<PAGE>
PAINEWEBBER TACTICAL ALLOCATION FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED JANUARY 1, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Tactical Allocation Fund ('Fund') will be asked to approve changes
to the Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Restrictions':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
(2) The Fund will not purchase any security if, as a result of that
purchase, 25% or more of the Fund's total assets would be invested
in securities of issuers having their principal business
activities in the same industry, except that this limitation does
not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to municipal
securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
<PAGE>
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER TACTICAL ALLOCATION FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION FOR CLASS Y SHARES
DATED JANUARY 1, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Tactical Allocation Fund ('Fund') will be asked to approve changes
to the Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Restrictions':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
<PAGE>
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Emerging Markets Equity Fund ('Fund') will be asked to approve
changes to the Fund's fundamental investment restrictions. If approved, the
following investment restrictions will supersede and replace the restrictions
listed in the section in the Fund's Statement of Additional Information entitled
'Investment Restrictions':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental limitation: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information:
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION FOR CLASS Y SHARES
DATED NOVEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Emerging Markets Equity Fund ('Fund') will be asked to approve
changes to the Fund's fundamental investment restrictions. If approved, the
following investment restrictions will supersede and replace the restrictions
listed in the section in the Fund's Statement of Additional Information entitled
'Investment Restrictions':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental limitation: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
investment restrictions are approved by the Fund's shareholders, the Fund would
become subject to the non-fundamental investment restrictions listed below.
These non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
SUPPLEMENT TO PAINEWEBBER EMERGING MARKETS EQUITY FUND
PROSPECTUS DATED NOVEMBER 1, 1995
March 1, 1996
Dear Investor,
This is a supplement to the PaineWebber Emerging Markets Equity Fund
Prospectus dated November 1, 1995. The purpose of the supplement is to revise
certain information contained in the Prospectus.
At a special meeting of shareholders scheduled for April 10, 1996 (the
'Special Meeting'), shareholders of PaineWebber Emerging Markets Equity Fund
('Fund') will be asked to approve changes to the Fund's fundamental investment
restrictions. If approved, the following investment restrictions will replace
those appearing under the 'Investment Restrictions' section on page 16 of the
Prospectus:
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
If you have any questions regarding PaineWebber Emerging Markets Equity
Fund, please call your Investment Executive at PaineWebber or one of its
correspondent firms.
<PAGE>
SUPPLEMENT TO PAINEWEBBER EMERGING MARKETS EQUITY FUND
PROSPECTUS FOR CLASS Y SHARES DATED NOVEMBER 1, 1995
March 1, 1996
Dear Investor,
This is a supplement to the PaineWebber Emerging Markets Equity
Fund - Class Y Shares Prospectus dated November 1, 1995. The purpose of the
supplement is to revise certain information contained in the Prospectus.
At a special meeting of shareholders scheduled for April 10, 1996 (the
'Special Meeting'), shareholders of PaineWebber Emerging Markets Equity
Fund - Class Y Shares ('Fund') will be asked to approve changes to the Fund's
fundamental investment restrictions. If approved, the following investment
restrictions will replace those appearing under the 'Investment Restrictions'
section on page 10 of the Prospectus:
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
If you have any questions regarding PaineWebber Emerging Markets Equity
Fund--Class Y Shares, please call your Investment Executive at PaineWebber or
one of its correspondent firms.
<PAGE>
PAINEWEBBER SMALL CAP GROWTH FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Small Cap Growth Fund ('Fund') will be asked to approve changes to
the Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental limitation: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
investment restrictions are approved by the Fund's shareholders, the Fund would
become subject to the non-fundamental investment restrictions listed below.
