<PAGE>
LIR PREMIER FUNDS SEMIANNUAL REPORT
August 15, 2000
Dear Shareholder,
We are pleased to present you with the semiannual report for LIR Premier Money
Market Fund and LIR Premier Tax-Free Money Market Fund for the six-month period
ended June 30, 2000.
MARKET REVIEW
--------------------------------------------------------------------------------
[GRAPHIC]
During this six-month period, all eyes pointed toward the Federal Reserve as
three rate hikes in February, March and May totaling 1% during the period raised
the Federal Funds rate to 6.5% in an attempt to slow down the economy. A tight
labor market remained a concern, as did escalating gasoline prices and a gross
domestic product (GDP) annual growth rate of 5.5% during the first quarter.
However, GDP is expected to slow to around 3.5% annually by year-end and other
signs, including slowing housing starts, signal that the economy may be cooling
or feeling the effects of the Federal Reserve's previous tightening moves.
The U.S. Treasury's announcement in January to buy back $30 billion in Treasury
debt during 2000 continued to drive down yields on the 30-year Treasury, causing
a dramatic yield curve inversion and creating only a 50 basis-point difference
between two-year notes and the 30-year bond. (A basis point equals 1/100th of
one percent.) The long bond began the period with a yield of 6.48% and closed
with a yield of 5.90%. The yield on 90-day Treasury bills closed at 5.86%, a
difference of only four basis points.
PORTFOLIO REVIEW
--------------------------------------------------------------------------------
LIR PREMIER MONEY MARKET FUND
Performance and Characteristics* 6/30/00 12/31/99
--------------------------------------------------------------------------------
7-Day Current Yield 5.66% 4.79%
7-Day Effective Yield 5.82% 4.90%
Weighted Average Maturity 34 days 40 days
Net Assets ($ billions) $1.971 $1.778
--------------------------------------------------------------------------------
* Yields will vary. Weightings represent percentages of net assets as of the
dates indicated. The Funds are actively managed and their portfolio
composition will vary over time.
LIRPREMIER MONEYMARKET FUND
Investment Goal:
High level of current income consistent with preservation of capital and
liquidity
Portfolio Manager:
Susan P.Ryan
Mitchell Hutchins Asset
Management Inc.
Commencement:
5/20/91 (predecessor fund)
Dividend Payments:
Monthly
LIRPREMIER TAX-FREE MONEYMARKET FUND
Investment Goal:
High level of current income exempt from federal income tax consistent with
preservation of capital and liquidity
Portfolio Manager:
Debbie Vermann
Mitchell Hutchins Asset
Management Inc.
Commencement:
10/7/96 (predecessor fund)
Dividend Payments:
Monthly
1
<PAGE>
SEMIANNUAL REPORT LIR PREMIER FUNDS
LIR PREMIER MONEY MARKET FUND (continued)
Sector Allocation* 6/30/00 12/31/99
--------------------------------------------------------------------------------
Commercial Paper 72.9% 60.4%
U.S. Government/Agency 13.3 18.2
Bank Obligations 7.2 18.4
Short-Term Corporate Obligations 4.6 0.7
Money Market Funds 1.9 0.0
Other Assets 0.1 0.5
Repurchase Agreements 0.0 1.8
--------------------------------------------------------------------------------
Total 100.0 100.0
LIR PREMIER TAX-FREE MONEY MARKET FUND
Performance and Characteristics* 6/30/00 12/31/99
--------------------------------------------------------------------------------
7-Day Current Yield 3.89% 3.59%
7-Day Effective Yield 3.96% 3.66%
Weighted Average Maturity 21 days 31 days
Net Assets ($mm) $112.1 $109.7
--------------------------------------------------------------------------------
Sector Allocation* 6/30/00 12/31/99
--------------------------------------------------------------------------------
Municipal Bonds 90.5% 77.8%
Commercial Paper 9.8 21.5
Cash -0.3 0.7
--------------------------------------------------------------------------------
Total 100.0 100.0
* Yields will vary. Weightings represent percentages of net assets as of the
dates indicated. The Funds are actively managed and their portfolio
composition will vary over time.
PORTFOLIO HIGHLIGHTS
Liquidity and credit quality continued to be our overriding focus during this
period of uncertainty. Thus, the Funds had average weighted maturities in line
with their peers. Our investment management team emphasized credit quality,
concentrating on the top-rated debt instruments and looking for competitive
YIELDS.
2
<PAGE>
LIR PREMIER FUNDS SEMIANNUAL REPORT
OUTLOOK
--------------------------------------------------------------------------------
One more Fed Fund hike--at the August 22 meeting or beyond--can't be discounted
despite signs that the belt-tightening has begun to slow growth. If moderate
growth is sustained, however, we expect that much of the uncertainty in the debt
market will subside. The obstacles that could change this outlook are a
continued tight labor market, where increased costs to employers could leak into
general inflation rate increases, and gasoline prices, which at this writing
seem to have peaked and begun a slow descent. We believe a drop in rates across
the yield curve will occur if the economy slows as expected, and that rates will
stabilize if GDP slows to 3.5% annually for 2000 and 3.0% annually for 2001.
We thank you for your continued support and welcome any comments or questions
you may have.
Sincerely,
/s/MARGO ALEXANDER /s/BRIAN M. STORMS
MARGO ALEXANDER BRIAN M. STORMS
Chairman and Chief Executive Officer President and Chief Operating Officer
Mitchell Hutchins Asset Management Inc. Mitchell Hutchins Asset Management Inc.
