MITCHELL HUTCHINS LIR MONEY SERIES, 485BPOS, 2000-08-25

MITCHELL HUTCHINS LIR MONEY SERIES
485BPOS, 2000-08-25

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<PAGE>

As filed with the Securities and Exchange Commission on August 25, 2000

1933 Act Registration No. 333-52965
1940 Act Registration No. 811-8767

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 8 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]

Amendment No. 9 [ X ]

MITCHELL HUTCHINS LIR MONEY SERIES
(Exact name of registrant as specified in charter)
51 West 52nd Street
New York, New York 10019-6114
(Address of principal executive offices)

Registrant's telephone number, including area code: (212) 713-2000

DIANNE E. O'DONNELL, ESQ.
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
(Name and address of agent for service)

Copies to:
ELINOR W. GAMMON, ESQ.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Second Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9000

Approximate Date of Proposed Public Offering: Effective Date of this
Post-Effective Amendment.

It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to Rule 485(b)
[X] On September 1, 2000, pursuant to Rule 485(b)
[ ] 60 days after filing pursuant to Rule 485(a)(1)
[ ] On____________ pursuant to Rule 485(a)(1)
[ ] 75 days after filing pursuant to Rule 485(a)(2)
[ ] On____________ pursuant to Rule 485(a)(2)

Title of Securities Being Registered: Shares of Beneficial Interest of Mitchell
Hutchins LIR Select Money Fund, LIR Cash Reserves Fund and LIR Liquid Assets
Fund.

<PAGE>
Mitchell Hutchins
LIR Select Money Fund

----------------

PROSPECTUS
SEPTEMBER 1, 2000

------------------------------

This prospectus offers two classes of money market fund shares. Institutional
shares are offered primarily to institutional investors and Financial
Intermediary shares are offered to banks and other financial intermediaries for
the benefit of their customers.

Not FDIC insured. May lose value. No bank guarantee.

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the fund's shares or determined whether this prospectus
is complete or accurate. To state otherwise is a crime.
<PAGE>
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------------------------
Mitchell Hutchins LIR Select Money Fund

Contents
THE FUND

What every investor 3 Investment Objective, Strategies and Risks
should know about 4 Performance
the fund 5 Expenses and Fee Tables
6 More About Risks and Investment
Strategies

YOUR INVESTMENT

-------------------------------------------------------------------------------
Information for 7 Managing Your Fund Account
managing your fund --Buying Shares
account --Selling Shares
--Exchanging Shares
-- Additional Information About
Your Account
--Pricing and Valuation

ADDITIONAL INFORMATION

-------------------------------------------------------------------------------

Additional important 10 Management
information about 11 Dividends and Taxes
the fund 12 Financial Highlights

-------------------------------------------------------------------------------
Where to learn more Back Cover
about the fund
</TABLE>

The fund is not a complete or
balanced investment program.

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Prospectus Page 2
<PAGE>
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Mitchell Hutchins LIR Select Money Fund

MITCHELL HUTCHINS LIR SELECT MONEY FUND
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

--------------------------------------------------------------------------------

FUND OBJECTIVE

Maximum current income consistent with liquidity and the preservation of
capital.

PRINCIPAL INVESTMENT STRATEGIES

The fund is a money market fund and seeks to maintain a stable price of $1.00
per share. The fund invests in a diversified portfolio of high quality money
market instruments of governmental and private issuers.

Money market instruments are short-term debt obligations and similar securities.
They also include longer term bonds that have variable interest rates or other
special features that give them the financial characteristics of short-term
debt. The fund invests in foreign money market instruments only if they are
denominated in U.S. dollars.

Mitchell Hutchins Asset Management Inc., the fund's investment adviser, selects
money market instruments for the fund based on its assessment of relative values
and changes in market and economic conditions. Mitchell Hutchins considers
safety of principal and liquidity in selecting securities for the fund and thus
may not buy securities that pay the highest yield.

PRINCIPAL RISKS

An investment in the fund is not a bank deposit and is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. While the fund seeks to maintain the value of your investment at $1.00
per share, you may lose money by investing in the fund. Money market instruments
generally have a low risk of loss, but they are not risk-free. The principal
risks presented by the fund are:

- CREDIT RISK -- Issuers of money market instruments may fail to make payments
when due, or they may become less willing or less able to do so.

- INTEREST RATE RISK -- The value of the fund's investments generally will fall
when short-term interest rates rise, and its yield will tend to lag behind
prevailing rates.

- FOREIGN INVESTING RISK -- The value of the fund's investments in foreign
securities may fall due to adverse political, social and economic developments
abroad. However, because the fund's foreign investments must be denominated in
U.S. dollars, it generally is not subject to the risk of changes in currency
valuations.

More information about risks of an investment in the fund is provided below in
"More About Risks and Investment Strategies."

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Prospectus Page 3
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Mitchell Hutchins LIR Select Money Fund

PERFORMANCE

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RISK/RETURN BAR CHART AND TABLE

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Institutional shares because they have a longer performance
history than Financial Intermediary shares.

The table that follows the bar chart shows the average annual returns over
several time periods for the fund's shares.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

TOTAL RETURN ON INSTITUTIONAL SHARES (1999 IS THE FUND'S FIRST FULL CALENDAR
YEAR OF OPERATIONS)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999 5.22%
</TABLE>

Total return January 1 to June 30, 2000--3.03%

Best quarter during years shown: 4th quarter, 1999--1.38%

Worst quarter during years shown: 2nd quarter, 1999--1.22%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1999

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES FINANCIAL INTERMEDIARY SHARES
(INCEPTION DATE) (8/10/98) (12/29/98)*
---------------- -------------------- -----------------------------
<S> <C> <C>
One Year................................................ 5.22% N/A
Life of Class........................................... 5.32% N/A
</TABLE>

---------

<TABLE>
<C> <S>
* Financial Intermediary shares have been outstanding only for
short periods since inception. Performance for Financial
Intermediary shares would be lower because of the 0.25%
shareholder servicing fee paid by those shares.
</TABLE>

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Prospectus Page 4
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Mitchell Hutchins LIR Select Money Fund

EXPENSES AND FEE TABLES

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FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.

SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES* (expenses that are deducted from fund assets)

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES FINANCIAL INTERMEDIARY SHARES
-------------------- -----------------------------
<S> <C> <C> <C> <C>
Management Fees............................... 0.18% 0.18%
Distribution and/or Service (12b-1) Fees...... 0.00% 0.00%
Other Expenses
Shareholder Servicing Fee................... 0.00% 0.25%
Miscellaneous Expenses...................... 0.00% 0.00%
---- ----
0.00% 0.25%
---- ----
Total Annual Fund Operating Expenses.......... 0.18% 0.43%
==== ====
</TABLE>

---------

*Mitchell Hutchins has agreed to waive 0.03% of its management fee from May 1,
2000 through January 31, 2001, so that the effective total fund operating
expenses during that period will be 0.15% for Institutional shares and 0.40%
for Financial Intermediary shares.

EXAMPLE

This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

This example assumes that you invest $10,000 in the fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Institutional shares........................................ $18 $ 58 $101 $230
Financial Intermediary shares............................... 44 138 241 542
</TABLE>

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Prospectus Page 5
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Mitchell Hutchins LIR Select Money Fund

MORE ABOUT RISKS AND INVESTMENT STRATEGIES

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PRINCIPAL RISKS

The main risks of investing in the fund are described below. Other risks of
investing in the fund, along with further detail about some of the risks
described below, are discussed in the fund's Statement of Additional Information
("SAI"). Information on how you can obtain the SAI is on the back cover of this
prospectus.

CREDIT RISK. Credit risk is the risk that the issuer of a money market
instrument will not make principal or interest payments when they are due. Even
if an issuer does not default on a payment, a money market instrument's value
may decline if the market believes that the issuer has become less able, or less
willing, to make payments on time. Even the highest quality money market
instruments are subject to some credit risk.

INTEREST RATE RISK. The value of money market instruments generally can be
expected to fall when short-term interest rates rise and to rise when short-
term interest rates fall. Interest rate risk is the risk that interest rates
will rise, so that the value of the fund's investments will fall. Also, the
fund's yield will tend to lag behind changes in prevailing short-term interest
rates. This means that the fund's income will tend to rise more slowly than
increases in short-term interest rates. Similarly, when short-term interest
rates are falling, the fund's income generally will tend to fall more slowly.

FOREIGN INVESTING RISK. Foreign investing involves risks relating to political,
social and economic developments abroad to a greater extent than investing in
the securities of U.S. issuers. In addition, there are differences between U.S.
and foreign regulatory requirements and market practices.

ADDITIONAL INVESTMENT STRATEGIES

Like all money market funds, the fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable price of
$1.00 per share. In addition, Mitchell Hutchins may use a number of professional
money management techniques to respond to changing economic and money market
conditions and to shifts in fiscal and monetary policy. These techniques include
varying the fund's composition and weighted average maturity based upon its
assessment of the relative values of various money market instruments and future
interest rate patterns. Mitchell Hutchins also may buy or sell money market
instruments to take advantage of yield differences.

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Prospectus Page 6
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Mitchell Hutchins LIR Select Money Fund

MANAGING YOUR FUND ACCOUNT

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BUYING SHARES
The fund accepts the settlement of purchase orders only in available federal
funds. Federal funds are funds deposited by a commercial bank in an account at a
Federal Reserve Bank that can be transferred to a similar account of another
bank in one day and thus may be made immediately available to the fund through
its custodian.

The fund offers two separate classes of shares--Institutional shares and
Financial Intermediary shares--as an economical and convenient means for
institutions to invest short-term funds that they hold for their own account or
hold or manage for others.

- You may buy Institutional shares if you are an institutional investor.
PaineWebber Incorporated, the distributor of the fund's shares, may, in its
discretion, make Institutional shares available to individuals or other
entities.

- You may buy Financial Intermediary shares only if you are a bank or other
financial intermediary buying the shares for the benefit of your customers.
Financial Intermediary shares bear special fees (paid by the fund) at the
annual rate of 0.25% of average net assets for services that these financial
intermediaries provide to the beneficial owners of the Financial Intermediary
shares.

Unless you specify otherwise, the fund will treat all purchase orders as orders
for Institutional shares.

You may buy fund shares by calling the fund's transfer agent, PFPC Inc., at
1-888-LIR-FUND and speaking to a representative. You may also buy fund shares by
contacting your Financial Advisor at PaineWebber or its correspondent firms, who
are then responsible for sending the order to the transfer agent. The
availability of fund shares to customers of PaineWebber's correspondent firms
may vary depending on the arrangements between PaineWebber and those firms.

You buy shares at the net asset value next determined after receipt and
acceptance of your purchase order by the transfer agent, subject to the fund
receiving payment the same day. Your purchase order will be effective only if
you wire payment in federal funds on the same business day that you place your
order, and your wire must actually be credited to the fund's bank account by a
Federal Reserve Bank that day. Otherwise, the order will be rejected. A business
day is any day that the fund's custodian, the fund's transfer agent and
PaineWebber are open for business.

Orders to buy shares of the fund received before noon (Eastern time) will
normally be executed as of noon (Eastern time). Orders received after noon
(Eastern time) but before 2:30 p.m. (Eastern time) will normally be executed as
of 2:30 p.m. (Eastern time). Orders received after 2:30 p.m. (Eastern time) but
before 5:00 p.m. (Eastern time) will normally be executed as of
5:00 p.m.(Eastern time).

The fund reserves the right to advance the time by which orders to buy or sell
its shares must be received by the transfer agent. The fund may do this when the
primary government securities dealers are either closed for business or close
early, or trading in money market instruments is limited due to national
holidays. For example, the fund may advance the time by which orders to buy or
sell its shares must be received by the transfer agent on any day that the New
York Stock Exchange ("NYSE") closes early because trading has been halted for
the day or The Bond Market Association ("BMA")(formerly known as the Public
Securities Association or "PSA") recommends that the securities markets close
early. Frequently, markets close on the afternoon of a business day prior to a
national holiday. Of course, if the fund's usual deadline for receipt by the
transfer agent of orders to buy or sell its shares is earlier than the time at
which markets close, the fund expects to follow its normal schedule. Investors
may call toll-free 1-888-LIR-Fund to inquire whether the fund intends to close
early on a given day.

The fund and PaineWebber reserve the right to reject a purchase order or suspend
the offering of fund shares. PaineWebber may return without notice money wired
to the fund where the investor fails to place a corresponding share purchase
order.

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Prospectus Page 7
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Mitchell Hutchins LIR Select Money Fund

WIRE INSTRUCTIONS:

Instruct your bank to transfer federal funds by wire to:

Mitchell Hutchins Institutional Funds
c/o The Bank of New York
CR DDA A/C # 8900337516
FFC PW A/C #
[INSERT PAINEWEBBER ACCOUNT NAME AND ACCOUNT NUMBER]
LIR Select Money Fund
ABA #021000018

PaineWebber or an investor's bank may impose a service charge for wire
transfers.

<TABLE>
<CAPTION>
MINIMUM INVESTMENTS:
<S> <C>
To open an account..... $10,000,000
To add to an account... $ 100,000
</TABLE>

PaineWebber may waive these minimums. The fund may change its minimum investment
requirements at any time. Investments must be denominated in U.S. dollars.

If your account balance has fallen below $10,000,000, your purchase order to add
to the account will be accepted only if the account balance will be at least
$10,000,000 after that purchase.

Financial intermediaries may establish different minimums for their customers
who purchase Financial Intermediary shares through them, provided that the
aggregate amounts purchased meet the above minimums. You may obtain additional
information about these minimums from your financial intermediary.

REMOTE TRADE ENTRY

The fund may offer an electronic trade order entry (RTE) capability to eligible
institutional investors who meet certain conditions. For more information on
this option, contact your Financial Advisor or the transfer agent at
1-888-LIR-FUND.

SELLING SHARES

You may sell your shares by calling the transfer agent at 1-888-LIR FUND and
speaking with a representative. You may also sell your shares by contacting your
Financial Advisor or correspondent firm (if you previously designated them to
give instructions to the transfer agent on your behalf); they are then
responsible for sending the order to the transfer agent.

Orders to sell fund shares received before noon (Eastern time) will normally be
executed as of noon (Eastern time). Orders received after noon (Eastern time)
but before 2:30 p.m. (Eastern time) will normally be executed as of 2:30 p.m.
(Eastern time). Orders received after 2:30 p.m. (Eastern time) and before
5:00 p.m. (Eastern time) will normally be executed as of 5:00 p.m. (Eastern
time).

As noted above under "Buying Shares," the fund may advance the time for the
transfer agent's receipt of orders to sell shares (E.G., days on which
securities markets close early prior to a national holiday).

Your sales proceeds will be paid in federal funds wired to one or more accounts
you have designated, normally on the business day the sale order is accepted. If
you sell all the shares you own, dividends accrued for the month to date will be
paid in federal funds and wired at the same time to the bank account(s) that you
designate.

If the transfer agent receives your order to sell shares late in the day, it
will process your order and initiate a wire. However, your bank account may not
receive the proceeds that day if a Federal Reserve Bank is experiencing delay in
transfer of funds. Neither the fund, PaineWebber nor the transfer agent is
responsible for the performance of your bank or any of its intermediaries.

The transfer agent will process your orders to sell shares only if you have on
file with it a properly completed account application, with signature guaranteed
or other authentication acceptable to the transfer agent. The account
application requires you to designate the bank account(s) or PaineWebber account
for wiring sales proceeds. You must submit any change in the designated
account(s) for sale proceeds in a form acceptable to the transfer agent. The
transfer agent will not place the sales order if the information you provide
does not correspond to the information on your application.

If you have additional questions on selling shares you should contact your
Financial Advisor or call the transfer agent at 1-888-LIR-FUND.

EXCHANGING SHARES

You may exchange shares of the fund for shares of the same class of any of the
Liquid Institutional Reserves funds--Money Market Fund, Government Securities
Fund and Treasury Securities Fund. Those funds all have higher total operating
expenses than the fund, but lower minimums for initial and subsequent purchases.

You can place an exchange order by calling the transfer agent at 1-888-LIR FUND
and speaking with a representative. You also can place an order through a
PaineWebber Financial Advisor or correspondent firm (if you previously
designated them to give instructions

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Prospectus Page 8
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Mitchell Hutchins LIR Select Money Fund

to the transfer agent on your behalf), who is then responsible for sending the
order to the transfer agent. You may exchange Financial Intermediary shares only
if you are a bank or other financial intermediary exchanging the shares for the
benefit of your customers.

Your exchange order must be received by 2:30 p.m. (Eastern time) to be effective
on that business day. Exchange orders received after that time will not be
executed, and you will have to place an exchange order before that time on the
following business day if you still wish to effect an exchange.

If you exchange all your fund shares, the dividends accrued on those shares for
the month to date will be invested in the shares of the other fund into which
the exchange is made.

Shareholders making their initial purchase of another fund through an exchange
should allow more time and must provide the transfer agent with a properly
completed account application for the new fund. These exchange orders should be
received by the transfer agent at least one half hour before the previously
mentioned deadlines to allow the transfer agent sufficient time to establish an
account in the new fund in the investor's name. Otherwise, the transfer agent
may not be able to effect the exchange.

If the total investment in your account has been less than $10,000,000 for 30
consecutive days, the fund may exchange your shares for shares of Liquid
Institutional Reserves--Money Market Fund unless you elected in your account
application to have the shares sold and the proceeds paid to you in federal
funds wired to your designated account.

The fund may modify or terminate the exchange privilege at any time.

ADDITIONAL INFORMATION ABOUT YOUR ACCOUNT

FINANCIAL INTERMEDIARY SHARES. Financial intermediaries buying or holding
shares for their customer accounts may charge those customers for cash
management and other services provided in connection with their account. These
charges may include account maintenance fees, compensating balance requirements
or fees based on account transactions, assets or income. The dividends payable
to the financial intermediaries' customers, who are the beneficial owners of the
shares, will be lower than those on Institutional shares by the amount of the
fees paid by the fund for shareholder services. A customer should consider the
terms of his account with a financial intermediary before purchasing shares.

A financial intermediary buying or selling shares for its customers is
responsible for transmitting orders to the transfer agent in accordance with its
customer agreements and the procedures noted above.

INSTITUTIONAL SHARES. PaineWebber or Mitchell Hutchins (not the fund) may pay
shareholder servicing fees to financial institutions that make Institutional
shares available to their customers. The amount of these fees will be negotiated
between PaineWebber or Mitchell Hutchins and the financial institution.

PRICING AND VALUATION

The price of fund shares is based on net asset value and is determined
separately for each class of shares. The net asset value is the total value of
the fund divided by the total number of shares outstanding. In determining net
asset value, the fund values its securities at their amortized cost. This method
uses a constant amortization to maturity of the difference between the cost of
the instrument to the fund and the amount due at maturity. The fund's net asset
value per share is expected to be $1.00, although this value is not guaranteed.

The fund's net asset value is normally determined three times each business day:

- noon (Eastern time),

- 2:30 p.m. (Eastern time) and

- 5:00 p.m. (Eastern time).

Your price for buying or selling shares will be the net asset value that is next
calculated after the fund accepts your order.

On any day that the fund determines to advance the time by which orders to buy
or sell its shares must be received by the transfer agent as described above
under "Buying Shares," the time for determination of the fund's net asset value
per share will be as of the same time the fund has determined to cease accepting
orders to buy or sell its shares. The fund will not price its shares again on
that business day, even though it normally prices its shares more than once each
business day.

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Prospectus Page 9
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Mitchell Hutchins LIR Select Money Fund

MANAGEMENT

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INVESTMENT ADVISER

Mitchell Hutchins is the investment adviser and administrator of the fund, and
is located at 51 West 52nd Street, New York, New York, 10019-6114. Mitchell
Hutchins is a wholly owned asset management subsidiary of PaineWebber
Incorporated. PaineWebber is the distributor of the fund's shares and is located
at 1285 Avenue of the Americas, New York, New York 10019-6028. PaineWebber is
wholly owned by Paine Webber Group Inc. ("PW Group"), a publicly owned financial
services holding company. On July 31, 2000, Mitchell Hutchins was the adviser or
sub-adviser of 31 investment companies with 75 separate portfolios and aggregate
assets of approximately $53.3 billion.

On July 12, 2000, PW Group and UBS AG ("UBS") announced that they had entered
into an agreement and plan of merger under which PW Group will merge into a
wholly owned subsidiary of USB. If all required approvals are obtained and the
required conditions are satisfied, PW Group and UBS expect to complete the
transaction in the fourth quarter of 2000. UBS, with headquarters in Zurich,
Switzerland, is an internationally diversified organization with operations in
many areas of the financial services industry.

MANAGEMENT FEES

Mitchell Hutchins' contract fee for the management services it provides to the
fund is at the annual rate of 0.18% of the fund's average daily net assets.
During the fiscal year ended April 30, 2000, Mitchell Hutchins waived part of
this fee so that the fund paid management fees to Mitchell Hutchins at the
effective annual rate of 0.14% of its average daily net assets.

In exchange for this fee, Mitchell Hutchins has agreed to bear all expenses of
the fund other than the management fees, shareholder service fees paid for
Financial Intermediary shares, interest, taxes, extraordinary costs and the cost
of securities purchased and sold by the fund, including any transaction costs.
Although Mitchell Hutchins is not obligated to pay the fees and expenses of the
fund's independent trustees, it is contractually obligated to reduce its
management fee in an amount equal to those fees and expenses. Mitchell Hutchins
estimates that these fees and expenses will be less than 0.01% of the fund's
average net assets.

Mitchell Hutchins has agreed to waive 0.03% of its management fees from May 1,
2000 through January 31, 2001, so that the effective management fees during that
period will be 0.15% of average daily net assets.

OTHER INFORMATION

The fund will maintain a rating from one or more rating agencies that provide
ratings on money market funds. There can be no assurance that the fund will
maintain any particular rating or maintain it with a particular rating agency.

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Prospectus Page 10
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Mitchell Hutchins LIR Select Money Fund

DIVIDENDS AND TAXES

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DIVIDENDS

The fund declares dividends daily and pays them monthly. Dividends are paid on
the last business day of a month or upon the sale of all the fund shares in a
shareholder's account.

The fund distributes any net short-term capital gain annually and anticipates
that any short-term capital gain distribution would be declared during the month
of December in a given year. The fund may make more frequent distributions if
necessary to maintain its share price at $1.00.

Shares earn dividends on the day they are purchased but do not earn dividends on
the day they are sold.

Dividends on Financial Intermediary shares will be lower than dividends on
Institutional shares because of the higher expenses borne by Financial
Intermediary shares.

You will receive dividends in additional shares of the same class unless you
elect to have the dividends transmitted by federal funds wire to either a
designated bank account or PaineWebber account. You must notify the transfer
agent in writing in a form acceptable to the transfer agent at least two
business days prior to the end of the month if you wish to change this election
for a particular monthly dividend.

TAXES

The dividends that you receive from the fund generally are subject to federal
income tax regardless of whether you receive them in additional fund shares or
in cash. If you hold fund shares through a tax-exempt account or plan, such as
an IRA or 401(k) plan, dividends on your shares generally will not be subject to
tax.

The fund expects that its dividends will be taxed as ordinary income. The fund
will tell you annually how you should treat its dividends for tax purposes. You
should not recognize any capital gain on the sale of your shares so long as the
fund maintains a share price of $1.00.

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Prospectus Page 11
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Mitchell Hutchins LIR Select Money Fund

FINANCIAL HIGHLIGHTS

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The following financial highlights table is intended to help you understand the
fund's financial performance since it commenced operations on August 10, 1998.
Certain information reflects financial results for a single fund share. In the
table, "total investment return" represents the rate that an investor would have
earned on an investment in the fund (assuming reinvestment of all dividends).

The information in the financial highlights has been audited by Ernst & Young
LLP independent auditors, whose report, along with the fund's financial
statements, is included in the fund's annual report to shareholders. The annual
report may be obtained without charge by calling 1-888-LIR-FUND.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES FINANCIAL INTERMEDIARY SHARES(2)
----------------------------------- ----------------------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FOR THE AUGUST 10, 1998+ NOVEMBER 4, 1999++ DECEMBER 29, 1998+
YEAR ENDED TO TO TO
APRIL 30, 2000 APRIL 30, 1999 MARCH 6, 2000 FEBRUARY 9, 1999
--------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of
period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- -------
Net investment
income.............. 0.054 0.037 0.018 0.006
Dividends from net
investment income... (0.054) (0.037) (0.018) (0.006)
---------- ---------- ---------- -------
Net asset value, end
of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== =======
Total investment
return(1)........... 5.54% 3.81% 1.84% 0.57%
========== ========== ========== =======
Ratios/Supplemental
Data:
Net assets, end of
period (000's)...... $2,290,822 $1,322,807 -- --
Expenses to average
net assets net of
waivers from
adviser............. 0.14% 0.07%* 0.40%* 0.32%*
Expenses to average
net assets before
waivers from
adviser............. 0.18% 0.18%* 0.43%* 0.43%*
Net investment income
to average net
assets net of
waivers from
adviser............. 5.48% 5.06%* 5.11%* 4.81%*
Net investment income
to average net
assets before
waivers from
adviser............. 5.44% 4.95%* 5.08%* 4.70%*
</TABLE>

---------

<TABLE>
<C> <S>
+ Issuance of shares
++ Reissuance of shares
* Annualized
(1) Total investment return is calculated assuming a $1,000
investment on the first day of the period reported,
reinvestment of all dividends and distributions at net asset
value on the payable dates, and a sale at net asset value on
the last day of the period reported. Total investment return
for periods of less than one year has not been annualized.
(2) At March 6, 2000 and February 9, 1999, there were no longer
any Financial Intermediary shares outstanding. Any further
subscriptions of such shares would be at a $1.00 per share.
</TABLE>

--------------------------------------------------------------------------------
Prospectus Page 12
<PAGE>

Ticker Symbol: Institutional Shares SELXX

If you want more information about the fund, the
following documents are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the fund's investments is available in the
fund's annual and semi-annual reports to shareholders.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI provides more detailed information about the fund and is incorporated
by reference into this prospectus.

