UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                  FORM 10-K

    X           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
  -----
                       SECURITIES EXCHANGE ACT OF 1934

                  FOR FISCAL YEAR ENDED: SEPTEMBER 30, 1996

                                      OR

               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                     For the transition period from to .

                       Commission File Number: 0-12087

             PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP
             (Exact name of registrant as specified in its charter)

        Delaware                                              04-2780287
(State of organization)                                    (I.R.S. Employer
                                                           Identification No.)

265 Franklin Street, Boston, Massachusetts                           02110
(Address of principal executive office)                           (Zip Code)

Registrant's telephone number, including area code:  (617) 439-8118

Securities registered pursuant to Section 12(b) of the Act:
                                                        Name of each exchange
Title of each class                                       on which registered
     None                                                        None 

          Securities registered pursuant to Section 12(g) of the Act:
                      UNITS OF LIMITED PARTNERSHIP INTEREST
                                (Title of class)

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
          ---

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X     No
                                             ---

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
                     DOCUMENTS INCORPORATED BY REFERENCE
Documents                                              Form 10-K Reference
---------                                              -------------------
Prospectus of registrant dated                                 Part IV
May 26, 1983, as supplemented





<PAGE>



           PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

                                1996 FORM 10-K

                              TABLE OF CONTENTS

Part I                                                                   Page
------                                                                   ----

Item  1     Business                                                       I-1

Item  2     Properties                                                     I-3

Item  3     Legal Proceedings                                              I-3

Item  4     Submission of Matters to a Vote of Security Holders            I-4


Part  II

Item  5     Market for the Partnership's Limited Partnership Interests and
               Related Security Holder Matters                            II-1

Item  6     Selected Financial Data                                       II-1

Item  7     Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                  II-2

Item  8     Financial Statements and Supplementary Data                   II-5

Item  9     Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure                                   II-5


Part III

Item  10    Directors and Executive Officers of the Partnership          III-1

Item  11    Executive Compensation                                       III-3

Item  12    Security Ownership of Certain Beneficial Owners 
               and Management                                            III-3

Item  13    Certain Relationships and Related Transactions               III-3


Part  IV

Item  14    Exhibits, Financial Statement Schedules and Reports
                on Form 8-K                                               IV-1

Signatures                                                                IV-2

Index to Exhibits                                                         IV-3

Financial Statements and Supplementary Data                        F-1 to F-29


<PAGE>


                                    PART I

Item 1.  Business

      Paine   Webber   Income   Properties   Five   Limited   Partnership   (the
"Partnership") is a limited partnership formed in January 1983 under the Uniform
Limited Partnership Act of the State of Delaware for the purpose of investing in
a diversified portfolio of existing  income-producing  operating properties such
as  apartments,   shopping  centers,   office   buildings,   and  other  similar
income-producing   properties.  The  Partnership  sold  $34,928,000  in  Limited
Partnership  Units (the "Units"),  representing  34,928 units at $1,000 per Unit
from May 26, 1983 to May 25, 1984 pursuant to a Registration  Statement filed on
Form S-11 under the Securities Act of 1933  (Registration No. 2-81537).  Limited
Partners will not be required to make any additional contributions.

      The  Partnership  originally  invested  the  net  proceeds  of the  public
offering,  through joint venture  partnerships,  in five  operating  properties,
which consisted of four multi-family apartment complexes and one retail shopping
center.  As  discussed  further  below,  through  September  30, 1996 one of the
Partnership's  original investments had been sold. As of September 30, 1996, the
Partnership  owned interests in operating  investment  properties  through joint
venture partnerships as set forth in the following table:

Name of Joint Venture                     Date of
Name and Type of Property                 Acquisition   Type of
Location                      Size        of Interest   Ownership (1)
---------------------------   ----        -----------  -------------

Randallstown Carriage Hill    806         8/30/83    Fee ownership of land and
  Associates and              units                  improvements (through
  Signature Partners, L.L.C.                         joint venture)
Carriage Hill Village Apartments
Randallstown, Maryland

Amarillo Bell Associates      144,000     9/30/83    Fee ownership of land and
Bell Plaza Shopping Center    gross                  improvements (though
Amarillo, Texas               leasable               joint venture)
                              sq. ft.

Greenbrier Associates         324         6/29/84    Fee ownership of land and
Greenbrier Apartments         units                  improvements (through
Indianapolis, Indiana                                joint venture)

Seven Trails West Associates  532         9/13/84    Fee ownership of land and
Seven Trails West Apartments  units                  improvements (through
Ballwin, Missouri                                    joint venture)

(1) See Notes to the  Financial  Statements  filed with this Annual Report for a
    description  of  the  long-term   mortgage   indebtedness   secured  by  the
    Partnership's  operating  property  investments and for a description of the
    agreements  through  which the  Partnership  has acquired  these real estate
    investments.

      The Partnership  previously owned an interest in Cambridge  Associates,  a
joint venture which owned the Cambridge Apartments, a 378-unit apartment complex
located in Omaha,  Nebraska.  On June 30, 1994,  Cambridge  Associates  sold its
operating  investment  property to an affiliate of the Partnership's  co-venture
partner for a gross  purchase  price of $9.7  million.  After  repayment  of the
outstanding mortgage debt and payment of transaction closing costs, net proceeds
of  approximately  $4.7 million were available for  distribution  to the venture
partners.  In accordance with the joint venture  agreement,  the Partnership was
entitled to and received  approximately $3.7 million of such proceeds. A portion
of the Cambridge sales proceeds was added to the Partnership's  cash reserves in
anticipation  of future capital  requirements  at certain of the remaining joint
ventures. The remainder of the proceeds,  totalling  approximately $2.2 million,
was  distributed  to the Limited  Partners in September  1994. See Note 4 to the
Financial Statements accompanying this Annual Report for a further discussion of
this transaction.


<PAGE>


      The Partnership's investment objectives are to:

     (i)   provide the Limited Partners with cash  distributions  which, to some
           extent, will not constitute taxable income;
     (ii)  preserve  and protect  the  Limited  Partners'  capital; 
     (iii) obtain  long-term  appreciation in the value of its  properties;  and
     (iv)  provide a  build-up of equity through the reduction of mortgage loans
           on its properties.

      The Partnership  suspended the payment of regular quarterly  distributions
of excess net cash flow in fiscal 1988.  Through September 30, 1996, the Limited
Partners had received  cumulative  cash  distributions  totalling  approximately
$18,047,000,  or  approximately  $542 per  original  $1,000  investment  for the
Partnership's earliest investors, of which approximately $7,720,000, or $284 per
original  $1,000  investment,  represents net proceeds from a refinancing of the
Carriage  Hill  Apartments  in 1987  and  approximately  $2,200,000,  or $63 per
original  $1,000  investment,  represents  the  distributed  portion  of the net
proceeds  from the sale of the  Cambridge  Apartments  in  1994.  The  remaining
distributions   have  been  made  from  the  net  operating  cash  flow  of  the
Partnership. A substantial portion of such distributions has been sheltered from
current  taxable income.  As of September 30, 1996, the Partnership  retains its
ownership  interest  in four of its five  original  investment  properties.  The
Partnership's success in meeting its capital appreciation  objective will depend
upon  the  proceeds  received  from  the  final  liquidation  of  the  remaining
investments.  The amount of such proceeds will ultimately  depend upon the value
of the underlying  investment properties at the time of their final disposition,
which cannot  presently be determined.  At the present time,  real estate values
for retail shopping  centers in certain markets are being adversely  impacted by
the  effects of  overbuilding  and  consolidations  among  retailers  which have
resulted in an oversupply of space. It remains unclear at this time what impact,
if any, this general trend will have on the  operations  and market value of the
Partnership's retail shopping center investment.

      All of the properties  securing the Partnership's  investments are located
in real  estate  markets  in which  they face  significant  competition  for the
revenues they generate.  The apartment  complexes compete with numerous projects
of  similar  type  generally  on the basis of  price,  location  and  amenities.
Apartment  properties  in all markets also compete with the local single  family
home market for prospective tenants. The continued  availability of low interest
rates on home mortgage  loans has increased the level of this  competition  over
the  past  several  years.  However,  the  impact  of the  competition  from the
single-family  home  market  has  been  offset  by the lack of  significant  new
construction  activity in the  multi-family  apartment  market over most of this
period. In the past 12 months,  development activity for multi-family properties
in many markets has escalated  significantly.  The shopping  center competes for
long-term commercial tenants with numerous projects of similar type generally on
the  basis  of  location,  rental  rates,  tenant  mix  and  tenant  improvement
allowances.

      The Partnership has no operating property  investments located outside the
United States.  The Partnership is engaged solely in the business of real estate
investment,  therefore,  presentation of information  about industry segments is
not applicable.

      The  Partnership  has no  employees;  it  has,  however,  entered  into an
Advisory  Contract with  PaineWebber  Properties  Incorporated  (the "Adviser"),
which is  responsible  for the  day-to-day  operations of the  Partnership.  The
Adviser is a wholly-owned  subsidiary of  PaineWebber  Incorporated  ("PWI"),  a
wholly owned subsidiary of PaineWebber Group, Inc. ("PaineWebber").

      The general partners of the Partnership (the "General Partners") are Fifth
Income Properties Fund, Inc. and Properties Associates.  Fifth Income Properties
Fund,  Inc., a wholly-owned  subsidiary of PaineWebber,  is the Managing General
Partner of the Partnership.  The Associate General Partner of the Partnership is
Properties  Associates,  a Massachusetts  general  partnership,  certain general
partners of which are officers of the Adviser and the Managing  General Partner.
Subject  to  the  General  Partner's  overall  authority,  the  business  of the
Partnership  is managed by the Adviser.  The terms of  transactions  between the
Partnership  and affiliates of the Managing  General  Partner of the Partnership
are set forth in Items 11 and 13 below to which  reference  is hereby made for a
description of such terms and transactions.


<PAGE>


Item 2. Properties

      As of  September  30,  1996,  the  Partnership  owned  interests  in  four
operating  properties  through  joint  venture  partnerships.  The joint venture
partnerships  and the related  properties  are referred to under Item 1 above to
which reference is made for the name, location and description of each property.

      Occupancy  figures  for each fiscal  quarter  during  1996,  along with an
average for the year, are presented below for each property:


                                          Percent Occupied At
                              -------------------------------------------------
                                                                       Fiscal
                                                                       1996
                              12/31/95   3/31/96    6/30/96   9/30/96  Average
                              --------   -------    -------   -------  -------

Carriage Hill Village 
  Apartments                   86%        85%       89%       94%       89%

Bell Plaza Shopping Center     82%        95%       98%       98%       93%

Greenbrier Apartments          93%        91%       91%       93%       92%

Seven Trails West Apartments   98%        96%       96%       95%       96%

Item 3.  Legal Proceedings

     In  November  1994,  a series of  purported  class  actions  (the "New York
Limited Partnership Actions") were filed in the United States District Court for
the Southern District of New York concerning PaineWebber Incorporated's sale and
sponsorship of various limited partnership investments,  including those offered
by the Partnership.  The lawsuits were brought against PaineWebber  Incorporated
and Paine Webber Group Inc. (together "PaineWebber"), among others, by allegedly
dissatisfied  partnership  investors.  In March  1995,  after the  actions  were
consolidated under the title In re PaineWebber Limited  Partnership  Litigation,
the  plaintiffs  amended their  complaint to assert claims  against a variety of
other  defendants,  including Fifth Income  Properties Fund, Inc. and Properties
Associates,  which are the General Partners of the Partnership and affiliates of
PaineWebber.  On May 30, 1995, the court certified class action treatment of the
claims asserted in the litigation.

     The amended complaint in the New York Limited  Partnership  Actions alleged
that, in connection with the sale of interests in Paine Webber Income Properties
Five Limited  Partnership,  PaineWebber,  Fifth Income Properties Fund, Inc. and
Properties  Associates  (1) failed to provide  adequate  disclosure of the risks
involved; (2) made false and misleading  representations about the safety of the
investments and the Partnership's anticipated performance;  and (3) marketed the
Partnership  to  investors  for whom such  investments  were not  suitable.  The
plaintiffs,  who  purported to be suing on behalf of all persons who invested in
Paine  Webber  Income  Properties  Five Limited  Partnership,  also alleged that
following  the sale of the  partnership  interests,  PaineWebber,  Fifth  Income
Properties  Fund,  Inc.  and  Properties  Associates   misrepresented  financial
information about the Partnerships value and performance.  The amended complaint
alleged that  PaineWebber,  Fifth Income  Properties  Fund,  Inc. and Properties
Associates  violated the  Racketeer  Influenced  and Corrupt  Organizations  Act
("RICO") and the federal  securities  laws.  The plaintiffs  sought  unspecified
damages,   including  reimbursement  for  all  sums  invested  by  them  in  the
partnerships,  as well as  disgorgement  of all fees and other income derived by
PaineWebber  from the limited  partnerships.  In addition,  the plaintiffs  also
sought treble damages under RICO.

     In January 1996,  PaineWebber signed a memorandum of understanding with the
plaintiffs in the New York Limited Partnership Actions outlining the terms under
which the parties have agreed to settle the case. Pursuant to that memorandum of
understanding,  PaineWebber  irrevocably  deposited  $125 million into an escrow
fund under the  supervision of the United States District Court for the Southern
District of New York to be used to resolve the  litigation in accordance  with a
definitive  settlement  agreement  and plan of  allocation.  On July  17,  1996,
PaineWebber and the class plaintiffs submitted a definitive settlement agreement
which has been preliminarily approved by the court and provides for the complete
resolution of the class action  litigation,  including  releases in favor of the
Partnership  and the General  Partners,  and the  allocation of the $125 million
settlement  fund among  investors  in the various  partnerships  at issue in the
case.  As part of the  settlement,  PaineWebber  also  agreed to  provide  class
members with certain financial  guarantees relating to some of the partnerships.
The details of the settlement are described in a notice mailed directly to class
members at the  direction of the court.  A final  hearing on the fairness of the
proposed  settlement  was held in December  1996, and a ruling by the court as a
result of this final hearing is currently pending.

     Under certain limited circumstances,  pursuant to the Partnership Agreement
and other contractual  obligations,  PaineWebber affiliates could be entitled to
indemnification  for expenses and  liabilities in connection with the litigation
described above. However, PaineWebber has agreed not to seek indemnification for
any amounts it is required to pay in connection  with the  settlement of the New
York Limited  Partnership  Actions.  At the present time,  the General  Partners
cannot estimate the impact, if any, of the potential  indemnification  claims on
the  Partnership's  financial  statements,  taken  as a whole.  Accordingly,  no
provision  for any  liability  which could result from the  eventual  outcome of
these  matters has been made in the  accompanying  financial  statements  of the
Partnership.

      The  Partnership  is not  subject  to any  other  material  pending  legal
proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders

      None.


<PAGE>

                                   PART II

Item 5.  Market  for the  Partnership's  Limited  Partnership  Interests  and
Related Security Holder Matters

      At  September  30,  1996 there were 2,366  record  holders of Units in the
Partnership.  There is no public market for the Units, and it is not anticipated
that a public market for Units will develop.  The Managing  General Partner will
not redeem or repurchase Units.

      No distributions were made to the Limited Partners during fiscal 1996.

