<Page>
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OMB APPROVAL
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OMB Number: 3235-0570
Expires: November 30, 2005
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hours per response....... 5.0
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06281
---------------------------------------------
LIQUID INSTITUTIONAL RESERVES
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
51 West 52nd Street, New York, New York 10019-6114
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Amy R. Doberman, Esq.
UBS Global Asset Management (US) Inc.
51 West 52nd Street
New York, NY 10019-6114
Copy to:
Jack W. Murphy, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, DC 20006-2401
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-882 5000
----------------------------
Date of fiscal year end: April 30, 2003
--------------------------
Date of reporting period: April 30, 2003
-------------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609. The OMB has reviewed this collection of
information under the clearance requirements of 44 U.S.C. Section 3507.
<Page>
ITEM 1. REPORT TO STOCKHOLDERS.
<Page>
[UBS GLOBAL ASSET MANAGEMENT LOGO]
UBS LIR MONEY MARKET FUND
UBS LIR TREASURY SECURITIES FUND
ANNUAL REPORT
APRIL 30, 2003
<Page>
UBS LIR MONEY MARKET FUND
UBS LIR TREASURY SECURITIES FUND
June 16, 2003
DEAR SHAREHOLDER,
We present you with the annual report for UBS LIR Money Market Fund and the UBS
LIR Treasury Securities Fund for the fiscal year ended April 30, 2003.
AN INTERVIEW WITH PORTFOLIO MANAGER SUSAN RYAN
Q. HOW DID THE FUNDS PERFORM OVER THE REVIEW PERIOD?
A. Short-term interest rates fell during the period. As a result, when holdings
in the Funds' portfolios matured, they had to be replaced with securities
that offered lower yields. At the end of the reporting period, UBS LIR
Treasury Securities Fund's seven-day current yield was 0.96%, down from 1.53%
at the end of its fiscal year on April 30, 2002. UBS LIR Money Market Fund's
Institutional share class had a seven-day current yield of 1.06% at period
end, down from 1.72% on April 30, 2002. (For more on the Funds' performance,
please refer to "Performance At A Glance" on page 5.)
Q. CAN YOU DESCRIBE THE ECONOMIC ENVIRONMENT DURING THE REPORTING PERIOD?
A. The US economy was generally weak throughout the Funds' fiscal year.
Early in the period, ongoing threats of terrorism, turmoil in the Middle
East, tepid corporate spending, a weak stock market and corporate accounting
scandals were clearly taking a toll on economic growth. Evidence of this was
reflected in the second quarter's anemic gross domestic product (GDP) figure,
which came in at 1.7%. The news improved somewhat during the third quarter,
when GDP rose to 4.0%; however, this figure fell to 1.4% during the last
three months of 2002. In the first quarter of 2003, concerns over a war with
Iraq created an additional obstacle impeding economic growth, and advance
estimates for GDP came in at a disappointing 1.9% growth rate.
[SIDENOTE]
UBS LIR MONEY MARKET FUND
UBS LIR TREASURY SECURITIES FUND
INVESTMENT GOAL (BOTH FUNDS):
High current income to the extent it is consistent with capital preservation and
liquidity.
PORTFOLIO MANAGER:
Susan P. Ryan
UBS Global Asset Management (US) Inc.
COMMENCEMENT:
INSTITUTIONAL SHARES -
LIR Money Market Fund: June 3, 1991
LIR Treasury Securities Fund: December 6, 1991
FINANCIAL INTERMEDIARY SHARES -
LIR Money Market Fund:
Original issuance: March 17, 1994; ceased April 30, 1995; reissued
January 14, 1998
DIVIDEND PAYMENTS:
Monthly
1
<Page>
Q. WHAT WERE SOME OF THE REASONS FOR THIS TEPID ECONOMIC GROWTH?
A. Throughout 2002, consumer spending, which accounts for two-thirds of the US
economy, was relatively strong. This contrasted sharply with corporate
spending, which continued to be subdued as many companies postponed major
purchases until they saw clearer signs of a sustainable economic recovery.
However, both consumer and corporate spending weakened during the first
quarter of 2003. The specter of, and eventual war with, Iraq, saber rattling
in North Korea and heightened concerns about terrorism preoccupied the
country and ultimately hindered economic growth.
Q. HOW HAS THE FEDERAL RESERVE BOARD (THE "FED") REACTED TO THE WEAKENING
ECONOMY?
A. In November 2002, the Fed acknowledged that the economy had hit a "soft
spot." After holding interest rates steady during the first ten months of
2002, the Fed moved into action in early November and lowered the federal
funds rate one half percentage point to 1.25%--a 41-year low.
Since that time, the Fed has held rates steady; as of this writing most
recently during its meeting on May 6, 2003 (after fiscal year end). In its
official statement, the Fed noted that despite disappointing numbers relating
to production and unemployment, the easing of geopolitical tensions had
increased consumer confidence, caused oil prices to decline and strengthened
the equity and debt markets. "These developments," the Fed statement read,
"along with the accommodative stance of monetary policy and ongoing growth in
productivity, should foster an improving economic climate over time."
Q. HOW DID YOU MANAGE THE FUNDS IN THE TURBULENT ECONOMIC ENVIRONMENT THAT
CHARACTERIZED THE PERIOD?
A. Both Funds are conservatively managed; however, UBS LIR Treasury Securities
Fund is more so in that it only invests in securities issued by the US
Treasury. UBS LIR Money Market Fund, which, likewise, invests in securities
issued by the US Treasury, can, additionally, invest in an array of
short-term instruments, including repos and time deposits. Furthermore, the
weighted average maturity ("WAM") of UBS LIR Money Market Fund cannot exceed
60 days because the Fund is AAA rated, whereas UBS LIR Treasury Securities
Fund can have a WAM that is extended to 90 days.
That said, in terms of investment strategies, we continued to utilize a
"barbell" strategy for the Funds, whereby we purchased securities at both
ends of the maturity spectrum. The longer-term securities--with maturities up
to one year in duration--were used to lock in higher yields as interest rates
fell. The shorter-term securities--typically less than one month in
duration--provided liquidity.
2
<Page>
Within both Funds, Treasury securities provided both high quality and
liquidity. In addition, within UBS LIR Money Market Fund, we emphasized
Agency securities that offered the highest credit quality and liquidity. The
credit markets were extremely volatile during the period given the uncertain
economy and the skepticism generated by corporate accounting scandals and
high profile bankruptcies; this focus helped us to avoid the impact these
problems had on the corporate credit markets.
Q. WHAT IS YOUR OUTLOOK FOR THE ECONOMY, AND HOW DO YOU ANTICIPATE STRUCTURING
THE FUNDS' PORTFOLIOS GOING FORWARD?
A. Despite the rapid conclusion to the war in Iraq, there continues to be a
great deal of uncertainty around the world. The repercussions of the war
remain unknown, the situation in North Korea remains volatile, and the
outbreak of Severe Acute Respiratory Syndrome (SARS) threatens to isolate
major economies.
In the US, you could view the economic "glass" as either being half empty or
half full. Among the positives, the war in Iraq is all but over, consumer
confidence rose sharply at the end of April, and oil prices have plummeted.
In addition, low interest rates have spurred another round of mortgage
refinancing and corporate spending is expected to increase at some point.
Finally, Congress has approved an economic stimulus package, although the
extent of its impact on the economy remains uncertain.
On the other hand, unemployment is high and the economy will have to gain
momentum in order to stimulate the labor market. Furthermore, the housing
market may have peaked and consumer debt levels are high. Lastly, the Fed has
less mobility to lower short-term interest rates.
Given the uncertain environment, we expect to continue to employ a barbell
strategy in order to lock in higher rates and maintain liquidity. We also
anticipate continuing to emphasize high quality portfolios for the Funds.
3
<Page>
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 additional information on the UBS
funds,* please contact your financial advisor or visit us at www.ubs.com.
Sincerely,
/s/ Joseph A. Varnas
JOSEPH A. VARNAS
PRESIDENT
UBS LIR Money Market Fund
UBS LIR Treasury Securities Fund
HEAD OF PRODUCT, TECHNOLOGY AND OPERATIONS
UBS Global Asset Management (US) Inc.
/s/ Susan P. Ryan
SUSAN P. RYAN
PORTFOLIO MANAGER
UBS LIR Money Market Fund
UBS LIR Treasury Securities Fund
EXECUTIVE DIRECTOR
UBS Global Asset Management (US) Inc.
This letter is intended to assist shareholders in understanding how the Funds
performed during the fiscal year ended April 30, 2003, and reflects our views at
the time of its writing. Of course, these views may change in response to
changing circumstances, and they do not guarantee the future performance of the
markets or the Funds. We encourage you to consult your financial advisor
regarding your personal investment program.
* Mutual funds are sold by prospectus only. The prospectus for a fund contains
more complete information regarding risks, charges and expenses, and should
be read carefully before investing.
4
<Page>
UBS LIR MONEY MARKET FUND
UBS LIR TREASURY SECURITIES FUND
PERFORMANCE AT A GLANCE
<Table>
<Caption>
YIELDS AND CHARACTERISTICS 4/30/03 10/31/02 4/30/02
- -------------------------------------------------------------------------------------------------------
Seven-Day Current Yield*
Money Market Fund:
Institutional Shares 1.06% 1.61% 1.72%
Financial Intermediary Shares 0.81 1.36 1.47
Treasury Securities Fund** 0.96 1.38 1.53
- -------------------------------------------------------------------------------------------------------
Seven-Day Effective Yield*
Money Market Fund:
Institutional Shares 1.07% 1.62% 1.74%
Financial Intermediary Shares 0.82 1.37 1.49
Treasury Securities Fund** 0.97 1.39 1.54
- -------------------------------------------------------------------------------------------------------
Weighted Average Maturity***
Money Market Fund 53 days 59 days 60 days
Treasury Securities Fund 58 days 62 days 70 days
- -------------------------------------------------------------------------------------------------------
<Caption>
SECTOR ALLOCATION**** 4/30/03 10/31/02 4/30/02
- -------------------------------------------------------------------------------------------------------
Money Market Fund:
Commercial Paper 57.7% 46.4% 40.5%
U.S. Government and Agency Obligations 14.1 18.9 23.0
Short-Term Corporate Obligations 12.7 11.7 6.4
Certificates of Deposit 8.3 12.6 18.3
Money Market Funds 4.5 4.2 8.7
Time Deposit 2.7 3.3 --
Bank Notes -- 3.7 3.3
Liabilities in Excess of Other Assets -- (0.8) (0.2)
TOTAL 100.0% 100.0% 100.0%
- -------------------------------------------------------------------------------------------------------
Treasury Securities Fund:
U.S. Treasury Obligations 95.5% 97.6% 96.4%
Money Market Funds 4.5 2.5 3.7
Liabilities in Excess of Other Assets -- (0.1) (0.1)
TOTAL 100.0% 100.0% 100.0%
- -------------------------------------------------------------------------------------------------------
<Caption>
NET ASSETS 4/30/03 10/31/02 4/30/02
- -------------------------------------------------------------------------------------------------------
Money Market Fund (bln) $ 1.9 $ 2.1 $ 2.4
Treasury Securities Fund (mm) $ 328.6 $ 437.9 $ 433.3
- -------------------------------------------------------------------------------------------------------
</Table>
* Yields will fluctuate and reflect fee waivers. Performance data quoted
represent past performance. Past performance does not guarantee future
results.
** Institutional Shares. UBS LIR Treasury Securities Fund did not have
Financial Intermediary shares outstanding during the periods indicated.
Yields for Financial Intermediary shares would be approximately 0.25% lower
than yields for Institutional shares.
*** The Funds are actively managed and their weighted average maturities will
differ over time.
**** Weightings represent percentages of net assets as of the dates indicated.
The Fund's portfolio is actively managed and its composition will vary over
time.
