PAINEWEBBER AMERICA FUND /NY/, 497, 1998-05-26

PAINEWEBBER AMERICA FUND /NY/
497, 1998-05-26

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<PAGE>
PaineWebber Growth and Income Fund
PaineWebber Growth Fund
PaineWebber Small Cap Fund

1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019
PROSPECTUS -- DECEMBER 1, 1997, AS REVISED DECEMBER 23, 1997

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

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

A Statement of Additional Information dated December 1,
1997 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. In addition, the Commission
maintains a website (http://www.sec.gov) that contains the
Statement of Additional Information, material incorporated
by reference, and other information regarding registrants
that file electronically with the Commission.

THE PAINEWEBBER FAMILY OF MUTUAL FUNDS

The PaineWebber Family of Mutual Funds consists of six
broad categories, which are presented here. Generally,
investors seeking to maximize return must assume greater
risk. The Funds in this Prospectus are all in the STOCK
FUNDS category.

<TABLE>
<S> <C>
/ / MONEY MARKET FUND for income and / / ASSET ALLOCATION FUNDS for high
stability by investing in high- quality, total return by investing in stocks
short-term investments. and bonds.
/ / BOND FUNDS for income by investing / / STOCK FUNDS for long-term growth by
mainly in bonds. investing mainly in equity securities.

/ / TAX-FREE BOND FUNDS for income exempt / / GLOBAL FUNDS for long-term growth by
from federal income tax and, in some investing mainly in foreign stocks or
cases, state and local income taxes, high current income by investing
by investing in municipal bonds. mainly in global debt instruments.
</TABLE>

A complete listing of the PaineWebber Family of Mutual
Funds is found on the back cover of this Prospectus.

INVESTORS SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR
REFERRED TO IN THIS PROSPECTUS. THE FUNDS AND THEIR
DISTRIBUTOR HAVE NOT AUTHORIZED ANYONE TO PROVIDE
INVESTORS WITH INFORMATION THAT IS DIFFERENT. THE
PROSPECTUS IS NOT AN OFFER TO SELL SHARES OF THE FUNDS IN
ANY JURISDICTION WHERE THE FUNDS OR THEIR DISTRIBUTOR MAY
NOT LAWFULLY SELL THOSE SHARES.

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

----------------
Prospectus Page 1
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
The Funds at a Glance................... 3

Expense Table........................... 5

Financial Highlights.................... 8

Investment Objectives & Policies........ 18

Investment Philosophy & Process......... 18

Performance............................. 20

The Funds' Investments.................. 23

Flexible Pricing SM..................... 25

How to Buy Shares....................... 29

How to Sell Shares...................... 30

Other Services.......................... 31

Management.............................. 31

Determining the Shares' Net Asset
Value................................. 34

Dividends & Taxes....................... 34

General Information..................... 35
</TABLE>

--------------------
Prospectus Page 2
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

THE FUNDS AT A GLANCE
- --------------------------------------------------------------------------------

The Funds (each a 'Fund') offered by this Prospectus are not intended to provide
a complete 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.

GROWTH AND INCOME FUND

GOAL: To increase the value of your investment by investing primarily in
dividend-paying equity securities believed to have 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 total 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; the investment
is not guaranteed.

SIZE: On October 31, 1997, the Fund had over $1.0 billion in net assets.

GROWTH FUND

GOAL: To increase the value of your investment by investing primarily in equity
securities of companies believed to have 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 10% of its total 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; the
investment is not guaranteed.

SIZE: On October 31, 1997, the Fund had over $370.6 million in net assets.

SMALL CAP FUND

GOAL: To increase the value of your investment by investing primarily in equity
securities of small capitalization ('small cap') companies.

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.
Small cap companies typically are subject to a greater degree of change in
earnings and business prospects than are larger, more established companies. In
addition, equity securities of small cap companies may be less liquid and more
volatile than those of larger companies. The Fund may also invest up to 10% of
its total 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; the investment is not guaranteed.

SIZE: On October 31, 1997, the Fund had over $128.2 million in net assets.

MANAGEMENT

Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'), an asset
management subsidiary of PaineWebber Incorporated ('PaineWebber'), is the
investment adviser and administrator of each Fund.

MINIMUM INVESTMENT

To open an account, investors need $1,000; to add to an account, investors need
only $100.

--------------------
Prospectus Page 3
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

THE FUNDS AT A GLANCE
(Continued)
- --------------------------------------------------------------------------------

WHO SHOULD INVEST

GROWTH AND INCOME FUND is designed for investors seeking current income and
capital growth through investment primarily in 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 larger, more established companies
believed to be undervalued and to have potential for rapid earnings growth. 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 designed 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 primarily in large, medium and small companies believed to have
greater capital growth potential. In addition, Growth Fund can invest in high
yield, high risk bonds and convertible securities. 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.

SMALL CAP FUND is designed for investors who are seeking long-term capital
appreciation through investments primarily in equity securities of small cap
U.S. companies and foreign companies that are traded in the United States. Small
Cap Fund seeks to invest in small cap companies believed to be undervalued and
to have strong earnings momentum. Several statistical studies have been
published indicating that the historical long-term returns of small cap equity
securities have been higher than those of large cap equity securities. Equity
securities of small cap companies generally exhibit greater market volatility
than is the case with equity securities of larger companies, or equity
securities in general. In addition, Small Cap 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, Small Cap Fund is designed for investors who are able to bear the

risks and fluctuations associated with investment in smaller companies.

HOW TO PURCHASE SHARES OF THE FUNDS

Investors may select among these classes of shares:

CLASS A SHARES

The price is the net asset value plus the initial sales charge; the maximum
sales charge is 4.5% of the public offering price. Although investors pay an
initial sales charge when they buy Class A shares, the ongoing expenses for this
class are lower than the ongoing expenses of Class B and Class C shares.

CLASS B SHARES

The price is the net asset value. Investors do not pay an initial sales charge
when they buy Class B shares. As a result, 100% of their purchase is immediately
invested. However, Class B shares have higher ongoing expenses than Class A
shares. Depending upon how long they own the shares, investors may have to pay a
sales charge when they sell Class B shares. This is called a 'contingent
deferred sales charge' and applies when investors sell their Class B shares
within six years after purchase. After six years, Class B shares convert to
Class A shares, which have lower ongoing expenses and no contingent deferred
sales charge.

CLASS C SHARES

The price is the net asset value. Investors do not pay an initial sales charge
when they buy Class C shares. As a result, 100% of their purchase is immediately
invested. However, Class C shares have higher ongoing expenses than Class A
shares. A contingent deferred sales charge of 1% is charged on shares sold
within one year of purchase. Class C shares never convert to any other class of
shares.

CLASS Y SHARES

Class Y shares are offered only to limited groups of investors. The price is the
net asset value. Investors do not pay an initial sales charge when they buy
Class Y shares. As a result, 100% of their purchase is immediately invested.
Investors also do not pay a contingent deferred sales charge when they sell
Class Y shares. Class Y shares have lower ongoing expenses than any other class
of shares.

--------------------
Prospectus Page 4
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

EXPENSE TABLE
- --------------------------------------------------------------------------------

The following tables are intended to assist investors in understanding the

expenses associated with investing in each class of shares of the Funds.
Expenses shown below represent those incurred for the most recent fiscal year.

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS Y
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Maximum Sales Charge on Purchases of Shares (as a
% of offering price)............................ 4.50% None None None
Sales Charge on Reinvested Dividends (as a % of
offering price)................................... None None None None
Maximum Contingent Deferred Sales Charge (as a %
of offering price or net asset value at the time
of sale, whichever is less)..................... None 5% 1% None
Exchange Fee...................................... None None None None
ANNUAL FUND OPERATING EXPENSES (as a % of average
net assets)
GROWTH AND INCOME FUND
Management Fees................................... 0.70% 0.70% 0.70% 0.70%
12b-1 Fees........................................ 0.23 1.00 1.00 None
Other Expenses.................................... 0.22 0.23 0.22 0.18
-------- -------- -------- --------
Total Operating Expenses.......................... 1.15% 1.93% 1.92% 0.88%
-------- -------- -------- --------
-------- -------- -------- --------
GROWTH FUND
Management Fees................................... 0.75% 0.75% 0.75% 0.75%
12b-1 Fees........................................ 0.23 1.00 1.00 None
Other Expenses.................................... 0.29 0.31 0.32 0.25
-------- -------- -------- --------
Total Operating Expenses.......................... 1.27% 2.06% 2.07% 1.00%
-------- -------- -------- --------
-------- -------- -------- --------
SMALL CAP FUND
Management Fees................................... 1.00% 1.00% 1.00% 1.00%
12b-1 Fees........................................ 0.25 1.00 1.00 None
Other Expenses.................................... 0.75 0.75 0.77 0.72
-------- -------- -------- --------
Total Operating Expenses.......................... 2.00% 2.75% 2.77% 1.72%
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>

- ------------------

CLASS A SHARES: Sales charge waivers and a reduced sales charge purchase plan
are available. Purchases of $1 million or more are not subject to an initial
sales charge. However, if an investor sells these shares within one year after
purchase, a contingent deferred sales charge of 1% of the offering price or the
net asset value of the shares at the time of sale, whichever is less, is
imposed.
CLASS B SHARES: Sales charge waivers are available. The maximum 5% contingent
deferred sales charge applies to sales of shares during the first year after

purchase. The charge generally declines by 1% annually, reaching zero after six
years.
CLASS C SHARES: If an investor sells these shares within one year after
purchase, a contingent deferred sales charge of 1% of the offering price or the
net asset value of the shares at the time of sale, whichever is less, is
imposed.
CLASS Y SHARES: No initial or contingent deferred sales charge is imposed, nor
are Class Y shares subject to 12b-1 distribution or service fees. Class Y shares
may be purchased by participants in certain investment programs that are
sponsored by PaineWebber and that may invest in PaineWebber mutual funds ('PW
Programs'), when Class Y shares are purchased through that PW Program.
Participation in a PW Program is subject to an advisory fee at an annual rate of
no more than 1.5% of assets held through that PW Program. This account charge is
not included in the table because investors who are not PW Program participants
also are permitted to purchase Class Y shares.

--------------------
Prospectus Page 5
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

EXPENSE TABLE
(Continued)
- --------------------------------------------------------------------------------

12b-1 distribution fees are asset-based sales charges. Long-term Class B and
Class C shareholders may pay more in direct and indirect sales charges
(including 12b-1 distribution fees) than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. 12b-1 fees have two components, as follows:

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
12b-1 service fees...................... 0.23% 0.25% 0.25% None
12b-1 distribution fees................. None 0.75 0.75 None

GROWTH FUND
12b-1 service fees...................... 0.23% 0.25% 0.25% None
12b-1 distribution fees................. None 0.75 0.75 None

SMALL CAP FUND
12b-1 service fees...................... 0.25% 0.25% 0.25% None
12b-1 distribution fees................. None 0.75 0.75 None
</TABLE>

The 12b-1 fees for Class A shares of Growth and Income Fund and Growth Fund
reflect a blended annual rate of the Fund's average daily net assets of 0.25%
and 0.15%, representing shares sold on or after December 2, 1988 and shares sold
prior to that date, respectively.

For more information, see 'Management' and 'Flexible Pricing SM.'