These non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information:
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER SMALL CAP GROWTH FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION FOR CLASS Y SHARES
DATED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Small Cap Growth Fund ('Fund') will be asked to approve changes to
the Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental limitation: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information:
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 15, 1995, AS REVISED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Growth and Income Fund ('Fund') will be asked to approve changes to
the Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental limitation: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER GROWTH FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 15, 1995, AS REVISED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Growth Fund ('Fund') will be asked to approve changes to the Fund's
fundamental investment restrictions. If approved, the following investment
restrictions will supersede and replace the restrictions listed in the section
in the Fund's Statement of Additional Information entitled 'Investment
Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER GROWTH FUND
PAINEWEBBER GROWTH AND INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION FOR CLASS Y SHARES
DATED NOVEMBER 15, 1995, AS REVISED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Growth Fund and PaineWebber Growth and Income Fund (each, a 'Fund'
and, collectively, the 'Funds') will be asked to approve changes to the Funds'
fundamental investment restrictions. If approved, the following investment
restrictions will supersede and replace the restrictions listed in the section
in the Funds' Statement of Additional Information entitled 'Investment
Limitations':
Each Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental limitation: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-and
asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward
<PAGE>
and spot currency contracts, swap transactions and other financial
contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Funds' shareholders, the Funds would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Funds' current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
Each Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED JANUARY 2, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Financial Services Growth Fund Inc. ('Fund') will be asked to
approve changes to the Fund's fundamental investment restrictions. If approved,
the following investment restrictions will supersede and replace the
restrictions listed in the section in the Fund's Statement of Additional
Information entitled 'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities, and except that the
Fund, under normal circumstances, will invest 25% or more of its
total assets in the related group of industries consisting of the
financial services industries.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward
<PAGE>
and spot currency contracts, swap transactions and other financial
contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Fund's Board of Directors without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER CAPITAL APPRECIATION FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED AUGUST 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Meeting'), shareholders of PaineWebber
Capital Appreciation Fund ('Fund') will be asked to approve changes to the
Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in each Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER U.S. GOVERNMENT INCOME FUND
PAINEWEBBER INVESTMENT GRADE INCOME FUND
PAINEWEBBER HIGH INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 10, 1995, AS REVISED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber High Income Fund, PaineWebber U.S. Government Income Fund and
PaineWebber Investment Grade Income Fund (each, a 'Fund' and, collectively, the
'Funds'), will be asked to approve changes to the Funds' fundamental investment
restrictions. If approved, the following investment restrictions will supersede
and replace the restrictions listed in the section in the Funds' Statement of
Additional Information entitled 'Investment Limitations':
Each Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities, and except that
PaineWebber U.S. Government Income Fund, under normal
circumstances, will invest 25% or more of its total assets in
mortgage-and asset-backed securities, which (whether or not issued
or guaranteed by an agency or instrumentality of the U.S.
government) shall be considered a single industry for purposes of
this limitation.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security
<PAGE>
interests and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated in an orderly
manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Funds' shareholders, the Funds would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Funds' current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
Each Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
3. CHANGE TO NON-FUNDAMENTAL INVESTMENT POLICIES. The first sentence under the
sub-heading 'Loan Participations and Assignments' on page 8 is revised to read:
'Investment Grade Income Fund and High Income Fund each may invest up to
5% of its total assets in secured or unsecured fixed or floating rate
loans ('Loans') arranged through private negotiations between a
borrowing corporation and one or more financial institutions
('Lenders').'
