Liquid Institutional Reserves
Money Market Fund
Government Securities Fund
Treasury Securities Fund
---------------------------------
PROSPECTUS
SEPTEMBER 1, 2000
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This prospectus offers two classes of shares for each money market fund.
Institutional shares are offered primarily to institutional investors, and
Financial Intermediary shares are offered to banks and other financial
intermediaries for the benefit of their customers.
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Not FDIC insured. May lose value. No bank guarantee.
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As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the funds' shares or determined whether this prospectus
is complete or accurate. To state otherwise is a crime.
<PAGE>
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Liquid Institutional Reserves
Money Market Fund Government Securities Fund Treasury Securities Fund
Contents
THE FUNDS
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What every investor Money Market Fund
should know about 3 Investment Objective, Strategies and Risks
the funds 4 Performance
5 Expenses and Fee Tables
Government Securities Fund
6 Investment Objective, Strategies and Risks
7 Performance
8 Expenses and Fee Tables
Treasury Securities Fund
9 Investment Objective, Strategies and Risks
10 Performance
11 Expenses and Fee Tables
12 More About Risks and Investment Strategies
YOUR INVESTMENT
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Information for 13 Managing Your Fund Account
managing your fund --Buying Shares
account --Selling Shares
--Exchanging Shares
--Additional Information
About Your Account
--Pricing and Valuation
ADDITIONAL INFORMATION
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Additional important 16 Management
information about the funds
17 Dividends and Taxes
18 Financial Highlights
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Where to learn more Back Cover
about the funds
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The funds are not complete or
balanced investment programs.
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Prospectus Page 2
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Liquid Institutional Reserves Money Market Fund
Money Market Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
--------------------------------------------------------------------------------
FUND OBJECTIVE
High current income to the extent consistent with the 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.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a money market fund and seeks to maintain a stable price of $1.00
per share. The fund invests in a diversified portfolio of high quality money
market instruments of governmental and private issuers.
Money market instruments are short-term debt obligations and similar securities.
They also include longer term bonds that have variable interest rates or other
special features that give them the financial characteristics of short-term
debt. The fund invests in foreign money market instruments only if they are
denominated in U.S. dollars.
PaineWebber Incorporated, the fund's investment adviser, has appointed Mitchell
Hutchins Asset Management Inc. to serve as the fund's sub-adviser. Mitchell
Hutchins selects money market instruments for the fund based on its assessment
of relative values and changes in market and economic conditions. Mitchell
Hutchins considers safety of principal and liquidity in selecting securities for
the fund and thus may not buy securities that pay the highest yield.
PRINCIPAL RISKS
An investment in the fund is not a bank deposit and is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. While the fund seeks to maintain the value of your investment at $1.00
per share, you may lose money by investing in the fund. Money market instruments
generally have a low risk of loss, but they are not risk-free. The principal
risks presented by the fund are:
o CREDIT RISK - Issuers of money market instruments may fail to make payments
when due, or they may become less willing or less able to do so.
o INTEREST RATE RISK - The value of the fund's investments generally will fall
when short term interest rates rise and its yield will tend to lag behind
prevailing rates.
o FOREIGN INVESTING RISK - The value of the fund's investments in foreign
securities may fall due to adverse political, social and economic
developments abroad. However, because the fund's foreign investments must be
denominated in U.S. dollars, it generally is not subject to the risk of
changes in currency valuations.
More information about risks of an investment in the fund is provided below in
"More About Risks and Investment Strategies."
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Prospectus Page 3
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Liquid Institutional Reserves Money Market Fund
PERFORMANCE
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RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Institutional shares because they have a longer performance
history than Financial Intermediary shares. The table that follows the bar chart
shows the average annual returns over several time periods for the fund's
shares.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN ON INSTITUTIONAL SHARES (1992 IS THE FUND'S FIRST FULL CALENDAR
YEAR OF OPERATIONS)
[BAR CHART OMITTED]
3.54% 2.98% 4.02% 5.76% 5.32% 5.47% 5.43% 5.07%
--------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Total return January 1 to June 30, 2000-- 2.98%
Best quarter during years shown: 2nd quarter, 1995 -- 1.44%
Worst quarter during years shown: 2nd quarter, 1993 -- 0.72%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1999
INSTITUTIONAL SHARES FINANCIAL INTERMEDIARY SHARES
(INCEPTION DATE) (6/3/91) (1/14/98)*
-------------- ------ --------
One Year .................. 5.07% 4.81%
Five Years ................ 5.41% N/A
Life of Class ............. 4.75% 4.99%
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* Average annual total returns for Financial Intermediary shares are for the
period January 14, 1998 through December 31, 1999. Such shares had previously
been outstanding only for short periods of time. For further information see
"Financial Highlights."