EXAMPLES OF EFFECT OF FUND EXPENSES

The following examples should assist investors in understanding various costs
and expenses incurred as shareholders of a Fund. The assumed 5% annual return
shown in the examples is required by regulations of the Securities and Exchange
Commission ('SEC') applicable to all mutual funds. THESE EXAMPLES 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, directly or indirectly, pay the following expenses on a
$1,000 investment in a Fund, assuming a 5% annual return:

GROWTH AND INCOME FUND

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................. $ 56 $80 $ 105 $178
Class B (Assuming sale of all shares at
end of period)........................ $ 70 $91 $ 124 $187
Class B (Assuming no sale of shares).... $ 20 $61 $ 104 $187
Class C (Assuming sale of all shares at
end of period)........................ $ 30 $60 $ 104 $224
Class C (Assuming no sale of shares).... $ 20 $60 $ 104 $224
Class Y................................. $ 9 $28 $ 49 $108
</TABLE>

GROWTH FUND

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................. $ 57 $83 $ 112 $191
Class B (Assuming sale of all shares at
end of period)........................ $ 71 $95 $ 131 $200
Class B (Assuming no sale of shares).... $ 21 $65 $ 111 $200
Class C (Assuming sale of all shares at
end of period)........................ $ 31 $65 $ 111 $240
Class C (Assuming no sale of shares).... $ 21 $65 $ 111 $240
Class Y................................. $ 10 $32 $ 55 $122
</TABLE>

--------------------
Prospectus Page 6
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

EXPENSE TABLE
(Continued)
- --------------------------------------------------------------------------------

SMALL CAP FUND

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................. $ 64 $ 105 $ 148 $267
Class B (Assuming sale of all shares at
end of period)........................ $ 78 $ 115 $ 165 $274
Class B (Assuming no sale of shares).... $ 28 $ 85 $ 145 $274
Class C (Assuming sale of all shares at
end of period)........................ $ 38 $ 86 $ 146 $310
Class C (Assuming no sale of shares).... $ 28 $ 86 $ 146 $310
Class Y................................. $ 17 $ 54 $ 93 $203
</TABLE>

ASSUMPTIONS MADE IN THE EXAMPLES
o ALL CLASSES: Reinvestment of all dividends and other distributions;
percentage amounts listed under 'Annual Fund Operating Expenses' remain the
same for years shown.
o CLASS A SHARES: Deduction of the maximum 4.5% initial sales charge at the
time of purchase.
o CLASS B SHARES: Deduction of the maximum applicable contingent deferred sales
charge at the time of redemption, which declines over a period of six years.
Ten-year figures assume that Class B shares convert to Class A shares at the
end of the sixth year.
o CLASS C SHARES: Deduction of a 1% contingent deferred sales charge for sales
of shares within one year of purchase.

--------------------
Prospectus Page 7
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

GROWTH AND INCOME FUND

The financial statements and notes, as well as the information for each of the
five years in the period ended August 31, 1997 appearing in the following
tables, have been audited by Ernst & Young LLP, independent auditors. Further
information about the Fund's performance is also included in the Annual Report
to Shareholders, which may be obtained without charge by calling 1-800-647-1568.
Information shown below for periods prior to the year ended August 31, 1993 has
also been audited by Ernst & Young LLP, independent auditors, whose reports
thereon were unqualified.

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
-------------------------------------------------------------------------------------------------------------
CLASS A
-------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 24.35 $ 22.52 $ 20.43 $ 20.86 $ 20.48 $ 19.26 $ 15.87 $ 16.50 $ 13.32 $ 18.06
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Net investment
income........... 0.23 0.22 0.24 0.28 0.28 0.24 0.19 0.51 0.49 0.60
Net realized and
unrealized gains
(losses) from
investments...... 9.29 3.46 3.18 (0.41) 0.37 1.25 3.50 (0.61) 3.17 (2.36)
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Total increase
(decrease) from
investment
operations....... 9.52 3.68 3.42 (0.13) 0.65 1.49 3.69 (0.10) 3.66 (1.76)
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Dividends from
investment
income........... (0.25) (0.34) (0.12) (0.27) (0.27) (0.27) (0.30) (0.53) (0.48) (0.88)
Distributions from
net realized
gains on
investment
transactions..... (3.02) (1.51) (1.21) (0.03) -- -- -- -- -- (2.10)
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Total dividends
and distributions
to
shareholders..... (3.27) (1.85) (1.33) (0.30) (0.27) (0.27) (0.30) (0.53) (0.48) (2.98)
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Net asset value,
end of period.... $ 30.60 $ 24.35 $ 22.52 $ 20.43 $ 20.86 $ 20.48 $ 19.26 $ 15.87 $ 16.50 $ 13.32
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------

Total investment
return (1)....... 42.42% 17.40% 18.30% (0.58)% 3.15% 7.78% 23.62% (0.72)% 28.03% (10.73)%
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Ratios/Supplemental
data:
Net assets, end of
period (000's)... $441,699 $276,016 $187,057 $222,432 $359,073 $358,643 $232,555 $58,649 $61,617 $62,917
Expenses to
average net
assets**......... 1.15% 1.20%(2) 1.19% 1.20% 1.13% 1.22% 1.42% 1.41% 1.41% 1.26%
Net investment
income to average
net assets**..... 0.88% 0.98%(2) 1.07% 1.29% 1.33% 1.26% 1.79% 3.11% 3.26% 4.24%
Portfolio turnover
rate............. 70% 112% 111% 94% 37% 16% 52% 32% 79% 89%
Average commission
rate paid (3).... $ 0.0598 $ 0.0598 -- -- -- -- -- -- -- --
</TABLE>

- ------------------

<TABLE>
<S> <C>
* Annualized.
** During certain periods presented, PaineWebber/Mitchell Hutchins waived
fees or reimbursed the Fund for portions of its operating expenses. If
such waivers or reimbursements had not been made for the Class A
shares, the annualized ratio of expenses to average net assets and the
annualized ratio of net investment income to average net assets would
have been 1.65% and 3.02%, respectively, for the year ended August 31,
1989 and 1.36% and 4.14%, respectively, for the year ended August 31,
1988.
+ Commencement of offering of shares.
(1) Total investment return is calculated assuming a $1,000 investment on
the first day of each period reported, reinvestment of all dividends
and other distributions at net asset value on the payable dates and a
sale at net asset value on the last day of each period reported. The
figures do not include sales charges; results for Class A, Class B and
Class C shares would be lower if sales charges were included. Total
investment return information for periods of less than one year has
not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
(3) Effective for fiscal years beginning on or after September 1, 1995,
the Fund is required to disclose the average commission rate paid per
share of common stock investments purchased or sold.
</TABLE>

--------------------
Prospectus Page 8
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

FINANCIAL HIGHLIGHTS
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
- -------------------------------------------------------------------------------------------------------
CLASS B
- -------------------------------------------------------------------------------------------------------
FOR THE
PERIOD
JULY 1,
FOR THE YEARS ENDED AUGUST 31, 1991+ TO
- ------------------------------------------------------------------------------------------ AUGUST 31,
1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 24.26 $ 22.37 $ 20.37 $ 20.78 $ 20.41 $ 19.23 $ 18.04
-------- -------- -------- -------- -------- -------- ----------
Net investment
income........... 0.04 0.04 0.06 0.10 0.12 0.13 0.02
Net realized and
unrealized gains
(losses) from
investments...... 9.23 3.45 3.18 (0.37) 0.36 1.20 1.17
-------- -------- -------- -------- -------- -------- ----------
Total increase
(decrease) from
investment
operations....... 9.27 3.49 3.24 (0.27) 0.48 1.33 1.19
-------- -------- -------- -------- -------- -------- ----------
Dividends from
investment
income........... (0.05) (0.09) (0.03) (0.11) (0.11) (0.15) --
Distributions from
net realized
gains on
investment
transactions..... (3.02) (1.51) (1.21) (0.03) -- -- --
-------- -------- -------- -------- -------- -------- ----------
Total dividends
and distributions
to
shareholders..... (3.07) (1.60) (1.24) (0.14) (0.11) (0.15) --
-------- -------- -------- -------- -------- -------- ----------
Net asset value,
end of period.... $ 30.46 $ 24.26 $ 22.37 $ 20.37 $ 20.78 $ 20.41 $ 19.23
-------- -------- -------- -------- -------- -------- ----------
-------- -------- -------- -------- -------- -------- ----------
Total investment
return (1)....... 41.33% 16.49% 17.38% (1.31)% 2.34% 6.99% 6.60%

-------- -------- -------- -------- -------- -------- ----------
-------- -------- -------- -------- -------- -------- ----------
Ratios/Supplementa
data:
Net assets, end of
period (000's)... $376,840 $277,753 $247,543 $289,290 $461,389 $386,275 $ 57,539
Expenses to
average net
assets**......... 1.93% 1.99%(2) 1.97% 1.97% 1.90% 1.97% 2.10%*
Net investment
income to average
net assets**..... 0.11% 0.17%(2) 0.29% 0.51% 0.57% 4.90% 1.18%*
Portfolio turnover
rate............. 70% 112% 111% 94% 37% 16% 52%
Average commission
rate paid (3).... $0.0598 $ 0.0598 -- -- -- -- --

CLASS C
- ------------------------------------------------------------------------------------------
FOR THE
PERIOD
JULY 2,
FOR THE YEARS ENDED AUGUST 31, 1992+ TO
- ------------------------------------------------------------------------------- AUGUST 31,
1997 1996 1995 1994 1993 1992
---------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 24.33 $ 22.43 $ 20.42 $ 20.83 $ 20.47 $ 20.95
---------- ------- ------- ------- ------- ----------
Net investment
income........... 0.05 0.05 0.06 0.11 0.11 0.02
Net realized and
unrealized gains
(losses) from
investments...... 9.24 3.46 3.19 (0.38) 0.37 (0.44)
---------- ------- ------- ------- ------- ----------
Total increase
(decrease) from
investment
operations....... 9.29 3.51 3.25 (0.27) 0.48 (0.42)
---------- ------- ------- ------- ------- ----------
Dividends from
investment
income........... (0.07) (0.10) (0.03) (0.11) (0.12) (0.06)
Distributions from
net realized
gains on
investment
transactions..... (3.02) (1.51) (1.21) (0.03) -- --
---------- ------- ------- ------- ------- ----------

Total dividends
and distributions
to
shareholders..... (3.09) (1.61) (1.24) (0.14) (0.12) (0.06)
---------- ------- ------- ------- ------- ----------
Net asset value,
end of period.... $ 30.53 $ 24.33 $ 22.43 $ 20.42 $ 20.83 $ 20.47
---------- ------- ------- ------- ------- ----------
---------- ------- ------- ------- ------- ----------
Total investment
return (1)....... 41.30% 16.52% 17.37% (1.29)% 2.35% 2.85%
---------- ------- ------- ------- ------- ----------
---------- ------- ------- ------- ------- ----------
Ratios/Supplementa
data:
Net assets, end of
period (000's)... $ 84,922 $43,148 $30,468 $37,287 $61,869 $ 13,019
Expenses to
average net
assets**......... 1.92% 1.99%(2) 1.98% 1.94% 1.87% 1.73%*
Net investment
income to average
net assets**..... 0.10% 0.18%(2) 0.28% 0.54% 0.61% 0.94%*
Portfolio turnover
rate............. 70% 112% 111% 94% 37% 16%
Average commission
rate paid (3).... $ 0.0598 $0.0598 -- -- -- --
</TABLE>

--------------------
Prospectus Page 9
<PAGE>
------------------------------
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

FINANCIAL HIGHLIGHTS
(Continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
---------------------------------------------------------------------
CLASS Y
---------------------------------------------------------------------
FOR THE
PERIOD