5
<Page>
UBS LIR MONEY MARKET FUND
STATEMENT OF NET ASSETS -- APRIL 30, 2003
<Table>
<Caption>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--14.11%
$ 15,000 U.S. Treasury Bills 07/17/03 1.215%@ $ 14,961,019
141,000 Federal Home Loan Bank 06/24/03 to 1.350 to
05/04/04 2.590 141,000,000
9,000 Federal Home Loan Mortgage Corp. 02/04/04 1.500 9,000,000
50,000 Federal National Mortgage Association 06/30/03 1.190@ 49,900,833
50,000 Student Loan Marketing Association 05/23/03 to 1.400 to
02/24/04 2.650 50,000,000
Total U.S. Government and Agency Obligations (cost--$264,861,852) 264,861,852
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--8.31%
BANKING-DOMESTIC--3.25%
18,000 State Street Bank & Trust Co. 04/08/04 1.300 18,000,000
25,000 SunTrust Bank 05/01/03 1.330* 24,999,524
18,000 Wells Fargo Bank N.A. 05/16/03 1.250 17,999,993
60,999,517
YANKEE--5.06%
25,000 Abbey National Treasury Services PLC 05/01/03 1.298* 24,996,916
20,000 ABN AMRO Bank N.V. 11/03/03 1.700 20,000,000
30,000 Westdeutcshe Landesbank AG 06/13/03 to 1.500 to
04/21/04 2.700 30,000,000
20,000 Westdeutcshe Landesbank AG 05/01/03 1.300* 19,998,277
94,995,193
Total Certificates of Deposit (cost--$155,994,710) 155,994,710
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER@--57.65%
ASSET BACKED-BANKING--1.78%
33,399 Stellar Funding Group, Inc. 05/06/03 to 1.260 to
05/16/03 1.280 33,386,445
ASSET BACKED-MISCELLANEOUS--20.94%
46,500 Asset Securitization Cooperative Corp. 05/08/03 1.250 46,488,698
55,000 Barton Capital Corp. 05/07/03 to
05/09/03 1.250 54,986,806
16,084 Enterprise Funding Corp. 05/02/03 1.250 16,083,442
75,000 Galaxy Funding, Inc. 05/05/03 to 1.260 to
07/17/03 1.300 74,922,144
</Table>
6
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER@--(CONTINUED)
ASSET BACKED-MISCELLANEOUS--(CONCLUDED)
$ 55,652 Giro Multi-Funding Corp. 05/06/03 1.250% $ 55,642,338
50,055 Quincy Capital Corp. 05/09/03 1.300 50,040,540
44,831 Thunderbay Funding, Inc. 05/01/03 to
05/12/03 1.270 44,817,389
50,000 Variable Funding Capital Corp. 05/14/03 1.260 49,977,250
392,958,607
AUTOMOBILE OEM--1.06%
20,000 BMW U.S. Capital, Inc. 05/01/03 1.350 20,000,000
BANKING-DOMESTIC--10.49%
25,000 Abbey National North America LLC 05/05/03 1.260 24,996,500
22,000 ABN-AMRO N.A. Finance Inc. 05/19/03 1.250 21,986,250
25,000 Bank of America Corp. 05/22/03 1.250 24,981,771
25,000 Credit Agricole Indosuez
North America 05/06/03 1.250 24,995,660
40,000 Credit Lyonnais North America, Inc. 06/17/03 1.250 39,934,722
25,000 Danske Corp. 05/27/03 1.250 24,977,430
25,000 National Australia Funding
(Delaware), Inc. 05/01/03 1.250 25,000,000
10,000 San Paolo IMI U.S. Financial Co. 05/01/03 1.250 10,000,000
196,872,333
BANKING-FOREIGN--4.02%
50,000 Bank of Ireland 05/12/03 to 1.245 to
05/16/03 1.260 49,976,642
25,500 HBOS Treasury Services PLC 05/01/03 to
05/02/03 1.260 25,499,300
75,475,942
BROKERAGE--8.52%
50,000 Citigroup Global Markets
Holdings, Inc 05/01/03 1.260 50,000,000
40,000 Goldman Sachs Group, Inc. 05/22/03 1.220 39,971,533
70,000 Morgan Stanley & Co. 05/05/03 to
05/08/03 1.260 69,988,100
159,959,633
</Table>
7
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER@--(CONCLUDED)
FINANCE NON-CAPTIVE DIVERSIFIED--5.78%
$ 89,000 CIT Group, Inc. 05/06/03 to 1.270 to
05/29/03 1.300% $ 88,950,617
19,626 International Lease Finance Corp. 05/13/03 1.250 19,617,822
108,568,439
METALS & MINING--5.06%
20,000 Rio Tinto (Commercial Paper) Ltd. 05/02/03 1.270 19,999,295
75,000 RWE AG 05/12/03 to 1.220 to
06/17/03 1.260 74,933,108
94,932,403
Total Commercial Paper (cost--$1,082,153,802) 1,082,153,802
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE OBLIGATIONS--12.68%
ASSET BACKED-FINANCE--7.99%
60,000 CC (USA), Inc.** 05/01/03 1.330* 60,000,000
25,000 Dorada Finance, Inc.** 05/01/03 1.325* 24,999,541
65,000 K2 (USA) LLC 05/01/03 to 1.290 to
05/20/03 1.330* 65,000,000
149,999,541
BANKING-DOMESTIC--1.33%
25,000 Wells Fargo & Co. 05/14/03 1.344* 25,000,000
ENERGY-INTEGRATED--1.23%
23,000 BP Capital Markets PLC 05/01/03 1.295* 23,000,000
FINANCE NON-CAPTIVE DIVERSIFIED--2.13%
40,000 General Electric Capital Corp.# 05/09/03 1.340* 40,000,000
Total Short-Term Corporate Obligations (cost--$237,999,541) 237,999,541
- ------------------------------------------------------------------------------------------------------------------------------------
TIME DEPOSIT--2.67%
50,000 Societe Generale (cost--$50,000,000) 05/01/03 1.375 50,000,000
</Table>
8
<Page>
<Table>
<Caption>
NUMBER OF
SHARES MATURITY INTEREST
(000) DATES RATES VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS--4.54%
68,617 AIM Liquid Assets Portfolio 05/01/03 1.220%+ $ 68,617,315
666 AIM Prime Money Market Portfolio 05/01/03 1.180+ 666,389
7,789 Blackrock Provident TempFund 05/01/03 1.145+ 7,788,520
242 Dreyfus Cash Management Fund 05/01/03 1.124+ 241,708
7,944 Scudder Money Market Series 05/01/03 1.183+ 7,944,093
Total Money Market Funds (cost--$85,258,025) 85,258,025
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost--$1,876,267,930
which approximates cost for federal income
tax purposes)--99.96% 1,876,267,930
Other assets in excess of liabilities--0.04% 717,512
Net Assets (applicable to 1,818,726,729 and
58,039,735 of Institutional shares and Financial
Intermediary shares, respectively, each equivalent
to $1.00 per share)--100.00% $ 1,876,985,442
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
* Variable rate securities--maturity dates reflect earlier of reset date or
maturity date. The interest rates shown are the current rates as of
April 30, 2003 and reset periodically.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
@ Interest rates shown are the discount rates at date of purchase.
# Illiquid security representing 2.13% of net assets.
+ Interest rates shown reflect yield at April 30, 2003.
OEM Original Equipment Manufacturer.
Weighted average maturity -- 53 days
See accompanying notes to financial statements
9
<Page>
UBS LIR TREASURY SECURITIES FUND
STATEMENT OF NET ASSETS -- APRIL 30, 2003
<Table>
<Caption>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--95.54%
$ 304,502 U.S. Treasury Bills(1) 05/01/03 to 1.120 to
10/16/03 1.255%@ $ 303,915,732
10,000 U.S. Treasury Notes(1) 06/30/03 3.875 10,025,331
Total U.S. Treasury Obligations (cost--$313,941,063) 313,941,063
- -----------------------------------------------------------------------------------------------------------------------------------
<Caption>
NUMBER OF
SHARES
(000)
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS--4.52%
3,177 Blackrock Provident Institutional
Treasury Trust Fund 05/01/03 1.015+ 3,176,802
11,689 Goldman Sachs Financial Square
Treasury Instruments Fund 05/01/03 0.988+ 11,688,613
Total Money Market Funds (cost--$14,865,415) 14,865,415
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost--$328,806,478
which approximates cost for federal
income tax purposes)--100.06% 328,806,478
Liabilities in excess of other assets--(0.06)% (205,153)
Net Assets (applicable to 328,531,003
Institutional shares, equivalent to
$1.00 per share)--100.00% $ 328,601,325
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
@ Interest rates shown are the discount rates at date of purchase.
+ Interest rates shown reflect yield at April 30, 2003.
(1) Security, or a portion thereof, was on loan at April 30, 2003.
Weighted average maturity -- 58 days
See accompanying notes to financial statements
10
<Page>
UBS LIR MONEY MARKET FUND
UBS LIR TREASURY SECURITIES FUND
STATEMENT OF OPERATIONS
<Table>
<Caption>
FOR THE YEAR ENDED APRIL 30, 2003
---------------------------------------
UBS LIR UBS LIR
MONEY MARKET TREASURY SECURITIES
FUND FUND
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 37,653,237 $ 7,168,072
EXPENSES:
Investment advisory and administration fees 5,494,918 1,142,136
Insurance expense 458,719 6,328
Transfer agency and related services fees 363,758 142,770
Custody and accounting 219,799 45,687
State registration fees 146,821 50,424
Shareholder servicing fees-financial intermediary shares 108,819 --
Professional fees 102,500 47,944
Reports and notices to shareholders 70,302 11,242
Trustees' fees 48,217 7,055
Other expenses 84,147 15,054
7,098,000 1,468,640
Less: Expense reimbursements from investment advisor and
administrator (834,776) (144,146)
Net expenses 6,263,224 1,324,494
Net investment income 31,390,013 5,843,578
Net realized gains from investment transactions 7,731 22,187
Net increase in net assets resulting from operations $ 31,397,744 $ 5,865,765
- ---------------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements
11
<Page>
UBS LIR MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEARS ENDED APRIL 30,
----------------------------------
2003 2002
- ----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 31,390,013 $ 79,362,886
Net realized gains from investment transactions 7,731 197,787
Net increase in net assets resulting from operations 31,397,744 79,560,673
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income-institutional shares (30,882,978) (77,950,012)
Net investment income-financial intermediary shares (507,035) (1,412,874)
(31,390,013) (79,362,886)
Net decrease in net assets
from beneficial interest transactions (533,959,341) (154,139,147)
Net decrease in net assets (533,951,610) (153,941,360)
NET ASSETS:
Beginning of year 2,410,937,052 2,564,878,412
End of year $ 1,876,985,442 $ 2,410,937,052
- ----------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements
12
<Page>
UBS LIR TREASURY SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEARS ENDED APRIL 30,
----------------------------------
2003 2002
- ----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 5,843,578 $ 6,111,705
Net realized gains from investment transactions 22,187 26,217
Net increase in net assets resulting from operations 5,865,765 6,137,922
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income-institutional shares (5,843,578) (6,111,705)
Net increase (decrease) in net assets
from beneficial interest transactions (104,694,401) 265,856,928
Net increase (decrease) in net assets (104,672,214) 265,883,145
NET ASSETS:
Beginning of year 433,273,539 167,390,394
End of year $ 328,601,325 $ 433,273,539
- ----------------------------------------------------------------------------------------------------------------
</Table>
See accompanying notes to financial statements
13
<Page>
UBS LIR MONEY MARKET FUND
UBS LIR TREASURY SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
UBS LIR Money Market Fund ("Money Market Fund") and UBS LIR Treasury Securities
Fund ("Treasury Securities Fund") (collectively, the "Funds") are diversified
series of Liquid Institutional Reserves (the "Trust"), an open-end management
investment company registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended. The Trust currently offers three
no-load series: the Funds and the UBS LIR Government Securities Fund. The
financial statements for the UBS LIR Government Securities Fund are not included
herein.
The Funds currently offer two classes of shares, Institutional shares
and Financial Intermediary shares. Each class represents interests in the same
assets of the 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.
At April 30, 2003, 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 the Funds' management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates. The
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, unless the Trust's
Board of Trustees (the "Board") determines that this does not represent fair
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 may purchase securities or other
obligations from a bank or securities dealer (or its affiliate), subject to the
seller's agreement to repurchase them at an agreed upon date (or upon demand)
and price. The Money Market Fund maintains custody of the underlying obligations
prior to their repurchase, either through its regular custodian or through a
special "tri-party" custodian or sub-custodian that maintains a separate account
for both the Money Market Fund and its counterparty. 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 of
default of the obligation to repurchase, the Money Market Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation.
14
<Page>
Repurchase agreements involving obligations other than U.S. government
securities (such as commercial paper, corporate bonds and mortgage loans) may be
subject to special risks and may not have the benefit of certain protections in
the event of the counterparty's insolvency. If the seller (or sellor's
guarantor, if any) becomes insolvent, the Money Market Fund may suffer delays,
costs and possible losses in connection with the disposition or retention of the
collateral. 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, advised or sub-advised by UBS Global Asset Management (US) Inc.
