<PAGE>
LIQUID INSTITUTIONAL RESERVES
MONEY MARKET FUND GOVERNMENT SECURITIES FUND TREASURY SECURITIES FUND
1285 AVENUE OF THE AMERICAS . NEW YORK, NEW YORK 10019
Professionally managed money market funds seeking:
. High Current Income
. High Liquidity
. Preservation of Capital
Money Market Fund, Government Securities Fund and Treasury Securities Fund
("Funds") are series of Liquid Institutional Reserves, a Massachusetts
business trust ("Trust"). Each Fund offers two separate classes of shares--
"Institutional" shares and "Financial Intermediary" shares. Institutional
shares are available for purchase primarily by institutional investors.
Financial Intermediary shares are available for purchase by banks and other
financial intermediaries for the benefit of their customers.
This Prospectus concisely sets forth information that a prospective investor
should know about the Funds before investing. Please retain this Prospectus
for future reference. A Statement of Additional Information dated September 1,
1997 (which is incorporated by reference herein) has been filed with the
Securities and Exchange Commission ("SEC"). The Statement of Additional
Information can be obtained without charge, and further inquiries can be made,
by contacting the Funds, your PaineWebber Investment Executive or
PaineWebber's correspondent firms, or by calling toll free 1-888-LIR-FUND. In
addition, the SEC maintains a website (http://www.sec.gov) that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding registrants that file electronically with the SEC.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. WHILE EACH 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.
SHARES OF A FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES OF A FUND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS DATED SEPTEMBER 1, 1997, AS REVISED JULY 15, 1998
<PAGE>
HIGHLIGHTS
See elsewhere in the Prospectus for more information on the topics discussed
in these highlights.
The Funds: Professionally managed money market funds (each a "Fund").
The Funds are designed primarily for institutions as an
economical and convenient means for the investment of
short-term funds that they hold for their own account or
hold or manage for others.
Each Fund offers investors the choice of investing in two
separate classes of shares.
. Institutional shares are available for purchase primarily
by institutional investors.
. Financial Intermediary shares are available for purchase
solely by banks and other financial intermediaries for
the benefit of their customers. Financial Intermediary
shares bear all fees payable by the Funds to those
financial intermediaries for certain services they
provide to the beneficial owners of those shares. See
"Purchases," "Redemptions," "Financial Intermediaries"
and "Valuation of Shares."
Investment Money Market Fund--A diversified money market fund seeking
Objectives and high current income to the extent consistent with the
Policies: preservation of capital and the maintenance of liquidity
through investments in a diversified portfolio of high
quality, short-term, U.S. dollar-denominated money market
instruments; invests in high quality money market
instruments.
Government Securities Fund--A diversified money market fund
seeking high current income consistent with the
preservation of capital and maintenance of liquidity
through investments in a diversified portfolio of high
quality, short-term, U.S. dollar-denominated money market
instruments; invests in short-term U.S. government
securities, the interest income from which is generally
exempt from state income taxation.
Treasury Securities Fund--A diversified money market fund
seeking high current income consistent with preservation of
capital and maintenance of liquidity through investments in
a diversified portfolio of high quality, short-term, U.S.
dollar-denominated money market instruments; invests
exclusively in securities issued by the U.S. Treasury,
which are supported by the full faith and credit of the
United States.
Net Assets at Money Market Fund--$1.0 billion
July 31, 1997: Government Securities Fund--$75.2 million.
Treasury Securities Fund--$75.8 million.
Distributor and
Investment
Adviser: PaineWebber Incorporated ("PaineWebber"). See "Management."
Sub-Adviser: Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"). See "Management"
Purchases: Shares may be purchased through PaineWebber, its
correspondent firms or through First Data Investor Services
Group, Inc., the Funds' transfer agent ("Transfer Agent").
See "Purchases."
Redemptions: Shares may be redeemed through PaineWebber, its
correspondent firms or the Transfer Agent. See
"Redemptions."
Dividends: Declared daily and paid monthly. All dividends are
automatically paid in Fund shares unless the shareholder
elects instead to have dividends transmitted by federal
funds wire to either a designated bank account or
PaineWebber account. See "Dividends and Taxes."
Minimum Initial $1,000,000 for Money Market Fund and Government Securities
Purchase: Fund (or in a combination of both) and $250,000 for
Treasury Securities Fund; no minimum for subsequent
purchases. (Financial intermediaries may establish
different minimums for their customers who purchase shares
through them.)
Public Offering Net asset value, which each Fund seeks to maintain at $1.00
Price: per share.
2
<PAGE>
WHO SHOULD INVEST. Each Fund has its own suitability considerations and risk
factors, as summarized below and described in detail under "Investment
Objectives and Policies." The Funds are designed primarily for institutions as
an economical and convenient means for the investment of short-term funds that
they hold for their own account or hold or manage for others. These
institutions include corporations, banks, trust companies, insurance companies,
investment counsellors, pension funds, employee benefit plans, law firms,
trusts, estates and educational, religious and charitable organizations. See
"Purchases" and "Management."
RISK FACTORS. There can be no assurance that any Fund will achieve its
investment objective. In periods of declining interest rates, a Fund's yield
will tend to be somewhat higher than prevailing short-term market rates, and in
periods of rising interest rates, a Fund's yield generally will be somewhat
lower. Money Market Fund may invest in U.S. dollar-denominated securities of
foreign issuers, which may present a greater degree of risk than investments in
securities of domestic issuers. See "Investment Objective and Policies" for
more information about these and other risk factors.
3
<PAGE>
EXPENSES OF INVESTING IN THE FUNDS. The following tables are intended to
assist investors in understanding the expenses associated with investing in
each Fund.
