<PAGE>
PaineWebber offers a family of 26 funds which encompass a diversified range of
investment goals.
BOND FUNDS
- High Income Fund
- Investment Grade Income Fund
- Low Duration U.S. Government Income Fund
- Strategic Income Fund
- U.S. Government Income Fund
TAX-FREE BOND FUNDS
- California Tax-Free Income Fund
- Municipal High Income Fund
- National Tax-Free Income Fund
- New York Tax-Free Income Fund
STOCK FUNDS
- Enhanced S&P 500 Fund
- Enhanced Nasdaq - 100 Fund
- Financial Services Growth Fund
- Growth Fund
- Growth and Income Fund
- Mid Cap Fund
- Small Cap Fund
- S&P 500 Index Fund
- Strategy Fund
- Tax-Managed Equity Fund
ASSET ALLOCATION FUNDS
- Balanced Fund
- Tactical Allocation Fund
GLOBAL FUNDS
- Asia Pacific Growth Fund
- Emerging Markets Equity Fund
- Global Equity Fund
- Global Income Fund
PAINEWEBBER MONEY MARKET FUND
PAINEWEBBER
-C-2000 PaineWebber Incorporated
All rights reserved
--------------------------------------------------------------------------------
SEMIANNUAL REPORT
LIQUID
INSTITUTIONAL
RESERVES
OCTOBER 31, 2000
<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
OFFICERS
Brian M. Storms Paul H. Schubert
PRESIDENT VICE PRESIDENT AND TREASURER
Amy R. Doberman Elbridge T. Gerry III
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 10019-6114
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>
LIQUID INSTITUTIONAL RESERVES SEMIANNUAL REPORT
Dear Shareholder, December 15, 2000
We are pleased to present you with the semiannual report for Liquid
Institutional Reserves (the "Funds") for the six-month period ended October 31,
2000.
MARKET REVIEW
--------------------------------------------------------------------------------
[GRAPHIC] The six months ended October 31, 2000 began with fears that
an overheated economy would push the increase in the rate of inflation to
potentially disruptive levels--the period ended with some concern that economic
growth had been halted to the extent that it could endanger a hoped-for economic
soft landing. Uncertainty in the equity markets was further fueled by corporate
earnings disappointments, rising energy prices, and rising tensions in the
Middle East. These factors pulled investors increasingly to fixed income
investments, attracted by their relative security and stability of principal.
As the economy showed signs of slowing in October, and expectations of a U.S.
Federal Reserve Board (the "Fed") rate cut grew stronger, treasury yields began
to decline. Despite these declines, yields for the 90-day Treasury bill rose 33
basis points while the 30-year bond rose three basis points (a basis point
equals 1/100th of one percent) during the six-months ended October 31, 2000.
In the latter part of the fiscal period, as the markets struggled and the
economy began to show signs of slowing, the Fed continued to warn that inflation
was its primary concern as it contemplated the future course of interest rates
with a bias toward halting inflation. Late in the period and post-period,
however, home sales and durable goods sales began to dip while unemployment
figures rose. The Gross Domestic Product (GDP) for the third quarter was revised
downward to a 2.4% annual rate of increase, and Fed Chairman Alan Greenspan
noted for the first time in more than a year that inflation might not be the
Fed's primary concern any longer.
[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--
June 3, 1991 (Money
Market Fund and
Government Securities
Fund)
December 6, 1991
(Treasury Securities Fund)
MMF Financial
Intermediary Shares--
original issuance
March 17, 1994, ceased
April 30, 1995; reissued
January 14, 1998
DIVIDEND PAYMENTS:
Monthly
--------------------------------------------------------------------------------
1
<PAGE>
SEMIANNUAL REPORT LIQUID INSTITUTIONAL RESERVES
<TABLE>
<CAPTION>
PERFORMANCE AND PORTFOLIO REVIEW
----------------------------------------------------------------------------------------
CURRENT SEVEN-DAY AVERAGE YIELD(1) 10/31/00 4/30/00 10/31/99
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund:
Institutional Shares 6.38% 5.92% 5.21%
Financial Intermediary Shares 6.13 5.67 4.96
Government Securities Fund+ 6.29 5.74 5.03
Treasury Securities Fund+ 5.81 5.30 4.45
----------------------------------------------------------------------------------------
<CAPTION>
EFFECTIVE SEVEN-DAY AVERAGE YIELD(1) 10/31/00 4/30/00 10/31/99
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund:
Institutional Shares 6.59% 6.10% 5.35%
Financial Intermediary Shares 6.32 5.83 5.08
Government Securities Fund+ 6.49 5.90 5.16
Treasury Securities Fund+ 5.98 5.44 4.54
----------------------------------------------------------------------------------------
<CAPTION>
WEIGHTED AVERAGE MATURITY 10/31/00 4/30/00 10/31/99
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund 55 days 45 days 52 days
Government Securities Fund 43 days 32 days 20 days
Treasury Securities Fund 32 days 45 days 42 days
----------------------------------------------------------------------------------------
<CAPTION>
NET ASSETS 10/31/00 4/30/00 10/31/99
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund $2.16 billion $1.90 billion $1.72 billion
Government Securities Fund $115.3 million $121.9 million $134.8 million
Treasury Securities Fund $141.5 million $118.5 million $120.2 million
----------------------------------------------------------------------------------------
</TABLE>
HIGHLIGHTS
[GRAPHIC] During the six-month period ended October 31, 2000, our strategy was
to keep the weighted average maturity longer than that of our peer group. In
anticipation of lower interest rates in the new year, we expect to continue this
approach. As we have done in the past, we continued to emphasize high credit
quality and liquidity, lengthening our portfolio maturities to seek competitive
yields while remaining focused on potential yield spread changes.
