[PW LOGO]
ANNUAL REPORT
MARCH 31, 1996
Utility Income Fund
Utility Income Fund
PaineWebber Mutual funds
<PAGE>
May 17, 1996
DEAR SHAREHOLDER:
We are pleased to present you with PaineWebber Utility Income Fund's Annual
Report for the period ended March 31, 1996. Moderate economic growth, low
inflation and strong corporate earnings growth helped propel the stock
market to record-breaking levels during 1995. Despite the uncertain interest
rate environment that emerged in 1996, the equity market indices still
registered broad-based gains during the first quarter of 1996.
By the end of 1995, most investors were convinced that the Federal Reserve
Board had achieved a "soft landing" for the economy, which led to a general
consensus that the Fed would act again to cut short-term interest rates.
Sentiment changed quickly in early March, however, in response to government
reports showing higher-than-expected economic growth: there was a sharp drop
in bond prices and volatility in the stock market. Meanwhile, the Federal
Reserve's Open Market Committee decided to keep monetary policy unchanged at
the March 26, 1996 meeting. The Fed's decision not to lower rates in March
(and, again in May) suggests that officials do not foresee a recession or
accelerating inflation.
Moving forward, our view is that the economy will continue to expand, but
slowly. We forecast that inflation will remain in check, creating an
environment for stable to lower interest rates. A recession within the next
year is unlikely, given the absence of many of the usual pre-recession
indicators. The economic backdrop for the rest of the year should be similar
to 1995's. However, we project that corporate earnings growth will be
moderate, which will probably result in stock prices not increasing as
dramatically as they did in 1995.
<PAGE>
PORTFOLIO REVIEW
PAINEWEBBER UTILITY INCOME FUND*
Major Fixed Income Holdings Major Equity Holdings
Viacom Inc. 3% GTE Corp. 4%
TCI Communications Inc. 2% FPL Group Inc. 4%
MCI Communications 2% NIPSCO Industries Inc. 3%
ILLINOIS Power Company 2% Baltimore Gas & Electric Co. 3%
*% of Net Assets on March 31, 1996
On December 13, 1995, the Fund's Board of Trustees voted to
change the Fund's fiscal year-end to March 31; previously, the
fiscal year-end was November 30. The Fund's total return for the
twelve months ended March 31, 1996, without deducting sales
charges, was 18.42% for Class A shares, 17.55% for Class B shares
and 17.54% for Class C shares. The Fund's total return for this
period, after deducting the maximum applicable sales charges, was
13.06% for Class A shares, 12.55% for Class B shares and 16.54%
for Class C shares.
Throughout most of the twelve-month period ended March 31,1996,
declining interest rates had a positive effect on the Fund's
performance. Performance of the portfolio was further enhanced
during this period by a decision to increase the Fund's equity
weighting from 57% as of November 30, 1995 (the prior fiscal
year-end) to 77% as of the Fund's latest fiscal year-end March
31, 1996. Utility security prices reversed direction in February
1996, and the back-up in interest rates in early March 1996 hurt
the Fund's performance further. However, utility equities, which
are often considered bond substitutes, did not decline as much as
bond prices during this period.
<PAGE>
PORTFOLIO REVIEW
As of March 31, 1996, approximately 20% of the Fund's net assets
were concentrated in the telecommunications sector--which we
believe offers a variety of investment opportunities. In
particular, the enactment of telecommunications legislation in
February, 1996, is likely to significantly change the
telecommunications landscape in the United States. Long distance
providers can now enter the local telephone business, from which
they were previously excluded. In addition, local telephone
companies will be permitted to provide long distance services
within their primary regions. At the same time, cable providers
were granted entry into telephony and likewise, telephone
companies were cleared to provide video services. This
deregulation effectively provides greatly expanded
diversification opportunities for all telecommunications
providers.
On the electric utility side, the Fund continued to emphasize
high-quality participants in the electric utility industry, where
a more gradual evolution of regulatory policies is taking place.
Electric utility regulations tend to vary state by state.
However, state regulatory boards seems to be moving towards a
less restrictive operating environment, which should be
beneficial to electric utilities in the long-term. The Fund's
performance was negatively affected during the last several
months by the Fund's significant investment in electric utilities
(66% of net assets on March 31, 1996). The unprecedented
volatility in the bond market during the first several months of
1996 caused parallel moves in electric utility securities, which
are extremely interest rate sensitive.