SHAREHOLDER TRANSACTION EXPENSES
FOR ALL FUNDS
<TABLE>
<S> <C>
Sales charge on purchases of shares........................................ None
Sales charge on reinvested dividends....................................... None
Redemption fee or deferred sales charge.................................... None
</TABLE>
ANNUAL FUND OPERATING EXPENSES*
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES FUND
AND
MONEY MARKET FUND TREASURY SECURITIES FUND
--------------------------- ---------------------------
FINANCIAL FINANCIAL
INSTITUTIONAL INTERMEDIARY INSTITUTIONAL INTERMEDIARY
SHARES SHARES** SHARES SHARES**
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees (after
fee waivers)........... 0.20% 0.20% 0.20% 0.20%
Other Expenses:
Shareholder Servicing
Fees.................. 0.00% 0.25% 0.00% 0.25%
Miscellaneous Expenses
(after
reimbursements)....... 0.05% 0.05% 0.10% 0.10%
Total Other Expenses
(after
reimbursements)........ 0.05% 0.30% 0.10% 0.35%
------ ------ ------ ------
Total Operating Expenses
(after fee waivers and
reimbursements)........ 0.25% 0.50% 0.30% 0.55%
====== ====== ====== ======
</TABLE>
EXAMPLE OF EFFECT OF FUND EXPENSES*
An investor would pay directly or indirectly the following expenses on a
$1,000 investment in each Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund
Institutional shares.......................... $ 3 $ 8 $14 $32
Financial Intermediary shares................. $ 5 $16 $28 $63
Government Securities Fund
Institutional shares.......................... $ 3 $10 $17 $38
Financial Intermediary shares................. $ 6 $18 $31 $69
Treasury Securities Fund
Institutional shares.......................... $ 3 $10 $17 $38
Financial Intermediary shares................. $ 6 $18 $31 $69
</TABLE>
This Example assumes that all dividends are reinvested and that the
percentage amounts listed under Annual Fund Operating Expenses remain the same
in the years shown. The above tables and the assumption in the Example of a 5%
annual return are required by regulations of the SEC applicable to all mutual
funds; the assumed 5% annual return is not a prediction of, and does not
represent, any Fund's projected or actual performance.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND EACH FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The actual expenses of each Fund will depend upon, among other things, the
level of average net assets and the extent to which each Fund incurs variable
expenses, such as transfer agency costs, and the extent to which PaineWebber
waives fees or reimburses a Fund for expenses.
(footnotes continue on following page)
4
<PAGE>
(footnotes from previous page)
*Information in the expense table and the example reflect an agreement by
PaineWebber and Mitchell Hutchins to waive 0.05% of the management fees and to
reduce or otherwise limit the expenses of each Fund, on an annualized basis, to
0.30% and 0.55% of each Fund's average daily net assets for Institutional
shares and Financial Intermediary shares, respectively. In the absence of this
agreement, Money Market Fund's, Government Securities Fund's and Treasury
Securities Fund's total operating expenses, stated as a percentage of average
net assets, would have been 0.30%, 0.53% and 0.72%, respectively, for
Institutional shares and 0.55%, 0.78% and 0.97%, respectively, for Financial
Intermediary shares. Without this agreement, under the assumptions set forth in
the example above, the expenses on a $1,000 investment in Money Market Fund,
Government Securities Fund and Treasury Securities Fund at the end of one,
three, five and ten years would have been $3, $10, $17 and $38; $5, $17, $30
and $66; and $7, $23, $40 and $89, respectively, for Institutional shares and
would have been $6, $18, $31 and $69; $8, $25, $43 and $97; and $10, $31, $54
and $119, respectively, for Financial Intermediary shares. PaineWebber and
Mitchell Hutchins do not anticipate that they will waive fees or reimburse
expenses in the current fiscal year, except to the extent necessary to comply
with the fee waiver and total expense limitation agreement described above.
**No Financial Intermediary shares were outstanding during each Fund's last
fiscal year.
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables provide investors with selected data and ratios for one
share of each class of shares outstanding for each Fund for each of the peri-
ods shown. No Financial Intermediary shares were outstanding during the fiscal
years ended April 30, 1997 and 1996. This information is supplemented by the
financial statements, accompanying notes and the unqualified report of Ernst &
Young LLP, independent auditors, which appear in the Funds' Annual Report to
Shareholders for the fiscal year ended April 30, 1997 and are incorporated by
reference into the Statement of Additional Information. The Funds' Annual Re-
port to Shareholders may be obtained without charge by calling 1-888-LIR-FUND.
The financial statements and notes, as well as the information in the tables
appearing below insofar as it relates to the fiscal years ended April 30, 1997
and 1996, have been audited by Ernst & Young LLP. The financial information
for periods prior to 1996 was audited by another independent accounting firm,
whose reports thereon were unqualified.
