<PAGE>
PAINEWEBBER CALIFORNIA TAX-FREE INCOME FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------------------- --------------------------------
12 MONTHS 6 MONTHS
08/31/97 02/28/97 08/31/96 ENDED 08/31/97 ENDED 08/31/97
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES $11.06 $10.91 $10.70 8.32% 3.73%
- --------------------------------------------------------------------------------------------
CLASS B SHARES 11.07 10.92 10.71 7.49 3.34
- --------------------------------------------------------------------------------------------
CLASS C SHARES 11.06 10.90 10.70 7.77 3.56
- --------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
09/16/85 - 12/31/85 $ 9.57 $ 10.09 -- $0.1827 7.41%
- --------------------------------------------------------------------------------------------
1986 10.09 11.18 -- 0.7883 19.18
- --------------------------------------------------------------------------------------------
1987 11.18 10.49 -- 0.7564 0.65
- --------------------------------------------------------------------------------------------
1988 10.49 10.74 -- 0.7908 10.20
- --------------------------------------------------------------------------------------------
1989 10.74 10.95 -- 0.7384 9.11
- --------------------------------------------------------------------------------------------
1990 10.95 10.88 $0.0340 0.7362 6.68
- --------------------------------------------------------------------------------------------
1991 10.88 11.29 0.0268 0.7064 10.84
- --------------------------------------------------------------------------------------------
1992 11.29 11.29 0.1701 0.6504 7.49
- --------------------------------------------------------------------------------------------
1993 11.29 11.70 0.3052 0.6077 11.96
- --------------------------------------------------------------------------------------------
1994 11.70 10.09 0.0969 0.5844 (8.07)
- --------------------------------------------------------------------------------------------
1995 10.09 11.18 -- 0.5713 16.80
- --------------------------------------------------------------------------------------------
1996 11.18 10.94 -- 0.5271 2.74
- --------------------------------------------------------------------------------------------
01/01/97- 08/31/97 10.94 11.06 -- 0.3014 3.92
- --------------------------------------------------------------------------------------------
TOTALS: $0.6330 $7.9415
- --------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/97: 152.70%
- --------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91 - 12/31/91 $10.95 $11.29 $0.0268 $0.3043 6.20%
- --------------------------------------------------------------------------------------------
1992 11.29 11.29 0.1701 0.5631 6.67
- --------------------------------------------------------------------------------------------
1993 11.29 11.70 0.3052 0.5188 11.11
- --------------------------------------------------------------------------------------------
1994 11.70 10.10 0.0969 0.5029 (8.69)
- --------------------------------------------------------------------------------------------
1995 10.10 11.19 -- 0.4899 15.91
- --------------------------------------------------------------------------------------------
1996 11.19 10.95 -- 0.4449 1.96
- --------------------------------------------------------------------------------------------
01/01/97 - 08/31/97 10.95 11.07 -- 0.2516 3.45
- --------------------------------------------------------------------------------------------
TOTALS: $0.5990 $3.0755
- --------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/97: 40.60%
- --------------------------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES; RESULTS FOR
EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CAPITAL GAIN DISTRIBUTIONS AND GAINS REALIZED
ON THE SALE OF FUND SHARES ARE TAXABLE.
7
<PAGE>
PAINEWEBBER CALIFORNIA TAX-FREE INCOME FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 - 12/31/92 $11.41 $11.28 $0.1701 $0.2625 2.68%
- ----------------------------------------------------------------------------
1993 11.28 11.69 0.3052 0.5477 11.40
- ----------------------------------------------------------------------------
1994 11.69 10.09 0.0969 0.5295 (8.47)
- ----------------------------------------------------------------------------
1995 10.09 11.17 -- 0.5149 16.09
- ----------------------------------------------------------------------------
1996 11.17 10.94 -- 0.4713 2.31
- ----------------------------------------------------------------------------
01/01/97 - 08/31/97 10.94 11.06 -- 0.2677 3.60
- ----------------------------------------------------------------------------
TOTALS: $0.5722 $2.5936
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
08/31/97: 28.84%
- ----------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL RETURN
<TABLE>
<CAPTION>
% RETURN AFTER DEDUCTING
% RETURN WITHOUT SALES CHARGE MAXIMUM SALES CHARGE
-----------------------------------------------------------
CLASS CLASS
-----------------------------------------------------------
A* B** C*** A* B** C***
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TWELVE MONTHS ENDED
09/30/97 8.25% 7.43% 7.60% 3.92% 2.43% 6.85%
- -------------------------------------------------------------------------------------
FIVE YEARS ENDED
09/30/97 5.82 5.03 5.27 4.96 4.69 5.27
- -------------------------------------------------------------------------------------
TEN YEARS ENDED 09/30/97 7.64 N/A N/A 7.20 N/A N/A
- -------------------------------------------------------------------------------------
COMMENCEMENT OF
OPERATIONS THROUGH
09/30/97+ 8.11 5.80 5.15 7.74 5.80 5.15
- -------------------------------------------------------------------------------------
</TABLE>
/1/ FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES; RESULTS
FOR EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
* MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 4% OF THE PUBLIC OFFERING PRICE.
CLASS A SHARES BEAR ONGOING 12B-1 SERVICE FEES.
** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 5% AND IS
REDUCED TO 0% AFTER 6 YEARS. CLASS B SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
*** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 0.75% AND IS
REDUCED TO 0% AFTER 1 YEAR. CLASS C SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
+ COMMENCEMENT OF ISSUANCE DATES ARE SEPTEMBER 16, 1985, JULY 1, 1991 AND JULY
2, 1992 FOR CLASS A, CLASS B AND CLASS C SHARES, RESPECTIVELY.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CAPITAL GAIN DISTRIBUTIONS AND GAINS REALIZED
ON THE SALE OF FUND SHARES ARE TAXABLE.
8
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
------------------------------------ -----------------------------
12 MONTHS 6 MONTHS
08/31/97 02/28/97 08/31/96 ENDED 08/31/97 ENDED 08/31/97
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES $11.76 $11.55 $11.28 9.37% 4.27%
- ---------------------------------------------------------------------------------------
CLASS B SHARES 11.75 11.55 11.27 8.55 3.79
- ---------------------------------------------------------------------------------------
CLASS C SHARES 11.76 11.55 11.27 8.91 4.01
- ---------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/03/84 - 12/31/84 $ 9.57 $ 9.60 -- 0.31%
--
- ---------------------------------------------------------------------------------------
1985 9.60 10.45 -- $0.8903 19.00
- ---------------------------------------------------------------------------------------
1986 10.45 11.39 -- 0.8246 17.38
- ---------------------------------------------------------------------------------------
1987 11.39 10.74 -- 0.7823 1.30
- ---------------------------------------------------------------------------------------
1988 10.74 11.06 -- 0.8244 10.98
- ---------------------------------------------------------------------------------------
1989 11.06 11.23 -- 0.8041 9.11
- ---------------------------------------------------------------------------------------
1990 11.23 11.15 -- 0.7843 6.55
- ---------------------------------------------------------------------------------------
1991 11.15 11.56 $0.0365 0.7519 11.12
- ---------------------------------------------------------------------------------------
1992 11.56 11.62 0.1314 0.7043 8.01
- ---------------------------------------------------------------------------------------
1993 11.62 12.25 0.1208 0.6507 12.32
- ---------------------------------------------------------------------------------------
1994 12.25 10.75 0.0135 0.6264 (7.14)
- ---------------------------------------------------------------------------------------
1995 10.75 11.84 -- 0.5954 16.01
- ---------------------------------------------------------------------------------------
1996 11.84 11.54 -- 0.5299 2.29
- ---------------------------------------------------------------------------------------
01/01/97 - 08/31/97 11.54 11.76 -- 0.3458 4.99
- ---------------------------------------------------------------------------------------
TOTALS: $0.3022 $9.1144
- ---------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/97: 185.63%
- ---------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91 - 12/31/91 $11.19 $11.55 $0.0365 $0.3222 6.50%
- ---------------------------------------------------------------------------------------
1992 11.55 11.62 0.1314 0.6139 7.27
- ---------------------------------------------------------------------------------------
1993 11.62 12.25 0.1208 0.5599 11.49
- ---------------------------------------------------------------------------------------
1994 12.25 10.75 0.0135 0.5406 (7.84)
- ---------------------------------------------------------------------------------------
1995 10.75 11.83 -- 0.5094 15.05
- ---------------------------------------------------------------------------------------
1996 11.83 11.53 -- 0.4467 1.52
- ---------------------------------------------------------------------------------------
01/01/97 - 08/31/97 11.53 11.75 -- 0.2906 4.49
- ---------------------------------------------------------------------------------------
TOTALS: $0.3022 $3.2833
- ---------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/97: 43.49%
- ---------------------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES; RESULTS FOR
EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CAPITAL GAIN DISTRIBUTIONS AND GAINS REALIZED
ON THE SALE OF FUND SHARES ARE TAXABLE.
9
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 - 12/31/92 $11.71 $11.62 $0.1314 $0.2766 2.78%
- ------------------------------------------------------------------------------
1993 11.62 12.25 0.1208 0.5904 11.77
- ------------------------------------------------------------------------------
1994 12.25 10.75 0.0135 0.5696 (7.60)
- ------------------------------------------------------------------------------
1995 10.75 11.84 -- 0.5369 15.42
- ------------------------------------------------------------------------------
1996 11.84 11.54 -- 0.4737 1.77
- ------------------------------------------------------------------------------
01/01/97 - 08/31/97 11.54 11.76 -- 0.3092 4.66
- ------------------------------------------------------------------------------
TOTALS: $0.2657 $2.7564
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
08/31/97: 30.49%
- ------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL RETURN
<TABLE>
<CAPTION>
% RETURN AFTER DEDUCTING
% RETURN WITHOUT SALES CHARGE MAXIMUM SALES CHARGE
-----------------------------------------------------------
CLASS CLASS
-----------------------------------------------------------
A* B** C*** A* B** C***
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TWELVE MONTHS ENDED
09/30/97 9.41% 8.59% 8.86% 5.07% 3.59% 8.11%
- -------------------------------------------------------------------------------------
FIVE YEARS ENDED
09/30/97 6.07 5.30 5.54 5.21 4.97 5.54
- -------------------------------------------------------------------------------------
TEN YEARS ENDED 09/30/97 7.89 N/A N/A 7.46 N/A N/A
- -------------------------------------------------------------------------------------
COMMENCEMENT OF
OPERATIONS THROUGH
09/30/97+ 8.62 6.14 5.42 8.28 6.14 5.42
- -------------------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES; RESULTS
WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
* MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 4% OF THE PUBLIC OFFERING PRICE.
CLASS A SHARES BEAR ONGOING 12B-1 SERVICE FEES.
** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 5% AND IS
REDUCED TO 0% AFTER 6 YEARS. CLASS B SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
*** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 0.75% AND IS
REDUCED TO 0% AFTER 1 YEAR. CLASS C SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
+ COMMENCEMENT OF ISSUANCE DATES ARE DECEMBER 3, 1984, JULY 1, 1991, JULY 2,
1992 AND NOVEMBER 3, 1995 FOR CLASS A, CLASS B, CLASS C AND CLASS Y SHARES,
RESPECTIVELY.
NOTE: THE FUND OFFERS CLASS Y SHARES TO A LIMITED GROUP OF INVESTORS, INCLUDING
INSIGHT INVESTMENT ADVISORY PROGRAM PARTICIPANTS. FOR THE SIX MONTHS ENDED
AUGUST 31, 1997 AND SINCE INCEPTION, NOVEMBER 3, 1995 THROUGH AUGUST 31, 1997,
CLASS Y SHARES HAD A TOTAL RETURN OF 4.41% AND 10.78%, RESPECTIVELY. FOR THE
TWELVE MONTHS ENDED SEPTEMBER 30, 1997 AND FOR THE PERIOD SINCE INCEPTION,
NOVEMBER 3, 1995 THROUGH SEPTEMBER 30, 1997, CLASS Y SHARES HAD AN AVERAGE
ANNUAL RETURN OF 9.70% AND 6.20%, RESPECTIVELY. CLASS Y SHARES DO NOT HAVE
INITIAL OR CONTINGENT DEFERRED SALES CHARGES OR ONGOING DISTRIBUTION AND
SERVICE FEES.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CAPITAL GAIN DISTRIBUTIONS AND GAINS REALIZED
ON THE SALE OF FUND SHARES ARE TAXABLE.
10
<PAGE>
PAINEWEBBER MUNICIPAL HIGH INCOME FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
---------------------------------- -----------------------------
12 MONTHS 6 MONTHS
08/31/97 02/28/97 08/31/96 ENDED 08/31/97 ENDED 08/31/97
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A
SHARES $10.65 $10.39 $10.12 10.98% 5.26%
- ----------------------------------------------------------------------------
CLASS B
SHARES 10.65 10.39 10.11 10.26 4.87
- ----------------------------------------------------------------------------
CLASS C
SHARES 10.65 10.39 10.12 10.42 5.00
- ----------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
------------------
PERIOD CAPITAL GAINS TOTAL
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
06/23/87 -
12/31/87 $ 9.58 $ 9.40 -- $0.3131 1.46%
- ----------------------------------------------------------------------------
1988 9.40 9.90 -- 0.8091 14.45
- ----------------------------------------------------------------------------
1989 9.90 10.09 -- 0.7380 9.66
- ----------------------------------------------------------------------------
1990 10.09 9.89 -- 0.7322 5.52
- ----------------------------------------------------------------------------
1991 9.89 10.38 $0.0679 0.7144 13.32
- ----------------------------------------------------------------------------
1992 10.38 10.54 0.1406 0.6736 9.79
- ----------------------------------------------------------------------------
1993 10.54 10.97 0.2037 0.6180 12.14
- ----------------------------------------------------------------------------
1994 10.97 9.52 0.0260 0.5865 (7.77)
- ----------------------------------------------------------------------------
1995 9.52 10.36 -- 0.6079 15.55
- ----------------------------------------------------------------------------
1996 10.36 10.39 -- 0.5627 5.94
- ----------------------------------------------------------------------------
01/01/97 -
08/31/97 10.39 10.65 -- 0.3335 5.82
- ----------------------------------------------------------------------------
TOTALS: $0.4382 $6.6890
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/97: 123.98%
- ----------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
------------------
PERIOD CAPITAL GAINS TOTAL
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91 -
12/31/91 $10.05 $10.38 $0.0679 $0.3170 7.21%
- ----------------------------------------------------------------------------
1992 10.38 10.54 0.1406 0.5930 8.95
- ----------------------------------------------------------------------------
1993 10.54 10.97 0.2037 0.5349 11.30
- ----------------------------------------------------------------------------
1994 10.97 9.52 0.0260 0.5103 (8.47)
- ----------------------------------------------------------------------------
1995 9.52 10.35 -- 0.5328 14.59
- ----------------------------------------------------------------------------
1996 10.35 10.38 -- 0.4854 5.15
- ----------------------------------------------------------------------------
01/01/97 -
08/31/97 10.38 10.65 -- 0.2860 5.45
- ----------------------------------------------------------------------------
TOTALS: $0.4382 $3.2594
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/97: 51.17%
- ----------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
AT NET ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES;
RESULTS FOR EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CAPITAL GAIN DISTRIBUTIONS AND GAINS REALIZED
ON THE SALE OF FUND SHARES ARE TAXABLE.