Item 6.  Selected Financial Data

           Paine Webber Income Properties Five Limited Partnership For the years
      ended September 30, 1996, 1995, 1994, 1993 and 1992
                      (In thousands except per Unit data)

                                        Years Ended September 30,
                            --------------------------------------------------
                                1996        1995      1994      1993     1992
                                ----        ----      ----      ----     ----

Revenues                    $     90     $   106   $    87  $    21   $    16

Operating loss              $   (132)    $  (207)  $  (262) $  (183)  $  (177)

Partnership's share of
  ventures' losses          $   (691)    $(1,182)  $  (995) $  (860)  $(1,160)

Partnership's share of gain on
  sale of operating investment
  property                         -           -   $ 3,174        -         -

Net income (loss)           $   (823)    $(1,389)  $ 1,917  $(1,043)  $(1,337)

Net income (loss) per Limited
  Partnership Unit          $ (23.33)    $(39.37)  $ 54.36  $(29.57)  $(37.90)

Cash distributions from sale,
  refinancing or other disposition
  transactions per Limited
  Partnership Unit                 -           -   $  63.00       -         -

Total assets                $  1,739    $  1,658  $  1,836 $  1,280   $ 2,319

      The above selected  financial data should be read in conjunction  with the
financial  statements and the related notes  appearing  elsewhere in this Annual
Report.

      The above per  Limited  Partnership  Unit  information  is based  upon the
34,928 Limited Partnership Units outstanding during each year.


<PAGE>


Item 7.   Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations

Liquidity and Capital Resources

      The Partnership offered limited  partnership  interests to the public from
May 1983 to May 1984  pursuant  to a  Registration  Statement  filed  under  the
Securities  Act of 1933.  Gross  proceeds of  $34,928,000  were  received by the
Partnership   and,  after  deducting   selling   expenses  and  offering  costs,
approximately  $30,920,000  was  invested  in joint  venture  interests  in five
operating  investment  properties.  The Partnership's  interest in the Cambridge
Apartments  property was sold in June 1994 in a  transaction  which  yielded net
proceeds of $3.7 million to the Partnership.  Of such proceeds, $2.2 million was
distributed  to the Limited  Partners  in  September  1994 and $1.5  million was
retained  by  the  Partnership  to  bolster  its  cash  reserve  balances.   The
Partnership does not have any commitments for additional capital expenditures or
investments but may be called upon to advance funds to its existing  investments
in accordance with the respective joint venture agreements.

     The Partnership's  four remaining  investment  properties  consist of three
multi-family  apartment  complexes  and one retail  shopping  center.  While the
current estimated market values of certain of the remaining properties are below
the amounts paid for the  properties at the time of the  Partnership's  original
investment in 1983 and 1984, all of the properties  have estimated  values above
their respective  outstanding mortgage debt obligations.  Management's  strategy
over the past  several  years has been to  capitalize  on the  favorable  market
interest  rate  environment  by  refinancing  the mortgage  loans secured by the
operating investment properties to improve cash flow and permit the reinvestment
of funds for capital  improvement  work. Such capital  improvements are aimed at
preserving  and enhancing  the  properties'  market values while the  respective
local economies and market conditions improve until favorable  opportunities for
the sale of the  properties  can be  achieved.  With  the  last of the  required
financing   transactions   completed  during  fiscal  1996,  the   Partnership's
management  will focus on potential  disposition  strategies  for the  remaining
investment  properties  beginning  in 1997.  Depending  on the  availability  of
favorable  sales  opportunities,  the  Partnership  could  be  positioned  for a
possible  liquidation  within the next  2-to-3  years.  There are no  assurances
however,  that the Partnership will be able to achieve the sale of its remaining
assets within this time frame.

     The average occupancy level at the Seven Trails West Apartments was 96% for
fiscal 1996,  compared to 95% for fiscal 1995.  During fiscal 1996, the property
continued to benefit from a combination of a stable  multi-family  rental market
and  the  improvements  in  physical  appearance   resulting  from  the  capital
improvement  programs  implemented  during  fiscal 1995 and 1996.  During fiscal
1996, major  enhancements that were completed included replacing numerous roofs,
gutters, decks and balconies, as well as upgrading apartment unit interiors on a
turnover basis. Such  improvements  have contributed to management's  ability to
implement monthly rental rate increases at Seven Trails.

     On April 17, 1996, the Partnership  successfully  completed the refinancing
of the existing first mortgage loan secured by the Seven Trails West Apartments,
reducing  the  annual  interest  rate  from 12% to 7.87%.  The new loan,  in the
initial principal amount of $17,000,000, is for a term of ten years with monthly
payments of principal and interest totalling  $130,000.  The proceeds of the new
loan, together with a contribution of $159,000 from the joint venture, were used
to pay off all  obligations  of the prior first mortgage loan as well as to fund
all reserves and escrows required by the new lender.  Because the prior mortgage
loan was not repaid by February 1, 1996, the joint venture  forfeited a $147,000
fee which had been paid to the prior  lender in  connection  with a fiscal  1994
extension agreement and was to be refundable under certain  conditions.  As part
of the  new  loan  agreement,  reserves  for  agreed  upon  repairs  and  future
replacements  aggregating  approximately  $209,000  were  established  in escrow
accounts with the mortgage  lender.  During  fiscal 1996,  the  Partnership  had
temporarily advanced $600,000 to the Seven Trails joint venture to be used for a
good faith  deposit with the new lender and for the  prepayment  of certain loan
closing costs.  Such amounts were returned to the  Partnership  during the third
quarter of fiscal 1996.

     The Bell Plaza  Shopping  Center was 98% leased at September  30, 1996,  up
from 78% at September  30, 1995.  During the first  quarter of fiscal 1996,  the
property's leasing team was able to complete  negotiations with a tenant,  World
Gym, to take the remaining  17,600 square feet of the former Wal-Mart space. The
new lease for the  remainder  of the  Wal-Mart  space has  improved  the overall
financial  performance of the center due to the fact that, on a combined  basis,
the new tenant and United Supermarkets, which has occupied 62,800 square feet of
the former  Wal-Mart  space since the first quarter of fiscal 1995, are paying a
higher per square foot rent than Wal-Mart was  originally  paying for its space.
As part of the  negotiation for the United  Supermarkets  lease, a free-standing
building formerly  occupied by a restaurant was demolished,  and the parking lot
at Bell Plaza was  reconfigured.  This  resulted in the  addition of 235 parking
spaces to the Center. As a result of the demolition,  the Center's leasable area
changed from 151,500  square feet to 144,000  square feet.  At the present time,
real  estate  values for retail  shopping  centers in certain  markets are being
adversely  impacted  by the effects of  overbuilding  and  consolidations  among
retailers  which have resulted in an oversupply of space.  It remains unclear at
this time what impact,  if any, this general  trend will have on the  operations
and market value of Bell Plaza in the near term. While operating results at Bell
Plaza remain strong at the present time, several area employers in the Amarillo,
Texas market have recently announced downsizing plans.  Management will continue
to closely monitor local market conditions in fiscal 1997.

     As previously  reported,  the fiscal 1995 refinancing of the first mortgage
loan secured by the Carriage Hill Apartments  reduced the venture's monthly debt
service  requirements and provided additional funds which have been used to make
improvements to the property.  These improvements included the conversion of the
gas  utilities to  individual  metering for each  apartment  unit.  In the past,
operating  results have been negatively  impacted by high utility costs incurred
during the winter season.  By transferring  the utility payments to the tenants,
the  property  management  company  sought  to  reduce  and  stabilize  property
operating expenses.  This conversion has now been completed,  and currently over
65% of residents  already pay for their own gas. In order to adjust rental rates
to market,  rental  rates for units in which the tenants pay their own gas bills
were lowered by approximately 8%. Current residents have the option upon renewal
to  lower  their  current  rent and  commence  paying  their  own gas bill or to
continue with landlord-paid gas and accept a 3% rental rate increase.  Occupancy
at the  property,  which had declined to the mid-80% range in early fiscal 1996,
had rebounded to 94% for the quarter ended September 30, 1996. Now, with the gas
utility  conversion program complete and the average occupancy level stabilized,
the property  management company  anticipates  implementing  further rental rate
increases in fiscal 1997.

     The occupancy  level at the Greenbrier  Apartments  averaged 92% for fiscal
1996,  compared to 91% for fiscal 1995. Capital  expenditures during fiscal 1996
included  carpeting and appliance  replacements on an as-needed  basis, and some
roof repairs. In addition,  the property's management team continued the balcony
and gutter replacement  program,  replaced  perimeter fences,  repaired concrete
retaining  walls  and  purchased   another  computer  for  the  leasing  office.
Improvements planned for fiscal 1997 include landscape replacements and updating
clubhouse interiors.  Greenbrier continues to produce excess cash flow after the
payment of operating  expenses,  debt service payments to the lender and capital
costs. The current mortgage debt of $5.4 million bears interest at 10% per annum
and is not  scheduled to mature until June 1998.  Because of the potential for a
sale of the property  prior to the June 1998 maturity date, as well as increases
in mortgage  interest rate levels which occurred during fiscal 1996,  management
has decided to defer any immediate refinancing plans.

     At September 30, 1996,  the  Partnership  had cash and cash  equivalents of
$1,739,000.  Such cash and cash  equivalents  will be  utilized  for the working
capital requirements of the Partnership and for future capital contributions, as
necessary,  related to the  Partnership's  joint ventures.  The source of future
liquidity  and  distributions  to the  partners  is  expected  to be  from  cash
generated by the Partnership's income-producing properties and from the proceeds
received from the sale or refinancing of such properties or from the sale of the
Partnership's  interests in the joint  ventures.  These sources of liquidity are
expected to be sufficient to meet the  Partnership's  needs on both a short-term
and long-term basis.

Results of Operations
1996 Compared to 1995
---------------------

     The Partnership reported a net loss of $823,000 for fiscal 1996 as compared
to a net loss of  $1,389,000  for  fiscal  1995.  The  primary  reason  for this
favorable  change in net  operating  results  is that the  Carriage  Hill  joint
venture  recognized an extraordinary  loss on the early  extinguishment  of debt
during the prior year of  approximately  $1,177,000 as a result of the write-off
of unamortized  deferred  financing costs related to the venture's prior debt in
conjunction  with the June 1995 refinancing  transaction  referred to above. The
Partnership's  share of this loss was  approximately  $471,000.  Excluding  this
non-recurring  charge in the prior year,  the  Partnership's  share of ventures'
losses  decreased by $20,000 when compared to the prior year.  This decrease can
be mainly  attributed to a $503,000  increase in combined revenues from the four
joint ventures.  Combined revenues  increased largely due to improved  occupancy
and rental rates at the Seven Trails West and  Greenbrier  Apartments.  Revenues
were also  higher at the Bell Plaza  Shopping  Center in fiscal  1996 due to the
leasing  improvements  discussed  further above. In addition,  combined interest
expense  decreased  by $261,000 as a result of the lower  interest  rates on the
debts  secured by the  Carriage  Hill  Apartments  and the Bell  Plaza  Shopping
Center,  which were  refinanced  in fiscal 1995,  and on the debt secured by the
Seven Trails  Apartments,  which was  refinanced in fiscal 1996. The increase in
rental  revenues  and  decrease in interest  expense  were  partially  offset by
increases  in  combined  property   operating   expenses  and  depreciation  and
amortization of $634,000 and $122,000, respectively. Property operating expenses
increased  primarily due to higher utility costs at the Carriage Hill Apartments
resulting from more severe weather  conditions during the current year. As noted
above,  the  venture  has  recently  completed  the  process of  converting  the
utilities at Carriage Hill  Apartments to individual  metering.  This conversion
will  significantly  reduce the venture's  future  exposure to  fluctuations  in
utility  charges  caused  by  extreme  weather   conditions.   Depreciation  and
amortization expense increased at all of the joint ventures, except for Carriage
Hill, during fiscal 1996 due to capital  improvements,  tenant  improvements and
leasing commissions which were incurred over the past year.

      The  Partnership's  operating loss decreased by $75,000,  for fiscal 1996,
when  compared  to the prior year.  The  decrease  in  operating  loss is mainly
attributable  to a decrease  in general and  administrative  expense of $91,000.
General and administrative  expense decreased mainly due to certain  incremental
expenses incurred in the prior year relating to an independent  valuation of the
Partnership's operating properties.

1995 Compared to 1994
---------------------

      The  Partnership  reported a net loss of  $1,389,000  for  fiscal  1995 as
compared to net income of $1,917,000  for the prior year. The primary reason for
this  unfavorable  change  in net  operating  results  was that the  Partnership
recognized  a $3.2  million  gain in  fiscal  1994 on the sale of the  Cambridge
Apartments,  which  occurred in June 1994. In addition,  the Carriage Hill joint
venture  recognized a loss of  $1,177,000  during fiscal 1995 as a result of the
write-off of unamortized deferred financing costs related to the venture's prior
debt in conjunction with the June 1995 refinancing transaction discussed further
above. The Partnership's share of this loss was $471,000,  which was included in
the  Partnership's  share of ventures' losses for fiscal 1995. The Partnership's
share of ventures' losses,  prior to the effect of the Carriage Hill refinancing
loss,  decreased  by $284,000  in fiscal  1995 mainly due to improved  operating
results at the Greenbrier, Seven Trails and Carriage Hill joint ventures. Rental
revenues were higher at all three apartment  properties in fiscal 1995,  despite
lower average occupancy  levels,  due to increases in rental rates made possible
by  the  generally  improving  market  conditions  for  multi-family   apartment
properties across the country during fiscal 1995. At Greenbrier, rental revenues
improved by $58,000,  or 4%, in fiscal  1995,  when  compared to the prior year,
while  average  occupancy  declined  from 94% to 91%. In  addition,  repairs and
maintenance   expenses  decreased  by  $96,000  at  Greenbrier  due  to  certain
non-recurring  repair work  performed in fiscal 1994 as a result of winter storm
damage.  Rental  revenues  increased  by  $194,000,  or 6%, at the Seven  Trails
property despite a slight drop in average  occupancy from 96% for fiscal 1994 to
95% for fiscal 1995.  Such  increased  revenues at Seven  Trails were  partially
offset by the increase in the venture's interest expense which resulted from the
fiscal 1994 modification  agreement  described above. At Carriage Hill, revenues
were up only slightly in what have been less favorable local market  conditions.
The improvement in the Carriage Hill joint venture's net operating  results were
more  attributable  to  a  decrease  in  expenses,  primarily  depreciation  and
utilities  expenses,  which declined by $61,000 and $63,000,  respectively.  The
improved  operating  results at the three  apartment  properties  were partially
offset by a decline in revenues at the Bell Plaza Shopping Center which resulted
from the  anchor  tenant  re-leasing  situation  described  further  above.  The
resulting drop in average  occupancy at Bell Plaza,  from 87% for fiscal 1994 to
78% for fiscal 1995,  contributed  to the  decrease of $64,000 in the  venture's
rental revenues.

     The unfavorable changes in net operating results were also partially offset
by a decrease  in the  Partnership's  operating  loss of  approximately  $55,000
during  fiscal  1995 due to an  increase  in  interest  income and a decrease in
general and administrative expenses. Interest income increased by $19,000 due to
an increase in the interest rates earned on the Partnership's cash reserves,  as
well as the  significant  increase  in the average  outstanding  balance of such
reserves which resulted from the retention of $1.5 million of the Cambridge sale
proceeds  from  the June  1994  sale  transaction.  General  and  administrative
expenses decreased by $36,000 mainly due to higher professional fees incurred in
fiscal 1994.