<TABLE>
<CAPTION>
MONEY MARKET FUND
---------------------------------------------------------------------------------------------------
FINANCIAL
INTERMEDIARY
INSTITUTIONAL SHARES SHARES**
------------------------------------------------------------------ --------------------------------
FOR THE YEARS ENDED FOR THE PERIOD FOR THE PERIOD
APRIL 30, JUNE 3, 1991+ FOR THE MARCH 17, 1994+
-------------------------------------------------- TO YEAR ENDED TO
1997 1996 1995++ 1994 1993 APRIL 30, 1992 APRIL 30, 1995++ APRIL 30, 1994
---------- -------- -------- -------- -------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- -------- -------- -------- ------- -------
Net investment income... 0.052 0.055 0.048 0.030 0.031 0.044 0.027 0.004
Net realized losses from
investment
transactions........... -- -- (0.008) -- -- -- -- --
---------- -------- -------- -------- -------- -------- ------- -------
Net increase from
investment operations.. 0.052 0.055 0.040 0.030 0.031 0.044 0.027 0.004
---------- -------- -------- -------- -------- -------- ------- -------
Dividends from net
investment income...... (0.052) (0.055) (0.048) (0.030) (0.031) (0.044) (0.027) (0.004)
---------- -------- -------- -------- -------- -------- ------- -------
Contribution to capital
from predecessor
adviser (1)............ -- -- 0.008 -- -- -- -- --
---------- -------- -------- -------- -------- -------- ------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ======== ======== ======= =======
Total investment return
(2).................... 5.33% 5.61% 4.91% 3.03% 3.16% 4.52% 3.10% 0.37%
========== ======== ======== ======== ======== ======== ======= =======
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $1,246,799 $421,878 $220,844 $254,281 $385,618 $335,868 -- $ 9,000
Expenses to average net
assets net of
waivers/reimbursements
from adviser........... 0.25% 0.31% 0.35% 0.33% 0.34% 0.30%* 0.60%* 0.58%*
Expenses to average net
assets before
waivers/reimbursements
from adviser........... 0.30% 0.37% 0.37% 0.33% 0.36% 0.41%* 0.62%* 0.58%*
Net investment income to
average net assets net
of
waivers/reimbursements
from adviser........... 5.24% 5.47% 4.68% 2.96% 3.13% 4.76%* 4.17%* 2.93%*
Net investment income to
average net assets
before waivers/
reimbursements from
adviser................ 5.19% 5.41% 4.66% 2.96% 3.11% 4.65%* 4.15%* 2.93%*
</TABLE>
- --------
+ Commencement of issuance of shares
++ Sub-advisory functions for the Fund were transferred from Kidder Peabody
Asset Management, Inc. to Mitchell Hutchins on January 30, 1995.
* Annualized
** For the years ended April 30, 1996 and 1997 and for the period from Decem-
ber 24, 1994 to April 30, 1995 there were no outstanding Financial Inter-
mediary shares of Money Market Fund. For the years ended April 30, 1996
and 1997 and for the period from March 22, 1995 to April 30, 1996 there
were no outstanding Financial Intermediary shares of Government Securities
Fund.
(1) Kidder Peabody Asset Management, Inc., the Funds' predecessor investment
adviser and administrator, purchased certain of Money Market Fund's and
Government Securities Fund's variable rate securities on July 6, 1994 at
prices equal to the securities' amortized cost plus accrued and unpaid in-
terest. Since the purchases were made at prices above the securities' cur-
rent fair value, the Funds recorded a contribution to capital.
(2) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and dis-
tributions at net asset value on the payable dates, and a sale at net as-
set value on the last date of each period reported. Total investment re-
turn for periods of less than one year has not been annualized.
6
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------
FINANCIAL
INTERMEDIARY
INSTITUTIONAL SHARES SHARES**
- ------------------------------------------------------------- ----------------
FOR THE YEARS ENDED FOR THE PERIOD FOR THE PERIOD
APRIL 30, JUNE 3, 1991+ JULY 12, 1994+
- --------------------------------------------- TO TO
1997 1996 1995++ 1994 1993 APRIL 30, 1992 APRIL 30, 1995++
---- ---- ------- ------- -------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------- ------- ------- ------- -------- -------- -------
0.051 0.053 0.048 0.029 0.031 0.044 0.032
-- 0.001 (0.008) -- -- -- --
- -------- ------- ------- ------- -------- -------- -------
0.051 0.054 0.040 0.029 0.031 0.044 0.032
- -------- ------- ------- ------- -------- -------- -------
(0.051) (0.054) (0.047) (0.029) (0.031) (0.044) (0.032)
- -------- ------- ------- ------- -------- -------- -------
-- -- 0.007 -- -- -- --
- -------- ------- ------- ------- -------- -------- -------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= ======== ======== =======
5.20% 5.50% 4.61% 2.97% 3.13% 4.46% 3.31%
======== ======= ======= ======= ======== ======== =======
$106,843 $43,770 $54,903 $84,209 $102,611 $144,853 --
0.30% 0.32% 0.35% 0.35% 0.34% 0.30%* 0.60%*
0.53% 0.56% 0.47% 0.37% 0.36% 0.41%* 0.72%*
5.09% 5.52% 4.75% 2.95% 3.11% 4.63%* 4.58%*
4.86% 5.28% 4.63% 2.93% 3.09% 4.52%* 4.46%*
<CAPTION>
TREASURY SECURITIES FUND
- ------------------------------------------------------------------------------
INSTITUTIONAL SHARES
- ------------------------------------------------------------------------
FOR THE YEARS ENDED FOR THE PERIOD
APRIL 30, DECEMBER 6, 1991+
- ------------------------------------------------------ TO
1997 1996 1995++ 1994 1993 APRIL 30, 1992
- -------- -------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------- -------- -------- -------- -------- -----------------
0.049 0.048 0.049 0.028 0.029 0.016
-- 0.003 (0.002) -- -- --
- -------- -------- -------- -------- -------- -----------------
0.049 0.051 0.047 0.028 0.029 0.016
- -------- -------- -------- -------- -------- -----------------
(0.049) (0.051) (0.047) (0.028) (0.029) (0.016)
- -------- -------- -------- -------- -------- -----------------
-- -- -- -- -- --
- -------- -------- -------- -------- -------- -----------------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== =================
5.02% 5.23% 4.75% 2.87% 2.89% 1.62%
======== ======== ======== ======== ======== =================
$65,893 $19,624 $23,762 $38,602 $8,064 $15,003
0.30% 0.32% 0.22% 0.18% 0.33% 0.06%*
0.72% 0.94% 0.84% 0.76% 1.10% 2.05%*
4.97% 5.71% 5.51% 3.66% 3.65% 5.88%*
4.56% 5.09% 4.89% 3.08% 2.88% 3.89%*
</TABLE>
7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is to earn high current income to the
extent consistent with the preservation of capital and the maintenance of li-
quidity through investments in a diversified portfolio of high quality, short-
term, U.S. dollar-denominated money market instruments. Each Fund seeks to
meet this objective by following different investment policies.