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Prospectus Page 4
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Liquid Institutional Reserves Money Market Fund
EXPENSES AND FEE TABLES
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FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price) ............................................ None
Maximum Deferred Sales Charge (Load) (as a % of offering price) ......... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
FINANCIAL
INSTITUTIONAL INTERMEDIARY
SHARES SHARES
--------------- ----------------
Management Fees ............................ 0.25% 0.25%
Distribution and/or Service (12b-1) Fees ... 0.00% 0.00%
Other Expenses
Shareholder Servicing Fee ................ 0.00% 0.25%
Miscellaneous Expenses* .................. 0.05% 0.05%
---- ----
0.05% 0.30%
------- -------
Total Annual Fund Operating Expenses ....... 0.30% 0.55%
======= =======
Expense Reimbursement* ..................... 0.02% 0.02%
------- -------
Net Expenses* .............................. 0.28% 0.53%
======= =======
----------
* The fund and PaineWebber have entered into a written expense reimbursement
agreement. PaineWebber is contractually obligated to reimburse fund expenses
through August 31, 2001 to the extent that the fund's expenses otherwise
would exceed the "Net Expenses" rates for each class as shown above. The fund
has agreed to repay PaineWebber for those reimbursed expenses if it can do so
over the following three years without causing the fund's expenses in any of
those years to exceed those "Net Expenses" rates.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same except for the one year period when
the fund's expenses are lower due to its reimbursement agreement with
PaineWebber. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Institutional Shares ............ $29 $ 94 $167 $379
Financial Intermediary Shares ... 54 174 305 687
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Prospectus Page 5
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Liquid Institutional Reserves Government Securities Fund
Government Securities Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
--------------------------------------------------------------------------------
FUND OBJECTIVE
High current income to the extent consistent with the 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.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a money market fund and seeks to maintain a stable price of $1.00
per share. The fund invests in a diversified portfolio of high quality, U.S.
government money market instruments and in related repurchase agreements.
Money market instruments are short-term debt obligations and similar securities.
They also include longer term bonds that have variable interest rates or other
special features that give them the financial characteristics of short-term
debt. Many U.S. government money market instruments pay income that is generally
exempt from state and local income tax.
The fund may invest a significant percentage of its assets in repurchase
agreements. Repurchase agreements are transactions in which the fund purchases
government securities and simultaneously commits to resell them to the same
counterparty at a future time and at a price reflecting a market rate of
interest. Income from repurchase agreements may not be exempt from state and
local income taxation. Repurchase agreements often offer a higher yield than
investments directly in government securities. In deciding whether an investment
in a repurchase agreement is more attractive than a direct investment in
government securities, the fund considers the possible loss of this tax
advantage.
PaineWebber Incorporated, the fund's investment adviser, has appointed Mitchell
Hutchins Asset Management Inc. to serve as the fund's sub-adviser. Mitchell
Hutchins selects money market instruments for the fund based on its assessment
of relative values and changes in market and economic conditions.
PRINCIPAL RISKS
An investment in the fund is not a bank deposit and is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. While the fund seeks to maintain the value of your investment at $1.00
per share, you may lose money by investing in the fund. Money market instruments
generally have a low risk of loss, but they are not risk-free. The principal
risks presented by the fund are:
o CREDIT RISK - Issuers of money market instruments may fail to make payments
when due, or they may become less willing or less able to do so.
o INTEREST RATE RISK - The value of the fund's investments generally will fall
when short-term interest rates rise and its yield will tend to lag behind
prevailing rates.
More information about risks of an investment in the fund is provided below in
"More About Risks and Investment Strategies."
-------------------------------=================--------------------------------
Prospectus Page 6
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Liquid Institutional Reserves Government Securities Fund
PERFORMANCE
--------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Institutional shares because they were the only class
outstanding for all periods shown. The table that follows the bar chart shows
the average annual returns over several time periods for the fund's shares.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN ON INSTITUTIONAL SHARES (1992 IS THE FUND'S FIRST FULL CALENDAR
YEAR OF OPERATIONS)
[BAR CHART OMITTED]
3.53% 2.94% 3.93% 5.57% 5.17% 5.30% 5.24% 4.91%
--------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Total return January 1 to June 30, 2000 -- 2.87%
Best quarter during years shown: 2nd quarter, 1995 -- 1.39%
Worst quarter during years shown: 2nd quarter and 4th quarter, 1993 -- 0.72%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1999
INSTITUTIONAL SHARES
(INCEPTION DATE) (6/3/91)
-------------- ------
One Year ..................................... 4.91%
Five Years ................................... 5.24%
Life of Class ................................ 4.57%
----------
* Because no Financial Intermediary shares were outstanding for a full calendar
year, average annual total return for Financial Intermediary shares is not
included in the table. Performance for Financial Intermediary shares would be
lower because of the 0.25% shareholder servicing fee paid by those shares.
