<PAGE>
LIQUID INSTITUTIONAL RESERVES SEMIANNUAL REPORT
Dear Shareholder, December 15, 1999
We are pleased to present you with the semiannual report for Liquid
Institutional Reserves (the "Funds") for the six-month period ended October 31,
1999.
MARKET REVIEW
During the past six-month period, fears of higher inflation became
[ICON] the dominant theme of the fixed income markets, and bond yields rose
in response. Interest rates rose as the markets reacted to improving
economic prospects in Asia and Latin America, rapidly growing U.S. demand,
higher oil prices and fears that future wage increases might not be offset by
commodity deflation. By the end of the semiannual period on October 31, 1999,
the Federal Reserve had raised the federal funds rate twice, by 0.25% each
time, to 5.25%. After period-end the Fed raised rates for a third time, to
5.50%.
PERFORMANCE AND PORTFOLIO REVIEW
CURRENT SEVEN-DAY AVERAGE YIELD(1)
<TABLE>
<CAPTION>
10/31/99 4/30/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund:
Institutional Shares 5.21% 4.74% 5.03%
Financial Intermediary Shares 4.96% 4.49% 4.77%
Government Securities Fund 5.03% 4.56% 4.81%
Treasury Securities Fund 4.45% 4.23% 4.18%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EFFECTIVE SEVEN-DAY AVERAGE YIELD(1)
10/31/99 4/30/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund:
Institutional Shares 5.35% 4.85% 5.15%
Financial Intermediary Shares 5.08% 4.59% 4.89%
Government Securities Fund 5.16% 4.66% 4.92%
Treasury Securities Fund 4.54% 4.32% 4.26%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED AVERAGE MATURITY
10/31/99 4/30/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund 52 days 54 days 51 days
Government Securities Fund 20 days 42 days 45 days
Treasury Securities Fund 42 days 74 days 49 days
- --------------------------------------------------------------------------------
</TABLE>
(1) Yields will fluctuate.
[Sidenote:]
- --------------------------------
LIQUID INSTITUTIONAL RESERVES
INVESTMENT GOAL
(ALL THREE FUNDS):
High current income to the
extent consistent with capital
preservation and liquidity
PORTFOLIO MANAGER:
Susan P. Ryan, Mitchell Hutchins
Asset Management Inc.
COMMENCEMENT:
Institutional Shares - MMF
6/3/91, Gov't 6/3/91, Treasury -
12/6/91; MMF Financial
Intermediary Shares - original
issuance 3/17/94, ceased
4/30/95, reissued 1/14/98
DIVIDEND PAYMENTS: Monthly
1
<PAGE>
<TABLE>
<CAPTION>
SEMIANNUAL REPORT
NET ASSETS
10/31/99 4/30/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund $1.716 billion $2.048 billion $1.832 billion
Government Securities Fund $134.8 million $138.8 million $108.5 million
Treasury Securities Fund $120.2 million $179.2 million $181.4 million
- --------------------------------------------------------------------------------
</TABLE>
HIGHLIGHTS
We remained slightly bullish on the fixed income markets during the first part
of the period, expecting the Federal funds rate to remain unchanged. Since we
did not expect major changes in monetary policy, we positioned the Funds'
weighted average maturities slightly longer than the averages of their peer
groups. During the last three months of the period, we returned the Funds'
maturities to the average of their peer groups in anticipation of rising
interest rates. We maintained our focus on top-tier credit quality
instruments.
OUTLOOK
- --------------------------------------------------------------------------------
The Federal Reserve has established a special Y2K lending program under
which credit may be extended to depository institutions to ease liquidity
pressures over the century date change. The Federal Reserve Bank of New York has
said it will expand the types of collateral it accepts in repurchase
transactions, will extend the maximum term of its repurchase transactions from
60 to 90 days and will introduce a standby financing facility for banks.
It is likely that issues of new short-term debt will decrease toward
year-end, limiting supplies and potentially triggering price increases. Also,
investors might seek safety by reducing their exposure to corporate credits and
increasing their positions in U.S. government securities, precipitating a
"flight to quality." To provide sufficient liquidity at year-end, we expect to
maintain a position of about 20% in U.S. government securities in the Money
Market Fund. (The other funds maintain a much higher percentage in U.S.
government securities.) However, this planned defensive posture may change in
response to changing market circumstances as Y2K approaches.
2
<PAGE>
LIQUID INSTITUTIONAL RESERVES SEMIANNUAL REPORT
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have. For a QUARTERLY REVIEW on a
fund in the PaineWebber Family of Funds,(2) please contact your Financial
Advisor.
Sincerely,
/s/Margo Alexander /s/Brian M. Storms
MARGO ALEXANDER BRIAN M. STORMS
Chairman and President and
Chief Executive Officer Chief Operating Officer
Mitchell Hutchins Mitchell Hutchins
Asset Management Inc. Asset Management Inc.
/s/Dennis L. Mccauley /s/Susan P. Ryan
DENNIS L. McCAULEY SUSAN P. RYAN
Managing Director and Chief Senior Vice President
Investment Officer - Fixed Income Mitchell Hutchins
Mitchell Hutchins Asset Management Inc.
Asset Management Inc.
This letter is intended to assist shareholders in understanding how the
funds performed during the six-month period ended October 31, 1999, and reflects
our views at the time of its writing. Of course, these views may change in
response to changing circumstances. We encourage you to consult your Financial
Advisor regarding your personal investment program.