<PAGE>
PORTFOLIO REVIEW
During the last several months, we have been managing the Fund to
reduce the portfolio's interest rate sensitivity and enhance
total return. Specifically, we established a position in a real
estate investment trust ("REIT"), Starwood Lodging Trust (1% of
net assets on March 31, 1996), and have added several other REIT
holdings since then. We are optimistic about the growth prospects
of select real estate sectors and have chosen to invest in REIT
equities, which are required to distribute most of their earnings
as dividends to shareholders, yet have been less sensitive to
bond prices than electric utility stocks. Also, investments were
made in certain long distance providers including MCI
Communications Corporation (1%). This company is experiencing
strong demand trends and offers attractive total return
potential, wherein lower current income than the Fund's other
telecommunications holdings should be more than offset by the
total return generated.
Going forward, we plan to add greater diversity to the Fund's
holdings, most likely by adding to the number of
telecommunications issues. In addition, we will continue to
search for companies in niches where near-term growth appears as
promising as long-term. We intend to maintain our overweighting
in utility stocks, as we continue to believe that utility stocks
stand a better chance of outperforming utility bonds in the
months ahead. Overall, the slow-growth, low-inflation economic
environment anticipated in the upcoming months should create a
benign operating climate for utility companies.
1995 was an exceptional year for most domestic equity and bond
investors. It is important to remember, however, that stock and
bond markets go down just as they go up. At times like these,
remember the importance of working with your Investment Executive
to help you find investments that are consistent with your risk
tolerance and time horizon.
<PAGE>
PAINEWEBBER U T I L I T Y I N C O M E F U N D
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
TOTAL RETURN1
NET ASSET VALUE --------------------------------
-------------------------------------- 12 MONTHS 4 MONTHS
03/31/96 11/30/95 03/31/95 ENDED 03/31/96 ENDED 3/31/96
<S> <C> <C> <C> <C> <C>
Class A Shares $ 9.76 $ 9.77 $ 8.65 18.42% 1.46%
Class B Shares 9.75 9.77 8.64 17.55 1.10
Class C Shares* 9.75 9.77 8.64 17.54 1.10
</TABLE>
Performance Summary Class A Shares
<TABLE>
<CAPTION>
NET ASSET VALUE
--------------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN1
<S> <C> <C> <C> <C> <C>
07/02/93 - 12/31/93 $ 10.00 $ 9.70 -- $ 0.2340 (0.70)%
1994 9.70 8.28 -- 0.4829 (9.71)
1995 8.28 10.14 -- 0.4662 28.82
01/01/96 - 03/31/96 10.14 9.76 -- 0.0956 (2.83)
Total: $0.0000 $ 1.2787
CUMULATIVE TOTAL RETURN AS OF 03/31/96: 12.23%
</TABLE>
Performance Summary Class B Shares
<TABLE>
<CAPTION>
NET ASSET VALUE
--------------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN1
<S> <C> <C> <C> <C> <C>
07/02/93 - 12/31/93 $ 10.00 $ 9.70 -- $ 0.2010 (1.02)%
1994 9.70 8.28 -- 0.4169 (10.40)
1995 8.28 10.14 -- 0.3980 27.87
01/01/96 - 03/31/96 10.14 9.75 -- 0.0791 (3.08)
Total: $0.0000 $ 1.0950
CUMULATIVE TOTAL RETURN AS OF 03/31/96: 9.90%
</TABLE>
Performance Summary Class C Shares*
<TABLE>
<CAPTION>
NET ASSET VALUE
--------------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN1
<S> <C> <C> <C> <C> <C>
07/02/93 - 12/31/93 $ 10.00 $ 9.70 -- $ 0.2020 (1.01)%
1994 9.70 8.28 -- 0.4158 (10.41)
1995 8.28 10.14 -- 0.3970 27.86
01/01/96 - 03/31/96 10.14 9.75 -- 0.0788 (3.09)
Total: $0.0000 $ 1.0936
CUMULATIVE TOTAL RETURN AS OF 03/31/96: 9.89%
</TABLE>
* Formerly Class D shares
1 Figures assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable dates and do not include sales charges;
results for each class would be lower if sales charges were included.
