UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549
                      ----------------------------------

                                   FORM 10-Q

   |X|      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997

                                      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: 0-15035

                  PAINEWEBBER GROWTH PARTNERS THREE L.P.
                  --------------------------------------
            (Exact name of registrant as specified in its charter)

      Delaware                                              04-2882258
-------------------------------                          ------------------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                           Identification No.)

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

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

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 |_|.

<PAGE>

                  PAINEWEBBER GROWTH PARTNERS THREE L.P.

                              BALANCE SHEETS
             September 30, 1997 and March 31, 1997 (Unaudited)
                              (In thousands)

                                  ASSETS
                                                 September 30     March 31
                                                 ------------     --------


Investment in joint venture, at equity              $      4      $     86
Cash and cash equivalents                                822         1,112
                                                    --------      --------
                                                    $    826      $  1,198
                                                    ========      ========

                     LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses               $     21      $     26
Partners' capital                                        805         1,172
                                                    --------      --------
                                                    $    826      $  1,198
                                                    ========      ========

              STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
        For the six months ended September 30, 1997 and 1996 (Unaudited)
                                 (In thousands)

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

Balance at March 31, 1996                           $  (143)      $ (3,196)
Net loss                                                 (6)          (118)
                                                    -------       --------
Balance at September 30, 1996                       $  (149)      $ (3,314)
                                                    =======       ========

Balance at March 31, 1997                           $    83       $  1,089
Cash distributions                                        -           (308)
Net loss                                                 (3)           (56)
                                                    -------       --------
Balance at September 30, 1997                       $    80       $    725
                                                    =======       ========





                          See accompanying notes.


<PAGE>


                     PAINEWEBBER GROWTH PARTNERS THREE L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
    For the three and six months ended September 30, 1997 and 1996 (Unaudited)
                    (In thousands, except for per Unit data)

                                    Three Months Ended    Six Months Ended
                                        September 30,       September 30,
                                   -------------------   ------------------
                                    1997        1996        1997     1996
                                    ----        ----        ----     ----

Revenues:
   Rental income                  $    -      $  372      $    -     $   738
   Interest and other income          11          10          26          19
                                  ------      ------      ------     -------
                                      11         382          26         757

Expenses:
   Property operating expenses         -         181           -         359
   Interest expense                    -         139           -         269
   Depreciation                        -          71           -         136
   Partnership management fees         -           -           -          22
   General and administrative         41          23          69          56
                                  ------      ------      ------     -------
                                      41         414          69         842
                                  ------      ------      ------     -------

Operating loss                       (30)        (32)        (43)        (85)

Partnership's share of
  unconsolidated venture's loss       (5)        (14)        (16)        (39)
                                  ------      ------      ------     -------
Net loss                          $  (35)     $  (46)     $  (59)    $  (124)
                                  ======      ======      ======     =======

Net loss per Limited 
  Partnership Unit                $(1.29)     $(1.69)     $(2.18)    $ (4.59)
                                  ======      =======     ======     =======



Cash distributions per 
  Limited Partnership Unit        $    -      $    -      $12.00     $     -
                                  ======      ======      ======     =======


      The above net loss and cash distributions per Limited Partnership Unit are
based upon the 25,657 Limited Partnership Units outstanding during each period.



                          See accompanying notes.


<PAGE>


                     PAINEWEBBER GROWTH PARTNERS THREE L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        For the six months ended September 30, 1997 and 1996 (Unaudited)
                Increase (Decrease) in Cash and Cash Equivalents
                                 (In thousands)

                                                        1997         1996
                                                        ----         ----
Cash flows from operating activities:
   Net loss                                          $   (59)    $  (124)
   Adjustments to reconcile net loss to net
    cash (used in) provided by operating activities:
     Partnership's share of unconsolidated venture's
       loss                                               16          39
     Depreciation                                         -          136
     Deferred management fees                             -           22
     Amortization of deferred financing costs             -           28
     Changes in assets and liabilities:
      Prepaid expenses                                    -           16
      Accounts payable and accrued expenses              (4)          24
      Accrued interest payable                            -           17
      Advances from consolidated venture                  -          (45)
                                                      -----       ------
         Total adjustments                               12          237
                                                      -----       ------
         Net cash (used in) provided by operating
           activities                                   (47)         113

