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[LOGO]
H&R BLOCK
FINANCIAL ADVISORS
TREASURER'S TRUST OF THE RESERVE
INSTITUTIONAL TRUST MONEY
MARKET FUNDS
PROSPECTUS
JULY 31, 2000
TREASURER'S TRUST is a class of shares of the Reserve Institutional Trust
(the "Trust") which is a registered investment company, offering two of its
no-load money market funds in this Prospectus:
PRIMARY INSTITUTIONAL FUND, and INTERSTATE TAX-EXEMPT INSTITUTIONAL FUND
(each a "Fund," collectively "the Funds").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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TABLE OF CONTENTS
ABOUT THE FUNDS
Investment Objective...........................................................2
Investment Strategies..........................................................2
Principal Risks of Investing in the Funds......................................5
Performance....................................................................6
Fees & Expenses of the Funds...................................................8
Fund Management................................................................8
YOUR ACCOUNT
How to buy shares..............................................................9
Selling shares................................................................10
ACCOUNT SERVICES..............................................................12
DIVIDENDS & TAXES.............................................................13
FINANCIAL HIGHLIGHTS..........................................................14
QUESTIONS?
Shareholders should direct their inquiries to the Firm from which they received
this Prospectus or to The Reserve Funds.
The Reserve Funds
1250 Broadway - 32nd floor
New York, NY 10001-3701
800-637-1700
212-401-5940 (fascimile)
[email protected]
or visit our web site at www.reservefunds.com
IT PAYS TO KEEP MONEY IN RESERVE-TM-
ABOUT THE FUNDS
The Funds are designed for institutional investors as a convenient alternative
to the direct investment of temporary cash balances in short-term money-market
accounts or instruments. The Funds seek to employ idle cash at yields
competitive with yields of other comparable short-term investments, and to
reduce or eliminate the mechanical problems of direct investment, such as
scheduling maturities and reinvestment, as well as, evaluating the credit of
issuers, investing in round lots, and safeguarding receipt and delivery of
securities.
INVESTMENT OBJECTIVE
The investment objective of the Primary Institutional 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 Institutional
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 these objectives cannot be assured.
INVESTMENT STRATEGIES
The Funds seek to maintain a stable $1.00 share price. The portfolio managers
monitor a range of economic and financial factors. Based on their analysis, the
Funds are invested in a mix of U.S. dollar denominated money-market securities,
that are intended to provide as high a yield as possible without violating the
Fund's credit quality policies or jeopardizing the stability of its share price.
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ABOUT THE FUNDS
PRIMARY INSTITUTIONAL FUND. The Primary Institutional Fund seeks to attain its
objective by investing in instruments issued by the U.S. government, its
agencies and instrumentalities ("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 nationally recognized statistical
rating organizations non-rated instruments of comparable quality as determined
by the Board of Trustees ("Trustees"), other short-term instruments of similar
quality, and instruments fully collateralized by such obligations.
The Primary Institutional Fund will principally invest in obligations of
U.S. banking institutions that are insured by the Federal Deposit Insurance
Corporation and deposit-type obligations of foreign branches of both U.S. banks
and foreign banks (Eurodollars) located in Australia, Canada, Western Europe and
Japan and which, at the time of investment, have more than $25 billion (or the
equivalent in other currencies) in total assets.
INTERSTATE TAX-EXEMPT INSTITUTIONAL FUND. The Interstate Tax-Exempt
Institutional Fund's investment objective 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.
The Interstate Tax-Exempt Institutional Fund's principal investment
strategies include investing primarily in high-quality, tax-exempt obligations
issued by states, counties, municipalities, authorities or other political
subdivisions. These securities are generally referred to as "municipal
obligations". The Fund intends to invest at least 80% of the value of the Fund's
net assets in municipal obligations which are exempt from federal income tax,
unless it has adopted a temporary defensive position. Interest received on
certain otherwise tax-exempt securities ("private activity bonds") may be
subject to a federal Alternative Minimum Tax ("AMT"). It is the position of the
SEC 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 AMT or at
least 80% of its income will be tax-exempt. Income received on such securities
is classified as a "tax preference item," which could subject certain
shareholders of the Fund to the AMT; however, the Fund avoids buying any AMT
paper.