FEBRUARY 12,
FOR THE YEARS ENDED AUGUST 31, 1992+ TO
----------------------------------------------------- AUGUST 31,
1997 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 23.45 $ 22.54 $ 20.42 $ 20.86 $ 20.48 $ 20.95
------- ------- ------- ------- ------- ------------
Net investment income.... 0.32 0.30 0.30 0.33 0.33 0.16
Net realized and
unrealized gains
(losses) from
investments............. 9.26 3.45 3.18 (0.40) 0.37 (0.49)
------- ------- ------- ------- ------- ------------
Total increase (decrease)
from investment
operations.............. 9.58 3.75 3.48 (0.07) 0.70 (0.33)
------- ------- ------- ------- ------- ------------
Dividends from investment
income.................. (0.32) (0.43) (0.15) (0.34) (0.32) (0.14)
Distributions from net
realized gains on
investment
transactions............ (3.02) (1.51) (1.21) (0.03) -- --
------- ------- ------- ------- ------- ------------
Total dividends and
distributions to
shareholders............ (3.34) (1.94) (1.36) (0.37) (0.32) (0.14)
------- ------- ------- ------- ------- ------------
Net asset value, end of
period.................. $ 30.59 $ 24.35 $ 22.54 $ 20.42 $ 20.86 $ 20.48
------- ------- ------- ------- ------- ------------
------- ------- ------- ------- ------- ------------
Total investment
return(1)............... 42.74% 17.77% 18.66% (0.31)% 3.44% (1.15)%
------- ------- ------- ------- ------- ------------
------- ------- ------- ------- ------- ------------

Ratios/supplemental data:
Net assets, end of period
(000's)................. $46,745 $22,942 $14,680 $14,690 $17,005 $ 10,560
Expenses to average net
assets.................. 0.88% 0.92%(2) 0.89% 0.90% 0.86% 0.93%*
Net investment income to
average net assets...... 1.14% 1.26%(2) 1.39% 1.60% 1.62% 1.56%*
Portfolio turnover....... 70% 112% 111% 94% 37% 16%
Average commission rate
paid(3)................. $0.0598 $0.0598 -- -- -- --
</TABLE>

- ------------------

<TABLE>

<S> <C>
* Annualized
+ Commencement of offering of shares.
(1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment
of all dividends and other distributions at net asset value on the payable dates and a sale at net asset value on the
last day of each period reported. Total investment return information for periods of less than one year has not been
annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
(3) Effective for fiscal years beginning on or after September 1, 1995, the Fund is required to disclose the average
commission rate paid per share of common stock investments purchased or sold.
</TABLE>

--------------------
Prospectus Page 10
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

[This page intentionally left blank]

--------------------
Prospectus Page 11

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

FINANCIAL HIGHLIGHTS
(Continued)
- --------------------------------------------------------------------------------

GROWTH FUND

The following tables provide investors with data and ratios for one Class A,
Class B, Class C and Class Y share for each of the periods shown. This
information is supplemented by the financial statements, accompanying notes and
the report of Ernst & Young LLP, independent auditors, which appear in the
Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1997,
and are incorporated by reference into the Statement of Additional Information.
The financial statements and notes, as well as the information for each of the
five years in the period ended August 31, 1997 appearing in the following
tables, have been audited by Ernst & Young LLP, independent auditors. Further
information about the Fund's performance is also included in the Annual Report
to Shareholders, which may be obtained without charge by calling 1-800-647-1568.
Information shown below for periods prior to the year ended August 31, 1993 has
also been audited by Ernst & Young LLP, independent auditors, whose reports
thereon were unqualified.
<TABLE>
<CAPTION>
GROWTH FUND
--------------------------------------------------------
CLASS A
--------------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,

--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 24.37 $ 22.27 $ 20.04 $ 20.60 $ 16.78
-------- -------- -------- -------- --------
Net investment income
(loss).................. (0.08)(4) (0.12) 0.01 -- 0.07
Net realized and
unrealized gains
(losses)
from investment
transactions............ 3.76(4) 4.06 2.25 0.51 4.37
-------- -------- -------- -------- --------
Total increase (decrease)
from investment
operations.............. 3.68 3.94 2.26 0.51 4.44
-------- -------- -------- -------- --------
Dividends from net
investment income....... -- -- -- -- --
Distributions from net
realized gains on
investment transactions
to shareholders......... (2.11) (1.84) (0.03) (1.07) (0.62)
-------- -------- -------- -------- --------
Total dividends and
distributions to
shareholders............ (2.11) (1.84) (0.03) (1.07) (0.62)
-------- -------- -------- -------- --------
Net asset value, end of
period.................. $ 25.94 $ 24.37 $ 22.27 $ 20.04 $ 20.60
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment
return(1)............... 15.85% 18.43% 11.28% 2.33% 26.97%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of period
(000's)................. $201,725 $203,882 $183,958 $141,342 $130,353
Expenses to average net
assets**................ 1.27% 1.28% 1.28%(2) 1.21% 1.22%
Net investment income
(loss) to average net
assets**................ (0.32)% (0.49)% 0.19%(2) 0.06% 0.38%
Portfolio turnover
rate.................... 86% 60% 36% 24% 36%
Average commission rate
paid(3)................. $ 0.0598 $ 0.0598 -- -- --

1992 1991 1990 1989 1988

-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 17.50 $ 13.43 $ 15.57 $ 11.21 $ 15.30
-------- -------- ------- ------- -------
Net investment income
(loss).................. -- 0.02 0.17 0.06 0.13
Net realized and
unrealized gains
(losses)
from investment
transactions............ (0.11) 4.68 (1.16) 4.40 (2.73)
-------- -------- ------- ------- -------
Total increase (decrease)
from investment
operations.............. (0.11) 4.70 (0.99) 4.46 (2.60)
-------- -------- ------- ------- -------
Dividends from net
investment income....... (0.01) (0.17) -- (0.10) (0.08)
Distributions from net
realized gains on
investment transactions
to shareholders......... (0.60) (0.46) (1.15) -- (1.41)
-------- -------- ------- ------- -------
Total dividends and
distributions to
shareholders............ (0.61) (0.63) (1.15) (0.10) (1.49)
-------- -------- ------- ------- -------
Net asset value, end of
period.................. $ 16.78 $ 17.50 $ 13.43 $ 15.57 $ 11.21
-------- -------- ------- ------- -------
-------- -------- ------- ------- -------
Total investment
return(1)............... (0.85)% 37.02% (7.05)% 40.10% (15.37)%
-------- -------- ------- ------- -------
-------- -------- ------- ------- -------
Ratios/Supplemental data:
Net assets, end of period
(000's)................. $102,640 $ 96,796 $72,805 $71,681 $70,551
Expenses to average net
assets**................ 1.43% 1.56% 1.59% 1.37% 1.22%
Net investment income
(loss) to average net
assets**................ 0.00% 0.10% 2.96% 0.14% 0.82%
Portfolio turnover
rate.................... 32% 29% 39% 44% 59%
Average commission rate
paid(3)................. -- -- -- -- --
</TABLE>

- ------------------

* Annualized.
** During certain periods presented, PaineWebber/Mitchell Hutchins waived fees
or reimbursed the Fund for portions of its operating expenses. If such
waivers or reimbursements had not been made for the Class A shares, the
annualized ratio of expenses to average net assets and the annualized ratio
of net investment income (loss) to average net assets would have been 1.76%
and (0.25)%, respectively, for the year ended August 31, 1989, and 1.41% and
0.63%, respectively, for the year ended August 31, 1988.
+ Commencement of offering of shares.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges; results would be lower if sales charges were
included. Total investment return information for periods less than one year
has not been annualized.
(2) These ratios include non-recurring reorganization expenses of 0.06%.
(3) Effective for fiscal years beginning on or after September 1, 1995, the Fund
is required to disclose the average commission rate paid per share of common
stock investments purchased or sold.
(4) Calculated using the average shares outstanding for the year.
</TABLE>

--------------------
Prospectus Page 12
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

FINANCIAL HIGHLIGHTS
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND
----------------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------------
FOR THE
PERIOD
JULY 1,
FOR THE YEARS ENDED AUGUST 31, 1991+ TO
--------------------------------------------------------------------- AUGUST 31,
1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 23.30 $ 21.53 $ 19.53 $ 20.25 $ 16.64 $ 17.48 $15.63
-------- -------- -------- ------- ------- ------- -----
Net investment income
(loss).................. (0.26)(4) (0.39) (0.02) (0.06) (0.05) (0.06) (0.02)
Net realized and
unrealized gains

(losses)
from investment
transactions............ 3.58 (4) 4.00 2.05 0.41 4.28 (0.18) 1.87
-------- -------- -------- ------- ------- ------- -----
Total increase (decrease)
from investment
operations.............. 3.32 3.61 2.03 0.35 4.23 (0.24) 1.85
-------- -------- -------- ------- ------- ------- -----
Dividends from net
investment income....... -- -- -- -- -- -- --
Distributions from net
realized gains on
investment transactions
to shareholders......... (2.11) (1.84) (0.03) (1.07) (0.62) (0.60) --
-------- -------- -------- ------- ------- ------- -----
Total dividends and
distributions to
shareholders............ (2.11) (1.84) (0.03) (1.07) (0.62) (0.60) --
-------- -------- -------- ------- ------- ------- -----
Net asset value, end of
period.................. $ 24.51 $ 23.30 $ 21.53 $ 19.53 $ 20.25 $ 16.64 $17.48
-------- -------- -------- ------- ------- ------- -----
-------- -------- -------- ------- ------- ------- -----
Total investment
return(1)............... 14.98 % 17.48% 10.40% 1.55% 25.91% (1.58)% 11.84%
-------- -------- -------- ------- ------- ------- -----
-------- -------- -------- ------- ------- ------- -----
Ratios/Supplemental data:
Net assets, end of period
(000's)................. $115,529 $140,551 $152,357 $97,272 $60,280 $35,867 $3,804
Expenses to average net
assets**................ 2.06 % 2.06% 2.06%(2) 2.00% 2.02% 2.20% 2.24%*
Net investment income
(loss) to average net
assets**................ (1.12)% (1.27)% (0.60)%(2) (0.66)% (0.46)% (0.70)% (0.81)%*
Portfolio turnover
rate.................... 86 % 60% 36% 24% 36% 32% 29%
Average commission rate
paid(3)................. $ 0.0598 $ 0.0598 -- -- -- -- --

<CAPTION>
CLASS C
--------------------------------------------------------------------
FOR THE
PERIOD
JULY 2,
FOR THE YEARS ENDED AUGUST 31, 1992+ TO
------------------------------------------------------- AUGUST 31,
1997 1996 1995 1994 1993 1992
---------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 23.48 $ 21.68 $ 19.67 $ 20.38 $ 16.75 $17.04
---------- ------- ------- ------- ------- -----

Net investment income
(loss).................. (0.27)(4) (0.34) (0.10) (0.08) (0.06) (0.01)
Net realized and
unrealized gains
(losses)
from investment
transactions............ 3.61(4) 3.98 2.14 0.44 4.31 (0.28)
---------- ------- ------- ------- ------- -----
Total increase (decrease)
from investment
operations.............. 3.34 3.64 2.04 0.36 4.25 (0.29)
---------- ------- ------- ------- ------- -----
Dividends from net
investment income....... -- -- -- -- -- --
Distributions from net
realized gains on
investment transactions
to shareholders......... (2.11) (1.84) (0.03) (1.07) (0.62) --
---------- ------- ------- ------- ------- -----
Total dividends and
distributions to
shareholders............ (2.11) (1.84) (0.03) (1.07) (0.62) --
---------- ------- ------- ------- ------- -----
Net asset value, end of
period.................. $ 24.71 $ 23.48 $ 21.68 $ 19.67 $ 20.38 $16.75
---------- ------- ------- ------- ------- -----
---------- ------- ------- ------- ------- -----
Total investment
return(1)............... 14.95% 17.50% 10.37% 1.59% 25.86% (2.95)%
---------- ------- ------- ------- ------- -----
---------- ------- ------- ------- ------- -----
Ratios/Supplemental data:
Net assets, end of period
(000's)................. $ 24,760 $29,923 $30,608 $28,561 $16,474 $2,275
Expenses to average net
assets**................ 2.07% 2.07% 2.05%(2) 1.98% 2.06% 1.98%*
Net investment income
(loss) to average net
assets**................ (1.13)% (1.28)% (0.57)%(2) (0.65)% (0.69)% (0.65)%*
Portfolio turnover
rate.................... 86% 60% 36% 24% 36% 32%
Average commission rate
paid(3)................. $ 0.0598 $0.0598 -- -- -- --
</TABLE>