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Prospectus Page 7
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Liquid Institutional Reserves Government Securities Fund
EXPENSES AND FEE TABLES
--------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price) ............................................ None
Maximum Deferred Sales Charge (Load) (as a % of offering price) ......... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
FINANCIAL
INSTITUTIONAL INTERMEDIARY
SHARES SHARES
-------------- ---------------
Management Fees ............................. 0.25% 0.25%
Distribution and/or Service (12b-1) Fees .... 0.00% 0.00%
Other Expenses
Shareholder Servicing Fee ................. 0.00% 0.25%
Miscellaneous Expenses* ................... 0.08% 0.08%
---- ----
0.08% 0.33%
------ ------
Total Annual Fund Operating Expenses ........ 0.33% 0.58%
====== ======
Expense Reimbursement* ...................... 0.04% 0.04%
------ ------
Net Expenses* ............................... 0.29% 0.54%
====== ======
----------
* The fund and PaineWebber have entered into a written expense reimbursement
agreement. PaineWebber is contractually obligated to reimburse fund expenses
through August 31, 2001 to the extent that the fund's expenses otherwise
would exceed the "Net Expenses" rates for each class as shown above. The fund
has agreed to repay PaineWebber for those reimbursed expenses if it can do so
over the following three years without causing the fund's expenses in any of
those years to exceed those "Net Expenses" rates.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same except for the one year period when
the fund's expenses are lower due to its reimbursement agreement with
PaineWebber. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Institutional Shares .............. $30 $102 $181 $414
Financial Intermediary Shares ..... 55 182 320 722
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Prospectus Page 8
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Liquid Institutional Reserves Treasury Securities Fund
Treasury Securities Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
--------------------------------------------------------------------------------
FUND OBJECTIVE
High current income to the extent consistent with the 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 investments.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a money market fund and seeks to maintain a stable price of $1.00
per share. The fund invests in U.S. Treasury money market instruments which are
supported by the full faith and credit of the United States. These investments
pay income that is generally exempt from state and local income tax.
Money market instruments are short-term debt obligations and similar securities.
They also include longer term bonds that have variable interest rates or other
special features that give them the financial characteristics of short-term
debt.
PaineWebber Incorporated, the fund's investment adviser, has appointed Mitchell
Hutchins Asset Management Inc. to serve as the fund's sub-adviser. Mitchell
Hutchins selects money market instruments for the fund based on its assessment
of relative values and changes in market and economic conditions.
PRINCIPAL RISKS
An investment in the fund is not a bank deposit and is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. While the fund seeks to maintain the value of your investment at $1.00
per share, you may lose money by investing in the fund. Money market instruments
generally have a low risk of loss, but they are not risk-free. The principal
risks presented by the fund are:
o CREDIT RISK - Issuers of money market instruments may fail to make payments
when due, or they may become less willing or less able to do so.
o INTEREST RATE RISK - The value of the fund's investments generally will fall
when short-term interest rates rise and its yield will tend to lag behind
prevailing rates.
More information about risks of an investment in the fund is provided below in
"More About Risks and Investment Strategies."
-------------------------------=================--------------------------------
Prospectus Page 9
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Liquid Institutional Reserves Treasury Securities Fund
PERFORMANCE
--------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Institutional shares because they were the only class
outstanding for all the periods shown. The table that follows the bar chart
shows the average annual returns over several time periods for the fund's
shares.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN ON INSTITUTIONAL SHARES (1992 IS THE FUND'S FIRST FULL CALENDAR
YEAR OF OPERATIONS)
[BAR CHART OMITTED]
3.34% 2.72% 3.93% 5.47% 4.97% 5.16% 4.94% 4.47%
--------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Total return January 1 to June 30, 2000 -- 2.63%
Best quarter during years shown: 2nd quarter, 1995 -- 1.38%
Worst quarter during years shown: 1st quarter, 1993 -- 0.65%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1999
INSTITUTIONAL SHARES*
(INCEPTION DATE) (12/6/91)
-------------- ------
One Year ................................... 4.47%
Five Years ................................. 5.00%
Life of Class .............................. 4.37%
----------
* No Financial Intermediary shares were outstanding prior to December 31, 1999.
Performance for Financial Intermediary shares would be lower because of the
0.25% shareholder servicing fee paid by those shares.
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Prospectus Page 10
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Liquid Institutional Reserves Treasury Securities Fund
EXPENSES AND FEE TABLES
--------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price) ............................................. None
Maximum Deferred Sales Charge (Load) (as a % of offering price) .......... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
FINANCIAL
INSTITUTIONAL INTERMEDIARY
SHARES SHARES
-------------- --------------
Management Fees ............................. 0.25% 0.25%
Distribution and/or Service (12b-1) Fees .... 0.00% 0.00%
Other Expenses
Shareholder Servicing Fee ................. 0.00% 0.25%
Miscellaneous Expenses* ................... 0.10% 0.10%
---- ----
0.10% 0.35%
------ ------
Total Annual Fund Operating Expenses ........ 0.35% 0.60%
====== ======
Expense Reimbursement* ...................... 0.06% 0.06%
------ ------
Net Expenses* ............................... 0.29% 0.54%
====== ======
----------
* The fund and PaineWebber have entered into a written expense reimbursement
agreement. PaineWebber is contractually obligated to reimburse fund expenses
through August 31, 2001 to the extent that the fund's expenses otherwise
would exceed the "Net Expenses" rates for each class as shown above. The fund
has agreed to repay PaineWebber for those reimbursed expenses if it can do so
over the following three years without causing the fund's expenses in any of
those years to exceed those "Net Expenses" rates.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same except for the one year period when
the fund's expenses are lower due to its reimbursement agreement with
PaineWebber. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Institutional Shares ............... $30 $106 $190 $437
Financial Intermediary Shares ...... 55 186 329 744
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Prospectus Page 11
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Liquid Institutional Reserves
Money Market Fund Government Securities Fund Treasury Securities Fund
MORE ABOUT RISKS
AND INVESTMENT STRATEGIES
--------------------------------------------------------------------------------
PRINCIPAL RISKS
The main risks of investing in the funds are described below. Not all of these
risks apply to each fund. You can find a list of the main risks that apply to a
particular fund under the "Investment Objective, Strategies and Risks" heading
for that fund.
