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PAINEWEBBER U.S. GOVERNMENT INCOME FUND
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
PAINEWEBBER HIGH INCOME FUND
PAINEWEBBER INVESTMENT GRADE INCOME FUND
PAINEWEBBER STRATEGIC INCOME FUND
SUPPLEMENT TO PROSPECTUS DATED APRIL 1, 1997
June 23, 1997
Dear Investor,
This is a supplement to the Prospectus of PaineWebber U.S. Government
Income Fund, PaineWebber Low Duration U.S. Government Income Fund, PaineWebber
High Income Fund, PaineWebber Investment Grade Income Fund and PaineWebber
Strategic Income Fund, dated April 1, 1997. The purpose of this supplement is to
notify prospective investors (i) 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; (ii) of revisions to the initial sales charge
schedule on Class A shares on certain amounts of investments in PaineWebber U.S.
Government Income Fund, PaineWebber High Income Fund, PaineWebber Investment
Grade Income Fund and PaineWebber Strategic Income Fund; and (iii) effective
June 1, 1997, Mitchell Hutchins Asset Management Inc., the investment adviser of
the Funds, began voluntarily reimbursing 25 basis points (0.25%) of PaineWebber
Strategic Income Fund's expenses.
(i) The disclosure with respect to sales charge waivers contained in the
Prospectus under the caption 'Flexible Pricing'sm' -- Class A
Shares -- Sales Charge Reduction & Waivers' will be superseded by the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 sales of the other
mutual fund;
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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;
is a participant in the PaineWebber Members Only Program'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
share 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
to PaineWebber or the Fund if they seek any of these waivers.
(ii) Revisions to initial sales charge schedule on Class A shares, for
PaineWebber U.S. Government Income Fund, PaineWebber High Income Fund,
PaineWebber Investment Grade Income Fund and PaineWebber Strategic
Income Fund, for the following amounts of investments:
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<CAPTION>
Sales Charge as a Percentage of: Discount to Selected
------------------------------- Dealers as Percentage of
Amount of Investment Offering Price Net Amount Invested Offering Price
- ------------------------------ -------------- ------------------- -------------------------
<S> <C> <C> <C>
$100,000 to $249,999 ......... 3.00% 3.09% 2.75%
$250,000 to $499,999 ......... 2.25% 2.30% 2.00%
</TABLE>
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(iii) Effective June 1, 1997, Mitchell Hutchins Asset Management Inc., the
investment adviser of the Funds, began reimbursing 25 basis points
(0.25%) of PaineWebber Strategic Income Fund's expenses. This
reimbursement of expenses was undertaken voluntarily by the investment
adviser and may be changed or terminated at any time.
If you have any questions regarding PaineWebber U.S. Government Income
Fund, PaineWebber Low Duration U.S. Government Income Fund, PaineWebber High
Income Fund, PaineWebber Investment Grade Income Fund and PaineWebber Strategic
Income Fund, 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'