The interest on securities generally known as municipal obligations is
exempt from federal income tax in the opinion of either bond counsel for the
issuers or, in some instances, the issuer itself. These securities may be issued
to raise money for various public purposes such as constructing public
facilities, while others are issued to obtain funding for privately operated
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 tolls from 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 a specific type of revenue bond or note
backed by the credit of a private issuer. Municipal obligations bear fixed,
variable or floating rates of interest.
The Fund will purchase tax-exempt securities which are rated MIG1 or MIG2 by
Moody's Investor Services, Inc., SP-1 or SP-2 by Standard & Poor's Corporation
or the equivalent. Municipal obligations which are not rated may also be
purchased provided the Adviser determines them to be of comparable quality
pursuant to guidelines established by the Trustees.
The Interstate Tax-Exempt Institutional Fund may purchase floating and
variable rate demand bonds, 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, usually upon not more than seven (7) days' notice. The
Fund will not invest more than 10% of the value of its assets in floating or
variable rate demand bonds for which there is no
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ABOUT THE FUNDS
secondary market if the demand feature on such municipal obligations requires
more than seven (7) days' notice.
The Funds may invest in repurchase agreements ("repos") but will limit them
to those banks and securities dealers who are deemed creditworthy pursuant to
the guidelines adopted by the Trustees. The U.S. Government and U.S. Treasury
Institutional Funds will further limit their investment in repos to those whose
underlying obligations are backed by the full faith and credit of the United
States, and, in the case of the U.S. Treasury Institutional Fund, repos will not
exceed 5% of its total assets except for temporary or emergency purposes.
Securities subject to repos will be placed in a segregated account and will be
monitored to ensure that the market value of the securities plus any accrued
interest will at least equal the repurchase price.
The Funds will not concentrate more than 25% of its total assets in the
securities of issuers in a single industry, except that the Primary
Institutional Fund may invest more than 25% of its assets in bank obligations.
The Funds will at all times as is practicable be invested in accordance with
the investment objective and strategies outlined above. However, from time to
time, a Fund may take temporary defensive positions that are inconsistent with
the Fund's principal investment strategies in attempting to respond to adverse
market, economic, political or other conditions. If a Fund adopts a temporary
defensive position, the Fund might not be able to attain its objective.
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ABOUT THE FUNDS
PRINCIPAL RISKS OF INVESTING IN THE FUNDS.
The following factors could reduce a Fund's income level and/or share price:
- INTEREST RATES could rise sharply causing the value of the Funds' securities
and share price to drop. Most of the Funds' performance depends on interest
rates. When interest rates fall, the Funds' yields will typically fall as
well.
- A FUND IS NOT FDIC-INSURED. The Funds are money-market funds which are a
specific type of fund that seeks to maintain a $1.00 price per share. An
investment in a Fund is not insured or guaranteed by the U.S. government,
Federal Deposit Insurance Corporation ("FDIC") or any other government
agency. Although each Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in a Fund.
However, each Fund has maintained a constant share price since inception, and
will strive to continue to do so.
- EACH FUND'S YIELD WILL VARY as the short-term securities in its portfolio
mature and the proceeds are reinvested in securities with different interest
rates.
- CERTAIN PORTFOLIO HOLDINGS. The risks that the Funds are subject to include
those risks associated with the market in general, as well as the types of
securities held. Repos could involve risks in the event of a default of the
repo counterparty, including possible delays, losses or restrictions upon a
Fund's ability to dispose of the underlying securities. As to the Primary
Institutional Fund, the risks are generally associated with investing in the
banking industry, such as interest rate risk, credit risk and regulatory
developments. Further, Euro and Yankee dollar investments involve certain
risks that are different from investments in domestic 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 banks are not
regulated by U.S. banking authorities and are generally not bound by
financial reporting standards comparable to U.S. banks. Adverse political,
regulatory, market or economic developments in foreign countries can affect
entities located in those countries. As to the Interstate Tax-Exempt
Institutional Fund, the risks are related to municipal obligations which are
volatile because unfavorable political or economic conditions and/or changes
in municipal market-related legislation or litigation within a specific state
can significantly affect the financial condition and credit quality of
issuers of municipal securities. Further, as to the Interstate Tax-Exempt
Institutional Fund, investments that secured by letters of credit or
guarantees of banks are subject to the same risks generally associated with
investing in the banking industry, such as interest rate risk, credit risk
and regulatory developments.