/s/SUSAN P. RYAN /s/DEBBIE VERMANN
SUSAN P. RYAN DEBBIE VERMANN
Portfolio Manager Portfolio Manager
LIR Premier Money Market Fund LIR Premier Tax-Free Money Market Fund
This letter is intended to assist shareholders in understanding how the Funds
performed during the six-month period ended June 30, 2000, and reflects our
views at the time of its writing. Of course, these views may change in response
to changing circumstances. We encourage you to consult your Investment
Representative regarding your personal investment program.
3
<PAGE>
LIR Premier Money Market Fund
Statement of Net Assets June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
---------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
U.S. Agency Obligations -- 13.32%
$ 61,586 Federal Home Loan Bank.. 07/06/00 to 07/07/00 6.450 to 6.460% $ 61,528,684
10,000 Federal Home Loan Bank.. 07/03/00 6.720 9,998,410
6,000 Federal Home Loan
Mortgage............... 07/11/00 6.470 5,989,216
10,000 Federal National
Mortgage Association... 08/09/00 6.620* 9,999,467
175,000 Student Loan Marketing
Association............ 07/05/00 6.284 to 6.695* 174,956,505
------------
Total U.S. Agency Obligations
(cost -- $262,472,282)............. 262,472,282
------------
Bank Notes -- 1.02%
Domestic -- 0.51%
10,000 Comerica Bank........... 06/07/01 6.573* 9,997,197
------------
Yankee -- 0.51%
10,000 Westpac Banking
Corporation............ 07/17/00 5.650 9,999,790
------------
Total Bank Notes (cost --
$19,996,987)...................... 19,996,987
------------
Certificates of Deposit -- 6.24%
Yankee -- 6.24%
10,000 Bank of Nova Scotia..... 02/20/01 6.750 9,996,962
28,000 Commerzbank AG.......... 04/30/01 to 06/29/01 6.920 to 7.140 27,994,549
10,000 Rabobank Nederland...... 02/22/01 6.760 9,996,934
10,000 Royal Bank of Canada.... 03/19/01 6.750 9,997,975
20,000 Svenska Handelsbanken... 05/02/01 to 05/16/01 6.995 to 7.320 20,001,255
15,000 UBS AG.................. 06/22/01 7.080 14,994,466
30,000 Westpac Banking
Corporation............ 01/18/01 to 05/14/01 6.545 29,996,076
------------
Total Certificates of Deposit
(cost -- $122,978,217)............. 122,978,217
------------
Commercial Paper@ -- 72.92%
Asset Backed - Auto & Truck -- 2.54%
50,000 New Center Asset Trust.. 07/03/00 7.040 49,980,444
------------
Asset Backed - Banking -- 8.66%
73,611 Atlantis One Funding.... 07/06/00 to 07/17/00 6.570 to 6.580 73,463,352
41,930 Centric Capital
Corporation............ 07/03/00 to 07/31/00 6.500 to 6.830 41,775,668
55,573 Woodstreet Funding
Corporation............ 07/10/00 to 07/19/00 6.550 to 6.600 55,408,113
------------
170,647,133
------------
Asset Backed - Miscellaneous --
14.85%
11,157 Delaware Funding
Corporation............ 07/27/00 6.580 11,103,979
53,910 Falcon Asset
Securitization
Corporation............ 07/05/00 to 08/04/00 6.545 to 6.600 53,665,388
8,921 Giro Funding US
Corporation............ 07/14/00 6.540 8,899,932
65,000 Preferred Receivables
Funding Corporation.... 07/18/00 to 08/03/00 6.550 to 6.620 64,730,421
46,831 Quincy Capital
Corporation............ 08/03/00 to 08/11/00 6.580 to 6.600 46,493,837
58,084 Triple A One Funding.... 07/05/00 to 07/28/00 6.590 to 6.990 58,005,211
15,000 Variable Funding Capital
Corporation............ 08/03/00 6.570 14,909,663
35,000 Variable Funding Capital
Corporation............ 07/07/00 to 07/14/00 6.458 to 6.593* 35,000,000
------------
292,808,431
------------
</TABLE>
4
<PAGE>
LIR Premier Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
---------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
Commercial Paper@ -- (continued)
Auto & Truck -- 11.53%
$ 40,645 BMW US Capital
Incorporated........... 07/10/00 to 07/21/00 6.150 to 6.550% $ 40,553,369
50,000 Daimler-Chrysler N.A.
Holding Corporation.... 07/12/00 6.810 49,895,958
60,000 Ford Motor Credit
Corporation............ 07/18/00 to 07/24/00 6.520 to 6.530 59,804,164
50,000 General Motors
Acceptance Corporation. 07/31/00 6.550 49,727,083
27,330 PACCAR Financial
Corporation............ 07/05/00 to 07/26/00 6.500 27,282,469
------------
227,263,043
------------
Banking - Domestic -- 1.76%
25,000 Abbey National North
America................ 07/17/00 6.150 24,931,667
10,000 Bank of America
Corporation............ 10/10/00 6.640 9,813,711
------------
34,745,378
------------
Broker - Dealer -- 6.73%
55,000 Bear Stearns Companies,
Incorporated........... 07/10/00 to 08/03/00 6.130 to 6.550 54,803,921
23,126 Merrill Lynch & Co.,
Incorporated........... 07/31/00 to 10/11/00 6.570 to 6.610 22,866,852
25,000 Morgan Stanley, Dean
Witter & Company....... 07/26/00 to 08/07/00 6.600 24,885,417
30,000 Morgan Stanley, Dean
Witter & Company....... 08/07/00 6.838* 30,000,000
------------
132,556,190
------------
Building Materials -- 0.55%
11,000 Sherwin-Williams
Company................ 07/24/00 6.520 10,954,179
------------
Chemicals -- 1.21%
24,000 Henkel Corporation...... 07/14/00 to 07/19/00 6.500 to 6.570 23,932,530
------------
Consumer Products -- 1.52%
30,000 Procter & Gamble
Company................ 07/12/00 to 07/31/00 6.500 to 6.520 29,871,472
------------
Drugs, Health Care -- 2.53%
25,000 Pfizer Incorporated..... 07/25/00 6.520 24,891,333
25,000 Warner Lambert Company.. 07/14/00 6.520 24,941,139
------------
49,832,472
------------
Energy -- 2.03%
40,000 Exxon Imperial U.S.