<PAGE>


1994 Compared to 1993
---------------------

     The  Partnership  reported  net income of  $1,917,000  for  fiscal  1994 as
compared to a net loss of $1,043,000 in the prior year.  The  Partnership's  net
income  for  fiscal  1994 was a result  of the  Partnership's  share of the gain
realized from the sale of the Cambridge Apartments. The total gain recognized by
the Cambridge joint venture totalled $3,336,000,  and the Partnership's share of
such gain amounted to $3,174,000  per the terms of the joint venture  agreement.
The Partnership's share of ventures' losses,  prior to the gain on the Cambridge
sale,  increased  by $135,000  when  compared to the fiscal 1993  results.  This
unfavorable  change  in  the  Partnership's   share  of  ventures'  losses  from
operations  was  mainly a result of an  increase  in the  operating  loss at the
Cambridge  Apartments,  primarily  due to the payment,  in  accordance  with the
agreement, of previously unaccrued subordinated management fees in the amount of
$100,000  upon the sale of the  operating  investment  property.  An increase in
interest  expense at the Seven Trails joint  venture  during  fiscal 1994,  as a
result of a modification and extension agreement on the venture's mortgage loan,
also contributed to the increase in the combined joint ventures' operating loss.
The Partnership's  operating loss increased by $79,000 during fiscal 1994 due to
an increase in Partnership general and administrative  expenses.  These expenses
increased mainly as a result of additional  expenditures  incurred related to an
independent  valuation  of the  Partnership's  operating  properties  which  was
commissioned  during  fiscal  1994  in  conjunction  with  management's  ongoing
refinancing efforts and portfolio management responsibilities.

Inflation
---------

     The Partnership  completed its thirteenth full year of operations in fiscal
1996 and the effects of inflation and changes in prices on revenues and expenses
to date have not been significant.

      Inflation in future  periods may increase  revenues,  as well as operating
expenses,  at the Partnership's  operating  investment  properties.  Some of the
existing leases with tenants at the Partnership's retail shopping center contain
rental  escalation  and/or expense  reimbursement  clauses based on increases in
tenant  sales or  property  operating  expenses  which  would  tend to rise with
inflation.  Tenants at the  Partnership's  apartment  projects  have  short-term
leases,  generally  of  6-to-12  months  in  duration.  Rental  rates  at  these
properties  can be adjusted to keep pace with  inflation,  as market  conditions
allow, as the leases are renewed or turned over. Such increases in rental income
would be expected to at least partially  offset the  corresponding  increases in
Partnership and property operating expenses caused by future inflation.

Item 8.  Financial Statements and Supplementary Data

      The financial statements and supplementary data are included under Item 14
of this Annual Report.

Item 9.  Changes in and  Disagreements  with  Accountants  on Accounting and
Financial Disclosure

      None.


<PAGE>


                                   PART III

Item 10.  Directors and Executive Officers of the Partnership

      The Managing General Partner of the Partnership is Fifth Income Properties
Fund,  Inc.  a  Delaware  corporation,  which is a  wholly-owned  subsidiary  of
PaineWebber.  The Associate  General  Partner of the  Partnership  is Properties
Associates,  a Massachusetts  general  partnership,  certain general partners of
which are also  officers of the Adviser and the Managing  General  Partner.  The
Managing  General  Partner  has overall  authority  and  responsibility  for the
Partnership's operation,  however, the day-to-day business of the Partnership is
managed by the Adviser pursuant to an advisory contract.

      (a) and (b) The names and ages of the directors  and  principal  executive
officers of the Managing General Partner of the Partnership are as follows:

                                                                     Date
                                                                     elected
      Name                      Office                      Age      to Office
      ----                      ------                      ---      ---------

Bruce J. Rubin       President and Director                 37       8/22/96
Terrence E. Fancher  Director                               43       10/10/96
Walter V. Arnold     Senior Vice President and Chief 
                       Financial Officer                    49       10/29/85
James A. Snyder      Senior Vice President                  51       7/6/92
David F. Brooks      First Vice President and 
                       Assistant Treasurer                  54       11/19/82 *
Timothy J. Medlock   Vice President and Treasurer           35       6/1/88
Thomas W. Boland     Vice President                         34       12/1/91

*  The date of incorporation of the Managing General Partner.

      (c) There are no other significant  employees in addition to the directors
and principal executive officers mentioned above.

      (d) There is no family  relationship among any of the foregoing  directors
and executive  officers of the Managing General Partner of the Partnership.  All
of the foregoing  directors  and  executive  officers have been elected to serve
until the annual meeting of the Managing General Partner.

      (e) All of the directors and officers of the Managing General Partner hold
similar  positions in affiliates of the Managing General Partner,  which are the
corporate general partners of other real estate limited  partnerships  sponsored
by PWI, and for which PaineWebber Properties Incorporated serves as the Adviser.
The  business  experience  of  each of the  directors  and  principal  executive
officers of the Managing General Partner is as follows:

      Bruce  J.  Rubin is  President  and  Director  of the  Managing  General
Partner.  Mr. Rubin was named  President and Chief  Executive  Officer of PWPI
in August 1996. Mr. Rubin joined  PaineWebber Real Estate  Investment  Banking
in November  1995 as a Senior Vice  President.  Prior to joining  PaineWebber,
Mr.  Rubin was  employed  by Kidder,  Peabody and served as  President  for KP
Realty Advisers,  Inc. Prior to his association  with Kidder,  Mr. Rubin was a
Senior Vice  President  and  Director of Direct  Investments  at Smith  Barney
Shearson.  Prior  thereto,  Mr.  Rubin was a First Vice  President  and a real
estate  workout  specialist  at  Shearson  Lehman  Brothers.  Prior to joining
Shearson  Lehman  Brothers in 1989, Mr. Rubin practiced law in the Real Estate
Group at  Willkie  Farr &  Gallagher.  Mr.  Rubin is a  graduate  of  Stanford
University and Stanford Law School.


<PAGE>


    Terrence E.  Fancher was  appointed  a Director  of the  Managing  General
Partner in October  1996.  Mr.  Fancher is the Managing  Director in charge of
PaineWebber's  Real Estate Investment  Banking Group. He joined PaineWebber as
a result  of the  firm's  acquisition  of  Kidder,  Peabody.  Mr.  Fancher  is
responsible  for the origination  and execution of all of  PaineWebber's  REIT
transactions,  advisory assignments for real estate clients and certain of the
firm's real estate debt and principal  activities.  He joined Kidder,  Peabody
in 1985 and,  beginning in 1989, was one of the senior executives  responsible
for  building   Kidder,   Peabody's  real  estate   department.   Mr.  Fancher
previously  worked for a major law firm in New York City.  He has a J.D.  from
Harvard  Law  School,  an M.B.A.  from  Harvard  Graduate  School of  Business
Administration and an A.B. from Harvard College.

      Walter V. Arnold is a Senior Vice President and Chief Financial Officer of
the Managing  General  Partner and a Senior Vice  President and Chief  Financial
Officer of the Adviser which he joined in October 1985. Mr. Arnold joined PWI in
1983 with the  acquisition  of Rotan  Mosle,  Inc.  where he had been First Vice
President and Controller  since 1978,  and where he continued  until joining the
Adviser.  Mr. Arnold is a Certified Public  Accountant  licensed in the state of
Texas.

      James A. Snyder is a Senior Vice President of the Managing General Partner
and a Senior Vice President of the Adviser.  Mr. Snyder re-joined the Adviser in
July 1992  having  served  previously  as an  officer  of PWPI from July 1980 to
August 1987.  From January 1991 to July 1992, Mr. Snyder was with the Resolution
Trust  Corporation where he served as the Vice President of Asset Sales prior to
re-joining  PWPI. From February 1989 to October 1990, he was President of Kan Am
Investors, Inc., a real estate investment company. During the period August 1987
to February 1989,  Mr. Snyder was Executive  Vice President and Chief  Financial
Officer  of  Southeast  Regional  Management  Inc.,  a real  estate  development
company.

      David F. Brooks is a First Vice  President and Assistant  Treasurer of the
Managing  General Partner and a First Vice President and an Assistant  Treasurer
of the Adviser.  Mr. Brooks joined the Adviser in March 1980. From 1972 to 1980,
Mr. Brooks was an Assistant  Treasurer of Property  Capital  Advisors,  Inc. and
also,  from March 1974 to February 1980, the Assistant  Treasurer of Capital for
Real  Estate,  which  provided  real estate  investment,  asset  management  and
consulting services.

      Timothy J.  Medlock is a Vice  President  and  Treasurer  of the  Managing
General  Partner and Vice President and Treasurer of the Adviser which he joined
in 1986.  From June 1988 to August 1989, Mr. Medlock served as the Controller of
the Managing General Partner and the Adviser. From 1983 to 1986, Mr. Medlock was
associated  with Deloitte  Haskins & Sells.  Mr. Medlock  graduated from Colgate
University  in 1983  and  received  his  Masters  in  Accounting  from  New York
University in 1985.

      Thomas W. Boland is a Vice  President  of the Managing  General  Partner
and a Vice  President and Manager of Financial  Reporting of the Adviser which
he joined in 1988.  From 1984 to 1987, Mr. Boland was  associated  with Arthur
Young & Company.  Mr. Boland is a Certified Public Accountant  licensed in the
state of  Massachusetts.  He holds a B.S. in Accounting from Merrimack College
and an M.B.A. from Boston University.

      (f) None of the directors and officers were involved in legal  proceedings
which are  material to an  evaluation  of his or her ability or  integrity  as a
director or officer.

      (g)  Compliance  With  Exchange Act Filing  Requirements:  The  Securities
Exchange Act of 1934 requires the officers and directors of the Managing General
Partner, and persons who own more than ten percent of the Partnership's  limited
partnership units, to file certain reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and ten-percent
beneficial  holders are required by SEC  regulations to furnish the  Partnership
with copies of all Section 16(a) forms they file.

      Based solely on its review of the copies of such forms received by it, the
Partnership  believes that, during the year ended September 30, 1996, all filing
requirements  applicable to the officers and  directors of the Managing  General
Partner and ten-percent beneficial holders were complied with.


<PAGE>


Item 11.  Executive Compensation

      The directors and officers of the  Partnership's  Managing General Partner
receive  no  current  or  proposed   remuneration  from  the  Partnership.   The
Partnership  is  required to pay certain  fees to the  Adviser,  and the General
Partners are entitled to receive a share of Partnership cash distributions and a
share of profits and losses. These items are described under Item 13.

    The Partnership has not paid regular cash  distributions  to the Unitholders
over the past five years.  Regular  quarterly  distributions of excess cash flow
were  suspended  in  1988.  Furthermore,  the  Partnership's  Units  of  Limited
Partnership  Interest are not actively traded on any organized exchange,  and no
efficient secondary market exists.  Accordingly no accurate price information is
available for these Units.  Therefore,  a presentation of historical  Unitholder
total returns would not be meaningful.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

      (a) The  Partnership  is a limited  partnership  issuing  Units of limited
partnership  interest,  not voting securities.  All the outstanding stock of the
Managing  General  Partner,  Fifth Income  Properties  Fund,  Inc.,  is owned by
PaineWebber.   Properties  Associates,  the  Associate  General  Partner,  is  a
Massachusetts  general  partnership,  the  general  partners  of which  are also
officers of the Adviser and the Managing General Partner.  No limited partner is
known by the  Partnership to own  beneficially  more than 5% of the  outstanding
interests of the Partnership.

      (b) The  directors  and  officers of the Managing  General  Partner do not
directly own any Units of limited  partnership  interest of the Partnership.  No
director or officer of the Managing General Partner,  nor any general partner of
the Associate General Partner, possesses a right to acquire beneficial ownership
of Units of limited partnership interest of the Partnership. As of September 30,
1996,  PaineWebber  and its  affiliates  owned 112 Units of limited  partnership
interests of the Partnership.

      (c) There exists no arrangement,  known to the Partnership,  the operation
of which  may,  at a  subsequent  date,  result  in a change in  control  of the
Partnership.

Item 13.  Certain Relationships and Related Transactions

      The General Partners of the Partnership are Fifth Income  Properties Fund,
Inc. (the "Managing General Partner"), a wholly-owned  subsidiary of PaineWebber
Group, Inc.  ("PaineWebber")  and Properties  Associates (the "Associate General
Partner"),  a Massachusetts  general  partnership,  certain general  partners of
which  are  also  officers  of the  Managing  General  Partner  and  PaineWebber
Properties  Incorporated.  Subject to the  Managing  General  Partner's  overall
authority,  the business of the Partnership is managed by PaineWebber Properties
Incorporated (the "Adviser") pursuant to an advisory contract.  The Adviser is a
wholly-owned  subsidiary  of  PaineWebber   Incorporated  ("PWI").  The  General
Partners,  the Adviser and PWI receive fees and  compensation,  determined on an
agreed-upon  basis, in consideration of various services performed in connection
with  the  sale  of the  Units,  the  management  of  the  Partnership  and  the
acquisition, management, financing and disposition of Partnership investments.

      All  distributable  cash,  as  defined,  for  each  fiscal  year  shall be
distributed  quarterly in the ratio of 99% to the Limited Partners and 1% to the
General  Partners.  All  sale  or  refinancing  proceeds  shall  be  distributed
generally 85% to the Limited Partners and 15% to the General Partners, after the
prior receipt by the Limited  Partners of their adjusted  capital  contributions
and a  cumulative,  noncompounded  return  on  their  average  adjusted  capital
contributions  ranging from 10% to 6%  depending  on when a Limited  Partner was
admitted to the Partnership.  All sale and refinancing  proceeds received by the
Partnership to date have been  distributed to the Limited Partners in accordance
with the Partnership Agreement.

      Pursuant to the terms of the Partnership Agreement, taxable income and tax
loss of the Partnership  will be allocated 99% to the Limited Partners and 1% to
the  General  Partners.  Taxable  income  or tax  loss  arising  from a sale  or
refinancing of investment  properties will be allocated to the Limited  Partners
and to the General  Partners in proportion to the amounts of sale or refinancing
proceeds to which they are entitled; provided that the General Partners shall be
allocated at least 1% of taxable income arising from a sale or  refinancing.  If
there are no sale or refinancing proceeds,  taxable income and tax losses from a
sale or refinancing  will be allocated 99% to the Limited Partners and 1% to the
General Partners.  Notwithstanding this, the Partnership Agreement provides that
the  allocation  of taxable  income and tax  losses  arising  from the sale of a
property which leads to the dissolution of the Partnership  shall be adjusted to
the extent  feasible so that neither the General or Limited  Partners  recognize
any gain or loss as a result of having  either a positive  or  negative  balance
remaining in their capital accounts upon the dissolution of the Partnership.  If
the General Partner has a negative  capital  account  balance  subsequent to the
sale of a  property  which  leads to the  dissolution  of the  Partnership,  the
General  Partner may be obligated to restore a portion of such negative  capital
account  balance  as  determined  in  accordance  with  the  provisions  of  the
Partnership Agreement.  Allocations of the Partnership's  operations between the
General Partners and the Limited Partners for financial accounting purposes have
been made in conformity with the allocations of taxable income or tax loss.

      Under  the  advisory  contract,   the  Adviser  has  specific   management
responsibilities:  to administer day-to-day operations of the Partnership and to
report  periodically  the performance of the Partnership to the Managing General
Partner.  The Adviser is paid a basic  management fee (4% of adjusted cash flow)
and an incentive  management  fee (5% of adjusted  cash flow  subordinated  to a
noncumulative annual return to the Limited Partners equal to 6% based upon their
adjusted capital contribution) for services rendered.
No management fees were earned during fiscal 1996.

      An affiliate of the Managing General Partner performs certain  accounting,
tax  preparation,  securities  law compliance  and investor  communications  and
relations  services  for the  Partnership.  The  total  costs  incurred  by this
affiliate in providing  such  services are  allocated  among  several  entities,
including the Partnership.  Included in general and administrative  expenses for
the year ended  September 30, 1996 is $81,000,  representing  reimbursements  to
this affiliate for providing such services to the Partnership.