11
<PAGE>
PAINEWEBBER MUNICIPAL HIGH INCOME FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 - 12/31/92 $10.50 $10.54 $0.0135 $0.2635 3.06%
- ------------------------------------------------------------------------------
1993 10.54 10.97 0.2037 0.5620 11.57
- ------------------------------------------------------------------------------
1994 10.97 9.52 0.0260 0.5339 (8.23)
- ------------------------------------------------------------------------------
1995 9.52 10.35 -- 0.5583 14.88
- ------------------------------------------------------------------------------
1996 10.35 10.39 -- 0.5106 5.51
- ------------------------------------------------------------------------------
01/01/97 - 08/31/97 10.39 10.65 -- 0.3018 5.50
- ------------------------------------------------------------------------------
TOTALS: $0.2432 $2.7301
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
08/31/97: 34.95%
- ------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL RETURN
<TABLE>
<CAPTION>
% RETURN AFTER DEDUCTING
% RETURN WITHOUT SALES CHARGE MAXIMUM SALES CHARGE
------------------------------------------------------------
CLASS CLASS
------------------------------------------------------------
A* B** C*** A* B** C***
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TWELVE MONTHS ENDED
09/30/97 10.37% 9.54% 9.82% 5.93% 4.54% 9.07%
- --------------------------------------------------------------------------------------
FIVE YEARS ENDED
09/30/97 6.72 5.94 6.20 5.85 5.62 6.20
- --------------------------------------------------------------------------------------
TEN YEARS ENDED 09/30/97 8.86 N/A N/A 8.42 N/A N/A
- --------------------------------------------------------------------------------------
COMMENCEMENT OF
OPERATIONS THROUGH
09/30/97+ 8.28 7.02 6.10 7.85 7.02 6.10
- --------------------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES; RESULTS
WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
* MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 4% OF THE PUBLIC OFFERING PRICE.
CLASS A SHARES BEAR ONGOING 12B-1 SERVICE FEES.
** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 5% AND IS
REDUCED TO 0% AFTER 6 YEARS. CLASS B SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
*** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 0.75% AND IS
REDUCED TO 0% AFTER 1 YEAR. CLASS C SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
+ COMMENCEMENT OF ISSUANCE DATES ARE JUNE 23, 1987, JULY 1, 1991 AND JULY 2,
1992 FOR CLASS A, CLASS B AND CLASS C SHARES, RESPECTIVELY.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CAPITAL GAIN DISTRIBUTIONS AND GAINS REALIZED
ON THE SALE OF FUND SHARES ARE TAXABLE.
12
<PAGE>
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------------- -----------------------------
6 MONTHS 12 MONTHS
08/31/97 02/28/97 08/31/96 ENDED 08/31/97 ENDED 08/31/97
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES $10.82 $10.66 $10.44 3.98% 8.75%
- ------------------------------------------------------------------------------
CLASS B SHARES 10.82 10.65 10.43 3.69 8.05
- ------------------------------------------------------------------------------
CLASS C SHARES 10.83 10.66 10.44 3.82 8.32
- ------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
09/23/88 -
12/31/88 $ 9.60 $ 9.61 -- $0.1630 1.82%
- ------------------------------------------------------------------------------
1989 9.61 9.84 -- 0.6931 9.90
- ------------------------------------------------------------------------------
1990 9.84 9.68 -- 0.6797 5.53
- ------------------------------------------------------------------------------
1991 9.68 10.22 -- 0.6637 12.85
- ------------------------------------------------------------------------------
1992 10.22 10.55 -- 0.6442 9.85
- ------------------------------------------------------------------------------
1993 10.55 11.26 $0.0253 0.5796 12.72
- ------------------------------------------------------------------------------
1994 11.26 9.68 0.1017 0.5095 (8.48)
- ------------------------------------------------------------------------------
1995 9.68 10.81 -- 0.5397 17.57
- ------------------------------------------------------------------------------
1996 10.81 10.65 -- 0.5175 3.46
- ------------------------------------------------------------------------------
01/01/97 -
08/31/97 10.65 10.82 -- 0.3085 4.57
- ------------------------------------------------------------------------------
TOTALS: $0.1270 $5.2985
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
08/31/97: 92.09%
- ------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91 -
12/31/91 $ 9.81 $10.22 -- $0.2930 7.25%
- ------------------------------------------------------------------------------
1992 10.22 10.55 -- 0.5654 9.02
- ------------------------------------------------------------------------------
1993 10.55 11.25 $0.0253 0.4959 11.78
- ------------------------------------------------------------------------------
1994 11.25 9.68 0.1017 0.4362 (9.08)
- ------------------------------------------------------------------------------
1995 9.68 10.81 -- 0.4616 16.71
- ------------------------------------------------------------------------------
1996 10.81 10.65 -- 0.4385 2.69
- ------------------------------------------------------------------------------
01/01/97 -
08/31/97 10.65 10.82 -- 0.2609 4.11
- ------------------------------------------------------------------------------
TOTALS: $0.1270 $2.9515
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
08/31/97: 48.38%
- ------------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
AT NET ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES;
RESULTS FOR EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CAPITAL GAIN DISTRIBUTIONS AND GAINS REALIZED
ON THE SALE OF FUND SHARES ARE TAXABLE.
13
<PAGE>
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 - 12/31/92 $10.45 $10.56 -- $0.2663 3.65%
- ------------------------------------------------------------------------------
1993 10.56 11.26 $0.0253 0.5226 12.04
- ------------------------------------------------------------------------------
1994 11.26 9.69 0.1017 0.4613 (8.81)
- ------------------------------------------------------------------------------
1995 9.69 10.81 -- 0.4875 16.87
- ------------------------------------------------------------------------------
1996 10.81 10.65 -- 0.4651 2.95
- ------------------------------------------------------------------------------
01/01/97 - 08/31/97 10.65 10.83 -- 0.2769 4.36
- ------------------------------------------------------------------------------
TOTALS: $0.1270 $2.4797
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
08/31/97: 32.96%
- ------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL RETURN
<TABLE>
<CAPTION>
% RETURN AFTER DEDUCTING
% RETURN WITHOUT SALES CHARGE MAXIMUM SALES CHARGE
-----------------------------------------------------------
CLASS CLASS
-----------------------------------------------------------
A* B** C*** A* B** C***
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TWELVE MONTHS ENDED
09/30/97 8.49% 7.69% 7.96% 4.15% 2.69% 7.21%
- --------------------------------------------------------------------------------
FIVE YEARS ENDED
09/30/97 6.43 5.66 5.90 5.55 5.33 5.90
- --------------------------------------------------------------------------------
COMMENCEMENT OF
OPERATIONS THROUGH
09/30/97+ 7.64 6.71 5.79 7.16 6.71 5.79
- --------------------------------------------------------------------------------
</TABLE>
/1/ FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
AT NET ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES;
RESULTS FOR EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
* MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 4% OF THE PUBLIC OFFERING PRICE.
CLASS A SHARES BEAR ONGOING 12B-1 SERVICE FEES.
** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 5% AND IS
REDUCED TO 0% AFTER 6 YEARS. CLASS B SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
*** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 0.75% AND IS
REDUCED TO 0% AFTER 1 YEAR. CLASS C SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
+ COMMENCEMENT OF ISSUANCE DATES ARE SEPTEMBER 23, 1988, JULY 1, 1991 AND JULY
2, 1992 FOR CLASS A, CLASS B AND CLASS C SHARES, RESPECTIVELY.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CAPITAL GAIN DISTRIBUTIONS AND GAINS REALIZED
ON THE SALE OF FUND SHARES ARE TAXABLE.
14
<PAGE>
PAINEWEBBER CALIFORNIA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS AUGUST 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 98.57%
$ 2,150 CALIFORNIA GENERAL OBLIGATION BONDS.... 11/01/09 6.500% $ 2,466,652
3,500 CALIFORNIA EDUCATIONAL FACILITIES
AUTHORITY STANFORD UNIVERSITY......... 11/01/16 6.000 3,649,660
3,500 CALIFORNIA EDUCATIONAL FACILITIES
AUTHORITY UNIVERSITY OF SOUTHERN
CALIFORNIA............................ 10/01/15 7.200 3,580,815
2,000 CALIFORNIA HEALTH FACILITIES FINANCING
AUTHORITY KAISER PERMANENTE HOSPITAL.. 10/01/18 7.000 2,135,800
1,950 CALIFORNIA POLLUTION CONTROL FINANCING
AUTHORITY SAN DIEGO GAS & ELECTRIC
(AMBAC INSURED)....................... 06/01/14 5.900 2,110,368
3,500 CALIFORNIA STATE DEPARTMENT OF
TRANSPORTATION........................ 03/01/16 6.500 3,749,165
10,450 CALIFORNIA STATE PUBLIC WORKS BOARD
DEPARTMENT OF CORRECTIONS (MBIA
INSURED).............................. 11/01/19 5.625 10,539,661
1,750 CALIFORNIA STATE PUBLIC WORKS BOARD
VARIOUS UNIVERSITY OF CALIFORNIA
PROJECTS.............................. 06/01/14 5.500 1,786,435
4,000 CALIFORNIA STATE UNIVERSITY REVENUE
HOUSING SYSTEMS (FGIC INSURED)........ 11/01/21 5.900 4,126,160
3,370 UNIVERSITY OF CALIFORNIA REVENUES
MULTIPLE PURPOSE PROJECTS (MBIA
INSURED).............................. 09/01/01 10.000 4,076,824
1,000 ANAHEIM PUBLIC FINANCING AUTHORITY
LEASE REVENUE SENIOR PUBLIC
IMPROVEMENTS PROJECT SERIES A (FSA
INSURED).............................. 09/01/24 6.000 1,092,290
1,390 BEVERLY HILLS CERTIFICATES OF
PARTICIPATION......................... 06/01/15 TO 06/01/19 6.750 TO 7.000 1,471,121
1,350 CONTRA COSTA COUNTY TRANSPORTATION
COMMISSION SALES TAX REVENUE BONDS.... 03/01/07 6.875 1,511,987
5,175 CONTRA COSTA WATER DISTRICT (AMBAC
INSURED).............................. 10/01/22 6.375 5,634,902
1,365 DEL MAR RACE TRACK AUTHORITY........... 08/15/11 6.200 1,441,686
1,365 DOWNEY CERTIFICATES OF PARTICIPATION
CIVIC CENTER PROJECT (MBIA INSURED)... 02/01/09 6.500 1,563,266
650 DUARTE REDEVELOPMENT AGENCY TAX
ALLOCATION DAVIS ADDITION PROJECT..... 09/01/14 6.700 668,356
2,000 EAST BAY MUNICIPAL UTILITY DISTRICT
(FGIC INSURED)........................ 06/01/12 6.000 2,100,420
1,000 FAIRFIELD PUBLIC FINANCING AUTHORITY
MUNICIPAL PARK IMPROVEMENT
(FGIC INSURED)........................ 07/01/14 6.250 1,073,280
3,195 FONTANA REDEVELOPMENT AGENCY TAX
ALLOCATION JURUPA HILLS REDEVELOPMENT
PROJECT............................... 10/01/23 TO 10/01/24 7.100 TO 7.200 3,508,989
2,000 FOOTHILL DE ANZA CALIFORNIA COMMUNITY
COLLEGE DISTRICT CERTIFICATES OF
PARTICIPATION......................... 09/01/13 6.250 2,137,440
2,000 FREMONT UNIFIED SCHOOL DISTRICT ALAMEDA
COUNTY (MBIA INSURED)................. 08/01/16 5.875 2,082,540
1,000 INTERMODAL CONTAINER TRANSFER
FACILITIES SOUTHERN PACIFIC TRANSFER
COMPANY............................... 11/01/14 7.700 1,066,760
5,000 LOS ANGELES HARBOR DEPARTMENT REVENUE.. 11/01/23 5.375 4,806,250
4,960 LOS ANGELES COUNTY PUBLIC WORKS
FINANCING AUTHORITY REVENUE REGIONAL
PARKS AND OPEN SPACE (MBIA INSURED)... 10/01/09 6.100 5,374,854
3,000 LOS ANGELES DEPARTMENT OF WATER & POWER
(CROSSOVER REFUNDED TO 01/15/01 @ 102). 01/15/31 7.100 3,271,560
1,500 LOS ANGELES DEPARTMENT OF WATER & POWER
(CROSSOVER REFUNDED TO 02/15/99 @
102).................................. 02/15/19 7.200 1,590,885
1,180 MODESTO WASTEWATER TREATMENT FACILITY
REVENUE (MBIA INSURED)................ 11/01/10 6.000 1,303,581
1,800 MODESTO PUBLIC FINANCING AUTHORITY
LEASE REVENUE JOHN THURMAN FIELD
RENOVATION PROJECT.................... 11/01/16 6.125 1,841,490
1,000 MOJAVE WATER AGENCY IMPROVEMENT
DISTRICT MORONGO BASIN (FGIC INSURED). 09/01/22 5.800 1,025,350
800 NEWPORT BEACH HEALTH FACILITIES HOAG
MEMORIAL HOSPITAL..................... 09/02/97 3.400* 800,000
5,000 OAKLAND GENERAL OBLIGATION BONDS (FGIC
INSURED).............................. 06/15/22 6.000 5,202,850
1,000 OAKLAND GENERAL OBLIGATIONS BONDS (MBIA
INSURED).............................. 12/15/22 5.900 1,034,080
12,480 ORANGE COUNTY RECOVERY CERTIFICATES OF
PARTICIPATION (MBIA INSURED).......... 06/01/10 TO 07/01/26 5.700 TO 6.000 13,333,841
810 ORANGE COUNTY SINGLE FAMILY RESIDENTIAL
MORTGAGE REVENUE BONDS (GNMA INSURED). 09/01/16 7.800 831,076
1,500 SACRAMENTO MUNICIPAL UTILITY DISTRICT
ELECTRIC REVENUE (AMBAC INSURED)...... 07/01/17 5.700 1,578,660
2,315 SAN BERNARDINO COUNTY TRANSPORTATION
AUTHORITY SALES TAX REVENUE (MBIA
INSURED).............................. 03/01/09 6.250 2,602,569
1,300 SAN DIEGO INDUSTRIAL DEVELOPMENT
AUTHORITY SAN DIEGO GAS & ELECTRIC.... 09/01/18 6.400 1,408,628
</TABLE>
15
<PAGE>
PAINEWEBBER CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- ------------- --------- ------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONCLUDED)
$ 7,000 SAN DIEGO INDUSTRIAL
DEVELOPMENT AUTHORITY SAN
DIEGO GAS & ELECTRIC (MBIA
INSURED).................... 09/01/18 6.100% $ 7,361,830
2,000 SAN FRANCISCO SEWER (AMBAC
INSURED).................... 10/01/11 6.000 2,113,160
4,525 SAN JOAQUIN HILLS
TRANSPORTATION CORRIDOR
AGENCY TOLL ROAD REVENUE.... 01/01/00 4.950+ 4,073,043
1,000 SAN JOSE REDEVELOPMENT AGENCY
TAX ALLOCATION (MBIA
INSURED).................... 08/01/09 6.000 1,105,060
2,000 SAN JOSE-SANTA CLARA WATER
FINANCING AUTHORITY SEWER
REVENUE (FGIC INSURED)...... 11/15/20 5.375 1,964,700
4,555 SAN MATEO COUNTY TRANSIT
DISTRICT (MBIA INSURED)..... 06/01/18 5.750 4,814,271
960 SAN YSIDRO SCHOOL DISTRICT
(AMBAC INSURED)............. 08/01/21 6.125 1,039,718
2,000 SANTA CLARA COUNTY FINANCING
AUTHORITY LEASE (AMBAC
INSURED).................... 11/15/20 6.750 2,257,040
5,000 SANTA MONICA PARKING
AUTHORITY................... 07/01/16 6.375 5,420,050
2,000 SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY............. 07/01/20 5.500 1,994,680
3,500 SOUTHERN CALIFORNIA RAPID
TRANSIT DISTRICT SPECIAL
BENEFIT ASSESSMENT DISTRICT
(AMBAC INSURED)............. 09/01/08 6.000 3,748,220
5,350 PUERTO RICO COMMONWEALTH
HIGHWAY & TRANSPORTATION
AUTHORITY................... 07/01/26 5.500 5,265,951
1,000 PUERTO RICO ELECTRIC POWER
AUTHORITY REVENUE........... 07/01/12 5.000 965,390
------------
TOTAL INVESTMENTS (COST --
$145,937,333) -- 98.57%................ 151,703,364
OTHER ASSETS IN EXCESS OF LIABILITIES --
1.43%.................................. 2,205,458
------------
NET ASSETS -- 100.00%................... $153,908,822
============
</TABLE>
- ---------
* VARIABLE RATE DEMAND NOTES AND VARIABLE RATE CERTIFICATES OF PARTICIPATION
WHICH ARE PAYABLE ON DEMAND. THE MATURITY DATE SHOWN IS THE NEXT INTEREST
RATE RESET DATE; THE INTEREST RATE SHOWN IS THE CURRENT RATE AS OF AUGUST 31,
1997.
