<PAGE> PAGE 1
000 B000000 07/31/96
000 C000000 0000900428
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 A
001 A000000 MH/KP INVESTMENT TRUST III
001 B000000 811-7630
001 C000000 2127131074
002 A000000 1285 AVENUE OF THE AMERICAS
002 B000000 NEW YORK
002 C000000 NY
002 D010000 10019
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 Y
007 B000000 1
007 C010100 1
007 C020100 PAINEWEBBER SMALL CAP GROWTH FUND
007 C030100 N
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
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007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
020 A000001 INSTINET CORP.
020 B000001 13-3443395
020 C000001 34
020 A000002 SMITH BARNEY, HARRIS UPHAM & CO.,INC.
020 B000002 13-1912900
020 C000002 12
020 A000003 MORGAN STANLEY AND COMPANY
020 B000003 13-2655998
020 C000003 11
020 A000004 BEAR, STEARNS SECURITIES CORP.
020 B000004 13-3299429
020 C000004 7
020 A000005 DONALDSON, LUFKIN & JENRETTE
020 B000005 13-2741729
020 C000005 6
020 A000006 PAINEWEBBER INC.
020 B000006 13-2638166
<PAGE> PAGE 2
020 C000006 4
020 A000007 MONTGOMERY SECURITIES
020 B000007 94-1701676
020 C000007 4
020 A000008 PRUDENTIAL SECURITIES
020 C000008 3
020 A000009 JEFFERIES & CO.
020 C000009 3
020 A000010 SALOMON BROTHERS, INC.
020 C000010 3
021 000000 118
022 A000001 FIRST CHICAGO CAPITAL MARKETS
022 B000001 36-3595942
022 C000001 67228
022 D000001 6977
022 A000002 STATE STREET BANK AND TRUST
022 B000002 04-1867445
022 C000002 65614
022 D000002 0
022 A000003 CITICORP SECURITIES MARKETS, INC.
022 C000003 52470
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022 C000004 48395
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022 C000005 34760
022 D000005 1611
022 A000006 DAIWA
022 B000006 13-5680329
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022 C000008 3796
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022 C000009 1834
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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SIGNATURE JULIAN SLUYTERS
TITLE SENIOR VP-TREASURER
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For period ending July 31, 1996 Attachment 77C
File Number 811-7630
Mitchell Hutchins/Kidder, Peabody Investment Trust III - Small Cap Growth Fund
A special meeting of shareholders was held on April 10, 1996, at which
the following proposals were approved:
To vote for or against the following changes to the Fund s fundamental
investment restrictions and policies (the enumeration below follows that
used in the related proxy statement):
Shares Voted
For
Shares Voted
Against
Shares
Abstain
1. Modification of Fundamental Restriction on Portfolio Diversification
for Diversified Funds
1,418,450
22,256
68,967
2. Modification of Fundamental Restriction on Concentration
1,416,454
23,609
69,610
3. Modification of Fundamental Restriction on Senior Securities and
Borrowing
1,416,454
23,609
69,610
4. Modification of Fundamental Restriction on Making Loans
1,416,454
23,609
69,610
5. Modification of Fundamental Restriction on Underwriting Securities
1,416,454
23,609
69,610
6. Modification of Fundamental Restriction on Real Estate
Investments
1,416,454
23,609
69,610
7. Modification of Fundamental Restriction on Investing in
Commodities
1,416,454
23,609
69,610
8. Elimination of Fundamental Restriction on Margin Transactions
1,416,454
23,609
69,610
9. Elimination of Fundamental Restriction on Short Sales
1,416,454
23,609
69,610
In addition to the item noted above, the Fund s shareholders elected board
members. Pursuant to Instruction 2 of Sub-
Item 77C of Form N-SAR, it is not necessary to provide in this exhibit details
concerning shareholder action on this proposal since
there were no solicitations in opposition to the registrant s nominees and all
of the nominees were elected.
A more complete description of the proposal referred to above is hereby
incorporated by reference to the Fund s proxy
materials dated February 28, 1996 relating to the Special Meeting of
Shareholders. These Schedule 14A materials were filed
with the Securities and Exchange Commission via EDGAR on February 28,
1996; the accession code number was 0000950112-
96-000634.
A special meeting of shareholders was held on July 19, 1996, at which the
following proposal was approved:
To vote for or against
Shares Voted
For
Shares Voted
Against
Shares
Abstain
Approval of an Agreement and Plan or Reorganization and Termination
under which the Fund would acquire the assets of PaineWebber Small
Cap Growth Fund.