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 10, 1995, AS REVISED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Low Duration U.S. Government Income Fund ('Fund') will be asked to
approve changes to the Fund's fundamental investment restrictions. If approved,
the following investment restrictions will supersede and replace the
restrictions listed in the section in the Fund's Statement of Additional
Information entitled 'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities, and except that the
Fund, under normal circumstances, will invest 25% or more of its
total assets in mortgage-and asset-backed securities, which
(whether or not issued or guaranteed by an agency or
instrumentality of the U.S. government) shall be considered a
single industry for purposes of this limitation.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward
<PAGE>
and spot currency contracts, swap transactions and other financial
contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION FOR CLASS Y SHARES
DATED NOVEMBER 10, 1995, AS REVISED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Low Duration U.S. Government Income Fund ('Fund') will be asked to
approve changes to the Fund's fundamental investment restrictions. If approved,
the following investment restrictions will supersede and replace the
restrictions listed in the section in the Fund's Statement of Additional
Information entitled 'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities, and except that the
Fund, under normal circumstances, will invest 25% or more of its
total assets in mortgage- and asset-backed securities, which
(whether or not issued or guaranteed by an agency or
instrumentality of the U.S. government) shall be considered a
single industry for purposes of this limitation.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward
<PAGE>
and spot currency contracts, swap transactions and other financial
contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER U.S. GOVERNMENT INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION FOR CLASS Y SHARES
DATED NOVEMBER 10, 1995, AS REVISED DECEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber U.S. Government Income Fund ('Fund') will be asked to approve
changes to the Fund's fundamental investment restrictions. If approved, the
following investment restrictions will supersede and replace the restrictions
listed in the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities, and except that the
Fund, under normal circumstances, will invest 25% or more of its
total assets in mortgage- and asset-backed securities, which
(whether or not issued or guaranteed by an agency or
instrumentality of the U.S. government) shall be considered a
single industry for purposes of this limitation.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward
<PAGE>
and spot currency contracts, swap transactions and other financial
contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER UTILITY INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Utility Income Fund ('Fund') will be asked to approve changes to the
Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities, and except that the
Fund, under normal circumstances, will invest 25% or more of its
total assets in the utility industries as a group. For this
purpose, utility industries consist of companies primarily engaged
in the ownership or operation of facilities used in the
generation, transmission or distribution of electricity,
telecommunications, gas, or water.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
<PAGE>
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER U.S. GOVERNMENT INCOME FUND
PAINEWEBBER INVESTMENT GRADE INCOME FUND
PAINEWEBBER HIGH INCOME FUND
SUPPLEMENT TO PROSPECTUS
DATED NOVEMBER 10, 1995
March 1, 1996
Dear Investor,
This is a supplement to the Prospectus of PaineWebber U.S. Government
Income Fund, PaineWebber Investment Grade Income Fund, and PaineWebber High
Income Fund, dated November 10, 1995. The purpose of the supplement is to revise
certain information contained in the Prospectus regarding PaineWebber High
Income Fund and PaineWebber Investment Grade Income Fund.
1. CHANGE IN INVESTMENT OBJECTIVE FOR HIGH INCOME FUND. At a special meeting of
shareholders, scheduled for April 10, 1996, shareholders of PaineWebber High
Income Fund ('Fund') will be asked to approve a change in the Fund's investment
objective from 'to provide the highest level of current income available without
undue risk' to 'to provide high income.' This change, which was approved by the
Trust's Board of Trustees, is intended to simplify the Fund's investment
objective, making it more comparable to those of other mutual funds with similar
investment strategies. The proposed change to the Fund's investment objective
does not reflect any current or contemplated change in the investment policies
of the Fund.
2. CHANGES IN INVESTMENT POLICY FOR HIGH INCOME FUND. Concurrently with its
proposed change in its investment objective, High Income Fund intends to change
its investment policy to reflect that High Income Fund may invest up to 25% of
its total assets in securities that are not currently providing income but that
have the potential for capital appreciation. This policy will reflect Mitchell
Hutchins' belief that High Income Fund should be able to take advantage of
opportunities for capital appreciation that become available in the market from
time to time. Mitchell Hutchins believes that the Fund can make limited
investments in non-income producing securities that present these opportunities
while still achieving its overall goal of providing high income to Shareholders.
This new policy will not be a part of the Fund's investment objective, but will
be designated a non-fundamental investment policy that may be changed by the
Fund's Board. The securities in which the Fund would be able to invest under
this policy include debt securities that are not currently paying income and
equity securities such as common stocks, warrants, rights and preferred stocks
that are not paying current income.
Effective February 29, 1996, the Board approved the following additional
changes to High Income Fund's investment policies: (a) the percentage of the
Fund's net assets that may be invested in securities of foreign issuers has been
increased from 25% to 35%, but the percentage of the Fund's net assets that may
be invested in securities of foreign issuers that are denominated and traded in
currencies other than the U.S. dollar continues to be 10%; and (b) the Fund's
policy of limiting investments in securities of a single issuer to 5% of its
total assets is made applicable only to 75% of its assets (as required under the
Fund's fundamental investment restrictions), rather than to 100% of its assets.