Each Fund maintains a dollar-weighted average portfolio maturity of 90 days
or less. All securities in which each Fund invests have or are deemed to have
remaining maturities of 397 days or less on the date of purchase. In managing
each Fund's portfolio, Mitchell Hutchins may employ a number of professional
money management techniques, including varying the composition and the
weighted average maturity of each Fund's portfolio based upon its assessment
of the relative values of various money market instruments and future interest
rate patterns, in order to respond to changing economic and money market con-
ditions and to shifts in fiscal and monetary policy. Mitchell Hutchins may
also seek to improve a Fund's yield by purchasing or selling securities to
take advantage of yield disparities among similar or dissimilar money market
instruments that regularly occur in the money markets.
There can be no assurance that the Funds will achieve their investment ob-
jectives. In periods of declining interest rates, the Funds' yields will tend
to be somewhat higher than prevailing short-term market rates, and in periods
of rising interest rates the opposite generally will be true. Also, when in-
terest rates are falling, net cash inflows from the continuous sale of a
Fund's shares are likely to be invested in portfolio instruments producing
lower yields than the balance of that Fund's portfolio, thereby reducing its
yield. In periods of rising interest rates, the opposite can be true.
MONEY MARKET FUND
Money Market Fund invests in high quality, short-term, U.S. dollar-denomi-
nated money market instruments. These instruments include government securi-
ties, obligations of banks, commercial paper and other short-term corporate
obligations, corporate bonds and notes, variable and floating rate securities
and participation interests or repurchase agreements involving any of the
foregoing securities. Participation interests are pro rata interests in secu-
rities held by others.
The U.S. government securities in which the Money Market Fund may invest in-
clude direct obligations of the U.S. Treasury (such as Treasury bills, notes
and bonds) and obligations issued or guaranteed by U.S. government agencies
and instrumentalities, including securities that are supported by the full
faith and credit of the United States (such as Government National Mortgage
Association certificates ("GNMAs")), securities supported primarily or solely
by the creditworthiness of the issuer (such as securities of the Resolution
Funding Corporation and the Tennessee Valley Authority) and securities that
are supported primarily or solely by specific pools of assets and the credit-
worthiness of a U.S. government-related issuer (such as mortgage-backed secu-
rities issued by Fannie Mae, also known as the Federal National Mortgage Asso-
ciation).
Money Market Fund may invest in obligations (including certificates of de-
posit, bankers' acceptances and similar obligations) of U.S. and foreign banks
having total assets in excess of $1.5 billion at the time of purchase. The
Fund may invest in non-negotiable time deposits of U.S. banks, savings associ-
ations and similar depository institutions having total assets in excess of
$1.5 billion at the time of purchase only if the time deposits have maturities
of seven days or less. Money Market Fund also may invest in interest-bearing
savings deposits in U.S. banks and savings associations having total assets of
$1.5 billion or less, provided that the principal amount of each deposit is
fully insured by the Federal Deposit Insurance Corporation and provided that
the aggregate principal amount of such deposits (plus interest earned) does
not exceed 5% of the Fund's assets.
The commercial paper and other short-term obligations purchased by Money
Market Fund consist only of obligations that Mitchell Hutchins determines,
pursuant to procedures adopted by the Trust's board of trustees (sometimes re-
ferred to as the "board"), present minimal credit risks and are either (1)
rated in the highest short- term rating category by at least two nationally
recognized statistical rating organizations ("NRSROs"), (2) rated in the high-
est short-term rating category by a single NRSRO if only that NRSRO has as-
signed the obligations a short-term rating, (3) was issued by an issuer that
has received such a short-term rating with respect to
8
<PAGE>
a security that is comparable in priority and security, or (4) is unrated, but
determined by Mitchell Hutchins to be of comparable quality ("First Tier Secu-
rities"). The Fund generally may invest no more than 5% of its total assets in
the securities of a single issuer (other than securities issued by the U.S.
government, its agencies or instrumentalities).
GOVERNMENT SECURITIES FUND
Government Securities Fund invests in U.S. government securities, the inter-
est income from which is generally exempt from state income taxation. The Fund
intends to emphasize investments in securities eligible for this exemption in
the maximum number of states. Securities generally eligible for this exemption
include those issued by the U.S. Treasury and those issued by certain agen-
cies, authorities or instrumentalities of the U.S. government, including the
Federal Home Loan Banks, Federal Farm Credit Banks Funding Corp. and the Stu-
dent Loan Marketing Association. The Fund seeks to invest substantially all of
its assets in securities with these characteristics. Under extraordinary cir-
cumstances, however, such as when securities with those characteristics are
unavailable at prices deemed reasonable by Mitchell Hutchins, the Fund may
temporarily hold cash or invest in other U.S. government securities, such as
those issued by the Government National Mortgage Association, the Federal Home
Loan Mortgage Corporation and the Small Business Administration. The Fund may
acquire any of the above securities on a forward commitment or when-issued ba-
sis. The Fund will not enter into repurchase agreements.
Each investor should consult its own tax advisor to determine whether dis-
tributions from Government Securities Fund derived from interest on its port-
folio securities are exempt from state income taxation in the investor's own
state.
TREASURY SECURITIES FUND
Treasury Securities Fund invests exclusively in securities issued by the
U.S. Treasury, which are supported by the full faith and credit of the United
States. The Fund may acquire any of these securities on a forward commitment
or when-issued basis. The Fund will not enter into repurchase agreements.
OTHER INVESTMENT POLICIES AND RISK FACTORS
U.S. GOVERNMENT SECURITIES. Money Market Fund may also acquire custodial re-
ceipts that evidence ownership of future interest payments, principal payments
or both that have been "stripped" from certain U.S. Treasury notes or bonds.