("UBS Global AM"). UBS Global AM is an indirect wholly owned asset management
subsidiary of UBS AG, an internationally diversified organization with
headquarters in Zurich, Switzerland and operations in many areas of the
financial services industry.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions is
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 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.
NET INVESTMENT INCOME AND INVESTMENT TRANSACTIONS--Income, expenses (excluding
class-specific expenses) and realized/unrealized gains/losses are allocated
proportionately to each class of shares based upon the relative net asset value
of each class at the beginning of the day (after adjusting for current capital
share activity of the respective classes). Class-specific expenses are charged
directly to the applicable class of shares.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Money Market Fund
to meet their obligations may be affected by economic developments, including
those particular to a specific industry or region.
INVESTMENT ADVISOR AND ADMINISTRATOR
The Trust has an Investment Advisory and Administration Contract ("Advisory
Contract") with UBS Financial Services Inc. ("UBS Financial Services(SM)*"), an
indirect wholly owned subsidiary of UBS AG, under which UBS Financial Services
serves as investment advisor and administrator of the Funds. In accordance with
the Advisory Contract, the Funds pay UBS Financial Services an investment
advisory and administration fee, which is accrued daily and paid monthly, at an
- ----------
* UBS Financial Services is a service mark of UBS AG.
15
<Page>
annual rate of 0.25% of each Fund's average daily net assets. At April 30, 2003,
the Money Market Fund and the Treasury Securities Fund owed UBS Financial
Services $406,692 and $76,473, respectively, in investment advisory and
administration fees.
UBS Global AM serves as sub-advisor and sub-administrator to the Trust pursuant
to a Sub-Advisory and Sub-Administration Contract ("Sub-Advisory Contract")
between UBS Financial Services and UBS Global AM. In accordance with the
Sub-Advisory Contract, UBS Financial Services (not the Funds) pays UBS Global AM
a fee, accrued daily and paid monthly, at an annual rate of 50% of the fee paid
by each Fund to UBS Financial Services under the Advisory Contract, net of
reimbursements.
UBS Financial Services has agreed to reimburse a portion of expenses to maintain
the Funds' total annual operating expenses through August 31, 2003, at a level
not exceeding 0.28% and 0.29% of the Money Market Fund's and the Treasury
Securities Fund's average daily net assets for Institutional shares,
respectively, and 0.53% and 0.54% of the Money Market Fund's and the Treasury
Securities Fund's average daily net assets for Financial Intermediary shares,
respectively. At April 30, 2003, UBS Financial Services owed the Money Market
Fund and the Treasury Securities Fund $96,689 and $13,336, respectively for
reimbursements. The Funds have agreed to repay UBS Financial Services for any
reimbursed expenses if they can do so over the following three years without
causing the Funds' expenses in any of those years to exceed the aforementioned
rates. For the year ended April 30, 2003, UBS Financial Services reimbursed
$834,776 and $144,146 in expenses from the Money Market Fund and the Treasury
Securities Fund, respectively.
SHAREHOLDER SERVICES PLAN AND AGREEMENT
Under a Shareholder Services Plan and Agreement ("Service Agreement") adopted
with respect to its Financial Intermediary shares, each Fund has agreed to pay
UBS Global AM 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, UBS Global AM pays an identical fee to the financial
intermediaries for certain support services that they provide to their customers
as specified in the Service Agreements. At April 30, 2003, the Money Market Fund
owed UBS Global AM $10,888 in shareholder service fees.
SECURITIES LENDING
Each Fund may lend securities up to 33 1/3% of its total assets to qualified
broker-dealers or institutional investors. The loans are secured at all times by
cash, cash equivalents or U.S. government securities in an amount at least equal
to the market value of the securities loaned, plus accrued interest and
dividends, determined on a daily basis and adjusted accordingly. Each Fund will
regain record
16
<Page>
ownership of loaned securities to exercise certain beneficial rights; however,
each Fund may bear the risk of delay in recovery of, or even loss of rights in,
the securities loaned should the borrower fail financially. Each Fund receives
compensation, which is included in interest income, for lending its securities
from interest earned on the cash, cash equivalents or U.S. government securities
held as collateral, net of fee rebates paid to the borrower plus reasonable
administrative and custody fees. For the year ended April 30, 2003, the Money
Market Fund and the Treasury Securities Fund earned $878 and $73,929,
respectively, for lending securities. Each Fund's lending agent was UBS
Financial Services, which earned $294 and $24,804, in compensation from the
Money Market Fund and the Treasury Securities Fund, respectively, for the year
ended April 30, 2003. At April 30, 2003, the Treasury Securities Fund owed UBS
Financial Services $2,499 in compensation.
At April 30, 2003, the Money Market Fund had no securities on loan, and the
Treasury Securities Fund had securities on loan having a market value of
$119,315,861. Treasury Securities Fund's custodian held U.S. government
securities having an aggregate value of $123,463,716 as collateral for portfolio
securities loaned as follows:
<Table>
<Caption>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- -----------------------------------------------------------------------------------
$ 28,350 Federal Home Loan
Mortgage Corp. 03/15/07 4.875% $ 30,808,625
77,300 Federal National 07/18/06 to 4.960 to
Mortgage Corp. 08/01/12 6.000 81,650,521
9,000 U.S. Treasury Bonds 05/15/30 6.250 11,004,570
- -----------------------------------------------------------------------------------
$ 123,463,716
- -----------------------------------------------------------------------------------
</Table>
BANK LINE OF CREDIT
The Funds participated with other funds managed, advised or sub-advised by UBS
Global AM in a $300 million committed credit facility ("Facility") with UBS AG,
Stamford Branch, to be utilized for temporary financing until the settlement of
sales or purchases of portfolio securities, the repurchase or redemption of
shares of the Funds at the request of the shareholders and other temporary or
emergency purposes. Under the Facility arrangement, each Fund had agreed to pay
a commitment fee, pro rata, based on the relative asset size of the funds in the
Facility. Interest would be charged to the Funds at rates based on prevailing
market rates in effect at the time of borrowings. For the year ended April 30,
2003, the Funds did not borrow under the Facility. For the year ended April 30,
2003, the Money Market Fund and Treasury Securities Fund paid commitment fees of
$28,253 and $6,044, respectively, to UBS AG.
17
<Page>
OTHER LIABILITIES
At April 30, 2003, the Money Market Fund had dividends payable and accrued
expenses (excluding investment advisory and administration fees and shareholder
servicing fees) of $1,620,557 and $245,581, respectively, and the Treasury
Securities Fund had dividends payable and accrued expenses (excluding investment
advisory and administration fees) of $290,324 and $50,852, respectively.
MONEY MARKET FUND INSURANCE BONDS
At April 30, 2003, the Money Market Fund had the ability to use insurance bonds
that provided limited coverage for certain loss events involving certain money
market instruments held by the Money Market 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 bonds provided for
coverage up to $200 million for a number of funds with a deductible of 30 basis
points (0.30%) of the total assets of the Money Market Fund for First Tier
Securities, 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 insurance
bonds, the Money Market Fund would have expected 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 would generally be no later than the maturity
of the security. While the insurance bonds were intended to provide some
protection against credit risk and to help the Money Market Fund maintain a
constant price per share of $1.00, there was no guarantee that the insurance
bonds would have done so. For the year ended April 30, 2003, the Money Market
Fund did not use these insurance bonds.
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, realized capital gains and certain other
amounts, if any, the Funds intend not to be subject to federal excise tax.
At April 30, 2003, the components of accumulated earnings on a tax basis were
substantially the same as for financial reporting purposes.
The tax character of distributions paid to shareholders by the Funds during the
fiscal years ended April 30, 2003 and April 30, 2002 was ordinary income.
18
<Page>
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 YEARS ENDED FOR THE YEARS ENDED
APRIL 30, APRIL 30,
---------------------------------------------------------------
2003 2002 2003 2002
---------------------------------------------------------------
MONEY MARKET FUND:
Shares sold 6,760,189,622 12,403,732,319 196,771,640 242,500,107
Shares repurchased (7,300,219,851) (12,669,692,975) (221,714,653) (211,075,935)
Dividends reinvested 31,013,891 80,374,917 10 22,420
Net increase (decrease)
in shares outstanding (509,016,338) (185,585,739) (24,943,003) 31,446,592
- -------------------------------------------------------------------------------------------------
TREASURY SECURITIES FUND:
Shares sold 1,084,850,636 909,011,825
Shares repurchased (1,195,198,806) (649,233,862)
Dividends reinvested 5,653,769 6,078,965
Net increase (decrease)
in shares outstanding (104,694,401) 265,856,928
- -----------------------------------------------------------------
</Table>
- ----------
* For the years ended April 30, 2003 and April 30, 2002, there were no
transactions in Financial Intermediary shares of the Treasury Securities
Fund.
19
<Page>
UBS LIR MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
year is presented below:
<Table>
<Caption>
INSTITUTIONAL SHARES
-----------------------------------------------------------------------------------------------
FOR THE YEARS ENDED APRIL 30,
-----------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.014 0.028 0.061 0.053 0.051
Dividends from net
investment income (0.014) (0.028) (0.061) (0.053) (0.051)
NET ASSET VALUE,
END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL INVESTMENT
RETURN(1) 1.42% 2.87% 6.25% 5.40% 5.22%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end
of year (000's) $ 1,818,943 $ 2,327,952 $ 2,513,344 $ 1,836,114 $ 2,036,379
Expenses to average net
assets, net of
reimbursements
from advisor 0.28% 0.28% 0.28% 0.28% 0.26%
Expenses to average net
assets, before
reimbursements
from advisor 0.32% 0.30% 0.31% 0.30% 0.31%
Net investment income
to average net assets,
net of reimbursements
from advisor 1.41% 2.81% 6.04% 5.26% 5.07%
Net investment income
to average net assets,
before reimbursements
from advisor 1.37% 2.79% 6.01% 5.24% 5.02%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each year reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the payable dates, and a sale
at net asset value on the last day of each year reported. Returns do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions.
20
<Page>
<Table>
<Caption>
FINANCIAL INTERMEDIARY SHARES
-----------------------------------------------------------------------------------------------
FOR THE YEARS ENDED APRIL 30,
-----------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
BEGINNING OF YEAR
Net investment income 0.012 0.026 0.058 0.050 0.048
Dividends from net
investment income (0.012) (0.026) (0.058) (0.050) (0.048)
NET ASSET VALUE,
END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL INVESTMENT
RETURN(1) 1.17% 2.62% 5.99% 5.14% 4.96%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end
of year (000's) $ 58,042 $ 82,985 $ 51,534 $ 64,634 $ 12,002
Expenses to average net
assets, net of
reimbursements
from advisor 0.53% 0.53% 0.53% 0.53% 0.51%
Expenses to average net
assets, before
reimbursements
from advisor 0.57% 0.54% 0.56% 0.55% 0.56%
Net investment income
to average net assets,
net of reimbursements
from advisor 1.16% 2.46% 5.74% 5.05% 4.82%
Net investment income
to average net assets,
before reimbursements
from advisor 1.12% 2.45% 5.71% 5.03% 4.77%
</Table>
21
<Page>
UBS LIR TREASURY SECURITIES FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
year is presented below:
<Table>
<Caption>
INSTITUTIONAL SHARES
-----------------------------------------------------------------------------------------------
FOR THE YEARS ENDED APRIL 30,
-----------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.013 0.025 0.054 0.049 0.046
Dividends from net
investment income (0.013) (0.025) (0.054) (0.047) (0.046)
Distributions from net
realized gains from
investment transactions -- -- -- (0.002) --
Total dividends and
distributions to
shareholders (0.013) (0.025) (0.054) (0.049) (0.046)
NET ASSET VALUE,
END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL INVESTMENT RETURN(1) 1.29% 2.56% 5.55% 4.97% 4.68%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end
of year (000's) $ 328,601 $ 433,274 $ 167,390 $ 118,525 $ 179,227
Expenses to average
net assets, net of
reimbursements
from advisor 0.29% 0.29% 0.29% 0.29% 0.28%
Expenses to average
net assets, before
reimbursements
from advisor 0.32% 0.35% 0.36% 0.35% 0.33%
Net investment income
to average net assets,
net of reimbursements
from advisor 1.28% 2.29% 5.36% 4.61% 4.57%
Net investment income
to average net assets,
before reimbursements
from advisor 1.25% 2.23% 5.29% 4.55% 4.52%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each year reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the payable dates, and a sale
at net asset value on the last day of each year reported. Returns do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions.
