PAINEWEBBER AMERICA FUND /NY/, 497, 1996-06-12

PAINEWEBBER AMERICA FUND /NY/
497, 1996-06-12

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PaineWebber

Growth and Income Fund

Growth Fund

Class Y Shares

1285 Avenue of the Americas, New York, NY 10019

Prospectus -- May 1, 1996

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PaineWebber Stock Funds are designed for investors generally seeking
capital appreciation by investing principally in equity securities.
PaineWebber Growth and Income Fund seeks to provide both capital growth and
current income by investing in dividend-paying equity securities believed
to have potential for rapid earnings growth. PaineWebber Growth Fund seeks
long-term capital appreciation by investing in equity securities of
companies with substantial potential for capital growth.

This Prospectus concisely sets forth information that an investor should
know about the Funds before investing. Please retain a copy of this
Prospectus for future reference.

A Statement of Additional Information dated May 1, 1996 has been filed with
the Securities and Exchange Commission and is legally part of this
Prospectus. The Statement of Additional Information can be obtained without
charge, and further inquiries can be made, by contacting an individual
Fund, your PaineWebber investment executive, PaineWebber's correspondent
firms or by calling toll-free 1-800-647-1568.

The Class Y shares described in this Prospectus are currently offered for
sale primarily to participants in the INSIGHT Investment Advisory Program
("INSIGHT"), when purchased through that program, and to the trustee of the
PaineWebber Savings Investment Plan ("PW SIP") on behalf of the PW SIP. See
"How to Buy Shares."

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS
OR THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUNDS OR THEIR DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS ANY SUCH
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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Prospectus Page 1
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PAINEWEBBER GROWTH AND INCOME FUND GROWTH FUND
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Table of Contents

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<TABLE>
<CAPTION>
Page
----
<S> <C>
The Funds at a Glance.............................................. 3
Expense Table...................................................... 5
Financial Highlights............................................... 6
Investment Objective and Policies.................................. 7
Investment Philosophy & Process.................................... 7
Performance........................................................ 9
The Funds' Investments............................................. 11
How to Buy Shares.................................................. 13
How to Sell Shares................................................. 14
Management......................................................... 14
Determining the Shares' Net Asset Value............................ 15
Dividends & Taxes.................................................. 16
General Information................................................ 17
</TABLE>

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Prospectus Page 2
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PAINEWEBBER GROWTH AND INCOME FUND GROWTH FUND
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The Funds at a Glance
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GROWTH AND INCOME FUND

GOAL: To increase the value of your investment by investing primarily in
dividend-paying equity securities with the potential for rapid earnings growth.

INVESTMENT OBJECTIVE: Current income and capital growth.

RISKS: Equity securities historically have shown greater growth potential than
other types of securities, but they have also shown greater volatility. Because
the Fund invests primarily in equity securities, its price will rise and fall.
The Fund may invest in U.S. dollar-denominated securities of foreign companies,
which involves more risk than investing in the securities of U.S. companies.
The Fund may also invest up to 10% of its assets in high yield, high risk
convertible bonds, which are considered predominantly speculative and may
involve major risk exposure to adverse conditions. The Fund may use
derivatives, such as options and futures, in its hedging activities, which may
involve special risks. Investors may lose money by investing in the Fund; your
investment is not guaranteed.

SIZE: On February 29, 1996, the Fund had over $599 million in assets.

GROWTH FUND

GOAL: To increase the value of your investment by investing primarily in equity
securities of companies with substantial potential for capital growth.

INVESTMENT OBJECTIVE: Long-term capital appreciation.

RISKS: Equity securities historically have shown greater growth potential than
other types of securities, but they have also shown greater volatility. Because
the Fund invests primarily in equity securities, its price will rise and fall.
The Fund may invest in U.S. dollar-denominated securities of foreign companies,
which involves more risk than investing in the securities of U.S. companies.
The Fund may also invest up to 35% of its net assets in high yield, high risk
bonds and convertible securities, which are considered predominantly
speculative and involve major risk exposure to adverse conditions. The Fund may
use derivatives, such as options and futures, in its hedging activities, which
may involve special risks. Investors may lose money by investing in the Fund;
your investment is not guaranteed.

SIZE: On February 29, 1996, the Fund had over $403 million in assets.

MANAGEMENT: Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), an
asset management subsidiary of PaineWebber Incorporated ("PaineWebber"), is the
investment adviser and administrator of Growth and Income Fund and Growth Fund
(each a "Fund" and, collectively, the "Funds").

WHO SHOULD INVEST

GROWTH AND INCOME FUND is designed for investors seeking capital growth and
current income through investment in growth-oriented, dividend-paying equity
securities of U.S. companies and foreign companies that are traded in the
United States. Growth and Income Fund invests primarily in equity securities of
larger growth companies and smaller issuers with the potential for rapid
earnings growth that pay dividends. In addition, Growth and Income Fund can
invest in high yield, high risk convertible bonds. These investments offer the
potential for greater returns but also entail a substantial degree of
volatility and risk. Accordingly, Growth and Income Fund is designed for
investors who are able to bear the risks that come with investments in the
stocks and bonds of such companies.

GROWTH FUND is for investors who want long-term capital appreciation through
investment primarily in growth-oriented equity securities of U.S. companies and
foreign companies that are traded in the United States. Growth Fund invests in
equity securities of both larger growth companies and smaller issuers with
greater appreciation potential. In addition, Growth Fund can invest in high
yield,

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Prospectus Page 3
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high risk bonds. These investments offer the potential for greater returns but
also entail a substantial degree of volatility and risk. Accordingly, Growth
Fund is designed for investors who are able to bear the risks that come with
investments in the stocks and bonds of such companies.