3. CHANGE TO INVESTMENT POLICY FOR INVESTMENT GRADE INCOME FUND. Effective
February 29, 1996, the Board approved an increase in the percentage of
Investment Grade Income Fund's total assets that may be invested in U.S. dollar
denominated securities of foreign issuers or foreign branches of U.S. banks that
are traded in the U.S. securities markets, or in U.S. dollar denominated
securities the value of which is linked to the value of foreign currencies, from
10% to 20%.
If you have any questions regarding PaineWebber U.S. Government Income
Fund, PaineWebber Investment Grade Income Fund, or PaineWebber High Income Fund,
please call your Investment Executive at PaineWebber or one of its correspondent
firms.
<PAGE>
PAINEWEBBER BALANCED FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED JULY 1, 1995, AS REVISED AUGUST 14, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Balanced Fund ('Fund') will be asked to approve changes to the
Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Fund's Board of Directors without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER MONEY MARKET FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED JULY 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Money Market Fund ('Fund') will be asked to approve changes to the
Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities or to certificates of
deposit and bankers' acceptances of domestic branches of U.S.
banks.
The following interpretation applies to, but is not a part of,
this fundamental restriction: With respect to this limitation,
domestic and foreign banking will be considered to be different
industries.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
<PAGE>
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Fund's Board of Directors without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER CALIFORNIA TAX-FREE INCOME FUND
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
PAINEWEBBER MUNICIPAL HIGH INCOME FUND
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 10, 1995, AS REVISED JANUARY 22, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber California Tax-Free Income Fund, PaineWebber National Tax-Free
Income Fund, PaineWebber Municipal High Income Fund, and PaineWebber New York
Tax-Free Income Fund ( each, a 'Fund' and, collectively, the 'Funds'), will be
asked to approve changes to the Funds' fundamental investment restrictions. If
approved, the following investment restrictions will supersede and replace the
restrictions listed in the section in Funds' Statement of Additional Information
entitled 'Investment Limitations of the Funds':
PaineWebber California Tax-Free Income Fund and PaineWebber National
Tax-Free Income Fund each will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Each state (including the District
of Columbia and Puerto Rico), territory and possession of the
United States, each political subdivision, agency, instrumentality
and authority thereof, and each multi-state agency of which a
state is a member is a separate 'issuer.' When the assets and
revenues of an agency, authority, instrumentality or other
political subdivision are separate from the government creating
the subdivision and the security is backed only by the assets and
revenues of the sub-division, such subdivision would be deemed to
be the sole issuer. Similarly, in the case of an Industrial
Development Bond or Private Activity Bond, if that bond is backed
only by the assets and revenues of the non-governmental user, then
that non-governmental user would be deemed to be the sole issuer.
However, if the creating government or another entity guarantees a
security, then to the extent that the value of all securities
issued or guaranteed by that government or entity and owned by the
Fund exceeds 10% of the Fund's total assets, the guarantee would
be considered a separate security and would be treated as issued
by that government or entity. This restriction does not limit the
percentage of the Fund's assets that may be invested in Municipal
Obligations insured by any given insurer.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
<PAGE>
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
PaineWebber Municipal High Income Fund and PaineWebber New York Tax-Free
Income Fund each will not:
(1) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(2) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(3) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(4) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(5) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(6) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Funds' shareholders, the Funds would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Funds' current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
2
<PAGE>
The following investment restrictions are not fundamental and may be
changed for any Fund by the Trust's Board of Trustees without shareholder
approval.
Each Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
3
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION FOR CLASS Y SHARES
DATED NOVEMBER 10, 1995, AS REVISED JANUARY 22, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber National Tax-Free Income Fund ('Fund') will be asked to approve
changes to the Fund's fundamental investment restrictions. If approved, the
following investment restrictions will supersede and replace the restrictions
listed in the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Each state (including the District
of Columbia and Puerto Rico), territory and possession of the
United States, each political subdivision, agency, instrumentality
and authority thereof, and each multi-state agency of which a
state is a member is a separate 'issuer.' When the assets and
revenues of an agency, authority, instrumentality or other
political subdivision are separate from the government creating
the subdivision and the security is backed only by the assets and
revenues of the sub-division, such subdivision would be deemed to
be the sole issuer. Similarly, in the case of an Industrial
Development Bond or Private Activity Bond, if that bond is backed
only by the assets and revenues of the non-governmental user, then
that non-governmental user would be deemed to be the sole issuer.