(1) Yields will fluctuate.
+ Institutional shares
2
<PAGE>
LIQUID INSTITUTIONAL RESERVES SEMIANNUAL REPORT
OUTLOOK
--------------------------------------------------------------------------------
[GRAPHIC] Most signs now point to the economy growing at a sustainable pace
during the coming months. We expect the GDP to grow at about 2.0% during the
fourth quarter of this year, increasing slightly to 2.5% during the second
quarter of 2001. Depending largely upon inflation figures, the Fed may lower
the Federal Funds rate by between 0.25% to 0.50% during the first half of
2001 to help ensure that the economy lands softly, although tensions across
the globe and the continued energy crisis continue to be areas of concern. We
will continue to focus on providing the Fund's shareholders with the highest
credit quality investments.
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have. For a QUARTERLY REVIEW on a
fund in the PaineWebber Family of Funds,(2) please contact your Financial
Advisor. For additional information, visit us at www.painewebber.com.
Sincerely,
/s/ Brian M. Storms /s/ Susan P. Ryan
BRIAN M. STORMS SUSAN P. RYAN
President and Senior Vice President
Chief Executive Officer Mitchell Hutchins
Mitchell Hutchins Asset Management Inc.
Asset Management Inc. Portfolio Manager,
Liquid Institutional Reserves
This letter is intended to assist shareholders in understanding how the Funds
performed during the six-month period ended October 31, 2000, and reflects our
views at the time of its writing. Of course, these views may change in response
to changing circumstances. We encourage you to consult your Financial Advisor
regarding your personal investment program.
(2) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
3
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
STATEMENT OF NET ASSETS OCTOBER 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
----------- ---------------------- --------------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--5.76%
$ 20,000 Federal Farm Credit Banks ................................. 11/01/00 6.864*% $ 20,000,000
90,000 Student Loan Marketing Association ........................ 11/07/00 6.835 to 6.865* 89,970,215
15,000 U.S. Treasury Bills ....................................... 08/30/01 5.830@ 14,266,391
-------------
Total U.S. Government and Agency Obligations (cost--$124,236,606) ... 124,236,606
-------------
DOMESTIC BANKERS ACCEPTANCE--0.10%
2,162 Chase Manhattan Bank (cost--$2,101,429) ................... 04/03/01 to 04/10/01 6.400 2,101,429
-------------
DOMESTIC BANK NOTES--1.16%
15,000 Comerica Bank ............................................. 11/07/00 6.570* 14,997,312
10,000 LaSalle Bank N.A. ......................................... 02/05/01 6.700 9,998,753
-------------
Total Domestic Bank Notes (cost--$24,996,065) ....................... 24,996,065
-------------
CERTIFICATES OF DEPOSIT--18.09%
DOMESTIC--0.70%
15,000 Wachovia Bank ............................................. 12/28/00 6.550 15,000,000
-------------
EURO DOLLAR--2.09%
15,000 ANz Bank .................................................. 06/19/01 7.100 15,015,780
30,000 Westdeutsche Landesbank Girozentrale ...................... 12/29/00 6.590 30,000,457
-------------
45,016,237
-------------
YANKEE--15.30%
10,000 Bank of Nova Scotia ....................................... 11/01/00 6.529* 9,998,074
15,000 Bank of Nova Scotia ....................................... 02/20/01 6.750 14,997,838
23,000 Bank of Scotland .......................................... 02/28/01 6.770 22,997,155
45,000 Canadian Imperial Bank of Commerce ........................ 12/27/00 6.620 45,001,496
45,000 Commerzbank AG ............................................ 04/27/01 to 07/31/01 6.580 to 7.075 44,998,075
20,000 Deutsche Bank AG .......................................... 09/11/01 6.790 19,998,368
25,000 Dexia Banque .............................................. 01/30/01 6.650 25,000,615
30,000 National Westminster Bank PLC ............................. 02/01/01 to 08/31/01 6.620 to 6.855 29,994,322
15,000 Societe Generale .......................................... 04/10/01 6.800 14,997,818
