<PAGE>
LIR LIQUID ASSETS FUND SEMIANNUAL REPORT
Dear Shareholder, December 15, 2000
We are pleased to present you with the semiannual report for LIR Liquid Assets
Fund (the "Fund") for the six-month period ended October 31, 2000.
--------------------------------------------------------------------------------
LIR LIQUID ASSETS FUND
INVESTMENT GOAL:
Provide as high a level of current interest income as is consistent with
maintaining liquidity and principal stability.
PORTFOLIO MANAGER:
Susan P.Ryan, Mitchell Hutchins Asset Management Inc.
COMMENCEMENT:
February 14, 2000
DIVIDEND PAYMENTS:
Monthly
--------------------------------------------------------------------------------
MARKET REVIEW
--------------------------------------------------------------------------------
[GRAPHIC]
The six months ended October 31, 2000 began with fears that an overheated
economy would push the increase in the rate of inflation to potentially
disruptive levels--the period ended with some concern that economic growth had
been halted to the extent that it could endanger a hoped-for economic soft
landing. Uncertainty in the equity markets was further fueled by corporate
earnings disappointments, rising energy prices, and rising tensions in the
Middle East. These factors pulled investors increasingly to fixed income
investments, attracted by their relative security and stability of principal.
As the economy showed signs of slowing in October, and expectations of a
U.S. Federal Reserve Board (the "Fed") rate cut grew stronger, treasury yields
began to decline. Despite these declines, yields for the 90-day Treasury bill
rose 33 basis points while the 30-year bond rose three basis points (a basis
point equals 1/100th of one percent) during the six months ended October 31,
2000.
In the latter part of the fiscal period, as the markets struggled and the
economy began to show signs of slowing, the Fed continued to warn that inflation
was its primary concern as it contemplated the future course of interest rates
with a bias toward halting inflation. Late in the period and post-period,
however, home sales and durable goods sales began to dip while unemployment
figures rose. The Gross Domestic Product (GDP) for the third quarter was revised
downward to a 2.4% annual rate of increase, and Fed Chairman Alan Greenspan
noted for the first time in more than a year that inflation might not be the
Fed's primary concern any longer.
1
<PAGE>
SEMIANNUAL REPORT LIR LIQUID ASSETS FUND
PERFORMANCE AND PORTFOLIO REVIEW
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YIELD AND CHARACTERISTICS 10/31/00 4/30/00
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Seven-Day Average Yield(1) 6.48% 5.99%
Effective Seven-Day Average Yield(1) 6.69% 6.17%
Weighted Average Maturity 42 days 33 days
Net Assets ($mm) $429.1 $326.1
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Yields will fluctuate.
<TABLE>
<CAPTION>
SECTOR ALLOCATION* 10/31/00 4/30/00
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Paper 59.6% Commercial Paper 81.0%
Bank Obligations 19.6 Certificates of Deposit 9.2
U.S. Gov't & Agency 11.2 Short-Term Corporate Obligations 5.4
Short-Term Corporate Obligations 5.2 U.S. Gov't Agency 3.1
Money Market Funds 4.1 Money Market Funds 1.4
Other Assets in Excess of Liabilities 0.3 Liabilities in Excess of Other Assets -0.1
-------------------------------------------------------------------------------------------------------------
Total 100.0 Total 100.0
</TABLE>
* Weightings represent percentages of net assets. The Fund's portfolio is
actively managed and its composition will vary over time.
HIGHLIGHTS
Although we continue to seek only high-credit quality debt instruments, the
Fund significantly lowered the percentage of its assets invested in commercial
paper during this period, reducing the percentage from 81% to just under 60%. We
also increased the amount of U.S. Government and Agency debt held by the Fund
from 3.1% to 11.2%. The Fund's average weighted maturity also increased by about
27% during this time from 33 days to 42 days. During this period, Fannie Mae
issued the largest non-Treasury bond sale in U.S. history. Fixed income
investments generally performed well across the board during this period, with
money market returns increasing to their highest levels in quite some time.