* * * *

The Funds offered by this Prospectus are not intended to provide a complete or
balanced investment program, but one or more of them may be appropriate as a
component of an investor's overall portfolio. Some common reasons to invest in
these Funds are to finance college educations, plan for retirement or diversify
a portfolio. When selling shares, investors should be aware that they may get
more or less for their shares than they originally paid for them. As with any
mutual fund there is no assurance that the Funds will achieve their goals.

HOW TO PURCHASE CLASS Y SHARES

Eligible investors may purchase Class Y shares of the Funds as follows:

The price is the net asset value next calculated after PaineWebber's New York
City headquarters or the Fund's Transfer Agent ("Transfer Agent") receives the
purchase order.

Investors do not pay an initial sales charge when they buy Class Y shares. 100%
of their purchase is immediately invested. Investors also do not pay a
redemption fee or contingent deferred sales charge when they sell Class Y
shares.

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Prospectus Page 4
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Expense Table
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The following tables are intended to assist investors in understanding the
expenses associated with investing in Class Y shares of the Funds. Expenses
shown below represent those incurred for the most recent fiscal year.

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS Y
- -------------------------------- -------
<S> <C>
Maximum Sales Charge on Purchases of Shares (as a % of offering price). None
Sales Charge on Reinvested Dividends (as a % of offering price)........ None
Maximum Contingent Deferred Sales Charge (as a % of net asset value at
the time of purchase or sale, whichever is less)...................... None
Exchange Fee........................................................... None
ANNUAL FUND OPERATING EXPENSES* (as a % of average net assets)
GROWTH AND INCOME FUND
Management Fees........................................................ 0.70%
12b-1 Fees............................................................. 0.00
Other Expenses......................................................... 0.19
----
Total Operating Expenses............................................... 0.89%
====
GROWTH FUND(A)
Management Fees........................................................ 0.75%
12b-1 Fees............................................................. 0.00
Other Expenses......................................................... 0.17
----
Total Operating Expenses............................................... 0.92%
====
</TABLE>
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* Participation in INSIGHT is subject to payment of an advisory fee at the
maximum annual rate of 1.50% of assets held through INSIGHT. This account
charge is not included in the table because non-INSIGHT participants are
permitted to purchase Class Y shares of the Fund.
(a) Does not include 0.06% in non-recurring reorganization expenses which were
incurred during the fiscal year ended August 31, 1995. If those expenses
were included, "Other expenses" for Class Y shares would be 0.22% and
"Total operating expenses" would be 0.97%.

EXAMPLE OF EFFECT OF FUND EXPENSES

The following example should assist investors in understanding various costs
and expenses incurred as shareholders of a Fund. The assumed 5% annual return
shown in the example is required by regulations of the Securities and Exchange
Commission ("SEC") applicable to all mutual funds. THE EXAMPLE SHOULD NOT BE
CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES
OF A FUND MAY BE MORE OR LESS THAN THOSE SHOWN.

An investor would pay the following expenses, directly or indirectly, on a
$1,000 investment in the Fund, assuming a 5% annual return.

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Class Y......................................... $ 9 $28 $49 $110
<CAPTION>
GROWTH FUND
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Class Y......................................... $ 9 $29 $51 $113
</TABLE>

ASSUMPTIONS MADE IN THE EXAMPLES

Reinvestment of all dividends and distributions; percentage amounts
listed under "Annual Fund Operating Expenses" remain the same for years
shown.

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Prospectus Page 5
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Financial Highlights

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The following table provides investors with data and ratios for one Class Y
share of each Fund for each of the periods shown. This information is
supplemented by the financial statements and accompanying notes appearing in
each Fund's Annual Report to Shareholders for the fiscal year ended August 31,
1995 and the report of Ernst & Young LLP, independent auditors, appearing in
each Fund's Annual Report to Shareholders. Both are incorporated by reference
into the Statement of Additional Information. The financial statements and
notes, as well as the information in the table appearing below, have been
audited by Ernst & Young LLP. Further information about each Fund's performance
is also included in the Annual Report to Shareholders, which may be obtained
without charge.

