund's shareholders approve the Reorganization, the Fund's holdings that are not compatible with PACE Large Company Growth 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 Large Company Growth Fund. As of December 27, 2000, Growth Fund held no securities that were incompatible with PACE Large Company Growth Fund's holdings. However, one of Growth Fund's sub-advisers had not fully completed its realignment of the Fund's portfolio to reflect its proprietary investment style and strategies. That realignment is continuing and is expected to result in further portfolio turnover for Growth Fund before the Reorganization occurs. 2 PACE LARGE COMPANY GROWTH EQUITY INVESTMENTS PAINEWEBBER GROWTH FUND PRO FORMA STATEMENT OF ASSETS AND LIABILITIES JULY 31, 2000 (UNAUDITED)
PRO FORMA COMBINED PACE LARGE PACE LARGE COMPANY COMPANY GROWTH PW GROWTH GROWTH EQUITY EQUITY INVESTMENTS FUND ADJUSTMENTS INVESTMENTS ------------------ ------------- ----------- -------------- ASSETS Investments in securities, at value (cost - $304,876,461, $305,134,104 and $610,010,565, respectively) $436,401,239 $582,998,256 $ - $1,019,399,495 Investment of cash collateral for securities loaned (cost - $68,528,100, $51,191,096 and $119,719,196, respectively) 68,528,100 51,191,096 - 119,719,196 Cash - 19,927 - 19,927 Receivable for investments sold 2,079,833 823,088 - 2,902,921 Receivable for shares of beneficial interest sold 166,754 66,714 - 233,468 Dividends and interest receivable 45,860 445,191 - 491,051 Deferred organizational expenses 1,025 - - 1,025 Other assets 48,711 93,038 - 141,749 ------------ ------------ ----------- -------------- Total assets 507,271,522 635,637,310 - 1,142,908,832 ------------ ------------ ----------- -------------- LIABILITIES Payable for cash collateral for securities loaned 68,528,100 51,191,096 - 119,719,196 Payable for investments purchased 621,687 5,498,863 - 6,120,550 Payable for shares of beneficial interest repurchased 145,262 368,186 - 513,448 Payable to custodian 733,188 - - 733,188 Payable to affiliates 306,627 379,599 - 686,226 Accrued expenses and other liabilities 130,549 590,648 - 721,197 ------------ ------------ ----------- -------------- Total liabilities 70,465,413 58,028,392 - 128,493,805 ------------ ------------ ----------- -------------- NET ASSETS Beneficial interest shares of $0.001 par value outstanding - 14,705,436, 18,722,269 and 34,151,115, respectively 249,985,378 291,024,784 - 541,010,162 Accumulated undistributed (distributions in excess of) net investment income (loss) 1,131 (2,172,520) - (2,171,389) Accumulated net realized gains from investment transactions 55,294,822 16,044,800 - 71,339,622 Net unrealized appreciation of investments 131,524,778 272,711,854 - 404,236,632 ------------ ------------ ----------- -------------- Net assets applicable to shares outstanding $436,806,109 $577,608,918 $ - $1,014,415,027 ============ ============ =========== ============== CLASS P: Net assets $436,806,109 $ - $ - $ 436,806,109 ------------ ------------ ----------- -------------- Shares outstanding 14,705,436 - - 14,705,436 ------------ ------------ ----------- -------------- Net asset and redemption value per share $ 29.70 $ - $ - $ 29.70 ============ ============ =========== ============== CLASS A: Net assets $ - $418,225,440 $ - $ 418,225,440 ------------ ------------ ----------- -------------- Shares