15,000 Societe Generale .......................................... 11/20/00 6.565* 14,999,140
65,000 Svenska Handelsbanken ..................................... 03/07/01 to 08/24/01 6.620 to 7.170 64,995,761
7,000 UBS AG .................................................... 07/19/01 7.030 6,999,057
15,000 Westpac Banking Corp. ..................................... 01/18/01 6.545 14,998,477
-------------
329,976,196
-------------
Total Certificates of Deposit (cost--$389,992,433) .................. 389,992,433
-------------
</TABLE>
4
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
----------- ---------------------- --------------- -------------
<S> <C> <C> <C>
TIME DEPOSIT--0.46%
$ 10,000 State Street Bank & Trust Co. (cost--$10,000,000) ......... 11/01/00 6.438% $ 10,000,000
-------------
YANKEE DEPOSIT NOTE--0.69%
15,000 Westpac Banking Corp. (cost--$14,998,224) ................. 01/31/01 6.560 14,998,224
-------------
COMMERCIAL [email protected]%
ASSET BACKED-AUTO & TRUCK--3.44%
75,000 New Center Asset Trust .................................... 11/20/00 to 02/28/01 6.480 to 6.500 74,219,051
-------------
ASSET BACKED-BANKING--6.85%
50,000 Atlantis One Funding Corp. ................................ 11/27/00 to 02/22/01 6.500 49,372,569
78,609 Centric Capital Corp. ..................................... 11/02/00 to 12/18/00 6.480 to 6.540 78,404,567
19,972 Woodstreet Funding Corp. .................................. 11/16/00 6.520 19,917,743
-------------
147,694,879
-------------
ASSET BACKED-FINANCE--0.34%
7,500 Beta Finance, Inc ......................................... 03/07/01 6.500 7,329,375
-------------
ASSET BACKED-MISCELLANEOUS--9.84%
87,540 Falcon Asset Securitization Corp. ......................... 11/13/00 to 12/20/00 6.490 to 6.510 87,221,581
50,397 Giro Funding U.S. Corp. ................................... 11/09/00 to 12/13/00 6.490 to 6.520 50,213,122
25,000 Preferred Receivables Funding Corp. ....................... 11/29/00 6.500 24,873,611
30,000 Receivables Capital Corp. ................................. 11/09/00 to 11/16/00 6.500 29,937,708
20,000 Variable Funding Capital Corp. ............................ 11/01/00 6.650 20,000,000
-------------
212,246,022
-------------
AUTO & TRUCK--2.65%
27,154 BMW US Capital Corp. ...................................... 11/01/00 6.480 27,154,000
30,000 Ford Motor Credit Corp. ................................... 11/02/00 6.490 29,994,592
-------------
57,148,592
-------------
BANKING-DOMESTIC--7.41%
20,000 Bank of America Corp. ..................................... 12/21/00 6.470 19,820,278
36,100 BCI Funding Corp. ......................................... 12/06/00 6.490 35,872,219
20,000 Den Danske Corp. .......................................... 12/27/00 6.460 19,799,022
20,000 Dexia CLF Finance Co. ..................................... 01/17/01 6.550 19,719,806
20,000 Fortis Funding LLC ........................................ 11/06/00 6.480 19,982,000
25,000 Morgan (J.P.) & Co., Inc. ................................. 12/11/00 6.480 24,820,000
20,000 Unifunding, Inc. .......................................... 01/26/01 6.530 19,688,011
-------------
159,701,336
-------------
BANKING-FOREIGN--1.16%
25,000 Banque et Caisse d'Epargne de L'Etat ...................... 11/09/00 6.510 24,963,833
-------------
BROKER-DEALER--5.77%
35,000 Bear Stearns Companies, Inc. .............................. 11/09/00 to 11/27/00 6.490 to 6.500 34,884,478
15,000 Morgan Stanley, Dean Witter & Co .......................... 11/03/00 6.775* 15,000,000
14,938 Morgan Stanley, Dean Witter & Co. ......................... 12/14/00 6.470 14,822,558
60,000 Salomon Smith Barney Holdings, Inc. ....................... 11/07/00 to 12/13/00 6.480 to 6.500 59,801,739
-------------
124,508,775
-------------
</TABLE>
5
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
----------- ---------------------- --------------- -------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONCLUDED)
BUILDING MATERIALS--0.60%
$ 13,000 Sherwin-Williams Co. ...................................... 11/06/00 6.480% $ 12,988,300
-------------
CONSUMER PRODUCTS--1.39%
30,000 Unilever Capital Corp. .................................... 11/02/00 to 11/17/00 6.500 to 6.520 29,940,411