--------------------
Prospectus Page 13
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

FINANCIAL HIGHLIGHTS
(Continued)

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
GROWTH FUND
------------------------------------------------------------------------
CLASS Y
------------------------------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year....... $ 24.74 $ 22.53 $ 20.22 $ 20.71 $ 16.83 $ 17.50
------- ------- ------- ------- ------- -------
Net investment income
(loss).................. (0.01)(4) (0.02) 0.24 0.03 0.08 0.05
Net realized and
unrealized gains
(losses)
from investments........ 3.84(4) 4.07 2.10 0.55 4.42 (0.11)
------- ------- ------- ------- ------- -------
Total increase (decrease)
from investment
operations.............. 3.83 4.05 2.34 0.58 4.50 (0.06)
------- ------- ------- ------- ------- -------
Dividends from net
investment income....... -- -- -- -- -- (0.01)
Distributions from net
realized gains on
investment transactions
to shareholders......... (2.11) (1.84) (0.03) (1.07) (0.62) (0.60)
------- ------- ------- ------- ------- -------
Total dividends and
distributions........... (2.11) (1.84) (0.03) (1.07) (0.62) (0.61)
------- ------- ------- ------- ------- -------
Net asset value, end of
year.................... $ 26.46 $ 24.74 $ 22.53 $ 20.22 $ 20.71 $ 16.83
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Total investment
return(1)............... 16.24% 18.72% 11.58% 2.67% 27.26% (0.52)%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Ratios/supplemental data:
Net assets, end of year
(000's)................. $20,281 $21,409 $20,948 $30,521 $20,706 $11,581
Expenses to average net
assets.................. 1.00% 1.02% 0.97%(2) 0.94% 0.95% 1.12%
Net investment income
(loss) to average net
assets.................. (0.05)% (0.23)% 0.53%(2) 0.40% 0.60% 0.38%
Portfolio turnover

rate.................... 86% 60% 36% 24% 36% 32%
Average commission rate
paid(3)................. $0.0598 $0.0598 -- -- -- --
</TABLE>

- ------------------

<TABLE>
<S> <C>
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each year reported.
(2) These ratios include non-recurring acquisition expenses of 0.05%.
(3) Effective for fiscal years beginning on or after September 1, 1995, the Fund
is required to disclose the average commission rate paid per share of common
stock investments purchased or sold.
(4) Calculated using the average shares outstanding for the year.
</TABLE>

--------------------
Prospectus Page 14
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

[This page intentionally left blank]

--------------------
Prospectus Page 15
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

FINANCIAL HIGHLIGHTS
(Continued)
- --------------------------------------------------------------------------------

SMALL CAP FUND

The following table provides investors with data
and ratios for one Class A, Class B, Class C and
Class Y share for each of the periods shown. This
information is supplemented by the financial state-
ments, accompanying notes and the report of Price
Waterhouse LLP, independent accountants, which appear in the Fund's Annual
Report to Shareholders for the fiscal year ended July 31, 1997, and are
incorporated by reference into the Statement of Additional Information. The
financial statements and notes, as well as the information appearing below, have
been audited by Price Waterhouse LLP. Further information about the Fund's
performance is also included in the Annual Report to Shareholders, which may be
obtained without charge by calling 1-800-647-1568.

<TABLE>
<CAPTION>
SMALL CAP FUND
-------------------------------------------------------------
CLASS A
-------------------------------------------------------------
FOR THE FOR THE
FOR THE YEARS PERIOD YEAR
ENDED JULY 31, ENDED ENDED
-------------------------------- JULY 31, JANUARY 31,
1997 1996# 1995 1994+ 1994
------- ------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 10.22 $ 11.30 $ 10.27 $ 10.61 $ 10.00
------- ------- -------- -------- -----------
Net investment income
(loss)...................... (0.14) 0.00@ 0.05 0.02 0.13
Net realized and unrealized
gains (losses) from
investments................. 3.75 0.50@ 1.50 (0.36) 0.62
------- ------- -------- -------- -----------
Net increase (decrease) from
investment operations....... 3.61 0.50 1.55 (0.34) 0.75
------- ------- -------- -------- -----------
Dividends from net investment
income...................... -- -- -- -- (0.12)
Distributions from net
realized gains from
investments................. (0.41) (1.58) (0.52) -- (0.02)
------- ------- -------- -------- -----------
Total dividends and
distributions............... (0.41) (1.58) (0.52) 0.00 (0.14)
------- ------- -------- -------- -----------
Net asset value, end of
period...................... $ 13.42 $ 10.22 $ 11.30 $ 10.27 $ 10.61
------- ------- -------- -------- -----------
------- ------- -------- -------- -----------
Total investment return (1)... 36.11% 4.69% 15.80% (3.20)% 7.58%
------- ------- -------- -------- -----------
------- ------- -------- -------- -----------

Ratios/Supplemental Data:
Net assets, end of period
(000's)..................... $32,968 $30,675 $ 20,494 $ 22,848 $25,226
Expenses to average net
assets...................... 2.00% 2.11% 1.98% 1.91%* 1.75%
Net investment income (loss)
to average net assets....... (1.16)% 0.02% 0.41% 0.41%* 1.41%
Portfolio turnover............ 54% 84% 19% 20% 98%
Average commission rate paid
(2)......................... $0.0597 -- -- -- --
</TABLE>

- ------------------

<TABLE>
<S> <C>
* Annualized
+ For the period February 1, 1994 to July 31, 1994.
++ For the period July 26, 1996 (commencement of offering shares) to July 31,
1996.
# Effective April 1, 1996, Mitchell Hutchins took over day-to-day management
of the Fund's assets.
@ Calculated using the average shares outstanding for the period.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the payable dates, and a sale
at net asset value on the last day of each period reported. The figures do
not include sales charges; results for Class A, Class B and Class C shares
would be lower if sales charges were included. Total investment return
information for periods of less than one year has not been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the Fund
is required to disclose the average commission rate paid per share of common
stock investments purchased or sold.
</TABLE>

--------------------
Prospectus Page 16
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

FINANCIAL HIGHLIGHTS
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP FUND
---------------------------------------------------------------
CLASS B
---------------------------------------------------------------
FOR THE
FOR THE YEARS PERIOD FOR THE
ENDED JULY 31, ENDED YEAR ENDED
--------------------------------- JULY 31, JANUARY 31,
1997 1996# 1995 1994+ 1994
------- ------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 9.98 $ 11.15 $ 10.22 $ 10.60 $ 10.00
------- ------- --------- --------- -----------
Net investment income
(loss)...................... (0.23) (0.09)@ (0.04) (0.02) 0.06
Net realized and unrealized
gains (losses) from

investments................. 3.66 0.50@ 1.49 (0.36) 0.62
------- ------- --------- --------- -----------
Net increase (decrease) from
investment operations....... 3.43 0.41 1.45 (0.38) 0.68
------- ------- --------- --------- -----------
Dividends from net investment
income...................... -- -- -- -- (0.06)
Distributions from net
realized gains from
investments................. (0.41) (1.58) (0.52) -- (0.02)
------- ------- --------- --------- -----------
Total dividends and
distributions............... (0.41) (1.58) (0.52) 0.00 (0.08)
------- ------- --------- --------- -----------
Net asset value, end of
period...................... $ 13.00 $ 9.98 $ 11.15 $ 10.22 $ 10.60
------- ------- --------- --------- -----------
------- ------- --------- --------- -----------
Total investment return (1)... 35.16% 3.90% 14.86% (3.58)% 6.81%
------- ------- --------- --------- -----------
------- ------- --------- --------- -----------

Ratios/Supplemental Data:
Net assets, end of period
(000's)..................... $40,749 $36,612 $46,142 $52,624 $59,993
Expenses to average net
assets...................... 2.75% 2.90% 2.74% 2.69%* 2.50%
Net investment income (loss)
to average net assets....... (1.91)% (0.78)% (0.35)% (0.37)%* 0.67%
Portfolio turnover............ 54% 84% 19% 20% 98%
Average commission rate paid
(2)......................... $0.0597 -- -- -- --

CLASS C CLASS Y
-------------------------------------------------------------- -----------------------
FOR THE FOR THE FOR THE
FOR THE YEARS PERIOD FOR THE YEAR PERIOD
ENDED JULY 31, ENDED YEAR ENDED ENDED ENDED
-------------------------------- JULY 31, JANUARY 31, JULY 31, JULY 31,
1997 1996# 1995 1994+ 1994 1997 1996++
------- ------- --------- --------- ----------- --------- ---------

<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 9.97 $ 11.14 $ 10.22 $ 10.59 $ 10.00 $ 10.21 $ 10.23
------- ------- --------- --------- ----------- --------- ---------
Net investment income
(loss)...................... (0.24) (0.08)@ (0.05) (0.02) 0.06 (0.11) 00.0@
Net realized and unrealized
gains (losses) from
investments................. 3.66 0.49@ 1.49 (0.35) 0.62 3.77 (0.02)@
------- ------- --------- --------- ----------- --------- ---------

Net increase (decrease) from
investment operations....... 3.42 0.41 1.44 (0.37) 0.68 3.66 (0.02)
------- ------- --------- --------- ----------- --------- ---------
Dividends from net investment
income...................... -- -- -- -- (0.07) -- --
Distributions from net
realized gains from
investments................. (0.41) (1.58) (0.52) -- (0.02) (0.41) --
------- ------- --------- --------- ----------- --------- ---------
Total dividends and
distributions............... (0.41) (1.58) (0.52) 0.00 (0.09) (0.41) 0.00
------- ------- --------- --------- ----------- --------- ---------
Net asset value, end of
period...................... $ 12.98 $ 9.97 $ 11.14 $ 10.22 $ 10.59 $ 13.46 $ 10.21
------- ------- --------- --------- ----------- --------- ---------
------- ------- --------- --------- ----------- --------- ---------
Total investment return (1)... 35.09% 3.90% 14.76% (3.49)% 6.77% 36.65% (0.20)%
------- ------- --------- --------- ----------- --------- ---------
------- ------- --------- --------- ----------- --------- ---------
Ratios/Supplemental Data:
Net assets, end of period
(000's)..................... $18,812 $18,606 $13,263 $16,285 $20,941 $ 2,768 $ 2,801
Expenses to average net
assets...................... 2.77% 2.91% 2.73% 2.69%* 2.50% 1.72% 1.72%
Net investment income (loss)
to average net assets....... (1.93)% (0.77)% (0.34)% (0.36)%* 0.64% (0.88)% 0.07%
Portfolio turnover............ 54% 84% 19% 20% 98% 54% 84%
Average commission rate paid
(2)......................... $0.0597 -- -- -- -- $0.0597 --

</TABLE>

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Prospectus Page 17
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

INVESTMENT OBJECTIVES & POLICIES
- --------------------------------------------------------------------------------

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, the 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. The
Fund seeks to achieve this objective by investing primarily in equity securities
issued by companies believed by Mitchell Hutchins to 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 bonds and convertible securities 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.

SMALL CAP FUND

The investment objective of Small Cap Fund is long-term capital appreciation.
Under normal circumstances, at least 65% of the Fund's total assets are invested
in equity securities of small cap companies, which are defined as companies
having market capitalizations of up to $1 billion at 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 U.S. government bonds,
corporate bonds and money market instruments, including up to 10% of total
assets 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
of foreign issuers traded on recognized U.S. exchanges or in the U.S. OTC
market.

* * * *

As with any mutual fund, there can be no assurance that any 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.

- --------------------------------------------------------------------------------
INVESTMENT PHILOSOPHY & PROCESS
- --------------------------------------------------------------------------------

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 total
assets in dividend-paying stocks.