- CREDIT QUALITY. Overall, a decline in the credit quality of an issuer or the
provider of credit support or a maturity-shortening structure for a security
can cause the price of a money-market security to decrease.
- NON-DIVERSIFICATION. The Funds are non-diversified; therefore, performance is
more dependent upon a smaller number of securities and issuers than in a
diversified portfolio. The change in value of any one security may affect the
overall value of the Fund more than it would in a diversified portfolio.
- MONEY-MARKET FUNDS V. EQUITY INVESTMENTS. Because of the low level of risk,
over time, a money-market fund may produce lower returns than bond or stock
investments, which entail higher levels of risk.
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ABOUT THE FUNDS
PERFORMANCE
The bar chart below shows the Funds' annual returns for the full calendar years
since inception, together with the best and worst quarters. The tables assume
reinvestment of dividends and distributions, if any. The bar chart shows the
annual returns of Treasurer's Trust. The annual returns of the other classes (A,
B, C and D) that are not offered in this Prospectus are substantially similar
because the shares are invested in the same portfolio of securities and the
annual returns would differ only to the extent the classes do not have the same
expenses. The accompanying "Average Annual Total Return as of December 31, 1999"
table gives some indication of risk of an investment in the Funds. As with all
mutual funds, the past is not a prediction of the future.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Total Return for Primary Institutional Fund - Treasurer's Trust
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<S> <C>
98 5.17%
99 4.80%
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CALENDAR YEARS ENDED DECEMBER 31
QUARTERLY RETURNS:
Best Quarter:4Q 1999 1.28%
Worst Quarter:2Q 1999 1.07%
Most Recent Calendar Quarter: 2Q 2000 1.44%
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF
DECEMBER 31, 1999 SINCE INCEPTION
1 YEAR
<S> <C>
4.80% 5.01%
</TABLE>
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ABOUT THE FUNDS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Total Return for Interstate Tax-Exempt Institutional Fund -
Treasurer's Trust
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<S> <C>
99 2.81%
</TABLE>
CALENDAR YEARS ENDED DECEMBER 31
QUARTERLY RETURNS:
Best Quarter:4Q 1999 0.78%
Worst Quarter:1Q 1999 0.59%
Most Recent Calendar Quarter: 2Q 2000 0.93%
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<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF
DECEMBER 31, 1999 SINCE INCEPTION
1 YEAR
<S> <C>
2.81% 2.92%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1999
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<CAPTION>
SINCE
1 YEAR INCEPTION
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<S> <C> <C>
Primary Institutional Fund--Class A..... 5.18% 5.39%
Primary Institutional Fund--Class B..... 4.96 5.20
Primary Institutional Fund--Class C..... 3.17(1) 4.70*
Interstate Tax-Exempt Institutional
Fund--Class A......................... 3.18 3.20
</TABLE>
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(1) For the period 4/30/99 to 12/31/99
* Annualized
For the Funds' current yields, call toll-free (800) 637-1700
or visit our web site at WWW.RESERVEFUNDS.COM.
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ABOUT THE FUNDS
FEES & EXPENSES OF THE FUNDS
This table describes the fees and expenses that you may pay if you buy and hold
shares of a Fund.