+ ZERO COUPON BOND, INTEREST RATE REFLECTS YIELD TO MATURITY AT DATE OF
PURCHASE.
AMBAC - AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC - FINANCIAL GUARANTY INSURANCE COMPANY
FSA - FINANCIAL SECURITY ASSURANCE INCORPORATED
GNMA - GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MBIA - MUNICIPAL BOND INVESTORS ASSURANCE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS AUGUST 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES --
102.49%
ARIZONA -- 4.82%
$10,510 MARICOPA COUNTY
COMMUNITY COLLEGE
DISTRICT............... 07/01/07 6.000% $ 11,257,786
3,700 PHOENIX GENERAL
OBLIGATION............. 07/01/16 6.250 4,143,704
------------
15,401,490
------------
CALIFORNIA -- 0.96%
160 CALIFORNIA STATE (FGIC
INSURED)............... 11/01/12 7.000 182,466
3,000 LOS ANGELES CALIFORNIA
HARBOR DEPARTMENT
REVENUE................ 11/01/23 5.375 2,883,750
------------
3,066,216
------------
COLORADO -- 4.40%
12,000 ARAPAHOE COUNTY CAPITAL
IMPROVEMENT TRUST FUND
HIGHWAY REVENUE........ 08/31/26 7.000 14,053,920
------------
DISTRICT OF COLUMBIA -- 1.47%
4,355 DISTRICT OF COLUMBIA
HOSPITAL REVENUE
MEDLANTIC HEALTHCARE
GROUP.................. 08/15/09 TO 08/15/10 6.000 4,702,640
------------
FLORIDA -- 1.02%
3,000 PLANT CITY UTILITY
SYSTEMS REVENUE........ 10/01/15 6.000 3,271,620
------------
GEORGIA -- 7.57%
5,900 ATLANTA GEORGIA......... 12/01/11 5.900 6,253,174
5,000 CONYERS WATER AND SEWAGE
REVENUE (AMBAC
INSURED)............... 07/01/15 6.600 5,636,750
3,000 GEORGIA MUNICIPAL
ELECTRIC AUTHORITY
POWER REVENUE.......... 01/01/12 6.250 3,296,190
8,000 HALL COUNTY SCHOOL
DISTRICT (AMBAC
INSURED)............... 12/01/14 6.700 9,008,400
------------
24,194,514
------------
HAWAII -- 0.16%
500 HAWAII STATE............ 02/01/08 5.125 510,305
------------
IDAHO -- 0.19%
600 IDAHO HEALTH FACILITIES
AUTHORITY ST. LUKES
MEDICAL CENTER PROJECT. 09/02/97 3.650* 600,000
------------
ILLINOIS -- 9.73%
6,500 ILLINOIS BOARD OF
EDUCATION CHICAGO
SCHOOL REFORM.......... 12/01/12 TO 12/01/17 5.800 TO 6.250 6,767,505
4,335 ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
CITIZENS UTILITIES..... 08/01/20 7.150 4,619,593
3,625 ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
REVENUE REFUNDING
COMMUNITY REHAB
PROVIDERS A............ 07/01/09 TO 07/01/15 5.900 TO 6.000 3,681,619
660 ILLINOIS HEALTH
FACILITIES AUTHORITY
REVENUE EVANGELICAL.... 04/15/17 6.750 765,732
340 ILLINOIS HEALTH
FACILITIES AUTHORITY
REVENUE EVANGELICAL
HOSPITAL (PRE-REFUNDED
WITH U.S. GOVERNMENT
SECURITIES TO 4/15/02 @
102)................... 04/15/17 6.750 377,301
</TABLE>
17
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------- -------- ------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
ILLINOIS -- (CONCLUDED)
$ 2,000 ILLINOIS SKYWAY TOLL BRIDGE REVENUE. 01/01/10 6.500% $ 2,223,840
500 CHICAGO METROPOLITAN WATER
RECLAMATION DISTRICT............... 12/01/10 7.000 597,095
2,500 CHICAGO SERIES A2................... 01/01/15 6.250 2,769,975
2,000 METROPOLITAN PIER & EXPOSITION
AUTHORITY (ILLINOIS) MCCORMICK
PLACE CONVENTION COMPLEX........... 07/01/26 7.000 2,348,200
1,170 NORTHERN ILLINOIS UNIVERSITY (PRE-
REFUNDED WITH U.S. GOVERNMENT
SECURITIES TO 04/01/09 @ 100)...... 04/01/13 10.400 1,592,311
4,620 REGIONAL TRANSPORTATION AUTHORITY
(FGIC INSURED)..................... 06/01/14 7.100 5,348,759
------------
31,091,930
------------
INDIANA -- 0.97%
3,000 INDIANA HEALTH FACILITY FINANCE
AUTHORITY METHODIST HOSPITAL OF
INDIANA............................ 09/01/15 5.750 3,085,020
------------
KENTUCKY -- 2.10%
6,500 JEFFERSON COUNTY POLLUTION CONTROL
REVENUE............................ 02/01/19 7.750 6,715,865
------------
LOUISIANA -- 0.06%
200 PARISH OF EAST BATON ROUGE POLLUTION
CONTROL REVENUE.................... 09/02/97 3.700* 200,000
------------
MARYLAND -- 1.59%
4,750 PRINCE GEORGES COUNTY MARYLAND
POLLUTION CONTROL REVENUE REFUNDING
POTOMAC ELECTRIC PROJECT........... 03/15/10 5.750 5,083,450
------------
MASSACHUSETTS -- 3.09%
6,000 MASSACHUSETTS STATE SERIES B (PRE-
REFUNDED WITH U.S. GOVERNMENT
SECURITIES TO 06/01/02 @ 101)...... 06/01/13 6.500 6,567,420
1,295 MASSACHUSETTS STATE SERIES D (PRE-
REFUNDED WITH U.S. GOVERNMENT
SECURITIES TO 05/01/02 @ 102)...... 05/01/12 5.750 1,385,741
1,770 MASSACHUSETTS WATER RESOURCES
AUTHORITY.......................... 12/01/11 6.000 1,924,202
------------
9,877,363
------------
MICHIGAN -- 2.35%
1,000 MICHIGAN STATE HOSPITAL FINANCE
AUTHORITY MCLAREN REGIONAL MEDICAL
CENTER (PRE-REFUNDED WITH U.S.
GOVERNMENT SECURITIES TO 09/15/01 @
102)............................... 09/15/21 7.500 1,132,050
1,915 ROYAL OAK HOSPITAL FINANCE AUTHORITY
WILLIAM BEAUMONT HOSPITAL.......... 01/01/19 6.625 2,059,563
235 ROYAL OAK HOSPITAL FINANCE AUTHORITY
WILLIAM BEAUMONT HOSPITAL (PRE-
REFUNDED WITH U.S. GOVERNMENT
SECURITIES TO 01/01/02 @ 102)...... 01/01/19 6.625 258,733
3,700 ROYAL OAK HOSPITAL FINANCE AUTHORITY
WILLIAM BEAUMONT HOSPITAL (PRE-
REFUNDED WITH U.S. GOVERNMENT
SECURITIES TO 01/01/01 @ 102)...... 01/01/20 6.750 4,041,880
------------
7,492,226
------------
MINNESOTA -- 2.02%
6,000 MINNESOTA PUBLIC FACILITIES
AUTHORITY WATER POLLUTION.......... 03/01/15 6.250 6,445,140
------------
MISSISSIPPI -- 2.05%
6,045 CLAIBORNE COUNTY MISSISSIPPI
POLLUTION CONTROL REVENUE MIDDLE
SOUTH ENERGY INCORPORATED.......... 12/01/14 9.875 6,553,929
------------
</TABLE>
18
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES
(CONTINUED)
NEW HAMPSHIRE -- 0.57%
$ 1,275 NEW HAMPSHIRE HIGHER
EDUCATIONAL & HEALTH
FACILITIES NEW
HAMPSHIRE COLLEGE...... 01/01/07 5.950% $ 1,284,869
500 NEW HAMPSHIRE INDUSTRIAL
DEVELOPMENT AUTHORITY
CENTRAL MAINE
POWER COMPANY.......... 05/01/14 7.375 538,945
------------
1,823,814
------------
NEW JERSEY -- 4.94%
1,890 NEW JERSEY HOUSING
GENERAL RESOLUTION
SERIES A............... 11/01/04 6.700 2,025,437
12,000 NEW JERSEY STATE
TURNPIKE AUTHORITY
(MBIA INSURED)......... 01/01/16 6.500 13,751,520
------------
15,776,957
------------
NEW YORK -- 19.79%
8,590 NEW YORK STATE DORMITORY
AUTHORITY REVENUES CITY
UNIVERSITY............. 07/01/02 TO 07/01/03 6.000 9,126,448
5,395 NEW YORK STATE ENERGY
RESEARCH AND
DEVELOPMENT AUTHORITY
ELECTRIC
FACILITIES REVENUE..... 09/01/19 TO 02/01/22 7.150 5,812,735
6,000 NEW YORK STATE
ENVIRONMENTAL
FACILITIES CORPORATION
STATE WATER
POLLUTION CONTROL...... 06/15/14 6.875 6,790,380
3,825 NEW YORK STATE LOCAL
GOVERNMENT ASSISTANCE
CORPORATION............ 04/01/14 6.000 4,126,639
4,960 NEW YORK CITY MUNICIPAL
WATER FINANCE AUTHORITY
WATER & SEWER SYSTEMS
REVENUE SERIES A....... 06/15/12 7.100 5,464,928
12,000 NEW YORK CITY MUNICIPAL
WATER FINANCE AUTHORITY
WATER & SEWER SYSTEMS
REVENUE SERIES B....... 06/15/27 5.500 11,894,640
1,000 PORT AUTHORITY NEW YORK
AND NEW JERSEY KENNEDY
INTERNATIONAL AIRPORT
COGENERATION PROJECT... 10/01/11 6.750 1,082,800
12,325 TRIBOROUGH BRIDGE &
TUNNEL AUTHORITY NEW
YORK REVENUES GENERAL
PURPOSE................ 01/01/17 TO 01/01/27 5.200 TO 5.500 12,451,607
3,100 TRIBOROUGH BRIDGE AND
TUNNEL AUTHORITY....... 01/01/10 7.100 3,393,384
2,800 UNITED NATIONS
DEVELOPMENT
CORPORATION............ 07/01/26 6.000 3,060,344
------------
63,203,905
------------
NORTH CAROLINA -- 2.53%
3,400 NORTH CAROLINA EASTERN
MUNICIPAL POWER AGENCY. 01/01/13 7.000 3,840,130
4,000 NORTH CAROLINA MEDICAL
CARE COMPANY REX
HOSPITAL............... 06/01/17 6.250 4,238,680
------------
8,078,810
------------
OHIO -- 0.34%
1,000 OHIO STATE
INFRASTRUCTURE
IMPROVEMENT............ 08/01/13 6.200 1,082,280
------------
OKLAHOMA -- 1.09%
3,290 HOLDENVILLE INDUSTRIAL
AUTHORITY CORRECTIONAL
FACILITY REVENUE....... 07/01/03 TO 07/01/06 6.050 TO 6.350 3,483,719
------------
OREGON -- 3.58%
10,400 PORTLAND SEWER SYSTEMS
REVENUE................ 06/01/15 6.250 11,443,224
------------
PENNSYLVANIA -- 0.97%
3,000 PENNSYLVANIA STATE
TURNPIKE COMMISSION
REVENUE................ 12/01/12 5.750 3,100,230
------------
</TABLE>
19
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES
(CONCLUDED)
PUERTO RICO -- 1.20%
$ 1,500 PUERTO RICO COMMONWEALTH
(MBIA INSURED)......... 07/01/15 5.650% $ 1,581,330
2,425 PUERTO RICO COMMONWEALTH
HIGHWAY &
TRANSPORTATION
AUTHORITY.............. 07/01/36 5.000 2,242,082
------------
3,823,412
------------
SOUTH CAROLINA -- 1.84%
1,000 CHARLESTON WATERWORKS &
SEWER REVENUE.......... 01/01/16 6.000 1,041,550
6,300 PIEDMONT MUNICIPAL POWER
AGENCY................. 01/01/23 4.000 4,824,288
------------
5,865,838
------------
TEXAS -- 16.45%
2,900 TEXAS STATE PUBLIC
PROPERTY FINANCE
CORPORATION REVENUE
MENTAL HEALTH.......... 09/01/03 5.400 2,944,225
8,000 TEXAS STATE TURNPIKE
AUTHORITY NORTH THRUWAY
REVENUE PRESIDENT
GEORGE BUSH TURNPIKE... 01/01/25 5.000 7,469,200
1,440 TEXAS STATE WATER
DEVELOPMENT SERIES A&C. 08/01/18 5.750 1,465,574
4,850 ALLIANCE AIRPORT
AUTHORITY INCORPORATED
TEXAS SPECIAL
FACILITIES REVENUE
AMERICA AIRLINES
INCORPORATED PROJECT... 12/01/29 7.500 5,250,707
9,000 AUSTIN UTILITY SYSTEMS
REVENUE+............... 11/15/05 TO 11/15/12 6.500 TO 6.750 10,121,790
1,321 HARRIS COUNTY LEASE (1). 05/15/02 5.500 1,351,006
710 HARRIS COUNTY TOLL ROAD
AUTHORITY(AMBAC
INSURED)............... 08/15/17 6.500 777,230
10,675 SAN ANTONIO ELECTRIC AND
GAS REVENUE............ 02/01/11 5.750 11,055,777
7,325 SAN ANTONIO ELECTRIC AND
GAS REVENUE (PRE-
REFUNDED WITH U.S.