These custodial receipts are known by various names, including "Treasury In-
vestment Growth Receipts" ("TIGRs") and "Certificates of Accrual on Treasury
Securities" ("CATS"). Each Fund may also invest in separately traded principal
and interest components of securities issued or guaranteed by the U.S. Trea-
sury. The principal and interest components of selected securities are traded
independently under the Separate Trading of Registered Interest and Principal
of Securities ("STRIPS") program. Under the STRIPS program, the principal and
interest components are individually numbered and separately issued by the
U.S. Treasury. The staff of the SEC currently takes the position that inter-
ests in "stripped" U.S. government securities that are not part of the STRIPS
program are not U.S. government securities.
VARIABLE AND FLOATING RATE SECURITIES. Money Market Fund and Government Se-
curities Fund may purchase variable and floating rate securities with remain-
ing maturities in excess of 13 months issued by U.S. government agencies or
instrumentalities or guaranteed by the U.S. government. In addition, Money
Market Fund may purchase variable and floating rate securities of other is-
suers with remaining maturities in excess of 13 months if they are subject to
a demand feature exercisable within 13 months or less. The yield on these se-
curities is adjusted in relation to changes in specific rates, such as the
prime rate, and different securities may have different adjustment rates. The
Funds' investments in these securities must comply with conditions established
by the SEC under which they may be considered to have remaining maturities of
13 months or less. A demand feature gives a Fund the right to tender them back
to the issuer or a remarketing agent and receive the principal amount of the
security prior to maturity. The demand feature may be backed by letters of
credit or other liquidity support arrangements provided by banks or other fi-
nancial institutions, whose credit standing affects the credit quality of the
obligation. Changes in the credit quality of these institutions could cause
losses to a Fund and affect its share price.
VARIABLE AMOUNT MASTER DEMAND NOTES. Securities purchased by Money Market
Fund may include variable amount master demand notes, which are unsecured re-
deemable obliga-
9
<PAGE>
tions that permit investment of varying amounts at fluctuating interest rates
under a direct agreement between the Fund and the 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 and are typically unrated.
REPURCHASE AGREEMENTS. Money Market Fund may enter into repurchase agree-
ments with U.S. banks and dealers with respect to any security in which that
Fund is authorized to invest, except that securities subject to repurchase
agreements may have maturities in excess of 13 months. Repurchase agreements
are transactions in which the Fund purchases securities from a bank or recog-
nized securities dealer and simultaneously commits to resell the securities to
that bank or dealer at an agreed upon date or upon demand and at a price re-
flecting a market rate of interest unrelated to the coupon rate or maturity of
the purchased securities. Although repurchase agreements carry certain risks
not associated with direct investments in securities, including possible de-
cline in the market value of the underlying securities and delays and costs to
the Fund if the other party to the repurchase agreement becomes insolvent, the
Fund intends to enter into repurchase agreements only with banks and dealers
in transactions believed by Mitchell Hutchins to present minimal credit risks
in accordance with guidelines established by the board.
FOREIGN SECURITIES. Money Market Fund may invest in U.S. dollar-denominated
securities of foreign issuers, including debt securities of foreign corpora-
tions and foreign governments and obligations of foreign banks. Such invest-
ments may involve risks that are different from investments in U.S. issuers.
These risks may include future unfavorable political and economic develop-
ments, possible withholding taxes, seizure of foreign deposits, currency con-
trols, interest limitations or other governmental restrictions that might af-
fect the payment of principal or interest on the securities held by the Fund.
Additionally, there may be less publicly available information about foreign
issuers as these issuers may not be subject to the same regulatory require-
ments as domestic issuers.
LENDING OF PORTFOLIO SECURITIES. Each Fund may lend its securities to quali-
fied broker-dealers or institutional investors in an amount up to 33 1/3% of
the Fund's total assets taken at market value. Lending securities enables the
Funds to earn additional income, but could result in a loss or delay in recov-
ering these securities.
OTHER INVESTMENT POLICIES. Each Fund may purchase securities on a "when-is-
sued" or forward commitment basis, that is, for delivery beyond 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 purchases securities on a when-issued basis, it immedi-
ately assumes the risks of ownership, including the risk of price fluctuation.
Failure by the issuer to deliver a security purchased on a when-issued basis
may result in a loss or missed opportunity to make an alternative investment.
Each Fund may borrow money from banks for temporary purposes in an aggregate
amount not exceeding 33 1/3% of the value of the Fund's total assets. A Fund
may not purchase portfolio securities while borrowings exceed 5% of the value
of the Fund's assets.
No Fund will invest more than 10% of its net assets in illiquid securities,
including repurchase agreements with maturities in excess of seven days.
A Fund's investment objective may not be changed without the approval of its
shareholders. Certain other investment limitations, as described in the State-
ment of Additional Information, also may not be changed without shareholder
approval. All other investment policies may be changed by the board without
shareholder approval.
PURCHASES
The Funds accept 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 an-
other bank in one day and thus may be made immediately available to a Fund
through its custodian.)
Each Fund offers investors the choice of investing in two separate classes
of shares--Institutional shares and Financial Intermediary shares. Institu-
tional shares in each Fund are available for purchase by institutional invest-
ors, and, at the discretion of PaineWebber, for purchase by individuals or
other entities. Financial Intermediary shares in each Fund are available for
purchase only by banks and other financial intermediaries for the benefit of
their customers. Financial Intermediary shares bear all fees pay-
10
<PAGE>
able by the Fund to those financial intermediaries for certain services they
provide to the beneficial owners of these shares.
The minimum initial investment is $1,000,000 in Money Market Fund or Govern-
ment Securities Fund (or in a combination of both) and $250,000 in Treasury
Securities Fund. These minimums may be waived at the discretion of
PaineWebber. Financial intermediaries purchasing shares for the accounts of
their customers may set a higher or lower minimum for their customers, pro-
vided that when their customers' shareholdings are aggregated, the above noted
minimum investment levels are met. There is no minimum subsequent investment,
except that certain financial intermediaries may establish minimums for subse-
quent investments by their customers. Investors interested in purchasing Fi-
nancial Intermediary shares should consult their financial institutions con-
cerning any initial or subsequent minimum investment requirements.