2
<PAGE>
LIR LIQUID ASSETS FUND SEMIANNUAL REPORT
OUTLOOK
--------------------------------------------------------------------------------
[GRAPHIC]
Most signs now point to the economy growing at a sustainable pace during
the coming months. We expect the GDP to grow at about 2.0% during the fourth
quarter of this year, increasing slightly to 2.5% during the second quarter of
2001. Depending largely upon inflation figures, the Fed may lower the Federal
Funds rate by between 0.25% to 0.50% during the first half of 2001 to help
ensure that the economy lands softly, although tensions across the globe and the
continued energy crisis continue to be areas of concern. We will continue to
focus on providing the Fund's shareholders with the highest credit quality
investments.
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have. For a QUARTERLY REVIEW on a
fund in the PaineWebber Family of Funds(2), please contact your Financial
Advisor. For additional information, visit us at www.painewebber.com.
Sincerely,
/s/ Brian M. Storms /s/ Susan P. Ryan
BRIAN M. STORMS SUSAN P. RYAN
President and Senior Vice President
Chief Executive Officer Mitchell Hutchins Asset
Mitchell Hutchins Asset Management Inc.
Management Inc. Portfolio Manager,
LIR Liquid Assets Fund
This letter is intended to assist shareholders in understanding how the
Fund performed during the six-month period ended October 31, 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 Financial
Advisor regarding your personal investment program.
(2) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
3
<PAGE>
LIR LIQUID ASSETS FUND
STATEMENT OF NET ASSETS OCTOBER 31, 2000(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------------- --------------- --------------- ---------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--11.18%
$10,000 Federal Home Loan Bank ............................. 11/01/00 6.814%* $ 9,999,705
8,000 Federal Home Loan Mortgage Corp. ................... 11/30/00 6.400@ 7,958,756
10,000 Federal Home Loan Mortgage Corp. ................... 11/07/00 6.735* 10,000,000
20,000 Student Loan Marketing Association ................. 11/07/00 6.835 to 7.065* 19,992,755
---------------
Total U.S. Government Agency Obligations (cost--$47,951,216) . 47,951,216
---------------
BANKERS ACCEPTANCE--0.51%
2,232 Chase Manhattan Bank (cost--$2,171,669) ............ 04/02/01 6.400 2,171,669
---------------
DOMESTIC BANK NOTES--3.49%
10,000 Bank of America N.A. ............................... 12/18/00 6.530 10,000,000
5,000 La Salle Bank N.A. ................................. 09/13/01 6.750 4,998,973
---------------
Total Domestic Bank Notes (cost--$14,998,973) ................ 14,998,973
---------------
CERTIFICATES OF DEPOSIT--15.61%
DOMESTIC--2.33%
10,000 Wachovia Bank N.A. ................................. 12/28/00 6.550 10,000,000
---------------
EURO-DOLLAR--2.33%
10,000 Westdeutsche Landesbank Girozentrale ............... 12/29/00 6.590 10,000,153
---------------
YANKEE--10.95%
5,000 Bank of Nova Scotia ................................ 11/01/00 6.529* 4,999,037
10,000 Bank of Scotland ................................... 11/06/00 6.770 9,998,763
5,000 Commerzbank AG ..................................... 12/01/00 6.580* 4,999,279
5,000 Deutsche Bank AG ................................... 09/10/01 6.780 4,999,996
5,000 Societe Generale ................................... 11/20/00 6.565* 4,999,713
5,000 Societe Generale ................................... 04/10/01 6.800 4,999,273
10,000 Svenska Handelsbanken .............................. 03/07/01 to 05/08/01 6.620 to 7.170 9,997,585
2,000 UBS AG ............................................. 07/19/01 7.030 1,999,730
---------------
46,993,376
---------------
Total Certificates of Deposit (cost--$66,993,529) ............ 66,993,529
---------------
COMMERCIAL [email protected]%
ASSET BACKED-AUTO & TRUCK--2.29%
10,000 New Center Asset Trust ............................. 02/14/01 6.490 9,810,708
---------------
ASSET BACKED-BANKING--3.30%
14,200 Centric Capital Corp. .............................. 11/09/00 to 12/08/00 6.490 to 6.500 14,157,540
---------------
</TABLE>
4
<PAGE>