22
<Page>
UBS LIR MONEY MARKET FUND
UBS LIR TREASURY SECURITIES FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Trustees and Shareholders of
UBS LIR Money Market Fund
UBS LIR Treasury Securities Fund
We have audited the accompanying statements of net assets of the UBS LIR Money
Market Fund and UBS LIR Treasury Securities Fund (the "Funds") (two of the funds
comprising Liquid Institutional Reserves) as of April 30, 2003, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned at April 30, 2003, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
UBS LIR Money Market Fund and UBS LIR Treasury Securities Fund at April 30,
2003, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended and the
financial highlights for each of the indicated periods, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
June 12, 2003
23
<Page>
UBS LIR MONEY MARKET FUND
UBS LIR TREASURY SECURITIES FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
BOARD OF TRUSTEES & OFFICERS
The Funds are governed by a Board of Trustees which oversees the Funds'
operations. Each Trustee serves an indefinite term of office. Officers are
appointed by the Trustees and serve at the pleasure of the Board. The table
below shows, for each Trustee and Officer, his or her name, address and age, the
position held with the Fund, the length of time served as a Trustee and Officer
of the Fund, the Trustee's or Officer's principal occupations during the last
five years, the number of portfolios in the UBS fund complex overseen by the
Trustee or for which a person served as an Officer, and other directorships held
by the Trustee.
The Funds' Statement of Additional Information contains additional information
about the Trustees and is available, without charge, upon request by calling
1-800-647 1568.
INTERESTED TRUSTEES
<Table>
<Caption>
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------------
Margo N. Alexander*++; Trustee Since 1996 Mrs. Alexander is retired. She was an
56 executive vice president of UBS Financial
Services Inc. ("UBS Financial
Services") (March 1984 to
December 2002). She was chief
executive officer of UBS Global
AM from January 1995 to October
2000, a director (from January
1995 to September 2001) and
chairman (from March 1999 to
September 2001).
E. Garrett Bewkes, Jr.*++; Trustee Since 1996 Mr. Bewkes serves as a consultant to
76 and UBS Financial Services (since May 1999).
Chairman Prior to November 2000, he was a
of the director of Paine Webber Group Inc.
Board of ("PW Group," formerly the holding
Trustees company of UBS Financial Services and
UBS Global AM) and prior to 1996, he was
a consultant to PW Group. Prior to 1988,
he was chairman of the board, president
and chief executive officer of American
Bakeries Company.
</Table>
24
<Page>
<Table>
<Caption>
NUMBER OF
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS
AND AGE OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------
Margo N. Alexander*++; Mrs. Alexander is a director or trustee None
56 of 19 investment companies (consisting
of 40 portfolios) for which UBS Global
AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
E. Garrett Bewkes, Jr.*++; Mr. Bewkes is a director or trustee of 33 Mr. Bewkes is also a director of Interstate
76 investment companies (consisting of 54 Bakeries Corporation.
portfolios) for which UBS Global AM or
one of its affiliates serves as
investment advisor, sub-advisor or
manager.
</Table>
25
<Page>
INDEPENDENT TRUSTEES
<Table>
<Caption>
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------------
Richard Q. Armstrong; 67 Trustee Since 1996 Mr. Armstrong is chairman and principal of
R.Q.A. Enterprises R.Q.A. Enterprises (management consulting
One Old Church Road-- firm) (since April 1991 and principal
Unit # 6 occupation since March 1995). Mr. Armstrong
Greenwich, CT 06830 was chairman of the board, chief executive
officer and co-owner of Adirondack
Beverages (producer and distributor of soft
drinks and sparkling/still waters) (from
October 1993 to March 1995). He was a
partner of The New England Consulting Group
(management consulting firm) (from December
1992 to September 1993). He was managing
director of LVMH U.S. Corporation (U.S.
subsidiary of the French luxury goods
conglomerate, Louis Vuitton Moet Hennessey
Corporation) (from 1987 to 1991) and
chairman of its wine and spirits
subsidiary, Schieffelin & Somerset Company
(from 1987 to 1991).
David J. Beaubien; 68 Trustee Since 2001 Mr. Beaubien is chairman of Yankee
101 Industrial Road Environmental Systems, Inc., a manufacturer
Turners Falls, MA 01376 of meteorological measuring systems. Prior
to January 1991, he was senior vice
president of EG&G, Inc., a company which
makes and provides a variety of scientific
and technically oriented products and
services. From 1985 to January 1995, Mr.
Beaubien served as a director or trustee on
the boards of the Kidder, Peabody & Co.
Incorporated mutual funds.
</Table>
26
<Page>
<Table>
<Caption>
NUMBER OF OTHER DIRECTORSHIPS
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX HELD BY TRUSTEE
AND AGE OVERSEEN BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------
Richard Q. Armstrong; 67 Mr. Armstrong is a director or trustee of 19 Mr. Armstrong is also a director
R.Q.A. Enterprises investment companies (consisting of 40 of AlFresh Beverages Canada,
One Old Church Road-- portfolios) for which UBS Global AM or one of Inc. (a Canadian Beverage
Unit # 6 its affiliates serves as investment advisor, subsidiary of AlFresh Foods Inc.)
Greenwich, CT 06830 sub-advisor or manager. (since October 2000).
David J. Beaubien; 68 Mr. Beaubien is a director or trustee of 19 Mr. Beaubien is also a director
101 Industrial Road investment companies (consisting of 40 of IEC Electronics, Inc., a
Turners Falls, MA 01376 portfolios) for which UBS Global AM or one of manufacturer of electronic
its affiliates serves as investment advisor, assemblies.
sub-advisor or manager.
</Table>
27
<Page>
<Table>
<Caption>
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
Richard R. Burt; 56 Trustee Since 1996 Mr. Burt is chairman of Diligence LLC (international
1275 Pennsylvania Ave., information and security firm) and IEP Advisors
N.W. (international investments and consulting firm). He
Washington, D.C. 20004 was the chief negotiator in the Strategic Arms
Reduction Talks with the former Soviet Union (from
1989 to 1991) and the U.S. Ambassador to the Federal
Republic of Germany (from 1985 to 1989). From 1991
to 1994, he served as a partner of McKinsey &
Company (management consulting firm).
Meyer Feldberg; 61 Trustee Since 1996 Mr. Feldberg is Dean and Professor of Management of
Columbia University the Graduate School of Business, Columbia
101 Uris Hall University. Prior to 1989, he was president of the
New York, New York Illinois Institute of Technology.
10027
George W. Gowen; 73
666 Third Avenue Trustee Since 1996 Mr. Gowen is a partner in the law firm of
New York, New York Dunnington, Bartholow & Miller. Prior to May 1994,
10017 he was a partner in the law firm of Fryer, Ross &
Gowen.
William W. Hewitt, Jr.**; 74 Trustee Since 2001 Mr. Hewitt is retired. From 1990 to January 1995,
c/o UBS Global Asset Mr. Hewitt served as a director or trustee on the
Management (US) Inc. boards of the Kidder, Peabody & Co. Incorporated
51West 52nd Street mutual funds. From 1986 to 1988, he was an executive
New York, New York vice president and director of mutual funds,
insurance and trust services of Shearson Lehman
Brothers Inc. From 1976 to 1986, he was president of
Merrill Lynch Funds Distributor, Inc.
Morton L. Janklow; 73 Trustee Since 2001 Mr. Janklow is senior partner of Janklow & Nesbit
445 Park Avenue Associates, an international literary agency
New York, New York representing leading authors in their relationships
10022 with publishers and motion picture, television and
multi-media companies, and of counsel to the law
firm of Janklow & Ashley.
</Table>
28
<Page>
<Table>
<Caption>
NUMBER OF OTHER DIRECTORSHIPS
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX HELD BY TRUSTEE
AND AGE OVERSEEN BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------
Richard R. Burt; 56 Mr. Burt is a director or trustee of 19 Mr. Burt is also a director of
1275 Pennsylvania Ave., investment companies (consisting of 40 Hollinger International, Inc.
N.W. portfolios) for which UBS Global AM or one of (publishing), HCL Technologies, Ltd.,
Washington, D.C. 20004 its affiliates serves as investment advisor, The Central European Fund, Inc.,
sub-advisor or manager. The Germany Fund, Inc., IGT,
Inc. (provides technology to
gaming and wagering industry)
and chairman of Weirton Steel
Corp. (makes and finishes steel
products). He is also a
director or trustee of funds in
the Scudder Mutual Funds Family
(consisting of 47 portfolios).
Meyer Feldberg; 61 Dean Feldberg is a director or trustee of 33 Dean Feldberg is also a
Columbia University investment companies (consisting of 54 director of Primedia Inc.
101 Uris Hall portfolios) for which UBS Global AM or one of (publishing), Federated
New York, New York its affiliates serves as investment advisor, Department Stores, Inc.
10027 sub-advisor or manager. (operator of department
stores), Revlon, Inc.
(cosmetics), Select Medical
Inc. (healthcare services) and
SAPPI, Ltd. (producer of
paper).
George W. Gowen; 73 Mr. Gowen is a director or trustee of 33 None
666 Third Avenue investment companies (consisting of 54
New York, New York portfolios) for which UBS Global AM or one of
10017 its affiliates serves as investment advisor,
sub-advisor or manager.
William W. Hewitt, Jr.**; 74 Mr. Hewitt is a director or trustee of 19 Mr. Hewitt is also a director
c/o UBS Global Asset investment companies (consisting of 40 or trustee of the Guardian Life
Management (US) Inc. portfolios) for which UBS Global AM or one of Insurance Company Mutual Funds
51West 52nd Street its affiliates serves as investment advisor, (consisting of 19 portfolios).
New York, New York sub-advisor or manager.
Morton L. Janklow; 73 Mr. Janklow is a director or trustee of 19 None
445 Park Avenue investment companies (consisting of 40
New York, New York portfolios) for which UBS Global AM or one of
10022 its affiliates serves as investment advisor,
sub-advisor or manager.
</Table>
29
<Page>
<Table>
<Caption>
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
Frederic V. Malek; 66 Trustee Since 1996 Mr. Malek is chairman of Thayer Capital Partners
1455 Pennsylvania (merchant bank) and chairman of Thayer Hotel
Avenue, N.W. Investors III, Thayer Hotel Investors II and
Suite 350 Lodging Opportunities Fund (hotel investment
Washington, D.C. partnerships). From January 1992 to November 1992,
20004 he was campaign manager of Bush-Quayle '92. From
1990 to 1992, he was vice chairman and, from 1989
to 1990, he was president of Northwest Airlines
Inc. and NWA Inc. (holding company of Northwest
Airlines Inc.). Prior to 1989, he was employed by
the Marriott Corporation (hotels, restaurants,
airline catering and contract feeding), where he
most recently was an executive vice president and
president of Marriott Hotels and Resorts.
Carl W. Schafer; 67 Trustee Since 1991 Mr. Schafer is president of the Atlantic Foundation
66 Witherspoon Street (charitable foundation). Prior to January 1993, he
#1100 was chairman of the Investment Advisory Committee
Princeton, NJ 08542 of the Howard Hughes Medical Institute.
William D. White; 69 Trustee Since 2001 Mr. White is retired. From February 1989 through
P.O. Box 199 March 1994, he was president of the National League
Upper Black Eddy, PA of Professional Baseball Clubs. Prior to 1989, he
18972 was a television sportscaster for WPIX-TV, New
York. Mr. White served on the board of directors of
Centel from 1989 to 1993 and on the board of
directors of Jefferson Banks Incorporated,
Philadelphia, PA.
</Table>
30
<Page>
<Table>
<Caption>
NUMBER OF OTHER DIRECTORSHIPS
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX HELD BY TRUSTEE
AND AGE OVERSEEN BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------
Frederic V. Malek; 66 Mr. Malek is a director or trustee of 19 Mr. Malek is also a director of
1455 Pennsylvania investment companies (consisting of 40 Aegis Communications, Inc.
Avenue, N.W. portfolios) for which UBS Global AM or one of (tele-services), American
Suite 350 its affiliates serves as investment advisor, Management Systems, Inc.
Washington, D.C. sub-advisor or manager. (management consulting and
20004 computer related services),
Automatic Data Processing, Inc.
(computing services), CB
Richard Ellis, Inc. (real
estate services), Federal
National Mortgage Association,
FPL Group, Inc. (electric
services), Manor Care, Inc.
(health care), and Northwest
Airlines Inc.
Carl W. Schafer; 67 Mr. Schafer is a director or trustee of 19 Mr. Schafer is also a director
66 Witherspoon Street investment companies (consisting of 40 of Labor Ready, Inc. (temporary
#1100 portfolios) for which UBS Global AM or one of employment), Roadway Corp.
