<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
PERFORMANCE RESULTS--(UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------- -----------------------------
12 MONTHS 6 MONTHS
11/30/95 05/31/95 11/30/94 ENDED 11/30/95 ENDED 11/30/95
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $2.34 $2.32 $2.25 10.25% 3.81%
- ---------------------------------------------------------------------------
Class B Shares 2.34 2.32 2.25 9.30 3.36
- ---------------------------------------------------------------------------
Class C Shares/2/ 2.34 2.32 2.25 9.60 3.50
- ---------------------------------------------------------------------------
</TABLE>
Performance Summary Class A Shares
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/03/93 - 12/31/93 $2.50 $2.48 -- $0.0812 2.48%
- -----------------------------------------------------------------------------
1994 2.48 2.25 -- 0.1217 -4.39
- -----------------------------------------------------------------------------
01/01/95 - 11/30/95 2.25 2.34 -- 0.1187 9.48
- -----------------------------------------------------------------------------
Total: $0.0000 $0.3216
- -----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
11/30/95: 7.27%
- -----------------------------------------------------------------------------
Performance Summary Class B Shares
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/03/93 - 12/31/93 $2.50 $2.48 -- $0.0687 1.97%
- -----------------------------------------------------------------------------
1994 2.48 2.25 -- 0.1034 -5.14
- -----------------------------------------------------------------------------
01/01/95 - 11/30/95 2.25 2.34 -- 0.1012 8.65
- -----------------------------------------------------------------------------
Total: $0.0000 $0.2733
- -----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
11/30/95: 5.10%
- -----------------------------------------------------------------------------
Performance Summary Class C Shares/2/
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/03/93 - 12/31/93 $2.50 $2.48 -- $0.0730 2.14%
- -----------------------------------------------------------------------------
1994 2.48 2.25 -- 0.1094 -4.89
- -----------------------------------------------------------------------------
01/01/95 - 11/30/95 2.25 2.34 -- 0.1065 8.91
- -----------------------------------------------------------------------------
Total: $0.0000 $0.2889
- -----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
11/30/95: 5.80%
- -----------------------------------------------------------------------------
</TABLE>
/1/ Figures assume reinvestment of all dividends at net asset value on the
payable dates, and do not include sales charges; results would be lower for
each class if sales charges were included.
/2/ Formerly Class D Shares
Note: The Fund offers Class Y shares to INSIGHT participants. Since inception,
October 20, 1995 through November 30, 1995, Class Y shares have a total
return of 0.83%. Class Y shares do not have initial or contingent deferred
sales charges or ongoing distribution and service fees.
1
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
Government National Mortgage Association Certificates - 32.27%
$ 231 GNMA.................... 02/15/23 8.000% $ 238,957
19,279 GNMA.................... 01/15/16 to 09/15/20 10.500 21,309,223
8,966 GNMA.................... 03/15/10 to 05/15/19 11.500 10,193,319
2,249 GNMA II ARM............. 01/20/18 6.750 2,279,892
10,061 GNMA II ARM............. 05/20/22 7.000 10,270,858
34,082 GNMA II ARM............. 06/20/23 7.375 34,876,005
22,801 GNMA II ARM............. 04/20/25 to 06/20/25 7.500 23,310,216
------------
Total Government National Mort-
gage Association Certificates
(cost - $102,738,526)........... 102,478,470
------------
Federal Home Loan Mortgage Corporation Certificates - 35.42%
5,594 FHLMC................... 05/01/16 8.500 5,770,597
860 FHLMC................... 07/01/09 to 02/01/10 9.000 893,663
1,988 FHLMC................... 11/01/16 9.750 2,161,174
6,026 FHLMC................... 05/01/11 to 12/01/20 11.000 6,716,233
4,646 FHLMC................... 06/01/04 to 06/01/20 11.500 5,194,860