-------------
DRUGS, HEALTH CARE--3.62%
48,500 Bayer Corp. ............................................... 12/18/00 6.470 to 6.480 48,090,082
30,000 Glaxo Wellcome PLC ........................................ 11/08/00 6.480 29,962,200
-------------
78,052,282
-------------
ENERGY--0.93%
20,000 Koch Industries ........................................... 11/01/00 6.630 20,000,000
-------------
FINANCE-CONSUMER--4.40%
25,000 American General Finance Corp. ............................ 11/08/00 6.490 24,968,451
70,000 Household Finance Corp. ................................... 11/01/00 6.660 70,000,000
-------------
94,968,451
-------------
FINANCE-INDEPENDENT--0.45%
10,000 National Rural Utilities Cooperative Finance Corp. ........ 04/18/01 6.450 9,699,000
-------------
FINANCE-SUBSIDIARY--1.15%
25,000 Deutsche Bank Financial Inc. .............................. 12/04/00 6.480 24,851,500
-------------
PRINTING & PUBLISHING--0.14%
3,000 Reed Elsevier, Inc. ....................................... 11/16/00 6.500 2,991,875
-------------
TELECOMMUNICATIONS--2.49%
34,000 American Telephone & Telegraph ............................ 11/27/00 to 12/20/00 6.480 to 6.500 33,803,259
20,000 BellSouth Capital Funding Corp. ........................... 12/13/00 6.460 19,849,267
-------------
53,652,526
-------------
Total Commercial Paper (cost--$1,134,956,208) ....................... 1,134,956,208
-------------
SHORT-TERM CORPORATE OBLIGATIONS--16.35%
ASSET BACKED-FINANCE--4.17%
35,000 Beta Finance, Inc. ........................................ 01/19/01 to 02/22/01 5.620 to 6.770 35,000,000
55,000 Beta Finance, Inc. ........................................ 11/01/00 to 11/07/00 6.648 to 6.965* 55,000,000
-------------
90,000,000
-------------
AUTO & TRUCK--3.59%
15,000 General Motors Acceptance Corp. ........................... 02/26/01 5.400 14,935,469
62,397 General Motors Acceptance Corp. ........................... 11/01/00 6.979 to 7.020* 62,542,685
-------------
77,478,154
-------------
BANKING-DOMESTIC--3.71%
55,000 Morgan (J.P.) & Co., Inc. ................................. 11/08/00 to 11/16/00 6.610 to 6.780* 55,019,253
25,000 Wells Fargo & Co. ......................................... 11/14/00 6.592* 25,000,000
-------------
80,019,253
-------------
</TABLE>
6
<PAGE>
LIQUID INSTITUTIONAL RESERVES--MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
----------- ---------------------- --------------- -------------
<S> <C> <C> <C>
SHORT-TERM CORPORATE OBLIGATIONS--(CONCLUDED)
BANKING-FOREIGN--0.70%
$ 15,000 Bank of Scotland Treasury Services PLC .................... 11/06/00 6.600*% $ 15,000,000
-------------
BROKER-DEALER--3.48%
10,000 Merrill Lynch & Company, Inc. ............................. 02/07/01 6.740 9,999,745
15,000 Merrill Lynch & Company, Inc. ............................. 11/06/00 6.580* 14,999,492
50,000 Morgan Stanley, Dean Witter & Co. ......................... 11/15/00 6.645* 50,000,000
-------------
74,999,237
-------------
FINANCE-INDEPENDENT--0.70%
15,000 National Rural Utilities Cooperative Finance Corp. ........ 01/22/01 6.730* 15,000,000
-------------
Total Short-Term Corporate Obligations (cost--$352,496,644) ......... 352,496,644
-------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
(000)
-----------
<S> <C>
MONEY MARKET FUNDS--4.60%
99,053 AIM Liquid Assets Money Market Portfolio .................. 99,052,845
119 AIM Prime Money Market Portfolio .......................... 118,519
--------------
Total Money Market Funds (cost--$99,171,364) ........................ 99,171,364
--------------
Total Investments (cost--$2,152,948,973 which approximates
cost for federal income tax purposes)--99.84% ..................... 2,152,948,973
Other assets in excess of liabilities--0.16% ........................ 3,392,151
--------------
Net Assets (applicable to 2,096,720,785 and 59,619,733 of
Institutional Shares and Financial Intermediary Shares,
respectively, each equivalent to $1.00 per share)--100.00% ........ $2,156,341,124
==============
</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 the current rates as of
October 31, 2000 and reset periodically.