Princeton, NJ 08542 its affiliates serves as investment advisor, (trucking), Guardian Life
sub-advisor or manager. Insurance Company Mutual Funds
(consisting of 19 portfolios),
the Harding, Loevner Funds
(consisting of four
portfolios), E.I.I. Realty
Securities Trust (investment
company) and Frontier Oil
Corporation.
William D. White; 69 Mr. White is a director or trustee of 19 None
P.O. Box 199 investment companies (consisting of 40
Upper Black Eddy, PA portfolios) for which UBS Global AM or one of
18972 its affiliates serves as investment advisor,
sub-advisor or manager.
</Table>
31
<Page>
OFFICERS
<Table>
<Caption>
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE FUND SERVED SERVES AS OFFICER
- -----------------------------------------------------------------------------------------------------
W. Douglas Beck*; Vice Since 2003 Mr. Beck is an executive director and
36 President head of mutual fund product management of
UBS Global AM (since 2002). From March
1998 to November 2002, he held various
positions at Merrill Lynch, the most
recent being first vice president and
co-manager of the managed solutions
group. Prior to March 1998, Mr. Beck was
a portfolio manager and managing director
at Raymond James & Associates. Mr. Beck
is vice president of UBS Supplementary
Trust and 22 investment companies
(consisting of 81 portfolios) for which
UBS Global AM or one of its affiliates
serves as investment advisor, sub-
advisor or manager.
Thomas Disbrow*; Vice Since 2000 Mr. Disbrow is a director and a senior
37 President manager of the mutual fund finance
and department of UBS Global AM. Prior to
Assistant November 1999, he was a vice president of
Treasurer Zweig/Glaser Advisers. Mr. Disbrow is a
vice president and assistant treasurer of
19 investment companies (consisting of 40
portfolios) for which UBS Global AM or
one of its affiliates serves as
investment advisor, sub-advisor or
manager.
Amy R. Doberman*; Vice Since 2000 Ms. Doberman is a managing director and
41 President general counsel of UBS Global AM. From
and December 1997 through July 2000, she was
Secretary general counsel of Aeltus Investment
Management, Inc. Prior to working at
Aeltus, Ms. Doberman was assistant chief
counsel of the SEC's Division of
Investment Management. Ms. Doberman is
vice president and assistant secretary of
UBS Supplementary Trust and five
investment companies (consisting of 44
portfolios) and vice president and
secretary of 19 investment companies
(consisting of 40 portfolios) for which
UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor
or manager.
</Table>
32
<Page>
<Table>
<Caption>
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE FUND SERVED SERVES AS OFFICER
- -----------------------------------------------------------------------------------------------------
David M. Goldenberg*; Vice Since 2002 Mr. Goldenberg is an executive director
36 President and deputy general counsel of UBS Global
and AM. From 2000 to 2002 he was director,
Assistant legal affairs at Lazard Asset Management.
Secretary Mr. Goldenberg was global director of
compliance for SSB Citi Asset Management
Group from 1998 to 2000. He was associate
general counsel at Smith Barney Asset
Management from 1996 to 1998. Prior to
working at Smith Barney Asset Management,
Mr. Goldenberg was branch chief and
senior counsel in the SEC's Division of
Investment Management. Mr. Goldenberg is
a vice president and secretary of UBS
Supplementary Trust and of five
investment companies (consisting of 44
portfolios) and a vice president and
assistant secretary of 19 investment
companies (consisting of 40 portfolios)
for which UBS Global AM or one of its
affiliates serves as investment advisor,
sub-advisor or manager.
Kevin J. Mahoney*; Vice Since 1999 Mr. Mahoney is a director and a senior
37 President manager of the mutual fund finance
and department of UBS Global AM. Prior to
Assistant April 1999, he was the manager of the
Treasurer mutual fund internal control group of
Salomon Smith Barney. Mr. Mahoney is a
vice president and assistant treasurer of
19 investment companies (consisting of 40
portfolios) for which UBS Global AM or
one of its affiliates serves as
investment advisor, sub-advisor or
manager.
</Table>
33
<Page>
<Table>
<Caption>
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE FUND SERVED SERVES AS OFFICER
- -----------------------------------------------------------------------------------------------------
Michael H. Markowitz***; Vice Since 2001 Mr. Markowitz is an executive director,
38 President portfolio manager and head of U.S. short
duration fixed income of UBS Global AM.
He is also an executive director and
portfolio manager of UBS Global Asset
Management (Americas) Inc. ("UBS Global AM
(Americas)"), an affiliate of UBS Global
AM. Mr. Markowitz is a vice president of
five investment companies (consisting of
25 portfolios) for which UBS Global AM or
one of its affiliates serves as
investment advisor, sub-advisor or
manager.
Susan P. Ryan*; 43 Vice Since 1995 Ms. Ryan is an executive director and
President portfolio manager of UBS Global AM. Ms.
Ryan is a vice president of five
investment companies (consisting of 13
portfolios) for which UBS Global AM or
one of its affiliates serves as
investment advisor, sub-advisor or
manager.
Paul H. Schubert*; Vice Since 1995 Mr. Schubert is an executive director and
40 President head of the mutual fund finance
and department of UBS Global AM. Mr. Schubert
Treasurer is treasurer and principal accounting
officer of UBS Supplementary Trust and of
three investment companies (consisting of
41 portfolios), a vice president and
treasurer of 20 investment companies
(consisting of 41 portfolios), and
treasurer and chief financial officer of
one investment company (consisting of two
portfolios) for which UBS Global AM or
one of its affiliates serves as
investment advisor, sub-advisor or
manager.
</Table>
34
<Page>
<Table>
<Caption>
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE FUND SERVED SERVES AS OFFICER
- -----------------------------------------------------------------------------------------------------
Joseph A. Varnas*; President Since 2003 Mr. Varnas is a managing director (since
35 March 2003), chief technology officer
(since March 2001) and head of product,
technology and operations of UBS Global
AM (since November 2002). From 2000 to
2001, he was manager of product
development in Investment Consulting
Services at UBS Financial Services. Mr.
Varnas was a senior analyst in the Global
Securities Research & Economics Group at
Merrill Lynch from 1995 to 1999. Mr.
Varnas is president of UBS Supplementary
Trust and 22 investment companies
(consisting of 81 portfolios) for which
UBS Global AM or one of its affiliates
serves as investment advisor, sub-
advisor or manager.
Keith A. Weller*; Vice Since 1996 Mr. Weller is a director and senior
41 President associate general counsel of UBS Global
and AM. Mr. Weller is a vice president and
Assistant assistant secretary of 19 investment
Secretary companies (consisting of 40 portfolios)
for which UBS Global AM or one of its
affiliates serves as investment advisor,
sub-advisor or manager.
</Table>
* This person's business address is 51 West 52nd Street, New York,
New York 10019-6114.
** Address for mailing purposes only.
*** This person's business address is One North Wacker Drive, Chicago, Illinois
60606.
+ Each Trustee holds office for an indefinite term. Officers of the Trust are
appointed by the Trustees and serve at the pleasure of the Board.
++ Mrs. Alexander and Mr. Bewkes are "interested persons" of the Fund as
defined in the Investment Company Act by virtue of their positions with UBS
Global AM and/or its affiliates.
35
<Page>
Trustees
E. Garrett Bewkes, Jr.
CHAIRMAN
Margo N. Alexander
Richard Q. Armstrong
David J. Beaubien
Richard R. Burt
Meyer Feldberg
George W. Gowen
William W. Hewitt, Jr.
Morton L. Janklow
Frederic V. Malek
Carl W. Schafer
William D. White
PRINCIPAL OFFICERS
Joseph A. Varnas
PRESIDENT
Amy R. Doberman
VICE PRESIDENT AND SECRETARY
Paul H. Schubert
VICE PRESIDENT AND TREASURER
Susan P. Ryan
VICE PRESIDENT
W. Douglas Beck
VICE PRESIDENT
INVESTMENT ADVISOR AND
ADMINISTRATOR
UBS Financial Services Inc.
1285 Avenue of the Americas
New York, New York 10019-6028
SUB-ADVISOR, SUB-ADMINISTRATOR
AND PRINCIPAL UNDERWRITER
UBS Global Asset Management (US) 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 A
FUND UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
(C) 2003 UBS Global Asset Management (US) Inc. All rights reserved.
<Page>
Presorted
[UBS GLOBAL ASSET MANAGEMENT LOGO] Standard
U.S.Postage
51 West 52nd Street PAID
New York, NY 10019-6114 Smithtown, NY
Permit 700
<Page>
[UBS GLOBAL ASSET MANAGEMENT LOGO]
UBS LIR GOVERNMENT SECURITIES FUND
ANNUAL REPORT
APRIL 30, 2003
<Page>
UBS LIR GOVERNMENT SECURITIES FUND
June 16, 2003
DEAR SHAREHOLDER,
We present you with the annual report for UBS LIR Government Securities Fund for
the fiscal year ended April 30, 2003.
AN INTERVIEW WITH PORTFOLIO MANAGER SUSAN RYAN
Q. HOW DID THE FUND PERFORM OVER THE REVIEW PERIOD?
A. Short-term interest rates fell over the 12-month period. As a result, when
holdings in the Fund's portfolio matured, they had to be replaced with
securities that offered lower yields. Therefore, at the end of the reporting
period, the Fund's Institutional share class had a seven-day current yield of
0.91%, down from 1.60% at the end of its fiscal year on April 30, 2002. (For
more on the Fund's performance, please refer to "Performance At A Glance" on
page 4.)
Q. CAN YOU DESCRIBE THE ECONOMIC ENVIRONMENT DURING THE REPORTING PERIOD?
A. The US economy was generally weak throughout the Fund's fiscal year. Early in
the period, ongoing threats of terrorism, turmoil in the Middle East, tepid
corporate spending, a weak stock market and corporate accounting scandals
were clearly taking a toll on economic growth. Evidence of this was reflected
in the second quarter's anemic gross domestic product (GDP) figure, which
came in at 1.7%. The news improved somewhat during the third quarter, when
GDP rose to 4.0%; however, this figure fell to 1.4% during the last three
months of 2002. In the first quarter of 2003, concerns over a war with Iraq
created an additional obstacle impeding economic growth, and advance
estimates for GDP came in at a disappointing 1.9% growth rate.
[SIDENOTE]
UBS LIR GOVERNMENT SECURITIES FUND
INVESTMENT GOAL:
Provide as high a level of current interest income as is consistent with
maintaining liquidity and principal stability.
PORTFOLIO MANAGER:
Susan P. Ryan
UBS Global Asset Management (US) Inc.
COMMENCEMENT:
Institutional shares--June 3, 1991
Select shares--May 23, 2001
DIVIDEND PAYMENTS:
Monthly
1
<Page>
Q. WHAT WERE SOME OF THE REASONS FOR THIS TEPID ECONOMIC GROWTH?
A. Throughout 2002, consumer spending, which accounts for two-thirds of the US
economy, was relatively strong. This contrasted sharply with corporate
spending, which continued to be subdued as many companies postponed major
purchases until they saw clearer signs of a sustainable economic recovery.
However, both consumer and corporate spending weakened during the first
quarter of 2003. The specter of, and eventual war with, Iraq, saber rattling
in North Korea and heightened concerns about terrorism preoccupied the
country and ultimately hindered economic growth.
Q. HOW HAS THE FEDERAL RESERVE BOARD (THE "FED") REACTED TO THE WEAKENING
ECONOMY?
A. In November 2002, the Fed acknowledged that the economy had hit a "soft
spot." After holding interest rates steady during the first ten months of
2002, the Fed moved into action in early November and lowered the federal
funds rate one half percentage point to 1.25%--a 41-year low.
Since that time, the Fed has held rates steady; as of this writing, most
recently during its meeting on May 6, 2003 (after fiscal year end). In its
official statement, the Fed noted that despite disappointing numbers relating
to production and unemployment, the easing of geopolitical tensions had
increased consumer confidence, caused oil prices to decline and strengthened
the equity and debt markets. "These developments," the Fed statement read,
"along with the accommodative stance of monetary policy and ongoing growth in
productivity, should foster an improving economic climate over time."
Q. HOW DID YOU MANAGE THE FUND IN THE TURBULENT ECONOMIC ENVIRONMENT THAT
CHARACTERIZED THE PERIOD?
A. In terms of investment strategies, the Fund continued to utilize a "barbell"
strategy, whereby we purchased securities at both ends of the maturity
spectrum. The Fund's longer-term securities--with final maturities up to one
year--were used to lock in higher yields as interest rates fell. At the same
time, our shorter-term securities--typically less than one month to
maturity--provided liquidity. As always, we emphasized Treasury and Agency
securities that offered the highest credit quality and liquidity.
