PAINEWEBBER GROWTH FUND
                       PAINEWEBBER GROWTH AND INCOME FUND
                            PAINEWEBBER MID CAP FUND
                           PAINEWEBBER SMALL CAP FUND

    SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 1, 1999

                                                                October 10, 2000

Dear Investor,

         The board of trustees for each of the above-referenced funds has
approved new investment management arrangements for the fund and related
investment strategy changes that became effective on October 10, 2000 pursuant
to a new Interim Investment Management and Administration Agreement between each
fund and Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins") and one
or more Interim Sub-Advisory Contracts between Mitchell Hutchins and
unaffiliated sub-advisers.

         As a result of these new investment management arrangements, the funds'
Statement of Additional Information ("SAI") is revised as follows:

THE SECOND PARAGRAPH OF THE COVER PAGE IS REPLACED IN ITS ENTIRETY BY THE
FOLLOWING:

       Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"),
       a wholly owned asset management subsidiary of PaineWebber
       Incorporated ("PaineWebber") serves as the manager and
       administrator for each fund. As distributor for the funds,
       Mitchell Hutchins has appointed PaineWebber to serve as dealer
       for the sale of fund shares. Mitchell Hutchins has appointed
       unaffiliated investment advisers (each a "sub-adviser") to
       serve as sub-advisers for each fund's investments.

THE NAME "MITCHELL HUTCHINS" IN REFERENCES TO DETERMINATIONS MADE BY A FUND'S
SUB-ADVISER IN THE SECTIONS CAPTIONED "THE FUNDS AND THEIR INVESTMENT POLICIES,"
"THE FUNDS' INVESTMENTS, RELATED RISKS AND LIMITATIONS," "STRATEGIES USING
DERIVATIVE INSTRUMENTS" AND "PORTFOLIO TRANSACTIONS" IS REPLACED BY THE PHRASE
"THE APPLICABLE SUB-ADVISER," EXCEPT IN THE SECTION CAPTIONED "LENDING OF
PORTFOLIO SECURITIES" ON P. 8.

THE DESCRIPTION OF PAINEWEBBER GROWTH FUND IN THE SECOND PARAGRAPH OF THE
SECTION CAPTIONED "THE FUNDS AND THEIR INVESTMENT POLICIES" ON P. 2 IS REPLACED
IN ITS ENTIRETY BY THE FOLLOWING:

       The investment objective of GROWTH FUND is long-term capital
       appreciation. The fund generally invests in common stocks of
       larger capitalization companies that are believed to have
       substantial potential for capital growth. Alliance Capital
       Management L.P. and State Street Global Advisors serve as the
       fund's sub-advisers. Under normal circumstances, the fund
       invests at least 65% of its total assets in equity securities.

THE DESCRIPTION OF PAINEWEBBER GROWTH AND INCOME FUND IN THE FIFTH PARAGRAPH OF
THE SECTION CAPTIONED "THE FUNDS AND THEIR INVESTMENT POLICIES" ON P. 2 IS
REPLACED IN ITS ENTIRETY BY THE FOLLOWING:

       The investment objective of GROWTH AND INCOME FUND is current
       income and capital growth. Institutional Capital Corporation,
       Westwood Management Corporation and State Street Global
       Advisors serve as the fund's sub-advisers. Under normal
       circumstances, the fund invests at least 65% of its total
       assets in equity securities believed to have substantial
       potential for capital growth. The fund seeks to achieve the





       income portion of its objective by investing, under normal
       circumstances, at least 65% of its total assets in
       income-producing securities, which may include dividend-paying
       equity securities, bonds and money market instruments. The
       fund may invest up to 10% of its total assets in convertible
       securities rated below investment grade but no lower than B by
       S&P or Moody's, comparably rated by another rating agency or,
       if unrated, determined by a sub-adviser to be of comparable
       quality. The fund may also invest up to 25% of its total
       assets in U.S. dollar denominated equity securities of foreign
       issuers that are traded on recognized U.S. exchanges or in the
       U.S. over-the-counter market.

THE DESCRIPTION OF PAINEWEBBER MID CAP FUND IN THE SEVENTH PARAGRAPH OF THE
SECTION CAPTIONED "THE FUNDS AND THEIR INVESTMENT POLICIES" ON P. 2 IS REPLACED
IN ITS ENTIRETY BY THE FOLLOWING:

       The investment objective of MID CAP FUND is long-term capital
       appreciation. Delaware Management Company serves as the fund's
       sub-adviser. Under normal circumstances, the fund invests at
       least 65% of its total assets in equity securities of medium
       capitalization ("mid cap") companies, which the fund defines
       as companies having market capitalizations of at least $750
       million and no more than $8 billion at the time of purchase.
       The fund may invest up to 35% of its total assets in equity
       securities of companies that are larger or smaller than mid
       cap companies, as well as in bonds and money market
       instruments. The fund may invest up to 35% of its total assets
       in U.S. dollar denominated equity securities of foreign
       issuers that are traded on recognized U.S. exchanges or in the
       U.S. over-the-counter market.

