<PAGE>
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GENERAL INFORMATION AND 24-HOUR YIELD AND BALANCE INFORMATION
800-637-1700
This literature is not authorized for distribution to prospective investors
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Distributor--Resrv Partners, Inc.
RTET/ANNUAL 07/00
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ANNUAL REPORT
NEW YORK TAX-EXEMPT FUND
CALIFORNIA II TAX-EXEMPT FUND
CONNECTICUT TAX-EXEMPT FUND
FLORIDA TAX-EXEMPT FUND
MASSACHUSETTS TAX-EXEMPT FUND
MICHIGAN TAX-EXEMPT FUND
NEW JERSEY TAX-EXEMPT FUND
OHIO TAX-EXEMPT FUND
PENNSYLVANIA TAX-EXEMPT FUND
VIRGINIA TAX-EXEMPT FUND
MAY 31, 2000
<PAGE>
RESERVE NEW YORK TAX-EXEMPT TRUST--NEW YORK TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--99.5% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$ 2,365,000 Bleecker HDC Terrace Apt., Project S85, 4.35%, 7/1/15
(a)..................................................... $ 2,365,000
2,000,000 Elmont UFSD, TAN, 3.90%, 6/29/00........................ 2,000,517
2,000,000 Elmont UFSD, TAN, 4.00%, 6/29/00........................ 2,000,664
1,430,000 Great Neck North Water Authority, WSR, 4.15%, 1/1/20
(a)..................................................... 1,430,000
3,100,000 Guilderland IDA for North Eastern Industrial Park, Ser.
1993 A, 4.25%, 12/1/08 (a).............................. 3,100,000
2,000,000 Hempstead Town IDA Resource Recovery for Corp. Credit,
4.05%, 12/1/10 (a)...................................... 2,000,000
3,500,000 Jefferson IDA for Watertown Carthage Project, 4.30%,
12/1/12 (a)............................................. 3,500,000
7,000,000 Long Island Power Authority, NY Electric System,
Series 4, 3.90%, 6/8/00 (b)............................. 7,000,000
5,000,000 Metropolitan Transit Authority GO, 3.95%, 6/14/00 (b)... 5,000,000
3,000,000 Metropolitan Transit Authority GO, 3.95%, 6/8/00 (b).... 3,000,000
5,000,000 Metropolitan Transit Authority GO, 4.00%, 6/12/00 (b)... 5,000,000
2,295,000 Metropolitan Transit Authority GO, 6.00%, 7/1/19 (b).... 2,298,953
3,800,000 Metropolitan Transit Authority GO, 7.50%, 7/1/16 (b).... 3,886,972
2,240,000 Metropolitan Transit Authority GO, 7.50%, 7/1/19 (b).... 2,280,233
1,150,000 New Rochelle BAN, 4.50%, 10/12/00....................... 1,151,220
4,650,000 New York City Cultural Resources for Asia Society,
4.00%, 4/1/30 (a)....................................... 4,650,000
4,000,000 New York City GO, Custodial Receipts, Series A31, 4.29%,
7/2/00 (a).............................................. 4,000,000
900,000 New York City GO, Series A4, 4.05%, 2/1/20 (a).......... 900,000
4,000,000 New York City GO, Series A4, 4.25%, 8/1/21 (a).......... 4,000,000
4,000,000 New York City GO, Series B5, 3.95%, 8/15/23 (a)......... 4,000,000
1,450,000 New York City GO, Series B8, 3.85%, 8/15/24 (a)......... 1,450,000
4,600,000 New York City GO, Series D, 3.90%, 2/1/22 (a)........... 4,600,000
2,800,000 New York City GO, Series D, 3.95%, 2/1/21 (a)........... 2,800,000
2,750,000 New York City GO, Series E2, 4.30%, 8/1/20 (a).......... 2,750,000
1,500,000 New York City GO, Series E3, 4.30%, 8/1/23 (a).......... 1,500,000
4,100,000 New York City GO, Series E4, 4.30%, 8/1/22 (a).......... 4,100,000
5,800,000 New York City GO, Series E5, 4,30%, 8/1/17 (a).......... 5,800,000
1,200,000 New York City GO, Series E5, 4.30%, 8/1/10 (a).......... 1,200,000
1,000,000 New York City GO, Series E5, 4.30%, 8/1/15 (a).......... 1,000,000
1,000,000 New York City GO, Series E5, 4.30%, 8/1/16 (a).......... 1,000,000
1,000,000 New York City GO, Series E5, 4.30%, 8/1/19 (a).......... 1,000,000
2,000,000 New York City GO, Series H6, 3.95%, 6/8/00 (b).......... 2,000,000
5,000,000 New York City HDC for Upper Fifth Avenue Project, 4.30%,
1/1/16 (a).............................................. 5,000,000
2,500,000 New York City HDC MFHR for Monterey, Series A, 3.19%,
11/15/19 (a)............................................ 2,500,000
5,900,000 New York City HDC MFHR for James Tower, 3.80%, 7/1/05
(a)..................................................... 5,900,000
2,250,000 New York City Health & Hospital, Series A, 3.90%,
2/15/26 (a)............................................. 2,250,000
5,355,000 New York City Health & Hospital, Series C, 3.80%,
2/15/26 (a)............................................. 5,355,000
866,000 New York City IDA for American Civil Liberties, 4.20%,
6/1/12 (a).............................................. 866,000
4,900,000 New York City IDA for Childrens Oncology Society, 3.90%,
5/1/21 (a).............................................. 4,900,000
1,500,000 New York City IDA for Stroheim & Romann Inc. Project,
4.25%, 12/1/15 (a)...................................... 1,500,000
500,000 New York City WSR, Series G, 4.30%, 6/15/24 (a)......... 500,000
1,200,000 New York State Dormitory Authority for Oxford University
Press, 3.80%, 7/1/25 (a)................................ 1,200,000
6,700,000 New York State Dormitory Authority for Public Library,
3.85%, 7/1/28 (a)....................................... 6,700,000
5,500,000 New York State Environmental, Series A, 4.65%, 7/11/00
(b)..................................................... 5,500,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE>
RESERVE NEW YORK TAX-EXEMPT TRUST--NEW YORK TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2000 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
<C> <S> <C>
$ 7,590,000 New York State HFA for Normandie Court, 3.70%, 5/15/15
(a)..................................................... $ 7,590,000
1,000,000 New York State HFA for Related Liberty View, Series A,
3.80%, 11/15/19 (a)..................................... 1,000,000
7,500,000 New York State HFA Service Contract Rev. Bonds,
Series A, 3.80%, 3/15/27 (a)............................ 7,500,000
7,000,000 New York State HFA, Series A, 3.90%, 3/15/28 (a)........ 7,000,000
1,885,000 New York State Local Government Assistance Corp.,
Series A, 3.80%, 4/1/22 (a)............................. 1,885,000
14,180,000 New York State Local Government Assistance Corp.,
Series B, 3.75%, 4/1/25 (a)............................. 14,180,000
3,000,000 New York State Local Government Assistance Corp.,
Series C, 7.00%, 4/1/10 (b)............................. 3,125,507
7,000,000 North Shore CSD, BAN, 4.00%, 7/13/00.................... 7,004,030
4,200,000 Onondaga County IDR for Edgecomb Metals Project, 4.25%,
11/1/09 (a)............................................. 4,200,000
2,400,000 Onondaga County IDR for McLane Co. Project, 4.85%,
11/1/04 (a)............................................. 2,400,000
5,000,000 Rochester BAN, 4.75%, 3/7/01............................ 5,019,775
1,410,000 Seneca County IDA for New York Chiropractic College,
4.25%, 11/1/27 (a)...................................... 1,410,000
4,000,000 Suffolk County IDR for Jefferson Ferry, 3.85%, 11/1/09
(a)..................................................... 4,000,000
4,550,000 Syracuse IDA for General Accident Insurance, 3.90%,