3,035 FHLMC ARM............... 09/01/24 7.853 3,147,445
3,050 FHLMC ARM............... 06/01/17 8.000 3,116,530
1,300 FHLMC Gold.............. 10/01/20 to 11/01/20 10.500 1,434,285
86,000 FHLMC Gold TBA.......... TBA 6.500 84,065,000
------------
Total Federal Home Loan Mortgage
Corporation Certificates
(cost - $112,158,920)........... 112,499,787
------------
Federal National Mortgage Association Certificates - 11.80%
4,830 FNMA.................... 02/01/05 9.000 5,069,898
7,634 FNMA.................... 04/01/10 to 12/01/15 9.250 8,044,527
1,002 FNMA.................... 03/01/06 to 12/01/09 9.500 1,061,725
1,607 FNMA.................... 04/01/10 to 06/01/19 10.250 1,757,164
4,066 FNMA.................... 11/01/10 to 04/01/22 10.500 4,364,543
5,593 FNMA.................... 07/01/13 to 05/01/20 11.000 6,279,387
4,183 FNMA ARM................ 09/01/15 7.015 4,301,218
6,367 FNMA ARM................ 01/01/31 7.822 6,602,121
------------
Total Federal National Mortgage
Association Certificates
(cost - $37,051,106)............ 37,480,583
------------
Collateralized Mortgage Obligations - 34.86%
FHLMC REMIC Series 35,
11,943 Class PA............... 06/17/06 6.750 11,949,671
FHLMC REMIC Series 158,
14,800 Class E................ 05/15/21 9.500 16,668,337
4,760 Bear Stearns, Series
1989-1, Class D........ 06/01/17 9.000 4,852,498
1,825 Collateralized Mortgage
Obligation Trust,
REMIC Series 28, Class
C...................... 12/01/10 8.500 1,826,028
13,783 Greenwich Capital Ac-
ceptance Corp.,
Series 1994-LB3, Class
A1..................... 08/25/24 7.527* 14,093,128
Prudential Bache Mort-
gage Trust Series 2,
2,303 Class C................ 06/01/18 9.200 2,365,262
Resolution Trust Corp.,
Series 1994-1, Class
7,759 A2A.................... 09/25/29 7.750 7,746,654
Resolution Trust Corp.,
Series 1994-C1, Class
663 A2A.................... 06/25/26 6.800 663,259
6,210 Ryland Mortgage Accept-
ance Corp., Series 76,
Class B................ 08/01/18 9.000 6,462,737
15,521 Saxon Mortgage Securi-
ties Corp., Series
1994-6, Class A........ 06/25/24 8.024* 15,928,159
9,171 Saxon Mortgage Securi-
ties Corp., Series
1994-8
Class A2............... 07/25/24 8.135* 9,348,985
18,408 Saxon Mortgage Securi-
ties Corp., Series
1994-10 Class A2....... 09/25/24 8.206* 18,799,033
------------
Total Collateralized Mortgage Ob-
ligations
(cost - $107,875,760)........... 110,703,751
------------
</TABLE>
2
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- -------------- -------------- ------------
<C> <S> <C> <C> <C>
Agency Backed Obligations - 0.56%
$ 1,800 Federal Home Loan Bank
Discount Notes
(cost - $1,790,880).... 01/02/96 5.700%@ $ 1,790,880
------------
Treasury Notes - 1.60%
5,000 United States Treasury
Notes
(cost - $5,007,741).... 02/28/97 6.875 5,089,060
------------
Commercial Paper - 8.33%
15,000 Koch Industries......... 01/10/96 5.680@ 14,905,334
3,100 Procter & Gamble Co. ... 02/16/96 5.630@ 3,062,670
8,500 United Parcel Service... 12/08/95 5.720@ 8,490,546
------------
Total Commercial Paper
(cost - $26,458,550)............ 26,458,550
------------
Repurchase Agreement - 1.27%
4,026 Repurchase Agreement
dated 11/30/95, with
State Street Bank &
Trust Co.,
collateralized by
$2,575,000 Treasury
Notes, 11.250% due
02/15/15; proceeds:
$4,026,587 (cost -
$4,026,000)........... 12/01/95 5.250 4,026,000
------------
Total Investments (cost -
$397,107,483) - 126.11%........ 400,527,081
Liabilities in excess of other
assets - (26.11%)............... (82,929,433)
------------
Net Assets - 100.00%............. $317,597,648
============
</TABLE>
- --------------------
* Floating rate mortgage backed security
@ Yield to maturity for discounted securities
ARM - Adjustable Rate Mortgage Security; the interest rate shown is the
current rate as of November 30, 1995.
REMIC - Real Estate Mortgage Investment Conduit
TBA - (To Be Assigned) Securities are purchased on a forward commitment
basis with an approximate (generally +/- 2.5%) principal amount and no
definite maturity date. The actual principal amount and maturity date
will be determined upon settlement when the specific mortgage pools are
assigned.