You may discuss your questions about the fund by contacting your Financial
Advisor. You may obtain free copies of annual and semi-annual reports and the
SAI by contacting the fund directly at 1-888-LIR-FUND.

You may review and copy information about the fund, including shareholder
reports and the SAI, at the Public Reference Room of the Securities and
Exchange Commission. You may obtain information about the operations of the
SEC's Public Reference Room by calling the SEC at 1-202-942-8090. You can get
copies of information about the fund:

- For a fee, by electronic request at [email protected] or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102; or

- Free, from the EDGAR Database on the SEC's Internet website at
http://www.sec.gov.

Mitchell Hutchins LIR Money Series
-- Mitchell Hutchins LIR Select Money Fund
Investment Company Act File No. 811-8767

MITCHELL HUTCHINS
LIR SELECT MONEY FUND

PROSPECTUS

SEPTEMBER 1, 2000

<PAGE>
LIR Cash Reserves Fund

----------------------------

PROSPECTUS
SEPTEMBER 1, 2000

----------------------------

This prospectus offers shares of a money market fund primarily to eligible
benefit plans that participate in the PaineWebber ACCESS-SM- program, but only
if Mitchell Hutchins or an affiliate does not serve as investment manager for
the plan. The fund may be made available to clients in other programs in the
future.

Contents
THE FUND

What every investor 3 Investment Objective,
should know about Strategies and Risks
the fund 3 Performance
4 Expenses and Fee Tables
5 More About Risks and Investment
Strategies

YOUR INVESTMENT
------------------------------------------------------------------

Information for 6 Managing Your Fund Account
managing your fund --Buying Shares
account --Selling Shares
--Pricing and Valuation

ADDITIONAL INFORMATION
------------------------------------------------------------------

Additional important 8 Management
information about 9 Dividends and Taxes
the fund 10 Financial Highlights
------------------------------------------------------------------

Where to learn more Back Cover
about the fund
</TABLE>

The fund is not a complete or
balanced investment program.

--------------------------------------------------------------------------------
2
<PAGE>
--------------------------------------------------------------------------------
LIR Cash Reserves Fund

LIR CASH RESERVES FUND
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
---------------------------------------------

FUND OBJECTIVE

To provide as high a level of current interest income as is consistent with
maintaining liquidity and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES

PRINCIPAL RISKS

- CREDIT RISK -- Issuers of money market instruments may fail to make payments
when due, or they may become less willing or less able to do so.

- INTEREST RATE RISK -- The value of the fund's investments generally will fall
when short-term interest rates rise, and its yield will tend to lag behind
prevailing rates.

More information about risks of an investment in the fund is provided below in
"More About Risks and Investment Strategies."

PERFORMANCE

The fund commenced operations on February 14, 2000. As a result, it does not
have performance information of at least one calendar year to include in a bar
chart or table reflecting average annual returns. You can obtain some
information as to how the fund has performed by requesting a copy of its annual
report or by speaking with your Financial Advisor.

--------------------------------------------------------------------------------
3
<PAGE>
--------------------------------------------------------------------------------
LIR Cash Reserves Fund

EXPENSES AND FEE TABLES
---------------------------------------------

FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.

SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)

<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % of
offering price)........................................... None
Maximum Deferred Sales Charge (Load) (as a % of offering
price).................................................... None
Redemption Fees............................................. None
Exchange Fees............................................... None
</TABLE>

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from the fund as a
percentage of average net assets)

<TABLE>
<S> <C>
Management Fees............................................. 0.33%
Distribution and/or Service (12b-1) Fees.................... None
Other Expenses*............................................. 0.20%
-----
Total Annual Fund Operating Expenses........................ 0.53%
=====
Expense Reimbursements/Management Fee Waivers**............. 0.06%
-----
Net Expenses**.............................................. 0.47%
=====
</TABLE>

---------

* Other expenses are based on estimated amounts for the current fiscal year.
** The fund and Mitchell Hutchins have entered into a written expense
reimbursement/management fee waiver agreement. Mitchell Hutchins is
contractually obligated to reimburse fund expenses to the extent that the
fund's expenses through the end of the fund's first three fiscal years
otherwise would exceed the "Net Expenses" rate shown above. The fund has
agreed to repay Mitchell Hutchins for those reimbursed expenses if the fund
can do so over the following three years without causing its expenses in
any of those years to exceed the "Net Expenses" rate. Mitchell Hutchins is
also contractually obligated to waive 0.04% of its 0.33% management fee
through the end of the fund's first three fiscal years.

EXAMPLE

This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$48 $151
</TABLE>

--------------------------------------------------------------------------------
4
<PAGE>
--------------------------------------------------------------------------------
LIR Cash Reserves Fund

MORE ABOUT RISKS
AND INVESTMENT STRATEGIES
---------------------------------------------

PRINCIPAL RISKS

ADDITIONAL INVESTMENT STRATEGIES

Like all money market funds, the fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable price of
$1.00 per share. The fund's investment strategies are designed to comply with
these requirements.

Mitchell Hutchins may use a number of professional money management techniques
to respond to changing economic and money market conditions and to shifts in
fiscal and monetary policy. These techniques include varying the fund's
composition and weighted average maturity based upon its assessment of the
relative values of various money market instruments and future interest rate
patterns. Mitchell Hutchins also may buy or sell money market instruments to
take advantage of yield differences.

--------------------------------------------------------------------------------
5
<PAGE>
--------------------------------------------------------------------------------
LIR Cash Reserves Fund

MANAGING YOUR FUND ACCOUNT

---------------------------------------------

BUYING SHARES
THE FUND OFFERS ITS SHARES PRIMARILY TO ELIGIBLE BENEFIT PLANS, INCLUDING
INDIVIDUAL RETIREMENT ACCOUNTS, THROUGH BROKERAGE ACCOUNTS ESTABLISHED AS
ELIGIBLE BENEFIT PLAN SWEEP ACCOUNTS AT PAINEWEBBER INCORPORATED OR MITCHELL
HUTCHINS. THE TYPES OF ELIGIBLE BENEFIT PLANS THAT ARE PERMITTED TO BUY FUND
SHARES ARE DESCRIBED BELOW. YOU CAN OPEN AN ELIGIBLE BENEFIT PLAN SWEEP ACCOUNT
BY CONTACTING YOUR FINANCIAL ADVISOR.

Fund shares are currently available primarily to eligible benefit plans
participating in the PaineWebber ACCESS-SM- program if Mitchell Hutchins or an
affiliate does not serve as investment manager to the eligible benefit plan
(I.E., PaineWebber, Mitchell Hutchins or their affiliates do not exercise any
investment discretion over account assets). The fund may be made available to
other programs in the future.

BUYING SHARES AUTOMATICALLY

The fund is designed to automatically invest free credit cash balances (that is,
immediately available funds) held in your account in shares of the fund. If you
are eligible to buy fund shares, the fund will be offered as the money market
sweep fund for the automatic investment of free credit cash balances. You should
contact your Financial Advisor to determine if another money market fund is
available for your account. (Neither Mitchell Hutchins nor any affiliate may
recommend a specific money market fund for automatic investment of such account
balances.) All free cash credit balances of $1.00 or more in your brokerage
account are automatically invested in the fund on a daily basis for settlement
the next business day. These amounts include proceeds of securities sold in your
account. All remaining free cash credit balances under $1.00 are invested in
fund shares monthly. There is no sales charge or commission paid for the
automatic purchase of shares.

Your purchase of fund shares will be priced at the next determination of net
asset value on any business day after federal funds become available to the
fund. Federal funds are funds deposited by a commercial bank in an account at a
Federal Reserve Bank that can be transferred to a similar account of another
bank in one day and thus can be made immediately available to the fund. A
business day is any day that the Boston offices of the fund's custodian and the
New York City offices of Mitchell Hutchins are open for business.

The fund and Mitchell Hutchins reserve the right to reject a purchase order or
suspend the offering of fund shares.

The fund pays no sales commission, sales load, or distribution fees to the
principal underwriter and its affiliates, or any other person, in connection
with the sale of fund shares. Neither Mitchell Hutchins nor any affiliate
exercises any discretion with respect to the timing or frequency of the
automatic investment of free cash balances.

Please consult your Financial Advisor for more information about this automatic
purchase feature.

--------------------------------------------------------------------------------
6
<PAGE>
--------------------------------------------------------------------------------
LIR Cash Reserves Fund

BENEFIT PLANS ELIGIBLE TO BUY FUND SHARES

Eligible benefit plans that may buy fund shares include

- individual retirement accounts (E.G., traditional, rollover and "SIMPLE" IRAs)

- simplified employee pension plans

- cash or deferred arrangements (I.E., 401(k) plans, including SIMPLE 401(k)
plans)

- profit sharing plans

- money purchase plans

- defined benefit plans

- target benefit plans

- church plans

- government plans

- self-employed plans (I.E., "Keoghs")

Other benefit plans may be eligible to buy fund shares. Contact your Financial
Advisor for more information regarding these benefit plans.

Although the amount that you may contribute to an eligible benefit plan in any
one year is subject to certain limitations, you may invest and reinvest assets
already held in an eligible benefit plan in the fund without regard to these
limitations.

SELLING SHARES
Your fund shares will be sold automatically to settle any outstanding securities
purchases or debits to your brokerage account.

If the proceeds from selling your fund shares remain in the eligible benefit
plan sweep account, certain adverse tax consequences that may otherwise be
applicable to eligible benefit plan distributions will not occur.

ADDITIONAL INFORMATION

Investment programs buying or holding shares for their client accounts may
charge clients for cash management and other services provided in connection
with their accounts.

You should consider the terms of your investment program before purchasing
shares.

PRICING AND VALUATION

The price of fund shares is based on net asset value. The net asset value per
share is the total value of the fund divided by the total number of shares
outstanding. In determining net asset value, the fund values its securities at
their amortized cost. This method uses a constant amortization to maturity of
the difference between the cost of the instrument to the fund and the amount due
at maturity. The fund's net asset value per share is expected to be $1.00 per
share, although this value is not guaranteed. Your price for buying or selling
your shares will be the net asset value that is next calculated after the fund
accepts your order.

The fund calculates its net asset value per share twice each business day at
noon, Eastern time, and the close of regular trading on the New York Stock
Exchange (generally, 4:00 p.m., Eastern time), on days that the New York Stock
Exchange is open, except Columbus Day and Veterans Day.

--------------------------------------------------------------------------------
7
<PAGE>
--------------------------------------------------------------------------------
LIR Cash Reserves Fund

MANAGEMENT

---------------------------------------------

INVESTMENT ADVISER

Mitchell Hutchins is the investment adviser, principal underwriter and
administrator of the fund. Mitchell Hutchins is located at 51 West 52nd Street,
New York, New York 10019-6114. Mitchell Hutchins is a wholly owned asset
management subsidiary of PaineWebber Incorporated, which is wholly owned by
Paine Webber Group Inc. ("PW Group"), a publicly owned financial services
holding company. On July 31, 2000, Mitchell Hutchins managed approximately $68.8
billion in client assets with Mitchell Hutchins or PaineWebber as the adviser or
sub-adviser of 31 investment companies with 75 separate portfolios and aggregate
assets of approximately $53.3 billion.

On July 12, 2000, PW Group and UBS AG ("UBS") announced that they had entered
into an agreement and plan of merger under which PW Group will merge into a
wholly owned subsidiary of UBS. If all required approvals are obtained and the
required conditions are satisfied, PW Group and UBS expect to complete the
transaction in the fourth quarter of 2000. UBS, with headquarters in Zurich,
Switzerland, is an internationally diversified organization with operations in
many areas of the financial services industry.

ADVISORY FEES

The fund pays advisory and administration fees to Mitchell Hutchins at the
annual contract rate of 0.33% of its average daily net assets. Mitchell Hutchins
has agreed to waive 0.04% of its 0.33% management fee through the end of the
fund's first three fiscal years.

In addition to the advisory and administration fees paid to Mitchell Hutchins as
described above, the fund pays all expenses not assumed by Mitchell Hutchins as
investment adviser and administrator. These expenses include interest charges,
taxes, expenses of issue and redemption of shares, fees and expenses of
registering and qualifying the fund and its shares for distribution under
federal and state regulations, custodial fees, auditing and legal expenses,
expenses of determining net asset value of the fund's shares, reports to
shareholders, expenses of shareholder meetings, expenses of printing and mailing
prospectuses and proxy materials to existing shareholders, and its proportionate
share of insurance premiums and professional association dues or assessments.
See "Investment Advisory, Administration and Distribution Arrangements" in the
SAI.

--------------------------------------------------------------------------------
8
<PAGE>
--------------------------------------------------------------------------------
LIR Cash Reserves Fund

DIVIDENDS AND TAXES
---------------------------------------------

DIVIDENDS

The fund declares dividends daily and pays them monthly. The fund distributes
any net short-term capital gain annually, but may make more frequent
distributions if necessary to maintain its share price at $1.00 per share.

Your dividends will be reinvested in additional shares of the fund, unless you
elect to receive them in cash. Contact your Financial Advisor or your financial
services firm if you prefer to receive dividends in cash.

TAXES

Eligible benefit plan participants ordinarily do not pay taxes on dividends they
receive on fund shares until they withdraw the proceeds from the plan.

Generally, withdrawals from an eligible benefit plan will be taxable as ordinary
income. Withdrawals will be subject to an additional tax equal to 10% of the
amount distributed unless the withdrawals are used to pay certain higher
education expenses and certain acquisition costs of first-time home buyers or
are made after the participant:

- reaches age 59 1/2;

- becomes permanently disabled; or

- reaches at least age 55 and is separated from service of the employer who
sponsored the plan.

The failure of an eligible benefit plan to distribute sufficient income after a
participant reaches age 70 1/2 may be subject to an excise tax. Moreover,
certain contributions to an eligible benefit plan in excess of the amounts
permitted by law may be subject to an excise tax.

If you hold fund shares other than through a tax-exempt account or plan, the
dividends that you receive from the fund generally are subject to federal income
tax regardless of whether you receive them in additional fund shares or in cash.
For these shareholders, the fund expects that its dividends will be taxed as
ordinary income.

The fund notifies its shareholders following the end of each calendar year of
the amount of all dividends paid that year.

--------------------------------------------------------------------------------
9
<PAGE>
--------------------------------------------------------------------------------
LIR Cash Reserves Fund

FINANCIAL HIGHLIGHTS

---------------------------------------------

The following financial highlights table is intended to help you understand the
fund's financial performance since it commenced operations on February 14, 2000.
Certain information reflects financial results for a single fund share. In the
table, "total investment return" represents the rate that an investor would have
earned on an investment in the fund (assuming reinvestment of all dividends).

<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 14, 2000+
TO
APRIL 30, 2000
------------------
<S> <C>
Net asset value, beginning of period.... $ 1.000
--------
Net investment income................... 0.012
Dividends from net investment income.... (0.012)
--------
Net asset value, end of period.......... $ 1.000
========
Total investment return(1).............. 1.18%
========
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $270,406
Expenses to average net assets net of
waivers/reimbursements from adviser... 0.47%*
Expenses to average net assets before
waivers/reimbursements from adviser... 0.53%*
Net investment income to average net
assets net of waivers/reimbursements
from adviser.......................... 5.57%*
Net investment income to average net
assets before waivers/reimbursements
from adviser.......................... 5.51%*
</TABLE>

---------

+ Commencement of operations.
* Annualized.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of the period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of the period reported. Total investment return
for the period has not been annualized.

--------------------------------------------------------------------------------
10
<PAGE>

If you want more information about the fund, the following documents are
available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the fund's investments is available in its annual
and semi-annual reports to shareholders.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI provides more detailed information about the fund and is incorporated by
reference into this prospectus.

You may discuss your questions about the fund by contacting your Financial
Advisor. You may obtain free copies of the fund's annual and semi-annual reports
and its SAI by contacting the fund directly at 1-800-647-1568.

You may review and copy information about the fund, including the shareholder
reports and the SAI, at the Public Reference Room of the Securities and Exchange
Commission. You may obtain information about the operations of the SEC's Public
Reference Room by calling the SEC at 1-202-942-8090. You can get copies of
information about the fund:

- For a fee, by electronic request at [email protected] or by writing the SEC's
Public Reference Section, Washington, D.C. 20549-0102; or

- Free, from the EDGAR Database on the SEC's Internet website at:
http://www.sec.gov.

Mitchell Hutchins LIR Money Series
--LIR Cash Reserves Fund
Investment Company Act File No. 811-8767

LIR
CASH RESERVES FUND
Prospectus

-----------------------

September 1, 2000

<PAGE>
LIR Liquid Assets Fund

----------------------------

PROSPECTUS
SEPTEMBER 1, 2000

----------------------------

This prospectus offers shares of a money market fund primarily to eligible
benefit plans that participate in certain PaineWebber or Correspondent Services
Corporation investment programs and that have arrangements with Mitchell
Hutchins or an affiliate to serve as investment manager for the client or
investment program.

Contents
THE FUND

<TABLE>
<CAPTION>
------------------------------------------------------------------
<S> <C> <C>
What every investor 3 Investment Objective,
should know about Strategies and Risks
the fund 3 Performance
4 Expenses and Fee Tables
5 More About Risks and Investment
Strategies

YOUR INVESTMENT
------------------------------------------------------------------

Information for 6 Managing Your Fund Account
managing your fund --Buying Shares
account --Selling Shares
--Pricing and Valuation

ADDITIONAL INFORMATION
------------------------------------------------------------------

Additional important 8 Management
information about 9 Dividends and Taxes
the fund 10 Financial Highlights
------------------------------------------------------------------

Where to learn more Back Cover
about the fund
</TABLE>

The fund is not a complete or
balanced investment program.

--------------------------------------------------------------------------------
2
<PAGE>
--------------------------------------------------------------------------------
LIR Liquid Assets Fund

LIR LIQUID ASSETS FUND
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
---------------------------------------------

FUND OBJECTIVE

To provide as high a level of current interest income as is consistent with
maintaining liquidity and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES

PRINCIPAL RISKS

- CREDIT RISK -- Issuers of money market instruments may fail to make payments
when due, or they may become less willing or less able to do so.

- INTEREST RATE RISK -- The value of the fund's investments generally will fall
when short-term interest rates rise, and its yield will tend to lag behind
prevailing rates.

More information about risks of an investment in the fund is provided below in
"More About Risks and Investment Strategies."

PERFORMANCE

The fund commenced operations on February 14, 2000. As a result, it does not
have performance information of at least one calendar year to include a bar
chart or table reflecting average annual returns. You can obtain some
information as to how the fund has performed by requesting a copy of its annual
report or by speaking with your Financial Advisor.

--------------------------------------------------------------------------------
3
<PAGE>
--------------------------------------------------------------------------------
LIR Liquid Assets Fund

EXPENSES AND FEE TABLES
---------------------------------------------

FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.

SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets as a
percentage of average net assets)

<TABLE>
<S> <C>
Management Fees*............................................ 0.03%
Distribution and/or Service (12b-1) Fees.................... None
Other Expenses**............................................ 0.17%
-----
Total Annual Fund Operating Expenses........................ 0.20%
=====
</TABLE>

---------

* The fund reimburses Mitchell Hutchins for its direct costs and expenses
incurred in managing the fund's portfolio, which are included in
"Management Fees" above. The fund also reimburses Mitchell Hutchins for its
direct costs and expenses in administering the fund. Mitchell Hutchins'
direct costs for management and administration services exclude any costs
attributable to overhead or any profit charge. These fees are estimated
amounts. Mitchell Hutchins periodically will review fund expenses in an
effort to confirm that only direct costs and expenses are paid to Mitchell
Hutchins by the fund. See "Additional Information -- Management." Mitchell
Hutchins has decided to waive its entire management fees (0.03%) from the
fund so that the effective total fund operating expenses will be 0.17%.
Mitchell Hutchins may terminate this voluntary waiver at any time in the
future.
** Other expenses are based on estimated amounts for the current fiscal year.

EXAMPLE

This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$17 $61
</TABLE>

--------------------------------------------------------------------------------
4
<PAGE>
--------------------------------------------------------------------------------
LIR Liquid Assets Fund

MORE ABOUT RISKS
AND INVESTMENT STRATEGIES
---------------------------------------------

PRINCIPAL RISKS

ADDITIONAL INVESTMENT STRATEGIES

--------------------------------------------------------------------------------
5
<PAGE>
--------------------------------------------------------------------------------
LIR Liquid Assets Fund

MANAGING YOUR FUND ACCOUNT

---------------------------------------------

BUYING SHARES

THE FUND OFFERS ITS SHARES PRIMARILY TO ELIGIBLE BENEFIT PLANS, INCLUDING
INDIVIDUAL RETIREMENT ACCOUNTS, THROUGH BROKERAGE ACCOUNTS ESTABLISHED AS
ELIGIBLE BENEFIT PLAN SWEEP ACCOUNTS AT PAINEWEBBER INCORPORATED, MITCHELL
HUTCHINS OR CERTAIN OTHER FINANCIAL SERVICES FIRMS. THE TYPES OF ELIGIBLE
BENEFIT PLANS THAT ARE PERMITTED TO BUY FUND SHARES ARE DESCRIBED BELOW. YOU CAN
OPEN AN ELIGIBLE BENEFIT PLAN SWEEP ACCOUNT BY CONTACTING YOUR FINANCIAL
ADVISOR.

Fund shares are available primarily to eligible benefit plans that participate
in certain investment programs offered by PaineWebber or an affiliate and
managed by Mitchell Hutchins or an affiliate. The eligible investment programs
include:

- PaineWebber ACCESS-SM-;

- PaineWebber Managed Account Consulting (MAC) Wrap;

- PaineWebber Portfolio Management Program (PMP);

- PaineWebber SELECTIONS-SM-; and

- CSChoice-SM-.

The fund may be made available to other programs in the future.

The fund is designed primarily for eligible benefit plans that participate in
these programs where Mitchell Hutchins or an affiliate serves as investment
manager (I.E., PaineWebber, Mitchell Hutchins or an affiliate exercises
investment discretion with respect to account assets).

BUYING SHARES AUTOMATICALLY

The fund is designed to automatically invest free credit cash balances (that is,
immediately available funds) held in your account in shares of the fund for the
investment programs listed above. If you are eligible to buy fund shares, the
fund will be offered as the money market sweep fund for the automatic investment
of free credit cash balances. You should contact your Financial Advisor to
determine if another money market fund is available for your account. (Neither
your Financial Advisor, Mitchell Hutchins, nor any affiliate may recommend a
specific money market fund for automatic investment of such account balances.)
All free cash credit balances of $1.00 or more in your brokerage account are
automatically invested in the fund on a daily basis for settlement the next
business day. These amounts include proceeds of securities sold in your account.
All remaining free cash credit balances under $1.00 are invested in fund shares
monthly. There is no sales charge or commission paid for the automatic purchase
of shares.

The fund and Mitchell Hutchins reserve the right to reject a purchase order or
suspend the offering of fund shares.

--------------------------------------------------------------------------------
6
<PAGE>
--------------------------------------------------------------------------------
LIR Liquid Assets Fund

The fund pays no sales commission, sales load or distribution fees to the
principal underwriter and its affiliates, or any other person, in connection
with the sale of fund shares. Neither Mitchell Hutchins nor any affiliate
exercises any discretion with respect to the timing or frequency of the
automatic investment of free cash balances.

Please consult your Financial Advisor for more information about this automatic
purchase feature.

BENEFIT PLANS ELIGIBLE TO BUY FUND SHARES

Eligible benefit plans that may buy fund shares include

- individual retirement accounts (E.G., traditional, rollover and "SIMPLE" IRAs)

- simplified employee pension plans

- cash or deferred arrangements (I.E., 401(k) plans, including SIMPLE
401(k) plans)

- profit sharing plans

- money purchase plans

- defined benefit plans

- target benefit plans

- church plans

- government plans

- self-employed plans (I.E., "Keoghs")

Other benefit plans may be eligible to buy fund shares. Contact your Financial
Advisor for more information regarding these benefit plans.

SELLING SHARES

Your fund shares will be sold automatically to settle any outstanding securities
purchases or debits to your brokerage account.

ADDITIONAL INFORMATION

Investment programs buying or holding shares for their client accounts may
charge clients for cash management and other services provided in connection
with their accounts.

You should consider the terms of your investment program before purchasing
shares.

PRICING AND VALUATION

--------------------------------------------------------------------------------
7
<PAGE>
--------------------------------------------------------------------------------
LIR Liquid Assets Fund

MANAGEMENT

---------------------------------------------

INVESTMENT ADVISER

Mitchell Hutchins is the investment adviser and administrator of the fund, and
its principal underwriter. Mitchell Hutchins is located at 51 West 52nd Street,
New York, New York 10019-6114. Mitchell Hutchins is a wholly owned asset
management subsidiary of PaineWebber Incorporated, which is wholly owned by
Paine Webber Group Inc. ("PW Group"), a publicly owned financial services
holding company. On July 31, 2000, Mitchell Hutchins managed approximately
$ 68.8 billion in client assets with Mitchell Hutchins or PaineWebber as the
adviser or sub-adviser of 31 investment companies with 75 separate portfolios
and aggregate assets of approximately $53.3 billion.

ADVISORY FEES

The fund has agreed to pay advisory and administration fees to Mitchell Hutchins
that are limited to reimbursements for direct costs, excluding any profit or
overhead, for the expenses Mitchell Hutchins incurs pursuant to an agreement
with the fund. Mitchell Hutchins has advised the fund that it expects advisory
and administration fees to approximate an annual rate of 0.03% of the average
daily net assets of the fund for its initial fiscal year. These fees are
estimated amounts. Mitchell Hutchins periodically will review fund expenses in
an effort to confirm that only direct costs and expenses are paid to Mitchell
Hutchins by the fund.