<TABLE>
<CAPTION>
CLASS Y(2)
----------------------------------------------------------------------------------------
GROWTH AND INCOME FUND GROWTH FUND
---------------------------------------- -------------------------------------
FOR THE
FOR THE PERIOD
YEARS ENDED FEBRUARY 12, FOR THE YEARS ENDED
AUGUST 31, 1992+ TO AUGUST 31,++
-------------------------- AUGUST 31, -------------------------------------
1995 1994 1993 1992 1995 1994 1993 1992
------- ------- ------- ------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 20.42 $ 20.86 $ 20.48 $ 20.95 $ 20.22 $ 20.71 $ 16.83 $ 17.50
------- ------- ------- ------- ------- ------- ------- -------
Net investment income... 0.30 0.33 0.33 0.16 0.24 0.03 0.08 0.05
Net realized and
unrealized gains
(losses) from
investment
transactions........... 3.18 (0.40) 0.37 (0.49) 2.10 0.55 4.42 (0.11)
------- ------- ------- ------- ------- ------- ------- -------
Total increase/decrease
from investment
operations............. 3.48 (0.07) 0.70 (0.33) 2.34 0.58 4.50 (0.06)
------- ------- ------- ------- ------- ------- ------- -------
Dividends from net
investment income...... (0.15) (0.34) (0.32) (0.14) -- -- -- (0.01)
Distributions from net
realized gains on
investment
transactions........... (1.21) (0.03) -- -- (0.03) (1.07) (0.62) (0.60)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and
distributions.......... (1.36) (0.37) (0.32) (0.14) (0.03) (1.07) (0.62) (0.61)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 22.54 $ 20.42 $ 20.86 $ 20.48 $ 22.53 $ 20.22 $ 20.71 $ 16.83
======= ======= ======= ======= ======= ======= ======= =======
Total investment
return(1).............. 18.66% (0.31)% 3.44% (1.15)% 11.58% 2.67% 27.26% (0.52)%
======= ======= ======= ======= ======= ======= ======= =======
Ratios/Supplemental
data:
Net assets, end of
period (000's)......... $14,680 $14,690 $17,005 $10,560 $20,948 $30,521 $20,706 $11,581
Expenses to average net
assets................. 0.89% 0.90% 0.86% 0.93%* 0.97%(3) 0.94% 0.95% 1.12%
Net investment income to
average net assets..... 1.39% 1.60% 1.62% 1.56%* 0.53%(3) 0.40% 0.60% 0.38%
Portfolio turnover...... 111.27% 94.32% 36.52% 15.57% 36.10% 24.41% 35.81% 32.49%
</TABLE>
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* Annualized.
+ Commencement of offering of shares.
++ A per share breakdown for Class Y shares has been omitted for the period
August 25, 1991 (commencement of offering of shares) to August 31, 1991 due
to immaterial amounts.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
capital gain distributions at net asset value on the payable date, and a
sale at net asset value on the last day of each period reported. Total
return information for periods less than one year are not annualized.
(2) Formerly Class C shares.
(3) These ratios include non-recurring reorganization expenses of 0.05%.

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Prospectus Page 6
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Investment Objective & Policies
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Investment Philosophy & Process

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The Funds' investment objectives may not be changed without shareholder
approval. Their other investment policies, except where noted, are not
fundamental and may be changed by the Funds' boards of trustees.

GROWTH AND INCOME FUND

The investment objective of Growth and Income Fund is current income and
capital growth. The Fund seeks to achieve this objective by investing primarily
in dividend-paying equity securities believed by Mitchell Hutchins to have the
potential for rapid earnings growth. Normally, Growth and Income Fund invests
at least 65% of its total assets in such equity securities. The Fund may invest
up to 35% of its total assets in equity securities not meeting these selection
criteria, as well as in U.S. government bonds, corporate bonds and money market
instruments, including up to 10% in convertible bonds rated below investment
grade. Up to 25% of the Fund's total assets may be invested in U.S. dollar-
denominated equity securities and bonds of foreign issuers that are traded on
recognized U.S. exchanges or in the U.S. over-the-counter ("OTC") market.

GROWTH FUND

The investment objective of Growth Fund is long-term capital appreciation.
Growth Fund seeks to achieve this objective by investing primarily in equity
securities issued by companies that, in the judgment of Mitchell Hutchins, have
substantial potential for capital growth. Under normal circumstances, at least
65% of the Fund's total assets are invested in equity securities. The Fund may
invest up to 35% of its total assets in U.S. government bonds and in corporate
bonds (including up to 10% in corporate bonds rated below investment grade). Up
to 25% of the Fund's total assets may be invested in U.S. dollar-denominated
equity securities and bonds of foreign issuers that are traded on recognized
U.S. exchanges or in the U.S. OTC market.

* * * *

As with any mutual fund, there can be no assurance that either of these Funds
will achieve its investment objective. Each Fund's net asset value fluctuates
based upon changes in the value of its portfolio securities.

GROWTH AND INCOME FUND

In seeking to balance capital growth with current income, Mitchell Hutchins
follows a disciplined investment process that relies on the Mitchell Hutchins
Equity Research Team and the Mitchell Hutchins Factor Valuation Model. In order
to fulfill the income component, the Fund invests at least 65% of its assets in
dividend-paying stocks.

The Model screens a universe of small-to large-capitalization companies from
ten different business sectors to identify undervalued companies with strong
earnings momentum, that rank well in three measures:

. VALUE: projected dividends, cash flow, earnings and book value;

. MOMENTUM: earnings and price to identify companies that could surprise on the
upside; and

. ECONOMIC SENSITIVITY: to forecast how different equity securities and
industries may perform under various economic scenarios.

The equity securities ranking in the top 20% of the Model's universe are
screened twice a month. Then the Team takes a closer look at those equity
securities that rank higher based on value and momentum. The Equity Research
Team applies traditional analysis and speaks to the management of these
companies, as well as those of their competitors. Based on the Team's findings
in the context of Mitchell Hutchins' economic forecast, the Fund decides
whether to purchase or sell

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Prospectus Page 7
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equity securities. In seeking capital appreciation, the Fund would also invest
in bonds when, for instance, Mitchell Hutchins anticipates that market interest
rates may decline or credit factors or ratings affecting particular issuers may
improve.

GROWTH FUND

In selecting equity securities with the potential for above-average growth in
earnings, cash flow and/or book value that are selling at a reasonable value
relative to that growth, Mitchell Hutchins follows a disciplined investment
process that relies on the Mitchell Hutchins Equity Research Team and combines
a "bottom-up," stock-by-stock approach with the Mitchell Hutchins Factor
Valuation Model. The Fund can invest in companies of large market
capitalizations, medium-sized companies and smaller companies that are
aggressively expanding their businesses. This flexibility allows the Fund to
invest more of its assets in companies that have greater earnings growth
potential regardless of their market capitalizations. When investing in small-
cap companies the Team places more emphasis on the trading volume of the
company's stock.