LIR LIQUID ASSETS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------------- --------------- --------------- ---------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONTINUED)
ASSET BACKED-MISCELLANEOUS--5.97%
$ 5,000 Asset Securitization Cooperative Corp. ............. 11/09/00 6.490% $ 4,992,789
15,000 Delaware Funding Corp. ............................. 11/17/00 6.500 14,956,666
5,700 Quincy Capital Corp. ............................... 11/17/00 6.510 5,683,508
---------------
25,632,963
---------------
AUTO & TRUCK--2.32%
10,000 DaimlerChrysler N.A. Holding Corp. ................. 12/01/00 6.480 9,946,000
---------------
BANKING-DOMESTIC--8.94%
1,200 Abbey National N.A. ................................ 11/03/00 6.480 1,199,568
5,000 BBL North America Funding Corp. .................... 11/14/00 6.490 4,988,282
10,000 Den Danske Corp. ................................... 12/18/00 6.460 9,915,661
5,000 Dexia CLF Finance Co. .............................. 01/17/01 6.550 4,929,951
2,707 Fortis Funding LLC ................................. 12/01/00 6.470 2,692,405
10,000 J.P. Morgan & Company, Inc. ........................ 12/11/00 6.480 9,928,000
4,735 KFW International Finance, Inc. .................... 12/06/00 6.470 4,705,216
---------------
38,359,083
---------------
BROKER-DEALER--4.64%
10,000 Bear Stearns Companies, Inc. ....................... 11/27/00 6.500 9,953,055
10,000 Salomon Smith Barney Holdings, Inc ................. 11/22/00 6.490 9,962,142
---------------
19,915,197
---------------
BUILDING MATERIALS--0.56%
2,400 Sherwin-Williams Co. ............................... 11/07/00 6.480 2,397,408
---------------
BUSINESS SERVICES--2.31%
10,000 First Data Corp. ................................... 12/19/00 6.465 9,913,800
---------------
CHEMICALS--1.16%
5,000 Henkel Corp. ....................................... 12/01/00 6.470 4,973,042
---------------
CONSUMER PRODUCTS--2.32%
10,000 Unilever Capital Corp. ............................. 11/17/00 6.500 9,971,111
---------------
DRUGS, HEALTH CARE--3.49%
10,000 American Home Products ............................. 11/08/00 6.480 9,987,400
5,000 Glaxo Wellcome Inc. ................................ 11/08/00 6.480 4,993,700
---------------
14,981,100
---------------
ELECTRONICS--3.47%
5,000 Emerson Electric Co. ............................... 12/15/00 6.450 4,960,583
10,000 Motorola Credit Corp. .............................. 12/18/00 6.470 9,915,531
---------------
14,876,114
---------------
ENERGY--1.63%
7,000 Exxon Mobil Corp. .................................. 11/08/00 6.470 6,991,194
---------------
</TABLE>
5
<PAGE>
LIR LIQUID ASSETS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------------- --------------- --------------- ---------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONCLUDED)
FINANCE-CONDUIT--0.75%
$ 3,200 ANZ (Delaware), Inc. ............................... 11/07/00 6.520% $ 3,196,523
---------------
FINANCE-CONSUMER--1.16%
5,000 Household Finance Corp. ............................ 11/29/00 6.490 4,974,761
---------------
FINANCE-INDEPENDENT--1.16%
5,000 National Rural Utilities Cooperative Finance Corp. . 11/20/00 6.480 4,982,900
---------------
FINANCE-SUBSIDIARY--3.48%
5,000 Deutsche Bank Financial Inc. ....................... 12/04/00 6.480 4,970,300
10,000 Dresdner U.S. Finance, Inc. ........................ 11/13/00 6.490 9,978,367
---------------
14,948,667
---------------
PRINTING & PUBLISHING--2.33%
10,000 Reed Elsevier (USA), Inc. .......................... 11/14/00 6.480 9,976,600
---------------
TELECOMMUNICATIONS--8.31%
10,000 American Telephone & Telegraph ..................... 11/02/00 to 12/20/00 6.480 to 6.530 9,954,993
10,000 BellSouth Capital Funding Corp. .................... 12/20/00 6.460 9,912,072
8,000 Lucent Technology, Inc. ............................ 11/15/00 6.480 7,979,840
7,875 Verizon Global Funding Inc. ........................ 12/05/00 to 12/13/00 6.460 to 6.470 7,820,640
---------------
35,667,545
---------------
Total Commercial Paper (cost--$255,672,256) .................. 255,672,256
---------------
SHORT-TERM CORPORATE OBLIGATIONS--5.24%
BANKING-DOMESTIC--0.58%
2,500 J.P. Morgan & Company, Inc. ........................ 11/16/00 6.610* 2,500,000