However, if the creating government or another entity guarantees a
security, then to the extent that the value of all securities
issued or guaranteed by that government or entity and owned by the
Fund exceeds 10% of the Fund's total assets, the guarantee would
be considered a separate security and would be treated as issued
by that government or entity. This restriction does not limit the
percentage of the Fund's assets that may be invested in Municipal
Obligations insured by any given insurer.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments
<PAGE>
supported by interests in real estate are not subject to this
limitation, and except that the Fund may exercise rights under
agreements relating to such securities, including the right to
enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER SMALL CAP VALUE FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 14, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Small Cap Value Fund ('Fund') will be asked to approve changes to
the Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
<PAGE>
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the vote of the Trust's Board of Trustees without shareholder
approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
Dated: March 1, 1996
2
<PAGE>
PAINEWEBBER STRATEGIC INCOME FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED JUNE 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of
PaineWebber Strategic Income Fund ('Fund') will be asked to approve changes to
the Fund's fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Fund's Statement of Additional Information entitled
'Investment Limitations':
The Fund will not:
(1) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities.
(2) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(3) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(4) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(5) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(6) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Fund's shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Fund's current
fundamental restrictions and would be in addition to the non-fundamental
policies and restrictions already described in the Statement of Additional
Information.
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
<PAGE>
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
Dated: March 1, 1996
2
<PAGE>
LIQUID INSTITUTIONAL RESERVES
MONEY MARKET FUND
GOVERNMENT SECURITIES FUND
TREASURY SECURITIES FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED SEPTEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS AND SUPERSEDES ANY CONTRARY INFORMATION
CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION:
1. FUNDAMENTAL INVESTMENT RESTRICTIONS. At a special meeting of shareholders
scheduled for April 10, 1996 (the 'Special Meeting'), shareholders of Money
Market Fund, Government Securities Fund, and Treasury Securities Fund (each, a
'Fund' and, collectively, the 'Funds'), will be asked to approve changes to the
Funds' fundamental investment restrictions. If approved, the following
investment restrictions will supersede and replace the restrictions listed in
the section in the Funds' Statement of Additional Information entitled
'Investment Restrictions':
The Trust may not, on behalf of any Fund:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage-and asset-backed securities
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities or to certificates of
deposit and bankers' acceptances of domestic branches of U.S.
banks.
The following interpretation applies to, but is not a part of,
this fundamental restriction: With respect to this limitation,
domestic and foreign banking will be considered to be different
industries.
(3) issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total
assets (including the amount of the senior securities issued but
reduced by any liabilities not constituting senior securities) at
the time of the issuance or borrowing, except that the Fund may
borrow up to an additional 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may
<PAGE>
exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real
estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
2. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. If the foregoing fundamental
restrictions are approved by the Funds' shareholders, the Fund would become
subject to the non-fundamental investment restrictions listed below. These
non-fundamental restrictions would replace certain of the Funds' current
fundamental restrictions and would be designated as such in the Statement of
Additional Information as follows:
The following investment restrictions are not fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.
The Fund will not:
o mortgage, pledge or hypothecate any assets except in connection with
permitted borrowings or the issuance of senior securities.
o purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
o engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments.
o invest in oil, gas or mineral exploration or development programs or
leases, except that investments in securities of issuers that invest
in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs or
leases are not subject to this prohibition.
o invest in companies for the purpose of exercising control or
management.
o invest in warrants, valued at the lower of cost or market, in excess
of 5% of the value of its net assets, which amount may include
warrants that are not listed on the New York or American Stock
Exchange, provided that those unlisted warrants, valued at the lower
of cost or market, do not exceed 2% of the Fund's net assets, and
further provided that this restriction does not apply to warrants
attached to, or sold as a unit with, other securities.
Dated: March 1, 1996
2