Cash flow from investing activities:
   Contribution to unconsolidated venture                 -          (61)
   Distribution from unconsolidated venture              65            -
                                                     ------       ------
         Net cash provided by (used in) investing
           activities                                    65          (61)

Cash flow from financing activities:
   Distributions to partners                           (308)           -
                                                     ------       ------

Net (decrease) increase in cash and cash
  equivalents                                          (290)          52

Cash and cash equivalents, beginning of period        1,112          801
                                                     ------       ------

Cash and cash equivalents, end of period             $  822       $  853
                                                     ======       ======

Cash paid during the period for interest             $    -       $  224
                                                     ======       ======


                          See accompanying notes.


<PAGE>


                  PAINEWEBBER GROWTH PARTNERS THREE L.P.
                Notes to Consolidated Financial Statements
                                (Unaudited)

1.    General
      -------

      The accompanying financial statements, footnotes and discussions should be
read in connection with the financial  statements and footnotes contained in the
Partnership's Annual Report for the year ended March 31, 1997. In the opinion of
management, the accompanying financial statements,  which have not been audited,
reflect all adjustments  necessary to present fairly the results for the interim
period. All of the accounting  adjustments reflected in the accompanying interim
financial statements are of a normal recurring nature.

      The  accompanying  financial  statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting  principles
which  requires  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, 1997 and March 31, 1997 and revenues and
expenses for each of the three and six-month  periods  ended  September 30, 1997
and 1996. Actual results could differ from the estimates and assumptions used.

      As discussed  further in Note 3, as a result of the sale of the  operating
property owned by the Summerwind joint venture in December 1996, the Partnership
has one remaining joint venture investment,  the Woodchase  Apartments (see Note
4). Management of the Partnership is currently  pursuing a possible sale of this
final  asset and a  potential  liquidation  of the  Partnership  which  could be
accomplished  prior to the end of calendar year 1997.  There are no  assurances,
however,  that the  disposition  of the  Partnership's  remaining  asset,  and a
liquidation of the Partnership will be accomplished within this time frame.

2.    Related Party Transactions
      --------------------------

      The Adviser  earned  management  fees of $22,000 for the six-month  period
ended September 30, 1996. A limitation on cumulative  management fees payable to
the  Adviser was reached in the first  quarter of fiscal  1997.  The Advisor had
deferred  payment of  management  fees  beginning in September  1986 pending the
generation of cash flow from the Partnership's investment properties. As part of
the  settlement  agreement  finalized  in the  fourth  quarter  of  fiscal  1997
regarding the class action lawsuit  discussed in the Annual Report,  the Adviser
agreed  to waive any  amounts  due to it under the  advisory  contract  with the
Partnership.  Consequently,  $1,265,000 of deferred management fees were written
off  and  recognized  as  an   extraordinary   gain  in  fiscal  1997.  See  the
Partnership's Annual Report for further information regarding management fees.

      Included in general and administrative  expenses for the six-month periods
ended  September  30,  1997  and  1996 is  $22,000  and  $18,000,  respectively,
representing  reimbursements to an affiliate of the Managing General Partner for
providing certain financial,  accounting and investor  communication services to
the Partnership.

      Also  included in general and  administrative  expenses for the  six-month
periods ended  September  30, 1997 and 1996 is $2,000 and $1,000,  respectively,
representing  fees  earned  by an  affiliate,  Mitchell  Hutchins  Institutional
Investors, Inc., for managing the Partnership's cash assets.