outstanding - 13,278,211 801,692 14,079,903 ------------ ------------ ----------- -------------- Net asset and redemption value per share $ - $ 31.50 $ - $ 29.70 ============ ============ =========== ============== Maximum offering price per share (net asset value plus sales charge of 4.5% of offering price) $ - $ 32.98 $ - $ 31.10 ============ ============ =========== ============== CLASS B: Net assets $ - $ 68,487,640 $ - $ 68,487,640 ------------ ------------ ----------- -------------- Shares outstanding - 2,441,700 (136,007) 2,305,693 ------------ ------------ ----------- -------------- Net asset value and offering price per share $ - $ 28.05 $ - $ 29.70 ============ ============ =========== ============== CLASS C: Net assets $ - $ 49,184,700 $ - $ 49,184,700 ------------ ------------ ----------- -------------- Shares outstanding - 1,729,915 (74,072) 1,655,843 ------------ ------------ ----------- -------------- Net asset value and offering price per share $ - $ 28.43 $ - $ 29.70 ============ ============ =========== ============== CLASS Y: Net assets $ - $ 41,711,138 $ - $ 41,711,138 ------------ ------------ ----------- -------------- Shares outstanding - 1,272,443 131,797 1,404,240 ------------ ------------ ----------- -------------- Net asset value and offering price per share $ - $ 32.78 $ - $ 29.70 ============ ============ =========== ==============
See accompanying notes to pro forma financial statements PACE LARGE COMPANY GROWTH EQUITY INVESTMENTS PAINEWEBBER GROWTH FUND PRO FORMA STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED JULY 31, 2000 (UNAUDITED)
PRO FORMA COMBINED PACE LARGE PACE LARGE COMPANY COMPANY GROWTH PW GROWTH GROWTH EQUITY EQUITY INVESTMENTS FUND ADJUSTMENTS INVESTMENTS ------------------ ------------- ------------- ------------ INVESTMENT INCOME: Interest $ 223,698 $ 3,092,485 $ - $ 3,316,183 Dividends 2,041,322 1,585,049 - 3,626,371 ----------------- ------------- ------------- ------------- 2,265,020 4,677,534 - 6,942,554 ----------------- ------------- ------------- ------------- EXPENSES: Investment advisory and administration 3,458,178 2,362,166 269,128 (a) 6,089,472 Shareholder distribution and servicing fees - 2,093,090 - 2,093,090 Transfer agency and service 129,725 310,293 - 440,018 Trustees' fees 26,250 13,500 (13,500) (b) 26,250 Legal and audit 61,118 80,133 (80,133) (b) 61,118 Amortization of organizational expenses 19,032 - - 19,032 Reports and notices to shareholders 43,320 34,110 (27,288) (b) 50,142 Federal and state registration fees 42,471 48,570 (38,856) (b) 52,185 Custody and accounting 247,363 322,954 - 570,317 Other expenses 13,538 85,076 - 98,614 ----------------- ------------- ------------- ------------- 4,040,995 5,349,892 109,351 9,500,238 Less: fee waivers and reimbursements from investment adviser (22,200) (33,483) (582,318) (638,001) ----------------- ------------- ------------- ------------- Net expenses 4,018,795 5,316,409 (472,967) (c) 8,862,237 ----------------- ------------- ------------- ------------- Net investment income (loss) (1,753,775) (638,875) 472,967 (1,919,683) ----------------- ------------- ------------- ------------- REALIZED AND UNREALIZED GAINS FROM INVESTMENT TRANSACTIONS: Net realized gains from investment transactions 56,955,344 21,124,792 - 78,080,136 Net change in unrealized appreciation of investments 14,949,193 252,187,878 - 267,137,071 ----------------- ------------- ------------- ------------- Net realized and unrealized gains from investment activities 71,904,537 273,312,670 - 345,217,207 ----------------- ------------- ------------- ------------- Net increase in net assets resulting from operations $ 70,150,762 $ 272,673,795 $ 472,967 $ 343,297,524 ================= ============= ============= =============