Other risks of investing in a fund, along with further detail about some of the
risks described below, are discussed in the funds' Statement of Additional
Information ("SAI"). Information on how you can obtain the SAI is on the back
cover of this prospectus.
CREDIT RISK. Credit risk is the risk that the issuer of a money market
instrument will not make principal or interest payments when they are due. Even
if an issuer does not default on a payment, a money market instrument's value
may decline if the market believes that the issuer has become less able, or less
willing, to make payments on time. Even the highest quality money market
instruments are subject to some credit risk.
INTEREST RATE RISK. The value of money market instruments generally can be
expected to fall when short-term interest rates rise and to rise when short-term
interest rates fall. Interest rate risk is the risk that interest rates will
rise, so that the value of a fund's investments will fall. Also, a fund's yield
will tend to lag behind changes in prevailing short-term interest rates. This
means that a fund's income will tend to rise more slowly than increases in
short-term interest rates. Similarly, when short-term interest rates are
falling, a fund's income generally will tend to fall more slowly.
FOREIGN INVESTING RISK. Foreign investing involves risks relating to political,
social and economic developments abroad to a greater extent than investing in
the securities of U.S. issuers. In addition, there are differences between U.S.
and foreign regulatory requirements and market practices.
ADDITIONAL INVESTMENT STRATEGIES
Like all money market funds, the funds are subject to maturity, quality and
diversification requirements designed to help them maintain a stable price of
$1.00 per share. The funds' investment strategies are designed to comply with
these requirements.
Mitchell Hutchins may use a number of professional money management techniques
to respond to changing economic and money market conditions and to shifts in
fiscal and monetary policy. These techniques include varying a fund's
composition and weighted average maturity based upon its assessment of the
relative values of various money market instruments and future interest rate
patterns. Mitchell Hutchins also may buy or sell money market instruments to
take advantage of yield differences.
Each fund may invest to a limited extent in shares of similar money market funds
that, for Government Securities Fund and Treasury Securities Fund, have like tax
characteristics.
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Prospectus Page 12
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Liquid Institutional Reserves
Money Market Fund Government Securities Fund Treasury Securities Fund
MANAGING YOUR FUND ACCOUNT
--------------------------------------------------------------------------------
BUYING SHARES
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 another
bank in one day and thus may be made immediately available to a fund through its
custodian.
Each fund offers two separate classes of shares -- Institutional shares and
Financial Intermediary shares -- as an economical and convenient means for
institutions to invest short-term funds that they hold for their own account or
hold or manage for others.
o You may purchase Institutional shares if you are an institutional investor.
PaineWebber Incorporated, the distributor of the fund's shares may, in its
discretion, make Institutional shares available to individuals or other
entities.
o You may purchase Financial Intermediary shares only if you are a bank or
other financial intermediary buying the shares for the benefit of your
customers. Financial Intermediary shares bear special fees (paid by the fund)
at the annual rate of 0.25% of average net assets attributable to Financial
Intermediary shares for services that these financial intermediaries provide
to the beneficial owners of the Financial Intermediary shares.
Unless you specify otherwise, the funds will treat all purchase orders as orders
for Institutional shares.
You may buy fund shares by calling the funds' transfer agent, PFPC Inc., at
1-888-LIR-FUND and speaking to a representative. You may also buy fund shares by
contacting your Financial Advisor at PaineWebber or its correspondent firms, who
are then responsible for sending the order to the transfer agent. The
availability of fund shares to customers of PaineWebber's correspondent firms
may vary depending on the arrangements between PaineWebber and those firms.
You buy shares at the net asset value next determined after receipt and
acceptance of your purchase order by the transfer agent, subject to a fund
receiving payment the same day. Your purchase order will be effective only if
you wire payment in federal funds on the same business day that you place your
order, and your wire must actually be credited to the funds' bank account by a
Federal Reserve Bank that day. Otherwise, the order will be rejected. A business
day is any day that the funds' custodian, the funds' transfer agent and
PaineWebber are open for business.
Orders to buy shares of Money Market Fund and Government Securities Fund
received before noon (Eastern time), will normally be executed as of noon
(Eastern time). Orders received after noon (Eastern time) but before 2:30 p.m.
(Eastern time), will normally be executed as of 2:30 p.m. (Eastern time). Orders
received after 2:30 p.m. (Eastern time) and before 4:30 p.m. (Eastern time),
will normally be executed as of 4:30 p.m. (Eastern time).
Orders to buy shares of Treasury Securities Fund received before noon (Eastern
time), will normally be executed as of noon (Eastern time). Orders received
after noon (Eastern time) but before 2:30 p.m. (Eastern time), will normally be
executed as of 2:30 p.m. (Eastern time).