Under the agreement with the fund, Mitchell Hutchins manages the investment
operations of the fund and also administers the fund's business affairs.
Mitchell Hutchins is entitled to be reimbursed by the fund for its direct
advisory and administrative costs and expenses, excluding any profit or
overhead, incurred in providing services to the fund. Mitchell Hutchins' costs
include the following: (i) paying the salaries and expenses of the fund's
officers and other personnel engaged in administering the fund's business;
(ii) monitoring financial and shareholder accounting services provided by the
fund's custodian and transfer agent, respectively; (iii) responding to
shareholder inquiries and disseminating information to shareholders;
(iv) monitoring compliance with the fund's registration statement and other
operating documents, with federal and state securities laws and
rules thereunder and with the Internal Revenue Code; (v) preparing semi-annual
and annual reports to shareholders; (vi) preparing filings required by the SEC;
(vii) assisting in the preparation of federal, state and local tax returns;
(viii) assisting with the payment of notice filing fees under state securities
laws; (ix) organizing annual and special meetings of the fund's shareholders;
and (x) paying any other costs and expenses Mitchell Hutchins incurs in managing
the portfolio of the fund. The fund will incur other expenses in its operations.
See "Investment Advisory, Administration and Distribution Arrangements" in the
SAI.

Mitchell Hutchins has decided to waive its entire management fees (0.03%) from
the fund. Mitchell Hutchins may terminate this voluntary waiver at any time in
the future.

--------------------------------------------------------------------------------
8
<PAGE>
--------------------------------------------------------------------------------
LIR Liquid Assets Fund

DIVIDENDS AND TAXES
---------------------------------------------

DIVIDENDS

TAXES

Eligible benefit plan participants ordinarily do not pay taxes on dividends they
receive on fund shares until they withdraw the proceeds from the plan.

- reaches age 59 1/2;

- becomes permanently disabled; or

- reaches at least age 55 and is separated from service of the employer who
sponsored the plan.

The failure of an eligible benefit plan to distribute sufficient income after a
participant reaches age 70 1/2 may be subject to an excise tax. Moreover,
certain contributions to a benefit plan in excess of the amounts permitted by
law may be subject to an excise tax.

The fund notifies its shareholders following the end of each calendar year of
the amount of all dividends paid that year.

--------------------------------------------------------------------------------
9
<PAGE>
--------------------------------------------------------------------------------
LIR Liquid Assets Fund

FINANCIAL HIGHLIGHTS

---------------------------------------------

This information in the financial highlights has been audited by Ernst & Young
LLP, independent auditors, whose report, along with the funds' financial
statements, is included in the fund's annual report to shareholders. The annual
report may be obtained without charge by calling 1-800-647-1568.

<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 14, 2000+
TO
APRIL 30, 2000
------------------
<S> <C>
Net asset value, beginning of period.... $ 1.000
--------
Net investment income................... 0.012
Dividends from net investment income.... (0.012)
--------
Net asset value, end of period.......... $ 1.000
========
Total investment return(1).............. 1.24%
========
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $326,125
Expenses to average net assets net of
waivers from adviser.................. 0.17%*
Expenses to average net assets before
waivers from adviser.................. 0.20%*
Net investment income to average net
assets net of waivers from adviser.... 5.89%*
Net investment income to average net
assets before waivers from adviser.... 5.86%*
</TABLE>

---------

--------------------------------------------------------------------------------
10
<PAGE>

If you want more information about the fund, the following documents are
available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the fund's investments is available in its annual
and semi-annual reports to shareholders.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI provides more detailed information about the fund and is incorporated by
reference into this prospectus.

- For a fee, by electronic request at [email protected] or by writing the SEC's
Public Reference Section, Washington, D.C. 20549-0102; or

- Free, from the EDGAR Database on the SEC's Internet website at:
http://www.sec.gov.

Mitchell Hutchins LIR Money Series
-- LIR Liquid Assets Fund
Investment Company Act File No. 811-8767

LIR
LIQUID ASSETS FUND
Prospectus
-----------------------

September 1, 2000

<PAGE>

MITCHELL HUTCHINS LIR SELECT MONEY FUND

51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6114

STATEMENT OF ADDITIONAL INFORMATION

Mitchell Hutchins LIR Select Money Fund is a professionally managed
money market fund. The Fund is a diversified series of Mitchell Hutchins LIR
Money Series ("Trust") an open-end investment company.

The fund's investment adviser and administrator is Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins"), a wholly owned asset management
subsidiary of PaineWebber Incorporated ("PaineWebber").
PaineWebber is the fund's distributor.

Portions of the fund's Annual Report to Shareholders are incorporated
by reference into this Statement of Additional Information ("SAI"). The Annual
Report accompanies this SAI. You may obtain an additional copy of the Annual
Report without charge by calling toll-free 1-888-LIR-FUND.

This SAI is not a prospectus and should be read only in conjunction
with the fund's current Prospectus, dated September 1, 2000. A copy of the
Prospectus may be obtained by calling any PaineWebber Financial Advisor or
correspondent firm or by calling toll-free 1-888-LIR-FUND. Customers of banks
and other financial intermediaries that purchase the fund's Financial
Intermediary shares may obtain the Prospectus from their financial
intermediaries. This SAI is dated September 1, 2000.

<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
The Fund and Its Investment Policies................................... 2
The Fund's Investments, Related Risks and Limitations.................. 2
Organization of the Trust; Trustees and Officers; Principal Holders and
Management Ownership of Securities............................. 9
Investment Advisory, Administration and Distribution Arrangements...... 17
Portfolio Transactions................................................. 19
Additional Information Regarding Redemptions...................... 20
Valuation of Shares.................................................... 21
Performance Information................................................ 21
Taxes.................................................................. 23
Other Information...................................................... 24
Financial Statements................................................... 25
</TABLE>

<PAGE>

THE FUND AND ITS INVESTMENT POLICIES

The fund's investment objective may not be changed without shareholder
approval. Except where noted, the other investment policies of the fund may be
changed by its board without shareholder approval. As with other mutual funds,
there is no assurance that the fund will achieve its investment objective.

The fund's investment objective is to earn maximum current income
consistent with liquidity and the preservation of capital. The fund invests in
high quality money market instruments that have, or are deemed to have,
remaining maturities of 13 months or less. Money market instruments are
short-term debt-obligations and similar securities. They also include longer
term bonds that have variable interest rates or other special features that give
them the financial characteristics of short-term debt. These instruments include
(1) U.S. and foreign government securities, (2) obligations of U.S. and foreign
banks, (3) commercial paper and other short-term obligations of U.S. and foreign
corporations, partnerships and trusts and similar entities, (4) funding
agreements and other insurance company obligations, (5) repurchase agreements
regarding any of the foregoing and (6) investment company securities. The fund
maintains a dollar-weighted average portfolio maturity of 90 days or less.

The fund may invest in obligations (including certificates of deposit,
bankers' acceptances, time deposits and similar obligations) of U.S. and foreign
banks only if the institution has total assets at the time of purchase in excess
of $1.5 billion. The fund's investments in non-negotiable time deposits of these
institutions will be considered illiquid if they have maturities greater than
seven calendar days.

The fund may purchase only those obligations that Mitchell Hutchins
determines, pursuant to procedures adopted by the board, present minimal credit
risks and are "First Tier Securities" as defined in Rule 2a-7 under the
Investment Company Act of 1940, as amended ("Investment Company Act"). First
Tier Securities include U.S. government securities and securities of other
registered investment companies that are money market funds. Other First Tier
Securities are either (1) rated in the highest short-term rating category by at
least two nationally recognized statistical rating agencies ("rating agencies"),
(2) rated in the highest short-term rating category by a single rating agency if
only that rating agency has assigned the obligation a short-term rating, (3)
issued by an issuer that has received such a short-term rating with respect to a
security that is comparable in priority and security, (4) subject to a guarantee
rated in the highest short-term rating category or issued by a guarantor that
has received the highest short-term rating for a comparable debt obligation or
(5) unrated, but determined by Mitchell Hutchins to be of comparable quality.

The fund generally may invest no more than 5% of its total assets in
the securities of a single issuer (other than U.S. government securities),
except that the fund may invest up to 25% of its total assets in First Tier
Securities of a single issuer for a period of up to three business days. The
fund may purchase only U.S. dollar denominated obligations of foreign issuers.

The fund may invest up to 10% of its net assets in illiquid securities.
The fund may purchase securities on a when-issued or delayed delivery basis. The
fund may lend its portfolio securities to qualified broker-dealers or
institutional investors in an amount up to 33 1/3% of its total assets. The fund
may borrow from banks or through reverse repurchase agreements for temporary
purposes, but not in excess of 33 1/3% of its total assets. The costs
associated with borrowing may reduce the fund's net income. The fund may invest
in the securities of other investment companies.

THE FUND'S INVESTMENTS, RELATED RISKS AND LIMITATIONS

The following supplements the information contained in the Prospectus
and above concerning the fund's investments, related risks and limitations.
Except as otherwise indicated in the Prospectus or the SAI, the fund has
established no policy limitations on its ability to use the investments or
techniques discussed in these documents.

2
<PAGE>

New forms of money market instruments continue to be developed. The fund may
invest in these instruments to the extent consistent with its investment
objective.

YIELDS AND CREDIT RATINGS OF MONEY MARKET INSTRUMENTS. The yields on
the money market instruments in which the fund invests are dependent on a
variety of factors, including general money market conditions, conditions in the
particular market for the obligation, the financial condition of the issuer, the
size of the offering, the maturity of the obligation and the ratings of the
issue. The ratings assigned by rating agencies represent their opinions as to
the quality of the obligations they undertake to rate. Ratings, however, are
general and are not absolute standards of quality. Consequently, obligations
with the same rating, maturity and interest rate may have different market
prices.

Subsequent to its purchase by the fund, an issue may cease to be rated
or its rating may be reduced. If a security in the fund's portfolio ceases to be
a First Tier Security (as defined above) or Mitchell Hutchins becomes aware that
a security has received a rating below the second highest rating by any rating
agency, Mitchell Hutchins and, in certain cases, the fund's board, will consider
whether the fund should continue to hold the obligation. A First Tier Security
rated in the highest short-term category by a single rating agency at the time
of purchase that subsequently receives a rating below the highest rating
category from a different rating agency may continue to be considered a First
Tier Security.

U.S. GOVERNMENT SECURITIES include direct obligations of the U.S.
Treasury (such as Treasury bills, notes or bonds) and obligations issued or
guaranteed as to principal and interest (but not as to market value) by the U.S.
government, its agencies or its instrumentalities. These U.S. government
securities may include mortgage-backed securities issued or guaranteed by
government agencies or government-sponsored enterprises. Other U.S. government
securities may be backed by the full faith and credit of the U.S. government or
supported primarily or solely by the creditworthiness of the government-related
issuer or, in the case of mortgage-backed securities, by pools of assets.

U.S. government securities also include separately traded principal and
interest components of securities issued or guaranteed by the U.S. Treasury,
which are traded independently under the Separate Trading of Registered Interest
and Principal of Securities ("STRIPS") program. Under the STRIPS programs, the
principal and interest components are individually numbered and separately
issued by the U.S. Treasury.

COMMERCIAL PAPER AND OTHER SHORT-TERM OBLIGATIONS. Commercial paper,
includes short-term obligations issued by corporations, partnerships, trusts or
other entities to finance short-term credit needs. The fund also may purchase
other types of non-convertible debt obligations subject to maturity constraints
imposed by the Securities and Exchange Commission ("SEC"). Descriptions of
certain types of short-term obligations are provided below.

ASSET-BACKED SECURITIES. The fund may invest in securities that are
comprised of financial assets that have been securitized through the use of
trusts or special purpose corporations or other entities. Such assets may
include motor vehicle and other installment sales contracts, home equity loans,
leases of various types of real and personal property and receivables from
revolving credit (credit card) agreements or other types of financial assets.
Payments or distributions of principal and interest may be guaranteed up to a
certain amount and for a certain time period by a letter of credit or pool
insurance policy issued by a financial institution unaffiliated with the issuer,
or other credit enhancements may be present. See "The Fund's Investments,
Related Risks and Limitations -- Credit and Liquidity Enhancements."

3
<PAGE>

VARIABLE AND FLOATING RATE SECURITIES AND DEMAND INSTRUMENTS. The fund
may purchase variable and floating rate securities with remaining maturities in
excess of 13 months issued by U.S. government agencies or instrumentalities or
guaranteed by the U.S. government. In addition, the fund may purchase variable
and floating rate securities of other issuers. The yields on these securities
are adjusted in relation to changes in specific rates, such as the prime rate,
and different securities may have different adjustment rates. Certain of these
obligations carry a demand feature that gives the fund the right to tender them
back to a specified party, usually the issuer or a remarketing agent, prior to
maturity. The fund's investment in variable and floating rate securities must
comply with conditions established by the SEC under which they may be considered
to have remaining maturities of 13 months or less. The fund will purchase
variable and floating rate securities of non-U.S. government issuers that have
remaining maturities of more than 13 months only if the securities are subject
to a demand feature exercisable within 13 months or less. See "The Fund's
Investments, Related Risks and Limitations -- Credit and Liquidity
Enhancements."

Generally, the fund may exercise demand features (1) upon a default
under the terms of the underlying security, (2) to maintain its portfolio in
accordance with its investment objective and policies or applicable legal or
regulatory requirements or (3) as needed to provide liquidity to the fund in
order to meet redemption requests. The ability of a bank or other financial
institution to fulfill its obligations under a letter of credit, guarantee or
other liquidity arrangement might be affected by possible financial difficulties
of its borrowers, adverse interest rate or economic conditions, regulatory
limitations or other factors. The interest rate on floating rate or variable
rate securities ordinarily is readjusted on the basis of the prime rate of the
bank that originated the financing or some other index or published rate, such
as the 90-day U.S. Treasury bill rate, or is otherwise reset to reflect market
rates of interest. Generally, these interest rate adjustments cause the market
value of floating rate and variable rate securities to fluctuate less than the
market value of fixed rate securities.

VARIABLE AMOUNT MASTER DEMAND NOTES. The fund may invest in variable
amount master demand notes, which are unsecured redeemable obligations that
permit investment of varying amounts at fluctuating interest rates under a
direct agreement between the fund and an issuer. The principal amount of these
notes may be increased from time to time by the parties (subject to specified
maximums) or decreased by the fund or the issuer. These notes are payable on
demand (subject to any applicable advance notice provisions) and may or may not
be rated.

FUNDING AGREEMENTS AND GUARANTEED INVESTMENT CONTRACTS. The fund may
invest in funding agreements and guaranteed investment contracts issued by
insurance companies which are obligations of the insurance company or its
separate account. Funding agreements permit the investment of varying amounts
under a direct agreement between the fund and an insurance company and provide
that the principal amount may be increased from time to time (subject to
specified maximums) by agreement of the parties or decreased by either party.
The fund expects to invest primarily in funding agreements and guaranteed
investment contracts with floating or variable rates that are subject to demand
features that permit the fund to tender its interest back to the issuer. To the
extent the fund invests in funding agreements and guaranteed investment
contracts that either do not have demand features or have demand features that
may be exercised more than seven days after the date of acquisition, these
investments will be subject to the fund's limitation on investments in illiquid
securities. See "The Fund's Investments, Related Risks and Limitations -- Credit
and Liquidity Enhancements" and "-- Illiquid Securities."

INVESTING IN FOREIGN SECURITIES. The fund's investments in U.S. dollar
denominated securities of foreign issuers may involve risks that are different
from investments in U.S. issuers. These risks may include future unfavorable
political and economic developments, possible withholding taxes, seizure of
foreign deposits, currency controls, interest limitations or other governmental
restrictions that might affect the payment of principal or interest on the
fund's investments. Additionally, there may be less publicly available
information about foreign issuers because they may not be subject to the same
regulatory requirements as domestic issuers.

CREDIT AND LIQUIDITY ENHANCEMENTS. The fund may invest in securities
that have credit or liquidity enhancements or may purchase these types of
enhancements in the secondary market. Such enhancements may be structured as
demand features that permit the fund to sell the instrument at designated times
and prices. These credit and liquidity enhancements may be backed by letters of
credit or other instruments provided by banks or other financial institutions
whose credit standing affects the credit quality of the underlying obligation.
Changes in the

4
<PAGE>

credit quality of these financial institutions could cause losses to the fund
and affect its share price. The credit and liquidity enhancements may have
conditions that limit the ability of the fund to use them when the fund wishes
to do so.

ILLIQUID SECURITIES. The term "illiquid securities" means securities
that cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which the fund has valued the securities and
includes, among other things, repurchase agreements maturing in more than seven
days and restricted securities other than those Mitchell Hutchins has determined
are liquid pursuant to guidelines established by the board. The fund may not be
able to readily liquidate its investments in illiquid securities and may have to
sell other investments if necessary to raise cash to meet its obligations. The
lack of a liquid secondary market for illiquid securities may make it more
difficult for the fund to assign a value to those securities for purposes of
valuing its portfolio and calculating its net asset value.

Restricted securities are not registered under the Securities Act of
1933, as amended ("Securities Act") and may be sold only in privately negotiated
or other exempted transactions or after a registration statement under the
Securities Act has become effective. Where registration is required, the fund
may be obligated to pay all or part of the registration expenses and a
considerable period may elapse between the time of the decision to sell and the
time the fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions were
to develop, the fund might obtain a less favorable price than prevailed when it
decided to sell.

Not all restricted securities are illiquid. A large institutional
market has developed for many U.S. and foreign securities that are not
registered under the Securities Act. Institutional investors generally will not
seek to sell these instruments to the general public, but instead will often
depend either on an efficient institutional market in which such unregistered
securities can be readily resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.

Institutional markets for restricted securities also have developed as
a result of Rule 144A under the Securities Act, which establishes a "safe
harbor" from the registration requirements of the Securities Act for resales of
certain securities to qualified institutional buyers. Such markets include
automated systems for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers, such as the PORTAL System sponsored
by the National Association of Securities Dealers, Inc. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
restricted securities held by the fund, however, could affect adversely the
marketability of such portfolio securities, and the fund might be unable to
dispose of them promptly or at favorable prices.

The board has delegated the function of making day-to-day
determinations of liquidity to Mitchell Hutchins pursuant to guidelines approved
by the board. Mitchell Hutchins takes into account a number of factors in
reaching liquidity decisions, which may include (1) the frequency of trades for
the security, (2) the number of dealers that make quotes for the security, (3)
the nature of the security and how trading is effected (E.G., the time needed to
sell the security, how bids are solicited and the mechanics of transfer) and (4)
the existence of demand features or similar liquidity enhancements. Mitchell
Hutchins monitors the liquidity of restricted securities in the fund's portfolio
and reports periodically on such decisions to the board.

Mitchell Hutchins also monitors the fund's overall holdings of
illiquid securities. If the fund's holdings of illiquid securities exceed its
limitation on investments in illiquid securities for any reason (such as a
particular security becoming illiquid, changes in the relative market values of
liquid and illiquid portfolio securities or shareholder redemptions), Mitchell
Hutchins will consider what action would be in the best interests of the fund
and its shareholders. Such action may include engaging in an orderly
disposition of securities to reduce the fund's holdings of illiquid securities.
However, the fund is not required to dispose of illiquid securities under these
circumstances.

5
<PAGE>

REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which
the fund purchases securities or other obligations from a bank or securities
dealer (or its affiliate) and simultaneously commits to resell them to the
counterparty at an agreed-upon date or upon demand and at a price reflecting a
market rate of interest unrelated to the coupon rate or maturity of the
purchased obligations. Securities or other obligations subject to repurchase
agreements may have maturities in excess of 13 months. The fund maintains
custody of the underlying obligations prior to their repurchase, either through
its regular custodian or through a special "tri-party" custodian or
sub-custodian that maintains separate accounts for both the fund and its
counterparty. Thus, the obligation of the counterparty to pay the repurchase
price on the date agreed to or upon demand is, in effect, secured by such
obligations.

Repurchase agreements carry certain risks not associated with direct
investments in securities, including a possible decline in the market value of
the underlying obligations. If their value becomes less than the repurchase
price, plus any agreed-upon additional amount, the counterparty must provide
additional collateral so that at all times the collateral is at least equal to
the repurchase price plus any agreed-upon additional amount. The difference
between the total amount to be received upon repurchase of the obligations and
the price that was paid by the fund upon acquisition is accrued as interest and
included in its net investment income. Repurchase agreements involving
obligations other than U.S. government securities (such as commercial paper,
corporate bonds and mortgage loans) may be subject to special risks and may not
have the benefit of certain protections in the event of the counterparty's
insolvency. If the seller or guarantor becomes insolvent, the fund may suffer
delays, costs and possible losses in connection with the disposition of
collateral. The fund intends to enter into repurchase agreements only in
transactions with counterparties believed by Mitchell Hutchins to present
minimum credit risks.

REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements involve
the sale of securities held by the fund subject to its agreement to repurchase
the securities at an agreed-upon date or upon demand and at a price reflecting a
market rate of interest. Reverse repurchase agreements are subject to the fund's
limitation on borrowings and may be entered into only with banks or securities
dealers or their affiliates. While a reverse repurchase agreement is
outstanding, the fund will maintain, in a segregated account with its custodian,
cash or liquid securities, marked to market daily, in an amount at least equal
to its obligations under the reverse repurchase agreement. See "The Fund's
Investments, Related Risks and Limitations -- Segregated Accounts."

Reverse repurchase agreements involve the risk that the buyer of the
securities sold by the fund might be unable to deliver them when the fund seeks
to repurchase. If the buyer of securities under a reverse repurchase agreement
files for bankruptcy or becomes insolvent, the buyer or trustee or receiver may
receive an extension of time to determine whether to enforce the fund's
obligation to repurchase the securities, and the fund's use of the proceeds of
the reverse repurchase agreement may effectively be restricted pending such
decision.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The fund may purchase
securities on a "when-issued" basis or may purchase or sell securities for
delayed delivery, I.E., for issuance or delivery to or by the fund later than
the normal settlement date at a stated price and yield. The fund generally would
not pay for such securities or start earning interest on them until they are
received. However, when the fund undertakes a when-issued or delayed delivery
obligation, it immediately assumes the risks of ownership, including the risks
of price fluctuation. Failure of the issuer to deliver a security purchased by
the fund on a when-issued or delayed delivery basis may result in the fund's
incurring a loss or missing an opportunity to make an alternative investment.

A security purchased on a when-issued or delayed delivery basis is
recorded as an asset on the commitment date and is subject to changes in market
value, generally based upon changes in the level of interest rates. Thus,
fluctuation in the value of the security from the time of the commitment date
will affect a fund's net asset value. When the fund commits to purchase
securities on a when-issued or delayed delivery basis, its custodian segregates
assets to cover the amount of the commitment. See "The Fund's Investments,
Related Risks and Limitations--Segregated Accounts." The fund's when-issued and
delayed delivery purchase commitments could cause its net asset value per share
to be more volatile.

INVESTMENTS IN OTHER INVESTMENT COMPANIES. The fund may invest in
securities of other money market funds, subject to limitations under the
Investment Company Act. Among other things, these limitations currently

6
<PAGE>

restrict the fund's aggregate investments in other investment companies to no
more than 10% of its total assets. The fund's investments in certain private
investment vehicles are not subject to this restriction. The shares of other
money market funds are subject to the management fees and other expenses of
those funds. At the same time, the fund would continue to pay its own management
fees and expenses with respect to all its investments, including shares of other
money market funds. The fund may invest in the securities of other money market
funds when Mitchell Hutchins believes that (1) the amounts to be invested are
too small or are available too late in the day to be effectively invested in
other money market instruments, (2) shares of other money market funds otherwise
would provide a better return than direct investment in other money market
instruments or (3) such investments would enhance the fund's liquidity.

LENDING OF PORTFOLIO SECURITIES. The fund is authorized to lend its
portfolio securities to broker-dealers or institutional investors that Mitchell
Hutchins deems qualified. Lending securities enables the fund to earn additional
income, but could result in a loss or delay in recovering these securities. The
borrower of the fund's portfolio securities must maintain acceptable collateral
with the fund's custodian in an amount, marked to market daily, at least equal
to the market value of the securities loaned, plus accrued interest and
dividends. Acceptable collateral is limited to cash, U.S. government securities
and irrevocable letters of credit that meet certain guidelines established by
Mitchell Hutchins. The fund may reinvest any cash collateral in money market
investments or other short-term liquid investments, including other investment
companies. The fund also may reinvest cash collateral in private investment
vehicles similar to money market funds, including one managed by Mitchell
Hutchins. In determining whether to lend securities to a particular
broker-dealer or institutional investor, Mitchell Hutchins will consider, and
during the period of the loan will monitor, all relevant facts and
circumstances, including the creditworthiness of the borrower. The fund will
retain authority to terminate any of its loans at any time. The fund may pay
reasonable fees in connection with a loan and may pay the borrower or placing
broker a negotiated portion of the interest earned on the reinvestment of cash
held as collateral. The fund will receive amounts equivalent to any interest,
dividends or other distributions on the securities loaned. The fund will regain
record ownership of loaned securities to exercise beneficial rights, such as
voting and subscription rights, when regaining such rights is considered to be
in the fund's interest.

Pursuant to procedures adopted by the board governing the fund's
securities lending program, PaineWebber has been retained to serve as lending
agent for the fund. The board also has authorized the payment of fees (including
fees calculated as a percentage of invested cash collateral) to PaineWebber for
these services. The board periodically reviews all portfolio securities loan
transactions for which PaineWebber acted as lending agent. PaineWebber also has
been approved as a borrower under the fund's securities lending program.

SEGREGATED ACCOUNTS. When the fund enters into certain transactions
that involve obligations to make future payments to third parties, including the
purchase of securities on a when-issued or delayed delivery basis or reverse
repurchase agreements, it will maintain with an approved custodian in a
segregated account cash or liquid securities, marked to market daily, in an
amount at least equal to the fund's obligation or commitment under such
transactions.