The data above represents past performance of the Fund's shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
<PAGE>
PAINEWEBBER U T I L I T Y I N C O M E F U N D
<TABLE><CAPTION>
PORTFOLIO OFINVESTMENTS MARCH 31, 1996
NUMBER OF
SHARES VALUE
- --------- ----------
<C> <S> <C>
COMMON STOCKS - 77.38%
30,000 AGL Resources Incorporated.................................................. $ 551,250
30,000 Allegheny Power Systems Incorporated........................................ 911,250
20,000 American Water Works Company Incorporated................................... 770,000
17,000 Ameritech Corporation....................................................... 926,500
65,000 Baltimore Gas & Electric Company............................................ 1,795,625
12,500 Bell Atlantic Corporation................................................... 771,875
32,000 BellSouth Corporation....................................................... 1,184,000
20,000 Boston Edison Company....................................................... 540,000
30,000 Carolina Power & Light...................................................... 1,117,500
15,000 CILCORP Incorporated........................................................ 645,000
55,000 CMS Energy Corporation...................................................... 1,622,500
25,000 CMS Energy Corporation, Class G............................................. 475,000
70,000 DPL Incorporated............................................................ 1,671,250
50,000 DQE Incorporated............................................................ 1,443,750
25,000 DTE Energy Company.......................................................... 840,625
35,000 Duke Power Company.......................................................... 1,767,500
60,000 Edison International Incorporated........................................... 1,027,500
45,000 FPL Group Incorporated...................................................... 2,036,250
50,000 GTE Corporation............................................................. 2,193,750
76,000 Houston Industries Incorporated............................................. 1,643,500
40,000 MCN Corporation............................................................. 925,000
35,000 NICOR Incorporated.......................................................... 936,250
50,000 NIPSCO Industries Incorporated.............................................. 1,862,500
25,000 NYNEX Corporation........................................................... 1,246,875
65,000 Ohio Edison Company......................................................... 1,470,625
42,500 PECO Energy Company......................................................... 1,131,562
40,000 Public Service Company of Colorado.......................................... 1,410,000
30,000 Public Service Company of New Mexico........................................ 558,750
20,000 Public Service Company of North Carolina.................................... 320,000
25,000 Public Service Enterprise Group............................................. 687,500
22,000 SBC Communications Incorporated............................................. 1,157,750
25,000 SCANA Corporation........................................................... 687,500
20,000 Sierra Pacific Resources.................................................... 502,500
63,000 Southern Company............................................................ 1,504,125
12,000 Starwood Lodging Trust...................................................... 405,000
60,000 TNP Enterprises Incorporated................................................ 1,387,500
20,000 Unicom Corporation.......................................................... 540,000
25,000 US West Communications Incorporated......................................... 809,375
45,000 Wisconsin Energy Corporation................................................ 1,276,875
----------
Total Common Stocks (cost - $38,003,797)............................................. 42,754,312
----------
</TABLE>
2
<PAGE>
PAINEWEBBER U T I L I T Y I N C O M E F U N D
<TABLE><CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- ---------- --------- -----------
<C> <S> <C> <C> <C>
CORPORATE BONDS - 15.86%
$ 700 Century Telephone Enterprises, Incorporated............ 05/01/24 8.250% $ 715,584
750 Commonwealth Edison Company............................ 04/15/23 8.000 725,513
800 Duquesne Light Company................................. 06/15/04 6.625 765,538
750 Georgia Power Company.................................. 02/01/23 7.950 744,860
1,000 Illinois Power Company................................. 08/01/03 6.500 965,781
1,000 MCI Communications Corporation......................... 03/15/24 7.750 986,823
800 News America Holdings Corporation...................... 02/01/13 9.250 886,386
1,000 TCI Communications, Incorporated....................... 08/01/05 8.000 1,025,930
500 Texas Utilities Electric Company....................... 06/01/02 8.000 526,423
1,500 Viacom Incorporated.................................... 07/07/06 8.000 1,421,250
-----------
Total Corporate Bonds (cost - $9,015,804)....................... 8,764,088
-----------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 2.70%
1,500 U.S. Treasury Bills (cost - $1,494,830)................. 04/25/96 5.170* 1,494,830
-----------
REPURCHASE AGREEMENT - 3.62%
1,998 Repurchase Agreement dated 03/29/96, with Daiwa
Securities America, Inc., collateralized by $1,980,000
U.S. Treasury Bonds, 7.125% due 02/15/23; proceeds:
$1,998,899 (cost - $1,998,000).......................... 04/01/96 5.400 1,998,000
-----------
Total Investments (cost - $50,512,431) -] 99.56%................. 55,011,230
Other assets in excess of liabilities - 0.44%.................... 241,594
-----------
Net Assets - 100.00%............................................. $55,252,824
-----------
-----------
</TABLE>
- ------------
* Yield to maturity at date of purchase
See accompanying notes to financial statements
3
<PAGE>
PAINEWEBBER U T I L I T Y I N C O M E F U N D
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1996
<S> <C>
Assets
Investments in securities, at value (cost $50,512,431)........................... $55,011,230
Dividends and interest receivable................................................ 267,317
Receivable for shares of beneficial interest sold................................ 31,739
Deferred organizational expenses................................................. 63,484
Other assets..................................................................... 84,147
-----------
Total assets..................................................................... 55,457,917
-----------
Liabilities
Payable for shares of beneficial interest repurchased............................ 71,311
Payable to affiliate............................................................. 59,889
Accrued expenses and other liabilities........................................... 73,893
-----------
Total liabilities................................................................ 205,093
-----------
Net Assets