GOVERNMENT SECURITIES
TO 02/01/02 @ 101)..... 02/01/11 5.750 7,760,398
4,000 TEXARKANA HEALTH
FACILITIES DEVELOPMENT
CORPORATION WADLEY
REGIONAL MEDICAL CENTER
(MBIA INSURED)......... 10/01/19 7.000 4,352,480
------------
52,548,387
------------
VIRGINIA -- 2.24%
5,500 PITTSYLVANIA COUNTY
VIRGINIA INDUSTRIAL
DEVELOPMENT AUTHORITY
REVENUE (1)............ 01/01/10 7.650 6,067,380
1,000 HAMPTON ROADS MEDICAL
COLLEGE................ 11/15/16 6.875 1,075,080
------------
7,142,460
------------
WYOMING -- 2.40%
7,000 SWEETWATER COUNTY SOLID
WASTE DISPOSAL REVENUE
FMC CORPORATION
PROJECT................ 06/01/24 7.000 7,677,040
------------
TOTAL INVESTMENTS (COST --
$310,910,823) -- 102.49%.......... 327,395,704
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (2.49)%.................. (7,940,109)
------------
NET ASSETS -- 100.00%.............. $319,455,595
============
</TABLE>
- ---------
* VARIABLE RATE DEMAND NOTES AND VARIABLE RATE CERTIFICATES OF PARTICIPATION
WHICH ARE PAYABLE ON DEMAND. THE MATURITY DATES SHOWN ARE THE NEXT INTEREST
RATE RESET DATES; THE INTEREST RATES SHOWN ARE THE CURRENT RATES AS OF AUGUST
31, 1997.
+ PURCHASED ON A FORWARD COMMITTMENT BASIS.
(1) ILLIQUID SECURITY REPRESENTING 2.32% OF NET ASSETS.
AMBAC - AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC - FINANCIAL GUARANTY INSURANCE COMPANY
MBIA - MUNICIPAL BOND INVESTORS ASSURANCE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
PAINEWEBBER MUNICIPAL HIGH INCOME FUND
PORTFOLIO OF INVESTMENTS AUGUST 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------- -------- -----------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 97.37%
CALIFORNIA -- 6.97%
$ 350 DUARTE CALIFORNIA REDEVELOPMENT
AGENCY TAX ALLOCATION REFUNDING
DAVIS ADDITION PROJECT.............. 09/01/14 6.700% $ 359,884
3,000 LAKE ELSINORE CALIFORNIA PUBLIC
FINANCING AUTHORITY LOCAL AGENCY
REVENUE............................. 09/01/20 7.100 2,990,220
2,975 LONG BEACH AQUARIUM OF THE PACIFIC
PROJECT............................. 07/01/15 6.125 3,026,348
-----------
6,376,452
-----------
COLORADO -- 3.49%
3,000 HYLAND HILLS METROPOLITAN PARK AND
RECREATION DISTRICT................. 12/15/15 6.750 3,194,460
-----------
FLORIDA -- 2.45%
2,035 ESCAMBIA COUNTY POLLUTION CONTROL
CHAMPION INTERNATIONAL CORPORATION
PROJECT............................. 08/01/22 6.900 2,241,125
-----------
GEORGIA -- 2.95%
2,500 DEVELOPMENT AUTHORITY OF EFFINGHAM
COUNTY FORT HOWARD PAPER
(ASSUMED BY FORT JAMES CORPORATION). 10/01/05 7.900 2,693,725
-----------
ILLINOIS -- 6.74%
2,500 ILLINOIS EDUCATIONAL FACILITIES
AUTHORITY COLUMBIA COLLEGE.......... 12/01/17 6.875 2,644,900
3,000 METROPOLITAN PIER & EXPOSITION
AUTHORITY (ILLINOIS) MCCORMICK PLACE
CONVENTION COMPLEX.................. 07/01/26 7.000 3,522,300
-----------
6,167,200
-----------
INDIANA -- 11.99%
4,000 INDIANA STATE DEVELOPMENT FINANCE
AUTHORITY INLAND STEEL CORPORATION.. 11/01/11 7.250 4,373,960
1,300 CRAWFORDSVILLE ECONOMIC DEVELOPMENT
AUTHORITY KROGER CO................. 11/01/12 7.700 1,462,123
2,500 INDIANAPOLIS AIRPORT AUTHORITY
FEDERAL EXPRESS..................... 01/15/17 7.100 2,783,875
200 INDIANAPOLIS INDIANA RESOURCE
RECOVERY REVENUE.................... 09/02/97 3.800* 200,000
2,000 WABASH SOLID WASTE DISPOSAL JEFFERSON
SMURFIT CORPORATION PROJECT......... 06/01/26 7.500 2,144,580
-----------
10,964,538
-----------
KENTUCKY -- 5.44%
2,200 ASHLAND SEWAGE AND SOLID WASTE
ASHLAND INCORPORATED PROJECT........ 02/01/22 7.125 2,444,750
1,250 KENTON COUNTY AIRPORT BOARD DELTA
AIRLINES............................ 02/01/21 7.125 1,358,387
1,000 RUSSELL HEALTH FINANCING AUTHORITY
FRANCISCAN SISTERS OF THE POOR
HEALTH SYSTEM....................... 07/01/15 8.100 1,173,070
-----------
4,976,207
-----------
LOUISIANA -- 3.68%
100 LOUISIANA PUBLIC FACILITIES AUTHORITY
REVENUE KENNER HOTEL LIMITED........ 09/02/97 3.050* 100,000
1,000 POINTE COUPEE PARISH GULF STATES
UTILITIES........................... 03/01/13 6.700 1,053,680
2,000 WEST FELICIANA PARISH GULF STATES
UTILITIES........................... 12/01/14 7.700 2,209,900
-----------
3,363,580
-----------
MASSACHUSETTS -- 1.13%
1,000 AGAWAM RESOURCE RECOVERY SPRINGFIELD
PROJECT............................. 12/01/08 8.500 1,033,340
-----------
</TABLE>
21
<PAGE>
PAINEWEBBER MUNICIPAL HIGH INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------- -------- -----------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW HAMPSHIRE -- 5.40%
$1,690 NEW HAMPSHIRE HIGHER EDUCATIONAL AND
HEALTH FACILITIES AUTHORITY REVENUE
NEW HAMPSHIRE COLLEGE................ 01/01/16 6.300% $ 1,706,173
3,000 NEW HAMPSHIRE INDUSTRIAL DEVELOPMENT
AUTHORITY CENTRAL MAINE POWER
COMPANY.............................. 05/01/14 7.375 3,233,670
-----------
4,939,843
-----------
NEW JERSEY -- 5.78%
2,000 NEW JERSEY ECONOMIC DEVELOPMENT
AUTHORITY VINELAND COGENERATION L.P.
PROJECT.............................. 06/01/19 7.875 2,174,420
2,900 NEW JERSEY HEALTH CARE FACILITIES
FINANCING AUTHORITY COLUMBUS
HOSPITAL............................. 07/01/21 7.500 3,108,365
-----------
5,282,785
-----------
NEW MEXICO -- 2.35%
2,000 CHAVES COUNTY HOSPITAL REVENUE BONDS
EASTERN NEW MEXICO MEDICAL CENTER.... 12/01/22 7.250 2,150,180
-----------
NEW YORK -- 12.06%
2,800 NEW YORK CITY INDUSTRIAL DEVELOPMENT
AGENCY AMERICAN AIRLINES
INCORPORATED......................... 08/01/24 6.900 3,066,224
3,870 NEW YORK ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY LILCO.......... 09/01/19 7.150 4,169,654
3,500 PORT AUTHORITY NEW YORK AND NEW JERSEY
KENNEDY INTERNATIONAL AIRPORT
COGENERATION PROJECT 4TH INSTALLMENT
PROJECT.............................. 10/01/11 6.750 3,789,800
-----------
11,025,678
-----------
OHIO -- 3.43%
3,000 DAYTON EMERY AIR FREIGHT.............. 10/01/09 6.200 3,138,390
-----------
OKLAHOMA -- 2.39%
2,050 HOLDENVILLE INDUSTRIAL AUTHORITY
CORRECTIONAL FACILITY................ 07/01/10 6.600 2,183,804
-----------
PENNSYLVANIA -- 1.85%
1,500 BEAVER COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY TOLEDO EDISON.............. 05/01/20 7.750 1,695,840
-----------
SOUTH CAROLINA -- 2.02%
1,750 MYRTLE BEACH CERTIFICATES OF
PARTICIPATION CONVENTION CENTER
PROJECT.............................. 07/01/17 6.875 1,844,693
-----------
TEXAS -- 2.28%
200 SABINE RIVER AUTHORITY TEXAS POLLUTION
CONTROL REVENUE...................... 09/02/97 3.300* 200,000
1,875 EL PASO INTERNATIONAL AIRPORT MARRIOTT
HOTEL................................ 03/01/22 7.875 1,887,263
-----------
2,087,263
-----------
UTAH -- 2.93%
2,500 TOOELE COUNTY UTAH HAZARDOUS WASTE
DISPOSAL REVENUE..................... 08/01/10 6.750 2,681,600
-----------
</TABLE>
22
<PAGE>
PAINEWEBBER MUNICIPAL HIGH INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------- -------- -----------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONCLUDED)
VIRGINIA -- 4.37%
$1,175 LOUDOUN COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY DULLES AIRPORT MARRIOTT
HOTEL............................... 09/01/15 7.125% $ 1,271,397
2,500 PITTSYLVANIA COUNTY VIRGINIA
INDUSTRIAL DEVELOPMENT AUTHORITY
REVENUE............................. 01/01/14 7.500 2,720,175
-----------
3,991,572
-----------
WASHINGTON -- 0.11%
100 WASHINGTON STATE HEALTH CARE
FACILITIES AUTHORITY FRED HUTCHINSON
CANCER CENTER....................... 09/02/97 3.350* 100,000
-----------
WEST VIRGINIA -- 2.40%
1,900 HARRISON COUNTY COMMERCIAL
DEVELOPMENT BONDS KROGER COMPANY.... 11/01/14 8.100 2,192,923
-----------
WISCONSIN -- 4.50%
100 WISCONSIN STATE HEALTH FACILITIES
AUTHORITY REVENUE FRANCISCAN HEALTH
CARE................................ 09/03/97 3.350* 100,000
3,900 JANESVILLE INDUSTRIAL DEVELOPMENT
REVENUE BONDS SIMMONS MANUFACTURING
COMPANY
PARAMOUNT COMMUNICATIONS............ 10/15/17 7.000 4,011,657
-----------
4,111,657
-----------
WYOMING -- 0.66%
300 KEMMERER WYOMING POLLUTION CONTROL
REVENUE............................. 09/02/97 3.750* 300,000
200 LINCOLN COUNTY POLLUTION CONTROL..... 09/02/97 3.050* 200,000
100 PLATTE COUNTY WYOMING POLLUTION
CONTROL REVENUE..................... 09/02/97 3.750* 100,000
-----------
600,000
-----------
TOTAL INVESTMENTS (COST -- $84,790,354) --
97.37%......................................... 89,036,855
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.63%.. 2,400,925
-----------
NET ASSETS -- 100.00%........................... $91,437,780
===========
</TABLE>
- ---------
* VARIABLE RATE DEMAND NOTES AND VARIABLE RATE CERTIFICATES OF PARTICIPATION
WHICH ARE PAYABLE ON DEMAND. THE MATURITY DATES SHOWN ARE THE NEXT INTEREST
RATE RESET DATES; THE INTEREST RATES SHOWN ARE THE CURRENT RATES AS OF AUGUST
31, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS AUGUST 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT INTEREST
(000) MATURITY DATES RATES VALUE
--------- -------------------- -------------- -----------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 99.15%
$1,705 METROPOLITAN
TRANSPORTATION
AUTHORITY.............. 07/01/11 TO 07/01/17 5.500 TO 6.250% $ 1,760,415
400 METROPOLITAN
TRANSPORTATION
AUTHORITY (MBIA
INSURED)............... 01/01/08 6.875 428,600
1,750 METROPOLITAN
TRANSPORTATION
AUTHORITY NEW YORK
COMMUTER FACILITIES
(MBIA INSURED)......... 07/01/17 6.250 1,878,240
2,000 NEW YORK STATE DORMITORY
AUTHORITY REVENUE BONDS
CITY UNIVERSITY OF NEW
YORK................... 07/01/02 TO 07/01/16 5.625 TO 6.000 2,078,340
450 NEW YORK STATE DORMITORY
AUTHORITY REVENUE BONDS
COLGATE UNIVERSITY
(MBIA INSURED)......... 07/01/16 6.000 490,032
1,500 NEW YORK STATE DORMITORY
AUTHORITY REVENUE BONDS
COLUMBIA UNIVERSITY.... 07/01/14 4.750 1,382,025
40 NEW YORK STATE DORMITORY
AUTHORITY REVENUE BONDS
FORDHAM UNIVERSITY
(AMBAC INSURED)........ 07/01/15 7.200 43,617
700 NEW YORK STATE DORMITORY
AUTHORITY REVENUE BONDS
STATE UNIVERSITY OF NEW
YORK................... 05/15/16 7.000 753,928
800 NEW YORK STATE ENERGY
RESEARCH & DEVELOPMENT
CENTRAL HUDSON GAS &
ELECTRIC (FGIC
INSURED)............... 10/01/14 7.375 868,104
2,400 NEW YORK STATE ENERGY
RESEARCH & DEVELOPMENT
CONSOLIDATED EDISON
COMPANY................ 08/15/20 6.100 2,517,384
680 NEW YORK STATE ENERGY
RESEARCH & DEVELOPMENT
LONG ISLAND LIGHTING... 12/01/20 7.150 732,653
250 NEW YORK STATE ENERGY
RESEARCH & DEVELOPMENT
NIAGARA MOHAWK (FGIC
INSURED)............... 10/01/13 6.625 272,910
1,500 NEW YORK STATE
ENVIRONMENTAL
FACILITIES CORPORATION
SPRING VALLEY WATER
(AMBAC INSURED)........ 08/01/24 6.150 1,583,100
700 NEW YORK STATE
ENVIRONMENTAL
FACILITIES CORPORATION
STATE WATER POLLUTION
CONTROL................ 06/15/10 7.250 777,182
300 NEW YORK STATE HOUSING
FINANCE AGENCY......... 09/15/12 7.300 331,515
1,500 NEW YORK STATE LOCAL
GOVERNMENT ASSISTANCE
CORPORATION............ 04/01/20 6.500 1,608,885
580 NEW YORK STATE MEDICAL
CARE FACILITIES
HOSPITAL AND NURSING
(FHA INSURED).......... 02/15/09 7.500 616,215
1,500 NEW YORK STATE MEDICAL
CARE FACILITIES
HOSPITAL AND NURSING
(HUNTINGTON HOSPITAL).. 11/01/14 6.500 1,606,215
1,000 NEW YORK STATE POWER
AUTHORITY REVENUE &
GENERAL PURPOSE........ 01/01/20 6.000 1,023,530
2,655 NEW YORK STATE THRUWAY
AUTHORITY.............. 01/01/00 TO 01/01/02 5.500 TO 5.900+ 2,250,478
2,000 NEW YORK STATE THRUWAY
AUTHORITY HIGHWAY &
BRIDGE TRUST FUND...... 04/01/14 6.000 2,112,440
1,500 NEW YORK STATE URBAN
DEVELOPMENT
CORPORATION............ 01/01/04 TO 04/01/05 6.250 TO 6.400 1,623,180
1,000 PORT AUTHORITY OF NEW
YORK & NEW JERSEY
KENNEDY INTERNATIONAL
AIRPORT COGENERATION
PROJECT................ 10/01/11 6.750 1,082,800
1,000 TRIBOROUGH BRIDGE AND
TUNNEL AUTHORITY (MBIA
INSURED)............... 01/01/12 6.000 1,092,810
1,000 ERIE COUNTY WATER
REVENUE AUTHORITY
(AMBAC INSURED)........ 12/01/14 6.750 1,102,950
300 NEW YORK CITY........... 09/02/97 3.700* 300,000
100 NEW YORK CITY (AMBAC
INSURED)............... 09/02/97 3.700* 100,000
2,100 NEW YORK CITY (FGIC
INSURED)............... 02/15/26 5.500 2,087,988
200 NEW YORK CITY (MBIA
INSURED)............... 09/02/97 3.700* 200,000
1,730 NEW YORK CITY INDUSTRIAL
DEVELOPMENT BONDS
LIGHTHOUSE PROJECT..... 07/01/22 6.500 1,853,349
545 NEW YORK CITY MUNICIPAL
WATER FINANCE AUTHORITY
WATER & SEWER SYSTEMS
REVENUE................ 06/15/12 7.100 600,481
1,500 NEW YORK CITY MUNICIPAL
WATER FINANCE AUTHORITY
WATER & SEWER SYSTEMS
REVENUE (MBIA INSURED). 06/15/27 5.500 1,486,830
1,025 NIAGARA FALLS (FGIC
INSURED)............... 06/15/08 5.500 1,067,066
1,250 ONEIDA HERKIMER WASTE
MANAGEMENT AUTHORITY... 04/01/14 6.750 1,332,287
2,700 PUERTO RICO COMMONWEALTH
HIGHWAY &
TRANSPORTATION
AUTHORITY.............. 07/01/13 TO 07/01/36 5.000 TO 6.250 2,679,479
1,000 PUERTO RICO ELECTRIC
POWER AUTHORITY
REVENUE................ 07/01/09 6.125 1,088,780
</TABLE>
24
<PAGE>
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT INTEREST
(000) MATURITY DATE RATE VALUE
--------- ------------- --------- -----------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONCLUDED)
$ 785 PUERTO RICO INDUSTRIAL MEDICAL
& ENVIRONMENTAL AUTHORITY
WARNER LAMBERT............... 05/01/14 7.600% $ 846,670
-----------
TOTAL INVESTMENTS (COST --
$41,237,002) -- 99.15%.................. 43,660,478
OTHER ASSETS IN EXCESS OF LIABILITIES --
0.85%................................... 375,390
-----------
NET ASSETS -- 100.00%.................... $44,035,868
===========
</TABLE>
- ---------
* VARIABLE RATE DEMAND NOTE IS PAYABLE ON DEMAND. THE MATURITY DATE SHOWN IS
THE NEXT INTEREST RATE RESET DATE, THE INTEREST RATE SHOWN IS THE CURRENT
RATE AS OF AUGUST 31, 1997.