Shares of the Funds are offered for sale, without a sales charge, at the net
asset value per share next determined after receipt and acceptance of a pur-
chase order by the Transfer Agent, subject to timely receipt of federal funds
as provided below. An investor can place a purchase order up until 2:30 p.m.
(Eastern time) for Money Market Fund and 12:00 noon (Eastern time) for Govern-
ment Securities Fund and Treasury Securities Fund by telephoning the Transfer
Agent at 1-888-LIR-FUND and speaking with a representative. Investors may also
place an order through a PaineWebber Investment Executive or correspondent
firm who must then relay the order to the Transfer Agent by the times noted
above. For the purchase of Fund shares to be effected on that Business Day,
the investor must wire federal funds to the Trust, care of the Transfer Agent,
and that wire must be credited to that bank account by a Federal Reserve Bank
on that Business Day. Otherwise, the order will be executed as of such times
on the following Business Day if federal funds have been received by that
time. Calls may be initiated by any authorized party on the account, including
your PaineWebber Investment Executive. A "Business Day" is any day on which
the Massachusetts offices of the Trust's custodian, State Street Bank and
Trust Company ("Custodian"), and the Transfer Agent, and the New York City of-
fices of PaineWebber and PaineWebber's bank are all open for business.
The Trust and PaineWebber reserve the right to reject any purchase order and
to suspend the offering of Fund shares for a period of time.
The availability of Fund shares to customers of PaineWebber's correspondent
firms may vary depending on the arrangements between PaineWebber and such
firms.
Investors who are purchasing shares should instruct their banks to transfer
federal funds by wire. Wire transfers should be directed to:
LIR Fund
[insert Fund name: Money Market, Government or Treasury]
c/o BSD&T Company
CR DDA #13-860-6
CR PW A/C #
[insert PaineWebber account name and account number]
ABA #011001234
Unless the investor otherwise specifies, all shares purchased will be Insti-
tutional shares.
REMOTE TRADE ENTRY. At its discretion, the Trust may offer eligible institu-
tional investors who meet certain conditions an electronic trade order entry
(RTE) capability. For more information on this option, please contact your
PaineWebber Investment Executive or the Transfer Agent at 1-888-LIR-FUND.
PaineWebber and/or an investor's bank may impose a service charge for wire
transfers.
EXCHANGES
Shareholders may exchange shares of one Fund for shares of another Fund
based on the next determined net asset value per share. Exchange orders are
accepted up until 12:00 noon (Eastern time) for each Fund by telephoning the
Transfer Agent at 1-888-LIR-FUND and speaking with a representative. Investors
may also place an order through a PaineWebber Investment Executive or corre-
spondent firm which must then relay the order to the Transfer Agent as noted
above. Calls may be initiated by any authorized party on the account, includ-
ing your PaineWebber Investment Executive.
Exchange transactions must meet the minimum initial investment of the new
Fund. There is no minimum for subsequent exchanges between Fund accounts once
they have been activated.
REDEMPTIONS
Shareholders may redeem all or any portion of the shares in their accounts
at any time at the
11
<PAGE>
net asset value per share next computed after the receipt of a redemption re-
quest in proper form by the Transfer Agent. Redemption orders are accepted up
until 2:30 p.m. (Eastern time) for Money Market Fund and up until 12:00 noon
(Eastern time) for Government Securities Fund and Treasury Securities Fund by
telephoning the Transfer Agent at 1-888-LIR-FUND and speaking with a represen-
tative. Investors may also place an order through a PaineWebber Investment Ex-
ecutive or correspondent firm which must then relay the order to the Transfer
Agent by the times noted above. Calls may be initiated by any authorized party
on the account, including your PaineWebber Investment Executive. Redemption
proceeds will be paid by federal funds wired to one or more of the bank ac-
counts that have been designated by the shareholder, normally on the Business
Day the redemption request is accepted.
ADDITIONAL INFORMATION ON REDEMPTIONS. Shareholders with questions about re-
demption requirements should consult their PaineWebber Investment Executives,
correspondent firms or the Transfer Agent at 1-888-LIR-FUND. Shareholders will
earn dividends on redeemed shares up to (but not including) the day of redemp-
tion. The redemption price may be more or less than the purchase price, de-
pending on the market value of a Fund's portfolio; however, each Fund antici-
pates that its net asset value per share will normally be $1.00 per share. See
"Valuation of Shares."
There is no minimum amount for redemptions.
ADDITIONAL INFORMATION ON FINANCIAL INTERMEDIARY SHARES. Each Fund's shares
are sold and redeemed without charge by the Fund. Financial intermediaries
purchasing or holding Financial Intermediary shares for their customer ac-
counts may charge customers for cash management and other services provided in
connection with their accounts, including, for instance, account maintenance
fees, compensating balance requirements or fees based on account transactions,
assets or income. The dividends payable to beneficial owners of Financial In-
termediary shares will be reduced by the amount of fees paid by a Fund for
services provided by financial intermediaries through which those shares are
purchased and held. See "Financial Intermediaries." A customer should consider
the terms of his or her account with a financial intermediary before purchas-
ing shares. A financial intermediary purchasing or redeeming shares on behalf
of its customers is responsible for transmitting orders to the Transfer Agent
in accordance with its customer agreements and the procedures noted above.
VALUATION OF SHARES
Each Fund uses its best efforts to maintain its net asset value at $1.00 per
share. Each Fund's net asset value per share is determined by dividing the
value of its investments and other assets minus its liabilities by the number
of Fund shares outstanding. The net asset value per share for Money Market
Fund is determined once each Business Day at 2:30 p.m. (Eastern time). The net
asset value per share for Government Securities Fund and Treasury Securities
Fund is determined once each Business Day at 12:00 noon (Eastern time).