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

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

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

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

--------------------
Prospectus Page 18
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

The equity securities in the Model's universe are screened twice a month. Then
the Team takes a closer look at those equity securities that rank in the top 20%
of the Model's universe based on value and momentum. The Team applies
traditional fundamental analysis and 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, Mitchell Hutchins
decides whether to purchase or sell equity securities for the Fund. 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 a modified, growth-oriented 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 modified, growth-oriented Model, which the Team generally utilizes as part
of the stock selection process, screens a universe of small to large
capitalization companies from ten different business sectors to identify
companies that rank especially well on growth variables, including earnings
momentum, stock price movement, economic sensitivity and other growth factors.

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

SMALL CAP FUND

In selecting small cap equity securities with the potential for capital
appreciation, Mitchell Hutchins follows a disciplined investment process that
relies on the Mitchell Hutchins Factor Valuation Model and the Mitchell Hutchins
Equity Research Team. 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:

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

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

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

Through this screening process, the Model identifies the equity securities of
small cap companies ranking in the top 20% of the universe. Then the Team
applies traditional fundamental analysis on the equity securities of these small
cap companies. The Team may speak to the management of these companies, as well
as to those of their competitors. Based on the Team's findings in the context of
Mitchell Hutchins' economic forecast, Mitchell Hutchins decides whether to
purchase or sell equity securities for the Fund. 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.

--------------------
Prospectus Page 19
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

PERFORMANCE
- --------------------------------------------------------------------------------

These charts show the total returns for the Funds. Sales charges have not been
deducted from total returns for Class A, B and C shares. Returns would be lower
if sales charges were deducted. Past results are not a guarantee of future
results. Average annual total returns both before and after deducting the
maximum sales charges are shown below in the tables that follow the performance
charts.

GROWTH AND INCOME FUND

<TABLE>

12/20/83-
12/31 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A -1.03% 14.90% 22.36% 12.68% -3.16% 17.83% 24.59% -1.01% 35.34% 3.90% -2.59% -5.87% 33.21% 23.46%
Class B 17.85% 3.09% -3.31% -6.62% 32.18% 22.55%
Class C 9.58% -3.30% -6.61% 32.21% 22.55%
Class Y 5.15% -2.31% -5.57% 33.63% 23.81%
</TABLE>

The 1983 return for Class A shares represents the period from inception on
December 20, 1983 through December 31, 1983. The 1991 return for Class B shares
represents the period from inception on July 1, 1991 through December 31, 1991.
The 1992 return for Class C shares represents the period from inception on July
2, 1992 through December 31, 1992. The 1992 return for Class Y shares represents
the period from inception on
February 12, 1992 through December 31, 1992.

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
As of August 31, 1997
CLASS A CLASS B CLASS C CLASS Y
-------- -------- -------- --------
Inception Date..................... 12/20/83 7/1/91 7/2/92 2/12/92
<S> <C> <C> <C> <C>
ONE YEAR
Before deducting maximum sales
charges....................... 42.42% 41.33% 41.30% 42.74%
After deducting maximum sales
charges....................... 36.00% 36.33% 40.30% 42.74%
FIVE YEARS
Before deducting maximum sales
charges....................... 15.19% 14.30% 14.31% 15.51%
After deducting maximum sales
charges....................... 14.12% 14.07% 14.31% 15.51%
TEN YEARS (OR LIFE OF CLASS)
Before deducting maximum sales
charges....................... 11.85% 13.85% 14.44% 13.54%
After deducting maximum sales
charges....................... 11.34% 13.85% 14.44% 13.54%
</TABLE>

--------------------
Prospectus Page 20
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

GROWTH FUND

<TABLE>
<CAPTION>
3/18/85-
12/31/85 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 16.87% 7.64% 4.34% 22.05% 34.27% -7.72% 47.61% 4.15% 19.17% -10.90% 33.02% 14.11%
Class B 22.18% 3.30% 18.26% -11.61% 31.95% 13.24%
Class C 12.73% 18.19% -11.58% 32.00% 13.18%
Class Y 12.21% 4.42% 19.47% -10.64% 33.40% 14.48%

</TABLE>

The 1985 return for Class A shares represents the period from inception on March
18, 1985 through December 31, 1985. The 1991 return for Class B shares
represents the period from inception on July 1, 1991 through December 31, 1991.
The 1992 return for Class C shares represents the period from inception on July
2, 1992 through December 31, 1992. The 1991 return for Class Y shares represents
the period from inception on August 26, 1991 through December 31, 1991.

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
As of August 31, 1997
CLASS A CLASS B CLASS C CLASS Y
-------- -------- -------- --------
Inception Date..................... 3/18/85 7/1/91 7/2/92 8/26/91
<S> <C> <C> <C> <C>
ONE YEAR
Before deducting maximum sales
charges....................... 15.85% 14.98% 14.95% 16.24%
After deducting maximum sales
charges....................... 10.63% 9.98% 13.95% 16.24%
FIVE YEARS
Before deducting maximum sales
charges....................... 14.67% 13.77% 13.76% 14.99%
After deducting maximum sales
charges....................... 13.62% 13.53% 13.76% 14.99%
TEN YEARS (OR LIFE OF CLASS)
Before deducting maximum sales
charges....................... 11.49% 12.77% 12.91% 12.65%
After deducting maximum sales
charges....................... 10.98% 12.77% 12.91% 12.65%
</TABLE>

--------------------
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<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

SMALL CAP FUND

2/1/93-12/31/93 1994 1995 1996
--------------- ---- ---- ----

Class A 7.68% -1.20% 16.81% 17.45%
Class B 6.91% -1.96% 15.90% 16.50%
Class C 6.97% -1.96% 15.84% 16.52%
Class Y 15.51%

The 1993 returns for Class A, Class B and Class C shares represent the period
from inception on February 1, 1993 through December 31, 1993. The 1996 return
for Class Y shares represents the period from inception on July 26, 1996 through
December 31, 1996.

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
As of July 31, 1997

CLASS A CLASS B CLASS C CLASS Y
-------- --------- -------- --------
Inception Date..................... 2/1/93 2/1/93 2/1/93 7/26/96
<S> <C> <C> <C> <C>
ONE YEAR
Before deducting maximum sales
charges....................... 36.11% 35.16% 35.09% 36.65%
After deducting maximum sales
charges....................... 30.01% 30.16% 34.09% 36.65%
LIFE
Before deducting maximum sales
charges....................... 12.79% 11.94% 11.92% 35.81%
After deducting maximum sales
charges....................... 11.64% 11.64% 11.92% 35.81%
</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 a Fund as a steady compound annual
rate of return. Actual year-by-year returns fluctuate and may be higher or lower
than standardized return. Standardized returns for Class A shares of the Funds
reflect deduction of the Funds' maximum initial sales charge of 4.5% at the time
of purchase, and standardized returns for the Class B and Class C shares of the
Funds reflect deduction of the applicable contingent deferred sales charge
imposed on the sale of shares held for the period. One-, five- and ten-year
periods will be shown, unless the Fund or class has been in existence for a
shorter period. If so, returns will be shown for the period since inception,
known as 'Life.' 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,

--------------------
Prospectus Page 22
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

average annual rates, actual year-by-year rates or any combination thereof.
Non-standardized return does not reflect initial or contingent deferred sales
charges and would be lower if such charges were deducted.

Total return information reflects past performance and does not 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 each Fund's performance is
contained in its Annual Report to Shareholders, which may be obtained without
charge by contacting the Fund, your PaineWebber investment executive or
PaineWebber's correspondent firms or by calling toll-free 1-800-647-1568.

- --------------------------------------------------------------------------------
THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------

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.

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

Under normal circumstances, each Fund invests primarily in equity securities.
Following is a discussion of the risks of these investments and other risks that
are common to each Fund:

EQUITY SECURITIES. While past performance does not guarantee future results,
equity securities 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
overall market and economic conditions. Common stocks generally represent the
riskiest investment in a company. It is possible that a Fund may experience a

substantial or complete loss on an individual equity 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 a bond's value or its liquidity. There is a risk
that bonds will be downgraded by rating agencies. The ratings 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.

--------------------
Prospectus Page 23
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

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. Credit risk is the risk that the issuer or a
guarantor may be unable to pay interest or repay principal on the bond. Credit
risk can be affected by many factors, including adverse changes in the issuer's
own financial condition or in economic conditions.

NON-INVESTMENT GRADE (LOWER-RATED) BOND RATINGS. Bonds rated below investment
grade are deemed by the ratings agencies to be predominantly speculative
regarding the issuer's ability to pay principal and interest and may involve
major risk exposure to adverse economic conditions. They are also known as 'junk
bonds.' During an economic downturn or period of rising interest rates, issuers
of these 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.

Small Cap 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.

DERIVATIVES. Some of the instruments in which the Funds may invest may be
referred to as 'derivatives,' because their value depends on (or 'derives' from)
the value of an underlying asset, reference rate or index. These instruments
include options, futures contracts and similar instruments that may be used in
hedging strategies. There is only limited consensus as to what constitutes a
'derivative' security. The market value of derivative instruments and securities
sometimes is more volatile than that of other investments, and each type of
derivative instrument may pose its own special risks. Mitchell Hutchins takes
these risks into account in its management of the Funds.
COUNTERPARTIES. The Funds may be exposed to the risk of financial failure or
insolvency of another party. To help lessen those risks, Mitchell Hutchins,
subject to the supervision of the respective boards of trustees, monitors and
evaluates the creditworthiness of the parties with which each Fund does
business.

In addition to these general risks, Small Cap Fund is also subject to the
following risk consideration:

SMALL CAP COMPANIES. Small cap companies may be more vulnerable than larger
companies to adverse business or economic developments. Small cap companies may
also have limited product lines, markets or financial resources and may be
dependent on a relatively small management group. Securities of such companies
may be less liquid and more volatile than securities of larger companies or the
market averages in general and, therefore, may involve greater risk than
investing in larger companies. In addition, small cap companies may not be
well-known to the investing public, may not have institutional ownership and may
have only cyclical, static or moderate growth prospects.

INVESTMENT TECHNIQUES AND STRATEGIES

HEDGING STRATEGIES USING DERIVATIVES. Each Fund may use derivatives, such as
options (on securities,
futures contracts and stock indexes) and futures contracts (on stock indexes and
interest rates) to reduce the overall risk of its investments ('hedge'). 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 of these derivatives, 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, a Fund may have lower net income and a net loss on the
investment. Each of these strategies involves certain risks, which include:

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

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

--------------------
Prospectus Page 24
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

o 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

o 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 taken at market value. Lending securities enables a Fund to
earn additional income, but could result in a loss or delay in recovering these
securities.

PORTFOLIO TURNOVER. Each Fund's portfolio turnover rate may vary greatly from
year to year and will not be a limiting factor when Mitchell Hutchins deems
portfolio changes appropriate. A higher turn-
over rate (100% or more) for a Fund will involve correspondingly greater
transaction costs, which will be borne directly by the Fund, and may increase
the potential for short-term capital gains.

DEFENSIVE POSITIONS. When Mitchell Hutchins believes that unusual market or
economic circumstances warrant a defensive posture, a Fund may temporarily
commit all or any portion of its assets to cash or investment grade money market
instruments, including repurchase agreements. In a typical repurchase agreement,
a 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.

ILLIQUID SECURITIES. Growth and Income Fund and Growth Fund each may invest up
to 10% of its net assets, and Small Cap Fund up to 15% 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 Funds' boards of trustees.

OTHER INFORMATION. Each Fund may purchase securities 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
investment grade money market instruments and/or cash for liquidity purposes or
pending investment in other securities.

Each Fund may borrow money for temporary or emergency purposes but not in excess
of 10% of its total assets, including reverse repurchase agreements up to an
aggregate value of 5% (10% for Small Cap Fund) of its net assets.