+ ZERO COUPON BOND INTEREST RATE REFLECTS YIELD TO MATURITY AT DATE OF
PURCHASE.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FHA -- FEDERAL HOUSING AUTHORITY
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
FUTURES CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF OUTSTANDING LONG IN EXPIRATION UNREALIZED
CONTRACTS FUTURE CONTRACTS EXCHANGE FOR DATE DEPRECIATION
--------- ---------------------- ------------ ---------- ------------
<C> <S> <C> <C> <C>
118 MUNICIPAL BOND FUTURES $1,183,438 DEC 97 $5,313
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
25
<PAGE>
PAINEWEBBER
STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CALIFORNIA NATIONAL MUNICIPAL NEW YORK
TAX-FREE TAX-FREE HIGH TAX-FREE
INCOME FUND INCOME FUND INCOME FUND INCOME FUND
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
INVESTMENTS IN
SECURITIES, AT VALUE
(COST--$145,937,333,
$310,910,823,
$84,790,354 AND
$41,237,002,
RESPECTIVELY)........... $151,703,364 $327,395,704 $89,036,855 $43,660,478
CASH..................... 69,442 5,147 45,867 44,562
RECEIVABLE FOR
INVESTMENTS SOLD........ 1,542,297 -- -- --
INTEREST RECEIVABLE...... 2,738,963 4,432,411 1,471,210 551,846
RECEIVABLE FOR SHARES OF
BENEFICIAL INTEREST
SOLD.................... 375,598 10,490 1,250,812 27,878
OTHER ASSETS............. 45,176 121,148 97,822 55,947
------------ ------------ ----------- -----------
TOTAL ASSETS............. 156,474,840 331,964,900 91,902,566 44,340,711
------------ ------------ ----------- -----------
LIABILITIES
PAYABLE FOR INVESTMENTS
PURCHASED............... 1,451,132 9,366,630 -- --
DIVIDENDS PAYABLE........ 471,058 643,284 297,562 129,818
PAYABLE FOR SHARES OF
BENEFICIAL INTEREST
REPURCHASED............. 415,713 2,064,859 45,992 32,489
PAYABLE TO AFFILIATES.... 117,602 253,361 84,675 38,913
VARIATION MARGIN PAYABLE. -- -- -- 6,099
ACCRUED EXPENSES AND
OTHER LIABILITIES....... 110,513 181,171 36,557 97,524
------------ ------------ ----------- -----------
TOTAL LIABILITIES........ 2,566,018 12,509,305 464,786 304,843
------------ ------------ ----------- -----------
NET ASSETS
BENEFICIAL INTEREST--
$0.001 PAR VALUE
(UNLIMITED AMOUNT
AUTHORIZED)............. 149,696,211 303,083,042 88,369,911 42,198,640
ACCUMULATED NET REALIZED
LOSSES FROM INVESTMENTS
AND FUTURES
TRANSACTIONS............ (1,553,420) (112,328) (1,178,632) (580,935)
NET UNREALIZED
APPRECIATION OF
INVESTMENTS AND FUTURES. 5,766,031 16,484,881 4,246,501 2,418,163
------------ ------------ ----------- -----------
NET ASSETS............... $153,908,822 $319,455,595 $91,437,780 $44,035,868
============ ============ =========== ===========
CLASS A:
NET ASSETS............... $118,905,172 $230,424,438 $54,259,217 $22,214,901
------------ ------------ ----------- -----------
SHARES OUTSTANDING....... 10,748,132 19,600,329 5,092,859 2,052,190
------------ ------------ ----------- -----------
NET ASSET VALUE AND
REDEMPTION VALUE PER
SHARE................... $11.06 $11.76 $10.65 $10.82
====== ====== ====== ======
MAXIMUM OFFERING PRICE
PER SHARE (NET ASSET
VALUE PLUS SALES CHARGE
OF 4.00% OF OFFERING
PRICE).................. $11.52 $12.25 $11.09 $11.27
====== ====== ====== ======
CLASS B:
NET ASSETS............... $ 18,397,798 $ 36,910,910 $18,067,872 $ 8,690,613
------------ ------------ ----------- -----------
SHARES OUTSTANDING....... 1,661,887 3,140,788 1,696,530 803,070
------------ ------------ ----------- -----------
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE................... $11.07 $11.75 $10.65 $10.82
====== ====== ====== ======
CLASS C:
NET ASSETS............... $ 16,605,852 $ 51,881,620 $19,110,691 $13,130,354
------------ ------------ ----------- -----------
SHARES OUTSTANDING....... 1,502,059 4,413,513 1,794,188 1,212,714
------------ ------------ ----------- -----------
NET ASSET VALUE AND
OFFERING PRICE PER
SHARE................... $11.06 $11.76 $10.65 $10.83
====== ====== ====== ======
CLASS Y:
NET ASSETS............... $ 238,627
------------
SHARES OUTSTANDING....... 20,294
------------
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
VALUE PER SHARE......... $11.76
======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
PAINEWEBBER
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED AUGUST 31, 1997
(UNAUDITED)
------------------------------------------------
CALIFORNIA NATIONAL MUNICIPAL NEW YORK
TAX-FREE TAX-FREE HIGH TAX-FREE
INCOME FUND INCOME FUND INCOME FUND INCOME FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INTEREST...................... $4,392,547 $ 9,707,786 $2,871,171 $1,297,205
---------- ----------- ---------- ----------
EXPENSES:
INVESTMENT ADVISORY AND
ADMINISTRATION............... 394,200 850,991 267,567 134,231
SERVICE FEES--CLASS A......... 150,997 307,470 65,799 27,997
SERVICE AND DISTRIBUTION
FEES--CLASS B................ 98,785 194,961 93,700 45,499
SERVICE AND DISTRIBUTION
FEES--CLASS C................ 64,220 206,943 66,791 49,676
CUSTODY AND ACCOUNTING........ 46,620 102,702 27,199 13,945
LEGAL AND AUDIT............... 45,733 45,103 40,468 39,450
TRANSFER AGENCY AND SERVICE
FEES......................... 27,252 66,721 25,893 18,635
STATE REGISTRATION............ 26,513 30,818 27,373 25,675
REPORTS AND NOTICES TO
SHAREHOLDERS................. 25,735 73,124 20,389 18,731
TRUSTEES' FEES................ 6,125 6,125 6,125 6,125
OTHER EXPENSES................ 19,686 3,229 9,558 10,947
---------- ----------- ---------- ----------
905,866 1,888,187 650,862 390,911
LESS: FEE WAIVERS FROM
ADVISER...................... -- -- -- (95,820)
---------- ----------- ---------- ----------
NET EXPENSES.................. 905,866 1,888,187 650,862 295,091
---------- ----------- ---------- ----------
NET INVESTMENT INCOME......... 3,486,681 7,819,599 2,220,309 1,002,114
---------- ----------- ---------- ----------
REALIZED AND UNREALIZED GAINS
(LOSSES) FROM INVESTMENT
ACTIVITIES:
NET REALIZED GAINS (LOSSES)
FROM:
INVESTMENT TRANSACTIONS...... 1,979,501 5,023,346 523,649 313,073
FUTURES CONTRACTS............ (22,342) 37,912 -- 16,900
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF:
INVESTMENTS.................. 83,584 677,023 1,671,009 347,030
FUTURES...................... -- -- -- (5,313)
---------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED
GAINS FROM INVESTMENT
ACTIVITIES................... 2,040,743 5,738,281 2,194,658 671,690
---------- ----------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... $5,527,424 $13,557,880 $4,414,967 $1,673,804
========== =========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
PAINEWEBBER CALIFORNIA TAX-FREE INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
AUGUST 31, 1997 ENDED
(UNAUDITED) FEBRUARY 28, 1997
--------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT INCOME........................ $ 3,486,681 $ 8,486,514
NET REALIZED GAINS FROM INVESTMENTS AND
FUTURES TRANSACTIONS........................ 1,957,159 654,917
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF INVESTMENTS.... 83,584 (3,028,942)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 5,527,424 6,112,489
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME--CLASS A............... (2,764,010) (6,690,592)
NET INVESTMENT INCOME--CLASS B............... (375,248) (957,662)
NET INVESTMENT INCOME--CLASS C............... (347,423) (838,260)
------------ ------------
TOTAL DIVIDENDS TO SHAREHOLDERS.............. (3,486,681) (8,486,514)
------------ ------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
NET PROCEEDS FROM THE SALE OF SHARES......... 6,665,576 8,838,812
COST OF SHARES REPURCHASED................... (22,109,628) (46,089,161)
PROCEEDS FROM DIVIDENDS REINVESTED........... 1,704,770 4,217,037
------------ ------------
NET DECREASE IN NET ASSETS DERIVED FROM
BENEFICIAL INTEREST TRANSACTIONS............ (13,739,282) (33,033,312)
------------ ------------
NET DECREASE IN NET ASSETS................... (11,698,539) (35,407,337)
NET ASSETS:
BEGINNING OF PERIOD.......................... 165,607,361 201,014,698
------------ ------------
END OF PERIOD................................ $153,908,822 $165,607,361
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
AUGUST 31, 1997 ENDED
(UNAUDITED) FEBRUARY 28, 1997
--------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT INCOME........................ $ 7,819,599 $ 18,925,055
NET REALIZED GAINS (LOSSES) FROM INVESTMENTS
AND FUTURES TRANSACTIONS ................... 5,061,258 (2,590,396)
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF INVESTMENTS.... 677,023 (1,953,998)
------------ -------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 13,557,880 14,380,661
------------ -------------
DIVIDENDS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME--CLASS A............... (5,862,736) (14,156,747)
NET INVESTMENT INCOME--CLASS B............... (776,458) (1,889,671)
NET INVESTMENT INCOME--CLASS C............... (1,174,250) (2,864,344)
NET INVESTMENT INCOME--CLASS Y............... (6,155) (14,293)
------------ -------------
TOTAL DIVIDENDS TO SHAREHOLDERS.............. (7,819,599) (18,925,055)
------------ -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
NET PROCEEDS FROM THE SALE OF SHARES......... 7,315,974 105,046,487
COST OF SHARES REPURCHASED................... (62,734,817) (190,976,675)
PROCEEDS FROM DIVIDENDS REINVESTED........... 4,864,272 11,884,626
------------ -------------
NET DECREASE IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS....................... (50,554,571) (74,045,562)
------------ -------------
NET DECREASE IN NET ASSETS................... (44,816,290) (78,589,956)
NET ASSETS:
BEGINNING OF PERIOD.......................... 364,271,885 442,861,841
------------ -------------
END OF PERIOD................................ $319,455,595 $ 364,271,885
============ =============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
PAINEWEBBER MUNICIPAL HIGH INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
AUGUST 31, 1997 ENDED
(UNAUDITED) FEBRUARY 28, 1997
--------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT INCOME........................ $ 2,220,309 $ 4,828,287
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS................................ 523,649 1,153,507
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF INVESTMENTS.... 1,671,009 (474,646)
----------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 4,414,967 5,507,148
----------- ------------
DIVIDENDS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME--CLASS A............... (1,380,036) (2,920,065)
NET INVESTMENT INCOME--CLASS B............... (419,839) (997,782)
NET INVESTMENT INCOME--CLASS C............... (420,434) (910,440)
----------- ------------
TOTAL DIVIDENDS TO SHAREHOLDERS.............. (2,220,309) (4,828,287)
----------- ------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
NET PROCEEDS FROM THE SALE OF SHARES......... 17,594,862 10,286,482
COST OF SHARES REPURCHASED................... (18,538,933) (26,447,595)
PROCEEDS FROM DIVIDENDS REINVESTED........... 1,201,232 2,620,432
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS............ 257,161 (13,540,681)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS........ 2,451,819 (12,861,820)
NET ASSETS:
BEGINNING OF PERIOD.......................... 88,985,961 101,847,781
----------- ------------
END OF PERIOD................................ $91,437,780 $ 88,985,961
=========== ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
AUGUST 31, 1997 ENDED
(UNAUDITED) FEBRUARY 28, 1997
--------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT INCOME........................ $ 1,002,114 $ 2,401,465
NET REALIZED GAINS FROM INVESTMENTS AND
FUTURES TRANSACTIONS........................ 329,973 469,607
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF INVESTMENTS.... 341,717 (901,550)
----------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 1,673,804 1,969,522
----------- ------------
DIVIDENDS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME--CLASS A............... (535,554) (1,280,146)
NET INVESTMENT INCOME--CLASS B............... (183,113) (425,371)
NET INVESTMENT INCOME--CLASS C............... (283,447) (695,948)
----------- ------------
TOTAL DIVIDENDS TO SHAREHOLDERS.............. (1,002,114) (2,401,465)
----------- ------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
NET PROCEEDS FROM THE SALE OF SHARES......... 2,786,986 2,580,008
COST OF SHARES REPURCHASED................... (6,483,808) (15,737,969)
PROCEEDS FROM DIVIDENDS REINVESTED........... 652,690 1,553,231
----------- ------------
NET DECREASE IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS....................... (3,044,132) (11,604,730)
----------- ------------
NET DECREASE IN NET ASSETS................... (2,372,442) (12,036,673)
NET ASSETS:
BEGINNING OF PERIOD.......................... 46,408,310 58,444,983
----------- ------------
END OF PERIOD................................ $44,035,868 $ 46,408,310
=========== ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Mutual Fund Trust ("Mutual Fund Trust") and PaineWebber Municipal
Series ("Municipal Series") (collectively, the "Trusts") were organized under
Massachusetts law by Declarations of Trust dated November 21, 1986 and January
28, 1987, respectively, and are registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end
diversified management investment company and an open-end non-diversified man-
agement investment company, respectively. Mutual Fund Trust has two series:
PaineWebber California Tax-Free Income Fund ("California Tax-Free Income Fund")
and PaineWebber National Tax-Free Income Fund ("National Tax-Free Income
Fund"). Municipal Series has two series: PaineWebber Municipal High Income Fund
("Municipal High Income Fund") and PaineWebber New York Tax-Free Income Fund
("New York Tax-Free Income Fund") (collectively, the "Funds").