---------------
BANKING-FOREIGN--1.16%
5,000 Bank of Scotland Treasury Services PLC ............. 11/06/00 6.600* 5,000,000
---------------
BROKER-DEALER--3.50%
10,000 Merrill Lynch & Company, Inc. ...................... 11/06/00 6.580* 9,999,661
5,000 Morgan Stanley Dean Witter & Co. ................... 11/15/00 6.645* 5,000,000
---------------
14,999,661
---------------
Total Short-Term Corporate Obligations (cost--$22,499,661) ... 22,499,661
---------------
</TABLE>
6
<PAGE>
LIR LIQUID ASSETS FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------------- ---------------
<S> <C>
MONEY MARKET FUNDS--4.13%
17,686,377 AIM Liquid Assets Money Market Portfolio ......... $ 17,686,377
19,784 AIM Prime Money Market Portfolio ................. 19,784
---------------
Total Money Market Funds (cost--$17,706,161) ................. 17,706,161
---------------
Total Investments (cost--$427,993,465 which approximates cost
for federal income tax purposes)--99.75% ................... 427,993,465
Other assets in excess of liabilities--0.25% ................. 1,059,342
---------------
Net Assets (applicable to 429,052,470 shares of beneficial interest outstanding equivalent
to $1.00 per share)--100.00% ............................... $429,052,807
===============
</TABLE>
---------------
* Variable rate securities--maturity date reflects earlier of reset date or
maturity date. The interest rates shown are the current rates as of October
31, 2000 and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity--42 days
See accompanying notes to financial statements
7
<PAGE>
LIR LIQUID ASSETS FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
OCTOBER 31, 2000
(UNAUDITED)
----------------
<S> <C>
INVESTMENT INCOME:
Interest...................................................... $12,485,093
----------------
EXPENSES:
Investment advisory and administration........................ 56,655
Transfer agency and related services fees..................... 122,462
Federal and state registration fees........................... 73,018
Professional fees............................................. 34,493
Custody and accounting........................................ 18,884
Offering Costs................................................ 13,800
Reports and notices to shareholders........................... 10,332
Trustees' fees................................................ 5,250
Insurance..................................................... 20,567
Other expenses................................................ 1,121
----------------
356,582
Less: Fee waivers from adviser................................ (56,653)
----------------
Net expenses.................................................. 299,929
----------------
Net investment income......................................... 12,185,164
NET REALIZED GAINS FROM INVESTMENT TRANSACTIONS............... 304
----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......... $12,185,468
================
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
LIR LIQUID ASSETS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FEBRUARY 14, 2000+
OCTOBER 31, 2000 TO
(UNAUDITED) APRIL 30, 2000
------------------ ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income...................................................... $ 12,185,164 $ 4,148,150
Net realized gains from investment transactions............................ 304 33
------------- ------------
Net increase in net assets resulting from operations....................... 12,185,468 4,148,183
------------- ------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME....................... (12,185,164) (4,148,150)
------------- ------------
NET INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........... 102,927,680 326,124,790
------------- ------------
Net increase in net assets................................................. 102,927,984 326,124,823
NET ASSETS:
Beginning of period........................................................ 326,124,823 --
------------- ------------
End of period.............................................................. $ 429,052,807 $326,124,823
============= ============
</TABLE>
-------------------------
+Commencement of operations.
