<PAGE> PAGE 1
000 B000000 08/31/97
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008 B00AA01 A
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008 D02AA01 NY
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010 C02AA01 NY
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<PAGE> PAGE 2
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012 C02AA01 DE
012 C03AA01 19809
013 A00AA01 PRICE WATERHOUSE, LLP
013 B01AA01 NEW YORK,
013 B02AA01 NY
013 B03AA01 10036
014 A00AA01 PAINEWEBBER, INC.
014 B00AA01 8-16267
015 A00AA01 STATE STREET BANK & TRUST CO.
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<PAGE> PAGE 3
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<PAGE> PAGE 6
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SIGNATURE PAUL SCHUBERT
TITLE TREASURER
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FORM 10f-3 Fund: PaineWebber Balanced Fund
Record of Securities purchased under the Fund's Rule 10f-3 proceedures.
1. Issuer: Samsonite Corp.
2. Date of purchase: 2/6/97 3. Date offering commenced: 2/6/97
4. Underwriters from whom purchased: Merrill Lynch
5. "Affiliated Underwriter" managing or participating in syndiaction:
PaineWebber.
6. Aggregate principal amount of purchase: $168,000
7. Aggregate principal amount of offering: $328,572,552
8. Purchase price (net of fees and expenses): $42
9. Initial public offering price: $42
10. Commission, spread or profit: _______% $1.26
11. Have the following conditions been satisfied?
YES NO
a. The securities are part of an issue
registered under the Securities Act of
1933 which is being offered to the public
or are "municipal securities" as defined
in Section 3(a)(29) if the Securities
Exchange Act of 1934. _X_ ___
b. The securities were purchased prior to the
end of the first full business day of the
offering at not more than the initial
offering price (or, if a rights offering,
the securities were purchased on or before
the fourth day preceding the day on which
the offering terminated. _x_ ___
c. The underwriting was a firm commitment
underwriting. _x_ ___
d. The commission spread or profit was
reasonable and fair in relation to
that being received by others for
underwriting similar securities during
the same period. _x_ ___
e. (1) If securities are registered under the
Securities Act of 1933, the issuer of the
securities and its predecessor have been in
continuous operation for not less than
three years. _x_ ___
(2) If securities are municipal securities,
the issue of securities has received an
investment grade rating from a nationally
recognized statistical rating organization
or, if the issuer or entity supplying the
revenues from which the issue is to be paid
shall have been in continuous operation for
less than three years (including any pre-
decessor), the issue has received one of the
three highest ratings from at least one such
rating organization. N/A ___
f. The amount of such securities purchased by
all of the investment companies advised by
Mitchell Hutchins did not exceed 4% of the
principal amount of the offering or $500,000
in principal amount, whichever is greater,
provided that in no event did such amount
exceed 10% of the principal amount of the
offering. _x_ ___
g. The purchase price was less than 3% of the
Fund's total assets. _x_ ___
h. No Affiliated Underwriter was a direct or
indirect participant in or beneficiary of
the sale or, with respect to municipal
securities, no purchases were designated
as group sales or otherwise allocated to
the account of any Affiliated Underwriter. _x_ ___
Approved: Mark Tincher Date 2/6/97
Form 10f-3 Fund: PaineWebber Balanced Fund
Record of Securities Purchased under the Fund's Rule 10f-3 proceedures.
1. Issuer: U.S. Rental
2. Date of Purchase: 2/2/97
3. Date of offering commenced: 2/21/97
4. Underwriters from whom purchased: Donaldson, Lufkin & Jenrette
Securities.
5. "Affiliated Underwriter" managing or participating in syndicate:
PaineWebber.