Each Fund values its portfolio securities using the amortized cost method of
valuation, under which market value is approximated by amortizing the differ-
ence between the acquisition cost and value at maturity of an instrument on a
straight-line basis over its remaining life. All cash, receivables and current
payables are carried at their face value. Other assets are valued at fair
value as determined in good faith by or under the direction of the board.
DIVIDENDS AND TAXES
DIVIDENDS. Each Business Day, each Fund declares as dividends all of its net
investment income. Shares are entitled to receive dividends beginning on the
date the purchase order is accepted; dividends are accrued to shareholder ac-
counts daily and are paid on the last Business Day of the month. Dividends are
automatically paid in additional Fund shares unless the shareholder elects in-
stead to have dividends transmitted by federal funds wire to either a desig-
nated bank account or PaineWebber account. Shares do not earn dividends on the
day of redemption.
Each Fund distributes its net short-term capital gain, if any, annually but
may make more frequent distributions of such gain if necessary to maintain its
net asset value per share at $1.00 or to avoid income or excise taxes. The
Funds do not expect to realize net long-term capital gain and thus do not an-
ticipate payment of any long-term capital gain distributions. Dividends paid
on both classes of shares are calculated at the same time and in the same man-
ner. Dividends on Institutional shares are expected to be higher than
12
<PAGE>
those paid on Financial Intermediary shares because of the higher expenses
borne by the Financial Intermediary shares.
FEDERAL TAX. Each Fund intends to continue to qualify for treatment as a
regulated investment company under the Internal Revenue Code so that it will
be relieved of federal income tax on that part of its investment company tax-
able income (consisting generally of taxable net investment income and net
short-term capital gain, if any) that is distributed to its shareholders.
Dividends from a Fund's investment company taxable income (whether paid in
cash or in additional Fund shares) are taxable to its shareholders as ordinary
income to the extent of its earnings and profits. Shareholders not subject to
tax on their income will not be required to pay tax on amounts distributed to
them. The Funds' dividends and distributions will not qualify for the divi-
dends-received deduction for corporations.
Some states permit shareholders to treat their portions of a Fund's divi-
dends that are attributable to interest on U.S. Treasury securities and cer-
tain U.S. government securities as income that is exempt from state and local
income taxes, if the Fund meets certain asset and diversification require-
ments. Dividends attributable to earnings on repurchase agreements and securi-
ties loans are, as a general rule, subject to state and local taxation.
Each Fund notifies its shareholders following the end of each calendar year
of the tax status of all distributions paid (or deemed paid) during that year.
The notice sent by each Fund specifies the portions of their dividends that
are attributable to U.S. Treasury securities and specific types of U.S. gov-
ernment securities.
Each Fund is required to withhold 31% of all taxable dividends payable to
any individuals and certain other noncorporate shareholders who (1) do not
provide the Fund with a correct taxpayer identification number or (2) other-
wise are subject to backup withholding.
ADDITIONAL INFORMATION. The foregoing is only a summary of some of the im-
portant federal, state and local income tax considerations generally affecting
the Funds and their shareholders; see the Statement of Additional Information
for a further discussion. There may be other federal, state and local tax con-
siderations applicable to a particular investor. Prospective shareholders are
urged to consult their tax advisers.
MANAGEMENT
The board, as part of its overall management responsibility, oversees vari-
ous organizations responsible for the Funds' day-to-day management.
PaineWebber, the Funds' investment adviser and administrator, provides a con-
tinuous investment program for each Fund and supervises all aspects of its op-
erations. As sub-adviser to the Funds, Mitchell Hutchins makes and implements
investment decisions and, as sub-administrator, is responsible for the day-to-
day administration of the Funds.
PaineWebber receives a monthly fee for these services. For the fiscal year
ended April 30, 1997, the advisory and administration fees payable to
PaineWebber by each Fund were equal to 0.25% of the Fund's average daily net
assets. PaineWebber has undertaken to waive 0.05% of its fees and to maintain
each Fund's total annual operating expenses at a level not exceeding 0.30% and
0.55% of the Fund's average daily net assets annually for Institutional shares
and Financial Intermediary shares, respectively. After PaineWebber's waiver of
a portion of the fees and/or expense reimbursements with respect to each
Fund's Institutional shares, for the fiscal year ended April 30, 1997, Money
Market Fund's, Government Securities Fund's and Treasury Securities Fund's to-
tal expenses represented 0.25%, 0.30% and 0.30%, respectively, of their aver-
age net assets. No Financial Intermediary shares of the Funds were outstanding
during that period. PaineWebber (not the Funds) pays Mitchell Hutchins a fee
for its sub-advisory and sub-administration services, at an annual rate of 50%
of the fee received by PaineWebber from each Fund for advisory and administra-
tive services.
PaineWebber and Mitchell Hutchins are located at 1285 Avenue of the Ameri-
cas, New York, New York 10019. Mitchell Hutchins is a wholly owned subsidiary
of PaineWebber, which is in turn wholly owned by Paine Webber Group Inc., a
publicly owned financial services holding company. At July 31, 1997,
PaineWebber or Mitchell Hutchins was investment adviser or sub-adviser to 29
registered investment companies with 64 separate portfolios and aggregate as-
sets in excess of $34.8 billion.
Mitchell Hutchins personnel may engage in securities transactions for their
own accounts pursuant to a code of ethics that establishes procedures for per-
sonal investing and restricts certain transactions.
13
<PAGE>
PaineWebber is the distributor of each Fund's shares.