(2) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
3
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
STATEMENT OF NET ASSETS OCTOBER 31, 1999(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- ------------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--16.11%
$ 15,000 U.S. Treasury Bills........... 12/23/99 4.700@% $ 14,898,167
40,000 Federal Home Loan Bank........ 11/01/99 to 11/02/99 5.400 to 5.655* 39,986,983
10,000 Federal Home Loan Bank........ 02/03/00 5.010@ 10,000,000
Federal Home Loan Mortgage
10,000 Corporation................... 11/02/99 5.645* 10,003,410
Federal Home Loan Mortgage
25,000 Corporation................... 12/14/99 to 02/04/00 5.200 to 5.580@ 24,717,014
Federal National Mortgage
10,000 Association................... 11/01/99 5.37* 9,996,148
Federal National Mortgage
25,000 Association................... 11/12/99 5.220@ 24,960,125
Student Loan Marketing
142,000 Association................... 11/01/99 to 11/02/99 5.310 to 5.895* 141,984,585
--------------
Total U.S. Government and Agency
Obligations (cost--$276,546,432)....... 276,546,432
--------------
DOMESTIC BANK NOTES--9.03%
16,000 First National Bank Chicago... 02/16/00 to 03/15/00 5.058 to 5.180 15,997,669
25,000 First National Bank Chicago... 11/01/99 5.380* 24,993,376
First Tennessee Bank, N.A.
34,000 Memphis....................... 01/14/00 to 04/12/00 5.100 to 5.210 34,000,000
First Tennessee Bank, N.A.
55,000 Memphis....................... 11/02/99 5.625 to 5.705* 55,000,000
10,000 KeyBank N.A................... 06/26/00 5.650 9,995,627
15,000 NationsBank N.A............... 01/06/00 5.000 14,999,477
--------------
Total Domestic Bank Notes
(cost--$154,986,149)................... 154,986,149
--------------
DEPOSIT NOTE--0.64%
YANKEE--0.64%
Canadian Imperial Bank of
Commerce
11,014 (cost--$11,050,315)........... 01/24/00 6.475 11,050,315
--------------
CERTIFICATES OF DEPOSIT--14.55%
YANKEE--14.55%
20,000 Barclays Bank PLC............. 11/01/99 5.390* 19,995,574
Bayerische Hypo-und
15,000 Vereinsbank AG................ 04/28/00 5.150 14,993,303
Canadian Imperial Bank of
21,000 Commerce...................... 02/07/00 to 04/12/00 5.010 to 5.120 20,996,930
National Westminster Bank
35,000 PLC........................... 01/07/00 to 04/03/00 4.980 to 5.200 34,998,561
7,000 Rabobank Nederland............ 01/07/00 4.990 6,999,248
4,000 Royal Bank of Canada.......... 03/31/00 5.265 3,999,443
55,000 Royal Bank of Canada.......... 11/01/99 5.390 to 5.395* 54,990,209
15,000 Societe Generale.............. 12/30/99 5.430 15,000,242
39,700 Svenska Handelsbanken......... 03/03/00 to 05/22/00 5.100 to 5.280 39,693,111
18,000 Toronto-Dominion Bank......... 03/02/00 to 04/17/00 5.060 to 5.270 17,996,907
20,000 Toronto-Dominion Bank......... 11/01/99 5.385* 19,995,198
--------------
Total Certificates of Deposit
(cost--$249,658,726)................... 249,658,726
--------------
TIME DEPOSITS--0.88%
Deutsche Bank Cayman
15,000 (cost--$15,000,000)........... 01/03/00 11.000 15,000,000
--------------
</TABLE>
4
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- ------------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL [email protected]%
ASSET BACKED-BANKING--3.77%
$ 50,000 Atlantis One Funding.......... 01/25/00 to 03/15/00 5.760 to 5.900% $ 49,037,653
Wood Street Funding
15,764 Corporation................... 11/29/99 5.370 15,698,159
--------------
64,735,812
--------------
ASSET BACKED-FINANCE--1.34%
23,545 Beta Finance, Incorporated.... 02/10/00 to 04/14/00 5.750 to 5.880 23,056,993
--------------
ASSET BACKED-MISCELLANEOUS--9.89%
Asset Securitization
15,000 Cooperative Corporation....... 11/15/99 5.456* 15,000,000
Enterprise Funding
31,111 Corporation................... 11/23/99 to 12/08/99 5.360 to 5.400 30,967,902
Falcon Asset Securitization
35,000 Corporation................... 11/09/99 to 01/27/00 5.400 to 5.960 34,710,283
Preferred Receivables Funding
37,800 Corporation................... 02/04/00 to 02/11/00 5.870 to 5.960 37,182,462
25,000 Quincy Capital Corporation.... 11/10/99 to 02/15/00 5.350 to 5.970 24,804,154
Variable Funding Capital
27,177 Corporation................... 11/10/99 to 01/21/00 5.380 to 6.000 27,018,897
--------------
169,683,698
--------------
AUTO & TRUCK--4.64%
10,000 BMW US Capital Incorporated... 11/12/99 5.300 9,983,806
Daimler-Chrysler N. A. Holding
20,000 Corporation................... 11/29/99 5.300 19,917,555
Ford Motor Credit
20,000 Corporation................... 12/07/99 5.300 19,894,000
General Motors Acceptance
30,000 Corporation................... 11/29/99 5.320 29,875,867
--------------
79,671,228
--------------
BANKING-DOMESTIC--10.39%
BBL North America Funding
10,000 Corporation................... 12/08/99 5.350 9,945,014
Cregem North America
15,000 Incorporated.................. 12/30/99 5.350 14,868,479
30,000 Den Danske Corporation........ 11/15/99 to 12/22/99 5.300 to 5.340 29,855,608