The Model screens a universe of small to large capitalization companies from
ten different business sectors to identify undervalued companies with strong
earnings momentum, that rank well in three measures.

. VALUE: projected dividends, cash flow, earnings and book value;

. MOMENTUM: earnings and price to identify companies that could surprise on the
upside; and

. ECONOMIC SENSITIVITY: to forecast how different equity securities and
industries may perform under various economic scenarios.

The equity securities ranking in the top 20% of the Model's universe are
screened on a monthly basis. Then the Team takes a closer look at those equity
securities that rank higher based on earnings growth and applies traditional
analysis. The Team may speak to the management of these companies, as well as
those of their competitors. Based on the Team's findings in the context of
Mitchell Hutchins' economic forecast, the Fund decides whether to purchase or
sell equity securities. In seeking capital appreciation, the Fund would also
invest in bonds when, for instance, Mitchell Hutchins anticipates that market
interest rates may decline or credit factors or ratings affecting particular
issuers may improve.

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Prospectus Page 8
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Performance
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Here are the total returns for the Funds. Past results are not a guarantee of
future results.

GROWTH AND INCOME FUND

As Class Y shares
commenced operations
on February 12, 1992,
the 1992 return
represents the period
from February 12,
1992 through
December 31, 1992.
[BAR GRAPH APPEARS HERE]

GROWTH FUND

As Class Y shares
commenced operations
on August 25, 1991,
the 1991 return
represents the period
from August 25, 1991
through December 31,
1991.
[BAR GRAPH APPEARS HERE]

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Prospectus Page 9
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GROWTH AND INCOME FUND

AVERAGE ANNUAL RETURNS
As of August 31, 1995
<TABLE>
<CAPTION>
CLASS Y SHARES
--------------
<S> <C>
Inception Date................................................... 2/12/92
One Year......................................................... 18.66%
Life............................................................. 5.37%
</TABLE>

GROWTH FUND

AVERAGE ANNUAL RETURNS
As of August 31, 1995
<TABLE>
<CAPTION>
CLASS Y SHARES
--------------
<S> <C>
Inception Date................................................... 8/26/91
One Year......................................................... 11.58%
Life............................................................. 10.33%
</TABLE>

PERFORMANCE INFORMATION

The Funds perform a standardized computation of annualized total return and may
show this return in advertisements or promotional materials. Standardized
return shows the change in value of an investment in the Funds as a steady
compound annual rate of return. Actual year-by-year returns fluctuate and may
be higher or lower than standardized return. One-, five- and ten-year periods
will be shown, unless the Fund or Class has been in existence for a shorter
period. Total return calculations assume reinvestment of dividends and other
distributions.

The Funds may use other total return presentations in conjunction with
standardized return. These may cover the same or different periods as those
used for standardized return and may include cumulative returns, average annual
rates, actual year-by-year rates or any combination thereof.

Total return information reflects past performance and does not necessarily
indicate future results. The investment return and principal value of shares of
the Funds will fluctuate. The amount investors receive when selling shares may
be more or less than what they paid. Further information about the Funds'
performance is contained in the Funds' Annual Reports, which may be obtained
without charge by contacting each Fund, your PaineWebber investment executive
or PaineWebber's correspondent firms or by calling toll-free 1-800-647-1568.

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Prospectus Page 10
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The Funds' Investments

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EQUITY SECURITIES include common stocks, preferred stocks and securities that
are convertible into them, including convertible debentures and notes and
common stock purchase warrants and rights. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation. While past
performance does not guarantee future results, common stocks historically have
provided the greatest long-term growth potential in a company. However, their
prices generally fluctuate more than other securities, and reflect changes in a
company's financial condition and in overall market and economic conditions.

Preferred stock has certain fixed-income features, like a bond, but is actually
equity in a company, like common stock. Convertible securities may include
debentures, notes and preferred equity securities, which are convertible into
common stock.

BONDS (including notes and debentures) are used by corporations and governments
to borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Bonds have varying degrees of investment risk and varying levels of sensitivity
to changes in interest rates.

RISKS

Each Fund predominantly invests its assets in equity securities. Following is a
discussion of these risks and other risks that are common to each Fund:

EQUITY SECURITIES. Equity securities historically have shown greater growth
potential than other types of securities. Common stocks generally represent the
riskiest investment in a company. It is possible that investors may lose their
entire investment.

FOREIGN SECURITIES. Each Fund may invest a portion of its assets in U.S.
dollar-denominated securities of foreign companies that are traded on
recognized U.S. exchanges or in the U.S. OTC market. Investing in the
securities of foreign companies involves more risks than investing in
securities of U.S. companies. Their value is subject to economic and political
developments in the countries where the companies operate and to changes in
foreign currency values. Values may also be affected by foreign tax laws,
changes in foreign economic or monetary policies, exchange control regulations
and regulations involving prohibitions on the repatriation of foreign
currencies.

In general, less information may be available about foreign companies than
about U.S. companies, and foreign companies are generally not subject to the
same accounting, auditing and financial reporting standards as are U.S.
companies.