FEE TABLE
SHAREHOLDER FEES None
(Fees paid directly from your investment)
ANNUAL FUND OPERATING EXPENSES FOR ALL FUNDS
(Expenses that are deducted from Fund assets)
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<S> <C>
Comprehensive Management Fee 0.25%
Distribution (12b-1) Fee 0.00
Other Operations Expenses (*) 0.35
----
Total Operating Expenses 0.60%
====
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(*) "Other Operating Expenses" include shareholder services fees and are based
on an estimated amount for the current fiscal year. Pursuant to the
Shareholder Service Plan, the Funds shall daily accrue and pay Firms a
shareholder service fee not to exceed 0.25% of the average daily net assets
of each Fund. Shareholders of Treasurer's Trust, pay Firms a service fee at
an annual rate up to 0.35% of the average daily NAV, for which the Firm
provides personal service, including maintaining shareholder accounts,
responding to inquiries, providing information about investments and
providing certain other services. It is expected that the Treasurer's Trust
shareholder accounts will require sub-accounting and other services which
are unique to the Treasurer's Trust shares.
EXAMPLE: This example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The example should
not be considered indicative of future investment returns and operating expenses
which may be more or less than those shown. This example is based on the annual
fund operating expenses described in the table.
This example uses the same assumptions other funds use in their
prospectuses. It assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
each Fund's operating expenses remain the same. The costs would be the same
whether you stayed in the Fund or sold your shares at the end of each period.
Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C> <C>
Treasurer's Trust $61 $192 $335 $750
</TABLE>
FUND MANAGEMENT
THE INVESTMENT ADVISER FOR THE RESERVE FUNDS is Reserve Management Company, Inc.
("RMCI"), 1250 Broadway, New York, NY 10001. Since November 15, 1971, RMCI and
its affiliates have provided investment advice to other mutual funds within the
Reserve family of funds which as of May 31, 2000, had approximately $7 billion
in assets under management.
RMCI manages the investment portfolios of the Funds, subject to policies
adopted by the Trustees. The Funds pay RMCI a comprehensive management fee of
0.25% per year of the average daily net assets of each Fund. RMCI pays all
administration and customary operating expenses of the Fund. Excluded from the
definition of customary operating expenses are interest, taxes, brokerage fees,
extraordinary legal and accounting fees and expenses, and the fees of the
disinterested Trustees, for which each Fund pays its direct or allocated share.
For the fiscal year ended May 31, 2000, the Primary and Interstate Tax-Exempt
Institutional Funds paid RMCI $1,073,925, and $117,444, respectively. These
amounts are net of waivers of $20,653 for the Interstate Tax-Exempt
Institutional Funds, respectively.
THE FUNDS' DISTRIBUTOR is Resrv Partners, Inc. ("Resrv"), 1250 Broadway, New
York, NY 10001-3701.
Although the Funds have adopted a Rule 12b-1 plan, which allows the Funds to
pay distribution fees for the sale and distribution of its shares, Class
Treasurer's Trust does not participate.
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YOUR ACCOUNT
HOW TO BUY SHARES.
SHARE PRICE: NET ASSET VALUE. Investors pay no sales charges to invest in the
Funds. The price you pay for a share of a Fund, and the price you receive upon
selling or redeeming a share of a Fund, is called the Fund's net asset value
("NAV") per share. Each Fund uses the amortized cost method of valuing its
securities which does not take into account unrealized gains or losses. This is
a standard calculation. The NAV is calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 PM Eastern time). However, NAV is not
calculated and purchase orders are not accepted on days the Exchange is closed
for holidays (New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day) or on regional bank holidays (Columbus Day and Veteran's Day).
Your order will be priced at the next NAV calculated after your order is
accepted (i.e., converted to federal funds) by the Funds.
MINIMUM INITIAL INVESTMENT
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<C> <C> <S>
REGULAR ACCOUNTS - None.
ALL IRA ACCOUNTS - $1,000 with $250 minimum subsequent investment.
</TABLE>
HOW TO PURCHASE
- BY WIRE. Shares of the Funds may ONLY be purchased by
wire. Prior to calling your bank, call The Reserve Funds
at 800-637-1700 for specific instructions or the Firm from
which you received this Prospectus.
- THIRD PARTY INVESTMENTS. Investments made through a third
party (rather than directly with Reserve) such as a
financial services agent may be subject to policies and
fees different than those described here. Banks, brokers,
401(k) plans, financial advisers and financial
supermarkets may charge transaction fees and may set
different minimum investments or limitations on buying or
selling shares. Investors should consult a representative
of the plan or financial institution if in doubt.