THE DESCRIPTION OF PAINEWEBBER SMALL CAP FUND IN THE NINTH PARAGRAPH OF THE
SECTION CAPTIONED "THE FUNDS AND THEIR INVESTMENT POLICIES" ON P.3 IS REPLACED
IN ITS ENTIRETY BY THE FOLLOWING:

       The investment objective of SMALL CAP FUND is long-term
       capital appreciation. Ariel Capital Management, Inc. and ICM
       Asset Management, Inc. serve as the fund's sub-advisers. Under
       normal circumstances, the fund invests at least 65% of its
       total assets in equity securities of small capitalization
       ("small cap") companies, which the fund defines as companies
       having market capitalizations of up to $1.5 billion at the
       time of purchase. The fund may invest up to 35% of its total
       assets in equity securities of companies that are larger than
       small cap companies, as well as in bonds and money market
       instruments. This includes up to 10% in convertible bonds that
       are rated below investment grade, but no lower than B by S&P
       or Moody's, comparably rated by another rating agency or, if
       unrated, determined by a sub-adviser to be of comparable
       quality. The fund may invest up to 25% of its total assets in
       U.S. dollar denominated equity securities of foreign issuers
       that are traded on recognized U.S. exchanges or in the U.S.
       over-the-counter market.

THE SECTION CAPTIONED "INVESTMENT ADVISORY, ADMINISTRATION AND DISTRIBUTION
ARRANGEMENTS -- INVESTMENT ADVISORY AND ADMINISTRATION ARRANGEMENTS" ON PP. 26-7
IS RETITLED "INVESTMENT MANAGEMENT, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS
- -- INVESTMENT MANAGEMENT AND ADMINISTRATION ARRANGEMENTS," ALL REFERENCES TO
"ADVISORY CONTRACT" ARE CHANGED TO "MANAGEMENT CONTRACT" AND THE FIRST PARAGRAPH
AND THE FOLLOWING PARAGRAPH PRECEDING THE TABLE ARE REPLACED IN THEIR ENTIRETY
BY THE FOLLOWING:

       INVESTMENT MANAGEMENT AND ADMINISTRATION ARRANGEMENTS.
       Mitchell Hutchins acts as the investment manager and
       administrator for each fund pursuant to separate interim
       investment management and administration contracts dated
       October 10, 2000 (each a "Management Contract") with each
       Trust. Under the Management Contracts, the funds pay fees
       (expressed as a percentage of the fund's average daily net
       assets) to Mitchell Hutchins for these services at the annual


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       contract rates of 0.75% for Growth Fund, 0.70% for Growth and
       Income Fund and 1.00% each for Mid Cap Fund and Small Cap
       Fund. All fees paid under the Management Contracts are
       computed daily and paid monthly.

       During the periods indicated, Mitchell Hutchins earned (or
       accrued) fees under prior investment advisory and
       administration contracts relating to each fund in the amounts
       set forth below:

THE FIRST FULL PARAGRAPH ON P. 27 IN THE SECTION CAPTIONED "INVESTMENT ADVISORY,
ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS -- INVESTMENT ADVISORY AND
ADMINISTRATION ARRANGEMENTS" IS REVISED BY REPLACING THE LAST SENTENCE WITH THE
FOLLOWING:

       The current Management Contract for each fund may be
       terminated without penalty on 10 days' written notice to
       Mitchell Hutchins by the board of the fund or by vote of a
       majority of the outstanding voting securities of the fund and
       will terminate 150 days after October 10, 2000 (on March 9,
       2000) unless it has by then been approved by a majority of the
       outstanding voting securities of the fund.

FOLLOWING THE FIRST FULL PARAGRAPH ON P. 27 IN THE SECTION CAPTIONED "INVESTMENT
ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS -- INVESTMENT ADVISORY
AND ADMINISTRATION ARRANGEMENTS," THE FOLLOWING NEW PARAGRAPHS ARE ADDED:

       The Management Contracts authorize Mitchell Hutchins to retain
       one or more sub-advisers for the management of a fund's
       investment portfolio and, as described below, Mitchell
       Hutchins has entered into one or more interim sub-advisory
       contracts (each a "Sub-Advisory Contract") for each fund.
       Mitchell Hutchins is responsible for monitoring the services
       furnished pursuant to the Sub-Advisory Contracts and making
       recommendations to the applicable board with respect to the
       retention or replacement of sub-advisers and renewal of
       Sub-Advisory Contracts.

       Under each Sub-Advisory Contract, the sub-adviser will not be
       liable for any error or judgment or mistake of law or for any
       loss suffered by a fund, its shareholders or Mitchell Hutchins
       in connection with the performance of the contract, except a
       loss resulting from willful misfeasance, bad faith, or gross
       negligence on the part of the sub-adviser in the performance
       of its duties or from reckless disregard of its duties and
       obligations thereunder.