Incorporated........... 07/06/00 6.550 39,963,611
------------
Finance - Consumer -- 2.53%
50,000 Household Finance
Corporation............ 07/26/00 6.530 49,773,264
------------
Finance - Conduit -- 2.28%
45,000 UBS Finance (Delaware)
LLC.................... 07/05/00 6.700 44,966,500
------------
Finance - Retail -- 2.28%
45,000 American Express Credit
Company................ 07/07/00 6.520 44,951,100
------------
Finance - Subsidiary -- 0.51%
10,000 Deutsche Bank Financial
Incorporated........... 07/24/00 6.560 9,958,089
------------
</TABLE>
5
<PAGE>
LIR Premier Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
---------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
Commercial Paper@ -- (concluded)
Insurance -- 3.43%
$ 45,000 AEGON Funding........... 07/05/00 to 07/06/00 6.120 to 6.520% $ 44,965,494
22,600 Teacher Insurance &
Annuity Association of
America................ 07/11/00 6.560 22,558,818
--------------
67,524,312
--------------
Insurance - Property/Casualty --
0.76%
15,000 A I Credit Corporation.. 07/06/00 6.770 14,985,896
--------------
Manufacturing - Diversified -- 0.31%
6,200 United Technologies
Corporation............ 07/13/00 6.520 6,186,525
--------------
Metals & Mining -- 0.80%
15,810 Rio Tinto America
Incorporated........... 07/05/00 6.510 15,798,564
--------------
Telecommunications -- 5.62%
50,000 American Telephone &
Telegraph.............. 07/11/00 5.570 49,908,750
28,700 BellSouth
Telecommunications..... 07/18/00 6.510 28,611,771
32,500 SBC Communications
Incorporated........... 07/24/00 to 08/16/00 6.530 32,308,091
--------------
110,828,612
--------------
Utility - Electric -- 0.49%
9,585 Southern Company........ 07/11/00 6.590 9,567,455
--------------
Total Commercial Paper (cost --
$1,437,095,200)................... 1,437,095,200
--------------
Short-Term Corporate Obligations --
4.56%
Asset Backed - Finance -- 1.78%
20,000 Beta Finance
Incorporated........... 01/19/01 to 06/26/01 6.280 to 7.080 20,000,000
15,000 Beta Finance
Incorporated........... 07/03/00 6.960* 15,000,000
--------------
35,000,000
--------------
Banking - Domestic -- 0.76%
15,000 Morgan (J.P.) & Co.
Incorporated........... 07/17/00 6.640* 15,000,000
--------------
Banking - Foreign -- 0.76%
15,000 Bank of Scotland
Treasury Services PLC.. 07/06/00 6.636* 15,000,000
--------------
Broker - Dealer -- 1.26%
25,000 Merrill Lynch & Co.,
Incorporated........... 07/06/00 6.616* 24,998,320
--------------
Total Short-Term Corporate
Obligations (cost -- $89,998,320).. 89,998,320
--------------
</TABLE>
6
<PAGE>
LIR Premier Money Market Fund
<TABLE>
<CAPTION>
Number of
Shares
(000) Value
---------- --------------
<S> <C> <C>
Money Market Funds -- 1.86%
28,979 AIM Liquid Assets Portfolio............................... $ 28,978,510
7,599 AIM Prime Portfolio....................................... 7,599,188
--------------
Total Money Market Funds (cost -- $36,577,698)....................... 36,577,698
--------------
Total Investments (cost -- $1,969,118,704 which approximates
cost for federal income tax purposes) -- 99.92%..................... 1,969,118,704
Other assets in excess of liabilities -- 0.08%....................... 1,573,584
--------------
Net Assets (applicable to
1,971,501,287 shares of beneficial
interest outstanding equivalent to
$1.00 per share) -- 100.00%......................................... $1,970,692,288
==============
</TABLE>
---------
* Variable rate securities -- maturity date reflects earlier of reset date or
stated maturity date. The interest rates shown are the current rates as of
June 30, 2000, and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity -- 34 days
See accompanying notes to financial statements
7
<PAGE>
LIR Premier Tax-Free Money Market Fund
Statement of Net Assets June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
---------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
Tax-Exempt Commercial Paper -- 9.76%
Alabama -- 0.89%
$ 1,000 Intermountain Power
Agency................. 09/13/00 4.050% $ 1,000,000
------------
Florida -- 2.14%
2,400 Florida Local Government
Finance Commission,
Series A............... 08/10/00 to 09/07/00 4.100 to 4.600 2,400,000
------------
Georgia -- 1.34%
1,500 Burke County Development
Authority Control
Revenue................ 07/21/00 4.000 1,500,000
------------
Illinois -- 1.78%
1,000 Illinois Education
Facilities Authority
Revenue (Field Museum). 09/07/00 4.650 1,000,000
1,000 Illinois Health
Facilities Authority
Revenue (Evanston
Hospital).............. 11/15/00 4.200 1,000,000
------------
2,000,000
------------
Indiana -- 1.83%
1,045 Hoosier City of Sullivan
National Rural
Utilities (Hoosier
Energy)................ 09/07/00 4.750 1,045,000
1,000 Plaquemines Port
Authority PCR (Tampa
Electric).............. 09/11/00 4.800 1,000,000
------------
2,045,000
------------
New York -- 0.89%
1,000 Metropolitan
Transporation
Authority.............. 10/11/00 4.600 1,000,000
------------
Tennessee -- 0.89%
1,000 Tennessee School Board.. 07/18/00 4.000 1,000,000