1,160,279
11,016
81,608
A more complete description of the proposal referred to above is hereby
incorporated by reference to the Fund s proxy
materials dated June 13, 1996 relating to the Special Meeting of Shareholders.
These Schedule 14A materials were filed with
the Securities and Exchange Commission via EDGAR on May 3, 1996; the
accession code number was 0000950112-96-
001306.
<PAGE>
FORM 10f-3 FUND: PaineWebber Small Cap
Growth
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Compuserve
(CCSRV)
2. Date of Purchase: 4-18-96
3. Date offering commenced: 4-18- 96
4. Underwriters from whom purchased: Goldman
Sachs
5. "Affiliated Underwriter" managing or participating in syndicate:
PaineWebbe
r
6. Aggregate principal amount of purchase:
$10,500
7. Aggregate principal amount of offering:
480,000,00
0
8. Purchase price (net of fees and expenses):
30
9. Initial public offering price:
30
10. Commission, spread or profit: % $1.00
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 predecessor),
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: Donald R. James Date: 4-29-96 <PAGE>
FORM 10f-3
FUND: PaineWebber Small Cap
Growth
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Planet Hollywood
(PHII)
2. Date of Purchase: 4-18-96
3. Date offering commenced: 4-18- 96
4. Underwriters from whom purchased: Bear
Stearns
5. "Affiliated Underwriter" managing or participating in syndicate:
PaineWebbe
r
6. Aggregate principal amount of purchase:
$6,300
7. Aggregate principal amount of offering:
194,400,00
0
8. Purchase price (net of fees and expenses):
18
9. Initial public offering price:
18
10. Commission, spread or profit: % $.65
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 predecessor),
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: Donald R. James Date: 4-29-96 <PAGE>
FORM 10f-3
FUND: PaineWebber Small Cap
Growth
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: American Portable
Telecom
2. Date of Purchase: 4-25-96
3. Date offering commenced: 4-25-96
4. Underwriters from whom purchased: Donaldson
Lufkin
5. "Affiliated Underwriter" managing or participating in syndicate:
PaineWebbe
r
6. Aggregate principal amount of purchase:
$136,000
7. Aggregate principal amount of offering:
187,000,00
0
8. Purchase price (net of fees and expenses):
17
9. Initial public offering price:
17
10. Commission, spread or profit: % $.64
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 predecessor),
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: Donald R. James Date: 4-29-96 <PAGE>
FORM 10f-3
FUND: PaineWebber Small Cap
Growth
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Factset Data
Systems
2. Date of Purchase: 6-28-96
3. Date offering commenced: 6-28- 96
4. Underwriters from whom purchased: Donaldson
Lufkin
5. "Affiliated Underwriter" managing or participating in syndicate:
PaineWebbe
r
6. Aggregate principal amount of purchase:
$102,000
7. Aggregate principal amount of offering:
53,125,00
0
8. Purchase price (net of fees and expenses):
17
9. Initial public offering price:
17
10. Commission, spread or profit: % $.71
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 predecessor),
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: Donald R. James Date: 8-27-96 <PAGE>
FORM 10f-3
FUND: PaineWebber Small Cap
Growth
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Rutherferd - Moran
Oil
2. Date of Purchase: 6-21-96
3. Date offering commenced: 6-21- 96
4. Underwriters from whom purchased: JP
Morgan
5. "Affiliated Underwriter" managing or participating in syndicate:
PaineWebbe
r
6. Aggregate principal amount of purchase:
$80,500
7. Aggregate principal amount of offering:
92,000,00
0
8. Purchase price (net of fees and expenses):
23
9. Initial public offering price:
23
10. Commission, spread or profit: % $.97
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 predecessor),
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: Donald R. James Date: 8-27-96 <PAGE>
FORM 10f-3
FUND: PaineWebber Small Cap
Growth
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Info Seek
(SEEK)
2. Date of Purchase: 6-11-96
3. Date offering commenced: 6-11- 96
4. Underwriters from whom purchased: Alex
Brown
5. "Affiliated Underwriter" managing or participating in syndicate:
PaineWebbe
r
6. Aggregate principal amount of purchase:
$12,000
7. Aggregate principal amount of offering:
36,000,00
0
8. Purchase price (net of fees and expenses):
12
9. Initial public offering price:
12
10. Commission, spread or profit: % $.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 predecessor),
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: Donald R. James Date: 7-12-96