Beneficial interest--$0.001 par value (unlimited amount authorized).............. 60,119,004
Undistributed net investment income.............................................. 21,931
Accumulated net realized losses from investment transactions..................... (9,386,910)
Net unrealized appreciation of investments....................................... 4,498,799
-----------
Net assets....................................................................... $55,252,824
-----------
-----------
Class A:
Net assets....................................................................... $ 9,415,881
-----------
Shares outstanding............................................................... 964,949
-----------
Net asset value and redemption value per share................................... $9.76
-----
-----
Maximum offering price per share (net asset value plus sales charge of 4.50% of
offering price).................................................................. $10.22
------
------
Class B:
Net assets....................................................................... $34,764,722
-----------
Shares outstanding............................................................... 3,563,886
-----------
Net asset value and offering price per share..................................... $9.75
-----
-----
Class C:
Net assets....................................................................... $11,072,221
-----------
Shares outstanding............................................................... 1,135,224
-----------
Net asset value and offering price per share..................................... $9.75
-----
-----
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
PAINEWEBBER U T I L I T Y I N C O M E F U N D
STATEMENT OF OPERATIONS
<TABLE><CAPTION>
FOR THE FOR THE
FOUR MONTHS ENDED YEAR ENDED
MARCH 31, 1996 NOVEMBER 30, 1995
----------------- -----------------
<S> <C> <C>
Investment Income:
Dividends................................................ $ 651,785 $ 1,951,645
Interest................................................. 417,657 2,167,531
----------- -----------------
1,069,442 4,119,176
----------- -----------------
Expenses:
Investment advisory and administration................... 139,394 436,613
Service fees--Class A.................................... 8,571 28,100
Service and distribution fees--Class B................... 124,751 380,824
Service and distribution fees--Class C................... 40,098 130,503
Legal and audit.......................................... 21,673 48,520
Reports and notices to shareholders...................... 21,155 63,464
Transfer agency and service fees......................... 16,632 61,695
Custody and accounting................................... 16,054 61,663
State registration....................................... 12,367 58,105
Amortization of organizational expenses.................. 9,423 28,185
Trustees' fees........................................... 2,083 6,250
Other expenses........................................... 998 3,008
----------- -----------------
413,199 1,306,930
Less: Fee waivers from adviser........................... (69,697) --
----------- -----------------
Net expenses............................................. 343,502 1,306,930
----------- -----------------
Net investment income.................................... 725,940 2,812,246
----------- -----------------
Realized and unrealized gains (losses) from investment
activities:
Net realized losses from investment transactions......... (120,140) (248,279)
Net change in unrealized appreciation/depreciation of
investments............................................ 246,922 10,159,054
-------- -----------------
Net realized and unrealized gains from investment
activities............................................. 126,782 9,910,775
-------- -----------------
Net increase in net assets resulting from operations..... $ 852,722 $12,723,021
-------- -----------------
-------- -----------------
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
PAINEWEBBER U T I L I T Y I N C O M E F U N D
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
FOR THE NOVEMBER 30,
FOUR MONTHS ENDED ---------------------------
MARCH 31, 1996 1995 1994
----------------- ----------- ------------
<S> <C> <C> <C>
From operations:
Net investment income............................... $ 725,940 $ 2,812,246 $ 3,585,702
Net realized losses from investment transactions.... (120,140) (248,279) (8,233,382)
Net change in unrealized appreciation/depreciation
of investments...................................... 246,922 10,159,054 (2,985,242)
----------------- ----------- ------------
Net increase (decrease) in net assets resulting from
operations.......................................... 852,722 12,723,021 (7,632,922)
----------------- ----------- ------------
Dividends to shareholders from:
Net investment income - Class A..................... (160,776) (569,343) (878,315)
Net investment income - Class B..................... (486,821) (1,637,731) (2,146,859)
Net investment income - Class C..................... (156,103) (559,933) (838,829)
----------------- ----------- ------------
Total dividends to shareholders..................... (803,700) (2,767,007) (3,864,003)
----------------- ----------- ------------
From beneficial interest transactions:
Net proceeds from the sale of beneficial interest... 3,128,944 13,428,355 31,602,333
Cost of beneficial interest repurchased............. (9,026,092) (28,464,756) (38,779,290)
Proceeds from dividends reinvested.................. 575,298 1,996,330 2,811,517
----------------- ----------- ------------
Net decrease in net assets from beneficial interest
transactions........................................ (5,321,850) (13,040,071) (4,365,440)
----------------- ----------- ------------
Net decrease in net assets.......................... (5,272,828) (3,084,057) (15,862,365)
Net assets:
Beginning of period................................. 60,525,652 63,609,709 79,472,074
----------------- ----------- ------------
End of period (including undistributed net
investment income of $21,931, $99,691 and $54,452,
respectively)...................................... $55,252,824 $60,525,652 $ 63,609,709
----------------- ----------- ------------
----------------- ----------- ------------
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
PAINEWEBBER N O T E S T O F I N A N C I A L S T A T E M E N T S
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Managed Investments Trust (the "Trust") was organized
under Massachusetts law by a Declaration of Trust dated November
21, 1986 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended,
as an open-end, diversified investment company. The Trust is a
series mutual fund with five funds: PaineWebber Utility Income
Fund (the "Fund"), PaineWebber U.S. Government Income Fund,
PaineWebber Investment Grade Income Fund, PaineWebber High Income
Fund and PaineWebber Low Duration U.S. Government Income Fund. At
a meeting held on December 13, 1995, the Board of Trustees elected
to change the Fund's fiscal year end from November 30 to March 31.