12/1/03 (a)............................................. 4,550,000
1,800,000 Triborough Bridge & Tunnel Authority, Series T, 6.00%,
1/1/22 (b).............................................. 1,806,669
2,945,000 Triborough Bridge & Tunnel Authority, Series T, 7.00%,
1/1/20 (b).............................................. 3,047,401
11,000,000 Triborough Bridge & Tunnel Authority, Series C, 4.10%,
1/1/13 (a).............................................. 11,000,000
1,300,000 Yonkers IDA Civic Revenue Bonds for Consumers Union
Facility, 3.90%, 7/1/19 (a)............................. 1,300,000
4,400,000 Yonkers IDR Civic Revenue Bonds for Consumers Union
Facility, 3.90%, 7/1/21 (a)............................. 4,400,000
-----------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $227,352,941)............... 99.5% 227,352,941
OTHER ASSETS, LESS LIABILITIES...................... 0.5 1,074,633
-------- ------------
NET ASSETS.......................................... 100.0% $228,427,574
======== ============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE BASED
ON 228,427,574 SHARES OF BENEFICIAL INTEREST,
$.001 PAR VALUE OUTSTANDING................................... $1.00
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
RESERVE TAX-EXEMPT TRUST--CALIFORNIA II TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--96.9% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$1,000,000 Anaheim UFSD for Facilities Building Funding, 3.85%,
9/1/13 (a).............................................. $ 1,000,000
1,745,000 Beverly Hills Public Financing Lease, Series A, 4.00%,
6/1/00 (b).............................................. 1,745,000
500,000 California Community Development for North California
Retirement Officers, 4.20%, 6/1/26 (a).................. 500,000
650,000 California EDA for Independent System, Series C, 4.00%,
4/1/08 (a).............................................. 650,000
1,500,000 California EDA for KQED Inc. Project, 3.80%, 4/1/20
(a)..................................................... 1,500,000
4,200,000 California EDA Independent Systems, Class A, 4.10%,
4/1/08 (a).............................................. 4,200,000
2,900,000 California HFF for Adventist Health Systems, Series A,
4.05%, 8/1/21 (a)....................................... 2,900,000
600,000 California PCR for Pacific Gas & Electric, Series A,
4.15%, 12/1/18 (a)...................................... 600,000
2,500,000 California PCR for Pacific Gas & Electric, Series E,
4.50%, 11/1/26 (a)...................................... 2,500,000
2,200,000 California PCR for Pacific Gas & Electric, Series F,
4.15%, 11/1/26 (a)...................................... 2,200,000
1,300,000 California PCR for Reynolds Metals, 3.70%, 12/1/15
(a)..................................................... 1,300,000
1,500,000 California RAN, Series A, 4.00%, 6/30/00................ 1,500,813
1,800,000 California School Facilities for Capital Improvement
Financing Projects, Series B, 3.80%, 7/1/24 (a)......... 1,800,000
2,500,000 California School Facilities for Capital Improvement
Financing Projects, Series C, 3.80%, 7/1/22 (a)......... 2,500,000
2,000,000 Chula Vista MHR for Terra Nova Association, 3.50%,
3/1/05 (a).............................................. 2,000,000
1,000,000 Elsinore Valley, WDS, Series A, 3.50%, 7/1/29 (a)....... 1,000,000
1,500,000 Fremont PFA for Family Resource Center, 4.05%, 8/1/28
(a)..................................................... 1,500,000
2,500,000 Hayward MHR for Shorewood, 3.90%, 8/1/14 (a)............ 2,500,000
1,500,000 Huntington Beach TAN, 4.25%, 10/3/00.................... 1,504,275
500,000 Irvine Ranch Water District, 4.15%, 10/1/10 (a)......... 500,000
2,000,000 Irvine Ranch Water District, 4.15%, 9/1/06 (a).......... 2,000,000
1,200,000 Irvine Ranch Water District, 4.15%, 9/2/15 (a).......... 1,200,000
1,700,000 Kern County COP, Series A, 3.50%, 8/1/06 (a)............ 1,700,000
1,500,000 Los Angeles Community Redevelopment Agency for Baldwin
Hills, 3.40%, 12/1/14 (a)............................... 1,500,000
1,420,000 Los Angeles Metropolitan Transit Authority, 5.50%,
7/1/00 (b).............................................. 1,422,411
3,000,000 Los Angeles Water Waste, 4.25%, 8/16/00 (b)............. 3,000,000
700,000 MSR Public Power Agency for San Juan, 3.90%, 7/1/22
(a)..................................................... 700,000
1,160,000 Northern California Power Agency for Geothermal Project,
5.50%, 7/1/00 (b)....................................... 1,161,677
2,800,000 Northern California Transmission, Series B, 3.25%,
7/13/00 (b)............................................. 2,800,000
3,300,000 Oakland COP for Capital Equipment, 3.75%, 12/1/15 (a)... 3,300,000
1,535,000 Oakland Redevelopment Agency for Central District,
5.40%, 2/1/01 (b)....................................... 1,552,388
2,300,000 Orange County COP, Series C, 4.15%, 8/1/17 (a).......... 2,300,000
1,080,000 Palomar Pomerado Health Systems, 4.25%, 11/1/00 (b)..... 1,082,398
1,500,000 Puerto Rico Electric Power Authority, Series W, 6.00%,
7/1/00 (b).............................................. 1,502,733
4,800,000 Riverside County COP, Class A, 4.05%, 12/1/15 (a)....... 4,800,000
700,000 Riverside County Housing Authority MHR for Tyler Springs
Apartments, Class C, 3.75%, 1/15/27 (a)................. 700,000
4,000,000 San Francisco Bay Area Rapid Transit, 3.35%, 6/8/00
(b)..................................................... 4,000,000
900,000 San Francisco City and County Redevelopment for MHR,
3.40%, 12/1/17 (a)...................................... 900,000
2,500,000 San Francisco MHR for Bayside Village, Series D, 4.50%,
12/1/05 (a)............................................. 2,500,000
2,000,000 San Joaquin County, 3.40%, 6/8/00 (b)................... 2,000,000
1,920,000 San Jose Redevelopment Agency, Tax Allocation Merged
Area, 4.75%, 8/1/00 (b)................................. 1,923,582
1,810,000 South Orange County Public Financing Authority GO,
4.50%, 9/1/00 (b)....................................... 1,814,873
2,000,000 Southeast Recovery Facilities Authority, Series A,
3.65%, 12/1/18 (a)...................................... 2,000,000
1,200,000 Southern California Public Power Authority, Class A,
3.50%, 7/1/23 (a)....................................... 1,200,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
RESERVE TAX-EXEMPT TRUST--CALIFORNIA II TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2000 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
<C> <S> <C>
$1,000,000 Southern California Public Power Authority, 6.00%,
7/1/18 (b).............................................. $ 1,002,100
1,215,000 University of California for Multipurpose Projects,
Series G, 4.50%, 9/1/00 (b)............................. 1,217,565
1,000,000 Upland CDA for MHR, 3.95%, 2/15/30 (a).................. 1,000,000
1,000,000 Vallejo City UFSD, Series E, 4.05%, 7/1/25 (a).......... 1,000,000
1,700,000 Ventura County Public Finance Authority, 3.30%, 8/10/00