------------
Total Tax-Exempt Commercial Paper
(cost -- $10,945,000).............. 10,945,000
------------
Municipal Bonds and Notes -- 90.49%
Alabama -- 0.89%
1,000 Mobile Industrial
Development Board Dock
and Wharf
(Holnam Inc)........... A 4.750 1,000,000
------------
Arizona -- 2.67%
1,500 Apache County Industrial
Development Authority
(Tuscon Electric)...... A 4.700 1,500,000
1,500 Pima County Industrial
Development Authority
Revenue (Tuscon
Electric Light & Power
Improvements).......... A 4.850 1,500,000
------------
3,000,000
------------
District of Columbia -- 0.89%
1,000 District of Columbia
Revenue Bond........... A 4.650 1,000,000
------------
Florida -- 4.78%
1,255 Broward County Housing
Revenue (Lake Park).... A 4.750 1,255,000
1,800 Dade County Water &
Sewer System Revenue... A 4.700 1,800,000
</TABLE>
8
<PAGE>
LIR Premier Tax-Free Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
---------- -------------- -------------- ------------
<C> <S> <C> <C> <C>
Municipal Bonds and Notes --
(continued)
Florida (concluded)
$ 1,200 Jacksonville County
Electric Authority..... A 4.550% $ 1,200,000
1,100 Volusia County Housing
Finance Authority (Sun
Pointe Apartments
Project)............... A 5.100 1,100,000
------------
5,355,000
------------
Georgia -- 5.66%
1,750 De Kalb Private Hospital
Authority, Revenue
Anticipation Bonds
(Eagleston Children's
Health Center)......... A 4.750 1,750,000
2,700 Fulco Hospital Revenue
Authority (Shepherd
Center)................ A 3.850 2,700,000
500 Gwinett County Revenue
Bonds (Post Court)..... A 4.750 500,000
1,400 Savannah County Economic
Revenue Bond (YMCA
Coastal)............... A 4.750 1,400,000
------------
6,350,000
------------
Illinois -- 14.96%
2,500 Chicago O'Hare
International Airport
Revenue, Series C,
General Airport, Second
Lien................... A 4.650 2,500,000
500 Cook County Public
Improvements, GO, MBIA. 11/01/00 6.750 514,894
1,000 Illinois Development
Finance Authority
(Jewish Federation).... A 4.800 1,000,000
1,800 Illinois Development
Finance Authority, PCR
(A.E. Staley
Manufacturing Co.)..... A 4.700 1,800,000
1,800 Illinois Educational
Facilities Authority
Revenue, Series Cp-1
(Depaul University).... A 4.700 1,800,000
1,860 Illinois Health
Facilities Authority
Revenue, Series B
(Advocate Health Care). A 4.900 1,860,000
1,900 Illinois Health
Facilities Authority
Revenue (Combined
Health & NW Community). A 4.700 1,900,000
300 Illinois Health
Facilities Authority
Revenue (Elmhurst
Memorial Health
System)................ A 4.700 300,000
1,000 Illinois Health
Facilities Authority
Revenue (Evanston
Hospital Corp.
Project)............... 11/30/00 4.000 1,000,000
300 Illinois Health
Facilities Authority
Revenue, Series A
(Resurrection Health
Care).................. A 4.650 300,000
1,000 Illinois Health
Facilities Authority
Revenue (University of
Chicago)............... A 4.650 1,000,000
1,800 Illinois Health
Facilities Authority
Revenue (University of
Chicago)............... A 4.550 1,800,000
1,000 Illinois State Toll
Highway Authority, Toll
Highway Priority
Refunding Revenue,
Series B............... A 4.700 1,000,000
------------
16,774,894
------------
Indiana -- 2.23%
500 Indiana Health
Facilities Financing
Authority, Hospital
Revenue (Aces
Rehabilitation
Hospital).............. A 4.700 500,000
1,000 Indiana Municipal Power
Agency, Series A
(Agency Power Supply
System Revenue)........ A 4.750 1,000,000
1,000 Rockport, PCR, Series B
(Indiana Power Co.
Project)............... A 4.900 1,000,000
------------
2,500,000
------------
Louisiana -- 5.30%
1,750 Calcasieu Parish
Louisiana Sales Tax
District............... A 4.850 1,750,000
400 East Baton Rouge Parish
Louisiana PCR (Exxon
Project)............... A 4.500 400,000
2,300 Louisiana Public
Facilities Authority,
Series 1985............ A 4.450 2,300,000
1,500 Louisiana State Offshore
Terminal Authority
(Loop)................. A 4.650 1,500,000
------------
5,950,000
------------
</TABLE>
9
<PAGE>
LIR Premier Tax-Free Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
---------- -------------- -------------- ------------
<C> <S> <C> <C> <C>
Municipal Bonds and Notes --
(continued)
Massachusetts -- 2.68%
$ 1,000 Massachusetts Bay
Transit Authority,
Series A, GO........... 09/01/00 4.250% $ 999,830
1,000 Massachusetts Municipal
Wholesale Electrical
Corp., Power Supply
System Revenue,
Series C............... A 4.600 1,000,000
1,000 Massachusetts Health &
Education Facilities
Authority, Revenue
Bonds (Harvard
University)............ A 4.500 1,000,000
------------
2,999,830
------------
Michigan -- 5.92%
2,000 Delta County Economic
Development Corp.,
Environmental
Improvement Revenue,
Series D (Mead Escanaba
Paper Co.)............. A 4.500 2,000,000
1,800 Detroit Sewer Disposal
Facilities Authority
Revenue................ A 4.950 1,800,000
1,000 Michigan State Finance
Authority School Loan
Notes.................. 04/23/01 5.000 1,005,831
1,840 Michigan State Hospital
Finance Authority
Revenue, Series A (St.