Currently, the Fund offers Class A, Class B and Class C (formerly
Class D) shares. 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
service/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 initial issuance. All classes of
shares have equal voting privileges, except that each class has
exclusive voting rights with respect to its service/distribution
plan. Organizational costs have been deferred and are being
amortized using the straight line method over a period not to
exceed 60 months from the date the Fund commenced operations.
The preparation of financial statements in accordance with
generally accepted accounting principles requires Fund management
to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could
differ from those estimates. Following is a summary of significant
accounting policies:
Valuation of Investments - Where market quotations are readily
available, portfolio securities are valued thereon, provided such
quotations adequately reflect the fair value of the securities in
the judgment of Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"), an affiliate and wholly owned subsidiary of
PaineWebber Incorporated ("PaineWebber") and investment adviser
and administrator of the Fund. Such quotations are based on the
last sales price, or if no sales price, at the closing bid price.
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.
7
<PAGE>
PAINEWEBBER
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. The Fund occasionally participates in joint
repurchase agreement transactions with other funds managed by
Mitchell Hutchins.
Investment Transactions and Investment Income - Investment
transactions are recorded on trade date. Realized gains and losses
from investment transactions are calculated on the identified cost
method. Interest income is recorded on an accrual basis and
dividend income is recorded on the ex-dividend date. Premiums are
amortized and discounts are accreted as adjustments to interest
income and the identified cost of securities.
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.
Dividends and Distributions - Dividends and distributions to
shareholders are recorded on the ex-dividend date. Dividends from
net investment income and distributions from realized gains from
investment transactions 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.
CONCENTRATION OF RISK
The Fund follows an investment policy of investing primarily in
securities of utility companies. Economic, legislative and
regulatory developments impacting those industries may affect the
market value of the Fund's investments.
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 0.70% of the Fund's average daily
net assets. At March 31, 1996, the Fund owed Mitchell Hutchins
$16,649 in investment advisory and administration fees.
8
<PAGE>
PAINEWEBBER
For the four months ended March 31, 1996 and for the year ended
November 30, 1995, the Fund paid $1,500 and $0, respectively in
brokerage commissions to PaineWebber for transactions executed on
behalf of 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 four months ended March 31, 1996
and for the year ended November 30, 1995, no reimbursements were
required pursuant to the above limitations. However, Mitchell
Hutchins voluntarily waived $69,697 of its investment advisory and
administration fee for the four months ended March 31, 1996.
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 service/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 distribution fees at the annual rate of
0.75% of the average daily net assets of Class B and Class C
shares. At March 31, 1996, the Fund owed Mitchell Hutchins $41,506
in service and distribution fees.
Mitchell Hutchins also receives the proceeds of the initial sales
charges paid by shareholders upon the purchase of Class A shares
and the contingent deferred sales charges paid by shareholders
upon certain redemptions of Class A, Class B and Class C shares.
Mitchell Hutchins has informed the Fund that, for the four months
ended March 31, 1996 and for the year ended November 30, 1995, it
earned $59,371 and $288,074, respectively 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 four
months ended March 31, 1996 and for the year ended November 30,
1995, PaineWebber earned $7,119 and $24,449, respectively. At
March 31, 1996, the Fund owed PaineWebber $1,734 for transfer
agency service fees.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at
March 31, 1996, was substantially the same as the cost of
securities for financial statement purposes.
9
<PAGE>
PAINE WEBBER
At March 31, 1996, 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)........................................................ $ 5,310,726
Gross depreciation (investments having an excess of cost over
value)....................................................... (811,927)
-----------
Net unrealized appreciation of investments..................... $ 4,498,799
-----------
-----------
</TABLE>
Total aggregate purchases and sales of portfolio securities,
excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
FOUR MONTHS ENDED YEAR ENDED
MARCH 31, NOVEMBER 30,
1996 1995
------------------ ------------
<S> <C> <C>
Purchases.................................... $ 11,774,099 $18,280,094
Sales........................................ $ 13,618,163 $36,466,540
</TABLE>
FEDERAL TAX STATUS
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.