3.    Sale of Operating Investment Property
      -------------------------------------

      The Partnership previously had an investment in the Summerwind Apartments,
owned by Tara  Associates,  Ltd., a majority owned and controlled joint venture.
Tara Associates,  Ltd., a Georgia limited partnership (the "joint venture"), was
organized  on December  19,  1983 to acquire  and  operate a 208-unit  apartment
complex,  Summerwind  Apartments,  located in Jonesboro,  Georgia. On October 8,
1985, the Partnership  acquired a 70% general partnership  interest in the joint
venture. The remaining 30% general and limited partnership  interests were owned
by John  Lie-Nielson  (the  "co-venturer").  Effective  February 23,  1990,  the
co-venturer's   general   partnership   interest  was  converted  to  a  limited
partnership interest,  thereby giving the Partnership control over the operating
investment  property.  Subsequent  to such date,  the venture was  reported on a
consolidated basis in the Partnership's financial statements.

      On December 27, 1996, Tara Associates, Ltd. sold the Summerwind Apartments
to an unrelated  third party for a net price of $550,000 plus the  assumption of
the outstanding  principal  balance of the mortgage loan secured by the property
of $8,330,000.  The Partnership received net proceeds of approximately  $319,000
after  deducting  closing costs and other credits to the buyer.  The Partnership
made a special  distribution  to the  Limited  Partners  on June 13, 1997 in the
amount of approximately  $308,000,  or $12 per original $1,000 investment,  from
the proceeds of this transaction.

      For income tax  reporting  purposes,  the  Summerwind  joint  venture  was
required to  maintain  its  accounting  records on a calendar  year basis.  As a
result,  the Partnership had accounted for its joint venture investment based on
financial  information  which  was  three  months  in  arrears  to  that  of the
Partnership.  The following is a summary of property  operating expenses of Tara
Associates,  Ltd.  for  the  three  and six  months  ended  June  30,  1996  (in
thousands):

                                      Three Months Ended   Six  Months Ended
                                          June 30, 1996      June 30, 1996
                                      ------------------   ------------------

      Property operating expenses:
         Repairs and maintenance             $   69              $   135
         Utilities                               17                   35
         Property taxes                          25                   50
         Management fees                         19                   37
         Salaries and administrative             51                  102
                                             ------              -------
                                             $  181              $   359
                                             ======              =======

4.    Unconsolidated Joint Venture Partnership
      ----------------------------------------

      The Partnership has an investment in one unconsolidated joint venture, St.
Louis  Woodchase  Associates,  which owns and operates an  operating  investment
property,  as more fully  described  in the  Partnership's  Annual  Report.  The
unconsolidated  joint  venture  is  accounted  for on the  equity  method in the
Partnership's  financial  statements  because  the  Partnership  does not have a
voting control interest in the venture.  Under the equity method, the investment
is carried at cost adjusted for the  Partnership's  share of venture's  earnings
and  losses  and  distributions.  The  Partnership  recognizes  its share of the
operating results of its unconsolidated joint venture based on financial results
of the venture which are three months in arrears to that of the Partnership.

      Summarized  operating results of the unconsolidated joint venture, for the
periods indicated, are as follows:

                      Condensed Summary of Operations
         For the three and six months ended June 30, 1997 and 1996
                              (in thousands)

                                   Three Months Ended    Six  Months Ended
                                          June 30,            June 30,
                                   ------------------   ------------------
                                      1997      1996      1997       1996
                                      ----      ----      ----       ----
  Revenues:
   Rental revenues                  $ 401    $  376     $  786      $ 734
   Other income                        18        17         34         32
                                    -----    ------     ------      -----
                                      419       393        820        766
  Expenses:
   Interest expense                   157       157        315        315
   Property operating expenses        137       137        265        271
   Real estate taxes                   23        21         46         43
   Depreciation                       109        97        217        192
                                    -----    ------     ------      -----
                                      426       412        843        821
                                    -----    ------     ------      -----
  Net loss                          $  (7)   $  (19)    $  (23)     $ (55)
                                    =====    ======     ======      =====

  Net loss:
   Partnership's share of net loss  $  (5)   $  (14)    $  (16)     $ (39)
   Co-venturer's share of net loss     (2)       (5)        (6)       (16)
                                    -----    ------     ------      -----
                                    $  (7)   $  (19)    $  (23)     $ (55)
                                    =====    ======     ======      =====