Q. WHAT IS YOUR OUTLOOK FOR THE ECONOMY AND HOW DO YOU ANTICIPATE STRUCTURING
THE PORTFOLIO GOING FORWARD?
A. Despite the rapid conclusion to the war in Iraq, there continues to be a
great deal of uncertainty around the world. The repercussions of the war
remain unknown, the situation in North Korea remains volatile, and the
outbreak of Severe Acute Respiratory Syndrome (SARS) threatens to isolate
major economies.
2
<Page>
In the US, you could view the economic "glass" as either being half empty or
half full. Among the positives, the war in Iraq is all but over, consumer
confidence rose sharply at the end of April, and oil prices have plummeted.
In addition, low interest rates have spurred another round of mortgage
refinancing and corporate spending is expected to increase at some point.
Finally, Congress has approved an economic stimulus package, although the
extent of its impact on the economy remains uncertain.
On the other hand, unemployment is high and the economy will have to gain
momentum in order to stimulate the labor market. Furthermore, the housing
market may have peaked and consumer debt levels are high. Lastly, the Fed has
less mobility to lower short-term interest rates.
Given the uncertain environment, we expect to continue to employ a barbell
strategy in order to lock in higher rates and maintain liquidity. We also
expect to continue emphasizing a higher quality portfolio for the Fund.
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 additional information on the UBS
funds,* please contact your financial advisor or visit us at www.ubs.com.
Sincerely,
/s/ Joseph A. Varnas /s/ Susan P. Ryan
JOSEPH A. VARNAS SUSAN P. RYAN
PRESIDENT PORTFOLIO MANAGER
UBS LIR Government Securities Fund UBS LIR Government Securities Fund
HEAD OF PRODUCT, TECHNOLOGY EXECUTIVE DIRECTOR
AND OPERATIONS UBS Global Asset Management (US) Inc.
UBS Global Asset Management (US) Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the fiscal year ended April 30, 2003, and reflects our views at
the time of its writing. Of course, these views may change in response to
changing circumstances, and they do not guarantee the future performance of the
markets or the Fund. We encourage you to consult your financial advisor
regarding your personal investment program.
* Mutual funds are sold by prospectus only. The prospectus for a fund contains
more complete information regarding risks, charges and expenses, and should
be read carefully before investing.
3
<Page>
UBS LIR GOVERNMENT SECURITIES FUND
PERFORMANCE AT A GLANCE
<Table>
<Caption>
YIELDS AND CHARACTERISTICS 4/30/03 10/31/02 4/30/02
- -------------------------------------------------------------------------------------------
Seven-Day Current Yield*
Institutional Shares 0.91% 1.44% 1.60%
Select Shares 1.01 1.54 1.70
Seven-Day Effective Yield*
Institutional Shares 0.92% 1.45% 1.61%
Select Shares 1.02 1.55 1.71
Weighted Average Maturity** 44 days 50 days 35 days
Net Assets (mm) $ 234.6 $ 299.6 $ 227.9
<Caption>
SECTOR ALLOCATION*** 4/30/03 10/31/02 4/30/02
- -------------------------------------------------------------------------------------------
U.S. Government & Agency Obligations 93.3% 96.3% 79.8%
Money Market Funds 6.8 3.8 8.3
Repurchase Agreements -- -- 11.9
Liabilities in Excess of Other Assets (0.1) (0.1) --
TOTAL 100.0% 100.0% 100.0%
===========================================================================================
</Table>
* Yields will fluctuate and reflect fee waivers. Performance data quoted
represent past performance. Past performance does not guarantee future
results.
** The Fund is actively managed and its weighted average maturity will differ
over time.
*** Weightings represent percentages of net assets as of the dates indicated.
The Fund's portfolio is actively managed and its composition will vary over
time.
4
<Page>
UBS LIR GOVERNMENT SECURITIES FUND
STATEMENT OF NET ASSETS -- APRIL 30, 2003
<Table>
<Caption>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--93.30%
$ 70,607 U.S. Treasury Bills 05/08/03 to 1.105 to
09/18/03 1.245%@ $ 70,480,644
13,000 Federal Farm Credit Bank 1.250 to
05/01/03 1.275* 12,999,501
25,179 Federal Farm Credit Bank 05/01/03 to 1.150 to
11/25/03 1.500@ 25,125,699
8,000 Federal Home Loan Bank 04/13/04 to 1.290 to
05/12/04 1.410 8,000,000
56,800 Federal Home Loan Bank 05/07/03 to 1.100 to
07/11/03 1.260@ 56,745,173
10,000 Student Loan Marketing Association 05/06/03 1.521* 10,006,394
35,504 Student Loan Marketing Association 05/07/03 to 1.160 to
05/08/03 1.190@ 35,496,565
Total U.S. Government and Agency Obligations
(cost--$218,853,976) 218,853,976
==============================================================================================================
<Caption>
NUMBER OF
SHARES
(000)
- --------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS--6.75%
8,561 BlackRock Provident Institutional
Treasury Trust Fund 05/01/03 1.015+ 8,560,559
7,289 Goldman Sachs Financial Square
Treasury Instruments Fund 05/01/03 0.988+ 7,289,418
Total Money Market Funds (cost--$15,849,977) 15,849,977
==============================================================================================================
Total Investments (cost--$234,703,953 which
approximates cost for federal income
tax purposes)--100.05% 234,703,953
Liabilities in excess of other assets--(0.05)% (126,627)
Net Assets (applicable to 151,463,828 and 83,088,228 of Institutional
shares and Select shares, respectively, each equivalent to $1.00 per
share)--100.00% $ 234,577,326
==============================================================================================================
</Table>
* Variable rate securities--maturity dates reflect earlier of reset date or
maturity date. The interest rates shown are the current rates as of April
30, 2003 and reset periodically.
@ Interest rates shown are the discount rates at date of purchase.
+ Interest rates shown reflect yield at April 30, 2003.
Weighted average maturity -- 44 days
See accompanying notes to financial statements
5
<Page>
UBS LIR GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
<Table>
<Caption>
FOR THE
YEAR ENDED
APRIL 30, 2003
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 4,171,223
EXPENSES:
Investment advisory and administration fees 671,069
Shareholder servicing fees-Institutional shares 159,023
Transfer agency and related services fees 126,993
Professional fees 49,453
State registration fees 45,975
Reports and notices to shareholders 43,344
Custody and accounting 26,843
Insurance expense 8,996
Trustees' fees 5,629
Interest expense 3,791
Other expenses 20,279
1,161,395
Less: Fee waivers/reimbursements from investment advisor and
administrator (488,578)
Net expenses 672,817
Net investment income 3,498,406
Net realized gain from investment transactions 1,360
Net increase in net assets resulting from operations $ 3,499,766
================================================================================
</Table>
See accompanying notes to financial statements
6
<Page>
UBS LIR GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEARS ENDED APRIL 30,
---------------------------------
2003 2002
- -----------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 3,498,406 $ 7,116,318
Net realized gains from investment transactions 1,360 5,362
Net increase in net assets resulting from operations 3,499,766 7,121,680
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income--Institutional shares (2,030,578) (5,540,669)
Net investment income--Select shares (1,467,828) (1,575,649)
(3,498,406) (7,116,318)
Net increase (decrease) in net assets from
beneficial interest transactions 6,662,066 (32,255,924)
Net increase (decrease) in net assets 6,663,426 (32,250,562)
NET ASSETS:
Beginning of year 227,913,900 260,164,462
End of year $ 234,577,326 $ 227,913,900
=========================================================================================
</Table>
See accompanying notes to financial statements
7
<Page>
UBS LIR GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
UBS LIR Government Securities Fund (the "Fund") is a diversified series of
Liquid Institutional Reserves (the "Trust"), an open-end management investment
company registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended. The Trust currently offers three
no-load series: the Fund, the UBS LIR Money Market Fund and the UBS LIR Treasury
Securities Fund. The financial statements for the UBS LIR Money Market Fund and
UBS LIR Treasury Securities Fund are not included herein.
The Fund currently offers two classes of shares, Institutional shares and Select
shares. Each class represents interests in the same assets of the Fund, and both
classes have equal voting privileges, except that owners of Institutional 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 Institutional shares are submitted to shareholders for
approval, only the holders of Institutional shares shall be entitled to vote
thereon.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires the Fund's management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates. The
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, unless the Fund's
Board of Trustees (the "Board") determines that this does not represent fair
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.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions is
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 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.
NET INVESTMENT INCOME AND INVESTMENT TRANSACTIONS--Income, expenses (excluding
class-specific expenses) and realized/unrealized gains/losses are allocated
proportionately to each class of shares based upon the relative net asset value
of each class at the beginning of the day (after adjusting for current capital
share activity of the respective classes). Class-specific expenses are charged
directly to the applicable class of shares.
8
<Page>
INVESTMENT ADVISOR AND ADMINISTRATOR
The Trust has an Investment Advisory and Administration Contract ("Advisory
Contract") with UBS Financial Services Inc. ("UBS Financial Services(SM)*"), an
indirect wholly owned subsidiary of UBS AG, under which UBS Financial Services
serves as investment advisor and administrator of the Fund. UBS AG is an
internationally diversified organization with headquarters in Zurich,
Switzerland and operations in many areas of the financial services industry. In
accordance with the Advisory Contract, the Fund pays UBS Financial Services an
investment advisory and administration fee, which is accrued daily and paid
monthly, at an annual rate of 0.25% of the Fund's average daily net assets. At
April 30, 2003 the Fund owed UBS Financial Services $48,790 in investment
advisory and administration fees.
UBS Global Asset Management (US) Inc. ("UBS Global AM") serves as sub-advisor
and sub-administrator to the Trust pursuant to a Sub-Advisory and
Sub-Administration Contract ("Sub-Advisory Contract") between UBS Financial
Services and UBS Global AM. UBS Global AM is an indirect wholly owned asset
management subsidiary of UBS AG. In accordance with the Sub-Advisory Contract,
UBS Financial Services (not the Fund) pays UBS Global AM a fee, accrued daily
and paid monthly, at an annual rate of 50% of the fee paid by the Fund to UBS
Financial Services under the Advisory Contract, net of waivers and/or
reimbursements.
The Fund and UBS Financial Services have entered into a written investment
advisory and administration fee waiver/expense reimbursement agreement under
which UBS Financial Services is contractually obligated to waive 0.10% of its
investment advisory and administration fees and to reimburse Fund expenses
through August 31, 2003, to the extent that the Fund's expenses otherwise would
exceed 0.29% for Institutional shares and 0.19% for Select shares. At April 30,
2003, UBS Financial Services owed the Fund $38,823 for fee waivers and
reimbursements under the above agreement. The Fund has agreed to repay UBS
Financial Services for any reimbursed expenses if it can do so over the
following three years without causing the Fund's expenses in any of those years
to exceed the aforementioned rates. For the year ended April 30, 2003, UBS
Financial Services reimbursed $220,151 in expenses, which is subject to
repayment through April 30, 2006, and waived $268,427 in investment advisory and
administration fees.
SHAREHOLDER SERVICES PLAN AND AGREEMENT
Under a Shareholder Services Plan and Agreement ("Service Agreement") adopted
with respect to its Institutional shares, the Fund has agreed to pay UBS Global
AM monthly fees at the annual rate of 0.10% of the average daily net assets of
the Institutional shares owned by the customers of financial intermediaries that
have entered into service agreements with UBS Global AM. Under Service
Agreements with those financial intermediaries, UBS Global AM pays an identical
fee to the
- ----------
* UBS Financial Services is a service mark of UBS AG.
9
<Page>
financial intermediaries for certain support services that they provide to their
customers as specified in the Service Agreements. At April 30, 2003, the Fund
owed UBS Global AM $12,852 in shareholder service fees.
BANK LINE OF CREDIT
The Fund participated with other funds managed, advised or sub-advised by UBS
Global AM in a $300 million committed credit facility ("Facility") with UBS AG,
Stamford Branch, to be utilized for temporary financing until the settlement of
sales or purchases of portfolio securities, the repurchase or redemption of
shares of the Fund at the request of the shareholders and other temporary or
emergency purposes. Under the Facility arrangement, the Fund had agreed to pay a
commitment fee, pro rata, based on the relative asset size of the funds in the
Facility. Interest would be charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the year ended April 30,
2003, the Fund had an average daily amount of borrowing outstanding under the
Facility of $19,997,000 for three days with a related weighted average
annualized interest rate of 2.275%. For the year ended April 30, 2003, the Fund
paid a commitment fee of $3,486 to UBS AG.