See accompanying notes to financial statements
3
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1995
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost - $397,107,483)........ $400,527,081
Cash............................................................. 72,843
Receivable for investments sold.................................. 231,744,057
Interest receivable.............................................. 2,323,998
Receivable for shares of beneficial interest sold................ 127,955
Deferred organizational expenses................................. 114,603
Other assets..................................................... 59,912
------------
Total assets..................................................... 634,970,449
------------
Liabilities
Payable for investments purchased................................ 314,790,937
Payable for shares of beneficial interest repurchased............ 1,132,289
Dividends payable................................................ 737,266
Payable to affiliate............................................. 285,434
Accrued expenses and other liabilities........................... 426,875
------------
Total liabilities................................................ 317,372,801
------------
Net Assets
Beneficial interest - $0.001 par value (unlimited amount
authorized)..................................................... 436,081,903
Distributions in excess of net investment income................. (736,246)
Accumulated net realized losses from investment, futures and
option transactions............................................. (121,167,607)
Net unrealized appreciation of investments....................... 3,419,598
------------
Net assets applicable to shares outstanding...................... $317,597,648
============
Class A:
Net assets....................................................... $127,961,306
------------
Shares outstanding............................................... 54,666,098
------------
Net asset and redemption value per share......................... $2.34
=====
Maximum offering price per share (net asset value plus sales
charge of 3.00% of offering price).............................. $2.41
=====
Class B:
Net assets....................................................... $ 9,147,163
------------
Shares outstanding............................................... 3,908,295
------------
Net asset value and offering price per share..................... $2.34
=====
Class C:
Net assets....................................................... $180,168,481
------------
Shares outstanding............................................... 77,008,184
------------
Net asset value and offering price per share..................... $2.34
=====
Class Y:
Net assets....................................................... $ 320,698
------------
Shares outstanding............................................... 136,948
------------
Net asset value and offering price and redemption value per
share........................................................... $2.34
=====
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C>
Investment Income:
Interest........................................................... $25,761,188
-----------
Expenses:
Investment advisory and administration............................. 1,839,876
Service fees - Class A............................................. 339,903
Service and distribution fees - Class B............................ 106,689
Service and distribution fees - Class C............................ 1,648,558
Transfer agency and service fees................................... 544,005
Custody and accounting............................................. 338,354
Reports and notices to shareholders................................ 269,342
Legal and audit.................................................... 156,811
State registration fees............................................ 104,992
Amortization of organizational expense............................. 47,000
Trustees' fees..................................................... 6,250
Other expenses..................................................... 204,193
-----------
5,605,973
-----------
Net investment income.............................................. 20,155,215
-----------
Realized and unrealized gains from investment activities:
Net realized gains from investment transactions.................... 2,426,285
Net change in unrealized appreciation/depreciation of investments.. 11,673,716
-----------
Net realized and unrealized gains from investment activities....... 14,100,001
-----------
Net increase in net assets resulting from operations............... $34,255,216
===========
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED NOVEMBER 30,
----------------------------------
1995 1994
---------------- -----------------
<S> <C> <C>
From operations:
Net investment income...................... $ 20,155,215 $ 53,831,622
Net realized gains (losses) from
investment, futures and
option transactions....................... 2,426,285 (122,429,696)
Net change in unrealized
appreciation/depreciation of investments.. 11,673,716 (10,439,486)
--------------- -----------------
Net increase (decrease) in net assets
resulting from operations................. 34,255,216 (79,037,560)
--------------- -----------------
Dividends to shareholders from:
Net investment income - Class A............ (7,943,582) (18,507,294)
Net investment income - Class B............ (531,437) (1,132,692)
Net investment income - Class C............ (11,679,163) (34,050,034)
Net investment income - Class Y............ (2,104) --
--------------- -----------------
(20,156,286) (53,690,020)
--------------- -----------------
From beneficial interest transactions:
Net proceeds from the sale of beneficial
interest.................................. 20,692,668 659,981,986
Shares issued in connection with the
acquisition of Mitchell Hutchins/Kidder,
Peabody Adjustable Rate Government Fund... 23,768,145 --
Cost of beneficial interest repurchased.... (220,493,522) (1,881,729,023)
Proceeds from dividends reinvested......... 11,255,825 37,606,736
--------------- -----------------
Net decrease in net assets from beneficial
interest transactions..................... (164,776,884) (1,184,140,301)
--------------- -----------------
Contribution to capital from adviser....... -- 16,014,012
--------------- -----------------
Net decrease in net assets................. (150,677,954) (1,300,853,869)
Net assets:
Beginning of year.......................... 468,275,602 1,769,129,471
--------------- -----------------
End of year................................ $ 317,597,648 $ 468,275,602
=============== =================
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
PAINEWEBBER NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Low Duration U.S. Government Income Fund (formerly PaineWebber
Short-Term U.S. Government Income Fund) (the "Fund"), a series of PaineWebber
Managed Investments Trust (the "Trust"), is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, as an
open-end, diversified investment company. Effective October 20, 1995, the Fund
commenced conducting business under the name "PaineWebber Low Duration U.S.
