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SUPPLEMENT TO PAINEWEBBER SMALL CAP GROWTH FUND PROSPECTUS
DATED DECEMBER 1, 1995
May 8, 1996
Dear Investor,
This is a supplement to the PaineWebber Small Cap Growth Fund Prospectus
dated December 1, 1995. The purpose of the supplement is to notify shareholders
that the board of trustees of PaineWebber Investment Trust III on behalf of its
sole series, PaineWebber Small Cap Growth Fund ('Fund'), has approved a Plan of
Reorganization and Termination ('Reorganization') for submission to Fund
shareholders at a special meeting to be held on July 19, 1996. If the proposed
Reorganization is approved and implemented, all the Fund's assets will be
acquired and its liabilities assumed by PaineWebber Small Cap Value Fund in a
tax-free reorganization. As a result of the Reorganization, the two funds'
assets would be combined and each Fund shareholder would, on the closing date of
the transaction, receive a number of full and fractional shares of the
corresponding class of shares of PaineWebber Small Cap Value Fund having an
aggregate value equal to the value of the shareholder's holding in the Fund.
PaineWebber Small Cap Value Fund is a series of PaineWebber Securities Trust, an
open-end management investment company organized as a Massachusetts business
trust.
The meeting of Fund shareholders to consider the proposed Reorganization
will be held on July 19, 1996. There can be no assurance that the Fund's
shareholders will approve the Reorganization. However, if the Reorganization is
approved, sales of all classes of Fund shares will cease on July 22, 1996, so
that Fund shares will no longer be available for purchase or exchange starting
on July 23, 1996, through the closing date of the Reorganization which it is
anticipated will occur on July 26, 1996. Redemptions of Fund shares and
exchanges of Fund shares for shares of another PaineWebber mutual fund may be
effected through the closing date of the Reorganization.
This supplement also updates and revises the information appearing under
the 'Management' section.
Mitchell Hutchins terminated the sub-advisory contract with George B.
Bjurman & Associates effective April 1, 1996. On that date, Mitchell Hutchins
assumed responsibility for the portfolio management of the Fund. Donald R.
Jones, a first vice president of Mitchell Hutchins, serves 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 a 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 Growth Fund,
please call your Investment Executive at PaineWebber or one of its correspondent
firms.
THIS SUPPLEMENT SUPERSEDES ANY PREVIOUS SUPPLEMENTS TO THE PROSPECTUS.