40,000 Fortis Funding LLC............ 12/03/99 to 12/28/99 5.350 to 5.400 39,717,478
15,000 Lloyds TSB Bank PLC........... 12/29/99 5.350 14,870,708
Santander Finance ( Delaware)
35,000 Inc........................... 11/15/99 to 12/16/99 5.320 to 5.390 34,880,903
25,000 Westpac Capital Corporation... 04/06/00 5.850 24,362,188
10,000 Westpac Trust Securities...... 02/07/00 5.890 9,839,661
--------------
178,340,039
--------------
BANKING-FOREIGN--2.03%
15,000 Halifax PLC................... 11/19/99 5.310 14,960,175
20,000 Nationwide Building Society... 12/13/99 5.340 19,875,400
--------------
34,835,575
--------------
BROKER-DEALER--1.44%
Morgan Stanley, Dean Witter &
25,000 Company....................... 01/18/00 to 02/03/00 5.920 to 5.930 24,639,475
--------------
</TABLE>
5
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- ------------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@--(CONTINUED)
BUSINESS SERVICES--1.46%
$ 15,000 Xerox Capital PLC............. 11/08/99 5.300% $ 14,984,542
10,000 Xerox Credit Corporation...... 11/15/99 5.300 9,979,389
--------------
24,963,931
--------------
CONSUMER PRODUCTS--0.87%
15,000 Clorox Company................ 11/10/99 5.290 14,980,163
--------------
DRUGS, HEALTH CARE--0.58%
10,000 Pfizer Incorporated........... 11/18/99 5.290 9,975,019
--------------
ELECTRONICS--1.16%
10,000 Motorola Incorporated......... 11/24/99 5.300 9,966,139
10,000 Siemens Capital Corporation... 11/30/99 5.320 9,957,144
--------------
19,923,283
--------------
ENERGY--1.09%
Exxon Imperial U.S.
18,910 Incorporated.................. 12/27/99 5.290 18,754,392
--------------
FINANCE-CONDUIT--1.99%
MetLife Funding
34,225 Incorporated.................. 11/15/99 to 11/17/99 5.290 to 5.300 34,151,783
--------------
FINANCE-SUBSIDIARY--1.16%
20,000 Dresdner U.S. Finance......... 12/14/99 5.350 19,872,194
--------------
INSURANCE--2.17%
7,500 Allstate Corporation.......... 02/11/00 5.970 7,373,137
Prudential Funding
30,000 Corporation................... 11/22/99 5.310 29,907,075
--------------
37,280,212
--------------
METALS & MINING--3.05%
Rio Tinto America
52,400 Incorporated.................. 11/10/99 to 11/18/99 5.310 52,291,351
--------------
OIL EQUIPMENT & SERVICES--0.83%
14,350 Colonial Pipeline Company..... 12/06/99 5.320 14,275,779
--------------
PAPER & FOREST PRODUCTS--0.58%
Weyerhauser Real Estate
10,000 Company....................... 11/19/99 5.290 9,973,550
--------------
PRINTING & PUBLISHING--1.16%
20,000 Reed Elsevier (USA) Inc....... 11/22/99 5.290 19,938,283
--------------
TELECOMMUNICATIONS--1.55%
15,000 AT&T.......................... 11/16/99 5.300 14,966,875
Bell Atlantic Network Funding
11,600 Corporation................... 11/17/99 5.300 11,572,676
--------------
26,539,551
--------------
</TABLE>
6
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- ------------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@--(CONCLUDED)
UTILITY-ELECTRIC--0.58%
$ 10,000 Southern Company.............. 11/08/99 5.320% $ 9,989,656
--------------
Total Commercial Paper
(cost--$887,871,967)................... 887,871,967
--------------
SHORT-TERM CORPORATE OBLIGATIONS--2.80%
AUTO & TRUCK--0.29%
Ford Motor Credit
5,000 Corporation................... 08/15/00 6.850 5,041,260
--------------
BROKER-DEALER--1.17%
Morgan Stanley, Dean Witter &
20,000 Company....................... 11/01/99 5.510* 20,000,000
--------------
COMPUTERS--0.29%
International Business
5,000 Machines Corporation.......... 07/10/00 5.755 5,000,346
--------------
FINANCE-DIVERSIFIED--1.05%
Associates Corporation of
3,000 North America................. 03/28/00 7.470 3,027,162
Associates Corporation of
15,000 North America................. 11/29/99 5.338* 14,994,063
--------------
18,021,225
--------------
Total Short-Term Corporate Obligations
(cost--$48,062,831).................... 48,062,831
--------------
<CAPTION>
NUMBER OF
SHARES
(000)
- ---------
<C> <S> <C> <C> <C>
MONEY MARKET FUNDS--4.93%
AIM Liquid Assets Money Market
62,307 Portfolio..................... 62,306,718
AIM Prime Money Market
22,284 Portfolio..................... 22,283,629
--------------
Total Money Market Funds
(cost--$84,590,347).................... 84,590,347
--------------
Total Investments (cost--$1,727,766,767
which approximates cost for federal
income tax purposes)--100.67%.......... 1,727,766,767
Liabilities in excess of other
assets--(0.67)%........................ (11,494,956)
--------------
Net Assets (applicable to 1,687,271,982
and 29,009,882 of Institutional Shares
and Financial Intermediary Shares,
respectively, each equivalent to $1.00
per share)--100.00%.................... $1,716,271,811
==============
-------
</TABLE>
@ Interest rates shown reflect the discount rates at time of purchase.
* Variable Rate Securities--Maturity date reflects earlier of reset date or
maturity date. The interest rates shown are current rates as of October 31,
1999 and reset periodically.