(b)..................................................... 1,700,000
1,700,000 Watereuse Finance Authority, 4.00%, 5/1/28 (a).......... 1,700,000
----------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $88,579,815)................ 96.9% 88,579,815
OTHER ASSETS, LESS LIABILITIES...................... 3.1 2,789,934
-------- -----------
NET ASSETS.......................................... 100.0% $91,369,749
======== ===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE,
BASED ON 91,369,749 SHARES OF BENEFICIAL INTEREST,
$.001 PAR VALUE OUTSTANDING................................... $1.00
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
RESERVE TAX-EXEMPT TRUST--CONNECTICUT TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--92.2% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$1,400,000 Connecticut DAI for Allen Group Inc., 4.30%, 2/1/13
(a)..................................................... $ 1,400,000
700,000 Connecticut DAI for Conco Medical, 4.15%,11/1/05 (a).... 700,000
4,975,000 Connecticut DAI for Independent Living Proj., 4.00%,
7/1/15 (a).............................................. 4,975,000
413,500 Connecticut DAI for Regional YMCA Project, 4.65%, 6/1/08
(a)..................................................... 413,500
1,400,000 Connecticut Development Authority PCR for Central
Vermont Public Service, 4.40%, 12/1/15 (a).............. 1,400,000
950,000 Connecticut HEFA for Charlotte Hungerford Hospital,
Series C, 4.10%, 7/1/13 (a)............................. 950,000
500,000 Connecticut HEFA for Gaylord Hospital, Series A, 3.95%,
7/1/20 (a).............................................. 500,000
280,000 Connecticut HEFA for Kingswood Oxford School Issue,
Series A, 4.65%, 2/1/09 (a)............................. 280,000
5,000,000 Connecticut HEFA for New Haven Hospital, Class F, 7.10%,
7/1/25 (b).............................................. 5,112,590
1,100,000 Connecticut HEFA for Pomfret School Issue, Series A,
4.25%, 7/1/24 (a)....................................... 1,100,000
950,000 Connecticut HEFA for Sharon Hospital, Series A, 4.10%,
7/1/27 (a).............................................. 950,000
1,500,000 Connecticut HEFA for Summerwood University, Series A,
3.90%, 7/1/30 (a)....................................... 1,500,000
1,000,000 Connecticut HEFA for Yale University, Series T-1. 4.30%,
7/1/29 (a).............................................. 1,000,000
1,500,000 Connecticut HEFA for Yale University, Series V, 4.10%,
7/1/33 (a).............................................. 1,500,000
300,000 Connecticut HFA, Series G, 4.15%, 5/15/18 (a)........... 300,000
2,000,000 Connecticut Special Asmt. Unemployment Comp., Series A,
5.50%, 11/15/00 (b)..................................... 2,015,099
2,200,000 Connecticut Special Asmt. Unemployment Comp., Series A,
5.50%, 5/15/01 (b)...................................... 2,229,628
1,500,000 Connecticut Special Asmt. Unemployment Comp., Series C,
3.38%, 11/15/01 (b)..................................... 1,500,000
1,000,000 Connecticut State for Bradley International Airport,
7.35%, 10/1/00 (b)...................................... 1,011,752
4,880,000 Connecticut State GO, Series B, 4.25%, 5/15/14 (a)...... 4,880,000
4,770,000 Connecticut State Special Tax Transportation
Infrastructure Second Lien Revenue Bonds, 4.10%, 12/1/10
(a)..................................................... 4,770,000
2,400,000 Hartford Redev. Agency MHR for Underwood Towers Project,
4.05%, 6/1/20 (a)....................................... 2,400,000
300,000 Puerto Rico GO, 5.90%, 7/1/00 (b)....................... 300,434
2,700,000 Puerto Rico Highway Authority, 8.00%, 7/1/18 (b)........ 2,763,361
1,200,000 Puerto Rico PCR for Reynolds Metals, 3.50%, 9/1/13
(a)..................................................... 1,200,000
500,000 Shelton County HFA for Crosby Commons Project, 4.20%,
1/1/31 (a).............................................. 500,000
1,500,000 South Central Connecticut WSR, 5.10%, 8/1/00 (b)........ 1,502,479
----------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $47,153,843)................ 92.2% $47,153,843
OTHER ASSETS, LESS LIABILITIES...................... 7.8 3,974,879
-------- -----------
NET ASSETS.......................................... 100.0% $51,128,722
======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
RESERVE TAX-EXEMPT TRUST--CONNECTICUT TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<C> <S> <C>
ASSETS
Investments in securities, at value (cost
$47,153,843)............................................ $47,153,843
Cash.................................................... 3,532,242
Accrued interest receivable............................. 444,034
-----------
Total Assets............................................ 51,130,119
-----------
LIABILITIES
Other payables and accrued expenses..................... 1,397
-----------
NET ASSETS.............................................. $51,128,722
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE, BASED ON 51,128,722 SHARES OF BENEFICIAL
INTEREST,
$.001 PAR VALUE OUTSTANDING............................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
RESERVE TAX-EXEMPT TRUST--FLORIDA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--93.3% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
FLORIDA--58.1%
$ 425,000 Brevard County MHR for Malabar Lakes Proj., 4.25%,
12/1/10 (a)............................................. $ 425,000
500,000 Broward County School District, Series C, 4.60%. 4/11/01
(b)..................................................... 501,648
680,000 Dade County IDA Aviation Authority Facilities,
Series 84A, 3.85%, 10/1/09 (a) ......................... 680,000
1,000,000 Dade County IDA for Dolphin Stadium Project, Series B,
4.10%, 1/1/16 (a)....................................... 1,000,000
495,000 Florida BOE, Series E, 7.25%, 6/1/23 (b)................ 504,900
1,015,000 Florida HFA, 4.45%, 6/1/07 (a).......................... 1,015,000
1,500,000 Florida Local Gov. Authority, 4.50%, 6/27/00 (a)........ 1,500,000
225,000 Gulf Breeze IDA Revenue Bonds, 4.30%, 12/1/15 (b)....... 225,000
1,500,000 Indian River Hospital District, 4.10%, 6/7/00 (b)....... 1,500,000
1,000,000 Martin County PCR for Florida Power & Light Co. Proj.,
4.40%, 7/15/22 (a) ..................................... 1,000,000
1,300,000 Miami Dade County School Board, Series C, 4.25%, 8/1/00
(b)..................................................... 1,300,627
700,000 Orange County IDA for Trinity Prep School, Series A,
4.60%, 10/1/23 (a)...................................... 700,000
1,000,000 Palm Beach County School District, 5.50%, 8/1/00 (b).... 1,002,610
300,000 Pasco County School District, 5.75%, 7/1/00 (b)......... 300,398
400,000 Pinnellas County for Chi Chi Rodriguez Foundation,
4.45%, 8/1/16 (a)....................................... 400,000
1,000,000 Pinnellas County Recovery, Series A, 6.60%, 10/1/00
(b)..................................................... 1,008,041
500,000 Pinnellas School District, TAN, 4.25%, 6/30/00.......... 500,231