     As a result of the sale of the  Summerwind  Apartments  (see  Note 3),  the
joint venture investment in the Woodchase  Apartments is the Partnership's final
remaining  asset.  Management  of  the  Partnership  is  currently  focusing  on
achieving  a  near-term  sale  of  the  Woodchase   property  and  completing  a
liquidation of the Partnership.  The property has been marketed  extensively and
sale packages were  distributed  to national,  regional,  and local  prospective
purchasers.  As a result of these  efforts,  15 offers were received and most of
the  offers  were at a sale  price  in  excess  of the  property's  most  recent
independent  appraised  value.  The Partnership and the co-venture  partner have
evaluated  the  offers,  as well as the  relative  strength  of the  prospective
purchasers,  and have  selected  an offer.  A purchase  and sale  agreement  was
negotiated with this  prospective  purchaser at a price of $13,050,000,  and the
contract was signed on October 24, 1997.  Consequently,  the Partnership expects
to close the sale and complete a  liquidation  by the end of calendar year 1997.
Following the sale of the Woodchase Apartments, the net sale proceeds along with
the Partnership's  remaining cash reserves after paying all  liquidation-related
expenses  will  be  distributed  to  the  Limited  Partners.   This  liquidating
distribution could be made by December 31, 1997. However,  since the sale of the
Woodchase  property  remains  subject to certain  due  diligence  and  financing
contingencies,  there are no assurances  that the sale and  liquidation  will be
completed within this time frame.
<PAGE>
                  PAINEWEBBER GROWTH PARTNERS THREE L.P.
                   MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information Relating to Forward-Looking Statements
--------------------------------------------------

      The following  discussion of financial condition includes  forward-looking
statements  which  reflect  management's  current  views with  respect to future
events and  financial  performance  of the  Partnership.  These  forward-looking
statements  are  subject to certain  risks and  uncertainties,  including  those
identified  in Item 7 of the  Partnership's  Annual  Report on Form 10-K for the
year ended March 31, 1997 under the heading  "Certain  Factors  Affecting Future
Operating  Results",  which could cause actual results to differ materially from
historical  results  or  those  anticipated.  The  words  "believe",   "expect",
"anticipate,"  and  similar  expressions  identify  forward-looking  statements.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements,  which were made based on facts and conditions as they existed as of
the date of this report.  The  Partnership  undertakes no obligation to publicly
update or revise  any  forward-looking  statements,  whether  as a result of new
information, future events or otherwise.

Liquidity and Capital Resources
-------------------------------

      During the third quarter of fiscal 1997, the  Partnership  signed a letter
of intent with an unrelated third party to sell the Summerwind  Apartments for a
net price of $550,000 in cash. The net purchase  price  reflected the assumption
by the purchaser of the $8,330,000  first mortgage loan secured by the operating
investment  property.  The  Partnership  received net proceeds of  approximately
$319,000 on December 27, 1996 after deducting closing costs and other credits to
the buyer. The Partnership  made a special  distribution to the Limited Partners
on June 13, 1997 in the amount of  approximately  $308,000,  or $12 per original
$1,000  investment,  from the proceeds of this  transaction.  The  Partnership's
original  investment in the Summerwind joint venture,  which  represented 13% of
the original portfolio investment,  totalled approximately $2.4 million. Despite
recovering less than 15% of the original investment,  management believes it was
the right time to sell this asset in light of the  property's  estimated  market
value, the limited potential for near-term  appreciation and the lack of options
for extending or refinancing the venture's long-term debt.