- AUTOMATIC ASSET BUILDER. You may purchase shares of a Fund
($25 suggested minimum) from a checking, NOW, or bank
money-market deposit account or from a U.S. government
distribution ($25 suggested minimum) such as social
security, federal salary, or certain veterans' benefits,
or other payment from the federal government. You may also
purchase shares automatically by arranging to have your
payroll deposited directly into your Reserve account.
Please call the Funds at 800-637-1700 for an application.
ALL INVESTMENTS MUST BE IN U.S. DOLLARS. CASH INVESTMENTS WILL NOT BE ACCEPTED.
PURCHASE ORDERS ARE NOT ACCEPTED ON DAYS THE EXCHANGE IS CLOSED FOR TRADING AND
REGIONAL BANK HOLIDAYS.
When purchasing shares, please keep in mind:
- All wires which do not correctly identify the account to be credited may
be returned or delay the purchase of shares. If you do not specify the
account number and the Fund you wish to invest in, all money will be
invested in the U.S. Government Fund under the sender's name until the
correct information can be determined.
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YOUR ACCOUNT
- Only federal funds wires are eligible for entry as of the business day
received.
- For federal funds wires to be eligible for same-day order entry, the
Primary Institutional Funds must be notified before 3:00 PM (Eastern
time, 11:00 AM for the Interstate Tax-Exempt Institutional Fund) of the
amount to be transmitted and the account to be credited.
- Payment by check not immediately convertible into federal funds will be
entered as of the business day when covering federal funds are received
or bank checks are converted into federal funds. Checks delivered to the
Fund's offices after 3:00 PM (Eastern time, 11:00 AM for the U.S.
Treasury and Interstate Tax-Exempt Institutional Funds) will be
considered received the next business day.
- Investors will be charged a fee (currently $15) for any check that does
not clear and will be responsible for any losses suffered by the Funds as
a result.
SELLING SHARES. Investors may sell (redeem) shares at any time. Shares will be
sold at the NAV next determined after the redemption request is received by the
Fund. Each Fund usually transmits payments the same day when requests are
received after 3:00 PM (Eastern time, 11:00 AM for the Interstate Tax-Exempt
Institutional Fund) and the next business day for requests received after the
time specified to enable shareholders to receive additional dividends. Shares do
not earn dividends on the day a redemption is effected, regardless of the time
the order is received. Orders will be processed promptly and investors will
generally receive the proceeds within a week after receiving your request. You
may sell shares by calling the Funds or with a letter of instruction.
Shareholders of the Treasurer's Trust shares will not be charged any fees on
redemptions by telephone or wire. The Funds assume no responsibility for delays
in the receipt of wired or mailed funds.
TELEPHONE REQUESTS. You may redeem by calling the Funds at 800-637-1700. Unless
you decline telephone privileges on your application and the Funds fail to take
reasonable measures to verify the request, the Funds will not be liable for any
unauthorized telephone redemption, or for any loss, cost or expense for acting
upon an investor's telephone instructions. Telephone redemptions will be sent to
the bank or brokerage account designated by the shareholder on the application
or in a letter with the signature guaranteed. 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. The Fund
reserves the right to refuse a telephone redemption if it reasonably believes
that the instructions are not genuine and/or it is advisable to do so.
WRITTEN REQUESTS. When writing a letter of instruction, please include the
name(s) and signature(s) of all account holders (signature(s) guaranteed, if
necessary), account number, Fund name, the dollar amount you want to redeem, and
how and where to send the proceeds. If you are redeeming your IRA, please call
for the applicable withholding requirements.
SIGNATURE GUARANTEED. The following situations require written instructions
along with signatures guaranteed.
(1) redemptions for more than $5,000, if redemption proceeds are not being
sent to the shareholder's designated bank or brokerage account; or
(2) redemptions on accounts whose address has been changed within the past
30 days; or
(3) redemption requests to be sent to someone other than the account owner
or the address of record.