Weighted Average Maturity--55 days
See accompanying notes to financial statements
7
<PAGE>
LIQUID INSTITUTIONAL RESERVES -- GOVERNMENT SECURITIES FUND
STATEMENT OF NET ASSETS OCTOBER 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
----------- ---------------------- --------------- -------------
<S> <C> <C> <C>
U.S. AGENCY OBLIGATIONS--97.28%
$ 29,500 Federal Farm Credit Bank .................................. 12/07/00 to 01/12/01 6.350 to 6.390@% $ 29,277,370
27,600 Federal Home Loan Bank .................................... 11/29/00 to 03/16/01 6.340 to 6.420@ 27,318,834
3,000 Federal Home Loan Mortgage Corp. .......................... 11/07/00 6.735* 3,000,000
18,754 Federal Home Loan Mortgage Corp. .......................... 11/10/00 to 01/25/01 6.400 to 6.430@ 18,678,344
5,000 Federal National Mortgage Association ..................... 02/22/01 to 02/23/01 6.445 to 6.570 4,998,831
17,140 Federal National Mortgage Association ..................... 12/07/00 to 04/26/01 6.280 to 6.380@ 16,942,241
12,000 Student Loan Marketing Association ........................ 11/07/00 6.835 to 6.865* 11,997,139
------------
Total U.S. Agency Obligations (cost--$112,212,759) .................. 112,212,759
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
(000)
-----------
<S> <C>
MONEY MARKET FUNDS--3.10%
3,384 Goldman Government Fund ................................... 3,384,401
187 Goldman Treasury Obligation Fund .......................... 186,534
------------
Total Money Market Funds (cost--$3,570,935) ......................... 3,570,935
------------
Total Investments (cost--$115,783,694 which approximates cost
for federal income tax purposes)--100.38% ......................... 115,783,694
Liabilities in excess of other assets--(0.38)% ...................... (436,193)
------------
Net Assets (applicable to 115,339,086 Institutional Shares,
equivalent to $1.00 per share)--100.00% ........................... $115,347,501
============
</TABLE>
-------------------
@ Interest rates shown are discount rates at date of purchase.
* Variable Rate Securities--Maturity date reflects earlier of reset date or
maturity date. The interest rates shown are the current rates as of
October 31, 2000 and reset periodically.
Weighted Average Maturity--43 days
See accompanying notes to financial statements
8
<PAGE>
LIQUID INSTITUTIONAL RESERVES -- TREASURY SECURITIES FUND
STATEMENT OF NET ASSETS OCTOBER 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
----------- ---------------------- --------------- ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS--97.11%
$138,094 U.S. Treasury Bills (cost--$137,396,098) .................. 11/02/00 to 02/15/01 5.840 to 6.330@% $137,396,098
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
(000)
-----------
<S> <C>
MONEY MARKET FUNDS--3.03%
4,292 Goldman Treasury Investor Fund (cost--$4,291,831) ......... 4,291,831
------------
Total Investments (cost--$141,687,929 which approximates cost
for federal income tax purposes)--100.14% ........................ 141,687,929
Liabilities in excess of other assets--(0.14)% ...................... (196,267)
------------
Net Assets (applicable to 141,474,320 Institutional Shares,
equivalent to $1.00 per share)--100.00% .......................... $141,491,662
------------
</TABLE>
-------------------
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity--32 days
See accompanying notes to financial statements
9
<PAGE>
LIQUID INSTITUTIONAL RESERVES
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED
OCTOBER 31, 2000
(UNAUDITED)
-----------------------------------------
MONEY GOVERNMENT TREASURY
MARKET SECURITIES SECURITIES
FUND FUND FUND
----------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................................................ $67,786,489 $4,154,670 $4,567,615
----------- ---------- ----------
EXPENSES:
Investment advisory and administration .............................. 2,544,014 160,573 193,120
Transfer agency and related services fees ........................... 190,141 19,345 19,737
Bond insurance expense .............................................. 176,682 -- --
Custody and accounting .............................................. 101,759 7,581 7,724
State and federal registration fees ................................. 65,453 17,220 17,519
Shareholder servicing fees--Financial Intermediary shares ........... 54,768 -- --
Professional fees ................................................... 53,384 17,768 18,807
Reports and notices to shareholders ................................. 30,985 14,573 12,005
Trustees' fees ...................................................... 5,250 5,250 5,250
Other expenses ...................................................... 16,300 9,161 10,346
----------- ---------- ----------
3,238,736 251,471 284,508
Less: Expense reimbursements from adviser ........................... (334,686) (65,289) (60,512)
----------- ---------- ----------
Net expenses ........................................................ 2,904,050 186,182 223,996
----------- ---------- ----------
Net investment income ............................................... 64,882,439 3,968,488 4,343,619
NET REALIZED GAINS (LOSSES) FROM INVESTMENT TRANSACTIONS ............ (2) (625) 13,554
----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ $64,882,437 $3,967,863 $4,357,173
=========== ========== ==========
</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, 2000 ENDED
(UNAUDITED) APRIL 30, 2000
---------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ............................................................... $ 64,882,439 $ 95,035,161
Net realized gains (losses) from investment transactions ............................ (2) 1,283
-------------- --------------
Net increase in net assets resulting from operations ................................ 64,882,437 95,036,444
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income--Institutional shares ......................................... (63,547,787) (93,698,675)
Net investment income--Financial Intermediary shares ................................ (1,334,652) (1,336,486)