Government Income Fund." The Board of Directors approved the change of the
Fund's name at a meeting held on July 20, 1995. The Trust is a series mutual
fund with five funds: the Fund, as well as PaineWebber U.S. Government Income
Fund, PaineWebber Investment Grade Income Fund, PaineWebber High Income Fund,
and PaineWebber Utility Income Fund, which are not presented in these financial
statements.
Organizational Matters - The Fund offers Class A, Class B, Class C (formerly
Class D) and Class Y (formerly Class C) shares. Effective November 10, 1995,
the Fund began using industry standardized nomenclature and Class D and Class C
shares were renamed Class C and Class Y shares, respectively. Each class
represents interests in the same assets of the Fund and the classes are
identical except for differences in their sales charge structures, ongoing
distribution charges and certain transfer agency expenses. In addition, Class B
shares and all corresponding dividend reinvested shares automatically convert
to Class A shares approximately six years after issuance. All classes of shares
have equal voting privileges, except that each class has exclusive voting
rights with respect to its distribution plan.
Valuation of Investments - Where market quotations are readily available,
portfolio securities are valued thereby, provided such quotations adequately
reflect, in the judgment of Mitchell Hutchins, the fair value of the
securities. When market quotations are not readily available, securities are
valued based upon appraisals derived from information concerning those
securities or similar securities received from recognized dealers in those
securities. All other securities are valued at fair value as determined in good
faith by or under the direction of the Trust's board of trustees. The amortized
cost method of valuation, which approximates market value, is used to value
debt obligations with 60 days or less remaining to maturity, unless the Trust's
board of trustees determines that this does not represent fair value.
Repurchase Agreements - The Fund's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
7
<PAGE>
PAINEWEBBER
Investment Transactions and Investment Income - Investment transactions are
recorded on the trade date. Realized gains and losses from investment
transactions are calculated using the identified cost method. Interest income
is recorded on an accrual basis. Discounts are accreted and premiums are
amortized as adjustments to interest income and the identified cost of
investments. The Fund may enter into transactions in which the Fund sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date (the "roll period"). During the roll period the Fund
foregoes principal and interest paid on the securities. The Fund is compensated
by the interest earned on the cash proceeds of the initial sale and by fee
income or a lower repurchase price.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of dividend-
eligible shares, as appropriate) of each class at the beginning of the day
(after adjusting for current capital share activity of the respective classes).
Class-specific expenses are charged directly to the applicable class of shares.
Federal Taxes - The Fund intends to distribute all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
Dividends and Distributions to Shareholders - Dividends and distributions to
shareholders are recorded on the ex-dividend date. The amount of dividends and
distributions are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These
"book/tax" differences are either considered temporary or permanent in nature.
To the extent these differences are permanent in nature, such amounts are
reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Funds to meet
their obligations may be affected by economic developments, including those
particular to a specific industry, country or region.
8
<PAGE>
PAINEWEBBER
ACQUISITION
Effective as of the close of business on October 20, 1995, the Fund acquired
all the net assets of Mitchell Hutchins/Kidder, Peabody Adjustable Rate
Government Fund ("MH/KP Adjustable Rate Government Fund") pursuant to a plan of
reorganization approved by MH/KP Adjustable Rate Government Fund shareholders
on October 19, 1995. The acquisition was accomplished by a tax-free exchange of
9,170,754 Class A, 892,249 Class C and 140,324 Class Y shares of Low Duration
U.S. Government Income Fund for 1,890,961 Class A, 183,977 Class B, and 28,934
Class C shares, respectively, of MH/KP Adjustable Rate Government Fund
outstanding on October 20, 1995. MH/KP Adjustable Rate Government Fund's net
assets at that date, valued at $23,768,145, including accumulated net realized
losses of $4,063,268 and net unrealized appreciation on investments of
$109,800, were combined with those of the Low Duration U.S. Government Income
Fund.