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YOUR ACCOUNT
Signature guarantees are designed to protect both you and the Funds from fraud
by reducing the risk of loss. Signature guarantees can be obtained from most
banks, credit unions or savings associations, or from broker/ dealers, national
securities exchanges or clearing agencies deemed eligible by the Securities and
Exchange Commission. Notaries public cannot provide signature guarantees.
THE FUNDS RESERVE CERTAIN RIGHTS.
The Funds reserve the right to make a "redemption in kind", (payment in
portfolio securities rather than cash), without notice, if the amount the
investor is redeeming is large enough to affect fund operations (for example, if
it represents more than 1% of the Fund's assets). Further, each Fund reserves
the right to:
- refuse any purchase or exchange request,
- change or discontinue its exchange privilege,
- change its minimum investment amounts,
- to liquidate an account without notice and remit the proceeds, if an
account becomes burdensome within the Funds' discretion,
- delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or
during unusual market conditions); and
- to charge shareholder accounts for specific costs incurred in processing
unusual transactions. Such transactions include, but are not limited to,
stop payment requests, copies of Fund redemption checks or shareholder
checks, copies of statements and special research services.
REDEMPTIONS THROUGH BROKERS AND FINANCIAL INSTITUTIONS. Redemptions through
brokers and financial institutions may involve such Firms' own redemption
minimums, services fees, and other redemption requirements.
ACCOUNT STATEMENTS. Shareholders are advised to retain all account statements.
You must notify us no later than sixty (60) days after Reserve sent you the
statement on which a problem or error first appeared.
SHAREHOLDER COMMUNICATIONS. The Funds will not send duplicate shareholder
communications, such as the Prospectus and Annual Report, to related accounts at
a common address, unless instructed to the contrary by you.
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ACCOUNT SERVICES
CHECKING, VISA AND ATM ACCESS. You may redeem shares of the Fund by using your
Reserve checks and VISA Check Card. Once you complete an application or a
signature card (for existing accounts) and certain other documentation, you can
write checks in any amount against your account. A check will be returned
(bounced) and a fee charged if you request a stop payment; the check is
postdated; contains an irregularity in the signature, amount or otherwise;
signature or payee is missing; or, is written against accounts with insufficient
or uncollected funds. Please do not use your checks to close your account.
Checking may not be available to clients of some Firms and some Firms may
establish their own minimum check amount. Shareholders may use their VISA Check
Card at ATM's to receive cash; shareholders will not be charged by The Reserve
Funds to use an ATM, but may be charged a surcharge by the ATM owner.
EXCHANGE PRIVILEGE. Investors can exchange all or some of the shares offered for
shares in other Reserve money market and equity funds. Investors can request an
exchange in writing or by telephone. Be sure to read the current prospectus for
any fund into which you are exchanging. Any new account established through an
exchange will have the same privileges as an original account (provided they are
available). There is currently no fee for exchanges.
INDIVIDUAL RETIREMENT ACCOUNTS. Investors may use the Funds as an investment for
Individual Retirement Accounts ("IRAs"). Information regarding administration
fees and other details is available from the Funds at 800-637-1700.
RESERVE EASY ACCESS AND ON-LINE ACCESS. Easy Access is The Reserve Funds'
24-hour toll-free telephone service that lets shareholders use a touch-tone
phone for a variety of options, which include obtaining yields, account
balances, check reorders. To use it, call 800-637-1700 and follow the
instructions. Clients may also access full account activity through On-line
Access for the previous six months on the Internet at www.reservefunds.com. You
must call The Reserve Funds to activate the Internet access.
12
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DIVIDENDS & TAXES
An investment in any mutual fund generally involves tax considerations. The
following discussion is intended as general information for U.S. citizens and
residents only. Because everyone's tax situation is unique, you should consult
your own tax advisor(s) with regard to the tax consequences of the purchase,
ownership or disposition of Fund shares. Any tax liabilities generated by your
transactions are your responsibility. Further, the applicable tax laws which
affect the Funds and their shareholders are subject to change and may be
retroactive.
The Funds intend to maintain their regulated investment company status for
federal income tax purposes, so that they will not be liable for federal income
taxes to the extent their taxable income and net capital gains are distributed.
