<PAGE> PAGE 1
000 B000000 08/31/97
000 C000000 0000703887
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000 H000000 N
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001 B000000 811-3502
001 C000000 2127132421
002 A000000 1285 AVENUE OF THE AMERICAS
002 B000000 NEW YORK
002 C000000 NY
002 D010000 10019
003 000000 N
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020 A000001 BEAR, STERNS & COMPANY
020 B000001 13-3299429
020 C000001 124
020 A000002 MORGAN STANLEY & COMPANY
020 B000002 13-2655998
020 C000002 71
020 A000003 DONALDSON, LUFKIN & JENRETTE
020 B000003 13-2741729
020 C000003 67
020 A000004 SALOMON BROTHERS INC
020 B000004 13-3082694
020 C000004 64
020 A000005 MERRILL LYNCH PIERCE
020 B000005 13-5674085
020 C000005 62
020 A000006 OPPENHEIMER & COMPANY, INC.
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<PAGE> PAGE 2
020 C000006 62
020 A000007 LEHMAN BROTHERS
020 B000007 13-2518466
020 C000007 58
020 A000008 SMITH BARNEY INC.
020 B000008 13-1912900
020 C000008 50
020 A000009 GOLDMAN SACHS
020 B000009 13-5108880
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022 A000001 STATE STREET BANK AND TRUST CO.
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022 C000001 4724940
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022 C000002 4081151
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022 C000003 3598873
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<PAGE> PAGE 3
022 B000010 13-2655998
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 10
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SIGNATURE JULIAN SLUYTERS
TITLE TREASURER
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</TABLE>
Report of Independent Auditors
To the Shareholders and Board of Trustees of
PaineWebber Growth and Income Fund
In planning and performing our audit of the financial statements
of PaineWebber Growth and Income Fund for the year ended
August 31, 1997, we considered its internal control, including
control activities for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing
our opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on the
internal control.
The management of PaineWebber Growth and Income Fund is responsible
for establishing and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles.
Those controls include the safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or
irregularities may occur and not be detected. Also, projection
of any evaluation of internal control to future periods is subject
to the risk that it may become inadequate because of changes in
conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of the internal control would not necessarily
disclose all matters in the internal control that might be
material weaknesses under standards established by the American
Institute of Certified Public Accountants. A material weakness
is a condition in which the design or operation of one or more
of the internal control components does not reduce to a
relatively low level the risk that errors or irregularities
in amounts that would be material in relation to the financial
statements being audited may occur and not be detected
within a timely period by employees in the normal course
of performing their assigned functions. However, we noted
no matters involving the internal control and its operation,
including controls for safeguarding securities, that we
consider to be material weaknesses as defined above at
August 31, 1997.
This report is intended solely for the information and
use of the shareholders, board of trustees and management
of PaineWebber Growth and Income Fund and the
Securities and Exchange Commission.
ERNST & YOUNG LLP
New York, New York
October 14, 1997
FORM 10f-3 FUND: PW Growth and Income
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Yurie Systems
2. Date of Purchase:2/5/97
3. Date offering commenced:2/5/97
4. Underwriters from whom purchased: Alex Brown
5. "Affiliated Underwriter" managing or participating
in syndicate: PaineWebber
6. Aggregate principal amount of purchase: $162,000
7. Aggregate principal amount of offering: $48,000,000
8. Purchase price (net of fees and expenses): $12
9. Initial public offering price: $12
10. Commission, spread or profit: % $0.47
11. Have the following conditions been satisfied? YES NO
a. The securities are part of an issue registered under
the Securities Act of 1933 which is being offered to the public
or are "municipal securities" as defined in Section 3(a)(29)
of the Securities Exchange Act of 1934. X ---
b. The securities were purchased prior to the end of the end
first full business day of the offering at not more than
the initial offering price (or, if a rights offering,
the securities were purchased on or before the fourth day
preceding the day on which the offering terminated. X ___
c. The underwriting was a firm commitment underwriting. X ___
d. The commission, spread or profit was reasonable and
fair in relation to that being received by others for
underwriting similar securities during the same period. X ___
e. (1) If securities are registered under the Securities Act
of 1933, the issuer of the securities and its predecessor have
been in continuous operation for not less than three years. X ___
(2) If securities are municipal securities, the issue of
securities has received an investment grade rating from a
nationally recognized statistical rating organization or,
if the issuer or entity supplying the revenues from which
the issue is to be paid shall have been in continuous
operation for less than three years (including any
predecessor), the issue has received one of the three
highest ratings from at least one such rating
organization. N/A ___
f. The amount of such securities purchased by all of
the investment companies advised by Mitchell Hutchins
did not exceed 4% of the principal amount of the offering
or $500,000 in principal amount, whichever is greater,
provided that in no event did such amount exceed 10% of
the principal amount of the offering. X ___
g. The purchase price was less than 3% of the Fund's
total assets. X ___
h. No Affiliated Underwriter was a direct or indirect
participant in or beneficiary of the sale or, with respect
to municipal securities, no purchases were designated
as group sales or otherwise allocated to the account of
any Affiliated Underwriter. X ___
Approved:Mark Tincher Date: 2/5/97
FORM 10f-3 FUND: PW Growth and Income
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Samsonite.