      The  Summerwind  joint venture had been  generating  excess cash flow from
operations  as a result of the low level of the  variable  interest  rate on the
venture's  first  mortgage  loan.  Such  excess  cash flow was being used to pay
Partnership  operating  expenses.  The debt secured by the Summerwind  property,
which  required   interest-only  payments  on  a  monthly  basis,  consisted  of
tax-exempt revenue bonds issued by a local housing authority.  The interest rate
on such debt,  which was tied to comparable  tax-exempt  bond  obligations,  was
significantly lower than rates on conventional mortgage financing.  In fact, the
venture's   cash  flow  would  likely  not  have  been   sufficient  to  support
conventional  financing,  including monthly principal  amortization,  at current
market  interest rates.  The mortgage loan secured by the Summerwind  Apartments
was subject to various prepayment provisions including a mandatory redemption on
March  16,  1997,  the first  scheduled  remarketing  date,  as  defined,  which
coincided  with the  expiration  of the  letter  of  credit  which  secured  the
underlying  bonds.  Unless the letter of credit was  replaced or  extended,  the
venture's  mortgage loan would  have  been  immediately  due and payable on this
scheduled expiration date. Management's estimate of the fair market value of the
Summerwind  Apartments  put the value of the  property at or slightly  above the
amount of the outstanding first mortgage loan as of December 1996.  Accordingly,
it was  unlikely  that the  property  would  have  satisfied  a letter of credit
issuer's  loan-to-value  ratio  requirements for issuing a new letter of credit.
Consequently,  the  property  would  likely  have been  subject  to  foreclosure
proceedings  during  fiscal 1997 if the  Partnership  had not completed the sale
transaction.  The price  that the buyer was  willing  to pay for the  Summerwind
property  was based  mainly  upon the  ability to receive  current net cash flow
after  completing  a  modification  and  extension  agreement  with the mortgage
lender. The modification and extension agreement required that the buyer deposit
significant additional collateral with the mortgage lender.

     As a result of the sale of the Summerwind  Apartments,  the Partnership has
one remaining joint venture investment, the Woodchase Apartments.  Management of
the  Partnership  is  currently  focusing on  achieving a near-term  sale of the
Woodchase property and completing a liquidation of the Partnership. The property
has been marketed  extensively  and sale packages were  distributed to national,
regional,  and local prospective  purchasers.  As a result of these efforts,  15
offers  were  received  and most of the offers were at a sale price in excess of
the property's most recent independent  appraised value. The Partnership and the
co-venture  partner have evaluated the offers,  as well as the relative strength
of the prospective  purchasers,  and have selected an offer. A purchase and sale
agreement  was  negotiated  with  this  prospective  purchaser  at  a  price  of
$13,050,000, and the contract was signed on October 24, 1997. Consequently,  the
Partnership  expects to close the sale and complete a liquidation  by the end of
calendar year 1997. Following the sale of the Woodchase Apartments, the net sale
proceeds  along  with the  Partnership's  remaining  reserves  after  paying all
liquidation-related  expenses will be distributed to the Limited Partners.  This
liquidating  distribution could be made by December 31, 1997. However, since the
sale of the  Woodchase  property  remains  subject to certain due  diligence and
financing  contingencies,  there are no assurances that the sale and liquidation
will be completed within this time frame.

      The  occupancy  level at the  Woodchase  Apartments  averaged  93% for the
quarter  ended  September  30, 1997,  compared to 94% for the prior  quarter.  A
program of  significant  property  repairs and  improvements  was  initiated  at
Woodchase  during  fiscal  1995 in  anticipation  of the  venture's  refinancing
efforts and has continued  subsequent to the  refinancing in  anticipation  of a
potential  sale of the  property.  This  program,  combined  with the  continued
improvements  in the apartment  segment of the real estate market,  has enhanced
the market value of the  Woodchase  property over the past several  years.  As a
result,  the  Partnership  is expected  to recover  more than its  original  net
investment in the Woodchase  property,  of $2.3 million,  from the proposed sale
transaction. At the agreed upon sale price of $13,050,000, the Partnership would
realize  approximately  $4.7 million of net proceeds  after the repayment of the
outstanding  first  mortgage  loan,  payment of closing costs and the co-venture
partner's share of the proceeds.