______________ (a) Reflects increase in fees resulting from the higher fee schedule, before waivers, of PACE Large Company Growth Equity Investments. (b) Reflects the anticipated savings of the merger. (c) Reflects decrease in fees resulting from the lower fee schedule, net of waivers, of PACE Large Company Growth Equity Investments. See accompanying notes to pro forma financial statements PACE LARGE COMPANY GROWTH EQUITY INVESTMENTS PAINEWEBBER GROWTH FUND PRO FORMA PORTFOLIO OF INVESTMENTS JULY 31, 2000 (UNAUDITED)
PRO FORMA COMBINED PACE LARGE COMBINED PACE LARGE COMPANY NUMBER OF COMPANY GROWTH PAINEWEBBER GROWTH EQUITY SHARES EQUITY INVESTMENTS GROWTH FUND INVESTMENTS ---------------- ------------------ --------------- ----------------- COMMON STOCKS - 94.29% Agriculture, Food & Beverage - 0.21% 55,000 Sysco Corp. $ - $ 2,165,625 $ 2,165,625 ------------- ------------- --------------- Airlines - 0.45% 195,000 Southwest Airlines Co. - 4,606,875 4,606,875 ------------- ------------- --------------- Alcohol - 0.28% 35,000 Anheuser-Busch Companies, Inc. - 2,817,500 2,817,500 ------------- ------------- --------------- Apparel, Retail - 0.30% 4,400 Calpine Corp - 313,500 313,500 75,000 Gap, Inc. - 2,685,938 2,685,938 ------------- ------------- --------------- - 2,999,438 2,999,438 ------------- ------------- --------------- Apparel, Textiles - 0.32% 75,000 Nike, Inc. - 3,281,250 3,281,250 ------------- ------------- --------------- Banks - 3.43% 243,600 Chase Manhattan Corp. 9,122,625 2,981,250 12,103,875 321,323 Citigroup, Inc. 18,862,979 3,810,375 22,673,354 ------------- ------------- --------------- 27,985,604 6,791,625 34,777,229 ------------- ------------- --------------- Chemicals - 0.53% 106,500 Sealed Air Corp.(1) 1,334,938 4,030,000 5,364,938 ------------- ------------- --------------- Computer-Business - 0.28% 60,000 CMG Information Services, Inc*(1) - 2,272,500 2,272,500 26,000 Priceline.com Inc.*(1) - 614,250 614,250 ------------- ------------- --------------- - 2,886,750 2,886,750 ------------- ------------- --------------- Computer Hardware - 14.37% 108,000 Apple Computer, Inc.*(1) - 5,487,750 5,487,750 728,100 Cisco Systems, Inc. * 24,087,544 23,557,500 47,645,044 655,400 Dell Computer Corp. * 16,494,137 12,302,500 28,796,637 332,000 EMC Corp.*(1) - 28,261,500 28,261,500 140,000 Network Appliance, Inc.* - 12,066,250 12,066,250 223,000 Sun Microsystems, Inc.*(1) 5,799,063 17,713,500 23,512,563 ------------- ------------- --------------- 46,380,744 99,389,000 145,769,744 ------------- ------------- --------------- Computer Software - 4.31% 31,000 Adobe Systems, Inc - 3,549,500 3,549,500 100,000 Cadence Design Systems, Inc.*(1) - 2,087,500 2,087,500 72,000 Compuware Corp.* - 576,000 576,000 40,000 International Business Machines Corp. - 4,497,500 4,497,500 50,000 Intuit - 1,700,000 1,700,000 247,700 Microsoft Corp. * 8,810,338 3,769,875 12,580,213 45,500 VERITAS Software Corp.* 4,638,156 - 4,638,156 111,600 Oracle Corp.