BOND RATINGS. Investment grade bonds are those rated within the four highest
categories by Standard & Poor's, a division of The McGraw Hill Companies
("S&P"), or Moody's Investors Service, Inc. ("Moody's"). Moody's fourth highest
category (Baa) includes securities which, in its opinion, have speculative
features. For example, changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments than is the case for higher-rated debt instruments. The Funds may also
invest in securities that are comparably rated by another ratings agency and in
unrated securities if they are deemed to be of comparable quality. Credit
ratings attempt to evaluate the safety of principal and interest payments and
do not evaluate the volatility of the bond's value or its liquidity. There is a
risk that bonds will be downgraded by rating agencies. The rating agencies may
fail to make timely changes in credit ratings in response to subsequent events,
so that an issuer's current financial condition may be better or worse than the
rating indicates.

INTEREST RATE AND CREDIT RISKS. Interest rate risk is the risk that interest
rates will rise and bond prices will fall, lowering the value of a Fund's bond
investments. Long-term bonds are generally more sensitive to interest rate
changes than short-term bonds. Adverse changes in economic conditions can
affect an issuer's ability to pay principal and interest.

NON-INVESTMENT GRADE (LOWER-RATED) BOND RATINGS. Lower-rated bonds are deemed
by the ratings agencies to be predominantly speculative regarding the issuer's
ability to pay principal and

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Prospectus Page 11
<PAGE>

interest and may involve major risk exposure during adverse economic
conditions. They are also known as "junk bonds." During an economic downturn or
period of rising interest rates, issuers of those securities may experience
financial stress that adversely affects their ability to pay interest and
principal and may increase the possibility of default. Lower-rated bonds are
frequently unsecured by collateral and will not receive payment until more
senior claims are paid in full. The market for lower-rated bonds is thinner and
less active, which may limit the Funds' ability to sell such bonds at a fair
value in response to changes in the economy or financial markets.

Growth and Income Fund can invest up to 10% of total assets in convertible
securities rated as low as B by S&P or Moody's or comparably rated by another
ratings agency.

Growth Fund can invest up to 10% of total assets in bonds and convertible
securities rated as low as B+ by S&P, B1 by Moody's or comparably rated by
another ratings agency.

INVESTMENT TECHNIQUES AND STRATEGIES

HEDGING STRATEGIES. Each of the Funds may use certain strategies designed to
adjust the overall risk of its portfolio of investments. These "hedging"
strategies involve derivative contracts, including options (on securities,
futures and stock indexes) and futures contracts (on stock indexes and interest
rates). In addition, new financial products and risk management techniques
continue to be developed and may be used if consistent with the Funds'
investment objectives and policies. The Statement of Additional Information for
the Funds contains further information on these strategies.

The Funds might not use any hedging strategies, and there can be no assurance
that any strategy used will succeed. If Mitchell Hutchins is incorrect in its
judgment on market values, interest rates or other economic factors in using a
hedging strategy, the Fund may have lower net income and a net loss on the
investment. Each of these strategies involves certain risks, which include:

. the fact that the skills needed to use hedging instruments are different from
those needed to select securities for the Funds,

. the possibility of imperfect correlation, or even no correlation, between
price movements of hedging instruments and price movements of the securities
being hedged,

. possible constraints placed on a Fund's ability to purchase or sell portfolio
investments at advantageous times due to the need for the Fund to maintain
"cover" or to segregate securities, and

. the possibility that the Fund is unable to close out or liquidate its hedged
position.

LENDING PORTFOLIO SECURITIES. Each Fund may lend its securities to qualified
broker-dealers or institutional investors in an amount up to 33 1/3% of that
Fund's total assets. Lending securities enables a Fund to earn additional
income, but could result in a loss or delay in recovering these securities.

DEFENSIVE POSITIONS. When Mitchell Hutchins believes that unusual circumstances
warrant a defensive posture, each Fund may temporarily commit all or any
portion of its assets to cash or money market instruments, including repurchase
agreements. In a typical repurchase agreement, the Fund buys a security and
simultaneously agrees to sell it back at an agreed-upon price and time, usually
no more than seven days after purchase.

OTHER INFORMATION. Growth and Income Fund and Growth Fund each may invest up to
10% of its net assets in illiquid securities. These include certain cover for
OTC options and securities whose disposition is restricted under the federal
securities laws. The Funds do not consider securities that are eligible for
resale pursuant to SEC Rule 144A to be illiquid securities if Mitchell Hutchins
has determined such securities to be liquid, based upon the trading markets for
the securities under procedures approved by the board of trustees.

Each Fund may also purchase bonds on a when-issued basis or may purchase or
sell securities for delayed delivery. A Fund generally would not pay for such
securities or start earning interest on them until they are delivered, but it
would immediately assume the risks of ownership, including the risk of price
fluctuation. Each Fund may invest up to 35% of its total assets in money market
instruments and/or cash for liquidity purposes or pending investment in other
securities.

Each Fund may borrow up to 10% of its total assets for temporary or emergency
purposes. Each Fund may sell securities short "against the box" to defer
realization of gains or losses for tax or other purposes. When a security is
sold against the box, the seller owns the security. Each Fund may enter into
reverse repurchase agreements up to an aggregate value of 5% of its net assets.

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How to Buy Shares
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Class Y shares are sold to eligible investors at the net asset value next
determined after the purchase order is received at PaineWebber's New York City
headquarters or, for purchases by the trustee of the PW SIP, by the Transfer
Agent. No initial or contingent deferred sales charge is imposed, nor are Class
Y shares subject to rule 12b-1 distribution or service fees. The Funds and
Mitchell Hutchins reserve the right to reject any purchase order and to suspend
the offering of the Class Y shares for a period of time. Mitchell Hutchins, the
distributor for each Fund's Class Y shares, has appointed PaineWebber to serve
as the exclusive dealer for each Fund's Class Y shares.