      The  Partnership  uses the  services  of Mitchell  Hutchins  Institutional
Investors,  Inc.  ("Mitchell  Hutchins"),  an affiliate of the Managing  General
Partner,  for the managing of cash assets.  Mitchell Hutchins is a subsidiary of
Mitchell Hutchins Asset Management,  Inc., an independently  operated subsidiary
of PaineWebber.  Mitchell  Hutchins earned $4,000 for managing the Partnership's
cash  assets  in  fiscal   1996,   which  amount  is  included  in  general  and
administrative  expenses  on the  accompanying  statement  of  operations.  Fees
charged by Mitchell Hutchins are based on a percentage of invested cash reserves
which varies based on the total amount of invested cash which Mitchell  Hutchins
manages on behalf of PWPI.



<PAGE>







                                   PART IV



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K


      (a)   The following documents are filed as part of this report:

            (1) and (2) Financial Statements and Schedule:

                     The  response to this  portion of Item 14 is submitted as a
                     separate  section of this  report.  See Index to  Financial
                     Statements and Financial Statement Schedule at
                     page F-1.

            (3)      Exhibits:

                The  exhibits  listed on the  accompanying  index to exhibits at
                page IV-3 are filed as part of this Report.


      (b)   No Current Reports on Form 8-K were filed during the last quarter of
            fiscal 1996.

      (c)   Exhibits

                  See (a)(3) above.

      (d)   Financial Statement Schedules

                The  response  to this  portion  of Item  14 is  submitted  as a
                separate  section  of  this  report.   See  Index  to  Financial
                Statements and Financial Statement Schedule at page F-1.











<PAGE>


                                  SIGNATURES


    Pursuant  to the  requirements  of  Section  13 or 15(d)  of the  Securities
Exchange Act of 1934, the  Partnership  has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                 PAINE WEBBER INCOME PROPERTIES FIVE
                                     LIMITED PARTNERSHIP


                                 By:  Fifth Income Properties Fund, Inc.
                                      ---------------------------------
                                      Managing General Partner


                                  By: /s/ Bruce J. Rubin
                                     -------------------
                                     Bruce J. Rubin
                                     President and Chief Executive Officer


                                  By: /s/ Walter V. Arnold
                                     ---------------------
                                     Walter V. Arnold
                                     Senior Vice President and
                                     Chief Financial Officer


                                  By: /s/ Thomas W. Boland
                                     ---------------------
                                     Thomas W. Boland
                                     Vice President

Dated:  January 10, 1997

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Partnership in
the capacity and on the dates indicated.




By:/s/ Bruce J. Rubin                           Date:  January 10, 1997
   ------------------------                            ----------------
   Bruce J. Rubin
   Director





By:/s/ Terrence E. Fancher                      Date:  January 10, 1997
   ------------------------                            ----------------
   Terrence E. Fancher
   Director

                                     


<PAGE>


                          ANNUAL REPORT ON FORM 10-K
                                Item 14(a)(3)

           PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP


                              INDEX TO EXHIBITS

                                                      Page Number in the Report
Exhibit No. Description of Document                   or Other Reference
----------- ------------------------                   ------------------

(3) and (4) Prospectus of the Registrant              Filed with the Commission
            dated May 26, 1983, supplemented,         pursuant to Rule 424(c)
            with particular reference to the          and incorporated  herein
            Restated Certificate and Agreement        by reference.
            Limited Partnership.


(10)        Material contracts previously filed as    Filed with the Commission
            exhibits to registration statements and   pursuant to Section 13 or
            amendments thereto of the registrant      15(d) of the Securities
            together with all such contracts filed    Exchange Act of 1934 and 
            as exhibits of previously filed Forms     incorporated herein by
            8-K and Forms 10-K are hereby             reference.
            incorporated herein by reference.


(13)        Annual Reports to Limited Partners        No Annual Report for the
                                                      year ended September 30,
                                                      1996 has been sent to   
                                                      the Limited Partners.
                                                      An  Annual  Report will
                                                      be sent to the Limited   
                                                      Partners subsequent to
                                                      this filing.


(27)        Financial Data Schedule                   Filed as last page of
                                                      EDGAR submission following
                                                      the Financial Statements
                                                      and Financial Statement
                                                      Schedule as required by
                                                      Item 14.


<PAGE>
                          ANNUAL REPORT ON FORM 10-K
                       Item 14(a) (1) and (2) and 14(d)

           PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

        INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE


                                                                    Reference
                                                                    ---------

Paine Webber Income Properties Five Limited Partnership:

      Report of independent auditors                                     F-2

      Balance sheets as of September 30, 1996 and 1995                   F-3

      Statements of operations  for the years ended  September 30,
        1996,  1995 and 1994                                             F-4

      Statements  of  changes in  partners'  capital  (deficit)  
        for the years ended September 30, 1996, 1995 and 1994            F-5

      Statements of cash flows for the years ended  September  30, 
        1996,  1995 and 1994                                             F-6

      Notes to financial statements                                      F-7

Combined  Joint  Ventures  of Paine  Webber  Income  Properties  Five  Limited
Partnership:

      Report of independent auditors                                    F-18

      Combined balance sheets as of September 30, 1996 and 1995         F-19

      Combined  statements of operations and changes in venturers' 
          deficit for the years ended September 30, 1996, 1995 
          and 1994                                                      F-20

      Combined  statements  of cash flows for the years  ended  
          September  30, 1996, 1995 and 1994                            F-21

      Notes to combined financial statements                            F-22

      Schedule III - Real estate and accumulated depreciation           F-29


   Other  schedules  have been  omitted  since the required  information  is not
present or not  present  in amounts  sufficient  to  require  submission  of the
schedule,  or because the  information  required  is  included in the  financial
statements, including the notes thereto.



<PAGE>


                        REPORT OF INDEPENDENT AUDITORS






The Partners of
Paine Webber Income Properties Five Limited Partnership:

      We have audited the  accompanying  balance  sheets of Paine Webber  Income
Properties  Five Limited  Partnership as of September 30, 1996 and 1995, and the
related statements of operations,  changes in partners' capital  (deficit),  and
cash flows for each of the three years in the period ended  September  30, 1996.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

      We conducted our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all  material  respects,  the  financial  position  of  Paine  Webber  Income
Properties  Five Limited  Partnership  at September  30, 1996 and 1995,  and the
results of its  operations and its cash flows for each of the three years in the
period  ended  September  30,  1996,  in  conformity  with  generally   accepted
accounting principles.







                                                /s/ ERNST & YOUNG LLP
                                                ---------------------
                                                ERNST & YOUNG LLP


Boston, Massachusetts
January 8, 1997


<PAGE>


            PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

                                BALANCE SHEETS
                          September 30, 1996 and 1995
                    (In thousands, except per Unit amounts)

                                    ASSETS
                                                            1996       1995
                                                            ----       ----

Cash and cash equivalents                                $  1,739    $  1,658
                                                         ========    ========

                       LIABILITIES AND PARTNERS' DEFICIT

Equity in losses in excess of investments and
  advances in joint ventures                             $  2,971    $  2,059
Accounts payable and accrued expenses                          30          38
                                                         --------    --------
      Total liabilities                                     3,001       2,097

Partners' deficit:
  General Partners:
   Capital contributions                                        1           1
   Cumulative net loss                                       (147)       (139)
   Cumulative cash distributions                              (60)        (60)

  Limited Partners ($1,000 per Unit; 34,928 Units issued):
   Capital contributions, net of offering costs            31,554      31,554
   Cumulative net loss                                    (14,563)    (13,748)
   Cumulative cash distributions                          (18,047)    (18,047)
                                                         --------   ---------
      Total partners' deficit                              (1,262)       (439)
                                                         --------   ---------
                                                         $  1,739    $  1,658
                                                         ========    ========





















                            See accompanying notes.


<PAGE>


            PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

                           STATEMENTS OF OPERATIONS
             For the years ended September 30, 1996, 1995 and 1994
                    (In thousands, except per Unit amounts)

                                                 1996        1995       1994
                                                 ----        ----       ----


Revenues:
   Interest income                             $   90       $ 106    $     87

Expenses:
   General and administrative                     222         313         349
                                               ------       -----    --------

Operating loss                                   (132)       (207)       (262)

Partnership's share of ventures' losses          (691)      (1,182)      (995)

Partnership's share of gain on sale of
   operating investment property                    -            -      3,174
                                               ------       ------   --------

Net income (loss)                              $ (823)      $(1,389) $  1,917
                                               ======       =======  ========

Net income (loss) per Limited
  Partnership Unit                             $(23.33)     $(39.37) $  54.36
                                               =======      =======  ========

Cash distributions per Limited
  Partnership Unit                             $     -      $     -  $  63.00
                                               =======      =======  ========



   The above net income (loss) and cash  distributions  per Limited  Partnership
Unit are based upon the 34,928 Limited Partnership Units outstanding during each
year.




















                            See accompanying notes.


<PAGE>


             PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

               STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT
             For the years ended September 30, 1996, 1995 and 1994
                                 (In thousands)

                                          General       Limited
                                          Partners      Partners      Total
                                          --------      --------      -----

Balance at September 30, 1993              $(203)       $ 1,436       $ 1,233

Net income                                    19          1,898         1,917

Cash distributions                             -         (2,200)       (2,200)
                                           -----        -------       -------

Balance at September 30, 1994               (184)         1,134           950

Net loss                                     (14)        (1,375)       (1,389)
                                           -----        -------       -------

Balance at September 30, 1995               (198)          (241)         (439)

Net loss                                      (8)          (815)         (823)
                                          ------        -------       -------

Balance at September 30, 1996              $(206)       $(1,056)      $(1,262)
                                           =====        =======       =======



























                            See accompanying notes.


<PAGE>


             PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS
             For the years ended September 30, 1996, 1995 and 1994
                Increase (Decrease) in Cash and Cash Equivalents
                                 (In thousands)

                                               1996         1995        1994
                                               ----         ----        ----

Cash flows from operating activities:
   Net income (loss)                           $ (823)    $(1,389)    $ 1,917
   Adjustments to reconcile net income (loss)
    to net cash used in operating activities:
     Partnership's share of ventures' losses      691       1,182         995
     Partnership's share of gain on sale of
      operating investment property                 -           -      (3,174)
      Changes in assets and liabilities:
      Accounts payable - affiliates                 -           -         (24)
      Accounts payable and accrued expenses        (8)         13           -
                                               -------    -------     --------
        Total adjustments                         683       1,195      (2,203)
                                               ------     -------     --------
        Net cash used in operating
          activities                             (140)       (194)       (286)

Cash flows from investing activities:
   Distributions from joint ventures              249         275       4,191
   Additional investments in and advances
      to joint ventures                          (628)       (259)       (586)
   Repayment of advances to joint ventures        600           -           -
                                               ------     -------     -------
        Net cash provided by
         investing activities                     221          16       3,605

Cash flows from financing activities:
   Distributions to partners                        -           -      (2,200)
                                               ------     -------     -------
        Net cash used in
         financing activities                       -           -      (2,200)
                                               ------     --------    -------

Net increase (decrease) in cash 
 and cash equivalents                              81       (178)       1,119

Cash and cash equivalents,
 beginning of year                              1,658       1,836         717
                                               -------   --------     --------

Cash and cash equivalents, end of year         $1,739    $  1,658     $ 1,836
                                               ======    ========     =======


                            See accompanying notes.


<PAGE>


                     PAINE WEBBER INCOME PROPERTIES FIVE
                             LIMITED PARTNERSHIP
                        Notes to Financial Statements


1.    Organization and Nature of Operations
      -------------------------------------

      Paine   Webber   Income   Properties   Five   Limited   Partnership   (the
    "Partnership") is a limited  partnership  organized  pursuant to the laws of
    the State of Delaware  in January  1983 for the  purpose of  investing  in a
    diversified  portfolio  of  income-producing   properties.  The  Partnership
    authorized  the  issuance  of units (the  "Units")  of  limited  partnership
    interest  (at $1,000 per Unit) of which  34,928 were  subscribed  and issued
    between May 26, 1983 and May 25, 1984.

      The  Partnership  originally  invested  the  net  proceeds  of the  public
    offering,  through joint venture partnerships,  in five operating investment
    properties,  comprised  of four  multi-family  apartment  complexes  and one
    retail  shopping  center.  To  date,  one  of  the  Partnership's   original
    investments  has been  sold.  See  Note 4 for a  further  discussion  of the
    Partnership's remaining real estate investments.

2.    Use of Estimates and Summary of Significant Accounting Policies
      ---------------------------------------------------------------

       The accompanying  financial  statements have been prepared on the accrual
    basis  of  accounting  in  accordance  with  generally  accepted  accounting
    principles  which require  management to make estimates and assumptions that
    affect the reported  amounts of assets and  liabilities  and  disclosures of
    contingent  assets and  liabilities  as of  September  30, 1996 and 1995 and
    revenues  and  expenses  for each of the  three  years in the  period  ended
    September  30, 1996.  Actual  results  could differ from the  estimates  and
    assumptions used.

      The   accompanying   financial   statements   include  the   Partnership's
    investments  in  certain  joint  venture  partnerships  which own  operating
    properties.  The  Partnership  accounts for its investments in joint venture
    partnerships using the equity method because the Partnership does not have a
    voting  control  interest  in the  ventures.  Under the  equity  method  the
    ventures  are carried at cost  adjusted for the  Partnership's  share of the
    ventures' earnings and losses and distributions. The Partnership's policy is
    to identify any  permanent  impairment  to the  carrying  value of its joint
    venture  investments on a specific  identification  basis.  At September 30,
    1996 and 1995, the carrying value of one of the Partnership's joint ventures
    is adjusted for an allowance for possible  investment loss. See Note 4 for a
    discussion of this allowance  account and a description of the joint venture
    partnerships.

      The Partnership  has reviewed FAS No. 121,  "Accounting for the Impairment
    of Long-Lived  Assets and for Long-Lived Assets To Be Disposed Of," which is
    effective for financial  statements for years  beginning  after December 15,
    1995, and believes this new pronouncement will not have a material effect on
    the Partnership's financial statements.

      For purposes of reporting cash flows,  cash and cash  equivalents  include
    all highly liquid  investments which have original  maturities of 90 days or
    less.

      The cash and cash  equivalents,  accounts  payable  and  accrued  expenses
    appearing on the accompanying balance sheets represent financial instruments
    for  purposes  of  Statement  of  Financial  Accounting  Standards  No. 107,
    "Disclosures about Fair Value of Financial Instruments." The carrying amount
    of  these  assets  and  liabilities  approximates  their  fair  value  as of
    September 30, 1996 due to the short-term maturities of these instruments.

      No  provision  for income  taxes has been made as the  liability  for such
    taxes is that of the partners rather than the Partnership.

3.    The Partnership Agreement and Related Party Transactions
      --------------------------------------------------------

      The General Partners of the Partnership are Fifth Income  Properties Fund,
    Inc.  (the  "Managing  General  Partner"),  a  wholly-owned   subsidiary  of
    PaineWebber  Group,  Inc.  ("PaineWebber")  and Properties  Associates  (the
    "Associate General Partner"),  a Massachusetts general partnership,  certain
    general  partners of which are also officers of the Managing General Partner
    and PaineWebber  Properties  Incorporated.  Subject to the Managing  General
    Partner's overall  authority,  the business of the Partnership is managed by
    PaineWebber Properties  Incorporated (the "Adviser") pursuant to an advisory
    contract.   The  Adviser  is  a   wholly-owned   subsidiary  of  PaineWebber
    Incorporated ("PWI"). The General Partners, the Adviser and PWI receive fees
    and  compensation,  determined on an agreed-upon  basis, in consideration of
    various  services  performed in connection  with the sale of the Units,  the
    management of the Partnership and the acquisition, management, financing and
    disposition of Partnership investments.