OTHER LIABILITIES
At April 30, 2003, dividends payable and accrued expenses (excluding investment
advisory and administration fees and shareholder servicing fees) were $187,607
and $46,024, respectively.
FEDERAL TAX STATUS
The 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 its net investment income, realized capital gains and certain other
amounts, if any, the Fund intends not to be subject to federal excise tax.
At April 30, 2003, the components of accumulated earnings on a tax basis were
substantially the same as for financial reporting purposes.
The tax character of distributions paid to shareholders by the Fund during the
fiscal years ended April 30, 2003 and April 30, 2002 was ordinary income.
In accordance with U.S. Treasury regulations, the Fund has elected to defer long
term realized capital losses of $1,149 arising after October 31, 2002. Such
losses are treated for tax purposes as arising on May 1, 2003.
10
<Page>
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 SELECT SHARES
----------------------------- ------------------------------------
FOR THE PERIOD
FOR THE YEARS ENDED FOR THE YEAR ENDED MAY 23, 2001+
APRIL 30, APRIL 30, TO
----------------------------- ------------------ APRIL 30,
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 233,672,603 718,807,927 1,062,329,760 464,967,870
Shares repurchased (257,839,769) (810,793,031) (1,034,681,852) (411,440,919)
Dividends reinvested 2,027,625 5,442,559 1,153,699 759,670
Net Increase (decrease) in shares outstanding (22,139,541) (86,542,545) 28,801,607 54,286,621
=====================================================================================================================
</Table>
- ----------
+ Commencement of issuance.
11
<Page>
UBS LIR 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 YEARS ENDED APRIL 30,
------------------------------------------------------------------------
2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.013 0.026 0.059 0.051 0.049
Dividends from net investment income (0.013) (0.026) (0.059) (0.051) (0.049)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL INVESTMENT RETURN(1) 1.27% 2.65% 6.02% 5.22% 5.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 151,490 $ 173,626 $ 260,164 $ 121,897 $ 138,783
Expenses to average net assets, net of fee
waivers/reimbursements from advisor 0.29% 0.29% 0.29% 0.29% 0.28%
Expenses to average net assets, before fee
waivers/reimbursements from advisor 0.47% 0.46% 0.38% 0.33% 0.33%
Net investment income to average net assets,
net of fee waivers/reimbursements
from advisor 1.26% 2.70% 5.68% 5.10% 4.90%
Net investment income to average net assets,
before fee waivers/reimbursements
from advisor 1.08% 2.53% 5.59% 5.06% 4.85%
========================================================================================================================
</Table>
+ Commencement of issuance.
* 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 other
distributions, if any, 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 of less than one year has not been annualized. Returns
do not reflect the deduction of taxes that a shareholder would pay on Fund
distributions.
12
<Page>
<Table>
<Caption>
SELECT SHARES
---------------------------
FOR THE
PERIOD
FOR THE MAY 23,
YEAR ENDED 2001+ TO
APRIL 30, APRIL 30,
2003 2002
- ---------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
Net investment income 0.014 0.024
Dividends from net investment income (0.014) (0.024)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL INVESTMENT RETURN(1) 1.37% 2.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 83,087 $ 54,288
Expenses to average net assets, net of fee
waivers/reimbursements from advisor 0.19% 0.19%*
Expenses to average net assets, before fee
waivers/reimbursements from advisor 0.37% 0.36%*
Net investment income to average net assets,
net of fee waivers/reimbursements
from advisor 1.36% 2.17%*
Net investment income to average net assets,
before fee waivers/reimbursements
from advisor 1.18% 2.00%*
===========================================================================
</Table>
13
<Page>
UBS LIR GOVERNMENT SECURITIES FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Trustees and Shareholders of
UBS LIR Government Securities Fund
We have audited the accompanying statement of net assets of the UBS
LIR Government Securities Fund (the "Fund") (one of the funds comprising Liquid
Institutional Reserves) as of April 30, 2003, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned at April 30, 2003, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
UBS LIR Government Securities Fund at April 30, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the indicated periods, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
June 12, 2003
14
<Page>
(This page intentionally left blank).
15
<Page>
UBS LIR GOVERNMENT SECURITIES FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
BOARD OF TRUSTEES & OFFICERS
The Fund is governed by a Board of Trustees which oversees the Fund's
operations. Each Trustee serves an indefinite term of office. Officers are
appointed by the Trustees and serve at the pleasure of the Board. The table
below shows, for each Trustee and Officer, his or her name, address and age, the
position held with the Fund, the length of time served as a Trustee and Officer
of the Fund, the Trustee's or Officer's principal occupations during the last
five years, the number of portfolios in the UBS fund complex overseen by the
Trustee or for which a person served as an Officer, and other directorships held
by the Trustee.
The Fund's Statement of Additional Information contains additional information
about the Trustees and is available without charge, upon request by calling
1-800-647 1568.
INTERESTED TRUSTEES
<Table>
<Caption>
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------------
Margo N. Alexander*++; Trustee Since 1996 Mrs. Alexander is retired. She was an executive vice president
56 of UBS Financial Services Inc. ("UBS Financial Services") (March
1984 to December 2002). She was chief executive officer of UBS
Global AM from January 1995 to October 2000, a director (from
January 1995 to September 2001) and chairman (from March 1999 to
September 2001).
E. Garrett Bewkes, Jr.*++; Trustee and Since 1996 Mr. Bewkes serves as a consultant to UBS Financial Services
76 Chairman (since May 1999). Prior to November 2000, he was a Director of
of the Paine Webber Group Inc. ("PW Group," formerly the holding
Board of company of UBS Financial Services and UBS Global AM) and prior to
Trustees 1996, he was a consultant to PW Group. Prior to 1988, he was
chairman of the board, president and chief executive officer of
American Bakeries Company.
</Table>
16
<Page>
<Table>
<Caption>
NUMBER OF
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS
AND AGE OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------------------
Margo N. Alexander*++; Mrs. Alexander is a director or trustee of 19 None
56 investment companies (consisting of 40
portfolios) for which UBS Global AM or one of
its affiliates serves as investment advisor,
sub-advisor or manager.
E. Garrett Bewkes, Jr.*++; Mr. Bewkes is a director or trustee of 33 Mr. Bewkes is also a director of Interstate
76 investment companies (consisting of 54 Bakeries Corporation.
portfolios) for which UBS Global AM or one of
its affiliates serves as investment advisor,
sub-advisor or manager.
</Table>
17
<Page>
INDEPENDENT TRUSTEES
<Table>
<Caption>
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------------
Richard Q. Armstrong; 67 Trustee Since 1996 Mr. Armstrong is chairman and principal of R.Q.A. Enterprises
R.Q.A. Enterprises (management consulting firm) (since April 1991 and principal
One Old Church Road-- occupation since March 1995). Mr. Armstrong was chairman of the
Unit # 6 board, chief executive officer and co-owner of Adirondack
Greenwich, CT 06830 Beverages (producer and distributor of soft drinks and
sparkling/still waters) (from October 1993 to March 1995). He was
a partner of The New England Consulting Group (management
consulting firm) (from December 1992 to September 1993). He was
managing director of LVMH U.S. Corporation (U.S. subsidiary of
the French luxury goods conglomerate, Louis Vuitton Moet
Hennessey Corporation) (from 1987 to 1991) and chairman of its
wine and spirits subsidiary, Schieffelin & Somerset Company (from
1987 to 1991).
David J. Beaubien; 68 Trustee Since 2001 Mr. Beaubien is chairman of Yankee Environmental Systems, Inc., a
101 Industrial Road manufacturer of meteorological measuring systems. Prior to
Turners Falls, MA 01376 January 1991, he was senior vice president of EG&G, Inc., a
company which makes and provides a variety of scientific and
technically oriented products and services. From 1985 to January
1995, Mr. Beaubien served as a director or trustee on the boards
of the Kidder, Peabody & Co. Incorporated mutual funds.
</Table>
18
<Page>
<Table>
<Caption>
NUMBER OF
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS
AND AGE OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------------------
Richard Q. Armstrong; 67 Mr. Armstrong is a director or trustee of 19 Mr. Armstrong is also a director of AlFresh
R.Q.A. Enterprises investment companies (consisting of 40 Beverages Canada, Inc. (a Canadian beverage
One Old Church Road-- portfolios) for which UBS Global AM or one of subsidiary of AlFresh Foods Inc.) (since October
Unit # 6 its affiliates serves as investment advisor, 2000).
Greenwich, CT 06830 sub-advisor or manager.
David J. Beaubien; 68 Mr. Beaubien is a director or trustee of 19 Mr. Beaubien is also a director of IEC
101 Industrial Road investment companies (consisting of 40 Electronics, Inc., a manufacturer of electronic
Turners Falls, MA 01376 portfolios) for which UBS Global AM or one of assemblies.
its affiliates serves as investment advisor,
sub-advisor or manager.
</Table>
19
<Page>
<Table>
<Caption>
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------------
Richard R. Burt; 56 Trustee Since 1996 Mr. Burt is chairman of Diligence LLC (international information
1275 Pennsylvania Ave., N.W. and security firm) and IEP Advisors (international investments
Washington, D.C. and consulting firm). He was the chief negotiator in the
20004 Strategic Arms Reduction Talks with the former Soviet Union (from
1989 to 1991) and the U.S. Ambassador to the Federal Republic of
Germany (from 1985 to 1989). From 1991 to 1994, he served as a
partner of McKinsey & Company (management consulting firm).
Meyer Feldberg; 61 Trustee Since 1996 Mr. Feldberg is Dean and Professor of Management of the Graduate
Columbia University School of Business, Columbia University. Prior to 1989, he was
101 Uris Hall president of the Illinois Institute of Technology.
New York, New York
10027
George W. Gowen; 73 Trustee Since 1996 Mr. Gowen is a partner in the law firm of Dunnington, Bartholow &
666 Third Avenue Miller. Prior to May 1994, he was a partner in the law firm of
New York, New York Fryer, Ross & Gowen.
10017
William W. Hewitt, Jr.**; 74 Trustee Since 2001 Mr. Hewitt is retired. From 1990 to January 1995, Mr. Hewitt
c/o UBS Global Asset served as a director or trustee on the boards of the Kidder,
Management (US) Inc. Peabody & Co. Incorporated mutual funds. From 1986 to 1988, he
51 West 52nd Street was an executive vice president and director of mutual funds,
New York, New York insurance and trust services of Shearson Lehman Brothers Inc.
10019-6114 From 1976 to 1986, he was president of Merrill Lynch Funds
Distributor, Inc.
Morton L. Janklow; 73 Trustee Since 2001 Mr. Janklow is senior partner of Janklow & Nesbit Associates, an
445 Park Avenue international literary agency representing leading authors in
New York, New York their relationships with publishers and motion picture,
10022 television and multi-media companies, and of counsel to the law
firm of Janklow & Ashley.
</Table>
20
<Page>
<Table>
<Caption>
NUMBER OF
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS
AND AGE OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------------------
Richard R. Burt; 56 Mr. Burt is a director or trustee of 19 Mr. Burt is also a director of Hollinger
1275 Pennsylvania Ave., N.W. investment companies (consisting of 40 International, Inc. (publishing), HCL
Washington, D.C. portfolios) for which UBS Global AM or one of Technologies, Ltd., The Central European Fund,
20004 its affiliates serves as investment advisor, Inc., The Germany Fund, Inc., IGT, Inc.
sub-advisor or manager. (provides technology to gaming and wagering
industry) and chairman of Weirton Steel Corp.
(makes and finishes steel products). He is also
a director or trustee of funds in the Scudder
Mutual Funds Family (consisting of 47
portfolios).
Meyer Feldberg; 61 Dean Feldberg is a director or trustee of 33 Dean Feldberg is also a director of Primedia Inc.
Columbia University investment companies (consisting of 54 (publishing), Federated Department Stores, Inc.
101 Uris Hall portfolios) for which UBS Global AM or one of (operator of department stores), Revlon, Inc.
New York, New York its affiliates serves as investment advisor, (cosmetics), Select Medical Inc. (healthcare
10027 sub-advisor or manager. services) and SAPPI, Ltd. (producer of paper).
George W. Gowen; 73 Mr. Gowen is a director or trustee of 33 None
666 Third Avenue investment companies (consisting of 54
New York, New York portfolios) for which UBS Global AM or one of
10017 its affiliates serves as investment advisor,
sub-advisor or manager.
William W. Hewitt, Jr.**; 74 Mr. Hewitt is a director or trustee of 19 Mr. Hewitt is also a director or trustee of the
c/o UBS Global Asset investment companies (consisting of 40 Guardian Life Insurance Company Mutual Funds
Management (US) Inc. portfolios) for which UBS Global AM or one of (consisting of 19 portfolios).