-------------- --------------
Total dividends to shareholders ..................................................... (64,882,439) (95,035,161)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS ......... 255,593,391 (147,634,006)
-------------- --------------
Net increase (decrease) in net assets ............................................... 255,593,389 (147,632,723)
NET ASSETS:
Beginning of period ................................................................. 1,900,747,735 2,048,380,458
-------------- --------------
End of period ....................................................................... $2,156,341,124 $1,900,747,735
============== ==============
</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, 2000 ENDED
(UNAUDITED) APRIL 30, 2000
---------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ............................................................... $ 3,968,488 $ 7,507,146
Net realized gains (losses) from investment transactions ............................ (625) 9,952
------------ ------------
Net increase in net assets resulting from operations ................................ 3,967,863 7,517,098
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Institutional shares ......................................... (3,968,488) (7,507,146)
Net realized gain from investment transactions--Institutional shares ................ -- (10,565)
------------ ------------
Total dividends and distributions to shareholders ................................... (3,968,488) (7,517,711)
------------ ------------
NET DECREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS .................... (6,549,328) (16,884,706)
------------ ------------
Net decrease in net assets .......................................................... (6,549,953) (16,885,319)
NET ASSETS:
Beginning of period ................................................................. 121,897,454 138,782,773
------------ ------------
End of period ....................................................................... $115,347,501 $121,897,454
============ ============
</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, 2000 ENDED
(UNAUDITED) APRIL 30, 2000
---------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ............................................................... $ 4,343,619 $ 6,182,662
Net realized gains (losses) from investment transactions ............................ 13,554 (121)
------------ ------------
Net increase in net assets resulting from operations ................................ 4,357,173 6,182,541
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Institutional shares ......................................... (4,343,619) (6,182,662)
Net realized gain from investment transactions--Institutional shares ................ -- (166,129)
------------ ------------
Total dividends and distributions to shareholders ................................... (4,343,619) (6,348,791)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS ......... 22,952,945 (60,535,731)
------------ ------------
Net increase (decrease) in net assets ............................................... 22,966,499 (60,701,981)
NET ASSETS:
Beginning of period ................................................................. 118,525,163 179,227,144
------------ ------------
End of period ....................................................................... $141,491,662 $118,525,163
============ ============
</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, 2000 the Government Securities Fund and the Treasury
Securities Fund had no Financial Intermediary shares outstanding.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires Fund management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
Following is a summary of significant accounting policies:
VALUATION AND ACCOUNTING FOR INVESTMENTS AND INVESTMENT INCOME--Investments
are valued at amortized cost which approximates market value. Investment
transactions are recorded on the trade date. Realized gains and losses from
investment transactions are calculated using the identified cost method.
Interest income is recorded on an accrual basis. Premiums are amortized and
discounts are accreted as adjustments to interest income and the identified cost
of investments.
REPURCHASE AGREEMENTS--The custodian for the Money Market Fund and Government
Securities Fund 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 and Government Securities
Fund have 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 and Government Securities Fund occasionally participate in joint
repurchase agreement transactions with other funds managed by Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins"), sub-adviser and sub-administrator
of the Funds, and a wholly owned asset management subsidiary of PaineWebber
Incorporated ("PaineWebber"), the adviser and administrator of the Funds. Paine
Webber is an indirect wholly owned subsidiary of UBS AG.
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 accounting principles generally accepted in the United States. These
"book/tax" differences are considered either 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, 2000, the Money Market Fund, the Government Securities Fund and the
Treasury Securities Fund owed PaineWebber $416,302, $24,011 and $21,112,
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 reimbursements.
PaineWebber and Mitchell Hutchins have agreed to reimburse a portion of
expenses to maintain the Funds' total annual operating expenses at levels not
exceeding 0.28%, 0.29% and 0.29% of the average daily net assets of the
Institutional shares of Money Market Fund, Government Securities Fund and
Treasury Securities Fund, respectively, and at 0.53% of the average daily net
assets for Financial Intermediary shares of Money Market Fund. For the six
months ended October 31, 2000, PaineWebber and Mitchell Hutchins reimbursed
$334,686, $65,289 and $60,512 in investment advisory and administration fees and
other expenses for Money Market Fund, the Government Securities Fund and the
Treasury Securities Fund, respectively.