      All  distributable  cash,  as  defined,  for  each  fiscal  year  shall be
    distributed  quarterly in the ratio of 99% to the Limited Partners and 1% to
    the General Partners.  All sale or refinancing proceeds shall be distributed
    generally 85% to the Limited Partners and 15% to the General Partners, after
    the  prior  receipt  by the  Limited  Partners  of  their  adjusted  capital
    contributions  and a  cumulative,  noncompounded  return  on  their  average
    adjusted  capital  contributions  ranging from 10% to 6% depending on when a
    Limited  Partner was admitted to the  Partnership.  All sale and refinancing
    proceeds  received by the  Partnership to date have been  distributed to the
    Limited Partners in accordance with the Partnership Agreement.

      Pursuant to the terms of the Partnership Agreement, taxable income and tax
    loss of the Partnership will be allocated 99% to the Limited Partners and 1%
    to the General  Partners.  Taxable income or tax loss arising from a sale or
    refinancing  of  investment  properties  will be  allocated  to the  Limited
    Partners and to the General Partners in proportion to the amounts of sale or
    refinancing  proceeds to which they are entitled;  provided that the General
    Partners  shall be  allocated at least 1% of taxable  income  arising from a
    sale or refinancing.  If there are no sale or refinancing proceeds,  taxable
    income and tax losses from a sale or  refinancing  will be allocated  99% to
    the Limited Partners and 1% to the General Partners.  Notwithstanding  this,
    the Partnership Agreement provides that the allocation of taxable income and
    tax  losses  arising  from  the  sale  of a  property  which  leads  to  the
    dissolution of the  Partnership  shall be adjusted to the extent feasible so
    that neither the General or Limited Partners recognize any gain or loss as a
    result of having  either a positive or negative  balance  remaining in their
    capital  accounts upon the  dissolution of the  Partnership.  If the General
    Partner has a negative  capital account balance  subsequent to the sale of a
    property  which leads to the  dissolution  of the  Partnership,  the General
    Partner  may be  obligated  to  restore a portion of such  negative  capital
    account  balance as  determined  in  accordance  with the  provisions of the
    Partnership Agreement.  Allocations of the Partnership's  operations between
    the General  Partners  and the Limited  Partners  for  financial  accounting
    purposes have been made in conformity with the allocations of taxable income
    or tax loss.

      Under  the  advisory  contract,   the  Adviser  has  specific   management
    responsibilities: to administer day-to-day operations of the Partnership and
    to report  periodically  the  performance of the Partnership to the Managing
    General  Partner.  The Adviser earns a basic  management fee (4% of adjusted
    cash  flow)  and an  incentive  management  fee (5% of  adjusted  cash  flow
    subordinated to a noncumulative  annual return to the Limited Partners equal
    to 6% based upon their adjusted capital contribution) for services rendered.
    No management fees were earned during the three-year  period ended September
    30, 1996.

      Included  in  general  and  administrative  expenses  for the years  ended
    September  30,  1996,  1995  and  1994  is  $81,000,  $87,000  and  $96,000,
    respectively,  representing  reimbursements  to an affiliate of the Managing
    General  Partner for providing  certain  financial,  accounting and investor
    communication services to the Partnership.

      The  Partnership  uses the  services  of Mitchell  Hutchins  Institutional
    Investors,  Inc. ("Mitchell Hutchins"), an affiliate of the Managing General
    Partner, for the managing of cash assets.  Mitchell Hutchins is a subsidiary
    of Mitchell  Hutchins  Asset  Management,  Inc., an  independently  operated
    subsidiary of  PaineWebber.  Mitchell  Hutchins  earned  $4,000,  $5,000 and
    $2,000 for managing the  Partnership's  cash assets in fiscal 1996, 1995 and
    1994, respectively, which amounts are included in general and administrative
    expenses on the accompanying statements of operations.

4.  Investments in Joint Venture Partnerships
    -----------------------------------------

      As of September 30, 1996 and 1995, the Partnership has investments in four
    joint ventures. On June 30, 1994, Cambridge  Associates,  a joint venture in
    which  the  Partnership  had an  interest,  sold  its  operating  investment
    property, the Cambridge Apartments,  a 378-unit apartment complex located in
    Omaha,  Nebraska,  to an affiliate of the Partnership's  co-venture partner.
    The property was sold for $9,700,000.  After repayment of the outstanding $5
    million  first  mortgage  loan  and  closing   costs,   the  sale  generated
    approximately  $4.7  million to be split  between  the  Partnership  and the
    co-venturer  in accordance  with the venture  agreement.  The  Partnership's
    share of such proceeds  amounted to approximately  $3.7 million in cash. The
    sale resulted in a gain of $3,336,000 which was recognized by the venture in
    fiscal 1994. The Partnership's share of such gain totalled $3,174,000.

      The  joint  ventures  are  accounted  for  on  the  equity  method  in the
    Partnership's financial statements.  Condensed combined financial statements
    of these joint ventures (including  Cambridge Associates through the date of
    the sale transaction described above) are as follows:
<PAGE>
                       Condensed Combined Balance Sheet
                        ------------------------------
                         September 30, 1996 and 1995
                                (in thousands)

                                    Assets
                                    ------
                                                            1996        1995
                                                            ----        ----

   Current assets                                        $  2,210    $  2,369
   Operating investment properties, net                    44,853      45,566
   Other assets, net                                        1,885       1,982
                                                         --------    --------
                                                         $ 48,948    $ 49,917
                                                         ========    ========

                      Liabilities and Venturers' Deficit
                      ----------------------------------

   Current liabilities                                   $  2,529    $ 18,333
   Other liabilities                                          878         980
   Long-term mortgage debt,
     less current portion                                  52,791      36,325

   Partnership's share of combined deficit                 (3,583)     (2,607)
   Co-venturers' share of combined deficit                 (3,667)     (3,114)
                                                         --------    --------
                                                         $ 48,948    $ 49,917
                                                         ========    ========

                 Reconciliation of Partnership's Investments
                 -------------------------------------------
                                (in thousands)
                                                            1996        1995
                                                            ----        ----

   Partnership's share of deficit, as shown above        $ (3,583)   $ (2,607)
   Partnership's share of current liabilities
     and long-term debt                                       912         848
   Less:  Allowance for possible investment loss (1)         (300)       (300)
                                                         --------    ---------

   Investments in joint ventures, at equity, net         $ (2,971)   $ (2,059)
                                                         ========    ========

   (1)The carrying value of the  Partnership's  investments in joint ventures at
      September 30, 1996 and 1995 is net of an allowance for possible investment
      loss of $300,000,  which  relates to the Amarillo  Bell  Associates  joint
      venture. See discussion below for further details.

                    Condensed Combined Summary of Operations
                    ----------------------------------------
             For the years ended September 30, 1996, 1995 and 1994
                                 (in thousands)
                                                1996        1995        1994
                                                ----        ----        ----
   Revenues:
     Rental income and expense recoveries     $11,646     $11,173     $12,458
     Interest and other income                    473         443         386
                                              -------     -------     -------
                                               12,119      11,616      12,844

   Expenses:
     Property operating expenses                5,602       4,968       6,199
     Depreciation and amortization              2,647       2,525       2,688
     Interest expense                           4,955       5,216       5,421
     Loss on write-off of deferred 
       financing costs                              -       1,177           -
                                              -------    --------     -------
                                               13,204      13,886      14,308
                                              -------    --------     -------

   Operating loss                              (1,085)     (2,270)     (1,464)

   Gain on sale of operating 
     investment property                            -           -       3,336
                                             --------    --------    --------

   Net income (loss)                         $ (1,085)   $ (2,270)   $  1,872
                                             ========    ========    ========
<PAGE>
   Net income (loss):
     Partnership's share of combined 
       income (loss)                         $   (691)   $ (1,182)   $  2,179
     Co-venturers' share of combined loss        (394)     (1,088)       (307)
                                             ---------   ---------   --------
                                             $ (1,085)   $ (2,270)   $  1,872
                                             ========    ========    ========


   The  Partnership's  share of the combined income (loss) of the joint ventures
is  presented  as follows  on the  accompanying  statements  of  operations  (in
thousands):

                                               1996        1995          1994
                                               ----        ----          ----

   Partnership's share of ventures' losses   $   (691)   $ (1,182)    $  (995)
   Partnership's share of gain on sale of
     operating investment property                  -           -        3,174
                                             --------    --------     -------
                                             $   (691)   $ (1,182)    $  2,179
                                             ========    ========     ========


    Investments  in  joint  ventures,   at  equity,  is  the  Partnership's  net
    investment  in the joint  venture  partnerships.  These joint  ventures  are
    subject to  partnership  agreements  which  determine  the  distribution  of
    available  funds,  the disposition of the venture's assets and the rights of
    the partners,  regardless of the Partnership's percentage ownership interest
    in the venture.  Substantially all of the Partnership's investments in these
    joint ventures are restricted as to distributions.

    Investments in joint ventures, at equity, on the accompanying balance sheets
    at September 30, 1996 and 1995 is comprised of the following (in thousands):

                                                            1996        1995
                                                            ----        ----

   Randallstown Carriage Hill Associates                $  (6,084)  $  (5,796)
   Signature Partners, L.L.C.                                 239         238
   Amarillo Bell Associates                                 1,623       1,556
   Greenbrier Associates                                      822         855
   Seven Trails West Associates                               429       1,088
                                                        ---------   ---------
                                                        $  (2,971)  $  (2,059)
                                                        =========   =========

    The Partnership  received cash  distributions from the ventures as set forth
    below (in thousands):

                                                1996        1995        1994
                                                ----        ----        ----

   Amarillo Bell Associates                   $     -     $    50     $    59
   Greenbrier Associates                          198         132         111
   Randallstown Carriage Hill Associates           51          93           -
   Cambridge Associates                             -           -       4,021
                                              -------     -------     -------
                                              $   249     $   275     $ 4,191
                                              =======     =======     =======

    A description of the ventures' properties and the terms of the joint venture
    agreements are summarized as follows:

a)  Randallstown Carriage Hill Associates
    -------------------------------------

    On August 30, 1983,  the  Partnership  acquired an interest in  Randallstown
    Carriage  Hill  Associates,  a Maryland  general  partnership  organized  to
    purchase and operate Carriage Hill Village Apartments, an 806-unit apartment
    complex in Randallstown,  Maryland.  The Partnership  ("PWIP5") is a general
    partner  in the joint  venture.  JBG  Associates  ("JBG")  was the  original
    co-venturer of the joint venture.  The joint venture obtained  necessary new
    capital by admitting Signature  Development  Corporation  ("Signature") as a
    new partner in fiscal 1988. The amended  partnership  agreement provided for
    the  admission of  Signature as a 50% partner in the joint  venture with JBG
    and PWIP5  (collectively  "JBG/PW").  JBG and PWIP5's ownership  percentages
    were adjusted, pro rata, to 10% and 40%, respectively. In return for its 50%
    interest,  Signature  committed to  contribute up to $3,000,000 to the joint
    venture over the first three years,  primarily to fund capital improvements,
    working capital needs and meet debt payments.

     The aggregate cash  investment made by the Partnership for its interest was
     approximately  $11,524,000 (including an acquisition fee of $1,150,000 paid
     to the  Adviser).  The  apartment  complex  was  acquired  subject  to four
     mortgages;  two  institutional  nonrecourse  first  mortgages with balances
     totalling  approximately  $6,136,000 at the time of closing, and two second
     mortgage  notes from the seller of the  property  with  balances  totalling
     $6,000,000 at the time of closing.  On December 30, 1986,  the  Partnership
     refinanced the aforementioned debt by obtaining a $28,000,000  non-recourse
     mortgage loan. The  Partnership  received a distribution  of  approximately
     $9,926,000 in fiscal 1987,  reflecting its share of the excess  refinancing
     proceeds. In fiscal 1995, the venture's mortgage debt was refinanced again.
     The new mortgage  loan, in the initial  principal  amount of  approximately
     $27.9  million,  has a fixed interest rate of 7.65% and a term of 35 years.
     The venture  recognized a loss of  $1,177,000  in fiscal 1995 in connection
     with the refinancing  transaction to write off the  unamortized  balance of
     the deferred  financing  costs related to the prior  mortgage loan. The new
     loan also released from the collateral a 23-acre parcel of excess land. The
     venture  distributed  this  land  parcel,  which  had a  carrying  value of
     $563,000, to a new entity, Signature Partners,  L.L.C., in conjunction with
     the  refinancing  transaction.  Signature  Partners,  L.L.C.  is  owned  by
     Signature,  JBG  and the  Partnership  with  the  same  ownership  interest
     percentages as in the Carriage Hill joint venture agreement. The land owned
     by  Signature  Partners,  L.L.C.  could  eventually  be  marketed  to local
     developers once market  conditions  improve.  Proceeds of any such sale, if
     completed,  would be distributed to the owners in accordance  with the same
     priorities  called for under the terms of the Carriage  Hill joint  venture
     agreement described below.

    The amended joint venture  agreement  provides that available net cash flow,
    as defined,  is to be distributed in the following order of priority:  1) To
    the partners for any  deficiency  loans,  as defined,  simple but cumulative
    interest  at 15% per annum;  2) To  Signature  and  JBG/PW,  until both have
    received an amount of $151,324  plus simple but  cumulative  interest at 10%
    thereon  from  January 15,  1995  through  the date of  distribution;  3) To
    Signature,  simple but cumulative interest at 10% per annum on the aggregate
    unreturned  balance of the Initial Capital  Commitment of $2,549,120 and any
    Additional Capital, as defined; 4) To JBG/PW, simple but cumulative interest
    at 10% per  annum on the  unreturned  balance  of  JBG/PW's  deemed  capital
    contribution  of  $1,500,000;  and (5) any net cash flow  remaining,  to the
    partners pro rata in proportion to their respective  partnership  interests.
    Any  cash  flow  distributed  by  the  joint  venture  to  JBG/PW  is  to be
    distributed  between  them in the  following  order of  priority:  1) To the
    holders of operating  notes,  interest on all operating notes other than the
    Initial  Operating  Loan,  as  defined;   2)  To  PWIP5  and  JBG,  $300,000
    distributed 90% to PWIP5 and 10% to JBG; and 3) any remainder,  80% to PWIP5
    and 20% to JBG.

    Per the terms of the  amended  joint  venture  agreement,  any net  proceeds
    arising from the  refinancing,  sale,  exchange or other  disposition of the
    Property or any part thereof,  will be distributed in the following order of
    priority:  1) To the  lenders of  deficiency  loans,  simple but  cumulative
    interest at 15% per annum on, and then to the payment of the  principal  of,
    any deficiency  loans; 2) To Signature and JBG/PW,  until both have received
    an amount of  $151,324  plus simple but  cumulative  interest at 10% thereon
    from January 15, 1995 through the date of distribution;  3) to Signature and
    JBG/PW, an amount equal to their respective Closing Adjustment Accounts,  as
    defined, plus the Deferred Distribution of $137,500 owed to JBG/PW, together
    with  simple  but  cumulative  interest  at 10%  per  annum  thereon;  4) to
    Signature,  simple but cumulative  interest at 10% per annum on, and then to
    the payment of principal of, the aggregate unreturned balance of the Initial
    Capital Commitment of $2,549,120 and any Additional  Capital, as defined; 5)
    to JBG/PW,  simple but cumulative  interest at 10% per annum on, and then to
    the payment of principal of, the  unreturned  aggregate  balance of JBG/PW's
    deemed capital contribution of $1,500,000, plus $351,000; and 5) the balance
    pro rata to the partners in proportion to their  respective  percentages  of
    partnership interests. Any capital proceeds distributed by the joint venture
    to JBG/PW  are to be  distributed  between  them in the  following  order of
    priority:  1) To the holders of operating notes, all unpaid accrued interest
    on, and then to the payment of principal of, all outstanding operating notes
    other  than  the  Initial  Operating  Loan;  2)  To  JBG,  any  subordinated
    management  fees and  management  fees then  unpaid and  accrued  from prior
    fiscal years,  3) To PWIP5,  payment of the Initial  Operating Note together
    with accrued interest thereon;  4) To JBG, $200,000 for services rendered in
    connection  with the refinancing of the original  mortgage;  5) To PWIP5 and
    JBG, the next $5,000,000  distributed 90% to PWIP5 and 10% to JBG; and 6) To
    PWIP5 and JBG, any  remaining  balance  distributed  80% to PWIP5 and 20% to
    JBG.