INVESTMENT ADVISER AND ADMINISTRATOR
The Trust's board of trustees has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment adviser and administrator of the
Fund. In accordance with the Advisory Contract, the Fund pays Mitchell Hutchins
an investment advisory and administration fee, which is accrued daily and paid
monthly, at the annual rate of 0.50% of the Fund's average daily net assets. At
November 30, 1995, the Fund owed Mitchell Hutchins $131,756 in investment
advisory and administration fees.
Under a separate contract with Mitchell Hutchins ("Sub-Advisory Contract"),
Pacific Investment Management Company ("PIMCO") serves as the Trust's sub-
adviser. Under the Sub-Advisory Contract, Mitchell Hutchins (not the Fund) will
pay PIMCO a fee, computed weekly and payable monthly, in an amount equal to
one-half of the advisory fee received by Mitchell Hutchins from the Fund.
In compliance with applicable state securities laws, Mitchell Hutchins will
reimburse the Fund if and to the extent that the aggregate operating expenses
in any fiscal year, exclusive of taxes, distribution fees, interest, brokerage
fees and extraordinary expenses, exceed limitations imposed by various state
regulations. Currently, the most restrictive limitation applicable to the Fund
is 2.5% of the first $30 million of average daily net assets, 2.0% of the next
$70 million and 1.5% of any excess over $100 million. For the year ended
November 30, 1995, no reimbursements were required pursuant to the above
limitation for the Fund.
DISTRIBUTION PLANS
Mitchell Hutchins is the distributor of the Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under
separate plans of distribution pertaining to the Class A, Class B, and Class C
shares, the Fund pays Mitchell Hutchins monthly service fees at the annual rate
of 0.25% of the average daily net assets of Class A, Class B and Class C shares
and monthly
9
<PAGE>
PAINEWEBBER
distribution fees at the annual rate of 0.75% and 0.50% of the average daily
net assets of Class B shares and Class C shares, respectively. At November 30,
1995, the Fund owed Mitchell Hutchins $146,658 in service and distribution
fees.
Mitchell Hutchins also receives the proceeds of the initial sales charges paid
by the shareholders upon the purchase of Class A shares and the contingent
deferred sales charges paid by the shareholders upon certain redemptions of
Class A, Class B and Class C shares. Mitchell Hutchins has informed the Fund
that for the year ended November 30, 1995, it earned $80,141 in sales charges.
TRANSFER AGENCY SERVICE FEES
The Fund pays PaineWebber an annual fee of $4.00 per active PaineWebber
shareholder account for certain services not provided by the Fund's transfer
agent. For these services for the year ended November 30, 1995, PaineWebber
earned $107,999 and was owed $7,020 at November 30, 1995 in shareholder service
fees from the Fund.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at November 30,
1995 was substantially the same as the cost of securities for financial
statement purposes.
At November 30, 1995, the components of the net unrealized appreciation of
investments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having an excess of value
over cost)........................................................ $4,223,400
Gross depreciation (investments having an excess of cost
over value)....................................................... (803,802)
----------
Net unrealized appreciation of investments......................... $3,419,598
==========
</TABLE>
For the year ended November 30, 1995, total aggregate purchases and sales of
portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<S> <C>
Purchases........................................................ $ 954,903,710
Sales............................................................ $1,023,215,895
</TABLE>
FEDERAL INCOME TAX STATUS
At November 30, 1995, the Fund had a net capital loss carryforward of
$121,081,702. The capital loss carryforward includes capital losses acquired by
the fund pursuant to its reorganization with MH/KP Adjustable Rate Government
Fund (which was acquired during fiscal year 1995) in the amount of $4,063,268.
The loss carryforward will expire between November 30, 2001 and November 30,
2003. To the extent such losses are used, as provided in the regulations, to
offset future net realized capital gains, it is probable these gains will not
be distributed.
10
<PAGE>
PAINEWEBBER NOTES TO FINANCIAL STATEMENTS-(CONCLUDED)
For the year ended November 30, 1995, the reclassification arising from
permanent book/tax differences resulted in an increase to distributions in
excess of net investment income of $444,053 and a decrease to beneficial
interest of $444,053.