INSIGHT

An investor who purchases $50,000 or more of shares of the mutual funds that
are available to INSIGHT participants (which include the PaineWebber mutual
funds in the Flexible Pricing SystemSM and certain other specified mutual
funds) may take part in INSIGHT, a total portfolio asset allocation program
sponsored by PaineWebber, and thus become eligible to purchase Class Y shares.
INSIGHT offers comprehensive investment services, including a personalized
asset allocation investment strategy using an appropriate combination of funds,
monitoring of investment performance and comprehensive quarterly reports that
cover market trends, portfolio summaries and personalized account information.

Participating in INSIGHT is subject to payment of an advisory fee to
PaineWebber at the maximum annual rate of 1.5% of assets held through the
program (generally charged quarterly in advance), which covers all INSIGHT
investment advisory services and program administration fees. Employees of
PaineWebber and its affiliates are entitled to a 50% reduction in the fee
otherwise payable for participation in INSIGHT. INSIGHT clients may elect to
have their INSIGHT fees charged to their PaineWebber accounts (by the automatic
redemption of money market fund shares) or, if a qualified plan, invoiced.

Please contact your PaineWebber investment executive or PaineWebber
correspondent firm or call 1-800-697-1568 for more information concerning
mutual funds that are available to INSIGHT participants or for other INSIGHT
program information.

PURCHASES BY THE TRUSTEE OF THE PW SIP

The Class Y shares also are offered for sale to the trustee of the PW SIP, a
defined contribution plan sponsored by Paine Webber Group Inc. ("PW Group").
The trustee of the PW SIP purchases and redeems Class Y shares to implement the
investment choices of individual plan participants with respect to their PW SIP
contributions. Individual plan participants should consult the Plan Information
Statement and Summary Plan Description of the PW SIP (collectively the "Plan
Documents") for a description of the procedures and limitations applicable to
making and changing investment choices.

Copies of the Plan Documents are available from the PaineWebber Incorporated
Benefits Department, 1000 Harbor Boulevard, 10th Floor, Weehawken, NJ 07087
(telephone 1-201-902-4444).

As described in the Plan Documents, the average net asset value per share at
which Class Y shares of a Fund are purchased or redeemed by the trustee of the
PW SIP for the accounts of individual participants might be more or less than
the net asset value per share prevailing at the time that such participants
made their investment choices or made their contributions to the PW SIP.

ACQUISITION OF CLASS Y SHARES BY OTHERS

Present holders of Class Y shares of a former Mitchell Hutchins/Kidder, Peabody
("MH/KP") mutual fund who are not current INSIGHT participants may acquire
Class Y shares of a Fund only when those shares are issued in connection with
the reorganization of the MH/KP mutual fund into that Fund. This category
includes former employees of Kidder, Peabody & Co., Incorporated ("Kidder,
Peabody"), their associated accounts, and present and former directors and
trustees of the MH/KP mutual funds.

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How to Sell Shares

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Management

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Dividends and other distributions on Class Y shares of a Fund issued in
connection with a reorganization will be paid in additional Class Y shares at
net asset value, unless the shareholder has requested cash payments. These
holders may not otherwise purchase additional Class Y shares.

Each Fund is authorized to offer Class Y shares to other employee benefit and
retirement plans of PW Group and its affiliates and certain other investment
programs that are sponsored by PaineWebber and that may invest in PaineWebber
mutual funds. At present, however, INSIGHT participants and the PW SIP are the
only purchasers in these two categories.
Investors can sell (redeem) shares at any time. Shares will be sold at the
share price as next calculated after the order is received and accepted. Share
prices are normally calculated at the close of regular trading on the New York
Stock Exchange (currently 4:00 p.m., Eastern time).

Because the Funds incur fixed costs in maintaining shareholder accounts, each
Fund reserves the right to purchase back all Fund shares in any shareholder
account having a net asset value of less than $500. If the Fund elects to do
so, it will notify the shareholder of the opportunity to increase the amount
invested to $500 or more within 60 days of the notice. The Fund will not
purchase back accounts that fall below $500 solely due to a reduction in net
asset value per share.

SALES BY PARTICIPANTS IN PW SIP

The trustee of the PW SIP sells Class Y shares to implement the investment
choices of individual plan participants with respect to their PW SIP
contributions, as described in the Plan Documents referenced under "How to Buy
Shares" above. The price at which Class Y shares are sold by the trustee of the
PW SIP might be more or less than the price per share at the time the
participants made their investment choices.
Each Fund is governed by a board of trustees, which oversees the Fund's
operations. It has appointed Mitchell Hutchins as investment adviser and
administrator responsible for the Fund's operations (subject to the authority
of the board of trustees).

Mitchell Hutchins, located at 1285 Avenue of the Americas, New York, New York,
10019, is the asset management subsidiary of PaineWebber, which is wholly owned
by Paine Webber Group Inc., a publicly owned financial services holding
company. At February 29, 1996, Mitchell Hutchins was adviser or sub-adviser of
32 investment companies with 66 separate portfolios and aggregate assets of
approximately $31.2 billion.

The boards of trustees have determined that brokerage transactions for the
Funds may be conducted through PaineWebber or its affiliates in accordance with
procedures adopted by each Fund's board of trustees.

ABOUT THE INVESTMENT ADVISER

As investment adviser for Growth and Income Fund and Growth Fund, Mitchell
Hutchins makes and implements all investment decisions and supervises all
aspects of each Fund's operations.