2. Date of Purchase: 2/6/97
3. Date offering commenced: 2/6/97
4. Underwriters from whom purchased: Merrill Lynch
5. "Affiliated Underwriter" managing or participating
in syndicate: PaineWebber
6. Aggregate principal amount of purchase: $588,000
7. Aggregate principal amount of offering: $328,572,552
8. Purchase price (net of fees and expenses): $42
9. Initial public offering price: $42
10. Commission, spread or profit: % $1.26
11. Have the following conditions been satisfied? YES NO
a. The securities are part of an issue registered
under the Securities Act of 1933 which is being
offered to the public or are "municipal securities"
as defined in Section 3(a)(29) of the Securities
Exchange Act of 1934. X ___
b. The securities were purchased prior to the end
of the end first full business day of the offering
at not more than the initial offering price
(or, if a rights offering, , the securities were
purchased on or before the fourth day preceding
the day on which the offering terminated. X ___
c. The underwriting was a firm commitment underwriting. X ___
d. The commission, spread or profit was reasonable
and fair in relation to that being received by others
for underwriting similar securities during the same
period. X ___
e. (1) If securities are registered under the
Securities Act of 1933, the issuer of the securities
and its predecessor have been in continuous operation
for not less than three years. X ___
(2) If securities are municipal securities,
the issue of securities has received an investment
grade rating from a nationally recognized statistical
rating organization or, if the issuer or entity
supplying the revenues from which the issue is
to be paid shall have been in continuous operation
for less than three years (including any predecessor),
the issue has received one of the three highest
ratings from at least one such rating organization. N/A ___
f. The amount of such securities purchased by all
of the investment companies advised by Mitchell
Hutchins did not exceed 4% of the principal amount
of the offering or $500,000 in principal amount,
whichever is greater, provided that in no event
did such amount exceed 10% of the principal
amount of the offering. X ___
g. The purchase price was less than 3% of the
Fund's total assets. X ___
h. No Affiliated Underwriter was a direct or
indirect participant in or beneficiary of the sale
or, with respect to municipal securities, no
purchases were designated as group sales or
otherwise allocated to the account of any
Affiliated Underwriter. X ___
Approved:Mark Tincher Date: 2/6/97
FORM 10f-3 FUND: PW Growth and Income
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: U.S. Rental
2. Date of Purchase: 2/21/97
3. Date offering commenced: 2/21/97
4. Underwriters from whom purchased: DLJ
5. "Affiliated Underwriter" managing or participating
in syndicate: PaineWebber
6. Aggregate principal amount of purchase: $392,000
7. Aggregate principal amount of offering: $200,000,000
8. Purchase price (net of fees and expenses): $20
9. Initial public offering price: $20
10. Commission, spread or profit: % $0.75
11. Have the following conditions been satisfied? YES NO
a. The securities are part of an issue registered
under the Securities Act of 1933 which is being
offered to the public or are "municipal securities"
as defined in Section 3(a)(29) of the Securities
Exchange Act of 1934. X ___
b. The securities were purchased prior to the end of
the end first full business day of the offering
at not more than the initial offering price
(or, if a rights offering, , the securities were
purchased on or before the fourth day preceding the
day on which the offering terminated. X ___
c. The underwriting was a firm commitment underwriting. X ___
d. The commission, spread or profit was reasonable
and fair in relation to that being received by others
for underwriting similar securities during the same period. X ___
e. (1) If securities are registered under
the Securities Act of 1933, the issuer of the
securities and its predecessor have been in continuous
operation for not less than three years. X ___
(2) If securities are municipal securities, the
issue of securities has received an investment grade
rating from a nationally recognized statistical rating
organization or, if the issuer or entity supplying the
revenues from which the issue is to be paid shall have
been in continuous operation for less than three years
(including any predecessor), the issue has received one
of the three highest ratings from at least one such
rating organization. N/A ___
f. The amount of such securities purchased by all of
the investment companies advised by Mitchell Hutchins did
not exceed 4% of the principal amount of the offering
or $500,000 in principal amount, whichever is greater,
provided that in no event did such amount exceed 10%
of the principal amount of the offering. X ___
g. The purchase price was less than 3% of the Fund's
total assets. X ___
h. No Affiliated Underwriter was a direct or
indirect participant in or beneficiary of the
sale or, with respect to municipal securities, no
purchases were designated as group sales or otherwise
allocated to the account of any Affiliated Underwriter. X ___
Approved:Mark Tincher Date: 2/24/97
