<PAGE> 1
THE RESERVE FUNDS General Information, Purchases and
[logo] Redemptions
---------------------------------------
24 Hour Yield and Balance Information
---------------------------------------
Nationwide 800-637-1700
TREASURER'S TRUST
PROSPECTUS
Treasurer's Trust is a no-load money market fund with four investment
portfolios: PRIMARY, U.S. GOVERNMENT, U.S. TREASURY and INTERSTATE TAX-EXEMPT
FUNDS ("Funds") and is designed for investors as a convenient investment vehicle
for short-term funds.
The objective of each Fund, except the Interstate Tax-Exempt Fund, is to
seek as high a level of current income as is consistent with preservation of
capital and liquidity, although achievement of this objective cannot be assured.
The objective of the Interstate Tax-Exempt Fund is to seek as high a level
of short-term interest income exempt from federal income taxes as is consistent
with preservation of capital and liquidity; however, achievement of this
objective cannot be assured.
- PRIMARY FUND invests in (i) obligations backed by the full faith and
credit of the United States government and its agencies or
instrumentalities; (ii) deposit-type obligations, acceptances and letters
of credit of FDIC-insured institutions and foreign banks with assets in
excess of $25 billion; (iii) short-term corporate obligations rated A-1 or
the equivalent thereof; (iv) other similar high-quality short-term
instruments; and (v) instruments fully collateralized by the foregoing
instruments.
- U.S. GOVERNMENT FUND invests in obligations backed by the full faith and
credit of the United States government or obligations collateralized
thereby.
- U.S. TREASURY FUND invests exclusively in full faith and credit
obligations of the United States government that provide interest income
exempt from state and local income taxes.
- INTERSTATE TAX-EXEMPT FUND invests principally in obligations issued by
the states, territories, possessions of the United States and their
political subdivisions, duly constituted authorities and corporations.
Treasurer's Trust is a class of shares within the Primary, U.S. Government,
U.S. Treasury and Interstate Tax-Exempt portfolios of the Reserve Institutional
Trust. For purposes of clarity, the terms Trust, Class, Portfolio and Fund are
used interchangably throughout this Prospectus.
SHARES OF THE FUNDS ARE NEITHER GUARANTEED NOR INSURED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus sets forth the information about each Fund which a
prospective investor should know before investing. A Statement of Additional
Information dated March 16, 1998, as amended, providing further details about
the Funds, has been filed with the Securities and Exchange Commission. It may be
obtained without charge by writing or calling the Funds at 800-637-1700. The
Statement of Additional Information is hereby incorporated by reference into
this Prospectus.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
Prospectus dated March 16, 1998
Investors are advised to read and retain this Prospectus for future reference.
<PAGE> 2
SHAREHOLDER EXPENSES
The following tables illustrate all expenses and fees that a shareholder of
each of the Funds will incur directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES FOR ALL FUNDS
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases................... None
Maximum Sales Load Imposed on Reinvested Dividends........ None
Redemption Fees........................................... None
Exchange Fees............................................. None
</TABLE>
ANNUAL FUND OPERATING EXPENSES FOR ALL FUNDS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C> <C>
Management Fee*.................................... .25%
12b-1 Fees......................................... None
Shareholder Services Fees........................ .25%
Other Operating Expenses++....................... .10%
Other Expenses..................................... .35%
Total Operating Expenses........................... .60%
</TABLE>
- ---------------
* Each Fund is charged a comprehensive management fee of 0.25% per annum of its
average daily net assets for its advisory fee and unique operating expenses
(other than the Service Fees) during the year. However, a Fund may be charged
for certain non-recurring extraordinary expenses. See "Investment Management
Agreement" on page 8.
++ "Other Operating Expenses" are based on an estimated amount for the current
fiscal year. The purpose of this table is to assist the investor in
understanding the costs and expenses that a shareholder in a Fund will bear
directly or indirectly.
The following examples illustrate the expenses that a shareholder would pay
on a $1,000 investment over various time periods assuming: (1) a 5% annual rate
of return and (2) redemption at the end of each time period for each Fund.
ALL FUNDS
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------ ------- ------- --------
<S> <C> <C> <C>
$6.13 $19.22 $33.48 $75.00
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
2
<PAGE> 3
FINANCIAL HIGHLIGHTS
The following information applies to a share of Treasurer's Trust -- Primary
Fund outstanding throughout the period. As of November 30, 1997, no other Fund
shares were outstanding. The information below should be read in conjunction
with the Financial Statements and related notes appearing in the Statement of
Additional Information.
<TABLE>
<CAPTION>
OCTOBER 15, 1997
(COMMENCEMENT OF
OPERATIONS) TO
NOVEMBER 30, 1997 (2)
TREASURER'S TRUST PRIMARY FUND (UNAUDITED) (4) ---------------------
<S> <C>
Net Asset Value, beginning of period.................... $ 1.0000
Income from investment operations:...................... $ .0072
Expenses................................................ .0007
--------
Net investment income (1)............................... .0065
Dividends from net investment income (1)................ $ (.0065)
--------
Net Asset Value, end of period.......................... $ 1.0000
========
Total return............................................ 5.01%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets in thousands, end of period.................. $160,803
Ratio of expenses to average net assets................. 60%(2)(3)
Ratio of net investment income to average net assets.... 4.98%(3)
</TABLE>
- ---------------
(1) Based on compounding of daily dividends. Not indicative of future results.
(2) The Primary Fund commenced operations on October 15, 1997.
(3) Annualized for the period October 15, 1997 through November 30, 1997.
(4) Prior to March 16, 1998, Treasurer's Trust was known as Class C.
3
<PAGE> 4
YIELD
Current yield refers to the income generated by an investment in a Fund over
a seven-day period. This income is then annualized, that is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
The effective yield is calculated similarly but, when annualized, the income
earned is assumed to be reinvested. The effective yield will be higher than the
current yield because of this compounding effect.
For the seven calendar days ended November 30, 1997, the current and
effective yields for the Fund were 5.05% and 5.18%, respectively.