150,000 Polk County IDA, 4.55% 1/1/11 (a)....................... 150,000
200,000 Port St. Lucie IDA for Florida Power and Light, 4.55%,
1/1/11 (a).............................................. 200,000
565,000 Sarasota County Public Hospital District, 4.00%, 6/12/00
(b)..................................................... 565,000
1,200,000 Seminole County School District, 5.70%. 8/1/00 (b)...... 1,203,329
100,000 Sunshine State GO, 4.30%, 7/1/16 (a).................... 100,000
1,000,000 Volusia County HEFA for South West Volusia Health,
4.35%, 11/15/23 (a)..................................... 1,000,000
----------------
16,781,784
----------------
ARIZONA--5.9%
1,700,000 Pima County IDA for Tucson Electric Power, Series A,
4.15%, 12/1/22 (a)...................................... 1,700,000
----------------
GEORGIA--2.4%
700,000 Fulton County Development Authority for Alfred & Adele
Davis, 4.35%, 12/1/19 (a) .............................. 700,000
----------------
ILLINOIS--7.1%
850,000 Illinois HFA for Northwest Community Hospital,
Series B, 4.40%, 10/1/15 (a) ........................... 850,000
1,200,000 McCook for St. Andrew Society, Series B, 4.30%, 12/1/21
(a)..................................................... 1,200,000
----------------
2,050,000
----------------
INDIANA--2.4%
700,000 Indiana HEFA for Community Mental Health &
Rehabilitation, 4.30%, 11/1/20 (a) ..................... 700,000
----------------
LOUISIANA--2.8%
800,000 Calcasieu Parish IDR PCR, 4.20%, 8/1/04 (a)............. 800,000
----------------
MARYLAND--1.5%
400,000 Baltimore IDA for Cap. Acquisition, 4.10%, 8/1/16 (a)... 400,000
----------------
NEBRASKA--1.4%
390,000 Buffalo County IDR for Agrex Inc., 4.35%, 2/1/15 (a).... 390,000
----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
RESERVE TAX-EXEMPT TRUST--FLORIDA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
<C> <S> <C>
PENNSYLVANIA--1.4%
$ 400,000 Allegheny County HDA for Allegheny General Hospital,
Series B, 4.85%, 9/1/20 (a)............................. $ 400,000
----------------
TEXAS--2.4%
700,000 Midlothian IDA PCR for Box Crow Cement, 4.05%, 12/1/09
(a)..................................................... 700,000
----------------
WASHINGTON--1.0%
300,000 Port of Seattle IDA, 4.45%, 12/1/05 (a)................. 300,000
----------------
WISCONSIN--6.9%
2,000,000 Green Bay IDA for St. Mary's Holdings, Inc., 4.40%,
11/1/00 (a)............................................. 2,000,000
----------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $26,921,784)................ 93.3% 26,921,784
OTHER ASSETS, LESS LIABILITIES...................... 6.7 1,940,787
-------- -----------
NET ASSETS.......................................... 100.0% $28,862,571
======== ===========
</TABLE>
RESERVE TAX-EXEMPT TRUST--FLORIDA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<C> <S> <C>
ASSETS
Investment in securities, at value (cost $26,921,784)... $ 26,921,784
Cash.................................................... 1,720,641
Accrued interest Receivable............................. 224,767
----------------
Total Assets............................................ 28,867,192
----------------
LIABILITIES
Other payables and accrued expenses..................... 4,621
----------------
NET ASSETS.............................................. $ 28,862,571
================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
BASED ON 28,862,571 SHARES OF BENEFICIAL INTEREST,
$.001 PAR VALUE OUTSTANDING............................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
RESERVE TAX-EXEMPT TRUST--MASSACHUSETTS TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--91.4% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$ 495,000 Dartmouth GO, 6.50%, 8/1/00(b).......................... $ 497,047
500,000 Massachusetts Bay Transit Authority, Series B, 7.88%,
3/1/21(b)............................................... 522,845
1,000,000 Massachusetts DFA for Elderhostel, 4.20%, 9/30/30(a).... 1,000,000
300,000 Massachusetts DFA for New Bedford Whaling Museum, 4.25%,
9/1/29(a)............................................... 300,000
700,000 Massachusetts GO, 4.25%, 9/1/16(a)...................... 700,000
500,000 Massachusetts GO, 5.00%, 1/1/01(b)...................... 502,040
200,000 Massachusetts HEFA Brigham & Women's Hospital, 4.00%,
7/1/17(a)............................................... 200,000
200,000 Massachusetts HEFA for Becker College, Series A-2,
4.30%, 7/1/09(a)........................................ 200,000
500,000 Massachusetts HEFA for Boston University, 4.20%
12/1/29(a).............................................. 500,000
485,000 Massachusetts HEFA for Endicott College, Series B,
4.35%, 10/1/18(a)....................................... 485,000
200,000 Massachusetts HEFA for Partnership Healthcare System,
4.00%, 7/1/27(a)........................................ 200,000
500,000 Massachusetts HEFA, Series B, 8.00%, 7/1/18(b).......... 511,606
1,000,000 Massachusetts HEFA for University of Massachusetts,
Series A, 3.95%, 11/1/30(a) ............................ 1,000,000
600,000 Massachusetts HEFA for Wellesley College, Series B,
4.00%, 7/1/22(a)........................................ 600,000
400,000 Massachusetts HEFA for Williams College, 4.10%,
8/1/14(a)............................................... 400,000
700,000 Massachusetts HFA for Multifamily Housing, 4.00%,
1/15/10(a).............................................. 700,000
200,000 Massachusetts IDA for KRH Rolls Project, 4.70%,
5/1/06(a)............................................... 200,000
200,000 Massachusetts IFA for Gordon College, 4.20%,
12/1/27(a).............................................. 200,000
700,000 Massachusetts IFA for Governor Dummer Academy, 4.20%,
7/1/26(a)............................................... 700,000
300,000 Massachusetts IFA for Holyoke Water Power Project,
3.80%, 5/1/22(a)........................................ 300,000
700,000 Massachusetts IFA for Lower Mills Association, 4.35%,
12/1/20(a).............................................. 700,000
400,000 Massachusetts Municipal Wholesale Electric Power Supply
Systems, Series C, 4.00%, 7/1/19(a) .................... 400,000
700,000 Massachusetts WRA, 3.85%, 6/9/00(b)..................... 700,000
700,000 Massachusetts WRA, Series A, 4.00%, 4/1/28(a)........... 700,000
600,000 Massachusetts WRA, Series B, 4.00%, 8/1/37(a)........... 600,000
500,000 Massachusetts WRA, Series D, 4.00%, 11/1/26(a).......... 500,000
1,000,000 Springfield Municipal Purpose Loan, 4.50%, 9/1/00(b).... 1,001,349
400,000 Watertown BAN, 4.25%, 11/16/00.......................... 400,670
----------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $14,720,557)................ 91.4% 14,720,557
OTHER ASSETS, LESS LIABILITIES...................... 8.6 1,387,245
-------- -----------
NET ASSETS.......................................... 100.0% $16,107,802
======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
RESERVE TAX-EXEMPT TRUST--MASSACHUSETTS TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<C> <S> <C>