Each fund reserves the right to advance the time by which orders to buy or sell
its shares must be received by the transfer agent. A fund may do this when the
primary government securities dealers are either closed for business or close
early, or trading in money market instruments is limited due to national
holidays. For example, a fund may advance the time by which orders to buy or
sell its shares must be received by the transfer agent on any day that the New
York Stock Exchange ("NYSE") closes early because trading has been halted for
the day or The Bond Market Association ("BMA") (formerly known as the Public
Securities Association or "PSA") recommends that the securities markets close
early. Frequently, markets close early on the afternoon of a business day prior
to a national holiday. Of course, if a fund's usual deadline for receipt by the
transfer agent of orders to buy or sell its shares is earlier than the time at
which markets close, the fund expects to follow its normal schedule. Investors
may call toll-free 1-888-LIR-Fund to inquire whether a fund intends to close
early on a given day.
The funds and PaineWebber reserve the right to reject a purchase order or
suspend the offering of fund shares. PaineWebber may return without notice money
wired to a fund where the investor fails to place a corresponding share purchase
order.
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Prospectus Page 13
<PAGE>
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Liquid Institutional Reserves
Money Market Fund Government Securities Fund Treasury Securities Fund
WIRE INSTRUCTIONS
Instruct your bank to transfer federal funds by wire to:
Mitchell Hutchins Institutional Funds
c/o The Bank of New York
CR DDA A/C #8900337516
FFC PW A/C # ________________________________________________________________
[INSERT PAINEWEBBER ACCOUNT NAME AND ACCOUNT NUMBER]
LIR ______________________________________________________ Fund
[INSERT MONEY MARKET, GOVERNMENT OR TREASURY]
ABA #021000018
PaineWebber or your bank may impose a service charge for wire transfers.
MINIMUM INVESTMENTS:
Money Market Fund and Government Securities Fund (or a combination of both):
To open an account .............................................. $1,000,000
To add to an account ............................................ None
Treasury Securities Fund:
To open an account .............................................. $250,000
To add to an account ............................................ None
PaineWebber may waive these minimums. A fund may change its minimum investment
requirements at any time. Investments must be denominated in U.S. dollars.
Financial intermediaries may establish different minimums for their customers
who purchase Financial Intermediary shares through them, provided that the
aggregate amounts purchased meet the above minimums. You may obtain additional
information about these minimums from your financial intermediary.
REMOTE TRADE ENTRY
The funds may offer an electronic trade order entry (RTE) capability to eligible
institutional investors who meet certain conditions. For more information on
this option, contact your Financial Advisor or the transfer agent at
1-888-LIR-FUND.
SELLING SHARES
You may sell your shares by calling the transfer agent at 1-888-LIR-FUND and
speaking with a representative. You also may sell your shares by contacting your
Financial Advisor or correspondent firm (if you previously designated them to
give instructions to the transfer agent on your behalf); they are then
responsible for sending the order to the transfer agent.
Orders to sell shares of Money Market Fund and Government Securities Fund
received before noon (Eastern time), will normally be executed as of noon
(Eastern time). Orders received after noon (Eastern time) but before 2:30 p.m.
(Eastern time), will normally be executed as of 2:30 p.m. (Eastern time). Orders
received after 2:30 p.m. (Eastern time) and before 4:30 p.m. (Eastern time),
will normally be executed as of 4:30 p.m. (Eastern time).
Orders to sell shares of Treasury Securities Fund received before noon (Eastern
time), will normally be executed as of noon (Eastern time). Orders received
after noon (Eastern time) but before 2:30 p.m. (Eastern time), will normally be
executed as of 2:30 p.m. (Eastern time).
As noted above under "Buying Shares," the funds may advance the time for the
transfer agent's receipt of orders to sell shares (E.G., days on which
securities markets close early prior to a national holiday).
Your sales proceeds will be paid in federal funds wired to one or more accounts
you have designated, normally on the business day the sale order is accepted. If
you sell all the shares you own, dividends accrued for the month to date will be
paid in federal funds and wired at the same time to the bank account(s) that you
designate.
Your bank account may not receive the proceeds in a timely manner if a Federal
Reserve Bank is experiencing delay in transfer of funds. Neither the funds,
PaineWebber nor the transfer agent is responsible for the performance of your
bank or any of its intermediaries.
The transfer agent will process your orders to sell shares only if you have on
file with it a properly completed account application, with a signature
guaranteed or other authentication acceptable to the transfer agent. The account
application requires you to designate the bank account(s) or PaineWebber account
for wiring sales proceeds. You must submit any change in the designated
account(s) for sale proceeds in a form acceptable to the transfer agent. The
transfer agent will not place the sales order if the information you provide
does not correspond to the information on your application.
If you have additional questions on selling shares, you should contact your
Financial Advisor or call the transfer agent at 1-888-LIR-FUND.
EXCHANGING SHARES
You may exchange shares of a fund for shares of the same class of another fund
or Mitchell Hutchins LIR Select Money Fund. Mitchell Hutchins LIR Select Money
Fund has a $10,000,000 minimum for initial purchases and a
-------------------------------==================-------------------------------
Prospectus Page 14
<PAGE>
--------------------------=============================-------------------------
Liquid Institutional Reserves
Money Market Fund Government Securities Fund Treasury Securities Fund
$100,000 minimum for subsequent purchases. These minimums apply to initial and
subsequent purchases made through an exchange of shares. All exchanges are based
on the next determined net asset value per share.