Currently, each Fund offers Class A, Class B, Class C and Class Y shares (no
Class Y shares were outstanding during the period for California Tax-Free In-
come Fund, Municipal High Income Fund and New York Tax-Free Income Fund). Each
class represents interests in the same assets of the applicable Fund and the
classes are identical except for differences in their sales charge structures,
ongoing service and distribution charges and certain transfer agency expenses.
In addition, Class B shares and all corresponding dividend reinvested shares
automatically convert to Class A shares approximately six years after initial
issuance. All classes of shares have equal voting privileges, except that each
class has exclusive voting rights with respect to its service and/or distribu-
tion plan.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assump-
tions that affect the reported amounts and disclosures in the financial state-
ments. Actual results could differ from those estimates. The following is a
summary of significant accounting policies:
Valuation of Investments--Where market quotations are readily available, port-
folio securities are valued thereon, provided such quotations adequately re-
flect the fair value of the securities, in the judgment of Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins"), a wholly owned asset management
subsidiary of PaineWebber Incorporated ("PaineWebber") and investment adviser,
administrator and distributor of the Funds. When market quotations are not
readily available, securities are valued based upon appraisals received from a
pricing service which utilizes a computerized matrix system, or based upon ap-
praisals derived from information concerning those securities or similar secu-
rities received from recognized dealers in those securities. All other securi-
ties are valued at fair value as determined in good faith by or under the di-
rection of each Trust's board of trustees. The amortized cost method of valua-
tion, which approximates market value, is used to value debt obligations with
60 days or less remaining to maturity, unless the respective Trust's board of
trustees determines that this does not represent fair value.
Investment Transactions and Investment Income--Investment transactions are re-
corded on the trade date. Realized gains and losses from investment transac-
tions are calculated on the identified cost method. Interest income is recorded
on an accrual basis. Discounts are accreted and premiums are amortized as ad-
justments to interest income and the identified cost of securities.
Income and expenses (excluding class-specific expenses) are allocated propor-
tionately to each class of shares based upon the relative value of dividend el-
igible shares of each class at the beginning of the day (after adjusting for
current capital share activity of the respective classes). Realized and
unrealized gains and losses are allocated proportionately to each class of
shares based upon the relative value of shares outstanding at the beginning of
the day (after adjusting for
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
current capital share activity of the respective class). Class-specific ex-
penses are charged directly to the applicable class of shares.
Future Contracts--Upon entering into a financial futures contract, the Funds
are required to pledge to a broker an amount of cash and/or municipal securi-
ties equal to a certain percentage of the contract amount. This amount is known
as the "initial margin." Subsequently payments, known as "variation margin,"
are made or received by the Funds each day, depending on the daily fluctuations
in the value of the underlying financial futures contracts. Such variation mar-
gin is recorded for financial statement purposes on a daily basis as unrealized
gain or loss until the financial futures contract is closed, at which time the
net gain or loss is reclassified to realized.
Using financial futures contracts involves various market risks. The maximum
amount at risk from the purchase of a futures contract is the contract value.
The Fund uses financial futures contracts in strategies intended to enhance in-
come or for hedging purposes. However, imperfect correlations between futures
contracts and the portfolio securities being hedged or, market disruptions, do
not normally permit full control of these risks at all times.
Dividends and Distributions--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences
are either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment, temporary differ-
ences do not require reclassification.
CONCENTRATION OF RISK
Each Fund follows an investment policy of investing primarily in municipal ob-
ligations of various states except for California Tax-Free Income Fund and New
York Tax-Free Income Fund which invest solely in municipal obligations of their
respective states. Economic changes affecting those states and certain of their
public bodies and municipalities may affect the ability of the issuers within
those states to pay interest on, or repay principal of, municipal obligations
held by those Funds.
BANK LINE OF CREDIT
The Funds may participate with other funds managed by Mitchell Hutchins in a
$200 million committed credit facility ("Facility") to be utilized for tempo-
rary financing until the settlement of sale or purchase of portfolio securi-
ties, the repurchase or redemption of shares of the Funds at the request of the
shareholders and other temporary or emergency purposes. In connection there-
with, the Funds have agreed to pay a commitment fee, pro rata, based on the
relative asset size of the Funds in the Facility. Interest is charged to the
Funds at rates based on prevailing market rates in effect at the time of
borrowings. For the six months ended August 31, 1997, the Funds did not borrow
under the Facility.
INVESTMENT ADVISER AND ADMINISTRATOR
Each Trust's board of trustees has approved an Investment Advisory and Admin-
istration Contract ("Advisory Contract") with Mitchell Hutchins, under which
Mitchell Hutchins serves as investment adviser and administrator of the Funds.
In accordance with the Advisory Contracts, each Fund pays Mitchell Hutchins an
investment advisory and administration fee, which is accrued daily and paid
monthly, at the annual rates of 0.50% of California Tax-Free Income Fund's and
National Tax-Free Income Fund's average daily net assets and 0.60% of Municipal
High Income Fund's and New York Tax-Free Income Fund's average daily net as-
sets. At August 31, 1997, California Tax-Free Income Fund, National Tax-Free
Income Fund, Municipal High Income Fund and New York Tax-Free Income Fund owed
Mitchell Hutchins $65,879, $138,015,
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
$46,018 and $18,423, respectively, in investment advisory and administration
fees. During the six months ended August 31, 1997 Mitchell Hutchins voluntarily
waived $80,145 in investment advisory and administration fees from the New York
Tax-Free Income Fund.
DISTRIBUTION PLANS
Mitchell Hutchins is the distributor of each Fund's shares and has appointed
PaineWebber as exclusive dealer for the sale of those shares. Under separate
plans of distribution pertaining to Class A, Class B and Class C shares, each
Fund pays Mitchell Hutchins monthly service fees at the annual rate of 0.25% of
the average daily net assets of each class of shares and monthly distribution
fees at the annual rate of 0.75% and 0.50% of the average daily net assets of
Class B and Class C shares, respectively. At August 31, 1997, California Tax-
Free Income Fund, National Tax-Free Income Fund, Municipal High Income Fund and
New York Tax-Free Income Fund owed Mitchell Hutchins $51,723, $115,346, $38,657
and $20,490, respectively, in service and distribution fees. For the six months
ended August 31, 1997, Mitchell Hutchins voluntarily waived $13,884 in service
and distribution fees from New York Tax-Free Income Fund.
Mitchell Hutchins also receives the proceeds of the initial sales charges paid
by shareholders upon the purchase of Class A shares and the contingent deferred
sales charges paid by shareholders upon certain redemptions of Class A, Class B
and Class C shares. Mitchell Hutchins has informed each Fund that, for the six
months ended August 31, 1997, it earned $67,807, $104,446, $57,103 and $48,287
in sales charges for the California Tax-Free Income Fund, National Tax-Free In-
come Fund, Municipal High Income Fund and New York Tax-Free Income Fund, re-
spectively.
TRANSFER AGENCY SERVICE FEES
Prior to August 1, 1997, each Fund paid PaineWebber an annual fee of $4.00 per
active PaineWebber shareholder account, plus certain out-of-pocket expenses,
for certain services not provided by the Fund's transfer agent. For these serv-
ices for the period ended July 31, 1997, PaineWebber earned $5,924, $15,757,
$5,104 and $2,077 from California Tax-Free Income Fund, National Tax-Free In-
come Fund, Municipal High Income Fund and New York Tax-Free Income Fund, re-
spectively. For the period ended July 31, 1997, PaineWebber voluntarily waived
$1,791 in transfer agency service fees from New York Tax-Free Income Fund.
Subsequent to August 1, 1997, PaineWebber provides transfer agency related
services to each Fund pursuant to a delegation of authority from PFPC, Inc.,
each Funds' transfer agent, and was compensated for these services by PFPC,
Inc., not the Funds. For the month of August 1997, PFPC, Inc. paid PaineWebber
$2,036, $5,399, $1,813 and $961 for these services for the California Tax-Free
Income Fund, National Tax-Free Income Fund, Municipal High Income Fund and New
York Tax-Free Income Fund, respectively.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at August 31,
1997, was substantially the same as the cost of securities for financial state-
ment purposes.
At August 31, 1997, the components of net unrealized appreciation of invest-
ments were as follows:
<TABLE>
<CAPTION>
CALIFORNIA NATIONAL MUNICIPAL NEW YORK
TAX-FREE TAX-FREE HIGH TAX-FREE
INCOME FUND INCOME FUND INCOME FUND INCOME FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
GROSS APPRECIATION
(INVESTMENTS HAVING AN EXCESS
OF VALUE OVER COST).......... $5,887,633 $16,922,247 $4,258,501 $2,480,085
GROSS DEPRECIATION
(INVESTMENTS HAVING AN EXCESS
OF COST OVER VALUE).......... (121,602) (437,366) (12,000) (56,609)
---------- ----------- ---------- ----------
NET UNREALIZED APPRECIATION OF
INVESTMENTS.................. $5,766,031 $16,484,881 $4,246,501 $2,423,476
========== =========== ========== ==========
</TABLE>
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the six months ended August 31, 1997, total aggregate purchases and sales
of portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
CALIFORNIA NATIONAL MUNICIPAL NEW YORK
TAX-FREE TAX-FREE HIGH TAX-FREE
INCOME FUND INCOME FUND INCOME FUND INCOME FUND
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
PURCHASES...................... $92,093,043 $162,130,659 $10,898,585 $4,263,375
SALES.......................... $97,670,371 $203,199,191 $12,942,546 $7,250,409
</TABLE>
FEDERAL TAX STATUS
Each Fund intends to distribute all of its tax-exempt income and any taxable
income and to comply with the requirements of the Internal Revenue Code appli-
cable to regulated investment companies. Accordingly, no provisions for federal
income taxes are required. In addition, by distributing during each calendar
year substantially all of its net investment income, capital gains and certain
other amounts, if any, each Fund intends not to be subject to a federal excise
tax.
At February 28, 1997, the Funds had the following net capital loss
carryforwards available as reductions, to the extent provided in the regula-
tions, of future net realized capital gains which expire as follows:
<TABLE>
<CAPTION>
FISCAL CALIFORNIA NATIONAL MUNICIPAL NEW YORK
YEAR TAX-FREE TAX-FREE HIGH TAX-FREE
ENDING INCOME FUND INCOME FUND INCOME FUND INCOME FUND
- ------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
2002........................... -- $2,034,069 -- --
2003........................... $3,509,975 549,124 $1,701,313 --
2004........................... -- -- -- $910,441
2005........................... -- 2,590,396 -- --
---------- ---------- ---------- --------
$3,509,975 $5,173,589 $1,701,313 $910,441
========== ========== ========== ========
</TABLE>
The capital loss carryforwards of National Tax-Free Income Fund includes
$2,583,193 from its acquisition on November 3, 1995, of Mitchell
Hutchins/Kidder, Peabody Municipal Bond Fund.