Weighted Average Maturity--52 days
See accompanying notes to financial statements
7
<PAGE>
LIQUID INSTITUTIONAL RESERVES--GOVERNMENT SECURITIES FUND
STATEMENT OF NET ASSETS OCTOBER 31, 1999(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------------------- -------------------- ---------------- ------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--100.35%
$ 1,000 Federal Farm Credit Bank...................... 01/03/00 5.276*% $ 999,679
14,500 Federal Farm Credit Bank...................... 11/09/99 to 12/13/99 4.550 to 5.210@ 14,468,220
9,000 Federal Home Loan Bank........................ 11/02/99 to 11/03/99 5.575 to 5.655* 8,998,823
1,500 Federal Home Loan Bank........................ 05/17/00 5.135 1,500,000
18,826 Federal Home Loan Bank........................ 11/03/99 to 04/14/00 5.140 to 5.570@ 18,733,545
38,173 Federal Home Loan Mortgage Corporation........ 11/01/99 to 11/04/99 5.200 to 5.220@ 38,168,650
4,000 Federal Home Loan Mortgage Corporation........ 11/02/99 5.645* 3,999,639
19,000 Federal National Mortgage Association......... 11/15/99 to 04/03/00 4.650 to 5.240@ 18,943,580
2,000 Federal National Mortgage Association......... 03/10/00 5.180 1,999,524
6,447 Student Loan Marketing Association............ 11/01/99 to 12/15/99 5.160 to 5.200@ 6,417,492
6,000 Student Loan Marketing Association............ 11/25/99 5.310* 5,999,256
15,000 Tennessee Valley Authority.................... 11/02/99 5.140@ 14,997,858
------------
Total Investments (cost--$135,226,266 which approximates cost for
federal income tax purposes)--100.35%............................... 135,226,266
Liabilities in excess of other assets--(0.35)%........................ (472,719)
------------
Net Assets (applicable to 134,743,876 Institutional Shares, equivalent
to $1.00 per share)--100.00%........................................ $134,753,547
============
</TABLE>
- ---------------
<TABLE>
<S> <C>
@ Interest rates shown are the discount rates at date of
purchase.
* Variable Rate Securities--Maturity date reflects earlier of
reset date or maturity date. The interest rates shown are
current rates as of October 31, 1999 and reset periodically.
Weighted Average Maturity--20 days
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
LIQUID INSTITUTIONAL RESERVES--TREASURY SECURITIES FUND
STATEMENT OF NET ASSETS OCTOBER 31, 1999(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- ------------------ ------------
<C> <S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS--97.38%
$ 47,787 U.S. Treasury Bills........... 12/09/99 to 01/27/00 4.590 to 4.940@% $ 47,281,043
69,649 U.S. Treasury Notes........... 11/15/99 to 07/31/00 5.375 to 7.750 69,723,217
------------
Total U.S. Treasury Obligations
(cost--$117,004,260)................... 117,004,260
------------
<CAPTION>
NUMBER OF
SHARES
(000)
- ---------
<C> <S> <C> <C> <C>
MONEY MARKET FUNDS--0.04%
Aim Tax Advantage Money Market
49 Fund (cost -- $48,556)........ 48,556
------------
Total Investments (cost--$117,052,816
which approximates cost for federal
income tax purposes)--97.42%........... 117,052,816
Other assets in excess of
liabilities--2.58%..................... 3,098,522
------------
Net Assets (applicable to 119,984,802
Institutional Shares, equivalent to
$1.00 per share)--100.00%.............. $120,151,338
============
</TABLE>
- ---------------
@ Interest rates shown reflect the discount rates at time of purchase.
Weighted Average Maturity--42 days
See accompanying notes to financial statements
9
<PAGE>
LIQUID INSTITUTIONAL RESERVES
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
OCTOBER 31, 1999
(UNAUDITED)
-------------------------------------
MONEY GOVERNMENT TREASURY
MARKET SECURITIES SECURITIES
FUND FUND FUND
----------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest.................................................... $48,213,499 $3,701,264 $3,432,784
----------- ---------- ----------
EXPENSES:
Investment advisory and administration...................... 2,318,400 182,849 186,837
Transfer agency and related services fees................... 188,653 12,131 16,749
State and federal registration fees......................... 119,658 11,827 13,068
Custody and accounting...................................... 93,468 5,316 8,552
Legal and audit............................................. 34,500 7,842 9,926
Reports and notices to shareholders......................... 23,968 4,570 5,124
Shareholder servicing fees--Financial Intermediary shares... 33,870 -- --
Trustees' fees.............................................. 5,250 5,250 5,250
Other expenses.............................................. 20,979 3,637 1,024
----------- ---------- ----------
2,838,746 233,422 246,530
Less: Fee waivers and expense reimbursements from adviser... (223,336) (22,478) (30,315)
----------- ---------- ----------
Net expenses................................................ 2,615,410 210,944 216,215
----------- ---------- ----------
Net investment income....................................... 45,598,089 3,490,320 3,216,569
NET REALIZED GAINS (LOSSES) FROM INVESTMENT TRANSACTIONS.... (9,378) 18 (3,502)
----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $45,588,711 $3,490,338 $3,213,067
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements
10
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
OCTOBER 31, 1999 ENDED
(UNAUDITED) APRIL 30, 1999
----------------- ---------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income....................................... $ 45,598,089 $ 94,951,866
Net realized gains (losses) from investment transactions.... (9,378) 44,391
-------------- --------------
Net increase in net assets resulting from operations........ 45,588,711 94,996,257
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income--Institutional shares................. (44,956,033) (94,471,543)
Net investment income--Financial Intermediary shares........ (642,056) (480,323)
-------------- --------------
Total dividends to shareholders............................. (45,598,089) (94,951,866)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS..................................... (332,099,269) 440,244,875
-------------- --------------
Net increase (decrease) in net assets....................... (332,108,647) 440,289,266
NET ASSETS:
Beginning of period......................................... 2,048,380,458 1,608,091,192
-------------- --------------
End of period............................................... $1,716,271,811 $2,048,380,458
============== ==============
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
LIQUID INSTITUTIONAL RESERVES--GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
OCTOBER 31, 1999 ENDED
(UNAUDITED) APRIL 30, 1999
