<PAGE>
SUPPLEMENT TO PAINEWEBBER SMALL CAP VALUE FUND PROSPECTUS DATED
NOVEMBER 14, 1995
February 9, 1996
Dear Investor,
This is a supplement to the PaineWebber Small Cap Value Fund Prospectus dated
November 14, 1995. The purpose of the supplement is to revise the information
appearing under the 'Prospectus Summary -- Sub-Adviser' and 'Management'
sections on page 2 and pages 20-21 of the Prospectus, respectively.
Mitchell Hutchins has terminated the sub-advisory contract with Quest Advisory
Corp., effective April 1, 1996. On that date, Mitchell Hutchins will assume
responsibility for the portfolio management of the Fund. Donald R. Jones, a
first vice president of Mitchell Hutchins, will serve as the Fund's portfolio
manager. Prior to joining Mitchell Hutchins in February 1996, Mr. Jones was a
vice president in the asset management group of First Fidelity Bancorporation.
At First Fidelity Bancorporation since 1983, Mr. Jones was a member of the Value
Discipline Stock Selection Committee and Small Capitalization Stock Selection
Committee and served as the co-manager or assistant manager of mutual funds and
personal trust commingled funds with aggregate assets of approximately $215
million.
If you have any questions regarding PaineWebber Small Cap Value Fund, please
call your Investment Executive at PaineWebber or one of its correspondent firms.