- --------------------------------------------------------------------------------
FLEXIBLE PRICINGSM
- --------------------------------------------------------------------------------

Each Fund offers four classes of shares that differ in terms of sales charges
and expenses. An investor can select the class that is best suited to his or her
investment needs, based upon the holding period and the amount of investment.

CLASS A SHARES

HOW PRICE IS CALCULATED: The price is the net asset value plus the initial sales
charge (the maximum is 4.5% of the public offering price) next calculated after
PaineWebber's New York City headquarters or PFPC Inc., the Funds' transfer agent
('Transfer Agent') receives the purchase order. Although investors pay an
initial sales charge when they buy Class A shares, the ongoing expenses for this
class are lower than those of Class B and Class C shares. Class A shares sales
charges are calculated as follows:

--------------------
Prospectus Page 25
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF: DISCOUNT TO SELECTED
---------------------------------------- DEALERS AS PERCENTAGE
AMOUNT OF INVESTMENT OFFERING PRICE NET AMOUNT INVESTED OF OFFERING 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(2)
</TABLE>

- ------------------
(1) A contingent deferred sales charge of 1% of the shares' offering price or
the net asset value at the time of sale by the shareholder, whichever is
less, is charged on sales of shares made within one year of the purchase
date. However, Class A shares representing reinvestment of any dividends or
other distributions are not subject to the 1% charge. Withdrawals under the
Systematic Withdrawal Plan are not subject to this charge. However,
investors may not withdraw more than 12% of the value of the Fund account
under the Plan in the first year after purchase.

(2) Mitchell Hutchins pays 1% to PaineWebber.

SALES CHARGE REDUCTIONS AND WAIVERS

Investors purchasing Class A shares in more than one PaineWebber mutual fund may
combine those purchases to get a reduced sales charge. Investors who already own
Class A shares in one or more PaineWebber mutual funds may combine the amount
they are currently purchasing with the value of such previously owned shares to
qualify for a reduced sales charge. To determine the sales charge reduction,
please refer to the chart above.

Investors may also qualify for a reduced sales charge when they combine their
purchases with those of:

o their spouses, parents or children under age 21;

o their Individual Retirement Accounts (IRAs);

o certain employee benefit plans, including 401(k) plans;

o any company controlled by the investor;

o trusts created by the investor;

o Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts created
by the investor or group of investors for the benefit of the investors'
children; or

o accounts with the same adviser.

Employers who own Class A shares for one or more of their qualified retirement
plans may also qualify for the reduced sales charge.

The sales charge will not apply when the investor:

o is an employee, director, trustee or officer of PaineWebber, its affiliates or
any PaineWebber mutual fund;

o is the spouse, parent or child of any of the above;

o buys these shares through a PaineWebber investment executive who was formerly
employed as a broker with a competing brokerage firm that was registered as a
broker-dealer with the SEC; and
o was the investment executive's client at the competing brokerage firm;

o within 90 days of buying Class A shares in a Fund, the investor sells shares
of one or more mutual funds that (a) were principally underwritten by the
competing brokerage firm or its affiliates and (b) the investor either paid
a sales charge to buy those shares, paid a contingent deferred sales charge
when selling them or held those shares until the contingent deferred sales
charge was waived; and

o the amount that the investor purchases does not exceed the total amount of
money the investor received from the sale of the other mutual fund;

o is a certificate holder of unit investment trusts sponsored by PaineWebber and
has elected to have dividends and other distributions from that investment
automatically invested in Class A shares;

o is an employer establishing an employee benefit plan qualified under section
401, including a salary reduction plan qualified under section 401(k), or
section 403(b) of the Internal Revenue Code ('Code') (each a 'qualified
plan'). (This waiver is subject to minimum requirements, with respect to the
number of employees and investment amount, established by Mitchell Hutchins.
Currently, the plan must have 50 or more eligible employees and at least $1
million in plan assets.) For investments made pursuant to this waiver,
Mitchell Hutchins may make a payment to PaineWebber out of its own resources
in an amount not to exceed 1% of the amount invested;

o is a participant in the PaineWebber Members Only Program(Trademark). For
investments made pursuant to this waiver, Mitchell Hutchins may make payments
out of its own resources to PaineWebber and to participating membership
organizations in a total amount not to exceed 1% of the amount invested;

--------------------
Prospectus Page 26
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

o is a variable annuity offered only to qualified plans. For investments made
pursuant to this waiver. Mitchell Hutchins may make payments out of its own
resources to PaineWebber and to the variable annuity's sponsor, adviser or
distributor in a total amount not to exceed 1% of the amount invested;

o acquires Class A shares through an investment
program that is not sponsored by PaineWebber or its affiliates and that
charges participants a fee for program services, provided that the program
sponsor has entered into a written agreement with PaineWebber permitting the
sale of Class A shares at net asset value to that program. For investments
made pursuant to this waiver, Mitchell Hutchins may make a payment to
PaineWebber out of its own resources in an amount not to exceed 1% of the
amount invested. For subsequent investments or exchanges made to supplement a

rebalancing feature of such an investment program, the minimum subsequent
investment requirement is waived; or

o acquires Class A shares in connection with a reorganization pursuant to which
a Fund acquires substantially all of the assets and liabilities of another
investment company in exchange solely for shares of the Fund.

For more information on how to get any reduced sales charge, investors should
contact a PaineWebber investment executive or a correspondent firm or call
1-800-647-1568. Investors must provide satisfactory information to PaineWebber
or the Fund if they seek any of these sales charge reductions or waivers.

CLASS B SHARES

HOW PRICE IS CALCULATED: The price is the net asset value next calculated after
PaineWebber's New York City headquarters or the Transfer Agent receives the
purchase order. The ongoing expenses investors pay for Class B shares are higher
than those of Class A shares. Because investors do not pay an initial sales
charge when they buy Class B shares, 100% of their purchase is immediately
invested.

Depending on how long they own their Fund investment, investors may have to pay
a sales charge when they sell their Fund shares. This sales charge is called a
'contingent deferred sales charge.' The amount of the charge depends on how long
the investor owned the shares. The sales charge is calculated by multiplying the
offering price (net asset value of the shares at the time of purchase) or the
net asset value at the time of sale by the shareholder, whichever is less, by
the percentage shown on the following table. Investors who own shares for more
than six years do not have to pay a sales charge when selling those shares.

<TABLE>
<CAPTION>
IF THE INVESTOR PERCENTAGE BY WHICH THE SHARES'
SELLS SHARES WITHIN: NET ASSET VALUE IS MULTIPLIED:
- ------------------------ -------------------------------
<S> <C>
1st year since purchase 5%
2nd year since purchase 4
3rd year since purchase 3
4th year since purchase 2
5th year since purchase 2
6th year since purchase 1
7th year since purchase None
</TABLE>

CONVERSION OF CLASS B SHARES

Class B shares automatically convert to the appropriate number of Class A shares
of equal dollar value after the investor has owned them for six years. Dividends
and other distributions paid to the investor by the Fund in the form of
additional Class B shares will also convert to Class A shares on a pro-rata
basis. This benefits shareholders because Class A shares have lower ongoing
expenses than Class B shares. If the investor has exchanged Class B shares
between PaineWebber funds, the Fund uses the purchase date at which the initial

investment was made to determine the conversion date.

MINIMIZING THE CONTINGENT DEFERRED SALES CHARGE

When investors sell Class B shares they have owned for less than six years, the
Fund automatically will minimize the sales charge by assuming the investors are
selling:

o First, Class B shares owned through reinvested dividends and capital gain
distributions; and

o Second, Class B shares held in the portfolio the longest.

WAIVERS OF THE CONTINGENT DEFERRED SALES CHARGE

The contingent deferred sales charge will not apply to:

o sales of shares under the Fund's Systematic Withdrawal Plan (investors may not
withdraw annually more than 12% of the value of the Fund account under the
Plan);

o a distribution from an IRA, a self-employed individual retirement plan ('Keogh
Plan') or a custodial account under section 403(b) of the Code (after the
investor reaches age 59 1/2);

o a tax-free return of an excess IRA contribution;

o a tax-qualified retirement plan distribution following retirement; or

o Class B shares sold within one year of an investor's death if the investor
owned the shares at the time of death either as the sole shareholder or with
his or her spouse as a joint tenant with the right of survivorship.

--------------------
Prospectus Page 27
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

An investor must provide satisfactory information to PaineWebber or the Fund if
the investor seeks any of these waivers.

CLASS C SHARES

HOW PRICE IS CALCULATED: The price of Class C shares is the net asset value
next calculated after PaineWebber's New York City headquarters or the Transfer
Agent receives the purchase order. The ongoing expenses of Class C shares are
higher than those of Class A shares. Because investors do not pay an initial
sales charge when they buy Class C shares, 100% of their purchase is immediately
invested.

A contingent deferred sales charge of 1% of the net asset value of the shares at
the time of purchase or sale, whichever is less, is charged on sales of shares

made within one year of the purchase date. Other PaineWebber mutual funds may
impose a different contingent deferred sales charge on Class C shares sold
within one year of the purchase date. A sale of Class C shares acquired through
an exchange and held less than one year will be subject to the same contingent
deferred sales charge that would have been imposed on the Class C shares of the
PaineWebber mutual fund originally purchased. Class C shares representing
reinvestment of any dividends or capital gains will not be subject to the 1%
charge. Withdrawals under the Systematic Withdrawal Plan also will not be
subject to this charge. However, investors may not withdraw more than 12% of the
value of the Fund account under the Plan in the first year after purchase.

CLASS Y SHARES

HOW PRICE IS CALCULATED: Eligible investors may purchase Class Y shares at the
net asset value next calculated after PaineWebber's New York City headquarters
or the Transfer Agent receives the purchase order. Because investors do not pay
an initial sales charge when they buy Class Y shares, 100% of their purchase is
immediately invested. No contingent deferred sales charge is imposed on Class Y
shares, and the ongoing expenses for Class Y shares are lower than for the other
classes because Class Y shares are not subject to 12b-1 distribution or service
fees.

LIMITED GROUPS OF INVESTORS. Only the following investors are eligible to
buy Class Y shares:

o a participant in one of the PW Programs listed below when Class Y shares are
purchased through that PW Program;

o an investor who buys $10 million or more at any one time in any combination of
PaineWebber mutual funds in the Flexible Pricing(Service Mark) System;

o a qualified plan that has either
5,000 or more eligible employees or
$50 million or more in assets;

o an investment company advised by PaineWebber or an affiliate of PaineWebber;
and

o for Growth and Income Fund and Growth Fund, the trustee of the PaineWebber
Savings Investment Plan ('PW SIP')

PACE MULTI-ADVISOR PROGRAM: An investor who participates in the PACE
Multi-Advisor Program is eligible to purchase Class Y shares. The PACE
Multi-Advisor Program is an advisory program sponsored by PaineWebber that
provides comprehensive investment services, including investor profiling, a
personalized asset allocation strategy using an appropriate combination of
funds, and a quarterly investment performance review. Participation in the PACE
Multi-Advisor Program is subject to payment of an advisory fee at the maximum
annual rate of 1.5% of assets. Employees of PaineWebber and its affiliates are
entitled to a waiver of this fee.

Please contact your PaineWebber investment executive or PaineWebber's
correspondent firms for more information concerning mutual funds that are
available through the PACE Multi-Advisor Program.

INSIGHT. An investor who participates in the INSIGHT Advisory Program
('INSIGHT'), a total portfolio asset allocation program sponsored by
PaineWebber, is eligible to purchase Class Y shares. Participation 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. Employees of PaineWebber and its
affiliates are entitled to a 50% reduction in the fee otherwise payable for
participation in INSIGHT.

--------------------
Prospectus Page 28
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

PURCHASES BY THE TRUSTEE OF THE
PW SIP

Class Y shares of Growth Fund and Growth and Income Fund 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 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, '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, 10th Floor, 1000 Harbor Boulevard, Weehawken, New Jersey
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 Growth Fund and Growth and Income Fund are purchased 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.