SHARES OF BENEFICIAL INTEREST
There is an unlimited amount of $0.001 par value shares of beneficial interest
authorized. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
--------------------------- ------------------------- ---------------------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ ------------- ----------- ------------ ------------ -------------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED
NOVEMBER 30,
1995:
Shares sold....... 3,414,851 $ 7,851,777 916,721 $ 2,108,569 4,678,309 $ 10,731,253 448 $ 1,069
Shares issued in
connection with
the acquisition
of
Mitchell
Hutchins/ Kidder,
Peabody
Adjustable Rate
Government Fund.. 9,170,754 21,362,365 -- -- 892,249 2,078,777 140,324 327,003
Shares
repurchased...... (29,451,783) (67,685,410) (3,100,165) (7,087,519) (63,802,261) (145,710,456) (4,340) (10,137)
Dividends
reinvested....... 1,076,029 2,468,585 150,283 344,937 3,681,087 8,441,101 516 1,202
------------ ------------- ----------- ------------ ------------ -------------- ------- --------
Net
increase/decrease. (15,790,149) $(36,002,683) (2,033,161) $(4,634,013) (54,550,616) $(124,459,325) 136,948 $319,137
============ ============= =========== ============ ============ ============== ======= ========
YEAR ENDED
NOVEMBER 30,
1994:
Shares sold....... 110,055,565 $ 270,928,898 6,067,397 $ 14,888,683 152,025,632 $ 374,164,405 -- --
Shares
repurchased...... (266,619,181) (638,103,042) (13,249,406) (30,880,652) (511,209,002) (1,212,745,329) -- --
Dividends
reinvested....... 4,302,214 10,296,539 315,736 746,713 11,154,830 26,563,484 -- --
------------ ------------- ----------- ------------ ------------ -------------- ------- --------
Net decrease ..... (152,261,402) $(356,877,605) (6,866,273) $(15,245,256) (348,028,540) $ (812,017,440) -- --
============ ============= =========== ============ ============ ============== ======= ========
</TABLE>
CAPITAL CONTRIBUTION FROM MITCHELL HUTCHINS
On September 23, 1994, the Fund recorded a capital contribution from Mitchell
Hutchins in the amount of $16.0 million or $0.06 per Fund share. An additional
$16.8 million was paid directly to certain shareholders who had redeemed Fund
shares prior to September 23, 1994. These amounts were paid by Mitchell
Hutchins in connection with the settlement of certain class action litigation.
The payments reflected losses that had been incurred by the Fund by reason of
its investments in non-planned amortization class interest-only and principal-
only (I/O and P/O) securities.
11
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------------- ------------------------------------
FOR THE YEARS FOR THE YEARS
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
NOVEMBER 30, MAY 3, 1993# NOVEMBER 30, MAY 3, 1993#
------------------ TO NOVEMBER 30, --------------- TO NOVEMBER 30,
1995 1994 1993 1995 1994 1993
-------- -------- --------------- ------ ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.......... $ 2.25 $ 2.48 $ 2.50 $ 2.25 $ 2.48 $ 2.50
-------- -------- -------- ------ ------- -------
Net investment
income.......... 0.13 0.12 0.07 0.11 0.10 0.06
Net realized and
unrealized gains
(losses) from
investment,
futures and
options
transactions.... 0.09 (0.29) (0.02) 0.09 (0.29) (0.02)
-------- -------- -------- ------ ------- -------
Net increase
(decrease) in
net asset value
from operations. 0.22 (0.17) 0.05 0.20 (0.19) 0.04
-------- -------- -------- ------ ------- -------
Dividends from
net investment
income.......... (0.13) (0.12) (0.07) (0.11) (0.10) (0.06)
-------- -------- -------- ------ ------- -------
Contribution to
capital from
adviser......... -- .06 -- -- .06 --
-------- -------- -------- ------ ------- -------
Net asset value,
end of period... $ 2.34 $ 2.25 $ 2.48 $ 2.34 $ 2.25 $ 2.48
======== ======== ======== ====== ======= =======
Total investment
return(1)....... 10.25% (4.50%)** 1.88% 9.30% (5.24%)** 1.47%
======== ======== ======== ====== ======= =======
Ratios/Supplemental
data:
Net assets, end
of period
(000's)......... $127,961 $158,712 $551,243 $9,147 $13,382 $31,706
Ratio of
expenses to
average net
assets(2)....... 1.15% 0.84% 0.81%* 2.02% 1.62% 1.62%*
Ratio of net
investment
income to
average net
assets(2)....... 5.89% 5.16% 4.85%* 5.03% 4.40% 4.31%*
Portfolio
turnover rate... 242% 246% 97% 242% 246% 97%
<CAPTION>
CLASS C*** CLASS Y
--------------------------------------- --------------
FOR THE YEARS FOR THE PERIOD
ENDED FOR THE PERIOD OCTOBER 20,