At March 31, 1996, the Fund had a net capital loss carryforward of
$9,266,770 which will expire between March 31, 2001 and March 31,
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.
In accordance with Treasury Regulations, the Fund has elected to
defer $120,140 of realized capital losses arising after October
31, 1995. Such losses have been treated for tax purposes as
arising on April 1, 1996.
10
<PAGE>
PAINE WEBBER
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
------------------------ ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Four months
ended March 31, 1996:
Shares sold.......... 31,380 $ 312,020 200,178 $ 2,022,789 79,126 $ 794,135
Shares repurchased... (179,206) (1,801,015) (513,198) (5,128,898) (207,611) (2,096,179)
Dividends reinvested. 11,257 112,880 33,769 338,597 12,349 123,821
Shares converted from
Class B to Class
A................... 1,409 14,346 (1,410) (14,346) -- --
---------- ----------- ---------- ------------ ---------- ------------
Net decrease......... (135,160) $(1,361,769) (280,661) $ (2,781,858) (116,136) $ (1,178,223)
---------- ----------- ---------- ------------ ---------- ------------
---------- ----------- ---------- ------------ ---------- ------------
Year ended
November 30, 1995:
Shares sold.......... 202,622 $ 1,796,027 1,035,911 $ 9,257,241 267,682 $ 2,375,087
Shares repurchased... (677,777) (5,988,235) (1,767,458) (15,877,641) (740,795) (6,598,880)
Dividends reinvested. 44,624 400,419 128,806 1,156,031 49,070 439,880
Shares converted from
Class B to Class
A................... 23,499 218,286 (23,473) (218,286) -- --
---------- ----------- ---------- ------------ ---------- ------------
Net decrease......... (407,032) $(3,573,503) (626,214) $ (5,682,655) (424,043) $ (3,783,913)
---------- ----------- ---------- ------------ ---------- ------------
---------- ----------- ---------- ------------ ---------- ------------
Year ended
November 30, 1994:
Shares sold.......... 844,216 $ 7,523,292 1,553,212 $ 13,963,371 1,130,190 $ 10,115,670
Shares repurchased... (1,087,232) (9,501,218) (1,959,760) (17,168,265) (1,378,485) (12,109,807)
Dividends reinvested. 70,501 620,904 176,677 1,553,050 72,624 637,562
---------- ----------- ---------- ------------ ---------- ------------
Net decrease......... (172,515) $(1,357,022) (229,871) $ (1,651,844) (175,671) $ (1,356,575)
---------- ----------- ---------- ------------ ---------- ------------
---------- ----------- ---------- ------------ ---------- ------------
</TABLE>
11
<PAGE>
PAINEWEBBER U T I L I T Y I N C O M E F U N D
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------
FOR THE FOR THE
FOUR PERIOD
MONTHS FOR THE YEARS ENDED JULY 2,
ENDED NOVEMBER 30, 1993+ TO
MARCH 31, ----------------------- NOVEMBER
1996 1995 1994 30, 1993
--------- ------- ------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.......... $ 9.77 $ 8.31 $ 9.66 $10.00
--------- ------- ------- -------
Net investment income......................... 0.15 0.47 0.48 0.20
Net realized and unrealized gains (losses)
from investment
transactions................................. -- 1.44 (1.31) (0.39)
--------- ------- ------- -------
Net increase (decrease) from investment
operations.................................... 0.15 1.91 (0.83) (0.19)
--------- ------- ------- -------
Dividends from net investment income.......... (0.16) (0.45) (0.52) (0.15)
--------- ------- ------- -------
Net asset value, end of period................ $ 9.76 $ 9.77 $ 8.31 $ 9.66
--------- ------- ------- -------
--------- ------- ------- -------
Total investment return(1).................... 1.46% 23.64% (8.76)% (1.95)%
--------- ------- ------- -------
--------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)............. $9,416 $10,750 $12,532 $16,224
Ratio of expenses, net of waivers from
adviser, to average net assets............... 1.09%* 1.49% 1.58% 1.55 %*
Ratio of expenses, before waivers from
adviser, to average net assets............... 1.44%* 1.49% 1.58% 1.55 %*
Ratio of net investment income, net of waivers
from adviser,
to average net assets........................ 4.26%* 5.13% 5.49% 5.38 %*
Ratio of net investment income, before waivers
from adviser,
to average net assets........................ 3.91%* 5.13% 5.49% 5.38 %*
Portfolio turnover rate....................... 21% 30% 92% 13 %
Average commission rate paid per share of
common stock
investments purchased/sold(2)................ $0.0600 -- -- --
</TABLE>
- ---------
* Annualized
** Formerly Class D shares
+ Commencement of issuance of shares
(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 each class would be lower if sales charges were included. Total
investment returns for periods of less than one year have not been
annualized.