To the extent that any such losses are used to offset future capital gains, it
is probable that the gains so offset will not be distributed.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SHARES OF BENEFICIAL INTEREST
There is an unlimited amount of $0.001 par value shares of beneficial interest
authorized. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA TAX-
FREE INCOME
FUND
SIX MONTHS ENDED
AUGUST 31,
1997:
SHARES SOLD..... 372,451 $ 4,085,588 159,016 $ 1,742,457 76,481 $ 837,531
SHARES
REPURCHASED.... (1,552,851) (16,924,186) (264,171) (2,873,855) (211,513) (2,311,587)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 165,682 1,832,931 (165,533) (1,832,931) -- --
DIVIDENDS
REINVESTED..... 120,704 1,316,994 14,637 159,741 20,916 228,035
----------- ------------ ---------- ------------ ---------- ------------
NET DECREASE.... (894,014) $ (9,688,673) (256,051) $ (2,804,588) (114,116) $ (1,246,021)
=========== ============ ========== ============ ========== ============
YEAR ENDED
FEBRUARY 28,
1997:
SHARES SOLD..... 510,488 $ 5,504,522 131,234 $ 1,418,045 178,083 $ 1,916,245
SHARES
REPURCHASED.... (2,963,291) (31,999,497) (681,970) (7,362,837) (625,668) (6,726,827)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 34,172 369,695 (34,152) (369,695) -- --
DIVIDENDS
REINVESTED..... 300,002 3,229,518 39,223 422,345 52,550 565,174
----------- ------------ ---------- ------------ ---------- ------------
NET DECREASE.... (2,118,629) $(22,895,762) (545,665) $ (5,892,142) (395,035) $ (4,245,408)
=========== ============ ========== ============ ========== ============
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------------------------- ------------------------ ------------------------ -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ ---------- ------------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NATIONAL TAX-
FREE INCOME
FUND
SIX MONTHS ENDED
AUGUST 31,
1997:
SHARES SOLD..... 414,174 $ 4,781,639 112,700 $ 1,301,294 106,272 $ 1,233,041 -- --
SHARES
REPURCHASED.... (4,097,015) (47,472,258) (391,529) (4,517,416) (929,715) (10,727,616) (1,505) $(17,527)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 161,873 1,889,531 (161,890) (1,889,531) -- -- -- --
DIVIDENDS
REINVESTED..... 313,374 3,625,619 34,895 403,529 71,667 828,968 532 6,156
----------- ------------ ---------- ------------ ---------- ------------ ------ ---------
NET DECREASE.... (3,207,594) $(37,175,469) (405,824) $ (4,702,124) (751,776) $ (8,665,607) (973) $ (11,371)
=========== ============ ========== ============ ========== ============ ====== =========
YEAR ENDED
FEBRUARY 28,
1997:
SHARES SOLD..... 8,619,128 $ 97,801,970 253,262 $ 2,877,367 381,333 $ 4,367,150 -- --
SHARES
REPURCHASED.... (13,822,729) (157,206,321) (1,118,597) (12,708,618) (1,842,002) (20,956,425) (9,251) $(105,311)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 107,309 1,229,690 (107,317) (1,229,690) -- -- -- --
DIVIDENDS
REINVESTED..... 775,209 8,810,453 91,161 1,035,371 178,183 2,024,390 1,269 14,412
----------- ------------ ---------- ------------ ---------- ------------ ------ ---------
NET DECREASE.... (4,321,083) $(49,364,208) (881,491) $(10,025,570) (1,282,486) $(14,564,885) (7,982) $ (90,899)
=========== ============ ========== ============ ========== ============ ====== =========
</TABLE>
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SHARES OF BENEFICIAL INTEREST (CONCLUDED)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------ --------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL HIGH INCOME
FUND
SIX MONTHS ENDED AUGUST
31, 1997
SHARES SOLD............. 1,051,635 $ 11,172,402 220,438 $ 2,301,040 391,049 $ 4,121,420
SHARES REPURCHASED...... (1,166,406) (12,334,649) (337,528) (3,519,979) (254,410) (2,684,305)
SHARES CONVERTED FROM
CLASS B TO CLASS A..... 75,150 792,904 (75,209) (792,904) -- --
DIVIDENDS REINVESTED ... 71,713 748,984 18,804 196,273 24,504 255,975
---------- ------------ -------- ----------- --------- -----------
NET INCREASE (DECREASE). 32,092 $ 379,641 (173,495) $(1,815,570) 161,143 $ 1,693,090
========== ============ ======== =========== ========= ===========
YEAR ENDED FEBRUARY 28,
1997:
SHARES SOLD............. 536,992 $ 5,536,346 175,425 $ 1,795,292 286,992 $ 2,954,844
SHARES REPURCHASED...... (1,250,644) (12,777,454) (617,828) (6,305,194) (721,045) (7,364,947)
SHARES CONVERTED FROM
CLASS B TO CLASS A..... 52,173 535,183 (52,179) (535,183) -- --
DIVIDENDS REINVESTED ... 156,542 1,601,417 44,526 455,296 55,120 563,719
---------- ------------ -------- ----------- --------- -----------
NET DECREASE............ (504,937) $ (5,104,508) (450,056) $(4,589,789) (378,933) $(3,846,384)
========== ============ ======== =========== ========= ===========
NEW YORK TAX-FREE INCOME
FUND
SIX MONTHS ENDED AUGUST
31, 1997
SHARES SOLD............. 110,432 $ 1,185,431 74,823 $ 802,536 74,719 $ 799,019
SHARES REPURCHASED...... (320,894) (3,419,736) (112,287) (1,194,624) (175,445) (1,869,448)
SHARES CONVERTED FROM
CLASS B TO CLASS A..... 56,023 607,404 (56,039) (607,404) -- --
DIVIDENDS REINVESTED.... 33,053 352,097 8,302 88,395 19,910 212,198
---------- ------------ -------- ----------- --------- -----------
NET DECREASE............ (121,386) $ (1,274,804) (85,201) $ (911,097) (80,816) $ (858,231)
========== ============ ======== =========== ========= ===========
YEAR ENDED FEBRUARY 28,
1997:
SHARES SOLD............. 88,199 $ 925,277 88,876 $ 938,568 67,988 $ 716,163
SHARES REPURCHASED...... (680,523) (7,153,673) (324,941) (3,422,517) (489,556) (5,161,779)
SHARES CONVERTED FROM
CLASS B TO CLASS A..... 5,504 58,218 (5,504) (58,218) -- --
DIVIDENDS REINVESTED ... 77,051 812,033 21,753 229,150 48,603 512,048
---------- ------------ -------- ----------- --------- -----------
NET DECREASE............ (509,769) $ (5,358,145) (219,816) $(2,313,017) (372,965) $(3,933,568)
========== ============ ======== =========== ========= ===========
</TABLE>
37
<PAGE>
PAINEWEBBER CALIFORNIA TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FOR THE FOR THE YEARS THREE FOR THE
ENDED YEAR YEAR ENDED MONTHS YEAR
AUGUST 31, ENDED ENDED FEBRUARY 28, ENDED ENDED
1997 FEBRUARY 28, FEBRUARY 29, ------------------- FEBRUARY 28, NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993 1992
----------- ------------ ------------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $10.91 $11.02 $10.68 $11.41 $11.80 $11.39 $11.13
------ ------ ------ ------ ------ ------ ------
NET INVESTMENT INCOME... 0.25 0.52 0.57 0.58 0.60 0.16 0.66
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) FROM
INVESTMENTS AND
FUTURES................ 0.15 (0.11) 0.34 (0.63) (0.08) 0.58 0.29
------ ------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE)
FROM INVESTMENT
OPERATIONS............. 0.40 0.41 0.91 (0.05) 0.52 0.74 0.95
------ ------ ------ ------ ------ ------ ------
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.25) (0.52) (0.57) (0.58) (0.60) (0.16) (0.66)
DISTRIBUTIONS FROM NET
REALIZED GAINS FROM
INVESTMENT
TRANSACTIONS........... -- -- -- (0.10) (0.31) (0.17) (0.03)
------ ------ ------ ------ ------ ------ ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS........... (0.25) (0.52) (0.57) (0.68) (0.91) (0.33) (0.69)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $11.06 $10.91 $11.02 $10.68 $11.41 $11.80 $11.39
====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 3.73% 3.92% 8.68% (0.18)% 4.46% 6.52% 8.73%
====== ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $118,905 $127,040 $151,684 $178,234 $227,179 $247,025 $239,851
EXPENSES TO AVERAGE NET
ASSETS................. 1.00%* 0.97% 0.94% 0.88% 0.90% 0.99%* 0.93%
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS..... 4.58%* 4.85% 5.21% 5.55% 5.10% 5.61%* 5.80%
PORTFOLIO TURNOVER RATE. 61% 73% 32% 11% 37% 3% 25%
</TABLE>
- ---------
+ COMMENCEMENT OF ISSUANCE OF SHARES
* ANNUALIZED
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
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 EACH CLASS WOULD BE LOWER IF SALES
CHARGES WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE
YEAR HAS NOT BEEN ANNUALIZED.
38
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- -----------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FOR THE FOR THE YEARS THREE FOR THE
ENDED YEAR YEAR ENDED MONTHS YEAR
AUGUST 31, ENDED ENDED FEBRUARY 28, ENDED ENDED
1997 FEBRUARY 28, FEBRUARY 29, ----------------- FEBRUARY 28, NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993 1992
- ----------- ------------ ------------ ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$10.92 $11.03 $10.69 $11.41 $11.81 $11.39 $11.14
------ ------ ------ ------ ------ ------ ------
0.21 0.44 0.48 0.50 0.51 0.14 0.57
0.15 (0.11) 0.34 (0.62) (0.09) 0.59 0.28
------ ------ ------ ------ ------ ------ ------
0.36 0.33 0.82 (0.12) 0.42 0.73 0.85
------ ------ ------ ------ ------ ------ ------
(0.21) (0.44) (0.48) (0.50) (0.51) (0.14) (0.57)
-- -- -- (0.10) (0.31) (0.17) (0.03)
------ ------ ------ ------ ------ ------ ------
(0.21) (0.44) (0.48) (0.60) (0.82) (0.31) (0.60)
------ ------ ------ ------ ------ ------ ------
$11.07 $10.92 $11.03 $10.69 $11.41 $11.81 $11.39
====== ====== ====== ====== ====== ====== ======
3.34% 3.14% 7.86% (0.85)% 3.56% 6.50% 7.80%
====== ====== ====== ====== ====== ====== ======
$18,398 $20,943 $27,175 $33,007 $41,979 $36,693 $30,205
1.77%* 1.74% 1.70% 1.64% 1.65% 1.74%* 1.68%
3.80%* 4.08% 4.45% 4.78% 4.32% 4.81%* 4.91%
61% 73% 32% 11% 37% 3% 25%
<CAPTION>
CLASS C
- ------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
SIX MONTHS FOR THE FOR THE YEARS THREE PERIOD
ENDED YEAR YEAR ENDED MONTHS JULY 2, 1992+
AUGUST 31, ENDED ENDED FEBRUARY 28, ENDED THROUGH
1997 FEBRUARY 28, FEBRUARY 29, ------------------ FEBRUARY 28, NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993 1992
----------- ------------ ------------ --------- -------- ------------ -------------
<C> <C> <C> <C> <C> <C> <C>
$10.90 $11.02 $10.67 $11.40 $11.79 $11.38 $11.41
------ ------ ------ ------ ------ ------ ------
0.22 0.47 0.51 0.53 0.54 0.14 0.21
0.16 (0.12) 0.35 (0.63) (0.08) 0.58 (0.03)
------ ------ ------ ------ ------ ------ ------
0.38 0.35 0.86 (0.10) 0.46 0.72 0.18
------ ------ ------ ------ ------ ------ ------
(0.22) (0.47) (0.51) (0.53) (0.54) (0.14) (0.21)
-- -- -- (0.10) (0.31) (0.17) --
------ ------ ------ ------ ------ ------ ------
(0.22) (0.47) (0.51) (0.63) (0.85) (0.31) (0.21)
------ ------ ------ ------ ------ ------ ------
$11.06 $10.90 $11.02 $10.67 $11.40 $11.79 $11.38
====== ====== ====== ====== ====== ====== ======
3.56% 3.30% 8.22% (0.70)% 3.91% 6.49% 1.28%
====== ====== ====== ====== ====== ====== ======
$16,606 $17,624 $22,155 $28,217 $53,874 $39,029 $30,141
1.51%* 1.49% 1.46% 1.40% 1.39% 1.48%* 1.39%*
4.06%* 4.34% 4.69% 5.05% 4.55% 5.06%* 4.79%*
61% 73% 32% 11% 37% 3% 25%
</TABLE>
39
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FOR THE FOR THE YEARS THREE FOR THE
ENDED YEAR YEAR ENDED MONTHS YEAR
AUGUST 31, ENDED ENDED FEBRUARY 28, ENDED ENDED
1997 FEBRUARY 28, FEBRUARY 29, ------------------- FEBRUARY 28, NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993 1992
----------- ------------ ------------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $11.55 $11.64 $11.26 $12.00 $12.09 $11.67 $11.40
------ ------ ------ ------ ------ ------ ------
NET INVESTMENT INCOME... 0.28 0.55 0.58 0.63 0.64 0.17 0.71
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) FROM
INVESTMENTS AND FUTURES
....................... 0.21 (0.09) 0.39 (0.73) 0.03 0.55 0.31
------ ------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE)
FROM INVESTMENT
OPERATIONS............. 0.49 0.46 0.97 (0.10) 0.67 0.72 1.02
------ ------ ------ ------ ------ ------ ------
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.28) (0.55) (0.59) (0.63) (0.64) (0.17) (0.71)
DISTRIBUTIONS FROM NET
REALIZED GAINS FROM
INVESTMENT
TRANSACTIONS........... -- -- -- (0.01) (0.12) (0.13) (0.04)
------ ------ ------ ------ ------ ------ ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS........... (0.28) (0.55) (0.59) (0.64) (0.76) (0.30) (0.75)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $11.76 $11.55 $11.64 $11.26 $12.00 $12.09 $11.67
====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 4.27% 4.14% 8.75% (0.63)% 5.65% 6.31% 9.21%
====== ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $230,424 $263,425 $315,899 $346,579 $432,825 $419,596 $396,587
EXPENSES TO AVERAGE NET
ASSETS................. 0.94%* 0.91% 0.93%(/2/) 0.88% 0.89% 0.88%* 0.91%
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS..... 4.77%* 4.85% 5.06%(/2/) 5.62% 5.28% 5.86%* 6.13%
PORTFOLIO TURNOVER RATE. 48% 81% 74% 60% 16% 5% 21%
</TABLE>
- ---------
* ANNUALIZED
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
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 EACH CLASS WOULD BE LOWER IF SALES
CHARGES WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE
YEAR HAS NOT BEEN ANNUALIZED.
(2) THESE RATIOS INCLUDE NON-RECURRING ACQUISITION EXPENSES OF 0.03%.
