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LIQUID INSTITUTIONAL RESERVES
MONEY MARKET FUND
GOVERNMENT SECURITIES FUND
TREASURY SECURITIES FUND
SUPPLEMENT TO PROSPECTUS
DATED SEPTEMBER 1, 1995
April 15, 1996
Dear Investor,
This is a supplement to the Prospectus of Liquid Institutional
Reserves - Money Market Fund, Government Securities Fund, and Treasury
Securities Fund, dated September 1, 1995. The purpose of the supplement is to
revise certain information contained in the Prospectus.
As a result of changes approved at a special meeting of shareholders of
Money Market Fund, Government Securities Fund, and Treasury Securities Fund
(each, a 'Fund' and, collectively, the 'Funds'), the following investment
restrictions replace those appearing under the 'Certain Investment
Policies - Investment Restrictions' section on page 16 of the Prospectus:
The Trust may not, on behalf of any Fund:
(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, and the
Money Market Fund reserves freedom of action to concentrate its
investments in, 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 interpretation applies to, but is not a part of,
this fundamental restriction: With respect to this limitation,
domestic and foreign banking will be considered to be different
industries.
(3) issue senior securities or borrow money, except as permitted under
the 1940 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.
(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.
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(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.
Additionally, effective February 28, 1996, the Board changed the
non-fundamental operating policies of each Fund to eliminate the Funds'
authority to invest in zero coupon bonds.
The following replaces the information appearing under the 'Investment
Adviser and Administrator' section on page 20 of the Prospectus:
The Funds pay the same fee for investment advisory and administration
services to PaineWebber as previously paid to Kidder Peabody Asset
Management, Inc. ('KPAM'), the Fund's predecessor investment adviser and
administrator. PaineWebber (not the Funds) pays Mitchell Hutchins a fee for
sub-advisory and sub-administration services at the annual rate of 50% of
the fee received by PaineWebber from the Funds. PaineWebber and Mitchell
Hutchins continue to manage the Funds in accordance with the Funds'
investment objectives, policies and restrictions.
If you have any questions regarding Liquid Institutional Reserves--Money
Market Fund, Government Securities Fund, or Treasury Securities Fund, please
call your Investment Executive at PaineWebber or one of its correspondent firms.
This Supplement supercedes all previous Supplements.
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