       Each Sub-Advisory Contract terminates automatically 150 days
       after October 10, 2000 (on March 9, 2000) and is terminable at
       any time without penalty on 10 days' written notice to
       Mitchell Hutchins by the board of the fund or by vote of a
       majority of the fund's outstanding voting securities and may
       be terminated by the sub-adviser upon not more than 60 days'
       written notice to Mitchell Hutchins. A Sub-Advisory Contract
       may be terminated by Mitchell Hutchins (1) upon material
       breach by the sub-adviser of its representations and
       warranties, which breach shall not be cured within a 20 day
       period after notice of such breach; or (2) if the sub-adviser
       becomes unable to discharge its duties and obligations under
       the Sub-Advisory Contract.

       For GROWTH FUND, Mitchell Hutchins has entered into separate
       Sub-Advisory Contracts with Alliance Capital Management L.P.
       ("Alliance Capital") and State Street Global Advisors
       ("SSgA"). Mitchell Hutchins (not the fund) pays Alliance a fee
       in the annual amount of 0.30% and SSgA a fee at the annual


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       rate of 0.15% of the fund's average daily net assets that it
       manages. Prior to October 10, 2000, Mitchell Hutchins managed
       the fund's assets.

       SSgA is the investment management division of State Street
       Bank and Trust Company, which is a wholly owned subsidiary of
       State Street Corporation, a publicly held bank holding
       company. Alliance Capital Management Corporation ("ACMC") is a
       general partner of Alliance Capital and an indirect wholly
       owned subsidiary of AXA Financial, Inc. ("AXA Financial"), a
       Delaware corporation whose shares are traded on the New York
       Stock Exchange, Inc. As of June 30, 2000, AXA Financial and
       its subsidiaries were the beneficial owners of an
       approximately 62.5% partnership interest in Alliance Capital,
       and Alliance Capital Management Holding L.P. ("Alliance
       Holding") owned an approximately 35% partnership interest in
       Alliance Capital. Equity interests in Alliance Holding are
       traded on the New York Stock Exchange in the form of units.
       Approximately 97.9% of Alliance Holding's units are owned by
       the public and management or employees of Alliance Capital and
       approximately 2.1% are owned by certain wholly owned
       subsidiaries of AXA Financial. The general partner of Alliance
       Holding is ACMC. As of March 1, 2000, AXA, a French insurance
       holding company, owned approximately 60.3% of the issued and
       outstanding shares of the common stock of AXA Financial.

       For GROWTH AND INCOME FUND, Mitchell Hutchins has entered into
       separate Sub-Advisory Contracts with Institutional Capital
       Corporation ("ICAP"), Westwood Management Corporation
       ("Westwood") and State Street Global Advisors ("SSgA").
       Mitchell Hutchins (not the fund) pays each investment adviser
       a fee at the annual rate of 0.30% (0.15% for SSgA) of the
       fund's average daily net assets that it manages. Prior to
       October 10, 2000, Mitchell Hutchins managed the fund's assets.
       Robert H. Lyon, who serves as president, chief investment
       officer and a director of ICAP owns a 51% controlling interest
       in ICAP. Westwood is a wholly owned subsidiary of Southwest
       Securities Group, Inc., a Dallas-based securities firm. SSgA
       is the investment management division of State Street Bank and
       Trust Company, which is a wholly owned subsidiary of State
       Street Corporation, a publicly held bank holding company.

       For MID CAP FUND, Mitchell Hutchins has entered into a
       Sub-Advisory Contract with Delaware Management Company.
       Mitchell Hutchins (not the fund) pays fees to Delaware
       Management Company for its services under the Sub-Advisory
       Contract at the annual rate of 0.40% of the fund's average
       daily net assets. Delaware Management Company assumed its fund
       responsibilities on October 10, 2000. Prior to October 10,
       2000, Mitchell Hutchins managed the fund's assets. Delaware
       Management Company is a series of Delaware Management Business
       Trust, a Delaware business trust. It is a member of Delaware
       Investments, a subsidiary of Lincoln National Corporation
       ("Lincoln National"). Lincoln National is a diversified
       organization with operations in many aspects of the financial
       services industry, including insurance and investment
       management.

       For SMALL CAP FUND, Mitchell Hutchins has entered into
       separate Sub-Advisory Contracts with Ariel Capital Management,
       Inc. ("Ariel") and ICM Asset Management, Inc. ("ICM").
       Mitchell Hutchins (not the fund) pays each of these
       sub-advisers a fee at the annual rate of 0.30% of the fund's
       average daily net assets that it manages. Prior to October 10,
       2000, Mitchell Hutchins managed the fund's assets. Ariel is an
       independent subchapter S corporation with a majority of
       ownership held by its employees. ICM also is an independent
       subchapter S corporation with a majority of ownership held by
       its employees. James M. Simmons, founder and chief investment
       officer of ICM, owns more than 25% of ICM's voting stock.




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