However, it is possible that events could occur which could cause the Fund to
incur some U.S. taxes. Dividends and distributions are taxable to most
shareholders as ordinary income (unless an investment is in an IRA or other
tax-advantaged account) in the tax year they are declared. The tax status of any
distribution is the same regardless of how long an investor has been in the fund
and whether distributions are reinvested or taken in cash. The tax status of
dividends and distributions will be detailed in an annual tax statement from the
Funds.
Each Fund declares dividends each day the Exchange is open. 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. Any net capital gains
realized will be distributed once a year. All dividends and capital gains
distributions, if any, are paid in the form of additional shares credited to an
investor's account at NAV unless the shareholder has requested otherwise on the
Account Application or in writing to the Fund.
As to the Interstate Tax-Exempt Institutional 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 as long-term
capital gains, regardless of the length of time the Fund's shares have been
owned by the shareholder.
BACKUP WITHHOLDING. As with all mutual funds, the Fund may be required to
withhold U.S. federal income tax at the rate of 31% of all taxable distributions
payable to certain shareholders who fail to provide the Fund with their correct
taxpayer identification number ("TIN") or to make required certifications, or
who have been notified by the Internal Revenue Service that they are subject to
backup withholding. However, special rules apply for certain accounts. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against the shareholder's U.S. federal income tax liability. Shareholders should
be aware that the Fund may be fined $50 annually by the IRS 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.
13
<PAGE>
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
beneficial interest outstanding of each Fund for the periods as indicated.
"Total Return" shows how much an investment in a series would have increased (or
decreased) during each period, assuming reinvestment of all dividends and
distributions, if any. These figures have been audited by PricewaterhouseCoopers
LLP, the Trust's independent accountants, whose report, along with each Funds'
financial statements, is included in the Trust's Annual Report, which is
available upon request by calling 800-637-1700.
PRIMARY INSTITUTIONAL FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------ -----------------------------------------
FISCAL YEAR FISCAL YEAR
ENDED MAY 31, ENDED MAY 31,
------------------------------ -----------------------------------------
2000 1999 1998(A) 2000 1999 1998 1997(B)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period............... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- ------- -------
Net investment income
from investment
operations........... .0572 .0509 .0332 .0549 .0488 .0529 .0179
Less dividends from net
investment income.... (.0572) (.0509) (.0332) (.0549) (.0488) (.0529) (.0179)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period............... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= ======= =======
Total Return........... 5.72% 5.09% 5.49%(d) 5.49% 4.88% 5.29% 4.95%(d)
RATIOS/SUPPLEMENTAL
DATA
Net assets end of
period (millions).... $ 305.6 $ 75.8 $ 4.4 $ 9.2 $ 4.2 $ 10.4 $ 2.0
Ratio of expenses to
average net assets... .25% .25% .25%(d) .48% .45% .45% .50%(d)(e)
Ratio of net investment
income to average net
assets............... 5.69% 4.79% 5.35%(d) 5.29% 4.79% 5.16% 4.81%(d)(e)
<CAPTION>
TREASURER'S TRUST CLASS C
------------------------------ -------------------
FISCAL YEAR FISCAL YEAR
ENDED MAY 31, ENDED MAY 31,
------------------------------ -------------------
2000 1999 1998(C) 2000 1999(F)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period............... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- -------
Net investment income
from investment
operations........... .0532 .0470 .0322 .0516 .0036
Less dividends from net
investment income.... (.0532) (.0470) (.0322) (.0516) (.0036)
------- ------- ------- ------- -------
Net asset value, end of
period............... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total Return........... 5.32% 4.70% 5.13%(d) 5.16% 4.11%
RATIOS/SUPPLEMENTAL
DATA
Net assets end of
period (millions).... $ 62.4 $ 154.1 $ 171.7 $ 64.0 $ 58.4
Ratio of expenses to
average net assets... .60% .60% .60%(d) .75% .75%(d)
Ratio of net investment
income to average net
assets............... 4.99% 4.59% 5.00%(d) 4.91% 4.12%(d)
</TABLE>
--------------------------
(a) From October 23, 1997 (Commencement of Operations) to May 31, 1998.