----------------- ---------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income....................................... $ 3,490,320 $ 5,600,628
Net realized gains from investment transactions............. 18 10,565
------------ ------------
Net increase in net assets resulting from operations........ 3,490,338 5,611,193
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income--Institutional shares................. (3,490,320) (5,600,628)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS..................................... (4,029,244) 38,632,650
------------ ------------
Net increase (decrease) in net assets....................... (4,029,226) 38,643,215
NET ASSETS:
Beginning of period......................................... 138,782,773 100,139,558
------------ ------------
End of period............................................... $134,753,547 $138,782,773
============ ============
</TABLE>
See accompanying notes to financial statements
12
<PAGE>
LIQUID INSTITUTIONAL RESERVES--TREASURY SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
OCTOBER 31, 1999 ENDED
(UNAUDITED) APRIL 30, 1999
----------------- ---------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income....................................... $ 3,216,569 $ 8,375,074
Net realized gains (losses) from investment transactions.... (3,502) 166,129
------------ ------------
Net increase in net assets resulting from operations........ 3,213,067 8,541,203
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income--Institutional shares................. (3,216,569) (8,375,074)
------------ ------------
NET DECREASE IN NET ASSETS FROM BENEFICIAL INTEREST
TRANSACTIONS.............................................. (59,072,304) (646,662)
------------ ------------
Net decrease in net assets.................................. (59,075,806) (480,533)
NET ASSETS:
Beginning of period......................................... 179,227,144 179,707,677
------------ ------------
End of period............................................... $120,151,338 $179,227,144
============ ============
</TABLE>
See accompanying notes to financial statements
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Liquid Institutional Reserves (the "Trust") is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. The Trust currently
offers three no-load series: the Money Market Fund, the Government Securities
Fund and the Treasury Securities Fund (collectively, the "Funds").
The Funds offer two classes of shares, Institutional shares and Financial
Intermediary shares. Each class represents interests in the same assets of a
Fund, and both classes have equal voting privileges, except that beneficial
owners of Financial Intermediary shares receive certain services directly from
financial intermediaries, bear certain service fees and to the extent that
matters pertaining to the Shareholder Services Plan or to the Financial
Intermediary shares are submitted to shareholders for approval, only the holders
of Financial Intermediary shares shall be entitled to vote thereon. For the six
months ended October 31, 1999 the Government Securities Fund and the Treasury
Securities Fund had no Financial Intermediary shares outstanding.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. Following is a summary of
significant accounting policies:
VALUATION AND ACCOUNTING FOR INVESTMENTS AND INVESTMENT INCOME--Investments
are valued at amortized cost which approximates market value. Investment
transactions are recorded on the trade date. Realized gains and losses from
investment transactions are calculated using the identified cost method.
Interest income is recorded on an accrual basis. Premiums are amortized and
discounts are accreted as adjustments to interest income and the identified cost
of investments.
REPURCHASE AGREEMENTS--The Money Market Fund's custodian takes possession of
the collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event that a counterparty defaults on its obligation to repurchase, the Money
Market Fund has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings. The Money
Market Fund occasionally participates in joint repurchase agreement transactions
with other funds managed by Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"), sub-adviser and sub-administrator of the Fund, a wholly owned asset
management subsidiary of PaineWebber Incorporated ("PaineWebber"), the adviser
and administrator of the Funds.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Funds to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
INVESTMENT ADVISER AND ADMINISTRATOR
The Trust has an Investment Advisory and Administration Contract ("Advisory
Contract") with PaineWebber under which PaineWebber serves as investment adviser
and administrator of the Funds. In accordance with the Advisory Contract,
PaineWebber receives compensation from the Funds, computed daily and paid
monthly, at an annual rate of 0.25% of each Fund's average daily net assets. At
October 31, 1999, the Money Market Fund, the Government Securities Fund and the
Treasury Securities Fund owed PaineWebber $337,497, $25,002 and $21,926,
respectively, in investment advisory and administration fees.
Mitchell Hutchins serves as sub-adviser and sub-administrator of the Trust
pursuant to a Sub-Advisory and Sub-Administration Contract ("Sub-Advisory
Contract") between PaineWebber and Mitchell Hutchins. In accordance with the
Sub-Advisory Contract, PaineWebber (not the Funds) pays Mitchell Hutchins a fee,
computed daily and paid monthly, at an annual rate of 50% of the fee paid by
each Fund to PaineWebber under the Advisory Contract, net of waivers and/or
reimbursements.
For the period May 1, 1999 to May 31, 1999, PaineWebber and Mitchell Hutchins
voluntarily waived 0.05% of these advisory fees and reimbursed a portion of
expenses to maintain each Fund's total annual operating expenses at a level not
exceeding 0.30% and 0.55% of the Funds' average daily net assets for
Institutional shares and Financial Intermediary shares, respectively. Effective
June 1, 1999, PaineWebber and Mitchell Hutchins discontinued the advisory fee
waivers for the Funds and agreed to reimburse a portion of expenses to maintain
the Fund's total annual operating expenses at a level not exceeding 0.28%, 0.29%
and 0.29% of the Money Market Fund, the Government Securities Fund and the
Treasury Securities Funds' average daily net assets for Institutional shares,
respectively, and 0.53% of the Money Market Fund's average daily net assets for
Financial Intermediary shares. For the six months ended October 31, 1999,
PaineWebber and Mitchell Hutchins voluntarily waived or reimbursed $223,336,
$22,478 and $30,315 in investment advisory and administration fees and other
expenses from the Money Market Fund, the Government Securities Fund and the
Treasury Securities Fund, respectively.