Mark A. Tincher has been responsible for the day-to-day management of Growth
and Income Fund since April 1995. Mr. Tincher, a vice president of the Fund, is
a managing director and chief investment officer of equities of Mitchell
Hutchins, responsible for overseeing the management of equity investments. Upon
his arrival at Mitchell Hutchins, Mr. Tincher formed the Mitchell

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PAINEWEBBER GROWTH AND INCOME FUND GROWTH FUND
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Determining the Shares' Net Asset Value

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Hutchins Equity Research Team. Each analyst specializes in different
industries, providing PaineWebber Stock Funds with more leverage. The Equity
Research Team is also assisted by members of Mitchell Hutchins' fixed income
groups, which provide input on market outlook, interest rate forecasts and
other considerations pertaining to domestic equity and fixed income
investments.

From March 1988 to March 1995, Mr. Tincher worked for Chase Manhattan Private
Bank where he was vice president. Before joining Mitchell Hutchins, Mr. Tincher
directed the U.S. funds management and equity research area at Chase and
oversaw the management of all Chase U.S. equity funds (the Vista Funds and
Trust Investment Funds).

Ellen R. Harris has been primarily responsible for the day-to-day portfolio
management of Growth Fund since its inception. Ms. Harris, a vice president of
the Fund, is a managing director of Mitchell Hutchins. Prior to joining
Mitchell Hutchins in 1983 as a portfolio manager, Ms. Harris served as a vice
president and portfolio manager at American General Capital Management (now
American Capital Management).

Mitchell Hutchins personnel may engage in securities transactions for their own
accounts pursuant to a code of ethics that establishes procedures for persons
investing and restricts certain transactions.

MANAGEMENT FEES & OTHER EXPENSES

The Funds pay Mitchell Hutchins a monthly fee for its services. For the most
recently ended fiscal year, the Funds paid advisory fees at the annual rate (as
a percentage of average daily net assets) of 0.70% for Growth and Income Fund
and 0.75% for Growth Fund. The management fees paid by Growth Fund are higher
than those paid by most other mutual funds. However, Mitchell Hutchins believes
that these fees are comparable to the management fees paid by other funds with
similar investment objectives and policies.

Each Fund also pays PaineWebber an annual fee of $4.00 per active shareholder
account held at PaineWebber for certain services not provided by the Transfer
Agent.

The net asset value of each Fund's shares fluctuates and is determined
separately for each Class as of the close of regular trading on the New York
Stock Exchange (currently 4:00 p.m., Eastern time) each Business Day. A
"Business Day" is any day, Monday through Friday, on which the New York Stock
Exchange is open for business. Each Fund's net asset value per share is
determined by dividing the value of the securities held by the Fund, plus any
cash or other assets, minus all liabilities, by the total number of Fund shares
outstanding.

Each Fund values its assets based on their current market value when market
quotations are readily available. If that value is not readily available,
assets are valued at fair value as determined in good faith by or under the
direction of its board of trustees. The amortized cost method of valuation
generally is used to value debt obligations with 60 days or less remaining to
maturity, unless a Fund's board of trustees determines that this does not
represent fair value. It should be recognized that judgment plays a greater
role in valuing lower rated corporate bonds because there is less reliable,
objective data available.

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Prospectus Page 15
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PAINEWEBBER GROWTH AND INCOME FUND GROWTH FUND
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Dividends & Taxes

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DIVIDENDS

Growth Fund pays an annual dividend and Growth and Income Fund pays a semi-
annual dividend from net investment income and net short-term capital gain, if
any. Each Fund also distributes annually substantially all of its net capital
gain (the excess of net long-term capital gain over net short-term capital
loss), if any. Each Fund may make additional distributions, if necessary, to
avoid a 4% excise tax on certain undistributed income and capital gain.

Dividends and other distributions paid on Class Y shares of the Funds are
calculated at the same time and in the same manner as dividends and
distributions of other classes of shares.

Each Fund's dividends and capital gain distributions are paid in additional
Fund shares of the same class at net asset value, unless the shareholder has
requested cash payments. Shareholders who wish to receive dividends and other
distributions in cash, either mailed to the shareholder by check or credited to
the shareholder's PaineWebber account, should contact their investment
executives at PaineWebber or one of its correspondent firms. For PW SIP
participants, the Fund's Class Y dividends and distributions are paid in
additional Class Y shares at net asset value unless the transfer agent is
instructed otherwise.

TAXES

Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Internal Revenue Code so that it will not have to
pay Federal income tax on that part of its investment company taxable income
(generally consisting of net investment income and net short-term capital gain)
and net capital gain that it distributes to its shareholders.

Dividends from each Fund's investment company taxable income (whether paid in
cash or additional shares) are generally taxable to shareholders as ordinary
income. Distributions of the Funds' net capital gain (whether paid in cash or
additional shares) are taxable to shareholders as a long-term capital gain,
regardless of how long they have held their Fund shares. Shareholders who are
not subject to tax on their income generally will not be required to pay tax on
distributions.

Qualified profit-sharing plans such as the PW SIP generally pay no Federal
income tax. Individual participants in the PW SIP should consult the plan
documents and their own tax advisers for information on the tax consequences of
participating in the PW SIP.

YEAR-END TAX REPORTING

Following the end of each calendar year, each Fund notifies its shareholders of
the dividends and capital gain distributions paid (or deemed paid) by a Fund
that year and any portion of those dividends that qualify for special tax
treatment.