* 14,105,175 - 14,105,175 ------------- ------------- --------------- 27,553,669 16,180,375 43,734,044 ------------- ------------- --------------- Consumer Durables - 0.47% 70,000 Avery Dennison Corp - 3,797,500 3,797,500 50,000 Masco Corp - 987,500 987,500 ------------- ------------- --------------- - 4,785,000 4,785,000 ------------- ------------- --------------- Diversified Retail - 3.79% 160,000 Costco Companies, Inc.* - 5,210,000 5,210,000 50,000 Federated Department Stores, Inc.* - 1,203,125 1,203,125 312,600 Kohls Corp. * 13,200,050 4,540,000 17,740,050 100,000 Target Corp.* - 2,900,000 2,900,000 207,100 Wal-Mart Stores, Inc. 5,334,431 6,043,125 11,377,556 ------------- ------------- --------------- 18,534,481 19,896,250 38,430,731 ------------- ------------- --------------- Drugs & Medicine - 5.61% 33,758 Aventis Corp.(1) - 2,548,729 2,548,729 49,312 Cardinal Health, Inc. - 3,624,432 3,624,432 90,000 Elan Corp. PLC, ADR*(1) - 4,809,375 4,809,375 14,000 Genetech, Inc.* - 2,129,750 2,129,750 494,450 Pfizer, Inc. 21,323,156 - 21,323,156 65,000 Pharmacylics, Inc.*(1) - 3,055,000 3,055,000 449,100 Schering-Plough Corp. 15,940,506 3,455,000 19,395,506
PRO FORMA COMBINED PACE LARGE COMBINED PACE LARGE COMPANY NUMBER OF COMPANY GROWTH PAINE WEBBER GROWTH EQUITY SHARES EQUITY INVESTMENTS GROWTH FUND INVESTMENTS --------- ------------------ ----------- ------------- 37,263,662 19,622,286 56,885,948 ------------------ ----------- ------------- Electric Utilities - 0.65% 123,800 AES Corp. * (1) 6,615,563 - 6,615,563 ------------------ ----------- ------------- Electrical Equipment - 6.46% 143,870 Honeywell, Inc. 4,837,629 - 4,837,629 63,400 Flextronics International Ltd.* 4,488,522 - 4,488,522 430,000 Solectron Corp. * 17,334,375 - 17,334,375 23,000 Corning, Inc. - 5,380,562 5,380,562 74,000 Jabil Circuit, Inc.* - 3,704,625 3,704,625 34,000 KLA-Tencor Corp.* - 1,810,500 1,810,500 110,000 Level 3 Communications, Inc.(1) - 7,528,125 7,528,125 28,000 Lucent Technologies, Inc. - 1,225,000 1,225,000 75,000 Motorola, Inc. - 2,479,688 2,479,688 100,000 SCI Systems, Inc.* - 4,587,500 4,587,500 70,000 Tellabs, Inc.*(1) - 4,550,000 4,550,000 120,000 Teradyne, Inc.* - 7,605,000 7,605,000 ------------------ ----------- ------------- 26,660,526 38,871,000 65,531,526 ------------------ ----------- ------------- Energy Reserves & Production - 0.43% 54,403 Exxon Mobil Corp(1) - 4,352,240 4,352,240 ------------------ ----------- ------------- Entertainment - 2.48% 480,000 Liberty Media Group - 10,680,000 10,680,000 30,000 Nokia Corp. ADR - 1,329,375 1,329,375 162,649 Viacom, Inc.*(1) - 10,785,662 10,785,662 125,000 Carnival Corp. - 2,335,937 2,335,937 ------------------ ----------- ------------- - 25,130,974 25,130,974 ------------------ ----------- ------------- Environmental Services - 0.50% 303,300 Republic Services, Inc. - 5,080,275 5,080,275 ------------------ ----------- ------------- Financial Services - 3.90% 80,000 Federal Home Loan Mortgage Association - 3,155,000 3,155,000 50,000 Federal National Mortgage - 2,493,750 2,493,750 Association 189,000 General Electric Co. (1) 17,488,750 3,292,000 20,780,750 393,150 MBNA Corp. 9,617,006 3,504,375 13,121,381 ------------------ ----------- ------------- 27,105,756 12,415,125 39,520,881 ------------------ ----------- ------------- Food Retail - 0.99% 100,000 Safeway, Inc.