51 West 52nd Street its affiliates serves as investment advisor,
New York, New York sub-advisor or manager.
10019-6114
Morton L. Janklow; 73 Mr. Janklow is a director or trustee of 19 None
445 Park Avenue investment companies (consisting of 40
New York, New York portfolios) for which UBS Global AM or one of
10022 its affiliates serves as investment advisor,
sub-advisor or manager.
</Table>
21
<Page>
<Table>
<Caption>
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------------
Frederic V. Malek; 66 Trustee Since 1996 Mr. Malek is chairman of Thayer Capital Partners (merchant bank)
1455 Pennsylvania and chairman of Thayer Hotel Investors III, Thayer Hotel
Avenue, N.W. Investors II and Lodging Opportunities Fund (hotel investment
Suite 350 partnerships). From January 1992 to November 1992, he was
Washington, D.C. campaign manager of Bush-Quayle '92. From 1990 to 1992, he was
20004 vice chairman and, from 1989 to 1990, he was president of
Northwest Airlines Inc. and NWA Inc. (holding company of
Northwest Airlines Inc.). Prior to 1989, he was employed by the
Marriott Corporation (hotels, restaurants, airline catering and
contract feeding), where he most recently was an executive vice
president and president of Marriott Hotels and Resorts.
Carl W. Schafer; 67 Trustee Since 1991 Mr. Schafer is president of the Atlantic Foundation (charitable
66 Witherspoon Street foundation). Prior to January 1993, he was chairman of the
#1100 Investment Advisory Committee of the Howard Hughes Medical
Princeton, NJ 08542 Institute.
William D. White; 69 Trustee Since 2001 Mr. White is retired. From February 1989 through March 1994, he
P.O. Box 199 was president of the National League of Professional Baseball
Upper Black Eddy, PA Clubs. Prior to 1989, he was a television sportscaster for
18972 WPIX-TV, New York. Mr. White served on the board of directors of
Centel from 1989 to 1993 and on the board of directors of
Jefferson Banks Incorporated, Philadelphia, PA.
</Table>
22
<Page>
<Table>
<Caption>
NUMBER OF
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS
AND AGE OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------------------
Frederic V. Malek; 66 Mr. Malek is a director or trustee of 19 Mr. Malek is also a director of Aegis
1455 Pennsylvania investment companies (consisting of 40 Communications, Inc. (tele-services), American
Avenue, N.W. portfolios) for which UBS Global AM or one of Management Systems, Inc. (management consulting
Suite 350 its affiliates serves as investment advisor, and computer related services), Automatic Data
Washington, D.C. sub-advisor or manager. Processing, Inc. (computing services), CB
20004 Richard Ellis, Inc. (real estate services),
Federal National Mortgage Association, FPL
Group, Inc. (electric services), Manor Care,
Inc. (health care), and Northwest Airlines Inc.
Carl W. Schafer; 67 Mr. Schafer is a director or trustee of 19 Mr. Schafer is also a director of Labor Ready,
66 Witherspoon Street investment companies (consisting of 40 Inc. (temporary employment), Roadway Corp.
#1100 portfolios) for which UBS Global AM or one of (trucking), Guardian Life Insurance Company
Princeton, NJ 08542 its affiliates serves as investment advisor, Mutual Funds (consisting of 19 portfolios), the
sub-advisor or manager. Harding, Loevner Funds (consisting of four
portfolios), E.I.I. Realty Securities Trust
(investment company) and Frontier Oil
Corporation.
William D. White; 69 Mr. White is a director or trustee of 19 None
P.O. Box 199 investment companies (consisting of 40
Upper Black Eddy, PA portfolios) for which UBS Global AM or one of
18972 its affiliates serves as investment advisor,
sub-advisor or manager.
</Table>
23
<Page>
OFFICERS
<Table>
<Caption>
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE FUND SERVED SERVES AS OFFICER
- --------------------------------------------------------------------------------------------------------------------------------
W. Douglas Beck*; 36 Vice President Since 2003 Mr. Beck is an executive director and head of mutual fund product
management of UBS Global AM (since 2002). From March 1998 to
November 2002, he held various positions at Merrill Lynch, the
most recent being first vice president and co-manager of the
managed solutions group. Prior to March 1998, Mr. Beck was a
portfolio manager and managing director at Raymond James &
Associates. Mr. Beck is vice president of UBS Supplementary Trust
and 22 investment companies (consisting of 81 portfolios) for
which UBS Global AMor one of its affiliates serves as investment
advisor, sub- advisor or manager.
Thomas Disbrow*; 37 Vice President Since 2000 Mr. Disbrow is a director and a senior manager of the mutual fund
and Assistant finance department of UBS Global AM. Prior to November 1999, he
Treasurer was a vice president of Zweig/Glaser Advisers. Mr. Disbrow is a
vice president and assistant treasurer of 19 investment companies
(consisting of 40 portfolios) for which UBS Global AM or one of
its affiliates serves as investment advisor, sub-advisor or
manager.
Amy R. Doberman*; 41 Vice President Since 2000 Ms. Doberman is a managing director and general counsel of UBS
and Secretary Global AM. From December 1997 through July 2000, she was general
counsel of Aeltus Investment Management, Inc. Prior to working at
Aeltus, Ms. Doberman was assistant chief counsel of the SEC's
Division of Investment Management. Ms. Doberman is vice president
and assistant secretary of UBS Supplementary Trust and five
investment companies (consisting of 44 portfolios) and vice
president and secretary of 19 investment companies (consisting of
40 portfolios) for which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or manager.
</Table>
24
<Page>
<Table>
<Caption>
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE FUND SERVED SERVES AS OFFICER
- --------------------------------------------------------------------------------------------------------------------------------
David M. Goldenberg*; 36 Vice President Since 2002 Mr. Goldenberg is an executive director and deputy general
and Assistant counsel of UBS Global AM. From 2000 to 2002 he was director,
Secretary legal affairs at Lazard Asset Management. Mr. Goldenberg was
global director of compliance for SSB Citi Asset Management Group
from 1998 to 2000. He was associate general counsel at Smith
Barney Asset Management from 1996 to 1998. Prior to working at
Smith Barney Asset Management, Mr. Goldenberg was branch chief
and senior counsel in the SEC's Division of Investment
Management. Mr. Goldenberg is a vice president and secretary of
UBS Supplementary Trust and of five investment companies
(consisting of 44 portfolios) and a vice president and assistant
secretary of 19 investment companies (consisting of 40
portfolios) for which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or manager.
Kevin J. Mahoney*; 37 Vice President Since 1999 Mr. Mahoney is a director and a senior manager of the mutual fund
and Assistant finance department of UBS Global AM. Prior to April 1999, he was
Treasurer the manager of the mutual fund internal control group of Salomon
Smith Barney. Mr. Mahoney is a vice president and assistant
treasurer of 19 investment companies (consisting of 40
portfolios) for which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or manager.
</Table>
25
<Page>
<Table>
<Caption>
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE FUND SERVED SERVES AS OFFICER
- --------------------------------------------------------------------------------------------------------------------------------
Michael H. Markowitz***; Vice President Since 2001 Mr. Markowitz is an executive director, portfolio manager and
38 head of U.S. short duration fixed income of UBS Global AM. He is
also an executive director and portfolio manager of UBS Global
Asset Management (Americas) Inc. ("UBS Global AM (Americas)"), an
affiliate of UBS Global AM. Mr. Markowitz is a vice president of
five investment companies (consisting of 25 portfolios) for which
UBS Global AM or one of its affiliates serves as investment
advisor, sub-advisor or manager.
Susan P. Ryan*; 43 Vice President Since 1995 Ms. Ryan is an executive director and a portfolio manager of UBS
Global AM. Ms. Ryan is a vice president of five investment
companies (consisting of 13 portfolios) for which UBS Global AM
or one of its affiliates serves as investment advisor,
sub-advisor or manager.
Paul H. Schubert*; 40 Vice President Since 1995 Mr. Schubert is an executive director and head of the mutual fund
and Treasurer finance department of UBS Global AM. Mr. Schubert is treasurer
and principal accounting officer of UBS Supplementary Trust and
of three investment companies (consisting of 41 portfolios), a
vice president and treasurer of 20 investment companies
(consisting of 41 portfolios), and treasurer and chief financial
officer of one investment company (consisting of two portfolios)
for which UBS Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
</Table>
26
<Page>
<Table>
<Caption>
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE FUND SERVED SERVES AS OFFICER
- --------------------------------------------------------------------------------------------------------------------------------
Joseph A. Varnas*; 35 President Since 2003 Mr. Varnas is a managing director (since March 2003), chief
technology officer (since March 2001) and head of product,
technology and operations of UBS Global AM (since November 2002).
From 2000 to 2001, he was manager of product development in
Investment Consulting Services at UBS Financial Services. Mr.
Varnas was a senior analyst in the Global Securities Research &
Economics Group at Merrill Lynch from 1995 to 1999. Mr. Varnas is
president of UBS Supplementary Trust and 22 investment companies
(consisting of 81 portfolios) for which UBS Global AM or one of
its affiliates serves as investment advisor, sub-advisor or
manager.
Keith A. Weller*; 41 Vice President Since 1996 Mr. Weller is a director and senior associate general counsel of
and Assistant UBS Global AM. Mr. Weller is a vice president and assistant
Secretary secretary of 19 investment companies (consisting of 40
portfolios) for which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or manager.
</Table>
* This person's business address is 51 West 52nd Street, New York, New York
10019-6114.
** Address for mailing purposes only.
*** This person's business address is One North Wacker Drive, Chicago, Illinois
60606.
+ Each Trustee holds office for an indefinite term. Officers of the Trust are
appointed by the Trustees and serve at the pleasure of the board.
++ Mrs. Alexander and Mr. Bewkes are "interested persons" of the Fund as
defined in the Investment Company Act by virtue of their positions with UBS
Global AM and/or its affiliates.
27
<Page>
TRUSTEES
E. Garrett Bewkes, Jr.
CHAIRMAN
Margo N. Alexander
Richard Q. Armstrong
David J. Beaubien
Richard R. Burt
Meyer Feldberg
George W. Gowen
William W. Hewitt, Jr.
Morton L. Janklow
Frederic V. Malek
Carl W. Schafer
William D. White
PRINCIPAL OFFICERS
Joseph A. Varnas
PRESIDENT
Amy R. Doberman
VICE PRESIDENT AND SECRETARY
Paul H. Schubert
VICE PRESIDENT AND TREASURER
Susan P. Ryan
VICE PRESIDENT
W. Douglas Beck
VICE PRESIDENT
INVESTMENT ADVISOR AND ADMINISTRATOR
UBS Financial Services Inc.
1285 Avenue of the Americas
New York, New York 10019-6028
SUB-ADVISOR, SUB-ADMINISTRATOR AND PRINCIPAL UNDERWRITER
UBS Global Asset Management (US) 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
FUND UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
(C) 2003 UBS Global Asset Management (US) Inc. All rights reserved.
<Page>
[UBS GLOBAL ASSET MANAGEMENT LOGO] Presorted
Standard
51 West 52nd Street U.S.Postage
New York, NY 10019-6114 PAID
Smithtown, NY
Permit 700
<Page>
ITEM 2. CODE OF ETHICS.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. [RESERVED BY SEC FOR FUTURE USE.]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED - END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. [RESERVED BY SEC FOR FUTURE USE.]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-2(c) under the Investment Company
Act of 1940) provide reasonable assurances that material information
relating to the registrant is made known to them by the appropriate
persons, based on their evaluation of these controls and procedures as
of a date within 90 days of the filing date of this report.
(b) There were no significant changes in the registrant's internal
controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation referenced in (a)
above, including any corrective actions with regard to significant
deficiencies and material weaknesses.
<Page>
ITEM 10. EXHIBITS.
(a) Form N-CSR disclosure requirement not yet effective with respect to
the registrant.
(b) (1) Certification pursuant to Rule 30a-2 under the Investment Company
Act of 1940 attached hereto as Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 attached hereto as Exhibit 99.906 CERT.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LIQUID INSTITUTIONAL RESERVES
By: /s/ Joseph A. Varnas
----------------------------
Joseph A. Varnas
President
Date: July 8, 2003
----------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Joseph A. Varnas
----------------------------
Joseph A. Varnas
President
Date: July 8, 2003
----------------------------
By: /s/ Paul H. Schubert
----------------------------
Paul H. Schubert
Treasurer
Date: July 8, 2003
----------------------------