Exchange orders are accepted up until 2:30 p.m. (Eastern time). Exchange orders
received after that time will not be effected, and you will have to place an
exchange order before that time on the following business day if you still wish
to effect an exchange. If you exchange all your fund shares, the dividends
accrued on those shares for the month to date also will be invested in the
shares of the other fund into which the exchange is made.
You can place an exchange order by calling the transfer agent at 1-888-LIR-FUND
and speaking with a representative. You also can place an exchange order through
a PaineWebber Financial Advisor or correspondent firm (if you previously
designated them to give instructions to the transfer agent on your behalf), who
is then responsible for sending the order to the transfer agent. You may
exchange Financial Intermediary shares only if you are a bank or other financial
intermediary exchanging the shares for the benefit of your customers.
Shareholders making their initial purchase of another fund through an exchange
should allow more time and must provide the transfer agent with a properly
completed account application for the new fund. These exchange orders should be
received by the transfer agent at least one half hour before the previously
mentioned deadline to allow the transfer agent sufficient time to establish an
account in the new fund in the investor's name. Otherwise the transfer agent may
not be able to effect the exchange.
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 except as noted above.
A fund may modify or terminate the exchange privilege at any time.
ADDITIONAL INFORMATION ABOUT YOUR ACCOUNT
FINANCIAL INTERMEDIARY SHARES. Financial intermediaries purchasing or holding
shares for their customer accounts may charge those customers for cash
management and other services provided in connection with their accounts. These
charges may include account maintenance fees, compensating balance requirements
or fees based on account transactions, assets or income. The dividends payable
to the financial intermediaries' customers, who are the beneficial owners of the
shares, will be lower than those on Institutional shares by the amount of the
fees paid by the fund for shareholder services. A customer should consider the
terms of his account with a financial intermediary before purchasing shares.
A financial intermediary buying or selling shares for its customers is
responsible for transmitting orders to the transfer agent in accordance with its
customer agreements and the procedures noted above.
INSTITUTIONAL SHARES. PaineWebber or Mitchell Hutchins (not the fund) may pay
shareholder servicing fees to financial institutions that make Institutional
shares available to their customers. The amount of these fees will be negotiated
between PaineWebber or Mitchell Hutchins and the financial institution.
PRICING AND VALUATION
The price of fund shares is based on net asset value and is determined
separately for each class of shares. The net asset value is the total value of a
fund divided by the total number of shares outstanding. In determining net asset
value, each fund values its securities at their amortized cost. This method uses
a constant amortization to maturity of the difference between the cost of the
instrument to the fund and the amount due at maturity. Each fund's net asset
value per share is expected to be $1.00 per share, although this value is not
guaranteed.
The net asset value per share for both Money Market Fund and Government
Securities Fund is normally determined three times each Business Day at
o noon (Eastern time);
o 2:30 p.m. (Eastern time); and
o 4:30 p.m. (Eastern time).
The net asset value per share for Treasury Securities Fund is normally
determined twice each Business Day at
o noon (Eastern time) and
o 2:30 p.m. (Eastern time).
Your price for buying or selling shares will be the net asset value that is next
calculated after a fund accepts your order.
On any day that a fund determines to advance the time by which orders to buy or
sell its shares must be received by the transfer agent as described above under
"Buying Shares," the time for determination of the fund's net asset value per
share will be as of the same time the fund has determined to cease accepting
orders to buy or sell its shares. The fund will not price its shares again on
that business day even if it normally prices its shares more than once each
business day.
-------------------------------==================-------------------------------
Prospectus Page 15
<PAGE>
--------------------------=============================-------------------------
Liquid Institutional Reserves
Money Market Fund Government Securities Fund Treasury Securities Fund
MANAGEMENT
--------------------------------------------------------------------------------
INVESTMENT ADVISER AND SUB-ADVISER
PaineWebber is the investment adviser and administrator of the funds and
distributor of their shares. Mitchell Hutchins Asset Management Inc. is each
fund's sub-adviser and sub-administrator. PaineWebber is located at 1285 Avenue
of the Americas, New York, New York, 10019-6028, and Mitchell Hutchins is
located at 51 West 52nd Street, New York, New York, 10019-6114. Mitchell
Hutchins is a wholly owned asset management subsidiary of PaineWebber, which is
wholly owned by Paine Webber Group Inc. ("PW Group"), a publicly owned financial
services holding company. On July 31, 2000, PaineWebber or Mitchell Hutchins was
the adviser or sub-adviser of 31 investment companies with 75 separate
portfolios and aggregate assets of approximately $53.3 billion.
On July 12, 2000, PW Group and UBS AG ("UBS") announced that they had entered
into an agreement and plan of merger under which PW Group will merge into a
wholly owned subsidiary of UBS. If all required approvals are obtained and the
required conditions are satisfied, PW Group and UBS expect to complete the
transaction in the fourth quarter of 2000. UBS, with headquarters in Zurich,
Switzerland, is an internationally diversified organization with operations in
many areas of the financial services industry.
ADVISORY FEES
The funds paid advisory and administration fees to PaineWebber for the most
recent fiscal year ended April 30, 2000 at the following annual rates based on
average net assets:
Money Market Fund ................................................... 0.25%
Government Securities Fund .......................................... 0.25%
Treasury Securities Fund ............................................ 0.25%
OTHER INFORMATION. Money Market Fund and Government Securities Fund will
maintain a rating from one or more rating agencies that provide ratings on money
market funds. There can be no assurance that either fund will maintain any
particular rating or maintain it with a particular rating agency.