      At  September  30,  1997,  the  Partnership  had  available  cash and cash
equivalents of  approximately  $822,000.  Such cash and cash equivalents will be
used for the working  capital  needs of the  Partnership  through  its  expected
liquidation. The source of future liquidity and distributions to the partners is
expected to be through the proceeds received from the sale or refinancing of the
Partnership's remaining investment property.  Subsequent to the eventual sale of
the  Woodchase  investment,  the net sale  proceeds,  along  with the  remaining
Partnership reserves after the payment of all liquidation-related expenses, will
be distributed to the Limited Partners.

Results of Operations
Three Months Ended September 30, 1997
-------------------------------------

     The  Partnership  reported a net loss of $35,000 for the three months ended
September  30,  1997 as compared to a net loss of $46,000 for the same period in
the prior year. This decrease of $11,000 in the Partnership's net loss is mainly
due to a $9,000 decrease in the Partnership's share of unconsolidated  venture's
loss. The Partnership's share of unconsolidated venture's loss, which represents
the operating results of the Woodchase joint venture, decreased mainly due to an
increase  in rental  revenue of  $25,000.  Rental  revenue  increased  due to an
increase  in average  rental  rates  during the period.  The  increase in rental
revenue was partially offset by an increase in depreciation  expense of $12,000.
Depreciation  expense increased due to additional  capital  improvements made at
the property during fiscal 1997 as part of the process of preparing the property
for a potential sale, as discussed further above. In addition, the Partnership's
operating loss decreased by $2,000 due to the inclusion of the operating loss of
the  consolidated  Summerwind  joint venture during the same period in the prior
year. As a result of the December 1996 sale discussed  further above,  there are
no results of the  Summerwind  joint  venture  included  in the  current  period
operations.

Six Months Ended September 30, 1997
-----------------------------------

     The  Partnership  reported a net loss of $59,000  for the six months  ended
September  30, 1997 as compared to a net loss of $124,000 for the same period in
the prior year.  This decrease of $65,000 in the  Partnership's  net loss is the
result of a $42,000 decrease in the Partnership's  operating loss and a decrease
of $23,000 in the  Partnership's  share of  unconsolidated  venture's  loss. The
Partnership's operating loss decreased primarily due to the inclusion of $22,000
in  management  fees and an  operating  loss of  $22,000  from the  consolidated
Summerwind joint venture in the six months ended September 30, 1996.  Management
fees are no longer  charged to the  Partnership  as a result of the class action
settlement  agreement  finalized during fiscal 1997, as discussed further in the
Annual Report.  As discussed  above,  the Summerwind  Apartments were sold to an
unrelated  third party on December  27, 1996.  In  addition,  interest and other
income  increased by $7,000 due to higher average  outstanding cash balances for
the current  six-month  period  resulting  from the temporary  investment of the
proceeds from the sale of the Summerwind Apartments. The decreases in management
fees and Summerwind operating loss and the increase in interest and other income
were  partially  offset by an increase in general and  administrative  expenses.
General and  administrative  expenses  increased by $13,000 primarily due to the
timing of certain required professional fees when compared to the same period in
the prior year.

      The Partnership's share of unconsolidated venture's loss, which represents
the  operating  results of the  Woodchase  joint  venture,  decreased by $23,000
mainly due to an increase in rental revenue. Rental revenue increased by $52,000
due to an increase in average  rental rates  during the period.  The increase in
rental revenue was partially  offset by an increase in  depreciation  expense of
$25,000.  Depreciation  expense increased due to additional capital improvements
which were  completed at the property  during fiscal 1997 as part of the process
of preparing the property for a potential sale, as discussed further above.


<PAGE>


                                  PART II
                             Other Information

Item 1. Legal Proceedings    NONE

Item 2. through 5.           NONE

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits: NONE

(b) Reports on Form 8-K:

     No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.




<PAGE>




                  PAINEWEBBER GROWTH PARTNERS THREE L.P.


                                SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                  PAINEWEBBER GROWTH PARTNERS THREE L.P.


                  By:  THIRD PW GROWTH PROPERTIES, INC.
                       Managing General Partner




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

Date: November 10, 1997