    All tax losses shall be allocated  to the  partners in  proportion  to their
    percentages  of partnership  interest;  provided,  however,  that no partner
    shall be  allocated  any loss which would reduce its capital  account  below
    zero unless all Partners  have negative  capital  accounts.  Taxable  income
    shall be allocated in accordance with the cash flow  distributions set forth
    above.  Any  income  allocated  by the  joint  venture  to  JBG/PW  is to be
    allocated  between them to the extent of cash flow  distributed  to them for
    such taxable year, with the remainder allocated 80% to PWIP5 and 20% to JBG.
    Tax  losses  allocated  by the joint  venture to JBG/PW  shall be  allocated
    between  them in the  ratio  of their  positive  capital  account  balances,
    subsequent to any distributions,  with any remaining losses allocated 80% to
    PWIP5 and 20% to JBG.  Allocations  of the joint  venture's  net  losses for
    financial  accounting  purposes  have  been  made  in  accordance  with  the
    allocations of tax losses.

    A management agreement ("Management  Agreement"),  dated as of July 8, 1988,
    between the joint  venture  and  Signature  Management  Services,  Inc.,  an
    affiliate of Signature, sets forth conditions of the property management for
    the  Carriage  Hill  Apartments.  The  Management  Agreement  provides for a
    monthly  management  fee of 5% of  the  prior  month's  gross  revenues,  as
    defined. During fiscal 1996, the management agreement was amended to provide
    for the  payment of 3% of the  previous  month's  collected  revenues  and a
    deferral of 2%. The deferred  management fees will be paid to Signature upon
    final distribution of the cumulative preferred return discussed above.

b)  Amarillo Bell Associates
    ------------------------

    On September 30, 1983, the  Partnership  acquired a 50% interest in Amarillo
    Bell Associates,  an existing Texas general partnership which owns a 144,000
    square foot shopping center in Amarillo, Texas. The Partnership is a general
    partner in the joint venture. The Partnership's  co-venturer is an affiliate
    of The Boyer Company.  The aggregate  investment by the  Partnership for its
    interest was  approximately  $2,222,000  (including  an  acquisition  fee of
    $230,000 paid to the Adviser).

    On June 19, 1995, the Partnership  completed the refinancing of the existing
    first  mortgage loan secured by Bell Plaza,  reducing the interest rate from
    9.4% to 8.125%. The new loan, in the initial principal amount of $3,300,000,
    has a seven-year term and requires monthly  principal and interest  payments
    based upon a twenty-five year amortization  schedule.  The terms of the loan
    allow for a prepayment of the  principal  balance after the end of one year.
    At September 30, 1996,  the balance of the mortgage  loan,  which matures on
    July 1, 2002, was approximately $3,250,000.

    Subsequent  to the end of fiscal  1990,  the  Partnership  had entered  into
    negotiations  with its  co-venture  partner to  execute a purchase  and sale
    agreement for the sale of the  Partnership's  interest in the joint venture.
    The  proposed  agreement  would  have  given  the  co-venturer  an option to
    purchase the Partnership's interest for $1,500,000. Because the option price
    was below the equity method carrying value of the  Partnership's  investment
    in  Amarillo  Bell   Associates  at  September  30,  1990,  the  Partnership
    recognized a provision  for possible  investment  loss of $300,000 in fiscal
    1990 which  reflected an estimate of the loss that would have been  incurred
    if the option had been executed and exercised. The co-venturer was unable to
    obtain  financing  to  complete  this  transaction  and the option was never
    executed. The $300,000 allowance for possible investment loss remains on the
    Partnership's balance sheet at September 30, 1996 due to management's belief
    that it  represents  a permanent  impairment  to the  carrying  value of the
    investment in the Bell Plaza joint venture.

    The joint venture agreement  provides that the Partnership will receive from
    cash flow an annual non-cumulative preferred return, payable monthly, of 50%
    of the  distributable  cash flow with a minimum of $164,000  from October 1,
    1988 annually through September 30, 1990. For the period after September 30,
    1990, the Partnership will receive an annual  distribution paid on a monthly
    basis equal to 50% of distributable  cash flow. The co-venturer will receive
    an  annual  non-cumulative  base  return  payable  quarterly  equal  to  the
    available cash flow after the Partnership's return as set forth above.

    Taxable income before  depreciation will be allocated to the Partnership and
    the  co-venturer  first in the same amount as cash is  distributed,  and any
    balance will be allocated 50% to the Partnership and 50% to the co-venturer.
    If  no  cash  flow  is  available,  then  100%  is to be  allocated  to  the
    Partnership.  Depreciation  will  be  allocated  to  the  partners  as it is
    attributable  to  their   respective   basis  in  the  depreciable   assets.
    Allocations of income and loss for financial  accounting  purposes have been
    made in accordance with the allocations of taxable income or tax loss.

    If additional  cash is required for any reason in connection  with the joint
    venture,  it is to be provided in equal  proportions by the  Partnership and
    the co-venturer.

    Per the terms of the joint venture  agreement,  distributions from a sale of
    the operating  investment  property and/or  refinancing  proceeds will be as
    follows,  after  the  payment  of  mortgage  debts  and  to the  extent  not
    previously returned to each partner: 1) to the Partnership,  an amount equal
    to the Partnership's gross investment, 2) to the co-venturer, $2,140,000, 3)
    payment of all unpaid accrued  interest on all  outstanding  operating notes
    and then to the  repayment  of the  principal of all  outstanding  operating
    notes,  4) payment  of any  accrued  subordinated  management  fees,  5) any
    remaining  balance  thereof shall be distributed  50% to the Partnership and
    50% to the co-venturer.

    The joint  venture has entered into a property  management  contract with an
    affiliate of the  co-venturer  cancellable at the option of the  Partnership
    upon the occurrence of certain events.  The management fee is equal to 4% of
    gross rents.

c)  Greenbrier Associates
    ----------------------

    On June 29,  1984,  the  Partnership  acquired  an  interest  in  Greenbrier
    Associates, an Indiana general partnership that owns and operates Greenbrier
    Apartments,  a 324-unit apartment complex located in Indianapolis,  Indiana.
    The Partnership is a general partner in the joint venture. The Partnership's
    co-venturer is an affiliate of the Paragon Group.

    The aggregate cash  investment  made by the Partnership for its interest was
    approximately  $4,109,000  (including an acquisition fee of $432,000 paid to
    the Adviser).  The apartment  complex is encumbered by a first mortgage loan
    with a balance of $5,400,000 at September 30, 1996.

    The joint venture agreement  provides that the Partnership will receive from
    available  cash flow an annual  cumulative  preferred  base return,  payable
    monthly, of $378,000.  The Partnership's  preference return is noncumulative
    on a year-to-year  basis  beginning July 1, 1987. The cumulative  preference
    return of the  Partnership  in arrears at  September  30,  1996 and 1995 for
    unpaid preference  returns through June 30, 1987 is approximately  $312,000.
    Since such amount is payable only from available  future sale or refinancing
    proceeds,  as set forth  below,  it is not  accrued  in the joint  venture's
    financial  statements.  After the  Partnership  has received  its  preferred
    return, the co-venturer is then entitled to receive an annual noncumulative,
    subordinated base return, payable quarterly,  of $21,000. Any remaining cash
    flow not previously  distributed at the end of each year will be used to pay
    any accrued  interest on all outstanding  operating notes. The next $100,000
    of cash flow in any year will be distributed  90% to the Partnership and 10%
    to the co-venturer. Thereafter, any excess cash flow will be distributed 80%
    to the Partnership and 20% to the co-venturer.

    Taxable  income or tax loss from  operations  will be  allocated in the same
    proportions  as cash  distributions,  but in no  event  less  than 5% to the
    co-venturer.  Additionally,  the  co-venturer  shall  not be  allocated  net
    profits in excess of net cash flow distributed to it during the fiscal year.
    Allocations  of the venture's  operations  between the  Partnership  and the
    co-venturer for financial  accounting  purposes have been made in conformity
    with the actual allocations of taxable income or tax loss.

    If additional  cash is required for any reason in connection  with the joint
    venture, it will be provided by the Partnership and the co-venturer as loans
    to the joint  venture.  Such loans would be provided 85% by the  Partnership
    and 15% by the co-venturer.

    Any  proceeds   arising  from  a  refinancing,   sale,   exchange  or  other
    distribution  of property  will be  distributed  in the  following  order of
    priority: (1) to the payment of unpaid principal and accrued interest on all
    outstanding operating notes, then to the repayment of unpaid operating loans
    and accrued  interest to the  Partnership  and the  co-venturer,  (2) to the
    Partnership, the aggregate amount of the Partnership's cumulative preference
    return  not  previously   distributed,   (3)  the  next  $4,044,000  to  the
    Partnership,  (4) the next $200,000 to the co-venturer,  (5) to the property
    manager,  an amount equal to the sum of any unpaid  subordinated  management
    fees,  (6) the  next  $3,500,000  to the  Partnership  and  the  co-venturer
    allocated  90%  and  10%,  respectively,  (7)  the  next  $3,000,000  to the
    Partnership and the co-venturer allocated 80% and 20%, respectively, and (8)
    any  remaining  balance  to  the  Partnership  and  the  co-venturer  in the
    proportions of 70% and 30%, respectively.

    The joint  venture  entered  into a  property  management  contract  with an
    affiliate of the  co-venturer,  cancellable at the option of the Partnership
    upon the occurrence of certain events. The management fee is 5% of the gross
    receipts collected from the property.

d)  Seven Trails West Associates
    ----------------------------

    On September 13, 1984, the Partnership  acquired an interest in Seven Trails
    West Associates, a Missouri general partnership that owns and operates Seven
    Trails West Apartments,  a 532-unit apartment complex in Ballwin,  Missouri.
    The Partnership is a general partner in the joint venture.

     The  aggregate  cash  investment  by the  Partnership  for its interest was
     approximately  $10,011,000 (including an acquisition fee of $1,050,000 paid
     to the Adviser). On April 17, 1996, the Partnership  successfully completed
     the  refinancing  of the existing  first mortgage loan secured by the Seven
     Trails  West  Apartments,  reducing  the annual  interest  rate from 12% to
     7.87%. The new loan, in the initial principal amount of $17,000,000, is for
     a term of ten  years  with  monthly  payments  of  principal  and  interest
     totalling  $130,000.  The  proceeds  of  the  new  loan,  together  with  a
     contribution  of $159,000 from the joint venture,  were used to pay off all
     obligations  of the  prior  first  mortgage  loan as  well  as to fund  all
     reserves and escrows required by the new lender. Because the prior mortgage
     loan was not repaid by  February  1, 1996,  the joint  venture  forfeited a
     $147,000 fee which had been paid to the prior lender in  connection  with a
     fiscal 1994  extension  agreement  and was to be  refundable  under certain
     conditions.

    The joint venture agreement  provides that the Partnership will receive from
    available  cash flow an annual  cumulative  preferred  base return,  payable
    monthly, of $875,000. The Partnership's  preference return was cumulative on
    a year to year basis through  September  30, 1987 and is cumulative  monthly
    but  not  annually  thereafter.  The  cumulative  preference  return  of the
    Partnership in arrears at September 30, 1996 for unpaid  preference  returns
    through  September 30, 1987 is approximately  $1,691,000.  As such amount is
    payable only from future  available  sale or  refinancing  proceeds,  as set
    forth below, it is not accrued in the joint venture's financial statements.

    After the Partnership has received its preferred return,  the co-venturer is
    then entitled to receive an annual noncumulative,  subordinated base return,
    payable quarterly,  of $50,000. Any cash flow not previously  distributed at
    the end of each  fiscal  year will be applied as  follows:  $250,000 of cash
    flow in any year will be distributed  90% to the  Partnership and 10% to the
    co-venturer;  the next $300,000 of annual cash flow will be distributed  80%
    to the Partnership and 20% to the co-venturer;  thereafter,  any excess cash
    flow will be distributed 70% to the Partnership and 30% to the co-venturer.

    Taxable  income or tax loss from  operations  will be  allocated in the same
    proportions  as cash  distributions,  but in no event  less  than 10% to the
    co-venturer.  Additionally,  the  co-venturer  shall  not be  allocated  net
    profits in excess of net cash flow distributed to it during the fiscal year.
    Allocations  of the venture's  operations  between the  Partnership  and the
    co-venturer for financial  accounting  purposes have been made in conformity
    with the allocations of taxable income or tax loss.

    If additional  cash is required for any reason in connection  with the joint
    venture,  the joint venture agreement calls for such funds to be provided by
    the  Partnership  and the  co-venturer as loans to the joint  venture.  Such
    loans would be provided 90% by the Partnership  and 10% by the  co-venturer.
    Through  September  30,  1996,  operating  notes have been  provided  by the
    Partnership  and  co-venturer  in  the  amounts  of  $836,000  and  $11,000,
    respectively.  The notes bear interest at the prime interest rate of a local
    bank.  The  Partnership  advanced 100% of the funds required to close a loan
    modification  and  extension  agreement in fiscal 1994.  The portion of such
    operating  notes  representing  the  co-venture  partner's  10% share of the
    required  funds bears  interest  at twice the rate of the regular  operating
    notes.

    Any  proceeds  arising  from  a  refinancing,  sale  or  exchange  or  other
    disposition of property will be  distributed  first to the payment of unpaid
    principal  and accrued  interest on any  outstanding  notes.  Any  remaining
    proceeds will be  distributed  in the following  order:  repayment of unpaid
    principal and accrued  interest on all  outstanding  operating  notes to the
    Partnership and the co-venturer;  and any remaining balance  distributed 90%
    to the Partnership and 10% to the co-venturer.

    The joint  venture has entered into a property  management  contract with an
    affiliate of the  co-venturer,  cancellable at the option of the Partnership
    upon the occurrence of certain events.  The management fee is equal to 4% of
    the gross receipts collected from the property.

5.  Legal Proceedings
    -----------------

      In November  1994,  a series of  purported  class  actions  (the "New York
    Limited Partnership Actions") were filed in the United States District Court
    for the Southern District of New York concerning PaineWebber  Incorporated's
    sale and sponsorship of various limited partnership  investments,  including
    those  offered  by  the  Partnership.  The  lawsuits  were  brought  against
    PaineWebber   Incorporated   and   Paine   Webber   Group   Inc.   (together
    "PaineWebber"),   among  others,  by  allegedly   dissatisfied   partnership
    investors.  In March 1995,  after the actions  were  consolidated  under the
    title In re  PaineWebber  Limited  Partnership  Litigation,  the  plaintiffs
    amended  their  complaint  to  assert  claims  against  a  variety  of other
    defendants,  including  Fifth Income  Properties  Fund,  Inc. and Properties
    Associates, which are the General Partners of the Partnership and affiliates
    of PaineWebber.  On May 30, 1995, the court certified class action treatment
    of the claims asserted in the litigation.