Mary Hospital of
Livonia Project)....... A 4.950 1,840,000
------------
6,645,831
------------
Minnesota -- 0.45%
500 Minnesota School
Districts Tax and
Anticipation
Certificates........... 02/16/01 4.750 501,810
------------
Mississippi -- 0.36%
400 Harrison County, PCR
(E.I. Dupont De
Nemours)............... A 4.550 400,000
------------
Missouri -- 2.41%
1,200 Columbia, Missouri
Special Obligation..... A 4.750 1,200,000
1,500 Missouri Health &
Education Facilities
Authority Revenue,
Series A
(Medical Research
Facilities -- Stowers). A 4.750 1,500,000
------------
2,700,000
------------
Nebraska -- 2.05%
1,000 Nebraska Help Increase
Revenue, Revenue Bond.. A 4.700 1,000,000
1,300 Nebraska Help Increase
Revenue, Series E,
Student Loan Revenue
Bond, MBIA............. A 4.700 1,300,000
------------
2,300,000
------------
New Hamsphire -- 1.25%
1,400 State Housing Finance
Authority, Multi-Family
Revenues (EQR Bond
Partnership)........... A 4.900 1,400,000
------------
New Mexico -- 1.43%
1,600 University of New Mexico
(University Revenue)... A 4.700 1,600,000
------------
New York -- 2.32%
1,500 City of New York........ A 4.450 to 4.750 1,500,000
1,000 City of New York
Transitional Financial
Authority.............. 11/01/00 4.850 1,000,000
100 New York Medical Care
Facilities Financing
Agency Revenue Series A
(Pooled Equipment Loan
Program II)............ A 4.500 100,000
------------
2,600,000
------------
</TABLE>
10
<PAGE>
LIR Premier Tax-Free Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
---------- -------------- -------------- ------------
<C> <S> <C> <C> <C>
Municipal Bonds and Notes --
(continued)
North Carolina -- 4.99%
$ 1,700 North Carolina
Educational Facilities
(Duke University)...... A 4.750% $ 1,700,000
1,000 North Carolina
Educational Facilities,
Finance Agency Revenue,
Series B (Elon
University)............ A 4.750 1,000,000
1,400 Union County PCR (Square
D), Revenue Bonds...... A 4.700 1,400,000
1,500 University of North
Carolina Chapel Hill
Foundation
(Certificates of
Participation)......... A 4.700 1,500,000
------------
5,600,000
------------
Ohio -- 2.76%
3,100 Ohio State Air Quality
Development Authority
(Ohio Edison).......... A 4.550 to 4.800 3,100,000
------------
Oregon -- 0.89%
1,000 Oregon State Housing &
Community Service
Single Family.......... 06/21/01 4.500 1,000,000
------------
Pennsylvania -- 7.17%
2,600 Bucks County Industrial
Development Authority,
Revenue Bonds
(SHV Real Estate)...... A 4.600 2,600,000
2,000 Delaware Valley
Regulatory Financing
Authority, Local
Government Revenue,
Series A............... A 4.750 2,000,000
1,000 Pennsylvania State
Higher Education
Facilities............. 03/01/01 7.375 1,039,965
500 Philadelphia Authority
for Industrial
Development (Fox Chase
Cancer Center Project). A 4.500 500,000
900 Philadelphia Water &
Waste Revenue, Series
B...................... A 4.700 900,000
1,000 University of Pittsburgh
Commonwealth System.... 05/23/01 5.200 1,004,693
------------
8,044,658
------------
South Carolina -- 2.23%
1,500 South Carolina Jobs
Economic Development
Authority, Hospital
Facilities Revenue..... A 4.700 1,500,000
1,000 Spartanburg County
School District........ 02/15/01 4.750 1,003,426
------------
2,503,426
------------
Tennessee -- 2.41%
2,200 Metropolitan Government
Nashville & Davidson
County (Vanderbilt
University)............ A 4.700 2,200,000
500 Tennessee Housing
Development Authority
(Home Owner)........... A 4.700 500,000
------------
2,700,000
------------
Texas -- 7.99%
1,000 Austin County Industrial
Development Corp.,
Industrial Development
Revenue (Justin
Industries, Inc.
Project)............... A 4.750 1,000,000
2,150 Brazos River Harbor
Navigation District
Brazoria County Revenue
Series A (Dow Chemical
Co. Project)........... A 4.550 2,150,000
1,000 Houston Independent
School District, Series
A, GO, PSF-GTD......... 08/15/00 5.200 1,001,431
1,000 Red River PCR
(Southwestern Public
Service)............... A 4.750 1,000,000
800 Sabine River Authority
Texas Pollution Control
Revenue (Texas Utility
Project Series A)...... A 4.550 800,000
3,000 Texas State Tax and
Revenue Anticipation
Notes Series A......... 08/31/00 4.500 3,003,840
------------
8,955,271
------------
</TABLE>
11
<PAGE>
LIR Premier Tax-Free Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
---------- -------------- -------------- ------------
<C> <S> <C> <C> <C>
Municipal Bonds and Notes --
(concluded)
Virginia -- 2.59%
$ 1,200 Loudoun County
Industrial Development
Authority Revenue
(Falcons
Landing Project)....... A 4.750% $ 1,200,000
1,000 Louisa Industrial
Development Authority
(Virginia Electric
Power)................. 10/13/00 4.600 1,000,000
700 Roanoke Industrial
Development Authority
Hospital Revenue
(Carilion
Health Systems
Series A).............. A 4.550 700,000
------------
2,900,000
------------
Washington -- 1.78%
2,000 Washington State, Series
96B, GO................ A 4.750 2,000,000
------------
Wisconsin -- 0.54%
600 La Crosse Pollution
Control Revenue
Refunding (Dairyland
Power Cooperative
Series A).............. A 4.450 600,000
------------
Wyoming -- 0.89%
1,000 Lincoln County PCR
(Exxon)................ A 4.550 1,000,000
------------
Total Municipal Bonds and Notes
(cost -- $101,480,720)............. 101,480,720
------------
Total Investments (cost --
$112,425,720 which approximates
cost for federal income tax
purposes) -- 100.25%............... 112,425,720
Liabilities in excess of other
assets -- (0.25)%.................. (283,628)
------------
Net Assets (applicable to
112,141,200 shares of beneficial
interest outstanding at $1.00 per
share) -- 100.00%.................. $112,142,092
============
</TABLE>
---------
A Variable rate demand notes are payable on demand. The interest rates
shown are the current rates as of June 30, 2000, and reset periodically.
