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PAINEWEBBER MUTUAL FUNDS
PROSPECTUS SUPPLEMENT
June 23, 1997
Dear Investor,
This is a supplement to the Prospectuses of the PaineWebber Mutual Funds
listed on the reverse side ("Funds"). The purpose of this supplement is to
notify prospective investors of changes to the sales charge waivers for the
Funds' Class A shares including the discontinuation of the waiver for advisory
clients of Mitchell Hutchins. The disclosure with respect to sales charge
waivers contained in the prospectus under the caption "Fexible Pricing'sm' --
Class A Shares -- Sales Charge Reductions & Waivers" will be superseded by the
following:
The sales charge will not apply when the Investor:
is an employee, director, trustee or officer of PaineWebber, its
affiliates or any PaineWebber mutual Fund;
is the spouse, parent or child of any of the above;
buys these shares through a PaineWebber Investment executive who was
formerly employed as a broker with a competing brokerage firm that was
registered as a broker-dealer with the SEC; and
was the investment executive's client at the competing brokerage
firm;
within 90 days of buying Class A shares in this Fund, the investor
sells shares of one or more mutual funds that (a) were principally
underwritten by the competing brokerage firm or its affiliates
and (b) the investor either paid a sales charge to buy those
shares, paid a contingent deferred sales charge when selling
them or held those shares until the contingent deferred sales
charge was waived; and
the amount that the investor purchases does not exceed the total
amount of money the investor received from the sale of the other
mutual fund;
is a certificate holder of unit investment trusts sponsored by
PaineWebber and has elected to have dividends and other distributions
from that investment automatically invested in Class A shares;
is an employer establishing an employee benefit plan qualified under
section 401, including a salary reduction plan qualified under section
401(k), or section 403(b) of the internal Revenue Code ("Code") (each
a "qualified pension plan"). (This waiver is subject to minimum
requirements, with respect to the number of employees and amount of
plan assets, established by Mitchell Hutchins. Currently, the plan must
have 50 or more eligible employees and at least $1 million in plan
assets.) For investments made pursuant to this waiver, Mitchell
Hutchins may make a payment to PaineWebber out of its own resources in
an amount not to exceed 1% of the amount invested;
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is a participant in the PaineWebber Members Only Programs'tm'. For
investments made pursuant to this waiver, Mitchell Hutchins may make
payments out of its own resources to PaineWebber and to participating
membership organizations in a total amount not to exceed 1% of the
amount invested;
is a variable annuity offered only to qualified pension plans. For
investments made pursuant to this waiver, Mitchell Hutchins may make
payments out of its own resources to PaineWebber and to the variable
annuity's sponsor, adviser or distributor in a total amount not to
exceed 1% of the amount invested;
acquires Class A shares through an investment program that is not
sponsored by PaineWebber or its affiliates and that charges
participants a fee for program services, provided that the program
sponsor has entered into a written agreement with PaineWebber
permitting the sale of Class A shares at net asset value to that
program. For investments made pursuant to this waiver, Mitchell
Hutchins may make a payment to PaineWebber out of its own resources in
an amount not to exceed 1% of the amount invested. For subsequent
investments or exchanges made to implement a rebalancing feature of
such an investment program, the minimum subsequent investment
requirement is also waived; or
acquires Class A shares in connection with a reorganization pursuant to
which a Fund acquires substantially all of the assets and liabilities
of another investment company in exchange solely for shares of the
Fund.
For more information on how to get any reduced sales charge, investors should
contact their Investment executive at PaineWebber or one of its correspondent
firms or call 1-800-647-1568. Investors must provide satisfactory information to
PaineWebber or the Fund if they seek any of these waivers.
THE PROSPECTUSES OF THE FOLLOWING PAINEWEBBER MUTUAL FUNDS ARE HEREBY
SUPPLEMENTED:
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NAME OF FUND DATE OF PROSPECTUS
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<S> <C>
PaineWebber Balanced Fund January 1, 1997
PaineWebber Capital Appreciation Fund August 1, 1996, as revised February 21, 1997
PaineWebber Emerging Markets Equity Fund March 1, 1997
PaineWebber Financial Services Growth Fund Inc. August 1, 1996, as revised February 21, 1997
PaineWebber Global Equity Fund March 1, 1997
PaineWebber Global Income Fund March 1, 1997
PaineWebber Growth Fund December 1, 1996
PaineWebber Growth and Income Fund December 1, 1996
PaineWebber Small Cap Fund December 1, 1996
PaineWebber Tactical Allocation Fund January 1, 1997
PaineWebber Utility Income Fund August 1, 1996, as revised February 21, 1997
</TABLE>
THIS PROSPECTUS SUPPLEMENT DOES NOT REPLACE ANY PRIOR SUPPLEMENTS TO THE
PROSPECTUSES LISTED ABOVE.
If you have any questions regarding the PaineWebber Mutual Funds listed
above, please call your Investment Executive at PaineWebber or one of its
correspondent firms.
STATEMENT OF DIFFERENCES
The trademark symbol shall be expressed as............... 'tm'
The service mark symbol shall be expressed as ........... 'sm'