      The amended complaint in the New York Limited  Partnership Actions alleged
    that,  in  connection  with the sale of  interests  in Paine  Webber  Income
    Properties Five Limited  Partnership,  PaineWebber,  Fifth Income Properties
    Fund,  Inc.  and  Properties  Associates  (1)  failed  to  provide  adequate
    disclosure   of  the  risks   involved;   (2)  made  false  and   misleading
    representations  about the safety of the investments  and the  Partnership's
    anticipated  performance;  and (3) marketed the Partnership to investors for
    whom such investments were not suitable. The plaintiffs, who purported to be
    suing  on  behalf  of all  persons  who  invested  in  Paine  Webber  Income
    Properties Five Limited Partnership, also alleged that following the sale of
    the partnership interests,  PaineWebber,  Fifth Income Properties Fund, Inc.
    and Properties  Associates  misrepresented  financial  information about the
    Partnerships  value and  performance.  The amended  complaint  alleged  that
    PaineWebber,  Fifth Income  Properties Fund, Inc. and Properties  Associates
    violated the Racketeer Influenced and Corrupt Organizations Act ("RICO") and
    the federal  securities  laws. The plaintiffs  sought  unspecified  damages,
    including  reimbursement  for all sums invested by them in the partnerships,
    as well as  disgorgement of all fees and other income derived by PaineWebber
    from the limited  partnerships.  In  addition,  the  plaintiffs  also sought
    treble damages under RICO.

      In January 1996, PaineWebber signed a memorandum of understanding with the
    plaintiffs in the New York Limited  Partnership  Actions outlining the terms
    under  which the parties  have  agreed to settle the case.  Pursuant to that
    memorandum of understanding,  PaineWebber irrevocably deposited $125 million
    into an escrow  fund under the  supervision  of the United  States  District
    Court  for the  Southern  District  of New  York to be used to  resolve  the
    litigation in accordance with a definitive  settlement agreement and plan of
    allocation. On July 17, 1996, PaineWebber and the class plaintiffs submitted
    a definitive  settlement agreement which has been preliminarily  approved by
    the court and  provides  for the  complete  resolution  of the class  action
    litigation,  including  releases in favor of the Partnership and the General
    Partners,  and the  allocation  of the $125  million  settlement  fund among
    investors in the various  partnerships  at issue in the case. As part of the
    settlement,  PaineWebber  also agreed to provide  class members with certain
    financial  guarantees  relating to some of the partnerships.  The details of
    the settlement are described in a notice mailed directly to class members at
    the direction of the court.  A final hearing on the fairness of the proposed
    settlement  was held in December 1996, and a ruling by the court as a result
    of this final hearing is currently pending.

      Under certain limited circumstances, pursuant to the Partnership Agreement
    and other contractual obligations,  PaineWebber affiliates could be entitled
    to  indemnification  for expenses and  liabilities  in  connection  with the
    litigation  described  above.  However,  PaineWebber  has agreed not to seek
    indemnification for any amounts it is required to pay in connection with the
    settlement of the New York Limited Partnership Actions. At the present time,
    the General  Partners cannot  estimate the impact,  if any, of the potential
    indemnification claims on the Partnership's financial statements, taken as a
    whole.  Accordingly,  no provision for any liability which could result from
    the  eventual  outcome of these  matters  has been made in the  accompanying
    financial statements.


<PAGE>


                        REPORT OF INDEPENDENT AUDITORS





The Partners of
Paine Webber Income Properties Five Limited Partnership:

     We have audited the  accompanying  combined  balance sheets of the Combined
Joint Ventures of Paine Webber Income Properties Five Limited  Partnership as of
September 30, 1996 and 1995, and the related  combined  statements of operations
and changes in venturers' deficit, and cash flows for each of the three years in
the period ended  September  30, 1996.  Our audits also  included the  financial
statement schedule listed in the Index at Item 14(a). These financial statements
and  schedule  are  the  responsibility  of the  Partnership's  management.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedule based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the combined financial statements referred to above present
fairly,  in all  material  respects,  the  combined  financial  position  of the
Combined  Joint  Ventures  of  Paine  Webber  Income   Properties  Five  Limited
Partnership  at September 30, 1996 and 1995,  and the combined  results of their
operations  and their cash flows for each of the three years in the period ended
September 30, 1996, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule,  when considered
in relation to the basic financial statements taken as a whole,  presents fairly
in all material respects the information set forth therein.




                                /S/ ERNST & YOUNG LLP
                                ---------------------
                                ERNST & YOUNG LLP



Boston, Massachusetts
December 6, 1996


<PAGE>


                          COMBINED JOINT VENTURES OF
           PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

                           COMBINED BALANCE SHEETS
                         September 30, 1996 and 1995
                                (In thousands)

                                    Assets

                                                            1996        1995
                                                            ----        ----
Current assets:
   Cash and cash equivalents                             $    469   $     545
   Escrow deposits                                          1,085       1,030
   Accounts receivable                                         83         130
   Prepaid expenses                                           573         664
                                                         --------   ---------
      Total current assets                                  2,210       2,369

Operating investment properties:
   Land                                                     5,250       5,250
   Buildings, improvements and equipment                   70,147      68,244
                                                        ---------    --------
                                                           75,397      73,494
   Less accumulated depreciation                          (30,544)    (27,928)
                                                        ---------   ---------
      Net operating investment properties                  44,853      45,566

Reserve for capital expenditures                              364         689

Deferred expenses, net of accumulated amortization
     of $234 ($212 in 1995)                                 1,373       1,138
Other assets, net                                             148         155
                                                        ---------   ---------
                                                        $  48,948   $  49,917
                                                        =========   =========

                      Liabilities and Venturers' Deficit
Current liabilities:
   Current portion of long-term debt                    $     461   $  14,911
   Current portion of deferred interest                         -       1,657
   Accounts payable                                           205         117
   Accounts payable - affiliates                              120          30
   Accrued real estate taxes                                  511         548
   Accrued interest                                           648         585
   Tenant security deposits                                   350         364
   Distributions payable to venturers                         132           -
   Other current liabilities                                  102         121
                                                       ----------   ---------
      Total current liabilities                             2,529      18,333

Notes payable to venturers                                    847         966

Other liabilities                                              31          14

Long-term debt                                             52,791      36,325

Venturers' deficit                                         (7,250)     (5,721)
                                                        ---------   ---------
                                                        $  48,948   $  49,917
                                                        =========   =========



                           See accompanying notes.


<PAGE>


                           COMBINED JOINT VENTURES OF
             PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

       COMBINED STATEMENTS OF OPERATIONS AND CHANGES IN VENTURERS' DEFICIT
             For the years ended September 30, 1996, 1995 and 1994
                                 (In thousands)

                                                1996        1995        1994
                                                ----        ----        ----

Revenues:
  Rental income and expense recoveries        $11,646     $11,173     $12,458
  Interest and other income                       473         443         386
                                              -------     -------     -------
                                               12,119      11,616      12,844

Expenses:
  Interest expense                              4,955       5,216       5,421
  Depreciation expense                          2,616       2,501       2,669
  Real estate taxes                               958         994       1,136
  Repairs and maintenance                         920         839       1,288
  Salaries and related expenses                 1,454       1,376       1,505
  Utilities                                       958         725         874
  General and administrative                      577         320         384
  Management fees                                 573         532         670
  Insurance                                       137         155         324
  Bad debt expense                                 25          27          18
  Amortization expense                             31          24          19
  Loss on write-off of deferred
     financing costs                                -       1,177           -
                                              -------     -------     -------
                                               13,204      13,886      14,308
                                              -------     -------     -------

Operating loss                                 (1,085)     (2,270)     (1,464)

Gain on sale of operating 
    investment property                             -           -        3,336
                                              -------    --------     --------

Net income (loss)                              (1,085)     (2,270)      1,872

Contributions from venturers                        -         916          50

Distributions to venturers                       (444)       (695)     (4,950)

Venturers' deficit, beginning of year          (5,721)     (3,672)       (644)
                                              -------    --------     -------

Venturers' deficit, end of year               $(7,250)   $ (5,721)    $(3,672)
                                              =======    ========     =======









                           See accompanying notes.


<PAGE>


                           COMBINED JOINT VENTURES OF
             PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP
                        COMBINED STATEMENTS OF CASH FLOWS
              For the years ended September 30, 1996, 1995 and 1994
                Increase (Decrease) in Cash and Cash Equivalents
                                 (In thousands)
                                                1996       1995       1994
                                                ----       ----       ----
Cash flows from operating activities:
   Net income (loss)                         $ (1,085)   $ (2,270)    $ 1,872
   Adjustments to reconcile net income
     (loss) to net cash provided by 
     operating activities:
      Depreciation and amortization             2,647       2,525       2,688
      Amortization of deferred financing costs     70          99          70
      Loss on write-off of deferred financing
        costs                                       -       1,177           -
      Gain on sale of operating investment
        property                                    -           -      (3,336)
      Changes in assets and liabilities:
         Escrow deposits                          (55)        183        (368)
         Accounts receivable                       47         (63)         21
         Prepaid expenses                          91         (83)        (48)
         Deferred expenses                        (86)       (126)       (144)
         Accounts payable                          88        (134)        (80)
         Accounts payable - affiliates             90         (14)        (45)
         Accrued real estate taxes                (37)         (1)         27
         Accrued interest                          63          60           7
         Tenant security deposits                 (14)        (34)        (97)
         Other current liabilities                (19)         (4)        (37)
         Deferred interest                     (1,657)         11         (88)
         Other liabilities                         17           1           2
                                               ------    --------     -------
            Total adjustments                   1,245       3,597      (1,428)
                                               ------    --------     -------
            Net cash provided by operating
              activities                          160       1,327         444
                                               ------    --------     -------

Cash flows from investment activities:
   Additions to operating investment 
     properties                               (1,903)     (1,323)       (776)
   Decrease (increase) in reserve for
     capital expenditures                         325       (467)         243
   Proceeds from sale of assets                     -          -        9,686
                                               ------    --------     -------
            Net cash (used in) provided by
              investing activities             (1,578)     (1,790)      9,153
                                               ------    --------     -------

Cash flows from financing activities:
   Proceeds from long-term debt                17,000      31,184           -
   Payment of deferred financing costs           (243)       (945)          -
   Contributions by venturers                       -         916          50
   Distributions to venturers                    (312)       (930)     (5,115)
   Repayment of long-term debt                (14,984)    (30,002)     (5,277)
   Proceeds from loans from venturers               -         119         586
   Repayment of notes to partners                (119)          -         (85)
                                               ------    --------     -------
            Net cash provided by (used in)
             financing activities               1,342         342      (9,841)
                                               ------    --------     -------

Net decrease in cash and cash equivalents         (76)       (121)       (244)
Cash and cash equivalents, beginning of year       545        666         910
                                               -------   --------     -------
Cash and cash equivalents, end of year         $   469   $    545     $   666
                                               =======   ========     =======
Cash paid during the year for interest         $ 6,479   $  4,909     $ 5,432
                                               ======    =======      =======

                           See accompanying notes.


<PAGE>


                          COMBINED JOINT VENTURES of
                     PAINE WEBBER INCOME PROPERTIES FIVE
                             LIMITED PARTNERSHIP
                    Notes to Combined Financial Statements



1.    Organization and Nature of Operations
      -------------------------------------

      The  accompanying  financial  statements of the Combined Joint Ventures of
    Paine Webber Income  Properties  Five Limited  Partnership  (Combined  Joint
    Ventures) include the accounts of Randallstown  Carriage Hill Associates,  a
    Maryland general partnership; Signature Partners, L.L.C., a Maryland limited
    liability company;  Amarillo Bell Associates,  a Texas general  partnership;
    Greenbrier Associates, an Indiana general partnership; Cambridge Associates,
    a Nebraska  general  partnership and Seven Trails West Associates a Missouri
    general  partnership.  As further described in Note 2, Cambridge  Associates
    sold its operating  investment  property and commenced a liquidation  of its
    operations  during  fiscal 1994.  The  financial  statements of the Combined
    Joint  Ventures  are  presented  in  combined  form due to the nature of the
    relationship  between the  co-venturers  and Paine Webber Income  Properties
    Five Limited Partnership  (PWIP5),  which owns a majority financial interest
    but does not have voting control in each joint venture.

    The dates of PWIP5's  acquisition  of interests in the joint ventures are as
    follows:

                                                  Date of Acquisition
                      Joint Venture               of Interest
                      -------------               -----------

         Randallstown Carriage Hill Associates     8/30/83
         Signature Partners L.L.C.                 6/1/95
         Amarillo Bell Associates                  9/30/83
         Greenbrier Associates                     6/29/84
         Cambridge Associates                      7/31/84
         Seven Trails West Associates              9/13/84


2.    Use of Estimates and Summary of Significant Accounting Policies
      ---------------------------------------------------------------

      The  accompanying  financial  statements have been prepared on the accrual
     basis of  accounting  in  accordance  with  generally  accepted  accounting
     principles which require  management to make estimates and assumptions that
     affect the reported  amounts of assets and  liabilities  and disclosures of
     contingent  assets and  liabilities  as of September  30, 1996 and 1995 and
     revenues  and  expenses  for each of the three  years in the  period  ended
     September  30, 1996.  Actual  results  could differ from the  estimates and
     assumptions used.

      Basis of presentation
      ---------------------

      Generally,  the records of the combined  joint  ventures are maintained on
     the income tax basis of  accounting  and  adjusted  to  generally  accepted
     accounting  principles for financial  reporting  purposes,  principally for
     depreciation.

      Reclassifications
      -----------------

      Certain  prior  year  amounts  have been  reclassified  to  conform to the
     current year presentation.

      Operating investment properties
      -------------------------------

      The  operating  investment  properties  are  carried at the lower of cost,
    reduced  by  accumulated  depreciation,  or net  realizable  value.  The net
    realizable  value of a property  held for long-term  investment  purposes is
    measured by the recoverability of the venture's  investment through expected
    future cash flows on an undiscounted  basis, which may exceed the property's
    market  value.  The  net  realizable  value  of a  property  held  for  sale
    approximates its current market value. All of the operating properties owned
    by the Combined Joint Ventures were held for long-term  investment  purposes
    as of September 30, 1996 and 1995.

       The Combined  Joint Ventures have reviewed FAS No. 121,  "Accounting  for
    the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed
    Of," which is effective for financial  statements for years  beginning after
    December  15,  1995,  and  believe  this new  pronouncement  will not have a
    material effect on the financial statements of the Combined Joint Ventures.

      Depreciation  expense  is  computed  on a  straight-line  basis  over  the
    estimated  useful  lives  of  the  buildings,  improvements  and  equipment,
    generally,  five to forty years.  Professional fees and other costs incurred
    in connection with the  acquisition of the properties have been  capitalized
    and are included in the cost of the land and buildings.

      Deferred expenses
      -----------------

      Deferred  expenses consist of leasing  commissions and loan fees which are
    being  amortized,  using  the  straight-line  method,  over the terms of the
    related leases and loans,  respectively.  Amortization of deferred loan fees
    is  included  in  interest  expense  on  the   accompanying   statements  of
    operations.

      Revenue Recognition
      -------------------

      The  Combined  Joint  Ventures  lease  space at the  operating  investment
    properties under short-term and long-term operating leases.  Rental revenues
    are recognized on a  straight-line  basis as earned pursuant to the terms of
    the leases.

      Income tax matters
      ------------------

      The  Combined  Joint  Ventures  are  comprised  of entities  which are not
    taxable and accordingly, the results of their operations are included on the
    tax returns of the various partners.  Accordingly no income tax provision is
    reflected in the accompanying combined financial statements.

      Cash and cash equivalents
      -------------------------

      For purposes of the statement of cash flows, the Partnerships consider all
    short-term investments with original maturity dates of 90 days or less to be
    cash equivalents.