GO General Obligation
MBIA Municipal Bond Investors Assurance
PCR Pollution Control Revenue
PSF-GTD Permanent School Fund Guarantee
Weighted Average Maturity -- 21 Days
See accompanying notes to financial statements
12
<PAGE>
Mitchell Hutchins LIR Money Series
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
June 30, 2000 (unaudited)
------------------------------
Premier Premier Tax-Free
Money Market Money Market
Fund Fund
------------ ----------------
<S> <C> <C>
Investment income:
Interest......................................... $62,522,057 $2,457,635
----------- ----------
Expenses:
Distribution and service fees.................... 6,055,447 378,070
Investment advisory and administration........... 2,056,109 126,023
State and federal registration fees.............. 410,716 29,173
Transfer agency and related services fees........ 388,577 12,693
Custody and accounting........................... 135,889 16,019
Legal and audit.................................. 111,077 30,071
Reports and notices to shareholders.............. 76,917 18,381
Insurance expense................................ 14,560 1,091
Trustees' fees................................... 5,250 5,250
Other expenses................................... 46,096 2,002
----------- ----------
9,300,638 618,773
Less: Fee waivers and expense reimbursements from
adviser......................................... (70,690) (182,445)
----------- ----------
Net expenses..................................... 9,229,948 436,328
----------- ----------
Net investment income............................ 53,292,109 2,021,307
Net realized gains (losses) from investment
transactions.................................... 12,654 (231)
----------- ----------
Net increase in net assets resulting from
operations...................................... $53,304,763 $2,021,076
=========== ==========
</TABLE>
See accompanying notes to financial statements
13
<PAGE>
LIR Premier Money Market Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six
Months Ended For the
June 30, 2000 Year Ended
(unaudited) December 31, 1999
-------------- -----------------
<S> <C> <C>
From operations:
Net investment income....................... $ 53,292,109 $ 72,087,587
Net realized gains from investment
transactions............................... 12,654 38,118
-------------- --------------
Net increase in net assets resulting from
operations................................. 53,304,763 72,125,705
-------------- --------------
Dividends to shareholders from:
Net investment income....................... (53,292,109) (72,087,587)
-------------- --------------
Net increase in net assets from beneficial
interest transactions...................... 192,349,772 390,388,354
-------------- --------------
Net increase in net assets.................. 192,362,426 390,426,472
Net assets:
Beginning of period......................... 1,778,329,862 1,387,903,390
-------------- --------------
End of period............................... $1,970,692,288 $1,778,329,862
============== ==============
</TABLE>
See accompanying notes to financial statements
14
<PAGE>
LIR Premier Tax-Free Money Market Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six
Months Ended
June 30, For the
2000 Year Ended
(unaudited) December 31, 1999
------------ -----------------
<S> <C> <C>
From Operations:
Net investment income.......................... $ 2,021,307 $ 2,880,697
Net realized gains (losses) from investment
transactions.................................. (231) 93
------------ ------------
Net increase in net assets resulting from
operations.................................... 2,021,076 2,880,790
------------ ------------
Dividends and distributions to shareholders
from:
Net investment income.......................... (2,021,307) (2,880,697)
Net realized gains from investment
transactions.................................. -- (1,226)
------------ ------------
Total dividends and distributions to
shareholders.................................. (2,021,307) (2,881,923)
------------ ------------
Net increase in net assets from beneficial
interest transactions......................... 2,441,142 6,881,382
------------ ------------
Net increase in net assets..................... 2,440,911 6,880,249
Net assets:
Beginning of period............................ 109,701,181 102,820,932
------------ ------------
End of period.................................. $112,142,092 $109,701,181
============ ============
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
Notes to Financial Statements (unaudited)
Organization and Significant Accounting Policies
Mitchell Hutchins LIR Money Series (the "Trust") is registered with the Secu-
rities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company organized as
a Delaware business trust on April 29, 1998. The Trust is a series mutual fund
with five funds: Mitchell Hutchins LIR Select Money Fund ("LIR Select Money
Fund"), LIR Premier Money Market Fund and LIR Premier Tax-Free Money Market
Fund (collectively, the "Funds"), LIR Cash Reserves Fund and LIR Liquid Assets
Fund. The financial statements for the LIR Select Money Fund, LIR Cash Reserves
Fund and LIR Liquid Assets Fund are not included herein.
In November and December 1999, the shareholders of Correspondent Cash Reserves
Money Market Portfolio and Correspondent Cash Reserves Tax Free Money Market
Portfolio approved an Agreement and Plan of Conversion and Termination to reor-
ganize into LIR Premier Money Market Fund and LIR Premier Tax-Free Money Market
Fund, respectively. This reorganization occurred on January 21, 2000. The Funds
are successors to those other funds.