6. Aggregate principal amount of purchase: $73,500.
7. Aggregate principal amount of offering: $200,000,000.
8. Purchae price (net of fees and expenses): $20
9. Initial public offering price: $20.
10. commission, spread of profit: ______% $0.75
11. Have the following conditions been satisfied?
YES NO
a. The securities are part of an issue
registered under the Securities Act of
1933 which is being offered to the public
or are "municipal securities" as defined in
Section 3(a)(29) of the Securities Act of
1934. _x_ ___
b. The securities were purchased prior to the
end of the first full business day of the
offering at not more than the initial
offering price (or, if a rights offering,
the securities were purchased on or before
the fourth day preceeding the day on which
the offering terminated. _x_ ___
c. the underwriting was a firm commitment
underwriting. _x_ ___
d. The commission, spread or profit was
reasonable and fair in relation to that
being received by others for underwriting
similar securities during the same period. _x_ ___
e. (1) If securities are registered under
the Securities Act of 1933, the issuer
of the securities and its predecessor have
been in continuous operation for not less
three years. _x_ ___
(2) If securities are municipal securities,
the issue of securities has received an
investment grade rating from a nationally
recognized statistical rating organization
or if the issuer or entity supplying the
revenues from which the issue is to be paid
shall have been in continuous operation for
less than three years (including any pre-
decessor), the issue has received one of the
three highest ratings from at least one such
rating organization. N/A ___
f. The amount of such securities purchased
by all of the investment companies advised
by Mitchell Hutchins did not exceed 4% of
the principal amount of the offering or
$500,000 in principal amount, whichever is
greater, provided that in no event did such
amount exceed 10% of the principal amount
of the offering. _x_ ___
g. The purchase price was less than 3% of the
Fun's total assets. _x_ ___
h. No Affiliated Underwriter was a direct or
indirect participant in or beneficiary of
the sale or, with respect to municipal
securities, no purchases were designated
as group sales or otherwise allocated to
the account of any Affiliated Underwriter. _x_ ___
Approved: Mark Tincher Date: 2/24/97
Form 10f-3 Fund: PaineWebber Balanced Fund
Record of Securities purchased under theFund's Rule 10f-3 proceedures.
1. Issuer: Yuri Systems
2. Date of Purchase: 2/5/97
3. Date offering commenced: 2/5/97
4. Underwriters from whom purchased: Alex Brown
5. "Affiliated Underwriter" managing or participating in syndicate:
PaineWebber.
6. Aggregate principal amount of purchase: $48,000.
7. Aggregate principal amount of offering: $48,000,000.
8. Purchase price (net of fees and expenses): $12.
9. Initial public offering price: $12.
10. Commission, spread or profit: ______% $0.47.
11. Have the following conditions been satisfied?
YES NO
a. The securities are part of an issue
registered under the Securities Act of
1933 which is being offered to the public
or are "municipal securities" as defined
in Section 3(a)(29) of the Securities
Exchange Act of 1934. _x_ ___
b. The securities were purchased prior to the
end of the first full business day of the
offering at not more than the initial
offering price (or, if a rights offering,
the securities were purchased on or before
the fourth day preceding the day on which
the offering terminated. _x_ ___
c. The underwriting was a firm commitment
underwriting. _x_ ___
d. The commission, spread or profit was
reasonable and fair in relation to that
being received by others for underwriting
similar securities during the same period. _x_ ___
e. (1) If securities are registered under
the Securities Act of 1933, the issuer of
the securities and its predecessor have
been in continuous operation for not less
than three years. _x_ ___
(2) If securities are municipal securities,
the issue of securities has received an
investment grade rating from a nationally
recognized statistical rating organization
or if the issuer or entity supplying the
revenues from which the issue is to be
paid shall have been in continuous operation
for less than three years (including any pre-
decessor), the issue has received one of the
three highest ratings from at least one such
rating organization. N/A ___
f. The amount of such securities purchased by
all of the investment companies advised by
Mitchell Hutchins did not exceed 4% of the
principal amount of the offering or $500,000
in principal amount, whichever is greater,
provided that in no event did such amount
exceed 10% of the principal amount of
the offering. _x_ ___
g. The purchase price was less than 3% of the
Fund's total assets. _x_ ___
h. No Affiliated Underwriter was a direct or
indirect participant in or beneficiary of
the sale or, with respect to municipal
securities, no purchases were designated
as group sales or otherwise allocated to
the account of any Affiliated Underwriter. _x_ ___
Approved: Mark Tincher Date: 2/5/97
PAINEWEBBER MASTER SERIES INC
PAINEWEBBER BALANCED FUND
FORM N-SAR
FILE #811-4448
ITEM 77D POLICIES WITH RESPECT TO SECURITY INVESTMENTS.
SUPPLEMENT DATED JUNE 26, 1997 TO PROSPECTUS DATED JANUARY 01, 1997 AS
PREVIOUSLY FILED WITH THE SEC ON JUNE 26, 1997 REGUARDING DOLLAR
WEIGHTED AVERAGE MATURITY FOR THE FIXED INCOME INVESTMENTS.
To the Shareholders and
Board of Trustees of
PaineWebber Balanced Fund
In planning and performing our audit of the financial statements of
PaineWebber Balanced Fund for the year ended August 31, 1997, we
considered its internal control, including control activities for
safeguarding securities, in order 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, not to provide
assurance on internal control.
The management of PaineWebber Balanced 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 activities. Generally, control
activities 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 generally accepted accounting principles.
Those control activities include the safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure 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 any specific internal control components does not reduce to a
relatively low level the risk that errors or irregularities 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, that we consider to be material weaknesses as defined above as
of August 31, 1997.
This report is intended solely for the information and use of management
and the Board of Trustees of PaineWebber Balanced Fund and the Securities
and Exchange Commission.
Price Waterhouse LLP
New York, NY
October 20, 1997