FEDERAL TAX STATUS
Each Fund intends to distribute all of its taxable income and to comply with
the other requirements of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, no provision for federal income taxes is
required. In addition, by distributing during each calendar year substantially
all of their net investment income, capital gains and certain other amounts, if
any, the Funds intend not to be subject to a federal excise tax.
At April 30, 1999, the Money Market Fund had a net capital loss carryforward
of $675. The loss carryforward is available as a reduction, to the extent
provided in the regulations, of future net realized capital gains, and will
expire by April 30, 2006. To the extent these losses are used to offset future
capital gains, it is probable that the gains so offset will not be distributed.
SHAREHOLDER SERVICE PLAN AND AGREEMENT
Under a Shareholder Service Plan and Agreement with respect to its Financial
Intermediary shares, each Fund pays PaineWebber monthly fees at the annual rate
of 0.25% of the average daily net assets of the Financial Intermediary shares
held by financial intermediaries on behalf of their customers. Under Service
Agreements with those financial intermediaries, PaineWebber pays the entire fee
to the financial intermediaries for certain support services that they provide
to the beneficial owners of the Financial Intermediary shares. At October 31,
1999, the Money Market Fund owed PaineWebber $6,991 in shareholder service fees.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MONEY MARKET FUND BOND
Effective September 30, 1999, the Money Market Fund obtained an insurance bond
that provides limited coverage for certain loss events involving certain money
market instruments held by the Fund. These loss events include non-payment of
principal or interest or a bankruptcy or insolvency of the issuer or credit
enhancement provider (if any). The insurance bond provides for coverage up to
$200 million for a number of funds with a deductible of 10 basis points (0.10%)
of the total assets of the Fund for First Tier Securities and 50 basis points
(0.50%) of the total assets of the Fund for Second Tier Securities, in each case
determined as of the close of business on the first business day prior to the
loss event. In the event of a loss covered under the bond, the Fund would expect
to retain the security in its portfolio, rather than having to sell it at its
current market value, until the date of payment of the loss, which is generally
no later than the maturity of the security. While the policy is intended to
provide some protection against credit risk and to help the Fund maintain a
constant price per share of $1.00, there is no guarantee that the insurance will
do so. For the period September 30, 1999 to October 31, 1999, the Money Market
Fund did not use this insurance bond.
OTHER LIABILITIES
At October 31, 1999, the Funds had the following liabilities outstanding:
<TABLE>
<CAPTION>
PAYABLE FOR
DIVIDENDS INVESTMENTS
PAYABLE PURCHASED
---------- -----------
<S> <C> <C>
Money Market Fund....................................... $7,487,566 $15,000,000
Government Securities Fund.............................. 585,023 --
Treasury Securities Fund................................ 469,930 46,497,864
</TABLE>
SHARES OF BENEFICIAL INTEREST
There is an unlimited amount of $0.001 par value shares of beneficial interest
authorized. Transactions in shares of beneficial interest, at $1.00 per share,
were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES FINANCIAL INTERMEDIARY SHARES*
----------------------------------- ----------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED
OCTOBER 31, 1999 APRIL 30, 1999 OCTOBER 31, 1999 APRIL 30, 1999
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
MONEY MARKET FUND:
Shares sold......................................... 6,123,914,520 12,503,291,139 56,905,359 44,909,334
Shares repurchased.................................. (6,521,676,337) (12,145,857,186) (39,896,706) (49,210,334)
Dividends reinvested................................ 48,653,895 87,111,922 -- --
--------------- ---------------- ------------ -----------
Net increase (decrease) in shares outstanding....... (349,107,922) 444,545,875 17,008,653 (4,301,000)
=============== ================ ============ ===========
GOVERNMENT SECURITIES FUND:
Shares sold......................................... 123,253,618 281,772,626
Shares repurchased.................................. (130,571,230) (248,308,554)
Dividends reinvested................................ 3,288,368 5,168,578
--------------- ----------------
Net increase (decrease) in shares outstanding....... (4,029,244) 38,632,650
=============== ================
TREASURY SECURITIES FUND:
Shares sold......................................... 79,438,145 476,238,175
Shares repurchased.................................. (141,869,703) (485,058,321)
Dividends reinvested................................ 3,359,254 8,173,484
--------------- ----------------
Net decrease in shares outstanding.................. (59,072,304) (646,662)
=============== ================
</TABLE>
- ---------------
* For the six months ended October 31, 1999, and for the year ended April 30,
1999, there were no transactions in Financial Intermediary shares for the
Government Securities Fund and Treasury Securities Fund.