-------------------------------==================-------------------------------
Prospectus Page 16
<PAGE>
--------------------------=============================-------------------------
Liquid Institutional Reserves
Money Market Fund Government Securities Fund Treasury Securities Fund
DIVIDENDS AND TAXES
--------------------------------------------------------------------------------
DIVIDENDS
Each fund declares dividends daily and pays them monthly. Dividends are paid on
the last business day of a month or upon the sale of all the fund shares in a
shareholder's account.
Each fund distributes any net short-term capital gain annually and anticipates
that any short-term capital gain distribution would be declared during the month
of December in a given year. A fund may make more frequent distributions if
necessary to maintain its share price at $1.00.
Shares earn dividends on the day they are purchased but do not earn dividends on
the day they are sold.
Dividends on Financial Intermediary shares of a fund will be lower than
dividends on its Institutional shares because of the higher expenses borne by
Financial Intermediary shares.
You will receive dividends in additional shares of the same class unless you
elect to have the dividends transmitted by federal funds wire to either a
designated bank account or PaineWebber account. You must notify the transfer
agent in writing in a form acceptable to the transfer agent at least two
business days prior to the end of the month if you wish to change this election
for a particular monthly dividend.
TAXES
The dividends that you receive from a fund generally are subject to federal
income tax regardless of whether you receive them in additional fund shares or
in cash. Shareholders not subject to tax on their income will not be required to
pay tax on amounts distributed to them. The funds' dividends will not qualify
for the dividends-received deduction for corporations.
Some states and localities do not tax dividends that are attributable to
interest on U.S. Treasury securities and certain other government securities
under certain circumstances.
The funds expect that their dividends will be taxed as ordinary income. Each
fund will tell you annually how you should treat its dividends for tax purposes.
You should not recognize any capital gain on the sale of your shares in a fund
so long as the fund maintains a share price of $1.00.
-------------------------------==================-------------------------------
Prospectus Page 17
<PAGE>
--------------------------=============================-------------------------
Liquid Institutional Reserves
Money Market Fund Government Securities Fund Treasury Securities Fund
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The following financial highlights tables are intended to help you understand
the funds' financial performance for the past 5 years. Certain information
reflects financial results for a single fund share. In the tables, "total
investment return" represents the rate that an investor would have earned on an
investment in the fund (assuming reinvestment of all dividends). Financial
Intermediary shares were not outstanding during the fiscal year ended April 30,
2000 for Government Securities Fund or Treasury Securities Fund and were
outstanding for only limited periods of time prior to that fiscal year for Money
Market Fund and Government Securities Fund.
The information in the financial highlights has been audited by Ernst & Young
LLP, independent auditors, whose reports, along with the funds' financial
statements, are included in the funds' annual report to shareholders. The annual
report may be obtained without charge by calling 1-888-LIR-FUND.
-------------------------------==================-------------------------------
Prospectus Page 18
<PAGE>
--------------------------=============================-------------------------
Liquid Institutional Reserves Money Market Fund
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET FUND
-------------------------------------------------------------------------------------------
FINANCIAL
INSTITUTIONAL SHARES INTERMEDIARY SHARES**
------------------------------------------------------------ ----------------------------
FOR THE
PERIOD
FOR THE YEARS JANUARY 14,
ENDED 1998+
FOR THE YEARS ENDED APRIL 30, APRIL 30, TO
------------------------------------------------------------ ----------------- APRIL 30,
2000 1999 1998 1997 1996 2000 1999 1998
---------- ---------- ---------- ---------- -------- ------- ------- -------
<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 ................ 0.053 0.051 0.054 0.052 0.055 0.050 0.048 0.015
---------- ---------- ---------- ---------- -------- ------- ------- -------
Dividends from net investment income . (0.053) (0.051) (0.054) (0.052) (0.055) (0.050) (0.048) (0.015)
---------- ---------- ---------- ---------- -------- ------- ------- -------
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(1) ........... 5.40% 5.22% 5.52% 5.33% 5.61% 5.14% 4.96% 1.51%
========== ========== ========== ========== ======== ======= ======= =======
Ratios/Supplemental Data:
Net assets, end of period (000's) .... $1,836,114 $2,036,379 $1,591,789 $1,246,799 $421,878 $64,634 $12,002 $16,302
Expenses to average net assets
net of waivers/reimbursements
from adviser ....................... 0.28% 0.26% 0.29% 0.25% 0.31% 0.53% 0.51% 0.54%*
Expenses to average net assets
before waivers/reimbursements
from adviser ....................... 0.30% 0.31% 0.34% 0.30% 0.37% 0.55% 0.56% 0.59%*
Net investment income to average
net assets net of waivers/
reimbursements from adviser ........ 5.26% 5.07% 5.38% 5.24% 5.47% 5.05% 4.82% 5.13%*
Net investment income to average
net assets before waivers/
reimbursements from adviser ........ 5.24% 5.02% 5.33% 5.19% 5.41% 5.03% 4.77% 5.07%*
</TABLE>
----------
+ Reissuance of shares.