* - 4,506,250 4,506,250 269,600 Kroger Co. * (1) 5,577,350 - 5,577,350 ------------------ ----------- ------------- 5,577,350 4,506,250 10,083,600 ------------------ ----------- ------------- Household Products - 0.91% 166,600 Colgate-Palmolive 9,277,538 - 9,277,538 ------------------ ----------- ------------- Industrial Parts, Services and Supplies - 3.48% 46,320 Capesuccess LLC+ - 15,749 15,749 50,500 Cendant Corp.* - 647,031 647,031 13,056 Immedient Corp*+ - 4,309 4,309 45,000 Ingersol-Rand Co - 1,766,250 1,766,250 90,000 Mettler Toledo International, Inc.* - 3,645,000 3,645,000 545,932 Tyco International Ltd. 18,906,900 10,300,462 29,207,362 ------------------ ----------- ------------- 18,906,900 16,378,801 35,285,701 ------------------ ----------- ------------- Information & Computer Services - 4.64% 195,800 America Online Inc. * (1) 2,708,275 7,730,312 10,438,587 57,000 Computer Sciences Corp. * 1,687,500 1,875,000 3,562,500 15,000 Media Metrix, Inc (1) - 390,000 390,000 40,000 Omnicom Group, Inc - 3,400,000 3,400,000 225,000 Paychex, Inc. (1) - 10,293,750 10,293,750 56,900 Nortel Networks Corp 4,231,937 - 4,231,937 73,200 Valassis Communications, Inc. - 2,461,350 2,461,350 26,000 VeriSign 4,125,875 - 4,125,875 19,600 Yahoo, Inc. * 2,522,275 - 2,522,275 100,000 Young & Rubicam, Inc. - 5,650,000 5,650,000 ------------------ ----------- ------------- 15,275,862 31,800,412 47,076,274 ------------------ ----------- ------------- Leisure - 0.90% 202,700 Harley Davidson Inc. (1) 9,096,163 - 9,096,163 ------------------ ----------- ------------- Long Distance & Phone Companies - 3.21% 678,920 AT&T Corp. * 14,308,975 1,108,181 15,417,156 35,000 France Telecom, ADR - 4,515,000 4,515,000 217,500 MCI Worldcom Inc.* - 8,496,094 8,496,094
PRO FORMA COMBINED PACE LARGE COMBINED PACE LARGE COMPANY NUMBER OF COMPANY GROWTH PAINE WEBBER GROWTH EQUITY SHARES EQUITY INVESTMENTS GROWTH FUND INVESTMENTS ---------------- ------------------ -------------- ----------------- 96,700 Sprint Corp.*(1) 2,198,062 1,933,750 4,131,812 ------------------ -------------- ----------------- 16,507,037 16,053,025 32,560,062 ------------------ -------------- ----------------- Manufacturing-General - 0.35% 60,000 United Technologies Corp. - 3,502,500 3,502,500 ------------------ -------------- ----------------- Manufacturing-High Technology - 0.27% 60,000 ASM Lithography Holdings N.V. - 2,385,000 2,385,000 10,000 Tycom Limited - 340,625 340,625 ------------------ -------------- ----------------- - 2,725,625 2,725,625 ------------------ -------------- ----------------- Media - 5.12% 55,743 Amfm Inc. * - 3,982,141 3,982,141 148,000 AT&T Liberty Media Group - 4,070,000 4,070,000 25,000 Cablevision Systems Corp.*(1) - 1,645,313 1,645,313 160,000 Comcast Corp.(1) - 5,442,500 5,442,500 91,300 Comcast Corp., Class A 3,105,626 - 3,105,626 90,000 Fox Entertainment Group, Inc.(1) - 2,756,250 2,756,250 291,250 Infinity Broadcasting Corp.*(1) - 10,266,562 10,266,562 232,700 Time Warner, Inc. (1) 5,958,619 11,886,562 17,845,181 135,000 USA Networks, Inc. - 2,843,438 2,843,438 ------------------ -------------- ----------------- 9,064,245 42,892,766 51,957,011 ------------------ -------------- ----------------- Medical Products - 2.03% 30,000 Minnesota Mining & Manufacturing Co. - 2,701,875 2,701,875 162,000 Guidant Corp.