ASSETS
Investments in securities, at value (cost
$14,720,557)............................................ $ 14,720,557
Cash.................................................... 1,267,597
Accrued interest receivable............................. 122,289
----------------
Total Assets............................................ 16,110,443
----------------
LIABILITIES
Other payables and accrued expenses..................... 2,641
----------------
NET ASSETS.............................................. $ 16,107,802
================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE, BASED ON 16,107,802 SHARES OF BENEFICIAL
INTEREST,
$.001 PAR VALUE OUTSTANDING............................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
RESERVE TAX-EXEMPT TRUST--MICHIGAN TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--92.3% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$100,000 Bruce Catholic Health Initiatives, 4.15%, 5/1/18(a)..... $ 100,000
200,000 Cornell Township EDC for Mead Escanaba Paper, 4.30%,
11/1/16(a).............................................. 200,000
100,000 Delta County EDC for Mead Escanaba Paper, Series D,
4.35%, 12/1/23(a)....................................... 100,000
100,000 Delta County EDC for Mead Escanaba Paper, Series E,
4.35%, 12/1/23(a)....................................... 100,000
125,000 Detroit EDC for Waterfront Reclamation, Series C, 4.45%,
5/1/09(a)............................................... 125,000
100,000 Detroit Sewer Disposal, Series B, 3.95%, 7/1/23(a)...... 100,000
100,000 Detroit Water Supply Systems, 4.05%, 7/1/13(a).......... 100,000
70,000 Garden City Hospital Finance Authority, 4.40%,
9/1/26(a)............................................... 70,000
100,000 Grand Rapids Water Supply System, 4.00%, 1/1/20(a)...... 100,000
100,000 Jackson EDC for Thrifty Leoni Project, 4.37%,
12/1/14(a).............................................. 100,000
100,000 Michigan HDA for Fairlane Meadow, 4.20%, 12/1/07(a)..... 100,000
100,000 Michigan Hospital Finance Authority for Hospital
Equipment, Series A, 4.00%, 12/1/23(a) ................. 100,000
100,000 Michigan Hospital Finance Authority for St. Mary
Hospital of Livonia, 4.20%, 7/1/17(a) .................. 100,000
100,000 Michigan HDA for Harbortown Ltd., 4.37%, 6/1/04(a)...... 100,000
100,000 Michigan HDA, Series B, 4.05%, 4/1/19(a)................ 100,000
100,000 Michigan Job Development Authority for Gordon Food
Service, 4.45%, 8/1/15(a) .............................. 100,000
100,000 Michigan Job Development Authority for Wyandotte Cort,
4.10%, 12/1/09 (a) ..................................... 100,000
100,000 Michigan Strategic Fund for Allen Group Inc., 4.15%,
11/1/25(a).............................................. 100,000
100,000 Michigan Strategic Fund for Detroit Edison, Series C,
4.45%, 9/1/30(a)........................................ 100,000
---------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $1,995,000)................. 92.3% 1,995,000
OTHER ASSETS, LESS LIABILITIES...................... 7.7 166,773
-------- ----------
NET ASSETS.......................................... 100.0% $2,161,773
======== ==========
</TABLE>
RESERVE TAX-EXEMPT TRUST--MICHIGAN TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<C> <S> <C>
ASSETS
Investment in securities, at value (cost $1,995,000).... $ 1,995,000
Cash.................................................... 156,944
Accrued interest receivable............................. 11,432
---------------
Total Assets............................................ 2,163,376
---------------
LIABILITIES
Other payables and accrued expenses..................... 1,603
---------------
NET ASSETS.............................................. $ 2,161,773
===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE, BASED ON 2,161,773 SHARES OF BENEFICIAL INTEREST,
$.001 PAR VALUE OUTSTANDING............................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
RESERVE TAX-EXEMPT TRUST--NEW JERSEY TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--93.0% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$1,800,000 Atlantic City Pooled Loan Program, 3.75%, 7/1/26(a)..... $ 1,800,000
700,000 Bernards Township BAN, 5.15%, 5/18/01................... 702,565
500,000 Bergen County GO, 4.50%, 7/15/00........................ 500,437
1,400,000 Camden Improvement Authority, 4.25%, 12/1/10(a)......... 1,400,000
2,200,000 Camden Improvement Authority, 4.30%, 6/1/29(a).......... 2,200,000
1,000,000 Casino Reinvestment Development Authority, Series A,
5.00%, 10/1/00(b)....................................... 1,002,591
900,000 Essex County Improvement Authority, 3.85%,
12/01/25(a)............................................. 900,000
800,000 Essex Improvement Authority for the Children's
Institute, 4.20%, 2/1/20 (a) ........................... 800,000
1,500,000 Freehold Township BAN, 4.25%, 11/10/00.................. 1,502,877
1,275,000 Gloucester County GO, 4.70%, 6/1/00(b).................. 1,275,000
2,000,000 Jersey City Redevelopment Authority for Dixon Mills
Apartments, 3.75%, 5/15/30(a) .......................... 2,000,000
1,000,000 Middlesex County BAN, 4.50%, 1/19/01.................... 1,003,168
1,300,000 Monmouth County Improvement Authority Pooled Government
Loan Program, 3.90%, 8/1/16(a) ......................... 1,300,000
300,000 New Jersey EDA for Bayonne IMTT Docking, Series B,
4.10%, 12/1/27(a)....................................... 300,000
200,000 New Jersey EDA for Bayonne IMTT Docking, Series C,
4.10%, 12/1/27(a)....................................... 200,000
985,000 New Jersey EDA for Catholic Community Series, 4.30%,
11/1/13(a).............................................. 985,000
680,000 New Jersey EDA for Economic Growth Bond, Series F,
4.25%, 8/1/14(a)........................................ 680,000
2,100,000 New Jersey EDA for Foreign Trade Zone, 4.40%,
12/1/07(a).............................................. 2,100,000
200,000 New Jersey EDA for NJ Natural Gas Co., 3.95%,
1/1/28(a)............................................... 200,000
800,000 New Jersey EDA for RJB Association, 4.20%, 8/1/08(a).... 800,000
900,000 New Jersey EDA for St. James Preparatory School, 4.20%,
12/1/27(a).............................................. 900,000
950,000 New Jersey EDA for St. Peters School, 4.30%,
1/1/10(a)............................................... 950,000
400,000 New Jersey EDA for Trailer Marine Corps Project, 4.25%,
2/1/02(a)............................................... 400,000
2,100,000 New Jersey EDA for Volvo of American Corp., 4.68%,
12/1/04(a).............................................. 2,100,000
750,000 New Jersey EDA, Series CC, 3.90%, 12/1/09(a)............ 750,000
1,300,000 New Jersey EFA for College of NJ, Series A, 4.10%,
7/1/29(a)............................................... 1,300,000
1,200,000 New Jersey EFA for Higher Education, Series A, 5.13%,
9/1/00(b)............................................... 1,204,313