BANK LINE OF CREDIT
The Funds may participate with other funds managed by Mitchell Hutchins in a
$200 million committed credit facility ("Facility") to be utilized for temporary
financing until the settlement of sales or purchases of portfolio securities,
the repurchase or redemption of shares of a Fund at the request of the
shareholders and other temporary or emergency purposes. In connection therewith,
the Funds have agreed to pay a commitment fee, pro rata, based on the relative
asset size of the funds in the Facility. Interest is charged to the Funds at
rates based on prevailing market rates in effect at the time of borrowings. For
the six months ended October 31, 2000 the Money Market Fund and the Government
Securities Fund did not borrow under this facility. The Treasury Securities Fund
borrowed $5,900,000 at an interest rate of 6.9% for the period October 6, 2000
to October 9, 2000.
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.
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,
2000, the Money Market Fund owed PaineWebber $12,883 in shareholder service
fees.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MONEY MARKET FUND INSURANCE BOND
The Money Market Fund has an insurance bond that provides limited coverage
for certain loss events involving certain money market instruments held by the
Fund. These loss events include non-payment of principal or interest or a
bankruptcy or insolvency of the issuer or credit enhancement provider (if any).
The insurance bond provides for coverage up to $200 million for a number of
funds with a deductible of 10 basis points (0.10%) of the total assets of the
Fund for First Tier Securities and 50 basis points (0.50%) of the total assets
of the Fund for Second Tier Securities, in each case determined as of the close
of business on the first business day prior to the loss event. In the event of a
loss covered under the bond, the Fund would expect to retain the security in its
portfolio, rather than having to sell it at its current market value, until the
date of payment of the loss, which is generally no later than the maturity of
the security. While the policy is intended to provide some protection against
credit risk and to help the Fund maintain a constant price per share of $1.00,
there is no guarantee that the insurance will do so. For the six months ended
October 31, 2000, the Money Market Fund did not use this insurance bond.
OTHER LIABILITIES
At October 31, 2000, the Funds had the following other liabilities
outstanding:
<TABLE>
<CAPTION>
DIVIDENDS
PAYABLE
-----------
<S> <C>
Money Market Fund ............................................................ $11,193,469
Government Securities Fund ................................................... 606,128
Treasury Securities Fund ..................................................... 695,296
</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>
FINANCIAL
INSTITUTIONAL SHARES INTERMEDIARY SHARES*
----------------------------------- -----------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED
OCTOBER 31, 2000 APRIL 30, 2000 OCTOBER 31, 2000 APRIL 30, 2000
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
MONEY MARKET FUND:
Shares sold ....................................... 5,996,105,773 12,555,684,920 110,328,546 125,615,287
Shares repurchased ................................ (5,793,830,074) (12,844,886,813) (115,760,214) (72,982,693)
Dividends reinvested .............................. 58,331,782 88,935,293 417,578 --
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in shares outstanding ..... 260,607,481 (200,266,600) (5,014,090) 52,632,594
================ ================ ================ ================
GOVERNMENT SECURITIES FUND:
Shares sold ....................................... 249,037,853 348,454,081
Shares repurchased ................................ (259,310,253) (372,396,988)
Dividends reinvested .............................. 3,723,072 7,058,201
---------------- ----------------
Net decrease in shares outstanding ................ (6,549,328) (16,884,706)
================ ================
TREASURY SECURITIES FUND:
Shares sold ....................................... 212,882,496 221,556,579
Shares repurchased ................................ (194,052,738) (288,382,268)
Dividends reinvested .............................. 4,123,187 6,289,958
---------------- ----------------
Net increase (decrease) in shares outstanding ..... 22,952,945 (60,535,731)
================ ================
</TABLE>
--------------------
* For the six months ended October 31, 2000 and the year ended April 30, 2000,
there were no transactions in Financial Intermediary shares for Government
Securities Fund and Treasury Securities Fund.
16
<PAGE>
(This page has been left blank intentionally.)
17
<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,
2000 --------------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
------------- ---------- ---------- ---------- ---------- ----------
<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 ............................... 0.032 0.053 0.051 0.054 0.052 0.055
-------- -------- -------- -------- -------- --------
Dividends from net investment income ................ (0.032) (0.053) (0.051) (0.054) (0.052) (0.055)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total investment return (1) ......................... 3.26% 5.40% 5.22% 5.52% 5.33% 5.61%
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000's) ................... $2,096,723 $1,836,114 $2,036,379 $1,591,789 $1,246,799 $421,878
Expenses to average net assets net of
waivers/reimbursements from adviser ............... 0.28%* 0.28% 0.26% 0.29% 0.25% 0.31%
Expenses to average net assets before
waivers/reimbursements from adviser ............... 0.31%* 0.30% 0.31% 0.34% 0.30% 0.37%
Net investment income to average net assets net of
waivers/reimbursements from adviser ............... 6.38%* 5.26% 5.07% 5.38% 5.24% 5.47%
Net investment income to average net assets before
waivers/reimbursements from adviser ............... 6.35%* 5.24% 5.02% 5.33% 5.19% 5.41%
</TABLE>
------------------------------
+ Issuance of shares.