16
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
OCTOBER 31, FOR THE YEARS ENDED APRIL 30,
1999 ----------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995++
----------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- -------- --------
Net investment income..... 0.025 0.051 0.054 0.052 0.055 0.048
Net realized losses from
investment
transactions............. -- -- -- -- -- (0.008)
---------- ---------- ---------- ---------- -------- --------
Net increase from
investment operations.... 0.025 0.051 0.054 0.052 0.055 0.040
---------- ---------- ---------- ---------- -------- --------
Dividends from net
investment income........ (0.025) (0.051) (0.054) (0.052) (0.055) (0.048)
---------- ---------- ---------- ---------- -------- --------
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
========== ========== ========== ========== ======== ========
Total investment return
(2)...................... 2.51% 5.22% 5.52% 5.33% 5.61% 4.91%
========== ========== ========== ========== ======== ========
Ratios/Supplemental Data:
Net assets, end of period
(000's).................. $1,687,262 $2,036,379 $1,591,789 $1,246,799 $421,878 $220,844
Expenses to average net
assets net of
waivers/reimbursements
from adviser............. 0.28%* 0.26% 0.29% 0.25% 0.31% 0.35%
Expenses to average net
assets before
waivers/reimbursements
from adviser............. 0.30%* 0.31% 0.34% 0.30% 0.37% 0.37%
Net investment income to
average net assets net of
waivers/reimbursements
from adviser............. 4.92%* 5.07% 5.38% 5.24% 5.47% 4.68%
Net investment income to
average net assets before
waivers/reimbursements
from adviser............. 4.90%* 5.02% 5.33% 5.19% 5.41% 4.66%
<CAPTION>
FINANCIAL INTERMEDIARY SHARES**
-----------------------------------------------------------------
FOR THE FOR THE
FOR THE PERIOD PERIOD
SIX MONTHS JANUARY 14, MARCH 17,
ENDED FOR THE 1998+ FOR THE 1994+
OCTOBER 31, YEAR ENDED TO YEAR ENDED TO
1999 APRIL 30, APRIL 30, APRIL 30, APRIL 30,
(UNAUDITED) 1999 1998 1995++ 1994
----------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ------- ------- ------- ------
Net investment income..... 0.024 0.048 0.015 0.027 0.004
Net realized losses from
investment
transactions............. -- -- -- -- --
---------- ------- ------- ------- ------
Net increase from
investment operations.... 0.024 0.048 0.015 0.027 0.004
---------- ------- ------- ------- ------
Dividends from net
investment income........ (0.024) (0.048) (0.015) (0.027) (0.004)
---------- ------- ------- ------- ------
Contribution to capital
from predecessor adviser
(1)...................... -- -- -- -- --
---------- ------- ------- ------- ------
Net asset value, end of
period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======= ======= ======= ======
Total investment return
(2)...................... 2.38% 4.96% 1.51% 3.10% 0.37%
========== ======= ======= ======= ======
Ratios/Supplemental Data:
Net assets, end of period
(000's).................. $ 29,010 $12,002 $16,302 -- $9,000
Expenses to average net
assets net of
waivers/reimbursements
from adviser............. 0.53%* 0.51% 0.54%* 0.60% 0.58%*
Expenses to average net
assets before
waivers/reimbursements
from adviser............. 0.55%* 0.56% 0.59%* 0.62% 0.58%*
Net investment income to
average net assets net of
waivers/reimbursements
from adviser............. 4.74%* 4.82% 5.13%* 4.17% 2.93%*
Net investment income to
average net assets before
waivers/reimbursements
from adviser............. 4.72%* 4.77% 5.07%* 4.15% 2.93%*
</TABLE>
- -------------
+ 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 period May 1, 1997 to January 13, 1998, for the years ended
April 30, 1996 and 1997 and for the period December 24, 1994 to April 30,
1995 there were no outstanding Financial Intermediary Shares.
(1) Kidder Peabody Asset Management, Inc., the Fund's predecessor investment
adviser and administrator, purchased certain of the Fund's variable rate
securities on July 6, 1994 at prices equal to the securities' amortized
cost plus accrued and unpaid interest. Since the purchases were made at
prices above the securities' current fair value, the Fund 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
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.
17
<PAGE>
LIQUID INSTITUTIONAL RESERVES--GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
FINANCIAL
INSTITUTIONAL SHARES INTERMEDIARY
------------------------------------------------------------------------- SHARES**
FOR THE SIX MONTHS ------------------
ENDED FOR THE PERIOD
OCTOBER 31, FOR THE YEARS ENDED APRIL 30, JULY 12, 1994+
1999 ---------------------------------------------------- TO
(UNAUDITED) 1999 1998 1997 1996 1995++ APRIL 30, 1995++
------------------ -------- -------- -------- -------- -------- ------------------
<S> <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
-------- -------- -------- -------- ------- ------- ------
Net investment income............ 0.024 0.049 0.052 0.051 0.053 0.048 0.032
Net realized gains (losses) from
investment transactions......... -- -- -- -- 0.001 (0.008) --
-------- -------- -------- -------- ------- ------- ------
Net increase from investment
operations...................... 0.024 0.049 0.052 0.051 0.054 0.040 0.032
-------- -------- -------- -------- ------- ------- ------
Dividends from net investment
income.......................... (0.024) (0.049) (0.052) (0.051) (0.054) (0.047) (0.032)
-------- -------- -------- -------- ------- ------- ------
Contribution to capital from
predecessor advisor (1)......... -- -- -- -- -- 0.007 --
-------- -------- -------- -------- ------- ------- ------
Net asset value, end of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======= ======= ======
Total investment return (2)...... 2.43% 5.04% 5.32% 5.20% 5.50% 4.61% 3.31%
======== ======== ======== ======== ======= ======= ======
Ratios/Supplemental Data:
Net assets, end of period
(000's)......................... $134,754 $138,783 $100,140 $106,843 $43,770 $54,903 --
Expenses to average net assets
net of
waivers/reimbursements from
adviser......................... 0.29%* 0.28% 0.30% 0.30% 0.32% 0.35% 0.60%*
Expenses to average net assets
before
waivers/reimbursements from
adviser......................... 0.32%* 0.33% 0.59% 0.53% 0.56% 0.47% 0.72%*
Net investment income to average
net assets net of
waivers/reimbursements from
adviser......................... 4.77%* 4.90% 5.21% 5.09% 5.52% 4.75% 4.58%*
Net investment income to average
net assets before
waivers/reimbursements from
adviser......................... 4.74%* 4.85% 4.91% 4.86% 5.28% 4.63% 4.46%*
</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 six months ended October 31, 1999, the years ended April 30, 1999,
1998 and 1997 and for the period March 22, 1995 to April 30, 1996 there were
no outstanding Financial Intermediary Shares. Any further subscriptions of
such shares would be at $1.00 per share.