* Annualized.
** For the period May 1, 1995 to January 13, 1998 there were no outstanding
Financial Intermediary Shares.
(1) Total investment return is calculated assuming a $1,000 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.
-------------------------------==================-------------------------------
Prospectus Page 19
<PAGE>
--------------------------=============================-------------------------
Liquid Institutional Reserves Government Securities Fund
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES FUND
------------------------------------------------------------
INSTITUTIONAL SHARES
------------------------------------------------------------
FOR THE YEARS ENDED APRIL 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income ............................................. 0.051 0.049 0.052 0.051 0.053
Net realized gains from investment transactions ................... -- -- -- -- 0.001
-------- -------- -------- -------- --------
Net increase from investment operations ........................... 0.051 0.049 0.052 0.051 0.054
-------- -------- -------- -------- --------
Dividends from net investment income .............................. (0.051) (0.049) (0.052) (0.051) (0.054)
-------- -------- -------- -------- --------
Net asset value, end of year ...................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return(1) ........................................ 5.22% 5.04% 5.32% 5.20% 5.50%
======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of year (000's) ................................... $121,897 $138,783 $100,140 $106,843 $ 43,770
Expenses to average net assets net of waivers/reimbursements
from adviser .................................................... 0.29% 0.28% 0.30% 0.30% 0.32%
Expenses to average net assets before waivers/reimbursements
from adviser .................................................... 0.33% 0.33% 0.59% 0.53% 0.56%
Net investment income to average net assets net of
waivers/reimbursements from adviser ............................. 5.10% 4.90% 5.21% 5.09% 5.52%
Net investment income to average net assets before
waivers/reimbursements from adviser ............................. 5.06% 4.85% 4.91% 4.86% 5.28%
</TABLE>
----------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year 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 year reported.
-------------------------------==================-------------------------------
Prospectus Page 20
<PAGE>
--------------------------=============================-------------------------
Liquid Institutional Reserves Treasury Securities Fund
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY SECURITIES FUND
-------------------------------------------------------------------
INSTITUTIONAL SHARES
-------------------------------------------------------------------
FOR THE YEARS ENDED APRIL 30,
-------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- -------
Net investment income ..................................... 0.049 0.046 0.051 0.049 0.048
Net realized gains from investment transactions ........... -- -- -- -- 0.003
-------- -------- -------- ------- -------
Net increase from investment operations ................... 0.049 0.046 0.051 0.049 0.051
-------- -------- -------- ------- -------
Dividends from net investment income ...................... (0.049) (0.046) (0.051) (0.049) (0.051)
-------- -------- -------- ------- -------
Total dividends and distributions to shareholders ......... (0.049) (0.046) (0.051) (0.049) (0.051)
-------- -------- -------- ------- -------
Net asset value, end of year .............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= =======
Total investment return(1) ................................ 4.97% 4.68% 5.23% 5.02% 5.23%
======== ======== ======== ======= =======
Ratios/Supplemental Data:
Net assets, end of year (000's) ........................... $118,525 $179,227 $179,708 $65,893 $19,624
Expenses to average net assets net of
waivers/reimbursements from adviser ..................... 0.29% 0.28% 0.30% 0.30% 0.32%
Expenses to average net assets before
waivers/reimbursements from adviser ..................... 0.35% 0.33% 0.47% 0.72% 0.94%
Net investment income to average net assets net of
waivers/reimbursements from adviser ..................... 4.61% 4.57% 5.09% 4.97% 5.71%
Net investment income to average net assets before
waivers/reimbursements from adviser ..................... 4.55% 4.52% 4.92% 4.56% 5.09%
</TABLE>
----------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year 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 year reported.
-------------------------------==================-------------------------------
Prospectus Page 21
<PAGE>
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<PAGE>
(This page has been left blank intentionally.)
<PAGE>
TICKER SYMBOL: Institutional Shares--
Money Market Fund LIRXX
Government Securities Fund LIGXX
Treasury Securities Fund LISXX
If you want more information about the funds, the following documents are
available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the funds' investments is available in the funds'
annual and semi-annual reports to shareholders.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more detailed information about the fund and is incorporated by
reference into this prospectus.
You may discuss your questions about a fund by contacting your Financial
Advisor. You may obtain free copies of annual and semi-annual reports and the
SAI by contacting the funds directly at 1-888-LIR-FUND.
You may review and copy information about the funds, including shareholder
reports and the SAI, at the Public Reference Room of the Securities and Exchange
Commission. You may obtain information about the operations of the SEC's Public
Reference Room by calling the SEC at 1-202-942-8900. You can get copies of
reports and other information about the fund:
o For a fee, by electronic request at [email protected] or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102; or
o Free, from the edgar Database on the SEC's Internet website at:
http://www.sec.gov
Liquid Institutional Reserves
-- Money Market Fund
-- Government Securities Fund
-- Treasury Securities Fund
Investment Company Act File No. 811-06281
(C)2000 PaineWebber Incorporated. All rights reserved.
LIQUID INSTITUTIONAL RESERVES
Prospectus
---------------------------------------------
MONEY MARKET FUND
GOVERNMENT SECURITIES FUND
TREASURY SECURITIES FUND
September 1, 2000