The Interstate Tax-Exempt Fund may also quote its tax equivalent yield,
which shows the taxable yield an investor would have to earn before taxes to
equal the Fund's tax-free yield. The tax equivalent yield is calculated by
dividing the Fund's current or effective yield by the result of one minus a
stated federal tax rate.
In reports or other communications to shareholders of the Trust or in
advertising materials, the Trust may compare its performance with that of other
money market funds listed in the rankings prepared by Lipper Analytical
Services, Inc., publications such as Barrons, Business Week, Forbes, Fortune,
Institutional Investor, Kiplinger's Personal Finance, Money, Morningstar Mutual
Fund Values, The New York Times, The Wall Street Journal and USA Today or other
industry or financial publications or other relevant indices and industry
publications.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of each Fund, except the Interstate Tax-Exempt
Fund, is to seek as high a level of current income as is consistent with
preservation of capital and liquidity. The investment objective of the
Interstate Tax-Exempt Fund is to seek as high a level of short-term interest
income exempt from Federal income taxes as is consistent with preservation of
capital and liquidity. There is no assurance that a Fund will achieve its
investment objective. The investment objective may not be changed, with respect
to a Fund, without the vote of a majority of the outstanding shares of that Fund
as defined in the Investment Company Act of 1940 ("Act").
The Primary Fund seeks to attain its objective by investing in U.S.
government securities; deposit-type obligations, such as negotiable certificates
of deposit and time deposits, bankers' acceptances and letters of credit of
domestic and foreign banks; savings and loan associations and savings banks;
high-quality domestic and foreign commercial paper as determined by any
nationally recognized statistical rating organization or, in the case of any
instrument that is not rated it must be of comparable quality as determined by
the Board of Trustees; other short-term instruments of similar quality; and
instruments fully collateralized by such obligations.
The U.S. Government Fund seeks to attain its objective by investing only in
securities backed by the full faith and credit of the United States government
or obligations collateralized thereby.
The U.S. Treasury Fund seeks to attain its objective by investing only in
securities of the United States government that provide interest income exempt
from state and local income taxes.
The Interstate Tax-Exempt Fund seeks to attain its objective by investing
principally in obligations issued by states, territories, and possessions of the
United States and their subdivisions, duly constituted authorities and
corporations, or participation in such obligations; the interest on which is
exempt from U.S. federal income taxes.
United States government securities include a variety of securities which
are issued or guaranteed by the U.S. Treasury, various agencies of the federal
government and various instrumentalities which have been established or
sponsored by the U.S. government, and certain interests in the foregoing types
of securities such as U.S. Treasury STRIPS. United States government securities
include direct obligations of the U.S. Treasury (such as Treasury bills,
Treasury notes, and Treasury bonds). Obligations such as securities issued by
the Government National Mortgage Association ("GNMA"), the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association
("FNMA"), the Student Loan Marketing Association ("SLMA") and the Federal Home
Loan Bank ("FHLB") are also considered U.S. government securities. Some
obligations of agencies and instrumentalities of the U.S. government, such as
the GNMA, are supported by the full faith and credit of the United States. Other
securities, such as obligations issued by the FNMA and SLMA, are supported by
the right of the issuer to borrow from the U.S. Treasury; and others, such as
obligations issued by the FHLB and FHLMC are supported only by the credit of the
agency or instrumentality issuing the obligation. In the case of securities not
backed by the full faith and credit of the United States the investor must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment.
4
<PAGE> 5
U.S. Treasury STRIPS permit the separate ownership and trading of the
interest and principal components of direct obligations of the U.S. Treasury.
These obligations may take the form of (i) obligations from which interest
coupons have been stripped; (ii) the interest coupons that are stripped; or
(iii) book entries at a Federal Reserve member bank representing ownership of
obligation components.
Under federal law, the income derived from obligations issued by the U.S.
Treasury and certain of its agencies and instrumentalities is exempt from state
personal income taxes. A substantial majority of the states that tax personal
income permit mutual funds to passthrough this tax exemption to shareholders. It
is anticipated that a substantial portion of the dividends paid to shareholders
of the U.S. Treasury Fund residing in these states will qualify for this
exemption from state taxation. However, a state or local taxing authority may,
in the future, seek to tax a shareholder on all or a portion of the interest
income of a security held by the U.S. Treasury Fund.
The Interstate Tax-Exempt Fund invests in securities generally known as
"municipal bonds" or "municipal notes" and the interest on them is exempt from
federal income tax in the opinion of either bond counsel for the issuers, or in
some instances, the issuer itself ("Municipal Obligations"). They are issued to
raise money for various public purposes such as constructing public or private
facilities. General obligation bonds and notes are backed by the taxing power of
the issuer. Revenue bonds and notes are backed by the revenues of a project or
facility such as a toll road or, in some cases, from the proceeds of a special
excise tax, but not by the general taxing power. Industrial development revenue
bonds and notes are backed by the credit of a private issuer. The Fund may
invest any portion of its assets in industrial revenue bonds and notes.
Municipal Obligations bear fixed, variable or floating rates of interest. Under
normal market conditions, at least 80% of the value of the Fund's assets will be
invested in Municipal Obligations, although the Fund may take a defensive
position and invest temporarily without limit in taxable U.S. government
securities and repurchase agreements pertaining to U.S. government securities.
In addition, except during temporary periods, imbalances in supply and demand in
the markets for certain municipal obligations, no more than 25% of the Fund's
assets will be invested in Municipal Obligations whose issuers are located in
the same state or in Municipal Obligations, the interest on which is paid from
revenues of similar type projects. See "Other Policies" below for a description
of the characteristics and risks of repurchase agreements.
The Interstate Tax-Exempt Fund may purchase floating and variable rate
demand notes, which are Municipal Obligations normally having stated maturities
in excess of one year, but which permit the holder to demand payment of
principal and accrued interest at any time, or at specified intervals not
exceeding one year, in each case, usually upon not more than seven days' notice.
The interest rates on these floating and variable rate demand notes fluctuate
from time to time. Frequently, such Municipal Obligations are secured by letters
of credit or other credit-support arrangements provided by banks. The Interstate
Tax-Exempt Fund may invest any portion of its assets in floating and variable
rate demand notes secured by bank letters of credit or other credit-support
arrangements. Use of letters of credit or other credit-support arrangements will
not adversely affect the tax-exempt status of these Municipal Obligations. The
Interstate Tax-Exempt Fund will not invest more than 10% of the value of its
assets in floating or variable rate demand notes for which there is no secondary
market if the demand feature on such Municipal Obligations is exercisable on
more than seven days' notice.