3,400,000 New Jersey HCF for Hospital Capital Asset, Series C,
4.05%, 7/1/35(a)........................................ 3,400,000
710,000 New Jersey Sports Expo Authority, Series C, 4.25%,
9/1/24(a)............................................... 710,000
1,000,000 New Jersey Transportation Authority, 4.50%,
12/15/00(b)............................................. 1,001,954
2,150,000 New Jersey Transportation Authority, Series A, GO,
6.00%, 6/15/00(b)....................................... 2,151,894
2,100,000 New Jersey Turnpike Authority, Series D, 3.80%,
1/1/18(a)............................................... 2,100,000
300,000 Port Authority NY and NJ, Series 5, 4.30%, 8/1/24(a).... 300,000
400,000 Port Authority NY and NJ, Series 2, 4.35%, 5/1/19(a).... 400,000
500,000 Somerset County GO, 4.70%, 9/1/00....................... 501,128
480,000 State of New Jersey GO, 7.00%, 4/1/03(b)................ 492,560
1,000,000 University of Puerto Rico, Series N, 4.63%, 6/1/00(b)... 1,000,000
----------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $41,313,487)................ 93.0% 41,313,487
OTHER ASSETS, LESS LIABILITIES...................... 7.0 3,120,601
-------- -----------
NET ASSETS.......................................... 100.0% $44,434,088
======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
RESERVE TAX-EXEMPT TRUST--NEW JERSEY TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<C> <S> <C>
ASSETS
Investments in securities, at value (cost
$41,313,487)............................................ $ 41,313,487
Cash.................................................... 2,735,006
Accrued interest receivable............................. 386,809
----------------
Total Assets............................................ 44,435,302
----------------
LIABILITIES
Other payables and accrued expenses..................... 1,214
----------------
NET ASSETS.............................................. $ 44,434,088
================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE, BASED ON 44,434,088 SHARES OF BENEFICIAL
INTEREST,
$.001 PAR VALUE OUTSTANDING............................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
RESERVE TAX-EXEMPT TRUST--OHIO TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--78.9% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$300,000 Columbus Electric Systems, 4.20%, 9/1/09(a)............. $ 300,000
300,000 Cuyahoga County HRB for Cleveland Clinic, Series A,
4.10%, 1/1/26(a)........................................ 300,000
200,000 Cuyahoga County HRB for University Hospital, 4.30%,
1/1/16(a)............................................... 200,000
100,000 Cuyahoga County HRB for University Hospital, Series D,
4.35%, 1/15/29 (a) ..................................... 100,000
400,000 Cuyahoga HRB for Cleveland Clinic, Series A, 4.15%,
1/1/16(a)............................................... 400,000
750,000 Cuyahoga IDA for Allen Group Project, 3.95%,
12/1/15(a).............................................. 750,000
100,000 Franklin County HRB for US Health Corp., Series A,
4.32%, 12/1/21(a)....................................... 100,000
100,000 Franklin County IDR for Kinder-Care Learning Centers,
Series A, 4.40%, 6/1/02(a) ............................. 100,000
400,000 Hamilton County HRB for Bethesda Hospital, 4.20%,
2/15/24(a).............................................. 400,000
400,000 Lucas County HEFA for Lutheran Home Society, 4.45%,
11/1/19(a).............................................. 400,000
100,000 Ohio Air Quality Dev. Authority for Cincinnati Gas &
Electric, 4.45%, 9/1/30(a) ............................. 100,000
500,000 Ohio Air Quality Dev. Authority for Cincinnati Gas &
Electric, 4.30%, 9/1/30(a) ............................. 500,000
300,000 Ohio Air Quality Dev. Authority for Mead Corp., 4.30%,
10/1/01(a).............................................. 300,000
800,000 Ohio Air Quality Dev. Authority for Timken, 4.15%,
6/1/01(a)............................................... 800,000
700,000 Ohio Water Development Authority PCR for Cleveland
Electric, Series B, 4.20%, 8/1/20(a) ................... 700,000
400,000 Ottawa County HRB for Luther Home of Mercy, 4.45%,
10/1/17(a).............................................. 400,000
800,000 Port Authority of Cincinnati and Hamilton Counties for
Kenwood Office Association, 4.45%, 9/1/25(a) ........... 800,000
400,000 Sharonville IDA for Edgecomb Metals Inc., 4.25%,
11/1/09(a).............................................. 400,000
---------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $7,050,000)................. 78.9% 7,050,000
OTHER ASSETS, LESS LIABILITIES...................... 21.1 1,883,649
-------- ----------
NET ASSETS.......................................... 100.0% $8,933,649
======== ==========
</TABLE>
RESERVE TAX-EXEMPT TRUST--OHIO TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<C> <S> <C>
ASSETS
Investments in securities, at value (cost $7,050,000)... $ 7,050,000
Cash.................................................... 1,855,607
Accrued interest receivable............................. 34,636
---------------
Total Assets............................................ 8,940,243
---------------
LIABILITIES
Other payables and accrued expenses..................... 6,594
---------------
NET ASSETS.............................................. $ 8,933,649
===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE, BASED ON 8,933,649 SHARES OF BENEFICIAL INTEREST,
$.001 PAR VALUE OUTSTANDING............................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
RESERVE TAX-EXEMPT TRUST--PENNSYLVANIA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--84.5% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$ 500,000 Allegheny HDA for Allegheny Hospital, Series B, 4.85%,
9/1/10(a)............................................... $ 500,000
500,000 Allegheny HDA for Allegheny Hospital, Series B, 4.85%,
9/1/20(a)............................................... 500,000
500,000 Allegheny HDA for Allegheny Hospital, Series C, 4.55%,
3/1/13(a)............................................... 500,000
500,000 Allegheny GO, Series C, 6.10%, 9/1/00(b)................ 502,744
300,000 Allegheny HDA for Childrens' Hospital Pittsburgh,
Series B, 4.40%, 12/1/15(a) ............................ 300,000
300,000 Allegheny IDA, Series C, 4.40%, 7/1/27(a)............... 300,000
1,000,000 Allegheny IDA for Environmental Improvements, 4.25%
12/1/32(a).............................................. 1,000,000
1,030,000 Bucks IDA for Edgecomb Metals Co., 4.25%, 10/1/09(a).... 1,030,000
764,000 Chartier Valley IDA Bonds for 1133 Penn Ave. Associates,
Series A, 4.40%, 8/1/07(a) ............................. 764,000
500,000 Conestoga Valley School District, Series B, 7.10%,
5/1/11(b)............................................... 512,300
1,000,000 Delaware County IDA for Scotfoam Corp., 4.05%,
10/1/05(a).............................................. 1,000,000
1,000,000 Delaware Valley Regional Finance Authority, 4.10%,
12/1/20(a).............................................. 1,000,000
