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SIGNATURE PAUL SCHUBERT
TITLE TREASURER
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Report of Independent Accountants
To the Shareholders and Trustees of
PaineWebber Strategic Income Fund
In planning and performing our audit of the financial
statements of PaineWebber Strategic Income Fund (the
"Fund") for the year ended November 30, 1998, 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 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 generally accepted accounting
principles. Those controls include the safeguarding of
assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in internal control, errors
or fraud 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 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 internal control components
does not reduce to a relatively low level the risk that
misstatements caused by error 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 as of November 30,
1998.
This report is intended solely for the information and use
of management and the Board of Trustees of PaineWebber
Strategic Income Fund and the Securities and Exchange
Commission.
PricewaterhouseCoopers LLP
New York, New York
January 22, 1999
(2)
To the Shareholders and Board of Trustees of
PaineWebber Strategic Income Fund