The preparation of financial statements in accordance with accounting princi-
ples generally accepted in the United States requires the Funds' management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
Certain prior year financial statement items have been reclassified to conform
to the current period presentation. The following is a summary of significant
accounting policies:
Valuation and Accounting for Investments and Investment Income--Investments
are valued at amortized cost which approximates market value. Investment trans-
actions are recorded on the trade date. Realized gains and losses from invest-
ment transactions are calculated using the identified cost method. Interest in-
come is recorded on an accrual basis. Premiums are amortized and discounts are
accreted as adjustments to interest income and the identified cost of invest-
ments.
Repurchase Agreements--The LIR Premier Money Market Fund's custodian takes
possession of the collateral pledged for investments in repurchase agreements.
The underlying collateral is valued daily on a mark-to-market basis to ensure
that the value, including accrued interest, is at least equal to the repurchase
price. In the event that a counterparty defaults on its obligation to repur-
chase, the Fund has the right to liquidate the collateral and apply the pro-
ceeds in satisfaction of the obligation. Under certain circumstances, in the
event of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral may be subject to legal proceedings.
Dividends and Distributions--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these differ-
ences are permanent in nature, such amounts are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary differences do
not require reclassification.
Concentration of Risk
The ability of the issuers of the debt securities held by the Funds to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
Investment Adviser and Administrator
The Trust has entered into an Investment Advisory and Administration Contract
("Advisory Contract") under which Mitchell Hutchins Asset Management Inc
("Mitchell Hutchins"), a wholly owned asset management subsidiary of
16
<PAGE>
Notes to Financial Statements (unaudited)
PaineWebber Incorporated ("PaineWebber"), a wholly owned subsidiary of Paine
Webber Group Inc. ("PW Group"), serves as investment adviser and administrator
of each Fund. In accordance with the Advisory Contract, Mitchell Hutchins re-
ceives compensation from each Fund, computed daily and paid monthly, at an an-
nual rate of 0.20% of each Fund's average daily net assets. At June 30, 2000,
the LIR Premier Money Market Fund and LIR Premier Tax-Free Money Market Fund
owed Mitchell Hutchins $284,939 and $4,474, respectively, in investment advi-
sory and administration fees. Mitchell Hutchins has contractually undertaken to
reimburse a portion of expenses and/or waive fees to maintain each Fund's total
annual operating expenses at a level not to exceed 0.90%, and 0.68% of the
Fund's average daily net assets for LIR Premier Money Market Fund and LIR Pre-
mier Tax-Free Money Market Fund, respectively, through December 31, 2000. For
the six months ended June 30, 2000 Mitchell Hutchins reimbursed $70,690 and
$75,325 in other expenses to the LIR Premier Money Market Fund and LIR Premier
Tax-Free Money Market Fund, respectively.
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.
Distribution Plan
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 under the
Act. Pursuant to the Distribution Plan, each Fund pays Correspondent Services
Corporation ("CSC"), an affiliate of PaineWebber, a monthly distribution and
service fee at an annual rate of 0.60% of the average daily net assets of each
Fund. CSC uses the amounts that it receives under the Distribution Plan to pay
certain correspondent firms and other financial services firms (together with
CSC, the "Securities Firms") with which it has entered into agreements under
which the Securities Firms have agreed to perform certain services for their
clients who are shareholders of a fund. CSC also uses the Distribution Plan fee
to (1) spend such amounts as it deems appropriate on any activities or expenses
primarily intended to result in the sale of fund shares and (2) offset each
fund's marketing costs, included related overhead expenses. At June 30, 2000,
the LIR Premier Money Market Fund and LIR Premier Tax-Free Money Market Fund
owed CSC $927,331 and $40,179 in distribution and service fees. CSC is contrac-
tually obligated to waive 0.17% of the LIR Premier Tax-Free Money Market Fund's
12b-1 fees through December 31, 2000. For the six months ended June 30, 2000,
CSC waived $107,120 in distribution fees from the LIR Premier Tax-Free Money
Market Fund.
Other Liabilities
At June 30, 2000, dividends payable were $2,728,626, and $113,720 for LIR Pre-
mier Money Market Fund and LIR Premier Tax-Free Money Market Fund, respective-
ly.
Federal Tax Status
Each Fund intends to distribute all of its income and to comply with the other
requirements of the Internal Revenue Code applicable to regulated investment
companies. Accordingly, no provision for federal income taxes is required. In
addition, by distributing during each calendar year substantially all of its
net investment income, capital gains and certain other amounts, if any, each
Fund intends not to be subject to federal excise tax.
At December 31, 1999, the LIR Premier Money Market Fund (successor fund to the
Correspondent Cash Reserves Money Market Portfolio) had a capital loss
carryforward of approximately $853,194 which is available to offset future net
realized gains on securities transactions to the extent provided for in the
Code. The capital loss carryforward will expire in fiscal year 2002.
17
<PAGE>
Notes to Financial Statements (unaudited)
Money Market Fund Bond
Each Fund obtained an insurance bond that provides limited coverage for cer-
tain loss events involving certain money market instruments held by each Fund.
These loss events include non-payment of principal or interest or a bankruptcy
or insolvency of the issuer or credit enhancement provider (if any). The insur-
ance bond provides for coverage up to $200 million for a number of funds with a
deductible of 10 basis points (0.10%) of the total assets of each Fund for
First Tier Securities and 50 basis points (0.50%) of the total assets of each
Fund for Second Tier Securities, in each case determined as of the close of
business on the first business day prior to the loss event. In the event of a
loss covered under the insurance bond, each Fund would expect to retain the se-
curity in its portfolio, rather than having to sell it at its current market
value, until the date of payment of the loss, which is generally no later than
the maturity of the security. While the policy is intended to provide some pro-
tection against credit risk and to help each Fund maintain a constant price per
share of $1.00, there is no guarantee that the insurance will do so. For the
six months ended June 30, 2000, the Funds did not use this insurance bond.