INVESTMENT LIMITATIONS OF THE FUND

FUNDAMENTAL LIMITATIONS. The following investment limitations cannot be
changed without the affirmative vote of the lesser of (a) more than 50% of the
outstanding shares of the fund or (b) 67% or more of the shares present at a
shareholders' meeting if more than 50% of the outstanding shares are represented
at the meeting in person or by proxy. If a percentage restriction is adhered to
at the time of an investment or transaction, a later increase or decrease in
percentage resulting from changing values of portfolio securities or amount of
total assets will not be considered a violation of any of the following
limitations. With regard to the borrowings limitation in fundamental limitation
(3), the fund will comply with the applicable restrictions of Section 18 of the
Investment Company Act.

7
<PAGE>

The fund will not:

(1) purchase securities of any one issuer if, as a result, more than 5%
of the fund's total assets would be invested in securities of that issuer or the
fund would own or hold more than 10% of the outstanding voting securities of
that issuer, except that up to 25% of the fund's total assets may be invested
without regard to this limitation, and except that this limitation does not
apply to securities issued or guaranteed by the U.S. government, its agencies
and instrumentalities or to securities issued by other investment companies.

The following interpretation applies to, but is not a part of, this
fundamental restriction: Mortgage- and asset-backed securities will not be
considered to have been issued by the same issuer by reason of the securities
having the same sponsor, and mortgage- and asset-backed securities issued by a
finance or other special purpose subsidiary that are not guaranteed by the
parent company will be considered to be issued by a separate issuer from the
parent company.

(2) purchase any security if, as a result of that purchase, 25% or more
of the fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to municipal securities or to
certificates of deposit and bankers' acceptances of domestic branches of U.S.
banks.

The following interpretations apply to, but are not a part of, this
fundamental restriction: (a) domestic and foreign banking will be considered
to be different industries; and (b) asset-backed securities will be grouped
in industries based upon their underlying assets and not treated as
constituting a single, separate industry.

(3) issue senior securities or borrow money, except as permitted under
the Investment Company Act and then not in excess of 33 1/3% of the fund's total
assets (including the amount of the senior securities issued but reduced by any
liabilities not constituting senior securities) at the time of the issuance or
borrowing, except that the fund may borrow up to an additional 5% of its total
assets (not including the amount borrowed) for temporary or emergency purposes.

(4) make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this restriction, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances or
similar instruments will not be considered the making of a loan.

The following interpretation applies to, but is not a part of, this fundamental
restriction: the fund's investments in master notes, funding agreements and
similar instruments will not be considered to be the making of a loan.

(1) engage in the business of underwriting securities of other issuers,
except to the extent that the fund might be considered an underwriter under the
federal securities laws in connection with its disposition of portfolio
securities.

(2) purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by interests
in real estate are not subject to this limitation, and except that the fund may
exercise rights under agreements relating to such securities, including the
right to enforce security interests and to hold real estate acquired by reason
of such enforcement until that real estate can be liquidated in an orderly
manner.

(3) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the fund may purchase, sell or
enter into financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative instruments.

8
<PAGE>

of an investment or transaction, a later increase or decrease in percentage
resulting from changing values of portfolio securities or amount of total
assets will not be considered a violation of any of the following limitations.

The fund will not:

(1) purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that the fund may
make margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.

(2) engage in short sales of securities or maintain a short position,
except that the fund may (a) sell short "against the box" and (b) maintain short
positions in connection with its use of financial options and futures, forward
and spot currency contracts, swap transactions and other financial contracts or
derivative instruments.

(3) purchase securities of other investment companies, except to the
extent permitted by the Investment Company Act and except that this limitation
does not apply to securities received or acquired as dividends, through offers
of exchange, or as a result of reorganization, consolidation, or merger.

(4) purchase portfolio securities while borrowings in excess of 5%
of its total assets are outstanding.

(5) invest more than 10% of its net assets in illiquid securities.

ORGANIZATION OF THE TRUST; TRUSTEES AND OFFICERS;
PRINCIPAL HOLDERS AND MANAGEMENT OWNERSHIP OF SECURITIES

The Trust was formed on April 29, 1998 as a business trust under the
laws of Delaware and has one operating series. The board has authority to
establish additional series and to issue an unlimited number of shares of
beneficial interest of each existing or future series, par value $0.001 per
share. The board oversees the fund's operations.

Trustees and executive officers of the Trust, their ages, business
addresses and principal occupations during the past five years are:

<TABLE>
<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
<S> <C> <C>
Margo N. Alexander*+; 53 Trustee and President Mrs. Alexander is Chairman (since March
1999), chief executive officer and a director of
Mitchell Hutchins (since January 1995), and an
executive vice president and a director of
PaineWebber (since March 1984). Mrs.
Alexander is president and a director or trustee
of 30 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

9
<PAGE>

<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
<S> <C> <C>
Richard Q. Armstrong; 65 Trustee Mr. Armstrong is chairman and principal of
R.Q.A. Enterprises R.Q.A. Enterprises (management consulting firm)
One Old Church Road (since April 1991 and principal occupation since
Unit #6 March 1995). Mr. Armstrong was chairman of
Greenwich, CT 06830 the board, chief executive officer and co-owner
of Adirondack Beverages (producer and
distributor of soft drinks and sparkling/still
waters) (October 1993-March 1995). He was a
partner of The New England Consulting Group
(management consulting firm) (December 1992-
September 1993). He was managing director of
LVMH U.S. Corporation (U.S. subsidiary of the
French luxury goods conglomerate, Louis
Vuitton Moet Hennessey Corporation) (1987-
1991) and chairman of its wine and spirits
subsidiary, Schieffelin & Somerset Company
(1987-1991). Mr. Armstrong is a director or
trustee of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

E. Garrett Bewkes, Jr.**+; 73 Trustee and Chairman of the Mr. Bewkes is a director of Paine Webber Group
Board of Trustees Inc. ("PW Group") (holding company of
PaineWebber and Mitchell Hutchins). Prior to
1996, he was a consultant to PW Group. He
serves as a consultant to PaineWebber (since
May 1999). Prior to 1988, he was chairman of the
board, president and chief executive officer of
American Bakeries Company. Mr. Bewkes is a
director of Interstate Bakeries Corporation. Mr.
Bewkes is a director or trustee of 40 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.

10
<PAGE>

<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
<S> <C> <C>
Richard R. Burt; 53 Trustee Mr. Burt is chairman of IEP Advisors, LLP
1275 Pennsylvania Ave, N.W. (international investments and consulting firm)
Washington, DC 20004 (since March 1994) and a partner of McKinsey &
Company (management consulting firm) (since
1991). He is also a director of Archer-Daniels-
Midland Co. (agricultural commodities),
Hollinger International Co. (publishing),
Homestake Mining Corp. (gold mining), six
investment companies in the Deutsche Bank
family of funds, nine investment companies in
the Flag Investors family of funds, The Central
European Fund, Inc. and The Germany Fund,
Inc., vice chairman of Anchor Gaming (provides
technology to gaming and wagering industry)
(since July 1999) and chairman of Weirton Steel
Corp. (makes and finishes steel products) (since
April 1996). He was the chief negotiator in the
Strategic Arms Reduction Talks with the former
Soviet Union (1989-1991) and the U.S.
Ambassador to the Federal Republic of Germany
(1985-1989). Mr. Burt is a director or trustee of
29 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Mary C. Farrell**+; 50 Trustee Ms. Farrell is a managing director, senior
investment strategist and member of the
Investment Policy Committee of PaineWebber.
Ms. Farrell joined PaineWebber in 1982. She is a
member of the Financial Women's Association
and Women's Economic Roundtable and
appears as a regular panelist on Wall $treet
Week with Louis Rukeyser. She also serves on
the Board of Overseers of New York
University's Stern School of Business. Ms.
Farrell is a director or trustee of 28 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.

<PAGE>

<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
<S> <C> <C>
Meyer Feldberg; 58 Trustee Mr. Feldberg is Dean and Professor of
Columbia University Management of the Graduate School of
101 Uris Hall Business, Columbia University. Prior to 1989, he
New York, NY 10027 was president of the Illinois Institute of
Technology. Dean Feldberg is also a director of
Primedia, Inc. (publishing), Federated
Department Stores, Inc. (operator of department
stores) and Revlon, Inc. (cosmetics). Dean
Feldberg is a director or trustee of 37 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.

George W. Gowen; 70 Trustee Mr. Gowen is a partner in the law firm of
666 Third Avenue Dunnington, Bartholow & Miller. Prior to May
New York, NY 10017 1994, he was a partner in the law firm of Fryer,
Ross & Gowen. Mr. Gowen is a director or
trustee of 37 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

Frederic V. Malek; 63 Trustee Mr. Malek is chairman of Thayer Capital Partners
1455 Pennsylvania Ave, N.W. (merchant bank) and chairman of Thayer Hotel
Suite 350 Investors II and Lodging Opportunities Fund
Washington, DC 20004 (hotel investment partnerships). From January
1992 to November 1992, he was campaign
manager of Bush-Quayle '92. From 1990 to 1992,
he was vice chairman and, from 1989 to 1990, he
was president of Northwest Airlines Inc. and
NWA Inc. (holding company of Northwest
Airlines Inc.). Prior to 1989, he was employed by
the Marriott Corporation (hotels, restaurants,
airline catering and contract feeding), where he
most recently was an executive vice president
and president of Marriott Hotels and Resorts.
Mr. Malek is also a director of Aegis
Communications, Inc. (tele-services), American
Management Systems, Inc. (management
consulting and computer related services),
Automatic Data Processing, Inc. (computing
services), CB Richard Ellis, Inc. (real estate
services), FPL Group, Inc. (electric services),
Global Vacation Group (packaged vacations),
HCR/Manor Care, Inc. (health care), SAGA
Systems, Inc. (software company) and
Northwest Airlines Inc. Mr. Malek is a director
or trustee of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

12
<PAGE>

<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
<S> <C> <C>
Carl W. Schafer; 64 Trustee Mr. Schafer is president of the Atlantic
66 Witherspoon Street, #1100 Foundation (charitable foundation supporting
Princeton, NJ 08542 mainly oceanographic exploration and research).
He is a director of Labor Ready, Inc. (temporary
employment), Roadway Express, Inc. (trucking),
The Guardian Group of Mutual Funds, the
Harding, Loevner Funds, Evans Systems, Inc.
(motor fuels, convenience store and diversified
company), Electronic Clearing House, Inc.
(financial transactions processing), Frontier Oil
Corporation and Nutraceutix, Inc.
(biotechnology company). Prior to January 1993,
he was chairman of the Investment Advisory
Committee of the Howard Hughes Medical
Institute. Mr. Schafer is a director or trustee of
29 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Brian M. Storms*+; 45 Trustee Mr. Storms is president and chief operating
officer of Mitchell Hutchins (since March 1999).
Mr. Storm was president of Prudential
Investments (1996-1999). Prior to joining
Prudential, he was a managing director at
Fidelity Investments. Mr. Storms is a director or
trustee of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

Thomas Disbrow***;34 Vice President and Mr. Disbrow is a first vice president and a senior
Assistant Treasurer manager of the mutual fund finance department
of Mitchell Hutchins. Prior to November 1999,
he was a vice president of Zweig/Glaser
Advisers. Mr. Disbrow is a vice president and
assistant treasurer of 30 investment companies
for which Mitchell Hutchins, PaineWebber or
one of their affiliates serves as investment
adviser.

Kris L. Dorr*; 36 Vice President Ms. Dorr is a first vice president and a portfolio
manager in the short-term strategies group of
Mitchell Hutchins. Ms. Dorr is a vice president
of one investment company for which Mitchell
Hutchins or PaineWebber serves as investment
adviser.

13
<PAGE>

<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
<S> <C> <C>
Elbridge T. Gerry III*; 43 Vice President Mr. Gerry is a managing director and a portfolio
manager of Mitchell Hutchins. Prior to January
1996, he was with J.P. Morgan Private Banking
where he was responsible for managing
municipal assets, including several municipal
bond funds. Mr. Gerry is a vice president of six
investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

John J. Lee***; 32 Vice President and Mr. Lee is a vice president and a manager of the
Assistant Treasurer mutual fund finance department of Mitchell
Hutchins. Prior to September 1997, he was an
audit manager in the financial services practice
of Ernst & Young LLP. Mr. Lee is a vice
president and assistant treasurer of 30
investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Kevin J. Mahoney***; 34 Vice President and Mr. Mahoney is a first vice president and a
Assistant Treasurer senior manager of the mutual fund finance
department of Mitchell Hutchins. From August
1996 through March 1999, he was the manager of
the mutual fund internal control group of
Salomon Smith Barney. Prior to August 1996, he
was an associate and assistant treasurer of
BlackRock Financial Management L.P. Mr.
Mahoney is a vice president and assistant
treasurer of 30 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

Michael H. Markowitz*; 35 Vice President Mr. Markowitz is a first vice president and a
portfolio manager in the short-term strategies
group of Mitchell Hutchins. Mr. Markowitz is a
vice president of one investment company for
which Mitchell Hutchins or PaineWebber serves
as investment adviser.

Dennis McCauley*; 53 Vice President Mr. McCauley is a managing director and chief
investment officer -- fixed income of Mitchell
Hutchins. Mr. McCauley is a vice president of
20 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Kevin P. McIntyre*; 33 Vice President Mr. McIntyre is a vice president and a portfolio
manager of Mitchell Hutchins. Mr. McIntyre is
a vice president of two investment companies
for which Mitchell Hutchins, PaineWebber or
one of their affiliates serves as investment
adviser.

14
<PAGE>

<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
<S> <C> <C>
Ann E. Moran***; 43 Vice President and Ms. Moran is a vice president and a manager of
Assistant Treasurer the mutual fund finance department of Mitchell
Hutchins. Ms. Moran is a vice president and
assistant treasurer of 30 investment companies
for which Mitchell Hutchins, PaineWebber or
one of their affiliates serves as investment
adviser.

Dianne E. O'Donnell**; 48 Vice President and Secretary Ms. O'Donnell is a senior vice president and
deputy general counsel of Mitchell Hutchins.
Ms. O'Donnell is a vice president and secretary
of 30 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Susan P. Ryan*; 40 Vice President Ms. Ryan is a senior vice president and a
portfolio manager of Mitchell Hutchins. Ms.
Ryan is a vice president of six investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.

Paul H. Schubert***; 37 Vice President and Treasurer Mr. Schubert is a senior vice president and the
director of the mutual fund finance department
of Mitchell Hutchins. Mr. Schubert is a vice
president and treasurer of 30 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.

Barney A. Taglialatela***; 39 Vice President and Mr. Taglialatela is a vice president and a
Assistant Treasurer manager of the mutual fund finance department
of Mitchell Hutchins. Mr. Taglialatela is a vice
president and assistant treasurer of 30
investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Debbie Vermann*; 41 Vice President Ms. Vermann is a vice president and portfolio
manager of Mitchell Hutchins. Ms. Vermann is
a vice president of four investment companies
for which Mitchell Hutchins, PaineWebber or
one of their affiliates serves as investment
adviser.

Keith A. Weller**; 39 Vice President and Mr. Weller is a first vice president and associate
Assistant Secretary general counsel of Mitchell Hutchins. Mr.
Weller is a vice president and assistant secretary
of 29 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
</TABLE>

---------------------------------------

* This person's business address is 51 West 52nd Street, New York, New York
10019-6114.

** This person's business address is 1285 Avenue of the Americas, New York,
New York 10019-6028.

15
<PAGE>

*** This person's business address is Newport Center III, 499 Washington
Blvd., 14th Floor, Jersey City, New Jersey 07310-1998.

+ Mrs. Alexander, Mr. Bewkes, Ms. Farrell and Mr. Storms are "interested
persons" of the fund and the Corporation as defined in the Investment
Company Act by virtue of their positions with Mitchell Hutchins,
PaineWebber, and/or PW Group.

The Trust pays each trustee who is not an "interested person" of the
Trust $1,000 annually per series and up to $150 per series for attending each
board meeting and each separate meeting of a board committee. The Trust has only
one operating series and thus pays each such trustee $1,000 annually plus any
additional amounts due for board or committee meetings. Each chairman of the
audit and contract review committees of individual funds within the PaineWebber
fund complex receives additional compensation, aggregating $15,000 annually,
from the relevant funds. All trustees are reimbursed for any expenses incurred
in attending meetings. Because PaineWebber and Mitchell Hutchins perform
substantially all the services necessary for the operation of the fund, the fund
requires no employees. No officer, director or employee of Mitchell Hutchins or
PaineWebber presently receives any compensation from the Trust for acting as a
board member or officer.

The table below includes certain information relating to the
compensation of the Trust's current board members who held office with the Trust
or with other PaineWebber funds during the periods indicated.

COMPENSATION TABLE+

<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION FROM
COMPENSATION THE TRUST AND THE FUND
NAME OF PERSON, POSITION FROM THE TRUST* COMPLEX**
------------------------ --------------- ---------
<S> <C> <C>
Richard Q. Armstrong,
Trustee........................................ $ 8,180 $ 104,650
Richard R. Burt,
Trustee........................................ 8,180 102,850
Meyer Feldberg,
Trustee........................................ 8,180 143,650
George W. Gowen,
Trustee........................................ 9,994 138,400
Frederic V. Malek,
Trustee........................................ 8,180 104,650
Carl W. Schafer,
Trustee........................................ 8,180 104,650
</TABLE>

--------------------
+ Only independent board members are compensated by the PaineWebber funds and
identified above; board members who are "interested persons," as defined by
the Investment Company Act, do not receive compensation from the
PaineWebber funds.

* Represents fees paid to each board member for the fiscal year ended
April 30, 2000.

** Represents total compensation paid during the calendar year ended
December 31, 1999, to each board member by 31 investment companies (34 in
the case of Messrs. Feldberg and Gowen) for which Mitchell Hutchins,
PaineWebber or one of their affiliates served as investment adviser. No
fund within the PaineWebber fund complex has a bonus, pension, profit
sharing or retirement plan.

16
<PAGE>

PRINCIPAL HOLDERS AND MANAGEMENT OWNERSHIP OF SECURITIES

As of August 9, 2000, trustees and officers owned in the aggregate less
than 1% of the outstanding shares of any class of the fund.

As of August 1, 2000, the following shareholders were shown in the
fund's records as owning 5% or more of a class of its shares.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED AS OF
NAME AND ADDRESS* AUGUST 1, 2000
<S> <C>
State of Iowa - State Treasurer 13.96% of
Institutional Shares
Norfolk Southern Railway 5.85% of
Institutional Shares
</TABLE>

------------------------------
*The shareholders listed above may be contacted c/o Mitchell Hutchins Asset
Management Inc., 51 West 52nd Street, New York, NY 10019-6114.

INVESTMENT ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS

INVESTMENT ADVISORY AND ADMINISTRATION ARRANGEMENTS. Mitchell Hutchins
acts as investment adviser and administrator of the fund pursuant to a contract
with the Trust ("Advisory Contract"). Under the Advisory Contract, the Trust
pays Mitchell Hutchins an annual fee, computed daily and paid monthly, at an
annual rate of 0.18% of the Fund's average daily net assets.

During the fiscal year ended April 30, 2000 and the fiscal period
August 10, 1998 (commencement of operations) to April 30, 1999, the fund paid
(or accrued) to Mitchell Hutchins investment advisory and administration fees of
$2,528,347 and $447,162, respectively, after giving effect to $687,813 and
$668,641, respectively, in fee waivers.

Under the terms of the Advisory Contract, Mitchell Hutchins bears all
expenses incurred in the fund's operation other than the fee payable under the
Advisory Contract, the fees payable pursuant to the shareholder service plan
adopted by the Trust with respect to the Fund's Financial Intermediary shares,
fees and expenses (including counsel fees) of the trustees of the Trust who are
not "interested persons" of the Trust or Mitchell Hutchins, as that term is
defined in the Investment Company Act ("Independent Trustees"), interest, taxes
and the cost (including brokerage commissions and other transaction costs, if
any) of securities purchased or sold by the Fund and any losses incurred in
connection therewith and extraordinary expenses (such as costs of litigation to
which the Trust or Fund is a party and of indemnifying officers and trustees of
the Trust).

Although Mitchell Hutchins is not obligated to pay the fees and
expenses of the Independent Trustees, the Advisory Contract requires that
Mitchell Hutchins reduce its management fee by an amount equal to those fees and
expenses.

Expenses borne by Mitchell Hutchins include the following (or the
fund's share of the following): (1) organizational expenses (if these expenses
are amortized over a period of more than one year, Mitchell Hutchins

17
<PAGE>

will bear in any one year only that portion of the organizational expenses that
would have been borne by the fund in that year), (2) filing fees and expenses
relating to the registration and qualification of the shares of the fund under
federal and state securities laws and maintaining such registration and
qualifications, (3) fees and salaries payable to the trustees (other than the
Independent Trustees) and officers, (4) all expenses incurred in connection
with the services of the trustees (other than the Independent Trustees),
including travel expenses, (5) costs of any liability, uncollectable items of
deposit and other insurance or fidelity bonds, (6) ordinary legal, accounting
and auditing expenses, excluding legal fees of special counsel for the
Independent Trustees and, as noted above, excluding extraordinary expenses,
such as litigation or indemnification expenses, (7) charges of custodians,
transfer agents and other agents, (8) costs of preparing share certificate (if
any); (9) expenses of setting in type and printing prospectuses and supplements
thereto, reports and statements to shareholders and proxy materials for
existing shareholders, (10) costs of mailing prospectuses and supplements
thereto, statements of additional information and supplements thereto, reports
and proxy materials to existing shareholders, (11) fees, voluntary assessments
and other expenses incurred in connection with membership in investment company
organizations, (12) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the board and any committees thereof, (13) the cost
of investment company literature and other publications provided to the
trustees and officers, (14) costs of mailing, stationery and communications
equipment, (15) expenses incident to any dividend, withdrawal or redemption
options, and (16) charges and expenses of any outside pricing service used to
value portfolio securities.

Under the Advisory Contract, Mitchell Hutchins will not be liable for
any error of judgment or mistake of law or for any loss suffered by the fund in
connection with the performance of the Advisory Contract, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Mitchell Hutchins in the performance of its duties or from reckless disregard of
its duties and obligations thereunder.

The Advisory Contract is terminable with respect to the fund at any
time without penalty by vote of the board or by vote of the holders of a
majority of the outstanding voting securities of the fund on 60 days' written
notice to Mitchell Hutchins, as the case may be. The Advisory Contract is also
terminable without penalty by Mitchell Hutchins on 60 days' written notice to
the other party. The Advisory Contract terminates automatically upon its
assignment.

SECURITIES LENDING. During the fiscal year ended April 30, 2000 and
the fiscal period August 10, 1998 (commencement of operations) to April 30,
1999, the fund paid no fees to PaineWebber for its services as securities
lending agent because the fund did not engage in any securities lending
activities.

NET ASSETS. The following table shows the approximate net assets as of
July 31, 2000, sorted by category of investment objective, of the investment
companies as to which Mitchell Hutchins serves as adviser or sub-adviser. An
investment company may fall into more than one of the categories below.

<TABLE>
<CAPTION>
NET ASSETS
INVESTMENT CATEGORY ($MIL)
------------------- ------
<S> <C>
Domestic (excluding Money Market)........................................... $ 9,156.5
Global...................................................................... 4,703.4
Equity/Balanced............................................................. 9,585.7
Fixed Income (excluding Money Market)....................................... 4,274.2
Taxable Fixed Income............................................... 2,859.4
Tax-Free Fixed Income.............................................. 1,414.8
Money Market Funds.......................................................... 39,450.0
</TABLE>

DISTRIBUTION ARRANGEMENTS. PaineWebber acts as distributor of each
class of shares of the fund under a distribution contract with the Trust, which
requires PaineWebber to use its best efforts, consistent with its other
business, to sell shares of the fund. Shares of the fund are offered on a
continuous basis, except that the Trust and

18
<PAGE>

PaineWebber reserve the right to reject any purchase order and to suspend the
offering of fund shares for a period of time. PaineWebber may pay shareholder
servicing fees to banks and broker-dealers that make Institutional shares of
the fund available to their customers. The annual rate of the shareholder
servicing fees will not exceed five basis points (0.05%) multiplied by the
average daily net asset value of Institutional shares held through the bank or
broker-dealer by its institutional customers, and will be paid monthly. The
cost of these shareholder servicing fees will be borne by PaineWebber or
Mitchell Hutchins Asset Management Inc. and will not be charged to or
reimbursed by the fund. PaineWebber is located at 1285 Avenue of the Americas,
New York, New York 10019-6028 and Mitchell Hutchins is located at 51 West 52nd
Street, New York, New York 10019-6114.

FINANCIAL INTERMEDIARIES. Financial intermediaries, such as banks and
savings associations, may purchase Financial Intermediary shares for the
accounts of their customers. The Trust has adopted a shareholder services plan
("Plan") with respect to Financial Intermediary shares. PaineWebber implements
the Plan on behalf of the Trust by entering into a service agreement with each
financial intermediary that purchases Financial Intermediary shares requiring it
to provide support services to its customers who are the beneficial owners of
Financial Intermediary shares.

Under the Plan, the fund pays PaineWebber a monthly fee at the annual
rate of 0.25% of the average daily net asset value of the Financial
Intermediary shares held by financial intermediaries on behalf of their
customers. Under each service agreement, PaineWebber pays an identical fee to
the financial intermediary for providing the support services to its customers
specified in the service agreement. These services may include: (i) aggregating
and processing purchase and redemption requests from customers and placing net
purchase and redemption orders with PaineWebber; (ii) providing customers with
a service that invests the assets of their accounts in Financial Intermediary
shares; (iii) processing dividend payments from the Trust on behalf of
customers; (iv) providing information periodically to customers showing their
positions in Financial Intermediary shares; (v) arranging for bank wires; (vi)
responding to customer inquiries relating to the services performed by the
financial intermediary; (vii) providing sub-accounting with respect to
Financial Intermediary shares beneficially owned by customers or the
information necessary for sub- accounting; (viii) forwarding shareholder
communications from the Trust (such as proxies, shareholder reports and
dividend, distribution and tax notices) to customers, if required by law; and
(ix) such other similar services as the fund may reasonable request from time
to time to the extent the financial intermediary is permitted to do so under
federal and state statutes, rules and regulations. The fund made payments
through PaineWebber to financial intermediaries in the amount of $5,518 and
$373, for its Financial Intermediary shares that were outstanding during the
fiscal year ended April 30, 2000 and the fiscal period ended April 30, 1999,
respectively.