WITHHOLDING REQUIREMENTS

Each Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to individuals and certain other
non-corporate shareholders who do not provide the Funds with a correct taxpayer
identification number. Withholding from dividends and capital gain
distributions at that rate is also required for shareholders who otherwise are
subject to backup withholding.

TAXES ON THE SALE OF FUND SHARES

When shareholders sell (redeem) shares, it may result in a taxable gain or
loss. This depends upon whether the shareholders receive more or less than
their adjusted basis for the shares. In addition, if a Fund's shares are bought
within 30 days before or after selling other shares of the Fund (regardless of
class) at a loss, all or a portion of that loss will not be deductible and will
increase the basis of the newly purchased shares.

* * * *

Because the foregoing only summarizes some of the important tax considerations
affecting the Funds and their shareholders, a further discussion is contained
in the Statement of Additional Information. Prospective shareholders are urged
to consult their tax advisers.

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Prospectus Page 16
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PAINEWEBBER GROWTH AND INCOME FUND GROWTH FUND
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General Information

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ORGANIZATION

GROWTH AND INCOME FUND

Growth and Income Fund is a diversified series of PaineWebber America Fund, an
open-end management investment company which was formed on October 31, 1986 as
a business trust under the laws of the Commonwealth of Massachusetts. The
trustees have authority to issue an unlimited number of shares of beneficial
interest of separate series, par value $0.001 per share.

GROWTH FUND

Growth Fund is a diversified series of PaineWebber Olympus Fund, an open-end
management investment company which was formed on October 31, 1986 as a
business trust under the laws of the Commonwealth of Massachusetts. The
trustees have authority to issue an unlimited number of shares of beneficial
interest of separate series, par value $0.001 per share.

The shares of each Fund are divided into four classes, designated Class A
shares, Class B shares, Class C shares and Class Y shares. Each Class
represents an interest in the respective Fund's investment portfolio and has
similar rights, privileges and preferences. However, each class may differ with
respect to sales charges, if any, distribution and/or service fees, if any,
other expenses allocable exclusively to each class, voting rights on matters
exclusively affecting that class, and its exchange privilege, if any. The
different sales charges and other expenses applicable to the different classes
of shares of the Funds will affect the performance of those classes.

Each share of a Fund is entitled to participate equally in dividends, other
distributions and the proceeds of any liquidation of that Fund. However, due to
the differing expenses of the classes, dividends on the other classes are
likely to be lower than for the Class Y shares.

More information concerning Class A, Class B and Class C shares of the Funds
may be obtained from a PaineWebber investment executive or correspondent firm
or by calling 1-800-647-1568.

Although each Fund is offering only its own shares, it is possible that a Fund
might become liable for a misstatement in the Prospectus about the other Fund.

VOTING RIGHTS

Shareholders of each Fund are entitled to one vote for each full share held and
fractional votes for fractional shares held. Voting rights are not cumulative
and, as a result, the holders of more than 50% of all the shares of any Trust
may elect all of the trustees of that Trust. The shares of the different
Classes of a Fund will be voted together except and except that only the
shareholders of a particular Class of a Fund are required to vote on matters
affecting only that Class, such as the terms of a plan as it relates to the
Class.

SHAREHOLDER MEETINGS

The Funds do not intend to hold annual meetings.

Shareholders of record of no less than two-thirds of the outstanding shares of
a Trust may remove a trustee through a declaration in writing or by vote cast
in person or by proxy at a meeting called for that purpose. A meeting will be
called to vote on the removal of a trustee at the written request of holders of
10% of a Trust's outstanding shares.

REPORTS TO SHAREHOLDERS

Each Fund sends Fund shareholders audited annual and unaudited semi-annual
reports, each of which includes a list of the investment securities held by
that Fund as of the end of the period covered by the report. The Statement of
Additional Information, which is incorporated herein by reference, is available
to shareholders upon request.

CUSTODIAN & RECORDKEEPING AGENT; TRANSFER & DIVIDEND AGENT

State Street Bank and Trust Company, located at One Heritage Drive, North
Quincy, Massachusetts 02171, serves as each Fund's custodian and recordkeeping
agent. PFPC Inc., a subsidiary of PNC Bank, N.A., serves as the Funds' transfer
and dividend disbursing agent. It is located at 400 Bellevue Parkway,
Wilmington, DE 19809.

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Prospectus Page 17
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PaineWebber Growth and Income Fund
PaineWebber Growth Fund

Class Y Shares
Prospectus -- May 1, 1996
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.PAINEWEBBER BOND FUNDS

High Income Fund
Investment Grade Income Fund
Low Duration U.S. Government Income Fund
Strategic Income Fund
U.S. Government Income Fund

.PAINEWEBBER TAX-FREE BOND FUNDS

California Tax-Free Income Fund
Municipal High Income Fund
National Tax-Free Income Fund
New York Tax-Free Income Fund

.PAINEWEBBER ASSET ALLOCATION FUNDS

Balanced Fund
Tactical Allocation Fund

.PAINEWEBBER GROWTH FUNDS

Capital Appreciation Fund
Financial Services Growth Fund
Growth Fund
Growth and Income Fund
Small Cap Value Fund
Utility Income Fund

.PAINEWEBBER GLOBAL FUNDS

Global Equity Fund
Global Income Fund
Emerging Markets Equity Fund

.PAINEWEBBER MONEY MARKET FUNDS

A prospectus containing more complete information for any of these funds,
including charges and expenses, can be obtained from a PaineWebber investment
executive or correspondent firm. Please read it carefully before investing. It
is important you have all the information you need to make a sound investment
decision.

(R) 1996 PaineWebber Incorporated