In view of the investment of the Interstate Tax-Exempt Fund in industrial
revenue development bonds and notes secured by letters of credit or guarantees
of banks, an investment in Interstate Tax-Exempt Fund shares should be made with
an understanding of the characteristics of the banking industry and the risks
such an investment may entail. Banks are subject to extensive government
regulations, which may limit both the amounts and the types of loans and other
financial commitments which may be made and interest rates and fees which may be
charged. The profitability of the banking industry is largely dependent upon the
availability and cost of funds for the purpose of financing lending operations
under prevailing money-market conditions. In addition, general economic
conditions play an important part in the operations of this industry, and
exposure to credit losses arising from possible financial difficulties of
borrowers might affect a bank's ability to meet its obligations under a letter
of credit.
The Interstate Tax-Exempt Fund will purchase tax-exempt securities which are
rated MIG-1 or MIG-2 by Moody's Investor Services, Inc. ("Moody's"), SP-1 or
SP-2 by Standard & Poor's Corporation ("S&P") or the equivalent thereof and
non-rated securities which are determined to be of comparable quality by the
Fund's Investment Adviser pursuant to guidelines established by the Board of
Trustees.
The Primary Fund may invest in obligations of U.S. banking institutions that
are insured by the FDIC; commercial paper which is rated, at the time of
investment, P-1 by Moody's Investors Service, Inc. ("Moody's"), A-1 by Standard
& Poor's Corporation ("S&P") or the equivalent thereof if rated by another
rating agency; and obligations of foreign banks which, at the time of
investment, have more than $25 billion (or the equivalent in other currencies)
in total assets and which, in the opinion of the Fund's Investment Adviser, are
of comparable quality to obligations of United States banks which may be
purchased by the Primary Fund. Instruments which are not rated may also be
purchased by the Primary Fund provided such instruments are determined to be of
comparable quality by the Board of Trustees of the Fund to those rated
instruments in which the Primary Fund may invest.
5
<PAGE> 6
The Primary Fund may invest in obligations of U.S. banks, foreign branches
of U.S. banks (Eurodollars), U.S. branches of foreign banks (Yankee dollars) and
foreign branches of foreign banks. Euro and Yankee dollar investments involve
certain risks that are different from investments in obligations of U.S. banks.
These risks may include unfavorable political and economic developments,
possible withholding taxes, seizure of foreign deposits, currency controls or
other governmental restrictions which might affect payment of principal or
interest. In addition, foreign branches of foreign banks are not regulated by
U.S. banking authorities and are generally not bound by financial reporting
standards comparable to U.S. banks. The Primary Fund will limit its investment
in foreign branches of foreign banks to those banks located in Australia,
Canada, Western Europe and Japan. The Primary Fund may also invest in Municipal
Obligations secured by bank letters of credit, the interest on which is not
exempt from federal income taxation.
OTHER POLICIES. PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS. The Primary,
U.S. Government and U.S. Treasury Funds may invest up to 100% of their assets in
repurchase agreement transactions. A repurchase agreement is a transaction by
which a Fund purchases a security (U.S. government or other) and simultaneously
commits to resell that security to the seller at the same price, plus interest
at a specified rate. Repurchase agreements usually have a short duration, often
less than one week. The Funds will limit repurchase agreements to those banks
and securities dealers who are deemed creditworthy pursuant to guidelines
adopted by the Funds' Board of Trustees. The Investment Adviser will follow
procedures to assure that all repurchase agreements are always fully
collateralized as to principal and interest. The instruments held as collateral
are valued daily, and if the value of the instruments declines, the Funds will
require additional collateral. If the other party to the repurchase agreement
defaults on its obligation to repurchase the underlying securities, a portfolio
may incur a loss to the extent that the proceeds from the sale of the collateral
were less than the repurchase price. In the event of insolvency or bankruptcy of
the other party to a repurchase agreement, a Fund may encounter difficulties and
might incur costs or possible losses of principal and income upon the exercise
of its rights under the repurchase agreement. The U.S. Treasury Fund will limit
its investment in repurchase agreements with respect to securities backed only
by the full faith and credit of the U.S. government to not more than 5% of its
total assets. Such investment will be for temporary purposes pending the
investment of uninvested cash in U.S. Treasury obligations. Securities subject
to repurchase agreements will be placed in a segregated account and the market
value will be monitored to ensure that the market value of the securities plus
any accrued interest thereon will at least equal the repurchase price.
The Primary and U.S. Government Funds may from time to time lend securities
on a short-term basis to banks, brokers and dealers (but not individuals) and
receive as collateral cash or securities issued by the U.S. government or its
agencies or instrumentalities (or any combination thereof), which collateral
will be required to be maintained at all times in an amount equal to at least
100% of the current value of the loaned securities plus accrued interest. In
determining whether to lend securities to a particular broker-dealer or
financial institution, the Fund will consider all relevant facts and
circumstances, including the creditworthiness of the broker-dealer or financial
institution. A Fund may pay reasonable finders', administrative and custodial
fees in connection with a loan. During the time portfolio securities are on loan
the borrower will pay the Fund an amount equivalent to any interest paid on such
securities and the Fund may invest the cash collateral and earn additional
income, or it may receive an agreed-upon amount of interest from the borrower
who has delivered equivalent collateral or secured a letter of credit. The value
of the securities loaned cannot exceed 25% of the Fund's total assets. Loans of
securities involve risks of delay in receiving additional collateral or in
recovering the securities lent or even loss of rights in the collateral in the
event of insolvency of the borrower of the securities. The Statement of
Additional Information further explains the Funds' securities-lending policies.