Under the terms of the service agreements, financial intermediaries are
required to provide to their customers a schedule of any additional fees that
they may charge customers in connection with their investments in Financial
Intermediary shares. Financial Intermediary shares are available for purchase
only by financial intermediaries that have entered into service agreements with
PaineWebber in connection with their investment. Financial intermediaries
providing services to beneficial owners of Financial Intermediary shares in
certain states may be required to be registered as dealers under the laws of
those states.

The Plan requires that PaineWebber provide to the board at least
annually a written report of the amounts expended by PaineWebber under service
agreements with financial intermediaries and the purposes for which such
expenditures were made. Each service agreement requires the financial
intermediary to cooperate with PaineWebber in providing information to the board
with respect to amounts expended and services provided under the service
agreement. The Plan may be terminated at any time, without penalty, by vote of
the trustees of the Trust who are not "interested persons" of the Trust as
defined in the Investment Company Act and who have no direct or indirect
financial interest in the operation of the Plan ("Disinterested Trustees"). Any
amendment to the Plan must be approved by the board and any material amendment
must be approved by the Disinterested Trustees.

Should future legislative, judicial or administrative action prohibit
or restrict the activities of banks serving as financial intermediaries in
connection with the provision of support services to their customers, the Trust
and PaineWebber might be required to alter or discontinue their arrangements
with financial intermediaries and change their method of operations with respect
to Financial Intermediary shares. It is not anticipated, however, that any

19
<PAGE>

change in the Trust's method of operations would affect its net asset values per
share or result in a financial loss to any shareholder.

Conflict of interest restrictions may apply to a financial
institution's receipt of compensation from a fund through PaineWebber under a
service agreement resulting from fiduciary funds being invested in Financial
Intermediary shares. Before investing fiduciary funds in Financial Intermediary
shares, financial intermediaries, including investment advisers and other money
managers under the jurisdiction of the SEC, the Department of Labor or state
securities commissions and banks regulated by the Comptroller of the Currency
should consult their legal advisors.

PORTFOLIO TRANSACTIONS

The fund purchases portfolio securities from dealers and underwriters
as well as from issuers. Securities are usually traded on a net basis with
dealers acting as principal for their own accounts without a stated commission.
Prices paid to dealers in principal transactions generally include a "spread,"
which is the difference between the prices at which the dealer is willing to
purchase and sell a specific security at the time. When securities are purchased
directly from an issuer, no commissions or discounts are paid. When securities
are purchased in underwritten offerings, they include a fixed amount of
compensation to the underwriter.

For purchases or sales with broker-dealer firms that act as principal,
Mitchell Hutchins seeks best execution. Although Mitchell Hutchins may receive
certain research or execution services in connection with these transactions,
it will not purchase securities at a higher price or sell securities at a lower
price than would otherwise be paid if no weight was attributed to the services
provided by the executing dealer. Mitchell Hutchins may engage in agency
transactions in over-the-counter securities in return for research and
execution services. These transactions are entered into only pursuant to
procedures that are designed to ensure that the transaction (including
commissions) is at least as favorable as it would have been if effected
directly with a market-maker that did not provide research or execution
services.

Research services and information received from brokers or dealers are
supplemental to Mitchell Hutchins' own research efforts and, when utilized, are
subject to internal analysis before being incorporated into their investment
processes. Information and research services furnished by brokers or dealers
through which or with which the fund effects securities transactions may be used
by Mitchell Hutchins in advising other funds or accounts and, conversely,
research services furnished to Mitchell Hutchins by brokers or dealers in
connection with other funds or accounts that either of them advises may be used
in advising the fund.

During the fiscal period ended April 30, 1999 and the fiscal year ended
April 30, 2000, the fund paid no brokerage commissions. Therefore, the fund has
not allocated any brokerage transactions for research, analysis, advice and
similar services.

Investment decisions for the fund and for other investment accounts
managed by Mitchell Hutchins are made independently of each other in light of
differing considerations for the various accounts. However, the same investment
decision may occasionally be made for the fund and one or more of such accounts.
In such cases, simultaneous transactions are inevitable. Purchases or sales are
then averaged as to price and allocated between the fund and such other
account(s) as to amount in a manner deemed equitable to the fund and such
account(s). While in some cases this practice could have a detrimental effect
upon the price or value of the security as far as the fund is concerned, or upon
its ability to complete its entire order, in other cases it is believed that
coordination and the ability to participate in volume transactions will be
beneficial to the fund.

As of April 30, 2000, the fund owned securities issued by the following
companies which are regular broker-dealers for the fund:

<TABLE>
<CAPTION>
ISSUER TYPE OF SECURITY VALUE
------ ---------------- -----
<S> <C> <C>
Bank of America Securities LLC Domestic Master Notes $ 100,000,000

20
<PAGE>

Bear Stearns Companies Incorporated Domestic Master Notes 100,000,000
J. P. Morgan Securities, Inc. Domestic Master Notes 50,000,000
Morgan Stanley, Dean Witter & Company Domestic Master Notes 100,000,000
</TABLE>

ADDITIONAL INFORMATION REGARDING REDEMPTIONS

The fund may suspend redemption privileges or postpone the date of
payment during any period (1) when the New York Stock Exchange is closed or
trading on the New York Stock Exchange is restricted as determined by the SEC,
(2) when an emergency exists, as defined by the SEC, that makes it not
reasonably practicable for the fund to dispose of securities owned by it or
fairly to determine the value of its assets or (3) as the SEC may otherwise
permit. The redemption price may be more or less than the shareholder's cost,
depending on the market value of the fund's portfolio at the time; although the
fund attempts to maintain a constant net asset value of $1.00 per share.

If conditions exist that make cash payments undesirable, the fund
reserves the right to honor any request for redemption by making payment in
whole or in part in securities chosen by the fund and valued in the same way as
they would be valued for purposes of computing the fund's net asset value. If
payment is made in securities, the shareholder may incur brokerage expenses in
converting these securities into cash.

VALUATION OF SHARES

The fund uses its best efforts to maintain its net asset value at $1.00
per share. The fund's net asset value per share is determined by The Bank of New
York ("BONY") as of noon, Eastern time, 2:30 p.m., Eastern time and again at
5:00 p.m. Eastern time, on each Business Day. As defined in the Prospectus,
"Business Day" means any day on which BONY, the fund's transfer agent (PFPC
Inc.) and PaineWebber are all open for business. One or more of these
institutions will be closed on the observance of the following holidays: New
Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day
and Christmas Day.

The fund values its portfolio securities in accordance with the
amortized cost method of valuation under Rule 2a-7 ("Rule") under the Investment
Company Act. To use amortized cost to value its portfolio securities, the fund
must adhere to certain conditions under the Rule relating to its investments,
some of which are discussed in this SAI. Amortized cost is an approximation of
market value of an instrument, whereby the difference between its acquisition
cost and value at maturity is amortized on a straight-line basis over the
remaining life of the instrument. The effect of changes in the market value of a
security as a result of fluctuating interest rates is not taken into account,
and thus the amortized cost method of valuation may result in the value of a
security being higher or lower than its actual market value. If a large number
of redemptions take place at a time when interest rates have increased, the fund
might have to sell portfolio securities prior to maturity and at a price that
might not be desirable.

The board has established procedures ("Procedures") for the purpose of
maintaining a constant net asset value of $1.00 per share, which include a
review of the extent of any deviation of net asset value per share, based on
available market quotations, from the $1.00 amortized cost per share. If that
deviation exceeds 1/2 of 1% for the fund, the board will promptly consider
whether any action should be initiated to eliminate or reduce material dilution
or other unfair results to shareholders. Such action may include redeeming
shares in kind, selling portfolio securities prior to maturity, reducing or
withholding dividends and utilizing a net asset value per share as determined by
using available market quotations. The fund will maintain a dollar-weighted
average portfolio maturity of 90 days or less and will not purchase any
instrument having, or deemed to have, a remaining maturity of more than 397
days, will limit portfolio investments, including repurchase agreements, to
those U.S. dollar denominated instruments that are of high quality under the
Rule and that Mitchell Hutchins, acting pursuant to the Procedures, determines
present minimal credit risks, and will comply with certain reporting and
recordkeeping procedures. There is no assurance that constant net asset value
per share will be maintained. If amortized cost ceases to represent fair value
per share, the board will take appropriate action.

21
<PAGE>

In determining the approximate market value of portfolio investments,
the fund may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. Other assets, if any, are valued at fair value as
determined in good faith by or under the direction of the board.

PERFORMANCE INFORMATION

The fund's performance data quoted in advertising and other promotional
materials ("Performance Advertisements") represent past performance and are not
intended to indicate future performance. The investment return will fluctuate.

TOTAL RETURN CALCULATIONS. Average annual total return quotes
("Standardized Return") used in the fund's Performance Advertisements are
calculated according to the following formula:

n
P(1 + T) = ERV
where: P = a hypothetical initial payment of $1,000 to purchase
shares of a specified class
T = average annual total return of shares of that class
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment at the beginning of that period.

Under the foregoing formula, the time periods used in Performance
Advertisements will be based on rolling calendar quarters, updated to the last
day of the most recent quarter prior to submission of the advertisement for
publication. Total return, or "T" in the formula above, is computed by finding
the average annual change in the value of an initial $1,000 investment over the
period. All dividends are assumed to have been reinvested at net asset value.

The following table shows performance information for the fund's shares
outstanding for the period indicated. Any returns for periods of more than one
year are expressed as an average annual return.

<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES
(INCEPTION DATE) (08/10/98)
<S> <C>
Year ended April 30, 2000:
Standardized Return................. 5.54%
Inception to April 30, 2000
Standardized Return................. 5.44%
</TABLE>

The fund had Financial Intermediary shares outstanding only during the
periods December 29, 1998 to February 9, 1999 and November 4, 1999 to March 6,
2000. Accordingly, no performance information is provided for Financial
Intermediary shares.

The fund may also advertise other performance data, which may consist
of the annual or cumulative return (including net short-term capital gain, if
any) earned on a hypothetical investment in the fund since it began operations
or for shorter periods. This return data may or may not assume reinvestment of
dividends (compounding).

CALCULATION OF YIELD. The fund computes its yield and effective yield
quotations for each class of shares using standardized methods required by the
SEC. The fund from time to time advertises for each class of shares (1) its
current yield based on a recently ended seven-day period, computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from that
shareholder account, dividing the

22
<PAGE>

difference by the value of the account at the beginning of the base period to
obtain the base period return and then multiplying the base period return by
(365/7), with the resulting yield figure carried to at least the nearest
hundredth of one percent; and (2) its effective yield based on the same
seven-day period by compounding the base period return by adding 1, raising the
sum to a power equal to (365/7) and subtracting 1 from the result, according to
the following formula:

365/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) ] - 1

Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yield of the fund fluctuates, it cannot be compared
with yields on savings accounts or other investment alternatives that provide an
agreed to or guaranteed fixed yield for a stated period of time. However, yield
information may be useful to an investor considering temporary investments in
money market instruments. In comparing the yield of one money market fund to
another, consideration should be given to each fund's investment policies,
including the types of investments made, the average maturity of the portfolio
securities and whether there are any special account charges that may reduce the
yield.

For the seven-day period ended April 30, 2000, the yield and effective
yield of the fund's Institutional shares was 6.02% and 6.20%, respectively. The
fund had Financial Intermediary shares outstanding only during the period
November 4, 1999 to March 6, 2000. Accordingly, no yield information is provided
for Financial Intermediary shares.

OTHER INFORMATION. The fund's performance data quoted in advertising
and other promotional materials ("Performance Advertisements") represent past
performance and are not intended to predict or indicate future results. The
return on an investment in the fund will fluctuate. In Performance
Advertisements, the fund may compare its yield with data published by Lipper
Analytical Services, Inc. for money funds ("Lipper"), CDA Investment
Technologies, Inc. ("CDA"), IBC Financial Data, Inc. ("IBC"), Wiesenberger
Investment Companies Service ("Wiesenberger") or Investment Company Data Inc.
("ICD"), or with the performance of recognized stock and other indexes,
including the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, the Morgan Stanley Capital International World Index, the
Lehman Brothers Treasury Bond Index, the Lehman Brothers Government/Corporate
Bond Index, the Salomon Smith Barney Government Bond Index and changes in the
Consumer Price Index as published by the U.S. Department of Commerce. The fund
also may refer in such materials to mutual fund performance rankings and other
data, such as comparative asset, expense and fee levels, published by Lipper,
CDA, IBC, Wiesenberger or ICD. Performance Advertisements also may refer to
discussions of the fund and comparative mutual fund data and ratings reported in
independent periodicals, including THE WALL STREET JOURNAL, MONEY MAGAZINE,
FORBES, BUSINESS WEEK, FINANCIAL WORLD, BARRON'S, FORTUNE, THE NEW YORK TIMES,
THE CHICAGO TRIBUNE, THE WASHINGTON POST and THE KIPLINGER LETTERS. Comparisons
in Performance Advertisements may be in graphic form.

The fund may also compare its performance with the performance of
bank certificates of deposit ("CDs") as measured by the CDA Certificate of
Deposit Index and the Bank Rate Monitor National Index and the average of
yields of CDs of major banks published by Banxquotes -Registered Trademark-
Money Markets. In comparing the fund's performance to CD performance,
investors should keep in mind that bank CDs are insured in whole or in part
by an agency of the U.S. government and offer fixed principal and fixed or
variable rates of interest, and that bank CD yields may vary depending on the
financial institution offering the CD and prevailing interest rates. Bank
accounts are insured in whole or in part by an agency of the U.S. government
and may offer a fixed rate of return. Fund shares are not insured or
guaranteed by the U.S. government and returns thereon will fluctuate. While
the fund seeks to maintain a stable net asset value of $1.00 per share, there
can be no assurance that it will be able to do so.

The fund may include discussions or illustrations of the effects of
compounding in Performance Advertisements. "Compounding" refers to the fact
that, if dividends on the fund investment are reinvested by being paid in
additional fund shares, any future income of the fund would increase the value,
not only of the original fund investment, but also of the additional fund shares
received through reinvestment. As a result, the value of the fund investment
would increase more quickly than if dividends had been paid in cash. The fund
may also make available

23
<PAGE>

to shareholders a daily accrual factor or "mil rate" representing dividends
accrued to shareholder accounts on a given day or days. Certain shareholders
may find that this information facilitates accounting or recordkeeping.

TAXES

BACKUP WITHHOLDING. The fund is required to withhold 31% of all
dividends and redemption proceeds payable to individuals and certain other
non-corporate shareholders who do not provide the fund or PaineWebber with a
correct taxpayer identification number or who otherwise are subject to backup
withholding.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY. To continue to
qualify for treatment as a regulated investment company ("RIC") under the
Internal Revenue Code, the fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income and net short-term capital gains, if any)
and must meet several additional requirements. Among these requirements are the
following: (1) the fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities and certain
other income; (2) at the close of each quarter of the fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. government securities, securities of other RICs and other
securities that are limited, in respect of any one issuer, to an amount that
does not exceed 5% of the value of the fund's total assets; and (3) at the
close of each quarter of the fund's taxable year, not more than 25% of the
value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer. If
the fund failed to qualify for treatment as a RIC for any taxable year, (1) it
would be taxed as an ordinary corporation on the full amount of its taxable
income for that year without being able to deduct the distributions it makes to
its shareholders and (2) the shareholders would treat all those distributions
as dividends (that is, ordinary income) to the extent of the fund's earnings
and profits. In addition, the fund could be required to recognize unrealized
gains, pay substantial taxes and interest, and make substantial distributions
before requalifying for RIC treatment.

OTHER INFORMATION

DELAWARE BUSINESS TRUST. Although Delaware law statutorily limits the
potential liabilities of a Delaware business trust's shareholders to the same
extent as it limits the potential liabilities of a Delaware corporation,
shareholders of the fund could, under certain conflicts of laws jurisprudence in
various states, be held personally liable for the obligations of the Trust or
fund. However, the Trust Instrument of the Trust disclaims shareholder liability
for acts or obligations of the Trust or its series (the fund). The Trust
Instrument provides for indemnification from the fund's property for all losses
and expenses of any fund shareholder held personally liable for the obligations
of the fund. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the fund
itself would be unable to meet its obligations, a possibility which Mitchell
Hutchins believes is remote and not material. Upon payment of any liability
incurred by a shareholder solely by reason of being or having been a shareholder
of the fund, the shareholder paying such liability will be entitled to
reimbursement from the general assets of the fund. The trustees intend to
conduct the operations of the fund in such a way as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of the fund.

CLASSES OF SHARES. A share of each class of the fund represents an
interest in the fund's investment portfolio and has similar rights, privileges
and preferences. Each share has equal voting, dividend and liquidation rights,
except that beneficial owners of Financial Intermediary shares receive certain
services directly from financial intermediaries and bear the related service
costs.

VOTING RIGHTS. Shareholders of the fund are entitled to one vote for
each full share held and fractional votes for fractional shares held. Voting
rights are not cumulative and, as a result, the holders of more than 50% of all
the shares of the Trust may elect all its board members. The shares of the fund
will be voted together, except that only the shareholders of a particular class
of the fund may vote on matters affecting only that class. Financial
intermediaries holding shares for their own accounts must undertake to vote the
shares in the same proportion as the vote of shares held for their customers.

24
<PAGE>

The fund does not hold annual meetings. There normally will be no
meetings of shareholders to elect trustees unless fewer than a majority of the
trustees holding office have been elected by the shareholders. Shareholders of
record of no less than two-thirds of the outstanding shares of the Trust may
remove a trustee by vote cast in person or by proxy at a meeting called for that
purpose. A meeting will be called to vote on the removal of a trustee at the
written request of holders of record of at least 10% of the outstanding shares
of the Trust.

PRIOR NAME. Prior to July 28, 1999, the Trust was known as "Mitchell
Hutchins Institutional Series."

CUSTODIAN; TRANSFER AND DIVIDEND AGENT. The Bank of New York, 48 Wall
Street, New York, New York 10286, is custodian of the fund's assets. PFPC Inc.,
a subsidiary of PNC Bank, N.A., serves as the fund's transfer and dividend
disbursing agent. It is located at 4400 Computer Drive, Westborough,
Massachusetts 01581-5159.

COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, N.W., Washington, D.C. 20036-1800, serves as counsel to
the fund. Kirkpatrick & Lockhart LLP also acts as counsel to PaineWebber and
Mitchell Hutchins in connection with other matters.

AUDITORS. Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, serves as independent auditors for the fund.

FINANCIAL STATEMENTS

The fund's Annual Report to Shareholders for its fiscal year ended
April 30, 2000 is a separate document supplied with this SAI, and the financial
statements, accompanying notes and report of independent auditors appearing
therein are incorporated herein by this reference.

25
<PAGE>

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR REFERRED TO IN THE
PROSPECTUS AND THIS STATEMENT OF ADDITIONAL INFORMATION. THE FUND AND ITS
DISTRIBUTOR HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT. THE PROSPECTUS AND THIS STATEMENT OF ADDITIONAL INFORMATION ARE NOT
AN OFFER TO SELL SHARES OF THE FUND IN ANY JURISDICTION WHERE THE FUND OR ITS
DISTRIBUTOR MAY NOT LAWFULLY SELL THOSE SHARES.

-----------

Mitchell Hutchins LIR
Select Money Fund

-------------------------------------------------------------------------------
Statement of Additional Information

September 1, 2000

--------------------------------------------------------------------------------

PAINEWEBBER

<PAGE>

LIR CASH RESERVES FUND
LIR LIQUID ASSETS FUND
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6114

STATEMENT OF ADDITIONAL INFORMATION

LIR Cash Reserves Fund ("Cash Reserves Fund") and LIR Liquid Assets Fund
("Liquid Assets Fund") are diversified no-load series of Mitchell Hutchins LIR
Money Series ("Trust"), a professionally managed open-end investment company
organized as a Delaware business trust. Each fund seeks to provide as high a
level of current interest income as is consistent with maintaining liquidity and
stability of principal.

Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly
owned asset management subsidiary of PaineWebber Incorporated ("PaineWebber"),
serves as the funds' investment adviser, administrator and distributor.

Portions of each fund's Annual Report to Shareholders are incorporated by
reference into this Statement of Additional Information ("SAI"). The Annual
Report accompanies this SAI. You may obtain an additional copy of a fund's
Annual Report without charge by calling toll-free 1-800-647-1568.

This SAI is not a Prospectus and should be read only in conjunction with a
fund's Prospectus, dated September 1, 2000. A copy of each fund's Prospectus may
be obtained by calling toll-free 1-800-647-1568. The Prospectuses contain more
information about the funds. You should read a fund's Prospectus carefully
before investing. This SAI is dated September 1, 2000.

TABLE OF CONTENTS

The Funds and Their Investment Policies................................ 2
The Funds' Investments, Related Risks and Limitations.................. 2
Organization of the Trust; Trustees and Officers; Principal Holders
and Management Ownership of Securities............................... 8
Investment Advisory, Administration and Distribution Arrangements...... 16
Portfolio Transactions................................................. 18
Additional Purchase and Redemption Information; Service Organizations.. 19
Valuation of Shares.................................................... 20
Performance Information................................................ 20
Taxes.................................................................. 22
Other Information...................................................... 23
Financial Statements................................................... 23

<PAGE>

THE FUNDS AND THEIR INVESTMENT POLICIES

Each fund's investment objective may not be changed without shareholder
approval. Except where noted, the other investment policies of a fund may be
changed by its board without shareholder approval. As with other mutual funds,
there is no assurance that a fund will achieve its investment objective.

Each fund's investment objective is to provide as high a level of current
interest income as is consistent with maintaining liquidity and stability of
principal. The funds invest in high quality money market instruments that have,
or are deemed to have, remaining maturities of 13 months or less. Money market
instruments are short-term debt obligations and similar securities. They also
include longer term bonds that have variable interest rates or other special
features that give them the financial characteristics of short-term debt. These
instruments include (1) U.S. and foreign government securities, (2) obligations
of U.S. and foreign banks, (3) commercial paper and other short-term obligations
of U.S. and foreign corporations, partnerships, trusts and similar entities, (4)
repurchase agreements regarding any of the foregoing and (5) investment company
securities. Each fund maintains a dollar-weighted average portfolio maturity of
90 days or less.

The funds may invest in obligations (including certificates of deposit,
bankers' acceptances, time deposits and similar obligations) of U.S. and foreign
banks only if the institution has total assets at the time of purchase in excess
of $1.5 billion. Each fund's investments in non-negotiable time deposits of
these institutions will be considered illiquid if they have maturities greater
than seven calendar days.

The funds may purchase only those obligations that Mitchell Hutchins
determines, pursuant to procedures adopted by the board, present minimal credit
risks and are "First Tier Securities" as defined in Rule 2a-7 under the
Investment Company Act of 1940, as amended ("Investment Company Act"). First
Tier Securities include U.S. government securities and securities of other
registered investment companies that are money market funds. Other First Tier
Securities are either (1) rated in the highest short-term rating category by at
least two nationally recognized statistical rating agencies ("rating agencies"),
(2) rated in the highest short-term rating category by a single rating agency if
only that rating agency has assigned the obligation a short-term rating, (3)
issued by an issuer that has received such a short-term rating with respect to a
security that is comparable in priority and security, (4) subject to a guarantee
rated in the highest short-term rating category or issued by a guarantor that
has received the highest short-term rating for a comparable debt obligation or
(5) unrated, but determined by Mitchell Hutchins to be of comparable quality.

Each fund generally may invest no more than 5% of its total assets in the
securities of a single issuer (other than U.S. government securities), except
that the fund may invest up to 25% of its total assets in First Tier Securities
of a single issuer for a period of up to three business days. The funds may
purchase only U.S. dollar denominated obligations of foreign issuers.

Each fund may invest up to 10% of its net assets in illiquid securities.
The funds may purchase securities on a when-issued or delayed delivery basis.
Each fund may lend its portfolio securities to qualified broker-dealers or
institutional investors in an amount up to 33 1/3% of its total assets. Each
fund may borrow from banks or through reverse repurchase agreements for
temporary purposes, but not in excess of 10% of its total assets. The costs
associated with borrowing may reduce the fund's net income. The funds may invest
in the securities of other investment companies.

THE FUNDS' INVESTMENTS, RELATED RISKS AND LIMITATIONS

The following supplements the information contained in the Prospectuses and
above concerning the funds' investments, related risks and limitations. Except
as otherwise indicated in the Prospectuses or this SAI, the funds have
established no policy limitations on their ability to use the investments or
techniques discussed in these documents.

YIELDS AND CREDIT RATINGS OF MONEY MARKET INSTRUMENTS; FIRST TIER
SECURITIES. The yields on the money market instruments in which each fund
invests (such as U.S. government securities, commercial paper and bank
obligations) are dependent on a variety of factors, including general money
market conditions, conditions in the particular market for the obligation, the
financial condition of the issuer, the size of the offering, the maturity of

2
<PAGE>

the obligation and the ratings of the issue. The ratings assigned by rating
agencies represent their opinions as to the quality of the obligations they
undertake to rate. Ratings, however, are general and are not absolute standards
of quality. Consequently, obligations with the same rating, maturity and
interest rate may have different market prices.