(1) Kidder Peabody Asset Management, Inc., the Fund's predecessor investment
adviser and administrator, purchased certain of the Fund's variable rate
securities on July 6, 1994 at prices equal to the securities' amortized cost
plus accrued and unpaid interest. Since the purchases were made at prices
above the securities' current fair value, the Fund 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
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.
18
<PAGE>
LIQUID INSTITUTIONAL RESERVES -- TREASURY SECURITIES FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
----------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED
OCTOBER 31, FOR THE YEARS ENDED APRIL 30,
1999 -------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995++
------------ -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- ------- -------
Net investment income.................................... 0.022 0.046 0.051 0.049 0.048 0.049
Net realized gains (losses) from investment
transactions............................................ -- -- -- -- 0.003 (0.002)
-------- -------- -------- ------- ------- -------
Net increase from investment operations.................. 0.022 0.046 0.051 0.049 0.051 0.047
-------- -------- -------- ------- ------- -------
Dividends from net investment income..................... (0.022) (0.046) (0.051) (0.049) (0.051) (0.047)
-------- -------- -------- ------- ------- -------
Net asset value, end of period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= ======= =======
Total investment return (1).............................. 2.19% 4.68% 5.23% 5.02% 5.23% 4.75%
======== ======== ======== ======= ======= =======
Ratios/Supplemental Data:
Net assets, end of period (000's)........................ $120,151 $179,227 $179,708 $65,893 $19,624 $23,762
Expenses to average net assets net of
waivers/reimbursements from adviser..................... 0.29%* 0.28% 0.30% 0.30% 0.32% 0.22%
Expenses to average net assets before
waivers/reimbursements from adviser..................... 0.33%* 0.33% 0.47% 0.72% 0.94% 0.84%
Net investment income to average net assets net of
waivers/reimbursements from adviser..................... 4.30%* 4.57% 5.09% 4.97% 5.71% 5.51%
Net investment income to average net assets before
waivers/reimbursements from adviser..................... 4.26%* 4.52% 4.92% 4.56% 5.09% 4.89%
</TABLE>
- -----------------
++ Sub-advisory functions for the Fund were transferred from Kidder Peabody
Asset Management, Inc. to Mitchell Hutchins on January 30, 1995.
* Annualized.
(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.
19
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES
E. Garrett Bewkes, Jr. Meyer Feldberg
CHAIRMAN
George W. Gowen
Margo N. Alexander
Frederic V. Malek
Richard Q. Armstrong
Carl W. Schafer
Richard R. Burt
Brian M. Storms
Mary C. Farrell
OFFICERS
Margo N. Alexander Paul H. Schubert
PRESIDENT VICE PRESIDENT AND TREASURER
Victoria E. Schonfeld Dennis L. McCauley
VICE PRESIDENT VICE PRESIDENT
Dianne E. O'Donnell Susan P. Ryan
VICE PRESIDENT AND SECRETARY VICE PRESIDENT
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
SUBADVISER AND SUBADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019
THIS REPORT IS NOT TO BE USED IN CONNECTION WITH THE OFFERING OF SHARES OF THE
FUNDS UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
THE FINANCIAL INFORMATION HEREIN IS TAKEN FROM THE RECORDS OF THE FUNDS WITHOUT
EXAMINATION BY INDEPENDENT AUDITORS WHO DO NOT EXPRESS AN OPINION THEREON.
A PROSPECTUS CONTAINING MORE COMPLETE INFORMATION FOR ANY OF THE FUNDS LISTED ON
THE BACK COVER CAN BE OBTAINED FROM A PAINEWEBBER FINANCIAL ADVISOR OR
CORRESPONDENT FIRM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
<PAGE>
- -----
PaineWebber offers a family of 28 funds which encompass a diversified range of
investment goals.
BOND FUNDS
- - High Income Fund
- - Investment Grade Income Fund
- - Low Duration U.S. Government Income Fund
- - Strategic Income Fund
- - U.S. Government Income Fund
TAX-FREE BOND FUNDS
- - California Tax-Free Income Fund
- - Municipal High Income Fund
- - National Tax-Free Income Fund
- - New York Tax-Free Income Fund
STOCK FUNDS
- - Financial Services Growth Fund
- - Growth Fund
- - Growth and Income Fund
- - Mid Cap Fund
- - Small Cap Fund
- - S&P 500 Index Fund
- - Strategy Fund
- - Tax-Managed Equity Fund
- - Utility Income Fund
ASSET ALLOCATION FUNDS
- - Balanced Fund
- - Tactical Allocation Fund
GLOBAL FUNDS
- - Asia Pacific Growth Fund
- - Emerging Markets Equity Fund
- - Global Equity Fund
- - Global Income Fund
MITCHELL HUTCHINS PORTFOLIOS
- - Aggressive Portfolio
- - Moderate Portfolio
- - Conservative Portfolio
PAINEWEBBER MONEY MARKET FUND
PAINEWEBBER
-C-1999 PaineWebber Incorporated
Member SIPC
All Rights Reserved.
[GRAPHIC]PaineWebber
- -----------------------
LIQUID
INSTITUTIONAL
RESERVES
SEMIANNUAL REPORT
OCTOBER 31, 1999