The Primary, U.S. Government and U.S. Treasury Funds may invest, without
limitation, in U.S. government securities and in instruments secured or
collateralized by U.S. government securities. A Fund will not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
providing for settlement in more than seven days after notice. A Fund will not
concentrate (i.e., invest 25% or more of its total assets) in the securities of
issuers in a single industry, except that the Primary Fund may invest 25% or
more of its total assets in banking. In addition, a Fund will not invest more
than 5% of its total assets in the securities of any single issuer (except U.S.
government securities or repurchase agreements collateralized by U.S. government
securities). Each Fund has the authority to borrow money (including reverse
repurchase agreements), for extraordinary or emergency purposes but not in an
amount exceeding 5% of its total assets. Reverse repurchase agreements involve
sales by a Fund of portfolio securities concurrently with an agreement by the
Fund to repurchase the same securities at a later date at a fixed price.
In order to provide liquidity, each Fund limits its average maturity to 90
days or less; buying securities which mature in 397 days or less; and buying
only high-quality securities.
INTERSTATE TAX-EXEMPT FUND. Certain banks and other municipal securities
dealers have indicated a willingness to sell Municipal Obligations to the Fund
accompanied by a commitment to repurchase the securities, at the Fund's option
or at a specified date, at an agreed upon price or yield within a specified
period prior to the maturity date of such securities at the amortized cost
thereof. If a bank or other municipal securities dealer were to default under
such stand-by commitment and fail to pay the exercise price, the Fund could
suffer a potential loss to the extent that the amount paid by the Fund, if any,
for the Municipal Obligation with the stand-by commitment
6
<PAGE> 7
exceeded the current value of the underlying Municipal Obligations. If a bank or
other municipal securities dealer defaults under its stand-by commitment, the
liquidity of the security subject to such commitment may be adversely affected.
Municipal Obligations are sometimes offered on a when-issued or delayed
delivery basis. There is no limit on the Fund's ability to purchase Municipal
Obligations on a when-issued basis. The price of when-issued securities, which
is generally expressed in yield terms, is fixed at the time the commitment to
purchase is made but delivery and payment for the when-issued securities takes
place at a later date normally, within one month and no interest accrues in the
interim. To the extent that assets of the Fund purchasing such securities are
not invested prior to the settlement of a purchase of securities, the Fund will
earn no income; however, it is the Fund's intent to be as fully invested as is
practicable. While when-issued securities may be sold prior to settlement date,
the Fund intends to purchase such securities with the purpose of actually
acquiring them unless a sale appears desirable for investment reasons. At the
time the Fund makes the commitment to purchase a Municipal Obligation on a
when-issued basis, it will record the transaction and reflect the value of the
security in determining its net asset value. The Fund will also maintain readily
marketable assets at least equal in value to commitments for when-issued
securities specifically for the settlement of such commitments. The Investment
Adviser does not believe that the Fund's net asset value or income will be
adversely affected by the purchase of Municipal Obligations on a when-issued
basis.
The Fund may purchase from financial institutions participation interests in
Municipal Obligations. A participation interest gives the Fund an undivided
interest in the Municipal Obligation in the proportion that the Fund's
participation interest bears to the total principal amount of the Municipal
Obligation. These instruments may have fixed, floating or variable rates of
interest. Frequently, such instruments are secured by letters of credit or other
credit-support arrangements provided by banks.
The Internal Revenue Code of 1986, as amended, subjects interest received on
certain otherwise tax-exempt securities ("private activity bonds") to a federal
alternative minimum tax. It is the position of the Securities and Exchange
Commission that in order for a fund to call itself "tax-free," not more than 20%
of its net assets may be invested in municipal securities subject to the federal
alternative minimum tax or at least 80% of its income must be free of both
regular income tax and alternative minimum tax. Income received on such
securities is classified as a "tax preference item" which could subject certain
investors in such securities, including shareholders of the Fund, to an
increased alternative minimum tax. However, as of the date of this Prospectus,
the Fund does not purchase such securities, but reserves the right to do so
depending on market conditions in the future.
Yields on municipal securities depend on a variety of factors, including
general economic and monetary conditions, money-market factors, conditions in
the tax-exempt securities market, size of a particular offering, maturity of the
obligation and rating of the issue. The ability of the Fund to achieve its
investment objective is also dependent on the continuing ability of issuers of
municipal securities to meet their obligations for the payment of interest and
principal when due.
From time to time the Fund may invest in taxable short-term investments
("Taxable Investments") consisting of obligations backed by the full faith and
credit of the United States government, its agencies or instrumentalities ("U.S.
Governments"); deposit-type obligations, acceptances, and letters of credit of
Federal Deposit Insurance Corporation member banks; and instruments fully
collateralized by such obligations. Unless the Fund has adopted a temporary
defensive position, no more than 20% of the net assets of the Fund will be
invested in Taxable Investments at any time. The Fund may enter into repurchase
agreements with regard to the taxable obligations listed above. Although the
Fund is permitted to make taxable temporary investments, there is no current
intention of generating income subject to federal income tax.
The Fund's Investment Adviser uses its reasonable business judgment in
selecting investments in addition to considering the ratings of Moody's and S&P.
This analysis considers, among other things, the financial condition of the
issuer by taking into account present and future liquidity, cash flow and
capacity to meet debt service requirements. Since the market value of debt
obligations fluctuates as an inverse function of changing interest rates, the
Fund seeks to minimize the effect of such fluctuations by investing in
instruments with remaining maturities of 397 days or less and limiting its
average maturity to 90 days or less.
The principal risk factors associated with investment in the Fund are the
risk of fluctuations in short-term interest rates, the risk of default among one
or more issuers of securities which comprise the Fund's assets and the risk of
non-diversification. As a non-diversified investment company, the Fund is
permitted to have all its assets invested in a limited number of issuers.
Accordingly, since a relatively high percentage of the Fund's assets may be
invested in the securities of a limited number of issuers, the Fund's investment
securities may be more susceptible to any single economic, political or
regulatory occurrence than the investment securities of a diversified investment
company. However, the Fund intends to qualify as a "regulated investment
company" for purposes of the Internal Revenue Code. This limits the aggregate
value of all investments (except United States government securities, securities
of other regulated investment companies, cash and cash items) so that, with
respect to at least 50% of its total assets, not more than 5% of such assets are
invested in the securities of a single issuer.