Subsequent to its purchase by a fund, an issue may cease to be rated or its
rating may be reduced. If a security in a fund's portfolio ceases to be a First
Tier Security (as defined above) or Mitchell Hutchins becomes aware that a
security has received a rating below the second highest rating by any rating
agency, Mitchell Hutchins and, in certain cases, the board, will consider
whether the fund should continue to hold the obligation. A First Tier Security
rated in the highest short-term category at the time of purchase that
subsequently receives a rating below the highest rating category from a
different rating agency may continue to be considered a First Tier Security.

U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. Treasury
(such as Treasury bills, notes or bonds) and obligations issued or guaranteed as
to principal and interest (but not as to market value) by the U.S. government,
its agencies or its instrumentalities. These U.S. government securities may
include mortgage-backed securities issued or guaranteed by government agencies
or government-sponsored enterprises. Other U.S. government securities may be
backed by the full faith and credit of the U.S. government or supported
primarily or solely by the creditworthiness of the government-related issuer or,
in the case of mortgage-backed securities, by pools of assets.

COMMERCIAL PAPER AND OTHER SHORT-TERM OBLIGATIONS. Commercial paper
includes short-term obligations issued by corporations, partnerships, trusts or
other entities to finance short-term credit needs. A fund also may purchase
other types of non-convertible debt obligations subject to maturity constraints
imposed by the Securities and Exchange Commission ("SEC"). Descriptions of
certain types of short-term obligations are provided below.

ASSET-BACKED SECURITIES. Each fund may invest in securities that are
comprised of financial assets that have been securitized through the use of
trusts or special purpose corporations or other entities. Such assets may
include motor vehicle and other installment sales contracts, home equity loans,
leases of various types of real and personal property and receivables from
revolving credit (credit card) agreements or other types of financial assets.
Payments or distributions of principal and interest may be guaranteed up to a
certain amount and for a certain time period by a letter of credit or pool
insurance policy issued by a financial institution unaffiliated with the issuer,
or other credit enhancements may be present. See "The Funds' Investments,
Related Risks and Limitations -- Credit and Liquidity Enhancements."

VARIABLE AND FLOATING RATE SECURITIES AND DEMAND INSTRUMENTS. Each fund
may purchase variable and floating rate securities with remaining maturities in
excess of 13 months issued by U.S. government agencies or instrumentalities or
guaranteed by the U.S. government. In addition, a fund may purchase variable and
floating rate securities of other issuers with remaining maturities in excess of
13 months if the securities are subject to a demand feature exercisable within
13 months or less. The yields on these securities are adjusted in relation to
changes in specific rates, such as the prime rate, and different securities may
have different adjustment rates. Certain of these obligations carry a demand
feature that gives a fund the right to tender them back to a specified party,
usually the issuer or a remarketing agent, prior to maturity. A fund's
investments in variable and floating rate securities must comply with conditions
established by the SEC under which they may be considered to have remaining
maturities of 13 months or less. See "The Funds' Investments, Related Risks and
Limitations -- Credit and Liquidity Enhancements."

Generally, a fund may exercise demand features (1) upon a default under
the terms of the underlying security, (2) to maintain its portfolio in
accordance with its investment objective and policies or applicable legal or
regulatory requirements or (3) as needed to provide liquidity to the fund in
order to meet redemption requests. The ability of a bank or other financial
institution to fulfill its obligations under a letter of credit, guarantee or
other liquidity arrangement might be affected by possible financial difficulties
of its borrowers, adverse interest rate or economic conditions, regulatory
limitations or other factors. The interest rate on floating rate or variable
rate securities ordinarily is readjusted

3
<PAGE>

on the basis of the prime rate of the bank that originated the financing or some
other index or published rate, such as the 90-day U.S. Treasury bill rate, or is
otherwise reset to reflect market rates of interest. Generally, these interest
rate adjustments cause the market value of floating rate and variable rate
securities to fluctuate less than the market value of fixed rate securities.

VARIABLE AMOUNT MASTER DEMAND NOTES. Each fund may invest in variable
amount master demand notes, which are unsecured redeemable obligations that
permit investment of varying amounts at fluctuating interest rates under a
direct agreement between a fund and an issuer. The principal amount of these
notes may be increased from time to time by the parties (subject to specified
maximums) or decreased by a fund or the issuer. These notes are payable on
demand (subject to any applicable advance notice provisions) and may or may not
be rated.

INVESTING IN FOREIGN SECURITIES. Each fund's investments in U.S. dollar
denominated securities of foreign issuers may involve risks that are different
from investments in U.S. issuers. These risks may include future unfavorable
political and economic developments, possible withholding taxes, seizure of
foreign deposits, currency controls, interest limitations or other governmental
restrictions that might affect the payment of principal or interest on the
fund's investments. Additionally, there may be less publicly available
information about foreign issuers because they may not be subject to the same
regulatory requirements as domestic issuers.

CREDIT AND LIQUIDITY ENHANCEMENTS. Each fund may invest in securities that
have credit or liquidity enhancements or a fund may purchase these types of
enhancements in the secondary market. Such enhancements may be structured as
demand features that permit a fund to sell the instrument at designated times
and prices. These credit and liquidity enhancements may be backed by letters of
credit or other instruments provided by banks or other financial institutions
whose credit standing affects the credit quality of the underlying obligation.
Changes in the credit quality of these financial institutions could cause losses
to a fund and affect its share price. The credit and liquidity enhancements may
have conditions that limit the ability of a fund to use them when a fund wishes
to do so.

ILLIQUID SECURITIES. The term "illiquid securities" means securities that
cannot be disposed of within seven days in the ordinary course of business at
approximately the amount at which a fund has valued the securities and includes,
among other things, repurchase agreements maturing in more than seven days and
restricted securities other than those Mitchell Hutchins has determined are
liquid pursuant to guidelines established by the board. A fund may not be able
readily to liquidate its investments in illiquid securities and may have to sell
other investments if necessary to raise cash to meet its obligations. The lack
of a liquid secondary market for illiquid securities may make it more difficult
for a fund to assign a value to those securities for purposes of valuing its
portfolio and calculating its net asset value.

Restricted securities are not registered under the Securities Act of 1933,
as amended ("Securities Act") and may be sold only in privately negotiated or
other exempted transactions or after a registration statement under the
Securities Act has become effective. Where registration is required, a fund may
be obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the fund
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the fund
might obtain a less favorable price than prevailed when it decided to sell.

Not all restricted securities are illiquid. A large institutional market
has developed for many U.S. and foreign securities that are not registered under
the Securities Act. Institutional investors generally will not seek to sell
these instruments to the general public, but instead will often depend either on
an efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.

Institutional markets for restricted securities also have developed as a
result of Rule 144A, which establishes a "safe harbor" from the registration
requirements of the Securities Act for resales of certain securities to
qualified institutional buyers. Such markets include automated systems for the
trading, clearance and settlement of

4
<PAGE>

unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc. An
insufficient number of qualified institutional buyers interested in purchasing
Rule 144A-eligible restricted securities held by a fund, however, could affect
adversely the marketability of such portfolio securities, and the fund might be
unable to dispose of them promptly or at favorable prices.

The board has delegated the function of making day-to-day determinations of
liquidity to Mitchell Hutchins pursuant to guidelines approved by the board.
Mitchell Hutchins takes into account a number of factors in reaching liquidity
decisions, which may include (1) the frequency of trades for the security, (2)
the number of dealers that make quotes for the security, (3) the nature of the
security and how trading is effected (E.G., the time needed to sell the
security, how bids are solicited and the mechanics of transfer) and (4) the
existence of demand features or similar liquidity enhancements. Mitchell
Hutchins monitors the liquidity of restricted securities in each fund's
portfolio and reports periodically on such decisions to the board.

Mitchell Hutchins also monitors each fund's overall holdings of illiquid
securities. If a fund's holdings of illiquid securities exceed its limitation on
investments in illiquid securities for any reason (such as a particular security
becoming illiquid, changes in the relative market values of liquid and illiquid
portfolio securities or shareholder redemptions), Mitchell Hutchins will
consider what action would be in the best interests of the fund and its
shareholders. Such action may include engaging in an orderly disposition of
securities to reduce the fund's holdings of illiquid securities. However, a fund
is not required to dispose of illiquid securities under these circumstances.

REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a
fund purchases securities or other obligations from a bank or securities dealer
(or its affiliate) and simultaneously commits to resell them to the counterparty
at an agreed-upon date or upon demand and at a price reflecting a market rate of
interest unrelated to the coupon rate or maturity of the purchased obligations.
Securities or other obligations subject to repurchase agreements may have
maturities in excess of 13 months. The fund maintains custody of the underlying
obligations prior to their repurchase, either through its regular custodian or
through a special "tri-party" custodian or sub-custodian that maintains separate
accounts for both the fund and its counterparty. Thus, the obligation of the
counterparty to pay the repurchase price on the date agreed to or upon demand
is, in effect, secured by such obligations.

Repurchase agreements carry certain risks not associated with direct
investments in securities, including a possible decline in the market value of
the underlying obligations. If their value becomes less than the repurchase
price, plus any agreed-upon additional amount, the counterparty must provide
additional collateral so that at all times the collateral is at least equal to
the repurchase price plus any agreed-upon additional amount. The difference
between the total amount to be received upon repurchase of the obligations and
the price that was paid by the fund upon acquisition is accrued as interest and
included in its net investment income. Repurchase agreements involving
obligations other than U.S. government securities (such as commercial paper and
corporate bonds) may be subject to special risks and may not have the benefit of
certain protections in the event of the counterparty's insolvency. If the seller
or guarantor becomes insolvent, the fund may suffer delays, costs and possible
losses in connection with the disposition of collateral. Each fund intends to
enter into repurchase agreements only in transactions with counterparties
believed by Mitchell Hutchins to present minimum credit risks.

REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements involve the
sale of securities held by a fund subject to its agreement to repurchase the
securities at an agreed-upon date or upon demand and at a price reflecting a
market rate of interest. Reverse repurchase agreements are subject to a fund's
limitation on borrowings and may be entered into only with banks or securities
dealers or their affiliates. While a reverse repurchase agreement is
outstanding, a fund will maintain, in a segregated account with its custodian,
cash or liquid securities, marked to market daily, in an amount at least equal
to its obligations under the reverse repurchase agreement. See "The Funds'
Investments, Related Risks and Limitations -- Segregated Accounts."

Reverse repurchase agreements involve the risk that the buyer of the
securities sold by a fund might be unable to deliver them when the fund seeks to
repurchase. If the buyer of securities under a reverse repurchase agreement
files for bankruptcy or becomes insolvent, the buyer or trustee or receiver may
receive an extension of time to determine whether to enforce a fund's obligation
to repurchase the securities, and a fund's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision.

5
<PAGE>

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each fund may purchase
securities on a "when-issued" basis or may purchase or sell securities for
delayed delivery, I.E., for issuance or delivery to or by the fund later than
the normal settlement date at a stated price and yield. A fund generally would
not pay for such securities or start earning interest on them until they are
received. However, when a fund undertakes a when-issued or delayed delivery
obligation, it immediately assumes the risks of ownership, including the risks
of price fluctuation. Failure of the issuer to deliver a security purchased by a
fund on a when-issued or delayed delivery basis may result in the fund's
incurring a loss or missing an opportunity to make an alternative investment.

A security purchased on a when-issued or delayed delivery basis is recorded
as an asset on the commitment date and is subject to changes in market value,
generally based upon changes in the level of interest rates. Thus, fluctuation
in the value of the security from the time of the commitment date will affect
the fund's net asset value. When a fund commits to purchase securities on a
when-issued or delayed delivery basis, its custodian segregates assets to cover
the amount of the commitment. See "The Funds' Investments, Related Risks and
Limitations -- Segregated Accounts." A fund's when-issued and delayed delivery
purchase commitments could cause its net asset value per share to be more
volatile.

INVESTMENTS IN OTHER INVESTMENT COMPANIES. Each fund may invest in
securities of other money market funds, subject to limitations under the
Investment Company Act. Among other things, these limitations currently restrict
a fund's aggregate investments in other investment companies to no more than 10%
of its total assets. A fund's investments in certain private investment vehicles
are not subject to this restriction. The shares of other money market funds are
subject to the management fees and other expenses of those funds. At the same
time, a fund would continue to pay its own management fees and expenses with
respect to all its investments, including shares of other money market funds. A
fund may invest in the securities of other money market funds when Mitchell
Hutchins believes that (1) the amounts to be invested are too small or are
available too late in the day to be effectively invested in other money market
instruments, (2) shares of other money market funds otherwise would provide a
better return than direct investment in other money market instruments or (3)
such investments would enhance the fund's liquidity.

LENDING OF PORTFOLIO SECURITIES. Each fund is authorized to lend its
portfolio securities to broker-dealers or institutional investors that Mitchell
Hutchins deems qualified. Lending securities enables a fund to earn additional
income, but could result in a loss or delay in recovering these securities. The
borrower of the fund's portfolio securities must maintain acceptable collateral
with the fund's custodian in an amount, marked to market daily, at least equal
to the market value of the securities loaned, plus accrued interest and
dividends. Acceptable collateral is limited to cash, U.S. government securities
and irrevocable letters of credit that meet certain guidelines established by
Mitchell Hutchins. Each fund may reinvest any cash collateral in money market
investments or other short-term liquid investments, including other investment
companies. A fund also may reinvest cash collateral in private investment
vehicles similar to money market funds, including one managed by Mitchell
Hutchins. In determining whether to lend securities to a particular
broker-dealer or institutional investor, Mitchell Hutchins will consider, and
during the period of the loan will monitor, all relevant facts and
circumstances, including the creditworthiness of the borrower. A fund will
retain authority to terminate any of its loans at any time. A fund may pay fees
in connection with a loan and may pay the borrower or placing broker a
negotiated portion of the interest earned on the reinvestment of cash held as
collateral. A fund will receive amounts equivalent to any interest, dividends or
other distributions on the securities loaned. A fund will regain record
ownership of loaned securities to exercise beneficial rights, such as voting and
subscription rights, when regaining such rights is considered to be in the
fund's interest.

Pursuant to procedures adopted by the board governing each fund's
securities lending program, PaineWebber has been retained to serve as lending
agent for the fund. The board also has authorized the payment of fees (including
fees calculated as a percentage of invested cash collateral) to PaineWebber for
these services. The board periodically reviews all portfolio securities loan
transactions for which PaineWebber acted as lending agent. PaineWebber also has
been approved as a borrower under the funds' securities lending program.

SEGREGATED ACCOUNTS. When a fund enters into certain transactions that
involve obligations to make future payments to third parties, including the
purchase of securities on a when-issued or delayed delivery basis and reverse
repurchase agreements, they will maintain with an approved custodian in a
segregated account cash or liquid

6
<PAGE>

securities, marked to market daily, in an amount at least equal to each fund's
obligation or commitment under such transactions.

INVESTMENT LIMITATIONS OF THE FUNDS

FUNDAMENTAL LIMITATIONS. The following investment limitations cannot be
changed for a fund without the affirmative vote of the lesser of (a) more than
50% of the outstanding shares of the fund or (b) 67% or more of the shares of
the fund present at a shareholders' meeting if more than 50% of the outstanding
shares are represented at the meeting in person or by proxy. If a percentage
restriction is adhered to at the time of an investment or transaction, a later
increase or decrease in percentage resulting from changing values of portfolio
securities or amount of total assets will not be considered a violation of any
of the following limitations. With regard to the borrowings limitation in
fundamental limitation (3), each fund will comply with the applicable
restrictions of Section 18 of the Investment Company Act.

Each fund will not:

The following interpretations apply to, but are not a part of, this
fundamental restriction: (a) domestic and foreign banking will be considered to
be different industries; and (b) asset-backed securities will be grouped in
industries based upon their underlying assets and not treated as constituting a
single, separate industry.

The following interpretation applies to, but is not a part of, this
fundamental restriction: the fund's investments in master notes and similar
instruments will not be considered to be the making of a loan.

(5) engage in the business of underwriting securities of other issuers,
except to the extent that the fund might be considered an underwriter under the
federal securities laws in connection with its disposition of portfolio
securities.

7
<PAGE>

(6) purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by interests
in real estate are not subject to this limitation, and except that the fund may
exercise rights under agreements relating to such securities, including the
right to enforce security interests and to hold real estate acquired by reason
of such enforcement until that real estate can be liquidated in an orderly
manner.

(7) purchase or sell physical commodities unless acquired as a result of
owning securities or other instruments, but the fund may purchase, sell or enter
into financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments.

NON-FUNDAMENTAL LIMITATIONS. The following investment restrictions are
non-fundamental and may be changed by the vote of the board without shareholder
approval. If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from changing values of
portfolio securities or amount of total assets will not be considered a
violation of any of the following limitations.

Each fund will not:

(1) purchase securities on margin, except for short-term credit necessary
for clearance of portfolio transactions and except that the fund may make margin
deposits in connection with its use of financial options and futures, forward
and spot currency contracts, swap transactions and other financial contracts or
derivative instruments.

(4) purchase portfolio securities while borrowings in excess of 5% of its
total assets are outstanding.

(5) invest more than 10% of its net assets in illiquid securities.

ORGANIZATION OF THE TRUST; TRUSTEES AND OFFICERS;
PRINCIPAL HOLDERS AND MANAGEMENT OWNERSHIP OF SECURITIES

The Trust was organized on April 29, 1998, as a business trust under the
laws of Delaware and has five series. The Trust has authority to issue an
unlimited number of shares of beneficial interest, par value $0.001 per share,
of existing or future series.

The Trust is governed by a board of trustees, which oversees the funds'
operations. The board also is authorized to establish additional series. The
trustees and executive officers of the Trust, their ages, business addresses and
principal occupations during the past five years are:

8
<PAGE>

NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------- ----------------------------------------
<S> <C> <C>
Margo N. Alexander*+; 53 Trustee and President Mrs. Alexander is Chairman (since March 1999),
chief executive officer and a director of Mitchell
Hutchins (since January 1995), and an executive
vice president and a director of PaineWebber
(since March 1984). Mrs. Alexander is president and
a director or trustee of 30 investment companies for
which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

Richard Q. Armstrong; 65 Trustee Mr. Armstrong is chairman and principal of R.Q.A.
R.Q.A. Enterprises Enterprises (management consulting firm) (since
One Old Church Road April 1991 and principal occupation since March 1995).
Unit #6 Mr. Armstrong was chairman of the board, chief
Greenwich, CT 06830 executive officer and co-owner of Adirondack Beverages
(producer and distributor of soft drinks and
sparkling/still waters) (October 1993-March 1995).
He was a partner of The New England Consulting Group
(management consulting firm) (December 1992-September
1993). He was managing director of LVMH U.S. Corporation
(U.S. subsidiary of the French luxury goods conglomerate,
Louis Vuitton Moet Hennessey Corporation) (1987-1991)
and chairman of its wine and spirits subsidiary,
Schieffelin & Somerset Company (1987-1991). Mr.
Armstrong is a director or trustee of 29 investment
companies for which Mitchell Hutchins, PaineWebber
or one of their affiliates serves as investment
adviser.

E. Garrett Bewkes, Jr.**+; 73 Trustee and Chairman of the Mr. Bewkes is a director of Paine Webber Group Inc.
Board of Trustees ("PW Group") (holding company of PaineWebber and Mitchell
Hutchins). He serves as a consultant to PaineWebber (since
May 1999). Prior to 1996, he was a consultant to PW Group.
Prior to 1988, he was chairman of the board, president and
chief executive officer of American Bakeries Company. Mr.
Bewkes is a director of Interstate Bakeries Corporation.
Mr. Bewkes is a director or trustee of 40 investment
companies for which Mitchell Hutchins, PaineWebber or one
of their affiliates serves as investment adviser.

9
<PAGE>

NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------- ----------------------------------------

<S> <C> <C>
Richard R. Burt; 53 Trustee Mr. Burt is chairman of IEP Advisors, LLP (international
1275 Pennsylvania Ave, N.W. investments and consulting firm) (since March 1994) and a
Washington, DC 20004 partner of McKinsey & Company (management consulting firm)
(since 1991). He is also a director of Archer-Daniels-
Midland Co. (agricultural commodities), Hollinger
International Co. (publishing) and Homestake Mining Corp.
(gold mining), six investment companies in the Deutsche
Bank family of funds, nine investment companies in the
Flag Investors family of funds, The Central European
Fund, Inc. and The Germany Fund, Inc., vice chairman of
Anchor Gaming (provides technology to gaming and wagering
industry) (since July 1999) and chairman of Weirton Steel
Corp. (makes and finishes steel products) (since April 1996).
He was the chief negotiator in the Strategic Arms Reduction
Talks with the former Soviet Union (1989-1991) and the U.S.
Ambassador to the Federal Republic of Germany (1985-1989).
Mr. Burt is a director or trustee of 29 investment companies
for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

Mary C. Farrell**+; 50 Trustee Ms. Farrell is a managing director, senior investment
strategist and member of the Investment Policy Committee of
PaineWebber. Ms. Farrell joined PaineWebber in 1982. She is
a member of the Financial Women's Association and Women's
Economic Roundtable and appears as a regular panelist on
Wall $treet Week with Louis Rukeyser. She also serves on the
Board of Overseers of New York University's Stern School of
Business. Ms. Farrell is a director or trustee of 28
investment companies for which Mitchell Hutchins, PaineWebber
or one of their affiliates serves as investment adviser.

Meyer Feldberg; 58 Trustee Mr. Feldberg is Dean and Professor of Management of the
Columbia University Graduate School of Business, Columbia University. Prior to
101 Uris Hall 1989, he was president of the Illinois Institute of
New York, NY 10027 Technology. Dean Feldberg is also a director of Primedia,
Inc. (publishing), Federated Department Stores, Inc. (operator
of department stores) and Revlon, Inc. (cosmetics). Dean
Feldberg is a director or trustee of 37 investment companies
for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

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<PAGE>

NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------- ----------------------------------------
<S> <C> <C>
George W. Gowen; 70 Trustee Mr. Gowen is a partner in the law firm of Dunnington,
666 Third Avenue Bartholow & Miller. Prior to May 1994, he was a partner in
New York, NY 10017 the law firm of Fryer, Ross & Gowen. Mr. Gowen is a
director or trustee of 37 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Frederic V. Malek; 63 Trustee Mr. Malek is chairman of Thayer Capital Partners (merchant
1455 Pennsylvania Ave, N.W. bank) and chairman of Thayer Hotel Investors II and Lodging
Suite 350 Opportunities Fund (hotel investment partnerships). From
Washington, DC 20004 January 1992 to November 1992, he was campaign manager
of Bush-Quayle 92. From 1990 to 1992, he was vice chairman
and, from 1989 to 1990, he was president of Northwest
Airlines Inc. and NWA Inc. (holding company of Northwest
Airlines Inc.). Prior to 1989, he was employed by the
Marriott Corporation (hotels, restaurants, airline
catering and contract feeding), where he most recently was
an executive vice president and president of Marriott
Hotels and Resorts. Mr. Malek is also a director of Aegis
Communications, Inc. (tele-services), American Management
Systems, Inc. (management consulting and computer related
services), Automatic Data Processing, Inc. (computing
services), CB Richard Ellis, Inc. (real estate services),
FPL Group, Inc. (electric services), Global Vacation Group
(packaged vacations), HCR/Manor Care, Inc. (health care),
SAGA Systems, Inc. and Northwest Airlines Inc. Mr. Malek is
a director or trustee of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

11
<PAGE>

NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------- ----------------------------------------
<S> <C> <C>
Carl W. Schafer; 64 Trustee Mr. Schafer is president of the Atlantic Foundation
66 Witherspoon Street, #1100 (charitable foundation supporting mainly oceanographic
Princeton, NJ 08542 exploration and research). He is a director of Labor
Ready, Inc. (temporary employment), Roadway Express, Inc.
(trucking), The Guardian Group of Mutual Funds, the Harding,
Loevner Funds, E.I.I. Realty Trust (investment company),
Evans Systems, Inc. (motor fuels, convenience store and
diversified company), Electronic Clearing House, Inc.
(financial transactions processing), Frontier Oil Corporation
and Nutraceutix, Inc. (biotechnology company). Prior to
January 1993, he was chairman of the Investment Advisory
Committee of the Howard Hughes Medical Institute. Mr. Schafer
is a director or trustee of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Brian M. Storms*+; 45 Trustee Mr. Storms is president and chief operating officer of
Mitchell Hutchins (since March 1999). Mr. Storms was president
of Prudential Investments (1996-1999). Prior to joining
Prudential, he was a managing director at Fidelity Investments.
Mr. Storms is a director or trustee of 29 investment companies
for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

Thomas Disbrow***, 34 Vice President and Mr. Disbrow is a first vice president and a senior manager
Assistant Treasurer of the mutual fund finance department of Mitchell Hutchins.
Prior to November 1999, he was a vice president of Zweig/Glaser
Advisers. Mr. Disbrow is a vice president and assistant
treasurer of 30 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates serves as
investment adviser.

Kris L. Dorr*; 36 Vice President Ms. Dorr is a first vice president and a portfolio manager
in the short-term strategies group of Mitchell Hutchins. Ms.
Dorr is a vice president of one investment company for which
Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

12
<PAGE>

NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------- ----------------------------------------
<S> <C> <C>
Elbridge T. Gerry III*; 43 Vice President Mr. Gerry is a managing director and a portfolio manager
of Mitchell Hutchins. Prior to January 1996, he was with
J.P. Morgan Private Banking where he was responsible for
managing municipal assets, including several municipal bond
funds. Mr. Gerry is a vice president of six investment
companies for which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.

John J. Lee***; 32 Vice President and Mr. Lee is a vice president and a manager of the mutual fund
Assistant Treasurer finance department of Mitchell Hutchins. Prior to September
1997, he was an audit manager in the financial services
practice of Ernst & Young LLP. Mr. Lee is a vice president
and assistant treasurer of 30 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Kevin J. Mahoney***; 34 Vice President and Mr. Mahoney is a first vice president and a senior manager
Assistant Treasurer of the mutual fund finance department of Mitchell Hutchins.
From August 1996 through March 1999, he was the manager of
the mutual fund internal control group of Salomon Smith Barney.
Prior to August 1996, he was an associate and assistant
treasurer of BlackRock Financial Management L.P. Mr. Mahoney
is a vice president and assistant treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.