      Fair Value of Financial Instruments
      -----------------------------------

    The carrying amounts of cash and cash equivalents, escrow deposits, accounts
    receivable,  accounts payable and accrued liabilities approximate their fair
    values as of September  30, 1996 due to the  short-term  maturities of these
    instruments. It is not practicable for management to estimate the fair value
    of the notes payable to venturers  because the obligations  were provided in
    non-arm's length transactions without regard to fixed maturities, collateral
    issues or other traditional conditions and covenants.  Information regarding
    the fair value of  long-term  debt is  provided in Note 5. The fair value of
    long-term debt is estimated using  discounted  cash flow analyses,  based on
    the current market rates for similar types of borrowing arrangements.


<PAGE>


      Escrow deposits
      ---------------

      Escrow  deposits at September 30, 1996 and 1995 consist of tenant security
    deposits,  amounts  escrowed  for the payment of  insurance  premiums,  real
    estate taxes and repair and replacement funds.

      Reserve for Capital Expenditures
      --------------------------------

      In connection  with the mortgage loan of the Carriage Hill joint  venture,
    an escrow reserve account was established for replacements  stipulating that
    a portion of each month's mortgage payment is to be deposited in the reserve
    for replacement  account.  When repairs are made, the joint venture pays the
    vendor and then the lender  reimburses  the joint  venture  and  reduces the
    escrow  account by the amount of the  expenditure.  These  funds can only be
    used for making necessary repairs as stipulated in the mortgage agreement.

3.    Joint Ventures
--    --------------

    See Note 4 to the financial  statements of PWIP5 in this Annual Report for a
    more detailed description of the joint venture partnerships. Descriptions of
    the ventures' properties are summarized below:

      a.    Randallstown Carriage Hill Associates
            -------------------------------------

            The  joint   venture  owns  and  operates   Carriage   Hill  Village
        Apartments,  an  806-unit  apartment  complex  located in  Randallstown,
        Maryland.

      b.    Signature Partners, L.L.C.
            --------------------------

            This  limited  liability  company  owns a  23-acre  parcel of land
        located in Randallstown, Maryland.  See Note 5.

      c.    Amarillo Bell Associates
            --------------------------

            The joint venture owns and operates Bell Plaza  Shopping  Center,  a
        144,000 gross leasable  square foot shopping center located in Amarillo,
        Texas.

      d.    Greenbrier Associates
            ---------------------

            The  joint  venture  owns  and  operates  Greenbrier  Apartments,  a
        324-unit apartment complex located in Indianapolis, Indiana.

      e.    Seven Trails West Associates
            -----------------------------

            The joint venture owns and operates Seven Trails West Apartments,  a
        532-unit apartment complex located in Ballwin, Missouri.

      f.    Cambridge Associates
            --------------------

            The  joint  venture  owned  and  operated  Cambridge  Apartments,  a
        378-unit apartment complex located in Omaha, Nebraska. On June 30, 1994,
        Cambridge  Associates  sold  its  operating  investment  property,   the
        Cambridge Apartments, to an affiliate of PWIP5's co-venture partner. The
        property was sold for $9,700,000.  After repayment of the outstanding $5
        million  first  mortgage  loan and  closing  costs,  the sale  generated
        approximately $4.7 million to be split between PWIP5 and the co-venturer
        in accordance with the venture agreement. PWIP5's share of such proceeds
        amounted to approximately $3.7 million in cash. The venture recognized a
        gain  of  $3,336,000  in  fiscal  1994  in  connection   with  the  sale
        transaction.

      The following description of the joint venture agreements provides certain
    general information.

      Allocations of net income and loss
      ----------------------------------

      The  agreements  generally  provide that taxable  income and losses (other
    than those resulting from sales or other  dispositions of the projects) will
    be allocated  between PWIP5 and the  co-venturers in the same proportions as
    cash flow distributed  from  operations,  except for certain items which are
    specifically  allocated to the  partners,  as set forth in the joint venture
    agreements.  Gains or losses  resulting from sales or other  dispositions of
    the  projects   shall  be  allocated  as  specified  in  the  joint  venture
    agreements. Allocations of income and loss for financial accounting purposes
    have been made in accordance with the actual joint venture agreement.

      Distributions
      -------------

      The joint venture agreements  generally provide that distributions will be
    paid on an annual basis first to PWIP5,  in specified  amounts  ranging from
    $283,500  to  $875,000  as a  preferred  return.  After  payment  of PWIP5's
    preference  return,  the agreements  generally provide for certain preferred
    payments,  up to  specified  amounts,  to be paid to the  co-venturers.  Any
    remaining distributable cash will be paid in proportions ranging from 90% to
    50% to PWIP5 and 10% to 50% to the  co-venturers,  as set forth in the joint
    venture  agreements.  Allocations of the distributable  cash of the Carriage
    Hill joint venture differ significantly from these general terms. See Note 4
    to the financial  statements  of PWIP5  included in this Annual Report for a
    further discussion.

      Distributions of net proceeds upon the sale or refinancing of the projects
    shall be made in  accordance  with  formulas  provided in the joint  venture
    agreements.

4.    Related Party Transactions
      --------------------------

      The Combined Joint Ventures  entered into property  management  agreements
    with  affiliates  of the  co-venturers,  cancelable  at the joint  ventures'
    option upon the occurrence of certain events.  The management fees are equal
    to  between  4% and 5% of gross  receipts,  as  defined  in the  agreements.
    Management  fees  totalling  $573,000,  $532,000 and $670,000 were earned by
    affiliates of the co-venturers for fiscal 1996, 1995 and 1994, respectively.
    During  fiscal 1996,  the  management  agreement of the Carriage  Hill joint
    venture was amended to provide for the payment of 3% of the previous month's
    collected  revenues and a deferral of 2% to be paid out of available sale or
    refinancing  proceeds.  Deferred management fees payable as of September 30,
    1996 amounted to $86,000.

      Accounts  payable  -  affiliates  at  September  30,  1996  and  1995  are
    principally management fees and reimbursements payable to property managers.
    Notes payable to venturers at September 30, 1996 represents  operating notes
    provided by PWIP5 and its co-venturer to Seven Trails West Associates. Notes
    payable to  venturers  at  September  30, 1995  represents  operating  notes
    provided by PWIP5 and its  co-venturer  to Seven Trails West  Associates and
    Randallstown  Carriage  Hill  Associates  in the  amounts  of  $848,000  and
    $118,000, respectively. Such loans generally bear interest at the prime rate
    and are payable only out of the respective venture's available net cash flow
    or sale or refinancing proceeds.


<PAGE>


5.    Long-term Debt
      -------------

      Long-term  debt at September  30, 1996 and 1995  consists of the following
    (in thousands):

                                                           1996        1995
                                                           ----        ----

     7.65%  mortgage note to a financial
     institution,  due in 2030. Payments
     are made in monthly installments of
     $191,   including   principal   and
     interest.   The  mortgage  note  is
     secured  by the  property  owned by
     Randallstown      Carriage     Hill
     Associates   and  is   subject   to
     certain        escrow       deposit
     requirements.  The mortgage note is
     co-insured   by  the  Secretary  of
     Housing and Urban Development (HUD)
     in accordance  with the  provisions
     of the National Housing Act and the
     laws of the State of Maryland.  The
     fair  value  of this  note  payable
     approximated  its carrying value as
     of  September  30, 1996.                          $ 27,675     $ 27,843

     8.125%  nonrecourse  mortgage  note
     secured by land and building  owned
     by   Amarillo   Bell    Associates,
     guaranteed   by  the   co-venturer.
     Payable in monthly  installments of
     $26,  including  interest,  with  a
     final   payment  of   approximately
     $2,943 due July 1,  2002.  The fair
     value   of   this   note    payable
     approximated  its carrying value as
     of September 30, 1996.                               3,250        3,293

     Wrap-around mortgage note of $5,400
     secured    by    the     Greenbrier
     Associates   property  which  bears
     interest  at 10%  payable  monthly.
     The entire  principal of $5,400 and
     any unpaid accrued  interest is due
     June 29, 1998. See discussion below
     regarding extension. The fair value
     of this note  payable  approximated
     its carrying  value as of September
     30, 1996.                                            5,400        5,400

     7.87%  nonrecourse   mortgage  note
     secured  by the Seven  Trails  West
     Associates   operating   investment
     property  bearing interest at 7.87%
     per annum.  The mortgage is payable
     in monthly installments,  including
     principal  and  interest,  of  $130
     through May 1, 2006,  at which time
     the final principal  installment of
     $13,724  plus  any  unpaid  accrued
     interest is due.  The fair value of
     this  note   payable   approximated
     $16,099 as of  September  30, 1996.                 16,927            -



<PAGE>


                                                           1996        1995
                                                           ----        ----

     Wrap-around   deed  of   trust   of
     $14,700,000  secured  by the  Seven
     Trails  West  Associates  operating
     investment    property,     bearing
     interest   of  12%   (11%   payable
     monthly,  1% accrued and deferred).
     The entire  principal  balance  and
     deferred  interest is due  February
     1,  1996.  See   discussion   below
     regarding     1994     modification
     agreement and 1996  refinancing.                           -      14,700
                                                          -------    --------
                                                           53,252      51,236

      Less current portion                                   (461)    (14,911)
                                                         --------    --------
                                                         $ 52,791    $ 36,325
                                                         ========    ========

    Maturities  of  long-term  debt,  which  is all  non-recourse  to the  joint
    ventures and PWIP5,  for each of the next five years and  thereafter  are as
    follows (in thousands):

            1997                   $   461
            1998                     5,897
            1999                       539
            2000                       582
            2001                       629
            Thereafter              45,144
                                   -------
                                   $53,252
                                   =======

      During  fiscal 1995, an existing  first  mortgage loan secured by Carriage
Hill, with an outstanding  principal balance of approximately $26.5 million, was
refinanced. The new loan, in the initial principal amount of approximately $27.9
million,  has a fixed interest rate of 7.65% and a term of 35 years. The venture
recognized  a  loss  of  $1,177,000  in  fiscal  1995  in  connection  with  the
refinancing  transaction  to write off the  unamortized  balance of the deferred
financing costs related to the prior mortgage loan. As part of this  refinancing
transaction, the Carriage Hill joint venture was able to secure the release from
collateral of a 23-acre parcel of excess land.  Title to this land,  which had a
carrying value of $563,000,  was  transferred  from the joint venture to a newly
formed  limited  liability  company,   Signature  Partners,  L.L.C.  ("Signature
Partners").  Signature  Partners is owned by the venture  partners with the same
ownership interest  percentages as in the Carriage Hill joint venture agreement.
This  land  could  eventually  be  marketed  to  local  developers  once  market
conditions  improve.  Proceeds  of  any  such  sale,  if  completed,   would  be
distributed  to the owners in  accordance  with the same  priorities  called for
under the terms of the Carriage Hill joint venture agreement.

      In fiscal 1993,  Greenbrier  Associates  exercised an option to extend the
maturity  date of its mortgage  loan to June 29, 1998,  at which time the entire
principal  and any  unpaid  accrued  interest  is due.  In  connection  with the
extension of the maturity date,  deferred interest expense of $263,000 was to be
paid partially with the extension, with two remaining installments of $88,000 to
be paid on June 30,  1994 and 1995.  As of  September  30,  1995,  all  deferred
interest had been paid.

      On April 17, 1996, the Seven Trails joint venture  successfully  completed
the  refinancing of the existing first mortgage loan secured by the Seven Trails
West  Apartments,  reducing the annual interest rate from 12% to 7.87%.  The new
loan,  in the  initial  principal  amount of  $17,000,000,  is for a term of ten
years.  The proceeds of the new loan,  together with a contribution  of $159,000
from the joint venture,  were used to pay off all obligations of the prior first
mortgage  loan as well as to fund all reserves  and escrows  required by the new
lender.  Because the prior mortgage loan was not repaid by February 1, 1996, the
joint  venture  forfeited a $147,000 fee which had been paid to the prior lender
in connection  with a fiscal 1994  extension  agreement and was to be refundable
under certain conditions. As part of the new loan agreement, reserves for agreed
upon repairs and future  replacements  aggregating  approximately  $209,000 were
established in escrow accounts with the mortgage lender.
<PAGE>

6.    Leases
      ------

      Minimum annual future lease revenues under noncancellable operating leases
at the Bell Plaza  Shopping  Center  (owned by Amarillo Bell  Associates)  as of
September 30, 1996 are as follows (in thousands):

            1997                 $     790
            1998                       764
            1999                       649
            2000                       482
            2001                       437
            Thereafter               3,824
                                 ---------
                                 $   6,946
                                 =========

      Revenues  from  two  majors  tenant  of the  Bell  Plaza  Shopping  Center
comprised  approximately  38% and 13% of the total  rental  revenues of Amarillo
Bell  Associates  for the year ended  September 30, 1996.  The duration of these
leases  extend  between the years 1999 and 2014 and the tenants are subject to a
base rent and a percentage rent which fluctuates with sales volume.



<PAGE>

<TABLE>



Schedule III - Real Estate and Accumulated Depreciation

                   COMBINED JOINT VENTURES OF PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP

              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION

                               September 30, 1996
                                 (In thousands)
<CAPTION>
                                                                                                                      Life on which
                           Initial Cost of      Costs        Gross Amount at Which Carried at                          Depreciation
                          Partnership        Capitalized               Close of period                                  in Latest
                               Buildings     (Removed)          Buildings                                               Income 
                               and          Subsequent to       and                Accumulated   Date of       Date     Statement  
Description Encumbrances  Land Improvements Acquisition(1) Land Improvements Total Depreciation  Construction  Acquired is Computed
----------- ------------  ---- ------------ -------------- ---- ------------ ----- ------------  ------------- -------- ------------
<S>              <C>      <C>       <C>       <C>           <C>      <C>       <C>       <C>         <C>       <C>       <C>   
COMBINED JOINT VENTURES:

Apartment Complex$27,675  $1,000   $23,633   $4,604         $1,000   $28,237   $29,237   $ 13,890    1970-73   8/30/83   5-30 yrs.
Randallstown, MD

Land                   -     563         -       38            601         -       601          -    -         6/1/95      -
Randallstown, MD

Shopping Center    3,250   1,519     6,310    1,124          1,519     7,434     8,953      2,784    1979-82   9/30/83   5-40 yrs.
Amarillo, TX

Apartment Complex  5,400     420     8,990      649            420     9,639    10,059      3,884    1964-68   6/29/84   5-30 yrs.
Indianapolis, IN

Apartment Complex
Ballwin, MO       16,927   1,710    22,131    2,252          1,710    24,837    26,547      9,986    1968-74   9/13/84   5-30 yrs.
                 ------    -----    ------   -----          ------   -------   -------   --------   
Total            $53,252  $5,212   $61,064   $8,667        $ 5,250   $70,147   $75,397   $ 30,544
                 =======  ======   ======    ======        =======   =======   =======   ======== 

Notes
(A) The  aggregate  cost of real estate owned at September 30, 1996 for Federal income tax  purposes is  
    approximately  $71,979,000.
(B) See Note 5 to Combined Financial  Statements for a description of the terms of the debt encumbering the
    properties.
(C) Reconciliation of real estate owned:
                                                   1996               1995             1994
                                                   ----               ----             ----
      Balance at beginning of period              $73,494           $72,171           $80,879
      Acquisitions and improvements                 1,903             1,323               776
      Dispositions                                      -                 -            (9,484)
                                                  -------           -------           -------
      Balance at end of period                    $75,397           $73,494           $72,171
                                                  =======           =======           =======

(D) Reconciliation of accumulated depreciation:

      Balance at beginning of period              $27,928          $25,427           $25,891
      Depreciation expense                          2,616            2,501             2,669
      Dispositions                                      -                -            (3,133)
                                                  -------          -------           -------
      Balance at end of period                    $30,544          $27,928           $25,427
                                                  =======          =======           =======

</TABLE>