FINANCIAL INTERMEDIARIES
Financial intermediaries, such as banks and savings associations, may pur-
chase Financial Intermediary shares for the accounts of their customers. The
Trust has adopted a shareholder services plan ("Plan") with respect to Finan-
cial 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 Interme-
diary shares. Under the Plan, each Fund pays PaineWebber an annual fee at the
annual rate of 0.25% of the average daily net asset value of the Financial In-
termediary shares held by financial intermediaries on behalf of their custom-
ers. 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, which are described in
greater detail in the Statement of Additional Information under "Other Infor-
mation--Financial Intermediaries," may include: aggregating and processing
purchase and redemption requests from customers and placing net purchase and
redemption orders with PaineWebber; providing customers with a service that
invests the assets of their accounts in Financial Intermediary shares;
processing dividend payments on behalf of customers; providing information pe-
riodically to customers showing their positions in Financial Intermediary
shares; arranging for bank wires; responding to customer inquiries relating to
the services performed by the financial intermediary; providing sub-accounting
with respect to Financial Intermediary shares beneficially owned by customers
or the information necessary for sub-accounting; forwarding shareholder commu-
nications from a Fund to customers, if required by law; and such other similar
services as the Trust may reasonably request from time to time to the extent
the financial intermediary is permitted to do so under federal and state stat-
utes, rules and regulations. Under the terms of the service agreements, finan-
cial 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.
Should future legislative, judicial or administrative action prohibit or re-
strict the activities of banks serving as financial intermediaries in connec-
tion 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 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 re-
ceipt of compensation from a Fund through PaineWebber under a service agree-
ment resulting from fiduciary funds being invested in Financial Intermediary
shares. Before investing fiduciary funds in Financial Intermediary shares, fi-
nancial intermediaries, including investment advisers and other money managers
under the jurisdiction of the Securities and Exchange Commission, the Depart-
ment of Labor or state securities commissions and banks regulated by the Comp-
troller of the Currency should consult their legal advisors.
PERFORMANCE INFORMATION
From time to time each Fund may advertise its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. The "yield" of a Fund is the income on an invest-
ment in that Fund over a specified seven-day period. This income is then
"annualized" (that is, assumed to be earned each week over a 52-week period)
and shown as a percentage of the investment. The "effective yield" is calcu-
lated similarly, but when annualized the income earned is assumed to be rein-
vested. The "effective yield" will be higher than the "yield" because of the
compounding effect of this assumed reinvestment.
Current yield and effective yield are calculated separately for Institu-
tional shares and Financial Intermediary shares. Since holders of Financial
Intermediary shares bear all service fees for the services rendered by finan-
cial intermedi-
14
<PAGE>
aries, the net yield on Financial Intermediary shares can be expected at any
given time to be approximately 0.25% lower than the net yield on Institutional
shares. Any additional fees directly assessed by financial intermediaries will
have the effect of further reducing the net yield realized by a beneficial
owner of Financial Intermediary shares.
Each Fund may also advertise other performance data, which may consist of
the annual or cumulative return (including realized 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 re-
investment of dividends (compounding).
GENERAL INFORMATION
The Trust is registered as an open-end management investment company and was
organized as a business trust under the laws of the Commonwealth of Massachu-
setts by Declaration of Trust dated February 14, 1991. The board has authority
to issue an unlimited number of shares of beneficial interest of separate se-
ries, par value $0.001 per share.
Each share of a Fund has equal voting, dividend and liquidation rights, ex-
cept that beneficial owners of Financial Intermediary shares receive certain
services directly from financial intermediaries, bear certain service fees and
enjoy exclusive voting rights on matters relating to these services and fees.
The Trust does not hold annual shareholder 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 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. The trustees are required to call a meeting
of shareholders of the Trust for the purposes of voting upon the question of
removal of any trustee when requested in writing to do so by the shareholders
of record of not less than 10% of the Trust's outstanding shares.
Shareholders of each Fund are entitled to one vote for each full share held
and fractional votes for fractional shares held. Voting rights are not cumula-
tive and, as a result, the holders of more than 50% of the shares of the Trust
may elect all of its trustees. The shares of each Fund will be voted together,
except that only the shareholders of a particular class of a Fund may vote on
matters affecting only that class. The shares of each series of the Trust will
be voted separately, except when an aggregate vote of all the securities is
required by law. Financial intermediaries holding shares for their own ac-
counts must undertake to vote the shares in the same proportions as the vote
of shares held for their customers.
CERTIFICATES. To avoid additional operating expenses and for investor conve-
nience, share certificates are not issued. Ownership of shares of each Fund is
recorded on a share register by the Transfer Agent, and shareholders have the
same rights of ownership with respect to such shares as if certificates had
been issued.
REPORTS. Shareholders receive audited annual and unaudited semiannual finan-
cial statements of the Funds. All purchases and redemptions of Fund shares are
confirmed to shareholders at least quarterly.
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, One Heri-
tage Drive, North Quincy, Massachusetts 02171, is custodian of the Trust's as-
sets. First Data Investor Services Group, Inc., whose principal business ad-
dress is 4400 Computer Drive, Westborough, Massachusetts 01581-5159, is the
Trust's transfer and dividend disbursing agent.
15
<PAGE>
Mitchell Hutchins'
Liquid
Institutional
Reserves
---------------------------------------------------------------------------
Money Market
Fund
Government
Securities
Fund
Treasury
Securities
Fund
SEPTEMBER 1, 1997, as revised July 15, 1998
TABLE OF CONTENTS
Highlights.................................................................. 2
Financial Highlights........................................................ 6
Investment Objectives and Policies.......................................... 8
Purchases................................................................... 10
Exchanges................................................................... 11
Redemptions................................................................. 11
Valuation of Shares......................................................... 12
Dividends and Taxes......................................................... 12
Management.................................................................. 13
Financial Intermediaries.................................................... 14
Performance Information..................................................... 14
General Information......................................................... 15
- -------------------------------------------------------------------------------
No person has been authorized to give any information or make any
representations not contained in this Prospectus in connection with the
offering made by this Prospectus. If given or made, such information or
representations must not be relied upon as having been authorized by the Funds
or their distributor. This Prospectus does not constitute an offering by the
Funds or their distributor in any jurisdiction in which such offering may not
lawfully be made.
PaineWebber
(C)1997 PaineWebber Incorporated