Michael H. Markowitz*; 35 Vice President Mr. Markowitz is a first vice president and a portfolio
manager in the short-term strategies group of Mitchell Hutchins.
Mr. Markowitz is a vice president of one investment company for
which Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.

Dennis McCauley*; 53 Vice President Mr. McCauley is a managing director and chief investment
officer-fixed income of Mitchell Hutchins. Mr. McCauley is a
vice president of 20 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates serves as
investment adviser.

Kevin P. McIntyre*; 33 Vice President Mr. McIntyre is a vice president and a portfolio manager of
Mitchell Hutchins. Mr. McIntyre is a vice president of two
investment companies for which Mitchell Hutchins, PaineWebber
or one of their affiliates serves as investment adviser.

13
<PAGE>

NAME AND ADDRESS; AGE POSITION WITH TRUST BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------- ----------------------------------------
<S> <C> <C>
Ann E. Moran***; 43 Vice President and Ms. Moran is a vice president and a manager of the mutual
Assistant Treasurer fund finance department of Mitchell Hutchins. Ms. Moran is a
vice president and assistant treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.

Dianne E. O'Donnell**; 48 Vice President and Secretary Ms. O'Donnell is a senior vice president and deputy general
counsel of Mitchell Hutchins. Ms. O'Donnell is a vice president
and secretary of 30 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates serves as
investment adviser.

Susan P. Ryan*; 40 Vice President Ms. Ryan is a senior vice president and a portfolio manager of
Mitchell Hutchins. Ms. Ryan is a vice president of six
investment companies for which Mitchell Hutchins, PaineWebber or
one of their affiliates serves as investment adviser.

Paul H. Schubert***; 37 Vice President and Treasurer Mr. Schubert is a senior vice president and the director of the
mutual fund finance department of Mitchell Hutchins. Mr.
Schubert is a vice president and treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.

Barney A. Taglialatela***; 39 Vice President and Mr. Taglialatela is a vice president and a manager of the mutual
Assistant Treasurer fund finance department of Mitchell Hutchins. Mr. Taglialatela
is a vice president and assistant treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.

Debbie Vermann*; 41 Vice President Ms. Vermann is a vice president and a portfolio manager of
Mitchell Hutchins. Ms. Vermann is a vice president of four
investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as investment
adviser.

Keith A. Weller**; 39 Vice President and Mr. Weller is a first vice president and associate general counsel
Assistant Secretary of Mitchell Hutchins. Mr. Weller is a vice president and
assistant secretary of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
</TABLE>

14
<PAGE>

--------------------------
* This person's business address is 51 West 52nd Street, New York, New York
10019-6114.

** This person's business address is 1285 Avenue of the Americas, New York,
New York 10019-6028.

*** This person's business address is Newport Center III, 499 Washington Blvd.,
14th Floor, Jersey City, New Jersey 07310-1998.

+ Mrs. Alexander, Mr. Bewkes, Ms. Farrell and Mr. Storms are "interested
persons" of the funds as defined in the Investment Company Act of by virtue
of their positions with Mitchell Hutchins, PaineWebber and/or PW Group.

The Trust pays each board member who is not an "interested person" of the
Trust $1,000 for each series annually and up to $150 per series for attending
each board meeting and each separate meeting of a board committee. Each chairman
of the audit and contract review committees of individual funds within the
PaineWebber fund complex receives additional compensation, aggregating $15,000
annually, from the relevant funds. All board members are reimbursed for any
expenses incurred in attending meetings. Because Mitchell Hutchins performs
substantially all the services necessary for the operation of the Trust, the
Trust requires no employees. No officer, director or employee of Mitchell
Hutchins or PaineWebber presently receives any compensation from the Trust for
acting as a board member or officer.

The table below includes certain information relating to the compensation
of the Trust's current board members who held office with the Trust or with
other PaineWebber funds during the periods indicated.

COMPENSATION TABLE+

<TABLE>
<CAPTION>
ESTIMATED
AGGREGATE
COMPENSATION TOTAL COMPENSATION FROM
NAME OF PERSON, POSITION FROM THE TRUST* THE FUND COMPLEX**
------------------------ --------------- --------------------
<S> <C> <C>
Richard Q. Armstrong,
Trustee........................ $ 8,180 $ 104,650
Richard R. Burt,
Trustee........................ 8,180 102,850
Meyer Feldberg,
Trustee........................ 8,180 143,650
George W. Gowen,
Trustee........................ 9,994 138,400
Frederic V. Malek,
Trustee........................ 8,180 104,650
Carl W. Schafer,
Trustee........................ 8,180 104,650
</TABLE>

--------------------------

+ Only independent board members are compensated by the PaineWebber funds and
identified above; board members who are "interested persons," as defined by
the Investment Company Act, do not receive compensation from the
PaineWebber funds.

15
<PAGE>

* Represents fees estimated to be paid to each board member by the Trust
during the funds' first full fiscal year of operations ending April 30,
2001.

** Represents total compensation paid during the calendar year ended December
31, 1999, to each board member by 31 investment companies (34 in the case
of Messrs. Feldberg and Gowen) for which Mitchell Hutchins, PaineWebber or
one of their affiliates served as investment adviser. No fund within the
PaineWebber fund complex has a bonus, pension, profit sharing or retirement
plan.

PRINCIPAL HOLDERS AND MANAGEMENT OWNERSHIP OF SECURITIES

As of August 9, 2000, trustees and officers owned in the aggregate less
than 1% of the outstanding shares of either fund.

As of August 1, 2000, no shareholders were shown in the funds' records as
owning 5% or more of a fund's shares.

INVESTMENT ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS

INVESTMENT ADVISORY AND ADMINISTRATION ARRANGEMENTS. Mitchell Hutchins acts
as the Trust's investment adviser and administrator for each fund pursuant to
separate contracts with the Trust (respectively, "Cash Reserves Contract" and
"Liquid Assets Contract"; collectively, "Advisory Contracts"). During the fiscal
period February 14, 2000 (commencement of operations) to April 30, 2000, Cash
Reserves Fund and Liquid Assets Fund paid (or accrued) to Mitchell Hutchins
investment advisory and administration fees of $191,184 and $21,138,
respectively.

Under the Cash Reserves Contract, Cash Reserves Fund pays Mitchell Hutchins
an annual fee, computed daily and paid monthly, at the rate of 0.33% of average
daily net assets. Under the terms of the Cash Reserves Contract, Cash Reserves
Fund bears all expenses incurred in its operation that are not specifically
assumed by Mitchell Hutchins. Expenses borne by the fund include the following
(or the fund's proportionate share of the following): (1) the cost (including
brokerage commissions and other transaction costs, if any) of securities
purchased or sold by the fund and any losses incurred in connection therewith;
(2) fees payable to and expenses incurred on behalf of the fund by Mitchell
Hutchins; (3) organizational expenses; (4) filing fees and expenses relating to
the registration and qualification of fund shares under federal and state
securities laws and maintaining such registrations and qualifications; (5) fees
and salaries payable to the trustees and officers who are not interested persons
of the fund or Mitchell Hutchins; (6) all expenses incurred in connection with
the trustees' services, including travel expenses; (7) taxes (including any
income or franchise taxes) and governmental fees; (8) costs of any liability,
uncollectible items of deposit and other insurance or fidelity bonds; (9) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Trust or the fund for violation of any law;
(10) legal, accounting and auditing expenses, including legal fees of special
counsel for those trustees who are not interested persons of the Trust; (11)
charges of custodians, transfer agents and other agents; (12) expenses of
setting in type and printing prospectuses and statements of additional
information and supplements thereto, reports and statements to shareholders and
proxy material for existing shareholders; (13) costs of mailing prospectuses and
supplements thereto, statements of additional information and supplements
thereto, reports, statements and proxy materials to existing shareholders; (14)
any extraordinary expenses (including fees and disbursements of counsel, costs
of actions, suits or proceedings to which the Trust is a party and the expenses
the Trust may incur as a result of its legal obligation to provide
indemnification to its officers, trustees, agents and shareholders) incurred by
a fund; (15) fees, voluntary assessments and other expenses incurred in
connection with membership in investment company organizations; (16) costs of
mailing and tabulating proxies and costs of meetings of shareholders, the board
and any committees thereof; (17) the cost of investment company literature and
other publications provided to the trustees and officers; and (18) costs of
mailing, stationery and communications equipment.

Under the terms of the Liquid Assets Contract, Mitchell Hutchins
manages the investment operations of Liquid Assets Fund and also administers the
fund's business affairs. In return, Liquid Assets Fund will pay to Mitchell
Hutchins a fee, computed daily and paid monthly. Where the services are provided
directly by Mitchell

16
<PAGE>

Hutchins or an affiliate, the fees will be limited to reimbursement of Mitchell
Hutchins' direct advisory/administrative costs and expenses and will exclude any
profit or overhead charges. Where Mitchell Hutchins arranges for an unaffiliated
person to provide services, the fund will reimburse Mitchell Hutchins for the
cost of the services provided by the unaffiliated person, but no additional
profit or overhead charge will be included or the fund will pay the service
provider directly. (These fees and expenses of the fund are referred to as
"Direct Expenses.") Mitchell Hutchins has advised the fund that it expects its
direct advisory/administrative costs and expenses to approximate an annual rate
of 0.03% of the average daily net assets of the fund for its initial fiscal
year. These expenses are estimated amounts in addition to other expenses of the
fund. Mitchell Hutchins periodically will review fund expenses in an effort to
confirm that only direct costs and expenses are paid to Mitchell Hutchins by the
fund.

The Direct Expenses borne by Liquid Assets Fund will include the following
(or the fund's proportionate share of the following): (1) expenses of paying the
salaries and expenses of the Trust's officers and other personnel engaged in
administering the Trust's business; (2) expenses of monitoring financial and
shareholder accounting services provided by the Trust's custodian and transfer
agent, respectively; (3) expenses of responding to shareholder inquiries and
disseminating information to shareholders; (4) expenses of monitoring compliance
with the Trust's registration statements and other operating documents, with
federal and state securities laws and rules thereunder and with the Internal
Revenue Code; (5) expenses of preparing semi-annual and annual reports to
shareholders; (6) expenses of preparing filings required by the SEC; (7)
expenses of assisting in the preparation of federal, state and local tax
returns; (8) expenses of assisting with the payment of notice filing fees under
state securities laws; (9) expenses of organizing annual and special meetings of
shareholders; (10) the cost (including brokerage commissions) of securities
purchased or sold by the fund and any losses incurred in connection therewith;
(11) expenses incurred on behalf of the fund by Mitchell Hutchins under the
Liquid Assets Contract; (12) expenses of organizing the Trust and the fund; (13)
filing fees and expenses relating to the registration and qualification of the
fund's shares and the Trust under federal and/or state securities laws and
maintaining such registration and qualifications; (14) fees and salaries payable
to the Trust's trustees and officers who are not interested persons of the Trust
or Mitchell Hutchins; (15) all expenses incurred in connection with the trustees
services, including travel expenses; (16) taxes (including any income or
franchise taxes) and governmental fees; (17) costs of any liability,
uncollectible items of deposit and other insurance and fidelity bonds; (18) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Trust or the fund for violation of any law;
(19) legal, accounting and auditing expenses, including legal fees of special
counsel for those trustees of the Trust who are not interested persons of the
Trust; (20) charges of custodians, transfer agents and other agents (including
any lending agent); (21) costs of preparing any share certificates; (22)
expenses of setting in type and printing prospectuses and supplements thereto,
statements of additional information and supplements thereto, reports and proxy
materials for existing shareholders; (23) costs of mailing prospectuses and
supplements thereto, statements of additional information and supplements
thereto, reports, statements and proxy materials to existing shareholders; (24)
any extraordinary expenses (including fees and disbursements of counsel, costs
of actions, suits or proceedings to which the Trust is a party and the expenses
the Trust may incur as a result of its legal obligation to provide
indemnification to its officers, trustees, agents and shareholders) incurred by
the Trust or the fund; (25) fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations; (26)
the cost of mailing and tabulating proxies and costs of meetings of
shareholders, the Board and any committees thereof; (27) the cost of investment
company literature and other publications provided by the Trust to its trustees
and officers; (28) costs of mailing, stationery and communications equipment;
(29) expenses incident to any dividend, withdrawal or redemption options; (30)
charges and expenses of any outside pricing service used to value portfolio
securities; and (31) interest on borrowings of the fund; and (32) any other
costs and expenses incurred in managing the portfolio of the fund.

General expenses of the Trust not readily identifiable as belonging to a
fund or to the Trust's other series are allocated among series by or under the
direction of the board of trustees in such manner as the board deems fair and
equitable. Services provided by Mitchell Hutchins under the Advisory and
Administration Contracts, as discussed above, include the provision of a
continuous investment program for the funds and supervision of all matters
relating to the administration and operation of the funds.

Under the Advisory and Administration Contracts, Mitchell Hutchins will not
be liable for any error of judgment of mistake of law or for any loss suffered
by the funds in connection with the performance of the Advisory and
Administration Contracts, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of Mitchell Hutchins in the performance of
its duties or from reckless disregard of its duties and obligations

17
<PAGE>

thereunder. The Advisory and Administration Contracts terminate automatically
upon assignment, and each is terminable at any time without penalty by the board
or by vote of the holders of a majority of a fund's outstanding voting
securities on 60 days' written notice to Mitchell Hutchins, or by Mitchell
Hutchins on 60 days' written notice to the fund.

SECURITIES LENDING. During the fiscal period from February 14, 2000
(commencement of operations) to April 30, 2000, the funds paid no fees to
PaineWebber for its services as securities lending agent because the funds did
not engage in any securities lending activities.

NET ASSETS
INVESTMENT CATEGORY ($MIL)
------------------- ----------

<S> <C>
Domestic (excluding Money Market) ........................ $9,156.5
Global.................................................... 4,703.4
Equity/Balanced........................................... 9,585.7
Fixed Income (excluding Money Market) .................... 4,274.2
Taxable Fixed Income ............................. 2,859.4
Tax-Free Fixed Income ............................ 1,414.8
Money Market Funds ....................................... 39,450.0
</TABLE>

DISTRIBUTION ARRANGEMENTS. Mitchell Hutchins acts as the distributor of
each fund's shares under a distribution contract with the Trust, which requires
Mitchell Hutchins to use its best efforts, consistent with its other business,
to sell shares of the funds. Shares of the funds are offered continuously.
Mitchell Hutchins is located at 51 West 52nd Street, New York, New York
10019-6114.

PORTFOLIO TRANSACTIONS

The funds purchase portfolio securities from dealers and underwriters as
well as from issuers. Securities are usually traded on a net basis with dealers
acting as principal for their own accounts without a stated commission. Prices
paid to dealers in principal transactions generally include a "spread," which is
the difference between the prices at which the dealer is willing to purchase and
sell a specific security at the time. When securities are purchased directly
from an issuer, no commissions or discounts are paid. When securities are
purchased in underwritten offerings, they include a fixed amount of compensation
to the underwriter.

For purchases or sales with broker-dealer firms that act as principal,
Mitchell Hutchins seeks best execution. Although Mitchell Hutchins may receive
certain research or execution services in connection with these transactions, it
will not purchase securities at a higher price or sell securities at a lower
price than would otherwise be paid if no weight was attributed to the services
provided by the executing dealer. Mitchell Hutchins may engage in agency
transactions in over-the-counter securities in return for research and execution
services. These transactions are entered into only pursuant to procedures that
are designed to ensure that the transaction (including commissions) is at least
as favorable as it would have been if effected directly with a market-maker that
did not provide research or execution services.

Research services and information received from brokers or dealers are
supplemental to Mitchell Hutchins' own research efforts and, when utilized, are
subject to internal analysis before being incorporated into its investment
processes. Information and research services furnished by brokers or dealers
through which or with which the funds effect securities transactions may be used
by Mitchell Hutchins in advising other funds or accounts and, conversely,
research services furnished to Mitchell Hutchins by brokers or dealers in
connection with other funds or accounts that it advises may be used in advising
the funds.

18
<PAGE>

During the fiscal period February 14, 2000 (commencement of operations) to
April 30, 2000, the funds paid no brokerage commissions. Therefore, the funds
have not allocated any brokerage transactions for research, analysis, advice and
similar services.

Investment decisions for a fund and for other investment accounts managed
by Mitchell Hutchins are made independently of each other in light of differing
considerations for the various accounts. However, the same investment decision
may occasionally be made for a fund and one or more accounts. In those cases,
simultaneous transactions are inevitable. Purchases or sales are then averaged
as to price and allocated between that fund and the other account(s) as to
amount in a manner deemed equitable to the fund and the other account(s). While
in some cases this practice could have a detrimental effect upon the price or
value of the security as far as a fund is concerned, or upon its ability to
complete its entire order, in other cases it is believed that simultaneous
transactions and the ability to participate in volume transactions will benefit
the fund.

As of April 30, 2000, each fund owned securities issued by the following
companies that are its regular broker-dealers:

CASH RESERVES FUND

Merrill Lynch & Co., Inc. Commercial Paper $ 9,999,163

LIQUID ASSETS FUND

American Express Credit Corp. Commercial Paper $14,965,000

ADDITIONAL PURCHASE AND REDEMPTION
INFORMATION; SERVICE ORGANIZATIONS

ADDITIONAL PURCHASE INFORMATION. Shares of the funds are offered to the
eligible benefit plans that participate in the programs described in the funds'
Prospectuses. A listing of the types of eligible benefit plans that may buy fund
shares is included in the Prospectuses. A PaineWebber or Mitchell Hutchins
client who applies to participate in a program described in the applicable
fund's Prospectus will be eligible to purchase shares of that fund upon
acceptance of the application by PaineWebber. Eligibility of participants is
within the discretion of PaineWebber. In the event a client of PaineWebber
leaves a program, the client may not continue to hold shares of the fund.

Each fund may, subject to approval by the board, accept securities in which
the fund is authorized to invest as consideration for the issuance of its
shares, provided that the value of the securities is at least equal to the net
asset value of the fund's shares at the time the transaction occurs. A fund may
accept or reject any such securities in its discretion.

ADDITIONAL REDEMPTION INFORMATION. Each fund may suspend redemption
privileges or postpone the date of payment during any period (1) when the New
York Stock Exchange is closed or trading on the New York Stock Exchange is
restricted as determined by the SEC, (2) when an emergency exists, as defined by
the SEC, that makes it not reasonably practicable for a fund to dispose of
securities owned by it or fairly to determine the value of its assets or (3) as
the SEC may otherwise permit. The redemption price may be more or less than the
shareholder's cost, depending on the market value of a fund's portfolio at the
time; although the funds attempt to maintain a constant net asset value of $1.00
per share.

Under normal circumstances, the funds will redeem shares when so requested
by a shareholder's broker-dealer, the shareholder's Financial Advisor or his or
her financial institution. Such a redemption order will be executed at the net
asset value next determined after the order is received by Mitchell Hutchins.
Redemptions of each fund's shares effected through a broker-dealer or other
financial institution may be subject to a service charge by that broker-dealer
or other financial institution.

19
<PAGE>

SERVICE ORGANIZATIONS. The funds may authorize service organizations, and
their agents, to accept on their behalf purchase and redemption orders that are
in "good form" in accordance with the policies of those service organizations.
The funds will be deemed to have received these purchase and redemption orders
when a service organization or its agent accepts them. Like all customer orders,
these orders will be priced based on each fund's net asset value next computed
after receipt of the order by the service organizations or their agents. Service
organizations may include retirement plan service providers who aggregate
purchase and redemption instructions received from numerous retirement plans or
plan participants.

VALUATION OF SHARES

The funds' net asset values per share are determined by the funds'
custodian, State Street Bank and Trust Company, twice each business day at noon
and the close of regular trading on the New York Stock Exchange (generally, 4:00
p.m., Eastern time), on days when the New York Stock Exchange is open, except
Columbus Day and Veterans Day. Generally, the net asset value will not be
determined on the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. Your price for
buying or selling your shares will be the net asset value that is next
calculated after the fund accepts your order.

Each fund values its portfolio securities in accordance with the amortized
cost method of valuation under Rule 2a-7 ("Rule") under the Investment Company
Act. To use amortized cost to value its portfolio securities, the funds must
adhere to certain conditions under the Rule relating to its investments, some of
which are discussed in this SAI. Amortized cost is an approximation of market
value of an instrument, whereby the difference between its acquisition cost and
value at maturity is amortized on a straight-line basis over the remaining life
of the instrument. The effect of changes in the market value of a security as a
result of fluctuating interest rates is not taken into account, and thus the
amortized cost method of valuation may result in the value of a security being
higher or lower than its actual market value. If a large number of redemptions
take place at a time when interest rates have increased, a fund might have to
sell portfolio securities prior to maturity and at a price that might not be
desirable.

The board has established procedures ("Procedures") for the purpose of
maintaining a constant net asset value of $1.00 per share, which include a
review of the extent of any deviation of net asset value per share, based on
available market quotations, from the $1.00 amortized cost per share. If that
deviation exceeds 1/2 of 1% for each fund, the board will promptly consider
whether any action should be initiated to eliminate or reduce material dilution
or other unfair results to shareholders. Such action may include redeeming
shares in kind, selling portfolio securities prior to maturity, reducing or
withholding dividends and utilizing a net asset value per share as determined by
using available market quotations. Each fund will maintain a dollar-weighted
average portfolio maturity of 90 days or less and will not purchase any
instrument having, or deemed to have, a remaining maturity of more than 397
days, will limit portfolio investments, including repurchase agreements, to
those U.S. dollar denominated instruments that are of high quality under the
Rule and that Mitchell Hutchins, acting pursuant to the Procedures, determines
present minimal credit risks, and will comply with certain reporting and
recordkeeping procedures. There is no assurance that constant net asset value
per share will be maintained. If amortized cost ceases to represent fair value
per share, the board will take appropriate action.

In determining the approximate market value of portfolio investments, the
funds may employ outside organizations, which may use a matrix or formula method
that takes into consideration market indices, matrices, yield curves and other
specific adjustments. This may result in the securities being valued at a price
different from the price that would have been determined had the matrix or
formula method not been used. Other assets, if any, are valued at fair value as
determined in good faith by or under the direction of the board.

PERFORMANCE INFORMATION

The funds' performance data quoted in advertising and other promotional
materials ("Performance Advertisements") represent past performance and are not
intended to indicate future performance. The investment return will fluctuate.

TOTAL RETURN CALCULATIONS. Average annual total return quotes
("Standardized Return") used in each fund's Performance Advertisements are
calculated according to the following formula:

20
<PAGE>

n
P(1 + T) = ERV
where: P = a hypothetical initial payment of $1,000 to purchase
shares
T = average annual total return of shares
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
at the beginning of that period.

Each fund may also advertise other performance data, which may consist of
the annual or cumulative return (including net short-term capital gain, if any)
earned on a hypothetical investment in the fund since it began operations or for
shorter periods. This return data may or may not assume reinvestment of
dividends (compounding).

CASH RESERVES FUND

-----------------------------------------------------------------------
INCEPTION DATE (2/14/00)
-----------------------------------------------------------------------
Inception to April 30, 2000
-----------------------------------------------------------------------
Standardized Return........................... 1.18%
-----------------------------------------------------------------------

LIQUID ASSETS FUND

-----------------------------------------------------------------------
INCEPTION DATE (2/14/00)
-----------------------------------------------------------------------
Inception to April 30, 2000
-----------------------------------------------------------------------
Standardized Return........................... 1.24%
-----------------------------------------------------------------------

CALCULATION OF YIELD. Each fund computes its yield and effective yield
quotations using standardized methods required by the SEC. The funds from time
to time advertise (1) their current yield based on a recently ended seven-day
period, computed by determining the net change, exclusive of capital changes, in
the value of a hypothetical pre-existing account having a balance of one share
at the beginning of the period, subtracting a hypothetical charge reflecting
deductions from that shareholder account, dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return and then multiplying the base period return by (365/7), with the
resulting yield figure carried to at least the nearest hundredth of one percent;
and (2) their effective yield based on the same seven-day period by compounding
the base period return by adding 1, raising the sum to a power equal to (365/7)
and subtracting 1 from the result, according to the following formula:

EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) 365/7] - 1

Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yield of each fund fluctuates, it cannot be compared
with yields on savings accounts or other investment alternatives that provide an
agreed to or guaranteed fixed yield for a stated period of time. However, yield
information may be useful to an investor considering temporary investments in
money market instruments. In comparing the yield of one money market fund to
another, consideration should be given to each fund's investment policies,
including the types of investments made, the average maturity of the portfolio
securities and whether there are any special account charges that may reduce the
yield.

21
<PAGE>

For the seven day period ended April 30, 2000, the yield and effective
yield of the funds was as follows:

---------------------------------------------------------------------------
YIELD EFFECTIVE YIELD
---------------------------------------------------------------------------
Cash Reserves Fund 5.75% 5.91%
---------------------------------------------------------------------------
Liquid Assets Fund 5.99% 6.17%
---------------------------------------------------------------------------

OTHER INFORMATION. The funds' performance data quoted in advertising and
other promotional materials ("Performance Advertisements") represent past
performance and are not intended to predict or indicate future results. The
return on an investment in each fund will fluctuate. In Performance
Advertisements, a fund may compare its yield with data published by Lipper
Analytical Services, Inc. for money funds ("Lipper"), CDA Investment
Technologies, Inc. ("CDA"), IBC Financial Data, Inc. ("IBC"), Wiesenberger
Investment Companies Service ("Wiesenberger") or Investment Company Data Inc.
("ICD"), or with the performance of recognized stock and other indexes,
including the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, the Morgan Stanley Capital International World Index, the
Lehman Brothers Treasury Bond Index, the Lehman Brothers Government/Corporate
Bond Index, the Salomon Smith Barney Government Bond Index and changes in the
Consumer Price Index as published by the U.S. Department of Commerce. The funds
also may refer in such materials to mutual fund performance rankings and other
data, such as comparative asset, expense and fee levels, published by Lipper,
CDA, IBC, Wiesenberger or ICD. Performance Advertisements also may refer to
discussions of the funds and comparative mutual fund data and ratings reported
in independent periodicals, including THE WALL STREET JOURNAL, MONEY MAGAZINE,
FORBES, BUSINESS WEEK, FINANCIAL WORLD, BARRON'S, FORTUNE, THE NEW YORK TIMES,
THE CHICAGO TRIBUNE, THE WASHINGTON POST and THE KIPLINGER LETTERS. Comparisons
in Performance Advertisements may be in graphic form.