(b) From January 21, 1997 (Commencement of Operations) to May 31, 1997.
(c) From October 15, 1997 (Commencement of Operations) to May 31, 1998.
(d) Annualized.
(e) Due to the voluntary waiver of certain expenses by RMCI, the net expense
ratio and net investment income amounted to .48% and 4.83%, respectively,
for the period ended May 31, 1997.
(f) From April 30, 1999 (Commencement of Operations) to May 31, 1999.
14
<PAGE>
FINANCIAL HIGHLIGHTS
INTERSTATE TAX-EXEMPT INSTITUTIONAL FUND
<TABLE>
<CAPTION>
CLASS A CLASS B TREASURER'S TRUST
--------------------- -------- ----------------------------------
FISCAL YEAR PERIOD PERIOD FISCAL YEAR FISCAL YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, MAY 31, MAY 31, MAY 31,
2000 1999(A) 1999(D) 2000 1999 1998(B)
---- ------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Net investment income
form investment
operations............. .0353 .0175 .0101 .0320 .0284 .0018
Less dividends from net
investment income...... (.0353) (.0175) (.0101) (.0320) (.0284) (.0018)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total
Return................. 3.53% 3.06%(c) 3.12%(c) 3.20% 2.84% 3.39%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets end of period
(millions)............. $ 48.4 $ 11.2 -- $ 16.3 $ 23.7 $ 14.0
Ratio of expenses to
average net assets..... .25% .25%(c) .45%(c) .60%(e) .60% .60%(c)
Ratio of net investment
income to average net
assets................. 3.71% 3.13%(c) 3.04%(c) 3.01%(e) 2.79% 3.33%(c)
</TABLE>
--------------------------
(a) From November 3, 1998 (Commencement of Operations) to May 31, 1999.
(b) From May 13, 1998 (Commencement of Operations) to May 31, 1998.
(c) Annualized.
(d) From August 4, 1998 (Commencement of Operations) to December 31, 1998 (the
final redemption of all outstanding shares).
(e) During the year ended May 31, 2000, RMCI voluntarily waived a portion of
its fee. Due to the voluntary waiver of certain expenses by RMCI, the net
expense ratio and net investment income amounted to .53% and 3.08%.
------------------
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.
---------------
15
<PAGE>
This Prospectus contains the information about each Fund which a prospective
investor should know before investing.
The Statement of Additional Information ("SAI") contains additional and more
detailed information about the Funds, and is considered part of this Prospectus.
Our Annual and Semi-Annual Reports list the holdings in each Fund, describe Fund
performance, include financial statements for the Funds, and discuss market
conditions and strategies that significantly affected the Funds' performance.
These documents may be obtained without charge by writing or calling The
Reserve Funds at 800-637-1700. You can download the documents from the Edgar
database of the SEC's web site (http://www.sec.gov) or you can obtain copies
by visiting the SEC's Public Reference Room in Washington, DC
(1-202-942-8090) or by electronic mail request at [email protected] or by
sending your request and duplicating fee to the SEC's Public Reference
Section, Washington, DC 20549-6009.
INVESTORS ARE ADVISED TO READ AND RETAIN
THIS PROSPECTUS FOR FUTURE REFERENCE.
[LOGO]
H&R BLOCK
FINANCIAL ADVISORS
H&R BLOCK FINANCIAL ADVISORS, INC.
751 GRISWOLD STREET, DETROIT, MI 48226-3274
MEMBER NYSE & SIPC
Distributor--Resrv Partners, Inc.
RIT/TT/HRBFA-07/2000
SEC File Number
Reserve Institutional Trust
811-3141
[H&R BLOCK LOGO]
H&R BLOCK
FINANCIAL ADVISORS
MONEY MARKET FUNDS
OFFERED BY THE RESERVE FUNDS
Treasurer's Trust:
Primary Institutional Fund
Interstate Tax-Exempt Institutional Fund
Prospectus
July 31, 2000