* 6,314,000 2,818,750 9,132,750 171,000 Medtroinc, Inc. 8,731,687 - 8,731,687 ------------------ -------------- ----------------- 15,045,687 5,520,625 20,566,312 ------------------ -------------- ----------------- Oil Refining - 0.43% 190,000 Conoco, Inc. - 4,381,875 4,381,875 ------------------ -------------- ----------------- Oil Services - 0.41% 50,000 Halliburton - 2,306,250 2,306,250 25,000 Schlumberger(1) - 1,848,438 1,848,438 ------------------ -------------- ----------------- - 4,154,688 4,154,688 ------------------ -------------- ----------------- Other Insurance - 1.48% 22,400 Ambac Financial Group - 1,443,400 1,443,400 154,200 American International Group, Inc.(1) 13,521,412 - 13,521,412 ------------------ -------------- ----------------- 13,521,412 1,443,400 14,964,812 ------------------ -------------- ----------------- Publishing - 0.60% 62,000 New York Times Co. - 2,553,625 2,553,625 83,000 News Corp. Ltd, ADR(1) - 3,501,562 3,501,562 ------------------ -------------- ----------------- - 6,055,187 6,055,187 ------------------ -------------- ----------------- Rental Auto/Equipment - 0.01% 18,749 ANC Rental Corp.(1) - 127,728 127,728 ------------------ -------------- ----------------- Restaurants - 0.16% 50,000 McDonalds Corp - 1,575,000 1,575,000 ------------------ -------------- ----------------- Securities & Asset Management - 2.39% 110,000 AXA Financial, Inc. - 4,207,500 4,207,500 75,000 Charles Schwab Corp - 2,709,375 2,709,375 50,000 Franklin Resources, Inc - 1,793,750 1,793,750 147,800 Morgan Stanley Dean Witter & Co. 13,486,750 - 13,486,750 16,000 Merrill Lynch & Co., Inc. 2,068,000 - 2,068,000 ------------------ -------------- ----------------- 15,554,750 8,710,625 24,265,375 ------------------ -------------- ----------------- Semiconductor - 10.21% 163,200 Altera Co* (1) 13,078,575 2,945,625 16,024,200 104,600 Applied Materials, Inc. 3,384,025 4,552,500 7,936,525 40,000 Broadcom Corp.(1) - 8,970,000 8,970,000 67,500 Fairchild Semiconductor - 2,387,812 2,387,812 International, Inc. 414,400 Intel Corp. (1) 23,656,200 4,005,000 27,661,200 236,000 JDS Uniphase Corp.*(1) 4,252,500 23,625,000 27,877,500 24,300 PMC-Sierra, Inc. 4,711,162 - 4,711,162 60,000 Texas Instruments, Inc.(1) - 3,521,250 3,521,250 60,000 Xilinx, Inc.* - 4,503,750 4,503,750 ------------------ -------------- ----------------- 49,082,462 54,510,937 103,593,399 ------------------ -------------- ----------------- Specialty Retail - 4.31% 150,000 Autonation, Inc.* (1) - 1,040,625 1,040,625 80,000 Bed, Bath & Beyond, Inc. (1) - 2,945,000 2,945,000 75,000 Circuit City Stores, Inc.(1) - 1,720,312 1,720,312
PRO FORMA COMBINED PACE LARGE COMBINED PACE LARGE COMPANY NUMBER OF COMPANY GROWTH PAINE WEBBER GROWTH EQUITY SHARES EQUITY INVESTMENTS GROWTH FUND INVESTMENTS --------- ------------------ ----------- ------------- 376,350 Home Depot, Inc. 8,608,613 10,867,500 19,476,113 82,000 Lowe's Companies, Inc. - 3,459,375 3,459,375 270,000 Staples, Inc. - 3,729,375 3,729,375 332,000 Tiffany & Co. 3,151,000 8,220,000 11,371,000 -------------- -------------- -------------- 11,759,613 31,982,187 43,741,800 -------------- -------------- -------------- Wireless Telecommunications - 3.62% 71,575 Amdocs LTD*(1) 4,808,945 - 4,808,945 165,000 AT&T Wireless Group* 4,537,500 - 4,537,500 20,700 Covad Communications Group, Inc* - 341,550 341,550 55,000 Dynergy Inc. - 3,870,625 3,870,625 67,135 Global Crossing Ltd. - 1,632,220 1,632,220 284,700 Nokia Corp. ADR 12,615,769 - 12,615,769 25,700 NorthPoint Communications Group, Inc* (1) - 303,581 303,581 13,800 Rhythms Netconnections, Inc.