7
<PAGE> 8
MANAGEMENT
INVESTMENT MANAGEMENT AGREEMENT. The Board of Trustees manages each Fund's
business and affairs. Reserve Management Company, Inc. ("Adviser"), 14 Locust
Place, Manhasset, NY 11030, a New Jersey corporation, provides the Funds with
investment advice pursuant to an Investment Management Agreement. Since November
15, 1971, the Adviser and its affiliates have been advising The Reserve Funds,
which currently have assets in excess of $4.5 billion. Under the Investment
Management Agreement, the Adviser manages each Fund's investments, including
effecting purchases and sales thereof, in furtherance of its investment
objective and policies, subject to overall control and direction by the
Trustees.
Each Fund pays the Adviser a comprehensive management fee calculated on an
annual basis at .25% of its average daily net assets. Under the terms of the
Investment Management Agreement with the Funds, the Adviser pays all employee
and ordinary operating costs of the Funds. Excluded from the definition of
ordinary operating costs are interest, taxes, brokerage fees, extraordinary
legal and accounting fees and expenses, fees under the Service Agreement
(discussed below) and certain unique operating expenses.
It is expected that the shareholders will be wrap fee accounts, trust
accounts, omnibus accounts and other accounts of smaller investors which require
sub-accounting and other such services. Payment for these services will be made
by the Funds and charged against the average daily net assets, rather than being
paid by the Adviser as part of its comprehensive fee.
The Investment Management Agreement provides that the Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by a
Fund in connection with the matters to which the Investment Management Agreement
relates, except a loss resulting from the willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.
The Adviser may make such advertising and promotional expenditures, using
its own resources, as it from time to time deems appropriate.
YEAR 2000. Like other investment companies, financial and business
organizations and individuals around the world, the Trust could be adversely
affected if the computer systems used by the Adviser, the Distributor or other
service providers to the Trust do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The computer system used for the
Trust's shareholder accounting function is already Year 2000 compliant. In
addition, the Adviser and the Distributor are taking steps that they believe are
reasonably designed to address the Year 2000 Problem with respect to computer
systems that they use and the Adviser is taking steps to obtain reasonable
assurances that comparable steps are being taken by the Trust's other service
providers. At this time, however, there can be no assurance that these steps
will be sufficient to avoid any adverse impact to the Trust.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Trust, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Trust is unable to
predict what impact, if any, the Year 2000 Problem will have on issuers of the
portfolio securities held by the Trust.
TRUSTEES. The Trustees serve indefinite terms (subject to certain removal
procedures) and they appoint their own successors, provided that at least a
majority of the Trustees have been elected by shareholders. A Trustee may be
removed at any meeting of shareholders by a vote of a majority of the Fund's
shareholders.
TRANSFER AGENT AND DIVIDEND PAYING AGENT. The Funds act as their own transfer
agent and dividend-paying agent.
SERVICE AGREEMENT. Each Fund is charged a service fee and operating expenses of
.25% and .10% per annum, respectively, of its daily net assets.
HOW TO BUY SHARES
Shares of a Fund may be purchased by wire only. Shares are sold at the net
asset value next determined after receipt of a purchase order in the manner
described below. Purchase orders are accepted on any day on which the New York
Stock Exchange and the Federal Reserve Bank of New York are open ("Fund Business
Day"). For Federal Fund wires to be eligible for same-day order entry, the Fund
must be notified before 2:00 PM (New York time for Primary and U.S. Government
Funds) (11:00 AM New York time for Interstate Tax-Exempt and U.S. Treasury
Funds) of the amount to be transmitted and the account to be credited, and the
Fund must receive the credit at its bank by 3:00 PM (New York time). Orders
received by a Fund after the times specified above will be priced at the public
offering price in effect at 3:00 PM (New York time) on the next business day.
The Funds do not determine net asset value, and purchase orders
8
<PAGE> 9
are not accepted, on the days those institutions observe the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day and Christmas Day.
To purchase shares of a Fund by Federal Reserve wire, call the Fund at
800-637-1700 or call your sales representative. To protect a Fund's performance
and shareholders, the Adviser discourages frequent trading in response to
short-term market fluctuations. The Funds reserve the right to refuse any
investment.
If the Public Securities Association recommends that the government
securities markets close early, the Funds may advance the time at which they
must receive notification of orders for purposes of determining eligibility for
dividends on that day. Investors who notify the Fund after the advanced time
become entitled to dividends on the following Fund Business Day. If a Fund
receives notification of a redemption request after the advanced time, it
ordinarily will wire redemption proceeds on the next Fund Business Day.
If an investor does not remit Federal Funds, such payment must be converted
into Federal Funds. This usually occurs within one Fund Business Day of receipt
of a bank wire. Prior to receipt of Federal Funds, the investor's monies will
not be invested.
Telephone the Fund, toll free at 800-637-1700 for wiring instructions.
SHARE CERTIFICATES. The Fund maintains a share account for each shareholder.
The Trust does not issue share certificates.
ACCOUNT STATEMENTS. Monthly account statements are sent to investors to report
transactions such as purchases and redemptions as well as dividends paid during
the month.
NET ASSET VALUE. Shares are sold to the public at net asset value ("NAV"). The
NAV of each Fund is calculated at the close of each business day (normally 4:00
PM New York time) by taking the sum of the value of each Fund's investments
(amortized cost value is used for this purpose) and any cash or other assets,
subtracting liabilities, and dividing by the total number of shares outstanding.
A "Business Day" is Monday through Friday exclusive of days the New York Stock
Exchange is closed for trading and bank holidays in New York State which include
Martin Luther King's Birthday and Columbus Day. It is the policy of each Fund to
seek to maintain a stable NAV per share of $1.00, although this share price is
not guaranteed.
DISTRIBUTOR. The Funds' distributor is Resrv Partners, Inc., 810 Seventh
Avenue, New York, NY 10019-5868, which is a wholly-owned subsidiary of the
Adviser.
