Report of Independent Auditors
To the Shareholders and
Board of Trustees of
PaineWebber Strategy Fund
In planning and performing our audit of the financial
statements of PaineWebber Strategy Fund (the "Fund") for
the period ended September 30, 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 the Fund is responsible for establishing
and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs
of controls. Generally, controls that are relevant to an
audit pertain to the entity's objective of preparing
financial statements for external purposes that are fairly
presented in conformity with accounting principles generally
accepted in the United States. Those 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 effectiveness of the design and
operation 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 misstatements caused by 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 and its operation, including controls
for safeguarding securities, that we consider to be
material weaknesses as defined above at
September 30, 2000.
This report is intended solely for the information and use
of the Board of Trustees and management of PaineWebber Strategy
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
November 21, 2000