See accompanying notes to financial statements
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
LIR Liquid Assets Fund (the "Fund") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, as a
diversified series of Mitchell Hutchins LIR Money Series (the "Trust"), 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: the Fund,
Mitchell Hutchins LIR Select Money Fund ("LIR Select Money Fund"), LIR Premier
Money Market Fund, LIR Premier Tax-Free Money Market Fund and LIR Cash Reserves
Fund. The financial statements for the LIR Select Money Fund, LIR Premier Money
Market Fund, LIR Premier Tax-Free Money Market Fund and LIR Cash Reserves Fund
are not included herein. Prior to commencement of operations, February 14, 2000,
the Fund had no activity.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires Fund management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
Following is a summary of significant accounting policies:
VALUATION AND ACCOUNTING FOR INVESTMENTS AND INVESTMENT INCOME--Investments
are valued at amortized cost which approximates market value. Investment
transactions are recorded on the trade date. Realized gains and losses from
investment transactions are calculated using the identified cost method.
Interest income is recorded on an accrual basis. Premiums are amortized and
discounts are accreted as adjustments to interest income and the identified cost
of investments.
REPURCHASE AGREEMENTS--The Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event that a counterparty defaults on its obligation to repurchase, the Fund has
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation. Under certain circumstances, in the event of default or
bankruptcy by the other party to the agreement, realization and/or retention of
the collateral may be subject to legal proceedings.
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 differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Fund 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 an Investment Advisory and Administration Contract ("Advisory
Contract") under which Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins") serves as investment adviser and administrator of the Fund. Mitchell
Hutchins is a wholly owned asset management subsidiary of PaineWebber
Incorporated ("PaineWebber"), a wholly owned indirect subsidiary of UBS AG. In
accordance with the Advisory Contract, the Fund has agreed to pay to
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
Mitchell Hutchins a fee, computed daily and paid monthly. Where the services are
provided directly by Mitchell Hutchins or an affiliate, the fee 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. 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.
For the six months ended October 31, 2000, Mitchell Hutchins waived its
entire fee for its direct advisory/administrative costs and expenses.
OTHER LIABILITIES
At October 31, 2000, dividends payable were $1,040,321.
FEDERAL TAX STATUS
The Fund intends to distribute all of its taxable income and to comply with
the other requirements of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, no provision for federal income taxes is
required. In addition, by distributing during each calendar year substantially
all of its net investment income, capital gains and certain other amounts, if
any, the Fund intends not to be subject to federal excise tax.
MONEY MARKET FUND INSURANCE BOND
The Fund obtained an insurance bond that provides limited coverage for
certain loss events involving certain money market instruments held by the 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
insurance 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 the Fund for
First Tier Securities and 50 basis points (0.50%) of the total assets of the
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 bond, the Fund would expect to retain the security 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 protection against
credit risk and to help the 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 October 31, 2000, the Fund did not use this
insurance bond.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
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 PERIOD
FOR THE SIX FEBRUARY 14, 2000+
MONTHS ENDED TO
OCTOBER 31, 2000 APRIL 30, 2000
---------------- ------------------
<S> <C> <C>
Shares sold .......................................... 1,194,829,957 916,095,614
Shares repurchased ................................... (1,103,708,654) (593,464,036)
Dividends reinvested ................................. 11,806,377 3,493,212
---------------- ------------------
Net increase in shares outstanding ................... 102,927,680 326,124,790
================ ==================
</TABLE>
------------------
+Commencement of operations.
