Report of Independent Auditors
To the Shareholders and
Board of Trustees of
PaineWebber Tax-Managed Equity Fund
In planning and performing our audit of
the financial
statements of PaineWebber Tax-Managed
Equity Fund
for the year ended August 31, 2000, we
considered its
internal control, including control
activities for
safeguarding securities, to determine our
auditing
procedures for the purpose of expressing
our opinion on
the financial statements and to comply
with the
requirements of Form N-SAR, and not to
provide
assurance on internal control.
The management of PaineWebber Tax-Managed
Equity
Fund is responsible for establishing and
maintaining
internal control. In fulfilling this
responsibility,
estimates and judgments by management are
required
to assess the expected benefits and
related costs of
control. Generally, internal controls
that are relevant to
an audit pertain to the entity's objective
of preparing
financial statements for external purposes
that are fairly
presented in conformity with accounting
principles
generally accepted in the United States.
Those internal
controls include the safeguarding of
assets against
unauthorized acquisition, use, or
disposition.
Because of inherent limitations in
internal control,
misstatements due to errors or fraud may
occur and not
be detected. Also, projections of any
evaluation of
internal control to future periods are
subject to the risk
that internal control may become
inadequate because of
changes in conditions, or that the degree
of compliance
with the policies or procedures may
deteriorate.
Our consideration of internal control
would not
necessarily disclose all matters in
internal control that
might be material weaknesses under
standards
established by the American Institute of
Certified
Public Accountants. A material weakness
is a
condition in which the design or operation
of one or
more of the specific internal control
components does
not reduce to a relatively low level the
risk that errors
or fraud in amounts that would be material
in relation
to the financial statements being audited
may occur and
not be detected within a timely period by
employees in
the normal course of performing their
assigned
functions. However, we noted no matters
involving
internal control, including control
activities for
safeguarding securities, and its operation
that we
consider to be material weaknesses as
defined above at
August 31, 2000.
This report is intended solely for the
information and
use of the Board of Trustees and
management of
PaineWebber Tax-Managed Equity Fund, and
the
Securities and Exchange Commission and is
not
intended to be and should not be used by
anyone other
than these specified parties.
ERNST & YOUNG LLP
October 17, 2000