(2) Disclosure effective for fiscal periods beginning on or after September 1,
1995.
12
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C**
- ---------------------------------------------- ----------------------------------------------
FOR THE FOR THE FOR THE FOR THE
FOUR PERIOD FOUR PERIOD
MONTHS FOR THE YEARS ENDED JULY 2, MONTHS FOR THE YEARS ENDED JULY 2,
ENDED NOVEMBER 30, 1993+ TO ENDED NOVEMBER 30, 1993+ TO
MARCH 31, ------------------- NOVEMBER MARCH 31, ------------------- NOVEMBER
1996 1995 1994 30, 1993 1996 1995 1994 30, 1993
- --------- ------- ------- -------- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9.77 $ 8.31 $ 9.65 $10.00 $ 9.77 $ 8.31 $ 9.65 $10.00
- --------- ------- ------- ------- --------- ------- ------- --------
0.12 0.40 0.42 0.17 0.12 0.40 0.42 0.16
(0.01) 1.45 (1.31) (0.39) (0.01) 1.45 (1.31) (0.38)
- --------- ------- ------- ------- --------- ------- ------- -------
0.11 1.85 (0.89) (0.22) 0.11 1.85 (0.89) (0.22)
- --------- ------- ------- ------- --------- ------- ------- -------
(0.13) (0.39) (0.45) (0.13) (0.13) (0.39) (0.45) (0.13)
- --------- ------- ------- ------- --------- ------- ------- -------
$ 9.75 $ 9.77 $ 8.31 $ 9.65 $ 9.75 $ 9.77 $ 8.31 $ 9.65
- --------- ------- ------- ------- --------- ------- ------- -------
- --------- ------- ------- ------- --------- ------- ------- -------
1.10% 22.73% (9.35)% (2.29)% 1.10% 22.71% (9.36)% (2.28)%
- --------- ------- ------- ------- --------- ------- ------- -------
- --------- ------- ------- ------- --------- ------- ------- -------
$34,765 $37,554 $37,156 $45,382 $11,072 $12,222 $13,922 $17,866
1.85%* 2.23% 2.33% 2.29%* 1.85%* 2.24% 2.32% 2.29%*
2.20%* 2.23% 2.33% 2.29%* 2.20%* 2.24% 2.32% 2.29%*
3.51%* 4.37% 4.72% 4.67%* 3.50%* 4.37% 4.69% 4.67%*
3.16%* 4.37% 4.72% 4.67%* 3.15%* 4.37% 4.69% 4.67%*
21% 30% 92% 13% 21% 30% 92% 13%
$0.0600 -- -- -- $0.0600 -- -- --
</TABLE>
13
<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 Utility Income Fund (one of the Portfolios of
PaineWebber Managed Investments Trust) (the "Fund") as of March
31, 1996, and the related statements of operations for the four
months ended March 31, 1996 and for the year ended November 30,
1995, the statement of changes in net assets for the four months
ended March 31, 1996 and for each of the two years in the period
ended November 30, 1995, and the financial highlights for each of
the indicated periods. 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 audits 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 March 31, 1996 by correspondence with the
custodian and a broker. 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 Utility Income Fund at March 31,
1996, the results of its operations for the four months ended
March 31, 1996 and for the year ended November 30, 1995, the
changes in its net assets for the four months ended March 31, 1996
and for each of the two years in the period ended November 30,
1995 and the financial highlights for each of the indicated
periods, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
New York, New York
May 14, 1996
14
<PAGE>
PAINEWEBBER
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 period end (March 31, 1996) as to the federal tax status of
distributions received by shareholders during such fiscal period
from the Fund. Accordingly, we are advising you that all of the
distributions paid by the Utility Income Fund during the period
were derived from net investment income and are taxable as
ordinary income. Of these distributions, 87.29% qualifies for the
dividends received deduction available to corporate shareholders.
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 1996. 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 will be mailed in
January 1997. Shareholders are advised to consult their own tax
advisers with respect to the tax consequences of their investment
in the Fund.
15
<PAGE>
PORTFOLIO REVIEW
Our ultimate objective in managing your investments is to help
you successfully meet your financial goals. We thank you for your
continued support, and welcome any comments or questions you may
have.
Sincerely,
/s/ Margo Alexander /s/ Karen L. Finkel
MARGO ALEXANDER KAREN L. FINKEL
PRESIDENT, FIRST VICE PRESIDENT,
MITCHELL HUTCHINS ASSET MITCHELL HUTCHINS ASSET
MANAGEMENT INC. MANAGEMENT INC.