CLIENTS OF FIRMS. Firms provide varying arrangements for their clients with
respect to the purchase and redemption of Fund shares and may arrange with their
clients for other investment or administrative services. Certain Firms which
utilize a centralized purchase method for shares, may have an earlier cut-off
for purchase orders than stated above in order to facilitate the transmission of
purchase orders by bulk wire. Firms are responsible for the prompt transmission
of purchase and redemption orders. Some Firms may establish higher minimum
investment requirements than set forth above. Some Firms may independently
establish and charge additional fees such as redemption fees to their clients
for their services, which charges would reduce their clients' yield or return.
Firms may also hold shares in nominee or street name as agent for and on behalf
of their clients. In such instances, the Funds' transfer agents will have no
information with respect to or control over the accounts of specific
shareholders. Such shareholders may obtain access to their accounts and
information about their accounts only from their Firm. In addition, certain
privileges with respect to the purchase and redemption of shares (such as check
writing redemptions) or the reinvestment of dividends may not be available
through such Firms or may only be available subject to certain conditions or
limitations. Some Firms may participate in a program allowing them access to
their clients' accounts for servicing including, without limitation, transfers
of registration and dividend payee changes; and may perform functions such as
generation of confirmation statements and disbursement of cash dividends. The
Prospectus should be read in connection with such Firm's material regarding its
fees and services.
SHARES OF BENEFICIAL INTEREST
The Reserve Institutional Trust was originally organized as a Maryland
corporation on February 5, 1981 and reorganized on September 16, 1986 as a
Massachusetts business trust, and is an open-end management investment company
commonly known as a mutual fund. At the date of this Prospectus, there were four
separate series authorized and two series outstanding. Additional series may be
added in the future by the Board of Trustees. The Trust is authorized to issue
an unlimited number of shares of beneficial interest which may be issued in any
number of series. Shares issued will be fully paid and nonassessable and will
have no preemptive rights. The shareholders of each series are entitled to a
full vote for each full share held (and fractional votes for fractional shares)
and have equal rights with respect to earnings, dividends, redemption and in the
net assets of their series on liquidation. The Trustees do not intend to hold
annual meetings of shareholders. The Trustees will call such special meetings of
shareholders as may be required under
9
<PAGE> 10
the 1940 Act (e.g., to approve a new investment advisory agreement or changing
the fundamental investment policies) or by the Declaration of Trust.
Under Massachusetts law, the shareholders and trustees of a business trust
can be personally liable for the trust's obligations to third parties unless, as
in this instance, the Declaration of Trust provides, in substance, that no
shareholder or Trustee shall be personally liable for the Trust's and each
investment portfolio's obligations to third parties, and requires that every
written contract made by a Fund contain a provision to that effect. The
Declaration of Trust also requires each Fund to indemnify its shareholders and
Trustees against such liabilities and any related claims or expenses.
DAILY DIVIDENDS
Each Fund declares dividends each business day. Dividends are distributed
daily as additional shares to shareholder accounts except for shareholders who
elect in writing to receive cash dividends, in which case monthly dividend
checks are sent to the shareholder. Although none are anticipated, any net
realized long-term capital gains will be distributed at least annually.
TAXES
Each Fund intends to maintain its regulated investment company status for
federal income tax purposes. Accordingly, the Funds intend to satisfy certain
requirements imposed by the Internal Revenue Code so as to avoid any federal
income or excise tax to them.
PRIMARY , U.S. GOVERNMENT , U.S. TREASURY FUNDS. For federal income tax
purposes, distributions out of interest earned by a Fund and net realized
short-term capital gains are taxable as ordinary income. Any distributions of
net long-term capital gains are taxable to shareholders at the applicable
mid-term or long-term capital gains rate, regardless of the length of time
shares have been owned by the shareholder. Distributions are taxable to
shareholders in the same manner, whether a shareholder receives such
distributions in cash or reinvests them in additional shares.
The U.S. Treasury Fund intends to invest only in U.S. Treasury securities
and obligations of those agencies and instrumentalities of the U.S. government
that provide interest income exempt in many states from state and local income
taxes except to the extent uninvested cash is invested in repurchase agreements.
Some states have minimum investment requirements that must be met by the U.S.
Treasury Fund. Distributions attributable to net capital gains, if any, are
generally subject to state and local taxes. It is possible that a state or local
taxing authority may currently or in the future seek to tax an investor on a
portion of the interest income of an obligation held by the U.S. Treasury Fund.
Shareholders should consult with their own tax advisers with respect to the
application of their state and local tax laws to these distributions.
INTERSTATE TAX-EXEMPT FUND. Dividends derived from the interest earned on
Municipal Obligations and designated by the Fund as "exempt-interest dividends"
are not subject to federal income taxes. Any distributions of net short-term
capital gains and taxable interest income, if any, are taxable as ordinary
income. Any distributions of net realized long-term capital gains earned by the
Fund are taxable to shareholders at the applicable mid-term or long-term capital
gains rate regardless of the length of time the Fund's shares have been owned by
the shareholder.
ALL FUNDS. A distribution will be treated as paid on December 31 of the current
calendar year if it is declared by a Fund in October, November or December with
a record date in such a month and paid by the Fund during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year in which the distributions are declared, rather than the
calendar year in which they are received.
Upon a sale or other disposition of shares of a Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, depending
upon the shareholder's holding period for the shares, in the event that the Fund
does not maintain a constant net asset value per share.
The Funds may be required to withhold U.S. federal income tax at the rate of
31% of all taxable distributions payable to shareholders who fail to provide a
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Backup withholding is not an additional tax. Any amount
withheld may be credited against the shareholder's U.S. federal income tax
liability.
Shareholders of each Fund are advised to retain all statements to maintain
accurate records of their investments. The Funds will report to their
shareholders before the end of February of each year as to the source of
dividends and other distributions, if any, paid or declared by each Fund during
the previous calendar year which may be exempt from state income taxes.
Shareholders should consult their own tax advisers regarding specific questions
as to federal, state or local taxes.
10
<PAGE> 11
Further information relating to tax consequences is contained in the
Statement of Additional Information.
REDEMPTIONS
TIME AND METHOD OF REDEMPTION. Shares of each Fund are redeemed at their net
asset value next determined after receipt by the Fund of a request in proper
form. Although the Funds have seven days to transmit payment for share
redemptions, they usually transmit payment the same day when redemption requests
are received before 12:00 noon (New York time) (11:00 AM New York time for the
U.S. Treasury Fund and Interstate Tax-Exempt Fund) and the next day for requests
received after 12:00 noon (New York time) (11:00 AM New York time for the U.S.