NOVEMBER 30, MAY 3, 1993# 1995# TO
---------------------- TO NOVEMBER 30, NOVEMBER 30,
1995 1994 1993 1995
--------- ------------ ---------------- --------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of
period.......... $ 2.25 $ 2.47 $ 2.50 $2.33
--------- ------------ ---------------- --------------
Net investment
income.......... 0.12 0.11 0.06 0.01
Net realized and
unrealized gains
(losses) from
investment,
futures and
options
transactions.... 0.09 (0.28) (0.03) 0.01
--------- ------------ ---------------- --------------
Net increase
(decrease) in
net asset value
from operations. 0.21 (0.17) 0.03 0.02
--------- ------------ ---------------- --------------
Dividends from
net investment
income.......... (0.12) (0.11) (0.06) (0.01)
--------- ------------ ---------------- --------------
Contribution to
capital from
adviser......... -- .06 -- --
--------- ------------ ---------------- --------------
Net asset value,
end of period... $ 2.34 $ 2.25 $ 2.47 $2.34
========= ============ ================ ==============
Total investment
return(1)....... 9.60% (4.99%)** 1.20% 0.83%
========= ============ ================ ==============
Ratios/Supplemental
data:
Net assets, end
of period
(000's)......... $180,169 $296,182 $1,186,181 $ 321
Ratio of
expenses to
average net
assets(2)....... 1.75% 1.36% 1.35%* 0.99%*
Ratio of net
investment
income to
average net
assets(2)....... 5.31% 4.65% 4.52%* 5.87%*
Portfolio
turnover rate... 242% 246% 97% 242%
</TABLE>
- ----------
# Commencement of issuance of shares
* Annualized
** Net of $0.06 contribution of capital from adviser. If such contribution had
not been made the total investment returns would have been (7.02)% for
Class A, (7.74)% for Class B and (7.50)% for Class C (formerly Class D).
*** Formerly Class D
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends at net
asset value on the payable dates, and a sale at net asset value on the last
day of each period reported. The figures do not include sales charges;
results for Class A, Class B and Class C would be lower if sales charges
were included. Total investment returns for periods less than one year have
not been annualized.
(2) During the year ended November 30, 1994 Mitchell Hutchins waived a portion
of its advisory and administration fees. If such waivers had not been made
the annualized ratios of expenses to average net assets, and net investment
income to average net assets, respectively, would have been 0.88% and 5.12%
for Class A, 1.66% and 4.35% for Class B, and 1.39% and 4.61% for Class C
(formerly Class D).
12
<PAGE>
PAINEWEBBER
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
PaineWebber Managed Investments Trust
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of PaineWebber Low Duration U.S. Government
Income Fund, formerly PaineWebber Short-term U.S. Government Income Fund (one
of the portfolios of PaineWebber Managed Investments Trust) (the "Fund") as of
November 30, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned at
November 30, 1995 by correspondence with the custodian and others. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
PaineWebber Low Duration U.S. Government Income Fund at November 30, 1995, and
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for the indicated periods, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
New York, New York
January 20, 1996
13
<PAGE>
PAINEWEBBER LOW DURATION U.S. GOVERNMENT INCOME FUND
TAX INFORMATION
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (November
30, 1995) as to the federal tax status of distributions received by
shareholders during such fiscal year from the Fund. Accordingly, we are
advising you that all of the distributions paid by the Low Duration U.S.
Government Income Fund during the period were derived from net investment
income and are taxable as ordinary income.
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not be
reported as taxable income. Some retirement trusts (e.g., corporate, Keogh and
403(b)(7) plans) may need this information for their annual reporting.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar year 1995. The second notification, which
will reflect the amounts to be used by calendar year taxpayers on their federal
income tax returns, will be made in conjunction with Form 1099 DIV and is
mailed in January 1996. Shareholders are advised to consult their own tax
advisers with respect to the tax consequences of their investment in the Fund.
14