PORTFOLIO MANAGER,
PAINEWEBBER UTILITY INCOME
FUND
/s/ Julianna M. Berry /s/ James F. Keegan
JULIANNA M. BERRY JAMES F. KEEGAN
VICE PRESIDENT, SENIOR VICE PRESIDENT,
MITCHELL HUTCHINS ASSET MITCHELL HUTCHINS ASSET
MANAGEMENT INC. MANAGEMENT INC.
PORTFOLIO MANAGER, PORTFOLIO MANAGER,
PAINEWEBBER UTILITY INCOME FUND PAINEWEBBER UTILITY INCOME
FUND
<PAGE>
<TABLE><CAPTION>
FUND PERFORMANCE
<S> <C> <C> <C>
The following graph
depicts the performance
of the PaineWebber PAINEWEBBER UTILITY INCOME FUND
Utility Income Fund Comparison of Change in Value of $10,000 investment in the Fund,
versus the Standard & the S&P 500 Stock Index, and the S&P 40 Utility Index
Poor's 500 Stock Index
and the Standard &
Poor's 40 Utility Index. It
is important to note the
PaineWebber Utility
Income Fund is a [GRAPH]
professionally managed
mutual fund while the
indices are not available
for investment and are
unmanaged. The
comparisons are shown
for illustrative 7/2/93 3/31/94 3/31/95 3/31/96
purposes only.
--- PaineWebber Utility Income --- Standard & Poor's 40 Utility Index
Fund Class A Shares
... PaineWebber Utility Income --- Standard & Poor's 500 Stock Index
--- PaineWebber Utility Income
Fund Class C Shares
Past performance is not predictive
of future performance.
<CAPTION>
Average Annual Return
% Return After Deducting
% Return Without Sales Charge Maximum Sales Charge
----------------------------- -------------------------
Class Class
----------------------------- -------------------------
A* B** C*** A* B** C***
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 3/31/96 18.42% 17.55% 17.54% 13.06% 12.55% 16.54%
Five Years Ended 3/31/96 N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------
Commencement of Operations
Through 3/31/96 4.29% 3.50% 3.49% 2.56% 2.46% 3.49%
- ----------------------------------------------------------------------------------------------------
* Maximum sales charge for Class A shares is 4.5% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after 6 years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charge for Class C shares is 0.75% and is
reduced to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution
and service fees.
+ Commencement of operations was July 2, 1993 for Class A, Class B and Class
C shares.
The investment return and principal value of an investment in the Fund will
fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
<PAGE>
BOARD OF TRUSTEES
TRUSTEES
E. Garrett Bewkes, Jr. Meyer Feldberg
CHAIRMAN George W. Gowen
Margo N. Alexander Frederic V. Malek
Richard Q. Armstrong Carl W. Schafer
Richard Burt John R. Torell III
Mary C. Farrell
OFFICERS
Margo N. Alexander Julian F. Sluyters
PRESIDENT VICE PRESIDENT AND TREASURER
Dianne E. O'Donnell Karen Finkel
VICE PRESIDENT AND SECRETARY VICE PRESIDENT
Victoria E. Schonfeld Ellen R. Harris
VICE PRESIDENT VICE PRESIDENT
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
A PROSPECTUS CONTAINING MORE COMPLETE INFORMATION FOR ANY OF THE FUNDS
LISTED ON THE BACK COVER CAN BE OBTAINED FROM A PAINEWEBBER INVESTMENT
EXECUTIVE OR CORRESPONDENT FIRM. READ THE PROSPECTUS CAREFULLY BEFORE
INVESTING.
THIS REPORT IS NOT TO BE USED IN CONNECTION WITH THE OFFERING OF SHARES OF
THE FUND UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
PW LOGO
Invest with more intelligence
PaineWebber offers a family of 22 funds which encompass a diversified range of
investment goals.
Investors may exchange their Fund shares with other Funds within the family
for a $5 exchange fee.
BOND FUNDS
- - High Income Fund - Strategic Income Fund
- - Investment Grade Income Fund - U.S. Government Income Fund
- - Low Duration U.S. Government
Income Fund
TAX-FREE BOND FUNDS
- - California Tax-Free Income Fund - National Tax-Free Income Fund
- - Municipal High Income Fund - New York Tax-Free Income Fund
STOCK FUNDS
- - Capital Appreciation Fund - Small Cap Growth Fund
- - Financial Services Growth Fund - Small Cap Value Fund
- - Growth Fund - Utility Income Fund
- - Growth and Income Fund
ASSET ALLOCATION FUNDS
- - Balanced Fund - Tactical Allocation Fund
GLOBAL FUNDS
- - Global Income Fund - Global Equity Fund
- - Emerging Markets Equity Fund
PAINEWEBBER MONEY MARKET FUND
Copy Rights 1996 PaineWebber Incorporated [LOGO] Printed on recycled paper
</TABLE>