* Annualized.
** For the period May 1, 1997 to January 13, 1998 there were no Financial
Intermediary Shares outstanding.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. Total investment
return for periods of less than one year has not been annualized.
18
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL INTERMEDIARY SHARES**
----------------------------------------------------
FOR THE FOR THE
SIX MONTHS PERIOD
ENDED FOR THE YEARS ENDED JANUARY 14,
OCTOBER 31, APRIL 30, 1998+ TO
2000 ----------------------- APRIL 30,
(UNAUDITED) 2000 1999 1998
------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Net investment income ............................... 0.031 0.050 0.048 0.015
-------- -------- -------- --------
Dividends from net investment income ................ (0.031) (0.050) (0.048) (0.015)
-------- -------- -------- --------
Net asset value, end of period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total investment return (1) ......................... 3.13% 5.14% 4.96% 1.51%
======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000's) ................... $59,618 $64,634 $12,002 $16,302
Expenses to average net assets net of
waivers/reimbursements from adviser ............... 0.53%* 0.53% 0.51% 0.54%*
Expenses to average net assets before
waivers/reimbursements from adviser ............... 0.56%* 0.55% 0.56% 0.59%*
Net investment income to average net assets net of
waivers/reimbursements from adviser ............... 6.09%* 5.05% 4.82% 5.13%*
Net investment income to average net assets before
waivers/reimbursements from adviser ............... 6.06%* 5.03% 4.77% 5.07%*
</TABLE>
19
<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>
INSTITUTIONAL SHARES
-----------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
OCTOBER 31, FOR THE YEARS ENDED APRIL 30,
2000 --------------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
------------- ---------- ---------- ---------- ---------- ----------
<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 ............................... 0.031 0.051 0.049 0.052 0.051 0.053
Net realized gains from investment transactions ..... -- -- -- -- -- 0.001
-------- -------- -------- -------- -------- --------
Net increase from investment operations ............. 0.031 0.051 0.049 0.052 0.051 0.054
-------- -------- -------- -------- -------- --------
Dividends from net investment income ................ (0.031) (0.051) (0.049) (0.052) (0.051) (0.054)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total investment return (1) ......................... 3.15% 5.22% 5.04% 5.32% 5.20% 5.50%
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000's) ................... $115,348 $121,897 $138,783 $100,140 $106,843 $43,770
Expenses to average net assets net of
waivers/reimbursements from adviser ............... 0.29%* 0.29% 0.28% 0.30% 0.30% 0.32%
Expenses to average net assets before
waivers/reimbursements from adviser ............... 0.39%* 0.33% 0.33% 0.59% 0.53% 0.56%
Net investment income to average net assets
net of waivers/reimbursements from adviser ........ 6.18%* 5.10% 4.90% 5.21% 5.09% 5.52%
Net investment income to average net assets
before waivers/reimbursements from adviser ........ 6.08%* 5.06% 4.85% 4.91% 4.86% 5.28%
</TABLE>
------------------------------
* Annualized.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. Total investment
return for a period less than one year has not been annualized.
20
<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,
2000 --------------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
------------- ---------- ---------- ---------- ---------- ----------
<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 ............................... 0.028 0.049 0.046 0.051 0.049 0.048
Net realized gains from investment
transactions ...................................... -- -- -- -- -- 0.003
-------- -------- -------- -------- -------- --------
Net increase from investment operations ............. 0.028 0.049 0.046 0.051 0.049 0.051
-------- -------- -------- -------- -------- --------
Dividends from net investment income ................ (0.028) (0.047) (0.046) (0.051) (0.049) (0.051)
Distributions from net realized gains from
investment transactions ........................... -- (0.002) -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions to
shareholders ...................................... (0.028) (0.049) (0.046) (0.051) (0.049) (0.051)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total investment return (1) ......................... 2.87% 4.97% 4.68% 5.23% 5.02% 5.23%
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000's) ................... $141,492 $118,525 $179,227 $179,708 $ 65,893 $ 19,624
Expenses to average net assets net of
waivers/reimbursements from adviser ............... 0.29%* 0.29% 0.28% 0.30% 0.30% 0.32%
Expenses to average net assets before
waivers/reimbursements from adviser ............... 0.37%* 0.35% 0.33% 0.47% 0.72% 0.94%
Net investment income to average net assets
net of waivers/reimbursements from adviser ........ 5.62%* 4.61% 4.57% 5.09% 4.97% 5.71%
Net investment income to average net assets
before waivers/reimbursements from adviser ........ 5.54%* 4.55% 4.52% 4.92% 4.56% 5.09%
</TABLE>
------------------------------
* Annualized.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. Total investment return
for a period less than one year has not been annualized.
21
<PAGE>
(This page has been left blank intentionally.)