40
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- ---------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FOR THE FOR THE YEARS THREE FOR THE
ENDED YEAR YEAR ENDED MONTHS YEAR
AUGUST 31, ENDED ENDED FEBRUARY 28, ENDED ENDED
1997 FEBRUARY 28, FEBRUARY 29, ----------------- FEBRUARY 28, NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993 1992
- ----------- ------------ ------------ ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$11.55 $11.64 $11.26 $11.99 $12.08 $11.67 $11.40
------ ------ ------ ------ ------ ------ ------
0.23 0.46 0.49 0.54 0.55 0.15 0.62
0.20 (0.09) 0.39 (0.72) 0.03 0.54 0.31
------ ------ ------ ------ ------ ------ ------
0.43 0.37 0.88 (0.18) 0.58 0.69 0.93
------ ------ ------ ------ ------ ------ ------
(0.23) (0.46) (0.50) (0.54) (0.55) (0.15) (0.62)
-- -- -- (0.01) (0.12) (0.13) (0.04)
------ ------ ------ ------ ------ ------ ------
(0.23) (0.46) (0.50) (0.55) (0.67) (0.28) (0.66)
------ ------ ------ ------ ------ ------ ------
$11.75 $11.55 $11.64 $11.26 $11.99 $12.08 $11.67
====== ====== ====== ====== ====== ====== ======
3.79% 3.35% 7.94% (1.29)% 4.87% 6.02% 8.36%
====== ====== ====== ====== ====== ====== ======
$36,911 $40,949 $51,546 $58,958 $70,988 $50,064 $39,564
1.70%* 1.67% 1.68%(/2/) 1.64% 1.63% 1.63%* 1.65%
3.98%* 4.09% 4.31%(/2/) 4.86% 4.50% 5.08%* 5.16%
48% 81% 74% 60% 16% 5% 21%
</TABLE>
41
<PAGE>
PAINEWEBBER NATIONAL TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS (CONCLUDED)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FOR THE FOR THE FOR THE YEARS THREE PERIOD
ENDED YEAR YEAR ENDED MONTHS JULY 2, 1992+
AUGUST 31, ENDED ENDED FEBRUARY 28, ENDED THROUGH
1997 FEBRUARY 28, FEBRUARY 29, ------------------ FEBRUARY 28, NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993 1992
----------- ------------ ------------ -------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD......... $11.55 $11.64 $11.26 $12.00 $12.09 $11.67 $11.71
------ ------ ------ ------ ------ ------ ------
NET INVESTMENT
INCOME......... 0.25 0.49 0.52 0.57 0.58 0.15 0.23
NET REALIZED AND
UNREALIZED
GAINS (LOSSES)
FROM
INVESTMENTS AND
FUTURES........ 0.21 (0.09) 0.39 (0.73) 0.03 0.55 (0.04)
------ ------ ------ ------ ------ ------ ------
NET INCREASE
(DECREASE) FROM
INVESTMENT
OPERATIONS..... 0.46 0.40 0.91 (0.16) 0.61 0.70 0.19
------ ------ ------ ------ ------ ------ ------
DIVIDENDS FROM
NET INVESTMENT
INCOME......... (0.25) (0.49) (0.53) (0.57) (0.58) (0.15) (0.23)
DISTRIBUTIONS
FROM NET
REALIZED GAINS
FROM INVESTMENT
TRANSACTIONS... -- -- -- (0.01) (0.12) (0.13) --
------ ------ ------ ------ ------ ------ ------
TOTAL DIVIDENDS
AND
DISTRIBUTIONS
TO
SHAREHOLDERS... (0.25) (0.49) (0.53) (0.58) (0.70) (0.28) (0.23)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD.. $11.76 $11.55 $11.64 $11.26 $12.00 $12.09 $11.67
====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1)...... 4.01% 3.61% 8.19% (1.13)% 5.13% 6.18% 1.41%
====== ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END
OF PERIOD
(000'S)........ $51,882 $59,652 $75,076 $101,642 $187,778 $138,989 $105,854
EXPENSES TO
AVERAGE NET
ASSETS......... 1.45%* 1.42% 1.45%(/2/) 1.40% 1.37% 1.37%* 1.42%*
NET INVESTMENT
INCOME TO
AVERAGE NET
ASSETS......... 4.26%* 4.34% 4.57%(/2/) 5.13% 4.75% 5.30%* 5.17%*
PORTFOLIO
TURNOVER RATE.. 48% 81% 74% 60% 16% 5% 21%
<CAPTION>
CLASS Y
-----------------------------------------
FOR THE
FOR THE PERIOD
SIX MONTHS FOR THE NOVEMBER 3,
ENDED YEAR 1995+
AUGUST 31, ENDED THROUGH
1997 FEBRUARY 28, FEBRUARY 29,
(UNAUDITED) 1997 1996
----------- ------------ ----------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD......... $11.55 $11.65 $11.62
------ ------ ------
NET INVESTMENT
INCOME......... 0.29 0.58 0.19
NET REALIZED AND
UNREALIZED
GAINS (LOSSES)
FROM
INVESTMENTS AND
FUTURES........ 0.21 (0.10) 0.01
------ ------ ------
NET INCREASE
(DECREASE) FROM
INVESTMENT
OPERATIONS..... 0.50 0.48 0.20
------ ------ ------
DIVIDENDS FROM
NET INVESTMENT
INCOME......... (0.29) (0.58) (0.17)
DISTRIBUTIONS
FROM NET
REALIZED GAINS
FROM INVESTMENT
TRANSACTIONS... -- -- --
------ ------ ------
TOTAL DIVIDENDS
AND
DISTRIBUTIONS
TO
SHAREHOLDERS... (0.29) (0.58) (0.17)
------ ------ ------
NET ASSET VALUE,
END OF PERIOD.. $11.76 $11.55 $11.65
====== ====== ======
TOTAL INVESTMENT
RETURN(1)...... 4.41% 4.32% 1.70%
====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END
OF PERIOD
(000'S)........ $239 $246 $341
EXPENSES TO
AVERAGE NET
ASSETS......... 0.67%* 0.65% 0.64%(/2/)*
NET INVESTMENT
INCOME TO
AVERAGE NET
ASSETS......... 5.03%* 5.13% 5.19%(/2/)*
PORTFOLIO
TURNOVER RATE.. 48% 81% 74%
</TABLE>
- ---------
+ COMMENCEMENT OF ISSUANCE OF SHARES
* ANNUALIZED
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
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 C WOULD BE LOWER IF SALES CHARGES
WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE YEAR
HAS NOT BEEN ANNUALIZED.
(2) THESE RATIOS INCLUDE NON-RECURRING ACQUISITION EXPENSES OF 0.03%.
42
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
43
<PAGE>
PAINEWEBBER MUNICIPAL HIGH INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE
ENDED YEAR FOR THE YEAR FOR THE YEARS ENDED
AUGUST 31, ENDED ENDED FEBRUARY 28,
1997 FEBRUARY 28, FEBRUARY 29, --------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ------------ ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $10.39 $10.29 $ 9.92 $10.77 $10.96 $10.29
------ ------ ------ ------ ------ ------
NET INVESTMENT INCOME... 0.28 0.56 0.62 0.59 0.61 0.67
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) FROM
INVESTMENTS............ 0.26 0.10 0.37 (0.82) 0.01 0.81
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE)
FROM INVESTMENT
OPERATIONS............. 0.54 0.66 0.99 (0.23) 0.62 1.48
------ ------ ------ ------ ------ ------
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.28) (0.56) (0.62) (0.59) (0.61) (0.67)
DISTRIBUTIONS FROM NET
REALIZED GAINS FROM
INVESTMENT
TRANSACTIONS........... -- -- -- (0.03) (0.20) (0.14)
------ ------ ------ ------ ------ ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS........... (0.28) (0.56) (0.62) (0.62) (0.81) (0.81)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $10.65 $10.39 $10.29 $ 9.92 $10.77 $10.96
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 5.26% 6.61% 10.18% (2.03)% 5.77% 15.05%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $54,259 $52,593 $57,280 $63,287 $82,248 $82,251
EXPENSES TO AVERAGE NET
ASSETS, NET OF WAIVERS
FROM ADVISER........... 1.20%* 1.15% 1.10% 1.13% 1.03% 0.87%
EXPENSES TO AVERAGE NET
ASSETS, BEFORE WAIVERS
FROM ADVISER........... 1.20%* 1.15% 1.10% 1.13% 1.16% 1.29%
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS, NET
OF WAIVERS FROM
ADVISER................ 5.24%* 5.49% 5.94% 5.96% 5.52% 6.31%
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS,
BEFORE WAIVERS FROM
ADVISER................ 5.24%* 5.49% 5.94% 5.96% 5.39% 5.89%
PORTFOLIO TURNOVER RATE. 13% 64% 48% 28% 23% 10%
</TABLE>
- ---------
+ COMMENCEMENT OF ISSUANCE OF SHARES
* ANNUALIZED
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD, REINVESTMENT OF ALL DIVIDENDS AND 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 EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE
INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE YEAR HAS NOT
BEEN ANNUALIZED.
44
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- -----------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE
ENDED YEAR FOR THE YEAR FOR THE YEARS ENDED
AUGUST 31, ENDED ENDED FEBRUARY 28,
1997 FEBRUARY 28, FEBRUARY 29, --------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
- ----------- ------------ ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
$10.39 $10.29 $ 9.92 $10.76 $10.96 $10.29
------ ------ ------ ------ ------ ------
0.24 0.48 0.54 0.52 0.52 0.59
0.26 0.10 0.37 (0.81) -- 0.81
------ ------ ------ ------ ------ ------
0.50 0.58 0.91 (0.29) 0.52 1.40
------ ------ ------ ------ ------ ------
(0.24) (0.48) (0.54) (0.52) (0.52) (0.59)
-- -- -- (0.03) (0.20) (0.14)
------ ------ ------ ------ ------ ------
(0.24) (0.48) (0.54) (0.55) (0.72) (0.73)
------ ------ ------ ------ ------ ------
$10.65 $10.39 $10.29 $ 9.92 $10.76 $10.96
====== ====== ====== ====== ====== ======
4.87% 5.82% 9.36% (2.67)% 4.88% 14.81%
====== ====== ====== ====== ====== ======
$18,068 $19,427 $23,868 $25,823 $32,287 $22,922
1.96%* 1.90% 1.85% 1.87% 1.79% 1.63%
1.96%* 1.90% 1.85% 1.87% 1.90% 2.01%
4.48%* 4.73% 5.19% 5.21% 4.72% 5.48%
4.48%* 4.73% 5.19% 5.21% 4.61% 5.10%
13% 64% 48% 28% 23% 10%
<CAPTION>
CLASS C
- ------------------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEARS FOR THE PERIOD
ENDED FOR THE YEAR FOR THE YEAR ENDED JULY 2, 1992+
AUGUST 31, ENDED ENDED FEBRUARY 28, THROUGH
1997 FEBRUARY 28, FEBRUARY 29, ------------------ FEBRUARY 28,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ------------ ------------ --------- -------- --------------
<C> <C> <C> <C> <C> <C>
$10.39 $10.29 $ 9.92 $10.77 $10.96 $10.50
------ ------ ------ ------ ------ ------
0.25 0.51 0.56 0.55 0.55 0.36
0.26 0.10 0.37 (0.82) 0.01 0.47
------ ------ ------ ------ ------ ------
0.51 0.61 0.93 (0.27) 0.56 0.83
------ ------ ------ ------ ------ ------
(0.25) (0.51) (0.56) (0.55) (0.55) (0.36)
-- -- -- (0.03) (0.20) (0.01)
------ ------ ------ ------ ------ ------
(0.25) (0.51) (0.56) (0.58) (0.75) (0.37)
------ ------ ------ ------ ------ ------
$10.65 $10.39 $10.29 $ 9.92 $10.77 $10.96
====== ====== ====== ====== ====== ======
5.00% 6.08% 9.64% (2.51)% 5.24% 7.72%
====== ====== ====== ====== ====== ======
$19,111 $16,967 $20,700 $23,158 $35,872 $21,638
1.70%* 1.66% 1.60% 1.63% 1.54% 1.40%*
1.70%* 1.66% 1.60% 1.63% 1.64% 1.69%*
4.72%* 4.98% 5.45% 5.48% 4.95% 5.26%*
4.72%* 4.98% 5.45% 5.48% 4.85% 4.97%*
13% 64% 48% 28% 23% 10%
</TABLE>
45
<PAGE>
PAINEWEBBER NEW YORK TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR FOR THE YEAR FOR THE YEARS ENDED
AUGUST 31, ENDED ENDED FEBRUARY 28,
1997 FEBRUARY 28, FEBRUARY 29, --------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ------------ ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $10.66 $10.71 $10.27 $11.03 $10.99 $10.12
------ ------ ------ ------ ------ ------
NET INVESTMENT INCOME... 0.26 0.51 0.54 0.54 0.57 0.63
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) FROM
INVESTMENTS AND
FUTURES................ 0.16 (0.05) 0.45 (0.66) 0.07 0.87
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE)
FROM INVESTMENT
OPERATIONS............. 0.42 0.46 0.99 (0.12) 0.64 1.50
------ ------ ------ ------ ------ ------
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.26) (0.51) (0.55) (0.54) (0.57) (0.63)
DISTRIBUTIONS FROM NET
REALIZED GAINS FROM
INVESTMENT
TRANSACTIONS........... -- -- -- (0.10) (0.03) --
------ ------ ------ ------ ------ ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS........... (0.26) (0.51) (0.55) (0.64) (0.60) (0.63)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $10.82 $10.66 $10.71 $10.27 $11.03 $10.99
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 3.98% 4.49% 9.83% (0.83)% 5.89% 15.44%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $22,215 $23,160 $28,734 $32,475 $45,033 $43,443
EXPENSES TO AVERAGE NET
ASSETS, NET OF WAIVERS
AND REIMBURSEMENTS FROM
ADVISER................ 1.02%* 1.02% 1.02% 1.01% 0.75% 0.34%
EXPENSES TO AVERAGE NET
ASSETS, BEFORE WAIVERS
AND REIMBURSEMENTS FROM
ADVISER ............... 1.44%* 1.50% 1.15% 1.26% 1.25% 1.47%
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS, NET
OF WAIVERS AND
REIMBURSEMENTS FROM
ADVISER ............... 4.78%* 4.91% 5.11% 5.38% 5.13% 6.07%
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS,
BEFORE WAIVERS AND
REIMBURSEMENTS FROM
ADVISER ............... 4.36%* 4.42% 4.98% 5.13% 4.63% 4.94%
PORTFOLIO TURNOVER RATE. 10% 40% 13% 6% 8% 6%
</TABLE>
- ---------
+ COMMENCEMENT OF ISSUANCE OF SHARES
* ANNUALIZED
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
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 EACH CLASS WOULD BE LOWER IF SALES
CHARGES WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE
YEAR HAS NOT BEEN ANNUALIZED.
46
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- ------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR FOR THE YEAR FOR THE YEARS ENDED
AUGUST 31, ENDED ENDED FEBRUARY 28,
1997 FEBRUARY 28, FEBRUARY 29, --------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
- ----------- ------------- ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
$10.65 $10.71 $10.27 $11.03 $10.98 $10.12
------ ------ ------ ------ ------ ------
0.22 0.44 0.47 0.47 0.49 0.56
0.17 (0.06) 0.44 (0.66) 0.08 0.86
------ ------ ------ ------ ------ ------
0.39 0.38 0.91 (0.19) 0.57 1.42
------ ------ ------ ------ ------ ------
(0.22) (0.44) (0.47) (0.47) (0.49) (0.56)
-- -- -- (0.10) (0.03) --
------ ------ ------ ------ ------ ------
(0.22) (0.44) (0.47) (0.57) (0.52) (0.56)
------ ------ ------ ------ ------ ------
$10.82 $10.65 $10.71 $10.27 $11.03 $10.98
====== ====== ====== ====== ====== ======
3.69% 3.62% 9.01% (1.57)% 5.19% 14.35%
====== ====== ====== ====== ====== ======
$8,691 $9,462 $11,862 $14,660 $19,193 $13,776
1.77%* 1.76% 1.77% 1.76% 1.51% 1.10%
2.21%* 2.27% 1.89% 2.01% 1.99% 2.19%
4.02%* 4.16% 4.36% 4.63% 4.34% 5.22%
3.58%* 3.65% 4.24% 4.83% 3.86% 4.13%
10% 40% 13% 6% 8% 6%
<CAPTION>
CLASS C
- ------------------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEARS FOR THE PERIOD
ENDED FOR THE YEAR FOR THE YEAR ENDED JULY 2, 1992+
AUGUST 31, ENDED ENDED FEBRUARY 28, THROUGH
1997 FEBRUARY 28, FEBRUARY 29, ------------------ FEBRUARY 28,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ------------ ------------ --------- -------- --------------
<C> <C> <C> <C> <C> <C>
$10.66 $10.71 $10.28 $11.03 $10.99 $10.45
------ ------ ------ ------ ------ ------
0.23 0.46 0.49 0.49 0.51 0.36
0.17 (0.05) 0.43 (0.65) 0.07 0.54
------ ------ ------ ------ ------ ------
0.40 0.41 0.92 (0.16) 0.58 0.90
------ ------ ------ ------ ------ ------
(0.23) (0.46) (0.49) (0.49) (0.51) (0.36)
-- -- -- (0.10) (0.03) --
------ ------ ------ ------ ------ ------
(0.23) (0.46) (0.49) (0.59) (0.54) (0.36)
------ ------ ------ ------ ------ ------
$10.83 $10.66 $10.71 $10.28 $11.03 $10.99
====== ====== ====== ====== ====== ======
3.82% 3.98% 9.17% (1.20)% 5.35% 8.38%
====== ====== ====== ====== ====== ======
$13,130 $13,786 $17,849 $21,095 $38,165 $19,553
1.52%* 1.52% 1.52% 1.52% 1.27% 0.90%*
1.95%* 2.04% 1.64% 1.75% 1.72% 1.83%*
4.28%* 4.41% 4.61% 4.89% 4.55% 5.04%*
3.85%* 3.89% 4.50% 4.65% 4.10% 4.11%*
10% 40% 13% 6% 8% 6%
</TABLE>
47