- --------------------------------------------------------------------------------
HOW TO BUY SHARES
- --------------------------------------------------------------------------------

Prices are calculated for each class of a Fund's shares once each Business Day,
at the close of regular trading on the New York Stock Exchange (currently 4:00
p.m., Eastern time). A 'Business Day' is any day, Monday through Friday, on
which the New York Stock Exchange is open for business.

The Funds and Mitchell Hutchins reserve the right to reject any purchase order
and to suspend the offering of Fund shares for a period of time.

When placing an order to buy shares, investors should specify which class of
shares they want to buy. If investors fail to specify the class, they will
automatically receive Class A shares, which include an initial sales charge.

Investors in Class Y shares must provide satisfactory information to PaineWebber
or an individual Fund that they are eligible to purchase Class Y shares.

PAINEWEBBER CLIENTS

Investors who are PaineWebber clients may buy shares through PaineWebber
investment executives or its correspondent firms. Investors may buy shares in
person, by mail, by telephone or by wire (the minimum wire purchase is $1
million). PaineWebber investment executives and correspondent firms are
responsible for promptly sending investors' purchase orders to PaineWebber's New
York City headquarters.

Investors may pay for their purchases with checks drawn on U.S. banks or with
funds they have in their brokerage accounts at PaineWebber or its correspondent
firms. Payment is due on the third Business Day after PaineWebber's New York
City headquarters receives the purchase order.

OTHER INVESTORS

Investors who are not PaineWebber clients may purchase Fund shares and set up an
account through the Transfer Agent (PFPC Inc.) by completing and signing an
account application which you may obtain by calling 1-800-647-1568. The
application and check must be mailed to PFPC Inc., Attn: PaineWebber Mutual
Funds, P.O. Box 8950, Wilmington, DE 19899.

New investors to PaineWebber may complete and sign an account application and
mail it along with a check. Investors may also open an account in person.

Investors who already have money invested in a PaineWebber mutual fund, and want
to invest in another PaineWebber mutual fund, can:

o mail an application with a check; or

o open an account by exchanging from another PaineWebber mutual fund.

Investors do not have to send an application when making additional investments
in the Fund.

MINIMUM INVESTMENTS

<TABLE>
<S> <C>
To open an account................. $1,000
To add to an account............... $ 100
</TABLE>

A Fund may waive or reduce these minimums for:

o employees of PaineWebber or its affiliates; or

o participants in certain pension plans, retirement accounts, unaffiliated
investment programs or the Fund's automatic investment plan.

--------------------

Prospectus Page 29
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

HOW TO EXCHANGE SHARES

As shareholders, investors have the privilege of exchanging Class A, B and C
shares for shares of the same class of other PaineWebber mutual funds. For
classes of shares where no initial sales charge is imposed, a contingent
deferred sales charge may apply if the investor sells the shares acquired
through the exchange. Class Y shares are not exchangeable.

Exchanges may be subject to minimum investment requirements of the fund into
which exchanges are made.

o Investors who purchased their shares through an investment executive at
PaineWebber or one of its correspondent firms may exchange their shares by
contacting their investment executive in person or by telephone, mail or wire.

o Investors who do not have an account with an investment executive at
PaineWebber or one of its correspondent firms may exchange their shares by
writing a 'letter of instruction' to the Transfer Agent. The letter of
instruction must include:

o the investor's name and address;

o the Fund's name;

o the Fund account number;

o the dollar amount or number of shares to be sold; and

o a guarantee of each registered owner's signature by an eligible institution,
such as a commercial bank, trust company or stock exchange member.

The letter must be mailed to PFPC Inc., Attn:
PaineWebber Mutual Funds, P.O. Box 8950,
Wilmington, DE 19899.

No contingent deferred sales charge is imposed when Class B or C shares are
exchanged for Class B or C shares of other PaineWebber mutual funds. A Fund will
use the purchase date of the initial investment to determine any contingent
deferred sales charge due when the acquired shares are sold. Fund shares may be
exchanged only after the settlement date has passed and payment for the shares
has been made. The exchange privilege is available only in those jurisdictions
where the sale of the fund shares to be acquired is authorized. This exchange
privilege may be modified or terminated at any time and, when required by SEC
rules, upon a 60-day notice. See the back cover of this Prospectus for a listing
of other PaineWebber mutual funds.

- --------------------------------------------------------------------------------
HOW TO SELL SHARES

- --------------------------------------------------------------------------------

Investors can sell (redeem) shares at any time. Shares will be sold at the share
price for that class (less any applicable contingent deferred sales charge) as
next calculated after the order is received by PaineWebber's New York City
headquarters or the Transfer Agent. Share prices are normally calculated at the
close of regular trading on the New York Stock Exchange (currently 4:00 p.m.,
Eastern time).

Investors who own more than one class of shares should specify which class they
are selling. If they do not, the Fund will assume they are first selling their
Class A shares, then Class C, then Class B and last, Class Y.

If a shareholder wants to sell shares that were purchased recently, the Fund may
delay payment until it verifies that good payment was received. In the case of
purchases by check, this can take up to 15 days.

Investors who have an account with PaineWebber or one of PaineWebber's
correspondent firms can sell their shares by contacting their investment
executive. Investors who do not have an account and have bought their shares
through the Funds' Transfer Agent (PFPC Inc.) may sell shares by writing a
'letter of instruction,' as detailed in 'How to Exchange Shares.'

Because the Funds incur certain fixed costs in maintaining shareholder accounts,
each Fund reserves the right to purchase back all of its shares in any
shareholder account with a net asset value of less than $500. If a 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.

REINSTATEMENT PRIVILEGE

Shareholders who sell their Class A shares may reinstate their Fund account
without a sales charge up to the dollar amount sold by purchasing the Fund's
Class A shares within 365 days after the sale. To take advantage of this
reinstatement privilege, shareholders must notify their investment executive at
PaineWebber or one of its correspondent firms at the time of purchase.

--------------------
Prospectus Page 30
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

OTHER SERVICES
- --------------------------------------------------------------------------------

Investors should consult their investment executives at PaineWebber or one of
its correspondent firms to learn more about the following services available
with respect to the Funds' Class A, Class B and C shares:

AUTOMATIC INVESTMENT PLAN

Investing on a regular basis helps investors meet their financial goals.
PaineWebber offers an Automatic Investment Plan with a minimum initial
investment of $1,000 through which the Fund will deduct $50 or more each month
from the investor's bank account to invest directly in the Fund. In addition to
providing a convenient and disciplined manner of investing, participation in the
Automatic Investment Plan enables the investor to use the technique of 'dollar
cost averaging.'

SYSTEMATIC WITHDRAWAL PLAN

The Systematic Withdrawal Plan allows investors to set up monthly, quarterly
(March, June, September and December), semiannual (June and December) or annual
(December) withdrawals from their Fund accounts. Minimum balances and
withdrawals vary according to the class of shares:

o CLASS A AND CLASS C SHARES. Minimum value of Fund shares is $5,000; minimum
withdrawals of $100.

o CLASS B SHARES. Minimum value of Fund shares is $20,000; minimum monthly,
quarterly, semi-annual and annual withdrawals of $200, $400, $600 and $800,
respectively.

Withdrawals under the Systematic Withdrawal Plan will not be subject to a
contingent deferred sales charge. Investors may not withdraw annually more than
12% of the value of the Fund account when the investor signed up for the Plan.
Shareholders who elect to receive dividends or other distributions in cash may
not participate in the Plan.

INDIVIDUAL RETIREMENT ACCOUNTS

Self-Directed IRAs are available through PaineWebber in which purchases of
PaineWebber funds and other investments may be made. Investors considering
establishing an IRA should review applicable tax laws and should consult their
tax advisers.

TRANSFER OF ACCOUNTS

If investors holding shares of a Fund in a PaineWebber brokerage account
transfer their brokerage accounts to another firm, the Fund shares will be moved
to an account with the Transfer Agent. However, if the other firm has entered
into a selected dealer agreement with Mitchell Hutchins relating to the Fund,
the shareholder may be able to hold Fund shares in an account with the other
firm.

- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------

Each Fund is governed by its board of trustees, which oversees the Fund's
operations. Each board has appointed Mitchell Hutchins as investment adviser and
administrator responsible for the Fund's operations (subject to the authority of
the board). As investment adviser and administrator, Mitchell Hutchins
supervises all aspects of each Fund's operations and makes and implements all

investment decisions for that Fund.

The boards, as part of their overall management responsibility, oversee various
organizations responsible for the day-to-day management of each Fund.

In accordance with procedures adopted by the boards, brokerage transactions for
the Funds may be conducted through PaineWebber or its affiliates and the Funds
may pay fees to PaineWebber for its services as lending agent in their portfolio
securities lending programs.

ABOUT THE INVESTMENT ADVISER

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.
On October 31, 1997, Mitchell Hutchins was adviser or sub-adviser of 29
investment companies with 64 separate portfolios and aggregate assets of
approximately $35.6 billion.

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

--------------------
Prospectus Page 31
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

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

Mark A. Tincher 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 Hutchins Equity Research Team. Each analyst on the Team focuses on
different industries. As a result, the Team provides PaineWebber Stock Funds
with more specialized knowledge of the various industries in which the Funds
generally invest. The Equity Research Team is also assisted by members of
Mitchell Hutchins' fixed income groups, who provide input on market outlook,
interest rate forecasts and other considerations pertaining to domestic equity
and fixed income investments.

GROWTH AND INCOME FUND

Mr. Tincher has been responsible for the day-to-day management of Growth and
Income Fund since April 1995. From March 1988 to March 1995, Mr. Tincher worked
for Chase Manhattan Private Bank where he was a vice president. 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).

Mr. Tincher was the sole portfolio manager of Vista Growth and Income Fund
('Vista Fund'), with full discretionary authority over the selection of
investments, from July 31, 1991 through March 16, 1995. Vista Fund's investment
objectives of long-term capital appreciation and dividend income are
substantially similar to Growth and Income Fund's investment objective of
current income and capital growth. Mr. Tincher used and relied upon the same
valuation model and analytical methods when managing the Vista Fund as he now
uses for Growth and Income Fund.

The cumulative total return for Vista Fund for the period it was managed by Mr.
Tincher was 46.18%; 39.24% after deducting that Fund's maximum sales charge of
4.75%. As of March 31, 1995, the Vista Fund had $1.6 billion in net assets. The
chart below shows calendar year total returns for Vista Fund; the 1991 return
represents the period from July 31, 1991 when Mr. Tincher took over day-to-day
management of the Vista Fund through December 31, 1991. Sales charges have not
been deducted from total returns. Returns would be lower if sales charges were
deducted.

7/3/91-12-31/91 1992 1993 1994
--------------- ---- ---- ----

Mr. Tincher's Term as
Manager of Vista Growth
and Income Fund 9.69% 15.11% 12.99% -3.41%

Average annual returns both before and after deducting the maximum sales charges
are shown in the table below. Average annual returns are for the one- and
three-year periods ended December 31, 1994 and the entire period during which
Mr. Tincher managed the Vista Fund (July 31, 1991 through March 16, 1995) and
are compared with the performance of the Standard & Poor's 500 Composite Stock
Price Index for each such period.

<TABLE>
<CAPTION>
VISTA S&P 500
FUND(1) INDEX(2)
------------ -------
<S> <C> <C>
Mr. Tincher's Term as Manager
7/31/91 through 3/16/95
Before deducting maximum sales
charges........................... 11.04% 10.17%
After deducting maximum sales
charges........................... 9.56% 10.17%

Three Years Ended 12/31/94
Before deducting maximum sales
charges........................... 7.90% 6.26%
After deducting maximum sales
charges........................... 6.16% 6.26%
One Year Ended 12/31/94
Before deducting maximum sales
charges........................... -3.41% 1.31%
After deducting maximum sales

charges........................... -8.00% 1.31%
</TABLE>

- ------------------
1. Average annual returns are for Class A shares and reflect, where applicable
the deduction of the maximum sales charge of 4.75%, changes in share prices,
reinvestment of dividends and distributions and are net of fund expenses. For
the fiscal years ended October 31, 1991 and October 31, 1992, expenses in the
amount of 0.51% and 0.03%, respectively, were waived or reimbursed.