Shares of Beneficial Interest
There is an unlimited amount of $0.001 par value shares of beneficial interest
authorized. Transactions in shares of beneficial interest, at $1.00 per share,
were as follows:
<TABLE>
<CAPTION>
For the Six For the Year
Months Ended Ended
June 30, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
LIR Premier Money Market Fund:
Shares sold.................................. 6,725,174,913 9,242,772,486
Shares repurchased........................... (6,583,966,180) (8,922,323,338)
Dividends reinvested......................... 51,141,039 69,939,206
-------------- --------------
Net increase in shares outstanding........... 192,349,772 390,388,354
============== ==============
LIR Premier Tax-Free Money Market Fund:
Shares sold.................................. 364,578,624 556,836,765
Shares repurchased........................... (364,096,583) (552,734,718)
Dividends reinvested......................... 1,959,101 2,779,335
-------------- --------------
Net increase in shares outstanding........... 2,441,142 6,881,382
============== ==============
</TABLE>
18
<PAGE>
LIR Premier Money Market Fund
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
For the Six
Months Ended For the Years Ended December 31,
June 30, 2000# --------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
Net investment income... 0.026 0.043 0.047 0.047 0.046 0.051
Dividends from net
investment income...... (0.026) (0.043) (0.047) (0.047) (0.046) (0.051)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total investment
return(1).............. 2.61% 4.40% 4.75% 4.77% 4.72% 5.24%
==== ==== ==== ==== ==== ====
Ratios/Supplemental
data:
Net assets, end of
period (000's)......... $1,970,692 $1,778,330 $1,387,903 $1,151,012 $1,007,265 $779,011
Expenses to average net
assets net of
waivers/reimbursements
from adviser........... 0.90%* 0.92% 0.93% 0.95% 0.88% 0.85%
Expenses to average net
assets before
waivers/reimbursements
from adviser........... 0.90%* 1.03% 1.04% 1.06% 1.01% 1.03%
Net investment income to
average net assets net
of
waivers/reimbursements
from adviser........... 5.18%* 4.32% 4.64% 4.68% 4.65% 5.14%
Net investment income to
average net assets
before
waivers/reimbursements
from adviser........... 5.18%* 4.21% 4.53% 4.57% 4.52% 4.96%
</TABLE>
---------
# The financial highlights for periods before January 21, 2000, reflect the
financial performance of Correspondent Cash Reserves Money Market
Portfolio, which reorganized into LIR Premier Money Market Fund on that
date.
* 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 less than one year has not been annualized.
19
<PAGE>
LIR Premier Tax-Free Money Market Fund
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
For the Six For the Years For the Period
Months Ended Ended December 31, October 7, 1996+
June 30, 2000# ---------------------------- through
(unaudited) 1999 1998 1997 December 31, 1996
-------------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net investment income... 0.016 0.025 0.028 0.029 0.010
Dividends from net
investment income...... (0.016) (0.025) (0.028) (0.029) (0.010)
------- ------- ------- ------- -------
Net asset value, end of
period................. $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total investment
return(1).............. 1.62% 2.53% 2.83% 2.90% 0.66%
==== ==== ==== ==== ====
Ratios/Supplemental
data:
Net assets, end of
period (000's)......... $112,142 $109,701 $102,821 $103,399 $80,409
Expenses to average net
assets net of
waivers/reimbursements
from adviser........... 0.68%* 0.74% 0.71% 0.78% 0.74%*
Expenses to average net
assets before
waivers/reimbursements
from adviser........... 0.98%* 1.05% 1.02% 1.18% 1.20%*
Net investment income to
average net assets net
of
waivers/reimbursements
from adviser........... 3.21%* 2.50% 2.79% 2.86% 2.80%*
Net investment income to
average net assets
before
waivers/reimbursements
from adviser........... 2.91%* 2.19% 2.48% 2.46% 2.34%*
</TABLE>
---------
+ Commencement of operations.
# The financial highlights for the periods before January 21, 2000, reflect
the financial performance of Correspondent Cash Reserves Tax Free Money
Market Portfolio, which reorganized into LIR Premier Tax-Free Money Market
Fund on that date.
* Annualized.
(1) Total investment return is calculated assuming $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
returns for the periods less than one year has not been annualized.
20
<PAGE>
--------------------------------------------------------------------------------
TRUSTEES
E. Garrett Bewkes, Jr. Meyer Feldberg
Chairman George W. Gowen
Margo N. Alexander Frederic V. Malek
Richard Q. Armstrong Carl W. Schafer
Richard R. Burt Brian M. Storms
Mary C. Farrell
PRINCIPAL OFFICERS
Margo N. Alexander Dennis L. McCauley
President Vice President
Dianne E. O'Donnell Susan P. Ryan
Vice President and Secretary Vice President
Paul H. Schubert Debbie Vermann
Vice President and Treasurer Vice President
INVESTMENT ADVISER,
ADMINISTRATOR AND
DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019
This report is not to be used in connection with the offering of shares of the
Fund unless accompanied or preceded by an effective prospectus.
The financial information included herein is taken from the records of the Fund
without examination by independent auditors who do not express an opinion
thereof.
<PAGE>
SEMIANNUAL REPORT
LIR PREMIER
MONEY MARKET
FUND
LIR PREMIER
TAX-FREE MONEY
MARKET FUND
Mitchell Hutchins
(C)2000 Mitchell Hutchins Asset Management Inc.
All Rights Reserved.
JUNE 30, 2000