Treasury Fund and Interstate Tax-Exempt Fund). This is not always possible,
however, and transmission of redemption proceeds may be delayed. Unless
otherwise specified, orders received after 12:00 noon (New York time) (11:00 AM
New York time for the U.S. Treasury Fund and Interstate Tax-Exempt Fund) are not
entered until the next business day to enable shareholders to receive additional
dividends. Payment will normally be made by check or bank transfer. Shares do
not earn dividends on the day a redemption is effected regardless of whether the
redemption order is received before or after 12:00 noon (11:00 AM for the U.S.
Treasury Fund and Interstate Tax-Exempt Fund).
WRITTEN AND TELEPHONE REDEMPTION REQUESTS. Shareholders will not be charged any
fees on redemptions by check or by wire. The Funds assume no responsibility for
delays in the receipt of wired or mailed funds. The use of a predesignated
financial institution, such as a savings bank, credit union or savings and loan
association which is not a member of the Federal Reserve wire system to receive
your wire, could cause such a delay. If a Fund has previously been advised in
writing of your brokerage or bank account, telephone requests by any person are
accepted for payment to such account by calling 800-637-1700. The Funds may be
liable for any losses caused by their failure to employ reasonable procedures.
To reduce the risk of loss, proceeds of telephone redemptions may be sent only
(1) to the bank or brokerage account designated by the shareholder, in writing,
on the investment Application or in a letter with the signature(s) guaranteed;
or (2) to the address of record if all the conditions listed below are met. To
change the designated brokerage or bank account it is necessary to contact the
Firm through which shares of the Fund were purchased or if purchased directly
from the Funds, it is necessary to send a written request to the Funds with
signature(s) guaranteed as described below. Other redemption orders must be in
writing with the necessary signature(s) guaranteed by a domestic commercial
bank; a domestic trust company; a domestic savings bank, credit union or savings
association; or a member Firm of a national securities exchange. Guarantees from
notaries public are unacceptable. The requirement of a guaranteed signature
protects against an unauthorized person redeeming shares and obtaining the
redemption proceeds. Redemption instructions and election of the plans described
may be made when your account is opened. Subsequent elections and changes in
instructions must be in writing with the signature(s) guaranteed. Changes in
registration or authorized signatories may require additional documentation.
The Funds reserve the right to refuse a telephone redemption if it believes
it is advisable to do so. Procedures for telephone redemptions may be modified
or terminated by the Fund at any time. During times of drastic economic or
market conditions, shareholders may experience difficulty in contacting the
Funds by telephone to request a redemption or exchange of a Fund's shares. In
such cases, shareholders should consider using another method of redemption,
such as a written request or a redemption by check.
REDEMPTION BY CHECK. By completing a signature card (and certain other
documentation if the record owner is a fiduciary, corporation, partnership,
trust or other organization) which is available from the Funds or the Firm
through which shares of the Funds were purchased, you can write checks against
your account. This privilege may not be available to clients of certain Firms.
There is no minimum amount for check redemptions, however, the Fund, upon proper
notice to the shareholder, may choose to impose a fee if it deems a
shareholder's actions to be burdensome to the Funds. A Firm may establish
variations of minimum check amounts for their customers if such variations are
approved by the Funds. This procedure lengthens the time your money earns
dividends, since redemptions are not made until the check is processed by the
Funds. Because of this, a check cannot completely liquidate your account, nor
may a check be presented for certification or immediate payment. Otherwise, you
may deposit a check in your bank account or use it to pay any third party
obligation not requiring certification. Shareholder checks written against
accounts with insufficient funds, postdated checks and checks which contain an
irregularity in the signature, amount or otherwise will be returned by the Funds
and a fee charged against the account. Because check redemptions are reported on
account statements, they will not be confirmed separately. A fee is charged for
providing check copies.
STOP PAYMENTS. The Funds will honor stop payment requests on unpaid shareholder
checks provided the Funds are advised of the correct check number, payee, check
amount and date. Stop payment requests received by the Funds by 2:00 PM (New
York time) in proper form will be effective the next business day. Oral stop
payment requests are effective for 14 calendar days, at which time they will be
canceled unless confirmed in writing. Written stop payment orders are effective
for one year. A fee is charged for this service.
AUTOMATIC WITHDRAWAL PLANS. If you have an account with a balance of at least
$5,000 you may make a written election to participate in either of the
following: (i) an Income Distribution Plan providing for monthly, quarterly or
annual payments by redemption of shares
11
<PAGE> 12
from reinvested dividends or distributions paid to your account during the
preceding period; or (ii) a Fixed Amount Withdrawal Plan providing for the
automatic redemption of a sufficient number of shares of your account to make a
specified monthly, quarterly or annual payment of a fixed amount. Changes to
instructions must be in writing with signature(s) guaranteed. In order for such
payments to continue under either Plan, there must be a minimum of $25 available
from reinvested dividends or distributions. Payments can be made to you or your
designee. An application for the Automatic Withdrawal Plans can be obtained from
the Funds. The amount, frequency and recipient of the payments may be changed by
giving proper written notice to the Funds. The Funds may impose a charge or
modify or terminate any Automatic Withdrawal Plan at any time after the
participant has been duly notified. This privilege may not be available to
clients of certain Firms or may be available subject to conditions or
limitations.
RESERVE AUTOMATIC TRANSFER. You may redeem shares of a Fund (minimum $100)
without charge by telephone if you have filed a separate Reserve Automatic
Transfer application with the Fund. The proceeds will be transferred between
your Fund account and the checking, NOW or bank money market deposit account (as
permitted) designated in the application. Only such an account maintained in a
domestic financial institution which is an Automated Clearing House member may
be so designated. Redemption proceeds will be on deposit in your account at the
Automated Clearing House member bank ordinarily two business days after receipt
of the redemption request. The Funds may impose a charge or modify or terminate
this privilege at any time after the participant has been duly notified. This
privilege may not be available to clients of certain Firms or may be available
subject to conditions or limitations.