(Footnotes on next page)

--------------------
Prospectus Page 32
<PAGE>
------------------------------

PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

(Footnotes from previous page)

2. The Standard & Poor's 500 Composite Stock Price Index ('Index') is an
unmanaged index of common stocks that is considered to be generally
representative of the United States stock market. The Index is adjusted to
reflect reinvestment of dividends. No sales charges are applicable.
- ------------------

Historical performance is not indicative of future performance. Vista Fund is a
separate fund and its historical performance is not indicative of the past or
future performance of Growth and Income Fund. S&P 500 Index and Vista Fund
performance information calculated by Lipper Analytical Services Inc; used with
permission.

GROWTH FUND

Ellen R. Harris has been responsible for the day-to-day portfolio management of
Growth Fund since its inception. Ms. Harris 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).

SMALL CAP FUND

Donald R. Jones has been primarily responsible for day-to-day portfolio
management of Small Cap Fund since April 1996. Mr. Jones has been a first vice
president of Mitchell Hutchins since February 1996. Prior to joining Mitchell
Hutchins, Mr. Jones was a vice president in the Asset Management Group of First
Fidelity Bancorporation, which he joined in 1983.

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,

0.75% for Growth Fund and 1.00% for Small Cap Fund.

DISTRIBUTION ARRANGEMENTS

Mitchell Hutchins is the distributor of each Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. There is no
distribution plan with respect to the Funds' Class Y shares. Under distribution
plans for Class A, Class B and Class C shares ('Class A Plan,' 'Class B Plan'
and 'Class C Plan,' collectively, 'Plans'), the Funds pay Mitchell Hutchins:

o Monthly service fees at the annual rate of up to 0.25% of the average daily
net assets of each class of shares.

o Monthly distribution fees at the annual rate of 0.75% of the average daily net
assets of Class B and Class C shares.

Under the Plans, Mitchell Hutchins primarily uses the service fees to pay
PaineWebber for shareholder servicing, currently at the annual rate of up to
0.25% of the aggregate investment amounts maintained in each Fund's Class A,
Class B and Class C shares by PaineWebber clients. PaineWebber then compensates
its investment executives for shareholder servicing that they perform and
offsets its own expenses in servicing and maintaining shareholder accounts.

Mitchell Hutchins uses the distribution fees under the Class B and Class C Plans
to:

o Offset the commissions it pays to PaineWebber for selling each Fund's Class B
and Class C shares, respectively.

o Offset each Fund's marketing costs attributable to such classes, such as
preparation, printing and distribution of sales literature, advertising and
prospectuses to prospective investors and related overhead expenses, such as
employee salaries and bonuses.

PaineWebber compensates investment executives when Class B and Class C shares
are bought by investors, as well as on an ongoing basis. Mitchell Hutchins
receives no special compensation from any of the Funds or investors at the time
Class B or C shares are bought.

Mitchell Hutchins receives the proceeds of the initial sales charge paid when
Class A shares are bought and of the contingent deferred sales charge paid upon
sales of shares. These proceeds may be used to cover distribution expenses.

The Plans and the related distribution contracts for each class of shares
('Distribution Contracts') specify that each Fund must pay service and
distribution fees to Mitchell Hutchins for its activities, not as reimbursement
for specific expenses incurred. Therefore, even if Mitchell Hutchins' expenses
exceed the service or distribution fees it receives, the Funds will not be
obligated to pay more than those fees. On the other hand, if Mitchell Hutchins'
expenses are less than such fees, it will retain its full fees and realize a
profit. Expenses in excess of service and distribution fees received or accrued
through the termination date of any Plan will be Mitchell Hutchins' sole
responsibility and not that of the Funds. Annually, the board of each Fund
reviews each Plan and Mitchell Hutchins' corresponding expenses for each class

separately from the Plans and expenses of the other classes.

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PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

DETERMINING THE SHARES'
NET ASSET VALUE
- --------------------------------------------------------------------------------

The net asset value of a 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. 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 market quotations are not readily
available, assets are valued at fair value as determined in good faith by or
under the direction of its board. 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 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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DIVIDENDS & TAXES
- --------------------------------------------------------------------------------

DIVIDENDS

Growth Fund and Small Cap Fund each pays an annual dividend, and Growth and
Income Fund pays a semiannual dividend, from its 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. If determined by its board to be in the best interests
of its shareholders, Growth and Income Fund may also make additional
distributions of net investment income and net short-term capital gain, if any.

Dividends and other distributions paid on each class of shares of a Fund are
calculated at the same time and in the same manner. Dividends on Class A, B and
C shares of a Fund are expected to be lower than those on its Class Y shares
because the other shares have higher expenses resulting from their service fees
and, in the case of Class B and Class C shares, their distribution fees.
Dividends on Class B and Class C shares of a Fund are expected to be lower than
those on its Class A shares because Class B and Class C shares have higher
expenses resulting from their

distribution fees. Dividends on each class might be affected differently by the
allocation of other class-specific expenses. See 'General Information.'

Each Fund's dividends and other 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 them by check or credited to their PaineWebber accounts,
should contact their investment executives at PaineWebber or one of its
correspondent firms or complete the appropriate section of the account
application.

TAXES

Each Fund intends to continue to qualify for treatment as a regulated investment
company under the 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 its shareholders as ordinary
income. Distributions of each Fund's net capital gain (whether paid in cash or
additional shares) are taxable to its shareholders as long-term capital gain,
regardless of how long they have held their Fund shares. Under the Taxpayer
Relief Act of 1997, different maximum tax rates apply to net capital gain
depending on the taxpayer's holding period and marginal rate of federal income
tax -- generally, 28% for gain recognized on capital assets held for more than
one year but not more than 18 months and 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain

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PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

recognized on capital assets held for more than 18 months. A notice issued by
the Internal Revenue Service in November 1997 permits each Fund to bifurcate
each net capital gain distribution into a 20% rate gain distribution and a 28%
rate gain distribution (in accordance with the Fund's holding periods for the
securities it sold that generated the gain) and requires its shareholders to
treat those portions accordingly. Shareholders who are not subject to tax on
their income generally will not be required to pay tax on distributions from the
Funds.

YEAR-END TAX REPORTING

Following the end of each calendar year, each Fund notifies its shareholders of
the amounts of dividends and capital gain distributions paid (or deemed paid) by
the Fund that year and any portion of those dividends that qualifies for special
tax treatment. The information regarding capital gain distributions designates
the portions thereof subject to the different maximum rates of tax applicable to
individuals' net capital gain indicated above.

BACKUP WITHHOLDING

Each Fund must 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 at that rate also is required from dividends and capital
gain distributions payable to such shareholders who otherwise are subject to
backup withholding.

TAXES ON THE SALE OR EXCHANGE OF FUND SHARES

A shareholder's sale (redemption) of Fund shares may result in a taxable gain or
loss. This depends upon whether the shareholder receives more or less than the
adjusted basis for the shares (which normally includes any initial sales charge
paid on Class A shares). An exchange of any Fund's shares for shares of another
PaineWebber mutual fund generally will have similar tax consequences. In
addition, if a Fund's shares are bought within 30 days before or after selling
other shares of that 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.

SPECIAL TAX RULES FOR CLASS A SHAREHOLDERS

Special tax rules apply when a shareholder sells (redeems) or exchanges Class A
shares within 90 days of purchase and subsequently acquires Class A shares of
the same or another PaineWebber mutual fund without paying a sales charge due to
the 365-day reinstatement privilege or the exchange privilege. In these cases,
any gain on the sale or exchange of the original Class A shares would be
increased, or any loss would be decreased, by the amount of the sales charge
paid when those shares were bought, and that amount would increase the basis of
the PaineWebber mutual fund shares subsequently acquired.

No gain or loss will be recognized to a shareholder as a result of conversion of
Class B shares into Class A shares.

* * * *

Because the foregoing only summarizes some of the important 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.

- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------

ORGANIZATION

GROWTH AND INCOME FUND

Growth and Income Fund is a diversified series of PaineWebber America Fund, an
open-end management investment company that was formed on October 31, 1986 as a
business trust under the laws of the Commonwealth of Massachusetts. The board

has 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 that was formed on October 31, 1986 as a business
trust under the laws of the Commonwealth of Massachusetts. The board has
authority to issue an unlimited number of shares of beneficial interest of
separate series, par value $0.001 per share.

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Prospectus Page 35
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PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

SMALL CAP FUND

Small Cap Fund is a diversified series of PaineWebber Securities Trust
('Securities Trust'), an open-end management investment company that was formed
on December 3, 1992 as a business trust under the laws of the Commonwealth of
Massachusetts. The board has authority to issue an unlimited number of shares of
beneficial interest of separate series, par value $0.001 per share. In addition
to Small Cap Fund, shares of one other series have been authorized.

The shares of each Fund are divided into four classes, designated Class A, Class
B, Class C and Class Y shares. Each class of shares of a Fund represents an
identical interest in that Fund's investment portfolio and has the same 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 a Fund's Class A, B, C and Y
shares will differ.

Although each Fund is offering only its own shares, it is possible that a Fund
could become liable for a misstatement in the Prospectus about another Fund. The
board of each Fund considered this factor in approving the use of a combined
Prospectus.

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 Fund (or

Securities Trust, which has more than one series) may elect all of the trustees
of that Fund or of Securities Trust. The shares of a Fund will be voted together
except that only the shareholders of a particular class of a Fund may vote on
matters affecting only that class, such as the terms of a Plan as it relates to
the class. The shares of each series of Securities Trust will be voted
separately except where an aggregate vote of all series is required by law.

SHAREHOLDER MEETINGS
The Funds do not hold annual meetings.

Shareholders of record of no less than two-thirds of the outstanding shares of a
Fund or Securities 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 Fund's or Securities Trust's outstanding shares.

REPORTS TO SHAREHOLDERS

Each Fund sends its shareholders audited annual and unaudited semiannual
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 DISBURSING 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 each Fund's transfer
and dividend disbursing agent. It is located at 400 Bellevue Parkway,
Wilmington, DE 19809. PFPC (not the Funds) pays PaineWebber for certain transfer
agency related services that PFPC has delegated to PaineWebber.

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PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

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PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

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PaineWebber Growth and Income Fund Growth Fund Small Cap Fund

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<PAGE>
PaineWebber Growth and Income Fund
PaineWebber Growth Fund
PaineWebber Small Cap Fund

PROSPECTUS--DECEMBER 1, 1997, AS REVISED DECEMBER 23, 1997

<TABLE>
<S> <C>
/ / PAINEWEBBER BOND FUNDS / / PAINEWEBBER STOCK FUNDS
High Income Fund Capital Appreciation Fund
Investment Grade Income Fund Financial Services Growth Fund
Low Duration U.S. Government Growth Fund
Income Fund Growth and Income Fund
Strategic Income Fund Small Cap Fund
U.S. Government Income Fund Utility Income Fund
/ / PAINEWEBBER TAX-FREE BOND FUNDS / / PAINEWEBBER GLOBAL FUNDS
California Tax-Free Income Fund Asia Pacific Growth Fund
Municipal High Income Fund Emerging Markets Equity Fund
National Tax-Free Income Fund Global Equity Fund
New York Tax-Free Income Fund Global Income Fund
/ / PAINEWEBBER ASSET / / PAINEWEBBER MONEY MARKET FUND
ALLOCATION FUNDS
Balanced Fund
Tactical Allocation Fund
</TABLE>

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.

---------------