795,000 Emmaus General Authority, 4.20%, 3/1/24(a).............. 795,000
300,000 Emmaus General Authority, 4.40%, 3/1/24(a).............. 300,000
600,000 Emmaus General Authority, 4.20%, 3/2/24(a).............. 600,000
350,000 Emmaus General Authority, 4.15%, 12/1/28(a)............. 350,000
500,000 Lancaster County, 4.38%, 5/1/30(a)...................... 500,000
1,000,000 Lancaster County HRB for Brethren Village, 4.38%,
6/15/20(a).............................................. 1,000,000
300,000 Lehigh IDA for Allentown Airport, 4.25%, 12/1/05(a)..... 300,000
1,255,000 Mercersburg General Purpose for Mercersburg College,
4.30%, 11/1/27(a)....................................... 1,255,000
1,000,000 Montgomery County IDA PCR, 4.05%, 6/12/00(b)............ 1,000,000
1,200,000 Montgomery IDA for Girls Scouts, 4.50%, 2/1/25(a)....... 1,200,000
300,000 Northeastern HRB for Wyoming Valley Health Care, 4.10%,
1/1/24(a)............................................... 300,000
500,000 Parkland School District, 5.00%, 9/1/00(b).............. 500,955
1,000,000 Pennsylvania GO, 6.60%, 1/1/01(b)....................... 1,013,424
200,000 Philadelphia Gas Works, 4.25%, 8/1/00(b)................ 200,112
400,000 Philadelphia MHR for Harbor View Tower, 4.40%,
11/1/27(a).............................................. 400,000
200,000 Pittsburgh GO, Series A, 5.00%, 3/1/01(b)............... 201,053
----------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $17,824,588)................ 84.5% 17,824,588
OTHER ASSETS, LESS LIABILITIES...................... 15.5 3,260,541
-------- -----------
NET ASSETS.......................................... 100.0% $21,085,129
======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
RESERVE TAX-EXEMPT TRUST--PENNSYLVANIA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<C> <S> <C>
ASSETS
Investments in securities, at value (cost
$17,824,588)............................................ $ 17,824,588
Cash.................................................... 3,137,126
Accrued interest receivable............................. 126,827
----------------
Total Assets............................................ 21,088,541
----------------
LIABILITIES
Other payables and accrued expenses..................... 3,412
----------------
NET ASSETS.............................................. $ 21,085,129
================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE, BASED ON 21,085,129 SHARES OF BENEFICIAL
INTEREST,
$.001 PAR VALUE OUTSTANDING............................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
RESERVE TAX-EXEMPT TRUST--VIRGINIA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--52.3% (NOTE 1)
--------- ----------------------------- --------
<C> <S> <C>
$100,000 Albemarle County IDA for University of Virginia, 4.15%,
10/1/22(a).............................................. $ 100,000
100,000 Bristol IDA for Bristol Health Care Center, 4.85%,
3/1/10(a)............................................... 100,000
100,000 Clarke County IDA for Winchester Medical Center, 4.30%,
1/1/30(a)............................................... 100,000
100,000 Hampton MHR for Shoreline Apartments, 4.25%,
12/1/19(a).............................................. 100,000
100,000 Loudoun County IDA for Falcons Landing, 4.10%,
11/1/28(a).............................................. 100,000
100,000 Lynchburgh IDA, 4.20%, 12/1/25(a)....................... 100,000
100,000 Newport News Redevelopment & Housing for Newport Oxford,
4.40%, 11/1/06 (a) ..................................... 100,000
100,000 Norfolk IDA for Children's Hospital, 4.40%, 6/1/20(a)... 100,000
100,000 Peninsula Port Authority for Dominion Term., 4.35%,
7/1/16(a)............................................... 100,000
100,000 Puerto Rico Government Development Bank, 3.40%,
12/1/15(a).............................................. 100,000
100,000 Virginia College Building Authority for University of
Richmond 4.35%, 11/1/22(a) ............................. 100,000
---------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (COST $1,100,000)................. 52.3% 1,100,000
OTHER ASSETS, LESS LIABILITIES...................... 47.7 1,004,222
-------- ----------
NET ASSETS.......................................... 100.0% $2,104,222
======== ==========
</TABLE>
RESERVE TAX-EXEMPT TRUST--VIRGINIA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<C> <S> <C>
ASSETS
Investments in securities, at value (cost $1,100,000)... $ 1,100,000
Cash.................................................... 1,001,341
Accrued interest receivable............................. 4,613
---------------
Total Assets............................................ 2,105,954
---------------
LIABILITIES
Other payables and accrued expenses..................... 1,732
---------------
NET ASSETS.............................................. $ 2,104,222
===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE, BASED ON 2,104,222 SHARES OF BENEFICIAL INTEREST,
$.001 PAR VALUE OUTSTANDING............................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
FOOTNOTES TO PORTFOLIO STATEMENTS
<TABLE>
<CAPTION>
SECURITY TYPE ABBREVIATIONS:
----------------------------
<C> <S> <C> <C>
Housing Facilities Authority
BAN --...................... Bond Anticipation Notes HFA -- Revenue Bonds
Health Facilities Financing
BOE --...................... Board of Education HFF -- Authority
CDA --...................... Community Redevelopment Agency HRB -- Hospital Revenue Bonds
Industrial Development Authority
COP --...................... Certificate of Participation IDA -- Revenue Bonds
Industrial Development Agency
CSD --...................... Central School District IDR -- Revenue Bonds
Development Authority Industrial Industrial Finance Agency Revenue
DAI --...................... Refunding Bonds IFA -- Bonds
DFA --...................... Development Finance Agency MHR -- Multifamily Housing Revenue Bonds
Economic Development Authority
EDA --...................... Revenue Bonds PCR -- Pollution Control Revenue Bonds
EDC --...................... Economic Development Corporation PFA -- Public Finance Authority
EFA --...................... Education Facilities Authority RAN -- Revenue Anticipation Notes
GO --....................... General Obligation Bonds TAN -- Tax Anticipation Notes
Health Care Facilities Revenue
HCF --...................... Bonds UFSD -- Union Free School District
HDA --...................... Hospital Development Authority WDS -- Water District Certificates
Housing Development Corporation
HDC --...................... Bonds WRA -- Water Resource Authority
Health & Education Facilities
HEFA --..................... Authority WSR -- Water System Revenue Bonds
</TABLE>
-----------------
(a) The interest rates, as reported on May 31, 2000, are subject to change
periodically. Securities payable on demand, are collateralized by bank
letters of credit or other credit agreements.
(b) Securities are collateralized by bank letters of credit or other credit
agreements.