12
<PAGE>
LIR LIQUID ASSETS 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 PERIOD
MONTHS ENDED FEBRUARY 14, 2000+
OCTOBER 31, 2000 TO
(UNAUDITED) APRIL 30, 2000
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ....................................... $ 1.000 $ 1.000
---------------- ----------------
Net investment income ...................................................... 0.033 0.012
Dividends from net investment income ....................................... (0.033) (0.012)
---------------- ----------------
Net asset value, end of period ............................................. $ 1.000 $ 1.000
================ ================
Total investment return(1) .................................................. 3.30% 1.24%
================ ================
Ratios/Supplemental Data:
Net assets, end of period (000's) ........................................... $429,053 $326,125
Expenses to average net assets net of waivers from adviser .................. 0.16%* 0.17%*
Expenses to average net assets before waivers from adviser .................. 0.19%* 0.20%*
Net investment income to average net assets net of waivers from adviser ..... 6.45%* 5.89%*
Net investment income to average net assets before waivers from adviser ..... 6.42%* 5.86%*
</TABLE>
------------------
+ Commencement of operations.
* Annualized.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each 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 each period reported. Total investment
return for periods of less than one year has not been annualized.
13
<PAGE>
--------------------------------------------------------------------------------
TRUSTEES
E. Garrett Bewkes, Jr.
CHAIRMAN
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
Brian M. Storms
OFFICERS
Brian M. Storms
PRESIDENT
Amy R. Doberman
VICE PRESIDENT
Dianne E. O'Donnell
VICE PRESIDENT AND SECRETARY
Paul H. Schubert
VICE PRESIDENT AND TREASURER
Elbridge T. Gerry III
VICE PRESIDENT
Susan P. Ryan
VICE PRESIDENT
INVESTMENT ADVISER,
ADMINISTRATOR AND
DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019-6114
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
RECORDS OF THE FUND WITHOUT EXAMINATION BY INDEPENDENT AUDITORS WHO DO NOT
EXPRESS AN OPINION THEREON.
A PROSPECTUS CONTAINING MORE COMPLETE INFORMATION FOR ANY OF THE FUNDS LISTED ON
THE BACK COVER CAN BE OBTAINED FROM A PAINEWEBBER FINANCIAL ADVISOR OR
CORRESPONDENT FIRM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
<PAGE>
-----
PaineWebber offers a family of 26 funds which encompass a diversified range of
investment goals.
BOND FUNDS
- High Income Fund
- Investment Grade Income Fund
- Low Duration U.S. Government Income Fund
- Strategic Income Fund
- U.S. Government Income Fund
TAX-FREE BOND FUNDS
- California Tax-Free Income Fund
- Municipal High Income Fund
- National Tax-Free Income Fund
- New York Tax-Free Income Fund
STOCK FUNDS
- Enhanced S&P 500 Fund
- Enhanced Nasdaq-100 Fund
- Financial Services Growth Fund
- Growth Fund
- Growth and Income Fund
- Mid Cap Fund
- Small Cap Fund
- S&P 500 Index Fund
- Strategy Fund
- Tax-Managed Equity Fund
ASSET ALLOCATION FUNDS
- Balanced Fund
- Tactical Allocation Fund
GLOBAL FUNDS
- Asia Pacific Growth Fund
- Emerging Markets Equity Fund
- Global Equity Fund
- Global Income Fund
PAINEWEBBER MONEY MARKET FUND
PAINEWEBBER
-C-2000 PaineWebber Incorporated
All rights reserved
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LIR LIQUID
ASSETS FUND
SEMIANNUAL REPORT
OCTOBER 31, 2000