The funds may also compare their performance with the performance of bank
certificates of deposit ("CDs") as measured by the CDA Certificate of Deposit
Index and the Bank Rate Monitor National Index and the average of yields of CDs
of major banks published by Banxquotes-Registered Trademark- Money Markets. In
comparing a fund's performance to CD performance, investors should keep in mind
that bank CDs are insured in whole or in part by an agency of the U.S.
government and offer fixed principal and fixed or variable rates of interest,
and that bank CD yields may vary depending on the financial institution offering
the CD and prevailing interest rates. Bank accounts are insured in whole or in
part by an agency of the U.S. government and may offer a fixed rate of return.
Fund shares are not insured or guaranteed by the U.S. government and returns
thereon will fluctuate. While the funds seek to maintain a stable net asset
value of $1.00 per share, there can be no assurance that they will be able to
do so.

The funds may include discussions or illustrations of the effects of
compounding in Performance Advertisements. "Compounding" refers to the fact
that, if dividends on fund shares are reinvested by being paid in additional
fund shares, any future income of the funds would increase the value, not only
of the original funds' investments, but also of the additional fund shares
received through reinvestment. As a result, the value of the funds' investment
would increase more quickly than if dividends had been paid in cash. The funds
may also make available to shareholders a daily accrual factor or "mil rate"
representing dividends accrued to shareholder accounts on a given day or days.
Certain shareholders may find that this information facilitates accounting or
recordkeeping.

TAXES

To continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code, each fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income and net short-term
capital gains, if any) and must meet several additional requirements. With
respect to each fund, these requirements include the following: (1) the fund
must derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities and certain other income; (2) at the close of
each quarter of the fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities that are limited, in respect of
any one issuer, to an amount that does not exceed 5% of the value of the fund's
total assets; and (3) at the close of each quarter of the fund's taxable year,
not more than 25% of the value of its total assets may be invested in

22
<PAGE>

securities (other than U.S. government securities or the securities of other
RICs) of any one issuer. If a fund failed to qualify for treatment as a RIC for
any taxable year, (1) it would be taxed as an ordinary corporation on the full
amount of its taxable income for that year without being able to deduct the
distributions it makes to its shareholders and (2) the shareholders would treat
all those distributions as dividends (that is, ordinary income) to the extent of
the fund's earnings and profits. In addition, the fund could be required to
recognize unrealized gains, pay substantial taxes and interest, and make
substantial distributions before requalifying for RIC treatment.

OTHER INFORMATION

DELAWARE BUSINESS TRUST. Although Delaware law statutorily limits the
potential liabilities of a Delaware business trust's shareholders to the same
extent as it limits the potential liabilities of a Delaware corporation,
shareholders of the funds could, under certain conflicts of laws jurisprudence
in various states, be held personally liable for the obligations of the Trust or
a fund. However, the Trust Instrument of the Trust disclaims shareholder
liability for acts or obligations of the Trust or its series (the funds). The
Trust Instrument provides for indemnification from a fund's property for all
losses and expenses of any fund shareholder held personally liable for the
obligations of the fund. Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is limited to circumstances in which
the fund itself would be unable to meet its obligations, a possibility which
Mitchell Hutchins believes is remote and not material. Upon payment of any
liability incurred by a shareholder solely by reason of being or having been a
shareholder of a fund, the shareholder paying such liability will be entitled to
reimbursement from the general assets of the fund. The trustees intend to
conduct the operations of the funds in such a way as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of each fund.

VOTING RIGHTS. Shareholders of the funds are entitled to one vote for each
full share held and fractional votes for fractional shares held. Voting rights
are not cumulative and, as a result, the holders of more than 50% of all the
shares of the Trust may elect all its board members. The shares of each series
of the Trust will be voted separately, except when an aggregate vote of all the
series is required by law.

The Trust does not hold annual meetings. There normally will be no meetings
of shareholders to elect trustees unless fewer than a majority of the trustees
holding office have been elected by the shareholders. Shareholders of record of
no less than two-thirds of the outstanding shares of the Trust may remove a
trustee by vote cast in person or by proxy at a meeting called for that purpose.
A meeting will be called to vote on the removal of a trustee at the written
request of holders of record of at least 10% of the outstanding shares of the
Trust.

PRIOR NAME. Prior to July 28, 1999, the Trust was known as "Mitchell
Hutchins Institutional Series."

CUSTODIAN AND RECORDKEEPING AGENT; TRANSFER AND DIVIDEND AGENT. State
Street Bank and Trust Company, located at 1776 Heritage Drive, North Quincy,
Massachusetts 02171, serves as custodian and recordkeeping agent for the funds.
PFPC Inc., a subsidiary of PNC Bank, N.A., serves as the funds' transfer and
dividend disbursing agent. It is located at 400 Bellevue Parkway, Wilmington, DE
19809.

COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800, serves as counsel to the funds.
Kirkpatrick & Lockhart LLP also acts as counsel to PaineWebber and Mitchell
Hutchins in connection with other matters.

AUDITORS. Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
serves as independent auditors for the funds.

FINANCIAL STATEMENTS

Each fund's Annual Report to Shareholders for its initial fiscal period
ended April 30, 2000 is a separate document supplied with this SAI, and the
financial statements, accompanying notes and report of independent auditors
appearing therein are incorporated herein by this reference.

23
<PAGE>

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR REFERRED TO IN A FUND'S
PROSPECTUS AND THIS STATEMENT OF ADDITIONAL INFORMATION. THE FUNDS AND THEIR
DISTRIBUTOR HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT. THE PROSPECTUSES AND THIS STATEMENT OF ADDITIONAL INFORMATION ARE NOT
AN OFFER TO SELL SHARES OF THE FUNDS IN ANY JURISDICTION WHERE THE FUNDS OR
THEIR DISTRIBUTOR MAY NOT LAWFULLY SELL THOSE SHARES.

-----------

LIR CASH RESERVES FUND
LIR LIQUID ASSETS FUND

------------------------------------------

Statement of Additional Information

September 1, 2000
------------------------------------------

<PAGE>

PART C. OTHER INFORMATION
-------------------------

Item 23. EXHIBITS

(1) (a) Trust Instrument (1)

(b) Amendment to Trust Instrument effective July 28, 1999 (2)

(2) By-Laws (1)

(3) Instruments defining the rights of holders of Registrant's shares of
beneficial interest (3)

(4) (a) Investment Advisory and Administration Contract for Mitchell
Hutchins LIR Select Money Fund (2)

(b) Investment Advisory and Administration Contract for LIR Premier
Money Market Fund and LIR Premier Tax-Free Money Market Fund (4)

(d) Investment Advisory and Administration Contract for LIR Liquid
Assets Fund (filed herewith)

(5) (a) Distribution Contract for Mitchell Hutchins LIR Select Money
Fund (2)

(b) Distribution Contract for LIR Premier Money Market Fund and LIR
Premier Tax-Free Money Market Fund (4)

(d) Dealer Agreement for LIR Cash Reserves Fund and LIR Liquid
Assets Fund (filed herewith)

(6) Bonus, profit sharing or pension plans - none

(7) (a) Custodian Agreement for LIR Select Money Fund (2)

(b) Custodian Agreement for LIR Premier Money Market Fund and LIR
Premier Tax-Free Money Market Fund (4)

(8) (a) (i) Form of Transfer Agency Agreement for LIR Select Money
Fund (2)

(ii) Transfer Agency Agreement for LIR Premier Money Market
Fund and LIR Premier Tax-Free Money Market Fund (4)

(iii) Form of Transfer Agency and Related Services Agreement
for LIR Cash Reserves Fund (5)

(iv) Form of Transfer Agency and Related Services Agreement
for LIR Liquid Assets Fund (5)

(b) Shareholder Service Plan (2)

(9) Opinion and consent of counsel (filed herewith)

(10) Other opinions, appraisals, rulings and consents: Auditors' consent
(filed herewith)

(11) Omitted Financial Statements - none

(12) Letter of investment intent (1)

(13) (a) Plan of Distribution pursuant to Rule 12b-1 (4)

<PAGE>

(b) Plan Agreement for LIR Premier Money Market Fund and LIR Premier
Tax-Free Money Market Fund (4)

(14) and

(27) Financial Data Schedule (not applicable)

(15) Plan Pursuant to Rule 18f-3 (1)

(16) Code of Ethics for Registrant and Mitchell Hutchins Asset Management
Inc. (6)

-----------------------------------
(1) Incorporated by reference from Pre-Effective Amendment No. 1 to the
registration statement, SEC File No. 333-52965, filed July 29, 1998.

(2) Incorporated by reference from Post-Effective Amendment No. 3 to the
registration statement, SEC File No. 333-52965, filed September 1,
1999.

(3) Incorporated by reference from Articles IV, VI and X of Registrant's
Trust Instrument and from Articles VI and IX of Registrant's By-Laws.

(4) Incorporated by reference from Post-Effective Amendment No. 7 to the
registration statement, SEC File No. 333-52965, filed April 27, 2000.

(5) Incorporated by reference from Post-Effective Amendment No. 6 to the
registration statement, SEC File No. 333-52965, filed November 9, 1999.

(6) Incorporated by reference from Post-Effective Amendment No. 29 to the
registration statement of PaineWebber Mutual Fund Trust, SEC File No.
2-98149, filed June 27, 2000.

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None.

Item 25. INDEMNIFICATION

Section 2 of Article IX of the Trust Instrument, "Indemnification,"
provides that the appropriate series of the Registrant will indemnify the
trustees and officers of the Registrant to the fullest extent permitted by law
against claims and expenses asserted against or incurred by them by virtue of
being or having been a trustee or officer; provided that no such person shall be
indemnified where there has been an adjudication or other determination, as
described in Article IX, that such person is liable to the Registrant or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office or
did not act in good faith in the reasonable belief that his action was in the
best interest of the Registrant. Section 2 of Article IX also provides that the
Registrant may maintain insurance policies covering such rights of
indemnification.

Additionally, "Limitation of Liability" in Section 1 of Article IX of the
Trust Instrument provides that the trustees or officers of the Registrant shall
not be personally liable to any person extending credit to, contracting with or
having a claim against the Registrant or a particular series; and that, provided
they have exercised reasonable care and have acted under the reasonable belief
that their actions are in the best interest of the Registrant, the trustees and
officers shall not be liable for neglect or wrongdoing by them or any officer,
agent, employee, investment adviser or independent contractor of the Registrant.

Section 9 of each Investment Advisory and Administration Contract
("Advisory Contract") with Mitchell

<PAGE>

Hutchins Asset Management Inc. ("Mitchell Hutchins") provides that Mitchell
Hutchins shall not be liable for any error of judgment or mistake of law or for
any loss suffered by any series ("Fund") of the Registrant in connection with
the matters to which the Advisory Contract relates, except for a loss resulting
from the willful misfeasance, bad faith, or gross negligence of Mitchell
Hutchins in the performance of its duties or from its reckless disregard of its
obligations and duties under the Advisory Contract. Section 10 or 11 of each
Advisory Contract provides that the Trustees shall not be liable for any
obligations of the Trust or any series under the Advisory Contract and that
Mitchell Hutchins shall look only to the assets and property of the Registrant
in settlement of such right or claim and not to the assets and property of the
Trustees.

Section 9 of each Distribution Contract provides that the Trust will
indemnify PaineWebber or Mitchell Hutchins and its officers, directors and
controlling persons against all liabilities arising from any alleged untrue
statement of material fact in the Registration Statement or from any alleged
omission to state in the Registration Statement a material fact required to be
stated in it or necessary to make the statements in it, in light of the
circumstances under which they were made, not misleading, except insofar as
liability arises from untrue statements or omissions made in reliance upon and
in conformity with information furnished by PaineWebber or Mitchell Hutchins to
the Trust for use in the Registration Statement; and provided that this
indemnity agreement shall not protect any such persons against liabilities
arising by reason of their bad faith, gross negligence or willful misfeasance;
and shall not inure to the benefit of any such persons unless a court of
competent jurisdiction or controlling precedent determines that such result is
not against public policy as expressed in the Securities Act of 1933. Section 9
of each Distribution Contract also provides that PaineWebber or Mitchell
Hutchins agrees to indemnify, defend and hold the Trust, its officers and
Trustees free and harmless of any claims arising out of any alleged untrue
statement or any alleged omission of material fact contained in information
furnished by PaineWebber or Mitchell Hutchins for use in the Registration
Statement or arising out of an agreement between PaineWebber or Mitchell
Hutchins and any retail dealer, or arising out of supplementary literature or
advertising used by PaineWebber or Mitchell Hutchins in connection with the
Contract. Section 10 of each Distribution Contract contains provisions similar
to Section 10 or 11 of the Investment Advisory and Administration Contracts,
with respect to Mitchell Hutchins and PaineWebber, as appropriate.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be provided to trustees, officers and controlling
persons of the Registrant, pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding or payment pursuant to any insurance policy) is
asserted against the Registrant by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Mitchell Hutchins, a Delaware corporation, is a registered investment
adviser and is a wholly owned subsidiary of PaineWebber which is, in turn, a
wholly owned subsidiary of Paine Webber Group Inc. Mitchell Hutchins is
primarily engaged in the investment advisory business. Information as to the
officers and directors of Mitchell Hutchins is included in its Form ADV, as
filed with the Securities and Exchange Commission (registration number
801-13219), and is incorporated herein by reference.

Item 27. PRINCIPAL UNDERWRITERS

a) Mitchell Hutchins or PaineWebber serves as principal underwriter
and/or investment adviser for the following investment companies:

ALL AMERICAN TERM TRUST INC.

<PAGE>

GLOBAL HIGH INCOME DOLLAR FUND INC.
INSURED MUNICIPAL INCOME FUND INC.
INVESTMENT GRADE MUNICPAL INCOME FUND INC.
LIQUID INSTITUTIONAL RESERVES
MANAGED HIGH YIELD PLUS FUND INC.
MITCHELL HUTCHINS LIR MONEY SERIES
MITCHELL HUTCHINS SECURITIES TRUST
MITCHELL HUTCHINS SERIES TRUST
PAINEWEBBER AMERICA FUND
PAINEWEBBER CASHFUND, INC.
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
PAINEWEBBER INDEX TRUST
PAINEWEBBER INVESTMENT SERIES
PAINEWEBBER INVESTMENT TRUST
PAINEWEBBER INVESTMENT TRUST II
PAINEWEBBER MANAGED ASSETS TRUST
PAINEWEBBER MANAGED INVESTMENTS TRUST
PAINEWEBBER MANAGED MUNICIPAL TRUST
PAINEWEBBER MASTER SERIES, INC.
PAINEWEBBER MUNICIPAL MONEY MARKET SERIES
PAINEWEBBER MUNICIPAL SERIES
PAINEWEBBER MUTUAL FUND TRUST
PAINEWEBBER OLYMPUS FUND
PAINEWEBBER RMA MONEY FUND, INC.
PAINEWEBBER RMA TAX-FREE FUND, INC.
PAINEWEBBER SECURITIES TRUST
STRATEGIC GLOBAL INCOME FUND, INC.
2002 TARGET TERM TRUST INC.

b) Mitchell Hutchins and PaineWebber serve as the Registrant's
principal underwriters. The directors and officers of PaineWebber,
their principal business addresses and their positions and offices
with PaineWebber are identified in its Form ADV, as filed with the
Securities and Exchange Commission (registration number 801-7163).
The directors and officers of Mitchell Hutchins, their principal
business addresses and their positions and offices with Mitchell
Hutchins are identified in its Form ADV, as filed with the
Securities and Exchange Commission (registration number
801-13219). The foregoing information is hereby incorporated herein
by reference. The information set forth below is furnished for those
directors and officers of PaineWebber or Mitchell Hutchins who also
serve as trustees or officers of the Registrant.

<PAGE>

POSITIONS AND OFFICES WITH UNDERWRITER OR
NAME POSITIONS AND OFFICES WITH REGISTRANT DEALER
---- ------------------------------------- ------
<S> <C> <C>
Margo N. Alexander* Trustee and President Chairman, Chief Executive Officer and a Director of
Mitchell Hutchins and an Executive Vice President
and Director of PaineWebber

Mary C. Farrell** Trustee Managing Director, Senior Investment Strategist and
member of the Investment Policy Committee of
PaineWebber

Brian M. Storms* Trustee President and Chief Operating Officer of Mitchell
Hutchins

Thomas Disbrow*** Vice President and Assistant Treasurer First Vice President and a Senior Manager of the
Mutual Fund Finance Department of Mitchell Hutchins

Kris L. Dorr* Vice President First Vice President and Portfolio Manager in the
Short-Term Strategies Group of Mitchell Hutchins

Elbridge T. Gerry, III* Vice President Managing Director and a Portfolio Manager of
Mitchell Hutchins

John J. Lee*** Vice President and Assistant Treasurer Vice President and a Manager of the Mutual Fund
Finance Department of Mitchell Hutchins

Kevin J. Mahoney*** Vice President and Assistant Treasurer First Vice President and a Senior Manager of the
Mutual Fund Finance Department of Mitchell Hutchins

Michael H. Markowitz* Vice President First Vice President and Portfolio Manager in the
Short-Term Strategies Group of Mitchell Hutchins

Dennis McCauley* Vice President Managing Director and Chief Investment Officer -
Fixed Income of Mitchell Hutchins

Kevin P. McIntyre* Vice President Vice President and a Portfolio Manager of Mitchell
Hutchins

Ann E. Moran*** Vice President and Assistant Treasurer Vice President and a Manager of the Mutual Fund
Finance Department of Mitchell Hutchins

Dianne E. O'Donnell** Vice President and Secretary Senior Vice President and Deputy General Counsel of
Mitchell Hutchins

Susan P. Ryan* Vice President Senior Vice President and Portfolio Manager of
Mitchell Hutchins

Paul H. Schubert*** Vice President and Treasurer Senior Vice President and the Director of the Mutual
Fund Finance Department of Mitchell Hutchins

<PAGE>

<CAPTION>
POSITIONS AND OFFICES WITH UNDERWRITER OR
NAME POSITIONS AND OFFICES WITH REGISTRANT DEALER
---- ------------------------------------- ------
<S> <C> <C>
Barney A. Taglialatela*** Vice President and Assistant Treasurer Vice President and a Manager of the Mutual Fund
Finance Department of Mitchell Hutchins

Debbie Vermann* Vice President Vice President and Portfolio Manager of Mitchell
Hutchins

Keith A. Weller** Vice President and Assistant Secretary First Vice President and Associate General Counsel
of Mitchell Hutchins
</TABLE>

-----------------------------------

* This person's business address is 51 West 52nd Street, New York, New York
10019-6114.
** This person's business address is 1285 Avenue of the Americas, New York,
New York 10019-6028.
*** This person's business address is Newport Center III, 499 Washington
Blvd., 14th Floor, Jersey City, New Jersey 07310-1998.

c) None

Item 28. LOCATION OF ACCOUNTS AND RECORDS

The books and other documents required by paragraphs (b)(4), (c) and (d) of
Rule 31a-1 under the Investment Company Act of 1940 are maintained in the
physical possession of Registrant's investment adviser, Mitchell Hutchins at
1285 Avenue of the Americas, New York, New York 10019 and 51 West 52nd Street,
New York, New York 10019-6114. All other accounts, books and documents required
by Rule 31a-1 are maintained in the physical possession of Registrant's transfer
agent and custodian.

Item 29. MANAGEMENT SERVICES

Not applicable.

Item 30. UNDERTAKINGS

None.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement under Rule 485(b) of the Securities Act of 1933 and has
duly caused this Post-Effective Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York, on the 25th day of August, 2000.

MITCHELL HUTCHINS LIR MONEY SERIES

By: /s/ Dianne E. O'Donnell
---------------------------------
Dianne E. O'Donnell
Vice President and Secretary

Pursuant to the requirements of the Securities Act of 1933, this Post-
ffective Amendment has been signed below by the following persons in the
capacities and on the dates indicated:

SIGNATURE TITLE DATE
---------- ------- -----

/s/ Margo N. Alexander President and Trustee August 25, 2000
--------------------------- (Chief Executive Officer)
Margo N. Alexander *

/s/ E. Garrett Bewkes, Jr. Trustee and Chairman August 25, 2000
--------------------------- of the Board of Trustees
E Garrett Bewkes,Jr *

/s/ Richard Q. Armstrong Trustee August 25, 2000
---------------------------
Richard Q. Armstrong *

/s/ Richard R. Burt Trustee August 25, 2000
---------------------------
Richard R. Burt *

/s/ Mary C. Farrell Trustee August 25, 2000
---------------------------
Mary C. Farrell *

/s/ Meyer Feldberg Trustee August 25, 2000
---------------------------
Meyer Feldberg *

/s/ George W. Gowen Trustee August 25, 2000
---------------------------
George W. Gowen *

/s/ Frederic V. Malek Trustee August 25, 2000
---------------------------
Frederic V. Malek *

/s/ Carl W. Schafer Trustee August 25, 2000
---------------------------
Carl W. Schafer *

/s/ Brian M. Storms Trustee August 25, 2000
---------------------------
Brian M. Storns *

/s/ Paul H. Schubert Vice President and
--------------------------- Treasurer (Chief Financial August 25, 2000
Paul H. Schubert * and Accounting Officer)

<PAGE>

SIGNATURES (CONTINUED)

* Signature affixed by Elinor W. Gammon pursuant to powers of attorney dated
May 13, 1998 and incorporated by reference from the Initial Registration
Statement of Mitchell Hutchins LIR Money Series (formerly Mitchell Hutchins
Institutional Series), SEC File 333-52965, filed May 19, 1998.

** Signature affixed by Elinor W. Gammon pursuant to power of attorney dated
May 14, 1999 and incorporated by reference from Post-Effective Amendment
No. 61 to the registration statement of PaineWebber Managed Investments
Trust, SEC File 2-91362, filed June 1, 1999.

<PAGE>

MITCHELL HUTCHINS LIR MONEY SERIES

EXHIBIT INDEX
-------------

Exhibit
Number
------

(1) (a) Trust Instrument (1)

(b) Amendment to Trust Instrument effective July 28, 1999 (2)

(2) By-Laws (1)

(3) Instruments defining the rights of holders of Registrant's shares of
beneficial interest (3)

(4) (a) Investment Advisory and Administration Contract for Mitchell
Hutchins LIR Select Money Fund (2)

(b) Investment Advisory and Administration Contract for LIR Premier
Money Market Fund and LIR Premier Tax-Free Money Market Fund (4)

(d) Investment Advisory and Administration Contract for LIR Liquid
Assets Fund (filed herewith)

(5) (a) Distribution Contract for Mitchell Hutchins LIR Select Money
Fund (2)

(b) Distribution Contract for LIR Premier Money Market Fund and LIR
Premier Tax-Free Money Market Fund (4)

(d) Dealer Agreement for LIR Cash Reserves Fund and LIR Liquid Assets
Fund (filed herewith)

(6) Bonus, profit sharing or pension plans - none

(7) (a) Custodian Agreement for LIR Select Money Fund (2)

(b) Custodian Agreement for LIR Premier Money Market Fund and LIR
Premier Tax-Free Money Market Fund (4)

(8) (a) (i) Form of Transfer Agency Agreement for LIR Select Money
Fund (2)

(ii) Transfer Agency Agreement for LIR Premier Money Market Fund
and LIR Premier Tax-Free Money Market Fund (4)

(iii) Form of Transfer Agency and Related Services Agreement for
LIR Cash Reserves Fund (5)

(iv) Form of Transfer Agency and Related Services Agreement for
LIR Liquid Assets Fund (5)

(b) Shareholder Service Plan (2)

(9) Opinion and consent of counsel (filed herewith)

(10) Other opinions, appraisals, rulings and consents: Auditors' consent
(filed herewith)

<PAGE>

(11) Omitted Financial Statements - none

(12) Letter of investment intent (1)

(13) (a) Plan of Distribution pursuant to Rule 12b-1 (4)

(b) Plan Agreement for LIR Premier Money Market Fund and LIR Premier
Tax-Free Money Market Fund (4)

(14) and

(27) Financial Data Schedule (not applicable)

(15) Plan Pursuant to Rule 18f-3 (1)

(16) Code of Ethics for Registrant and Mitchell Hutchins Asset Management
Inc. 6/

-----------------------------------
(1) Incorporated by reference from Pre-Effective Amendment No. 1 to the
registration statement, SEC File No. 333-52965, filed July 29, 1998.

(2) Incorporated by reference from Post-Effective Amendment No. 3 to the
registration statement, SEC File No. 333-52965, filed September 1, 1999.

(3) Incorporated by reference from Articles IV, VI and X of Registrant's
Trust Instrument and from Articles VI and IX of Registrant's By-Laws.

(4) Incorporated by reference from Post-Effective Amendment No. 7 to the
registration statement, SEC File No. 333-52965, filed April 27, 2000.

(5) Incorporated by reference from Post-Effective Amendment No. 6 to the
registration statement, SEC File No. 333-52965, filed November 9, 1999.

(6) Incorporated by reference from Post-Effective Amendment No. 29 to the
registration statement of PaineWebber Mutual Fund Trust, SEC File No.
2-98149, filed June 27, 2000.