* - 165,600 165,600 35,000 Sprint Corp* - - - 184,400 Vodafone Group PLC, ADR*(1) 6,335,063 1,617,187 7,952,250 18,500 Williams Communications Group* - 499,500 499,500 -------------- -------------- -------------- 28,297,277 8,430,263 36,727,540 -------------- -------------- -------------- Total Common Stock (cost - $529,969,681) 436,401,239 520,083,482 956,484,721 -------------- -------------- -------------- Preferred Stock --------------- Industrial Parts, Services & Suppliers - 0.00% 3,585 Capesuccess LLC+ - 1,183 1,183 -------------- -------------- --------------
PRO FORMA COMBINED PACE LARGE COMBINED PACE LARGE COMPANY PRINCIPAL MATURITY INTEREST COMPANY GROWTH PAINE WEBBER GROWTH EQUITY AMOUNT (000) DATES RATES EQUITY INVESTMENTS GROWTH FUND INVESTMENTS ------------- -------------------- ------------------ ----------- ------------- U.S. GOVERNMENT AGENCY OBLIGATION - 4.45% Federal Home Loan Bank Discount Note (cost - $45,095,591) 08/09/2000 6.375@ - 45,095,591 45,095,591 -------------- -------------- -------------- REPURCHASE AGREEMENT - 1.76% $ 17,818 Repurchase Agreement dated 7/31/00 with SG Cowen Securities Group, collateralized by $15,736,000 U.S. Treasury Bonds, 7.500% due 11/15/16 (value-$18,175,080); proceeds: $17,821,217 (cost - $17,818,000) 08/01/00 6.500 - 17,818,000 17,818,000 -------------- -------------- -------------- Total Investments (cost- $610,010,565) - 100.49% 436,401,239 582,998,256 1,019,399,495 (Liabilities) Other Assets in Excess of Other Assets (Liabilities) - (0.49)% 404,870 (5,389,338) (4,984,468) -------------- -------------- -------------- Net Assets - 100% $436,806,109 $577,607,735 $1,014,413,844 ============== ============== ==============
+ Illuquid security. * Non-income producing security. @ Interst rate shown is discount rate at date of purchase. ADR American Depositary Receipt. (1) Security, or portion thereof, was on loan at July 31, 2000. See accompanying notes to pro forma financial statements. PACE Large Company Growth Equity Investments PaineWebber Growth 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 Growth Fund ("Growth"), PACE Large Company Growth Equity Investments ("Large Company Growth") would acquire the assets of Growth in exchange solely for the assumption by Large Company Growth of Growth's assets and stated liabilities and shares of Large Company Growth that correspond to the outstanding shares of Growth. The number of shares to be received would be based on the relative net asset value of Large Company Growth's shares on the effective date of the Plan and Growth will be terminated as soon as practicable thereafter. The PRO FORMA financial statements reflect the financial position of Large Company Growth and Growth at July 31, 2000 and the combined results of operations of Large Company Growth and Growth (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, net of waivers, of Large Company Growth. Growth currently pays Rule 12b-1 distribution or service fees; as of July 31, 2000, Large 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 $232,000 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-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 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.