RESTRICTIONS. The right of redemption may be suspended or the date of payment
postponed for more than seven days only (a) when the New York Stock Exchange is
closed (other than for customary closings), (b) when, as determined by the
Securities and Exchange Commission ("SEC"), trading on the Exchange is
restricted or an emergency exists making it not reasonably practicable to
dispose of securities owned by a Fund or for it to determine fairly the value of
its net assets, or (c) for such periods as the SEC may by order permit. If
shares of a Fund are purchased by check or Reserve Automatic Transfer, the Fund
may delay transmittal of redemption proceeds until such time as it has assured
itself that good payment has been collected for the purchase of such shares. The
Fund may delay payment until the checks for the purchase of shares have cleared
or for up to ten (10) business days, whichever occurs first. Shareholder checks
written against funds which are not yet considered collected will be returned
and a fee charged against the account. When a purchase is made by wire and
subsequently redeemed, the proceeds from such redemptions normally will not be
transmitted until two business days after the purchase by wire.
GENERAL INFORMATION
JOINT OWNERSHIP. When an account is registered in the name of one person and
another, for example a husband and wife, either person is entitled to redeem
shares in the account. The Funds assume no responsibility to either joint owner
for actions taken by the other joint owner with respect to an account so
registered. The investment Application provides that persons so registering
their account indemnify and hold the Fund harmless for actions taken by either
party.
BACKUP WITHHOLDING. The Funds are required by federal law to withhold 31% of
dividends and other distributions that are subject to federal income tax if (i)
a correct and certified Taxpayer Identification Number (TIN) is not provided for
your account, (ii) you fail to certify that you have not been notified by the
IRS that you underreported taxable interest or dividend payments or (iii) a Fund
is notified by the IRS (or a broker) that the TIN provided is incorrect or you
are otherwise subject to backup withholding. Amounts withheld and forwarded to
the IRS can be credited as a payment of tax when completing your federal income
tax return. For individual shareholders, the TIN is the social security number.
However, special rules apply for certain accounts. For example, for an account
established under the Uniform Gift to Minors Act, the TIN of the minor should be
furnished. Shareholders should be aware that, under regulations promulgated by
the IRS, a Fund may be fined $50 annually for each account for which a certified
TIN is not provided or is incorrect. In the event that such a fine is imposed
with respect to an account in any year, a corresponding charge will be made
against the account. The Funds will not accept purchase orders for accounts
which a correct and certified TIN is not provided or otherwise subject to backup
withholding unless the accountholder is a non-resident alien.
REPORTS AND STATEMENTS. Shareholders receive an annual report containing
audited financial statements and an unaudited semi-annual report. A statement is
sent to each shareholder at least quarterly. Shareholders who are clients of
certain Firms will receive a statement combining transactions in Fund shares
with statements covering other brokerage or mutual fund accounts.
RESERVE EASY ACCESS. Easy Access is The Reserve Funds' 24-hour toll-free
telephone service that lets customers use a touch-tone phone to obtain yields
and account balances. To use it, call 800-637-1700 and follow the instructions
you will receive.
INQUIRIES. Shareholders should direct their inquiries to the Firm from which
they received this Prospectus or the Funds.
12
<PAGE> 13
SPECIAL SERVICES. The Funds reserve the right to charge shareholder accounts
for specific costs incurred in processing unusual transactions for shareholders.
Such transactions include, but are not limited to, stop payment requests on or
copies of Fund redemption checks or shareholder checks, copies of statements and
special research services.
PERFORMANCE. The Funds may compare their performance to other income producing
alternatives such as (i) money-market funds (based on yields cited by Donoghue's
Money Fund Report and other industry publications); and (ii) various bank
products (based on average rates of bank and thrift institution certificates of
deposit, money-market deposit accounts and NOW accounts as reported by the Bank
Rate Monitor and other industry publications). An investment in Fund shares is
not insured by the Federal Deposit Insurance Corporation.
Yield information is useful in reviewing a Fund's performance relative to
other funds that hold investments of similar quality. Because yields will
fluctuate, yield information may not provide a basis for comparison with bank
and thrift certificates of deposit which normally pay a fixed rate for a fixed
term and are subject to a penalty for withdrawals prior to maturity which will
reduce their return.
RESERVE CASH PERFORMANCE ACCOUNT AND ACCOUNT PLUS
The Fund offers a comprehensive package of services which enhance access to
an investment in the portfolios. The Reserve Cash Performance Account ("CPA")
and CPA Plus services include: (i) any amount checking; and (ii) a comprehensive
monthly statement which summarizes your CPA activity by payee and expense
category and simplifies budget and tax recordkeeping. These CPA services are
provided for a fee and transaction charges may apply. Participating Firms may
also charge their own service fees.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
------------------------
13
<PAGE> 14
(This page intentionally left blank)
<PAGE> 15
(This page intentionally left blank)
<PAGE> 16
[CAPTION]
[CAPTION]
TABLE OF CONTENTS
[S] [C]
PAGE
---
[S] [C]
Shareholder Expenses............................ 2
Financial Highlights............................ 3
Yield........................................... 4
Investment Objective and Policies............... 4
Management...................................... 8
How to Buy Shares............................... 8
Shares of Beneficial Interest................... 9
Daily Dividends................................. 10
Taxes........................................... 10
Redemptions..................................... 11
General Information............................. 12
Reserve Cash Performance Account and Account
Plus.......................................... 13
Investors are advised to read and retain
this Prospectus for future reference.
THE RESERVE FUNDS
[logo]
Founders of
"America's First
Money Fund"
810 Seventh Avenue, New York, NY 10019-5868
GENERAL INFORMATION AND 24 HOUR YIELD AND BALANCE INFORMATION
800-637-1700
Distributor -- Resrv Partners, Inc.
THE RESERVE FUNDS
[logo]
Founders of
"America's First
Money Fund"
-------------------------------------------------------------------------
----------
-------------------------------------------------------------------------
----------
TREASURER'S TRUST
PRIMARY FUND
U.S. GOVERNMENT FUND
U.S. TREASURY FUND
INTERSTATE TAX-EXEMPT FUND
