<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY EQUITY INCOME FUND, INC.
Supplement to Prospectus Dated June 1, 1995
THE FOLLOWING DISCLOSURE AMENDS CERTAIN INFORMATION CONTAINED IN THE FUND'S
PROSPECTUS RELATING TO THE PLAN OF REORGANIZATION AND TERMINATION:
The meeting of the Fund's shareholders to consider the proposed Plan of
Reorganization and Termination with PaineWebber Growth and Income Fund
("Reorganization") will be held on October 6, 1995, not August 4, 1995. If the
Reorganization is approved, sales of all Classes of Fund shares will cease on
October 6, 1995, so that Fund shares will no longer be available for purchase or
exchange starting on October 9, 1995 through the closing date of the
Reorganization.
THE FOLLOWING DISCLOSURE AMENDS THE FIRST PARAGRAPH UNDER "PURCHASE OF SHARES -
CLASS A SHARES" ON PAGE 14 OF THE FUND'S PROSPECTUS:
The sales load schedule for Class A shares appearing on page 14 of the
Prospectus is replaced with the schedule shown below, effective as of July 3,
1995:
<TABLE>
<CAPTION>
Sales Charge as a
Percentage of Discount to
----------------------- Selected
Net Amount Dealers as a
Invested Percentage
Amount of Purchase Offering (Net Asset of Offering
at Offering Price Price Value) Price
- ------------------------- ---------------------------------------
<S> <C> <C> <C>
Less than $50,000 ......................................... 4.50% 4.71% 4.25%
$50,000 to $99,999 ........................................ 4.00 4.17 3.75
$100,000 to $249,999 ...................................... 3.50 3.63 3.25
$250,000 to $499,999 ...................................... 2.50 2.56 2.25
$500,000 to $999,999 ...................................... 1.75 1.78 1.50
$1,000,000 and over (1) ................................... None None 1.00
</TABLE>
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(1) Mitchell Hutchins Asset Management Inc. pays compensation to PaineWebber
Incorporated out of its own resources.
Dated: August 3, 1995