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 2000
<TABLE>
<CAPTION>
RESERVE NEW YORK
TAX-EXEMPT TRUST RESERVE TAX-EXEMPT TRUST
---------------- ---------------------------------------------------
NEW YORK CALIFORNIA II CONNECTICUT FLORIDA MASSACHUSETTS
FUND FUND(1) FUND FUND FUND
---------------- ------------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME (Note
1)..................... $6,984,215 $1,945,864 $1,844,763 $943,070 $472,626
---------- ---------- ---------- -------- --------
EXPENSES (Note 2)
Management fee......... 61,896 -- 17,596 7,546 4,863
Comprehensive
management fee....... 1,476,313 476,709 402,668 192,611 98,563
Distribution (12b-1)
fees................. 393,904 119,177 107,715 51,174 26,598
Other expenses......... 37,811 -- 11,231 5,201 3,592
---------- ---------- ---------- -------- --------
Total expenses before
waivers............ 1,969,924 595,886 539,210 256,532 133,616
Expenses waived...... -- (24,022) -- -- --
---------- ---------- ---------- -------- --------
Total expenses after
waivers............ 1,969,924 571,864 539,210 256,532 133,616
---------- ---------- ---------- -------- --------
NET INVESTMENT INCOME.... $5,014,291 $1,374,000 $1,305,553 $686,538 $339,010
========== ========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
RESERVE TAX-EXEMPT TRUST
-----------------------------------------------------
MICHIGAN NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
FUND FUND FUND FUND FUND(2)
-------- ---------- ------- ------------ --------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME (Note
1)..................... $50,075 $1,499,567 $81,465 $676,624 $7,514
------- ---------- ------- -------- ------
EXPENSES (Note 2)
Management fee......... -- 13,730 -- 5,779 --
Comprehensive
management fee....... 11,118 341,410 16,505 135,734 1,444
Distribution (12b-1)
fees................. 2,780 85,263 4,127 36,252 361
Other expenses......... -- 8,912 -- 4,141 --
------- ---------- ------- -------- ------
Total expenses before
waivers............ 13,898 449,315 20,632 181,906 1,805
Expenses waived...... -- -- -- -- (73)
------- ---------- ------- -------- ------
Total expenses after
waivers............ 13,898 449,315 20,632 181,906 1,732
------- ---------- ------- -------- ------
NET INVESTMENT INCOME.... $36,177 $1,050,252 $60,833 $494,718 $5,782
======= ========== ======= ======== ======
</TABLE>
---------------
(1) For the period July 2, 1999 (Commencement of Operations) to May 31, 2000.
(2) For the period March 3, 2000 (Commencement of Operations) to May 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
RESERVE NEW YORK
TAX-EXEMPT TRUST RESERVE TAX-EXEMPT TRUST
-------------------------------- ----------------------------------------------------
NEW YORK FUND CALIFORNIA II FUND CONNECTICUT FUND
-------------------------------- ------------------ --------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
MAY 31, 2000 MAY 31, 1999 MAY 31, 2000(A) MAY 31, 2000 MAY 31, 1999
--------------- --------------- ------------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment
income............... $ 5,014,291 $ 4,121,961 $ 1,374,000 $ 1,305,553 $ 1,006,967
------------- ------------- ------------- ------------- -------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income
(Note 1)............. (5,014,291) (4,121,961) (1,374,000) (1,305,553) (1,006,967)
------------- ------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Net proceeds from sale
of shares............ 821,096,889 727,809,717 595,952,442 140,956,225 169,702,015
Dividends reinvested... 5,014,291 4,121,961 1,374,000 1,305,553 1,006,967
Cost of shares
redeemed............. (783,664,964) (717,162,559) (505,956,693) (146,571,734) (152,056,981)
------------- ------------- ------------- ------------- -------------
Net increase (decrease)
in net assets derived
from capital share
transactions and from
investment
operations........... 42,446,216 14,769,119 91,369,749 (4,309,956) 18,652,001
NET ASSETS:
Beginning of year...... 185,981,358 171,212,239 -- 55,438,678 36,786,677
------------- ------------- ------------- ------------- -------------
End of year............ $ 228,427,574 $ 185,981,358 $ 91,369,749 $ 51,128,722 $ 55,438,678
============= ============= ============= ============= =============
</TABLE>
-----------------
(a) For the period July 2, 1999 (Commencement of Operations) to May 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
RESERVE TAX-EXEMPT TRUST
-------------------------------------------------------------------------------------------------------
FLORIDA FUND MASSACHUSETTS FUND MICHIGAN FUND
-------------------------------- -------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
MAY 31, 2000 MAY 31, 1999 MAY 31, 2000 MAY 31, 1999 MAY 31, 2000 MAY 31, 1999(B)
--------------- --------------- --------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment
income............... $ 686,538 $ 509,841 $ 339,010 $ 569,377 $ 36,177 $ 14,305
------------- ------------- ------------ ------------ ------------ ----------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income
(Note 1)............. (686,538) (509,841) (339,010) (569,377) (36,177) (14,305)
------------- ------------- ------------ ------------ ------------ ----------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Net proceeds from sale
of shares............ 197,568,078 141,741,605 67,762,141 76,638,806 11,678,027 2,100,000
Dividends reinvested... 686,538 509,841 339,010 569,377 36,177 14,305
Cost of shares
redeemed............. (192,022,135) (130,438,595) (71,921,640) (82,662,880) (10,766,736) (900,000)
------------- ------------- ------------ ------------ ------------ ----------
Net increase (decrease)
in net assets derived
from capital share
transactions and from
investment
operations........... 6,232,481 11,812,851 (3,820,489) (5,454,697) 947,468 1,214,305
NET ASSETS:
Beginning of year...... 22,630,090 10,817,239 19,928,291 25,382,988 1,214,305 --
------------- ------------- ------------ ------------ ------------ ----------
End of year............ $ 28,862,571 $ 22,630,090 $ 16,107,802 $ 19,928,291 $ 2,161,773 $1,214,305
============= ============= ============ ============ ============ ==========
</TABLE>
-----------------
(b) For the period December 14, 1998 (Commencement of Operations) to May 31,
1999.
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
RESERVE TAX-EXEMPT TRUST
--------------------------------------------------------------------------------------------------
NEW JERSEY FUND OHIO FUND PENNSYLVANIA FUND VIRGINIA FUND
---------------------------- ------------------------- -------------------------- -------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
MAY 31, MAY 31, MAY 31, MAY 31, MAY 31, MAY 31, MAY 31,
2000 1999 2000 1999 2000 1999 2000(C)
------------- ------------- ------------ ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment
income............... $ 1,050,252 $ 978,333 $ 60,833 $ 41,205 $ 494,718 $ 428,975 $ 5,782
------------- ------------- ------------ ----------- ------------ ------------ ----------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income
(Note 1)............. (1,050,252) (978,333) (60,833) (41,205) (494,718) (428,975) (5,782)
------------- ------------- ------------ ----------- ------------ ------------ ----------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Net proceeds from sale
of shares............ 215,890,580 223,758,247 18,513,169 2,750,308 84,167,132 79,111,957 2,098,440
Dividends reinvested... 1,050,252 978,333 60,833 41,205 494,718 428,975 5,782
Cost of shares
redeemed............. (213,823,240) (221,020,524) (10,862,839) (4,075,632) (80,526,010) (75,778,781) --
------------- ------------- ------------ ----------- ------------ ------------ ----------
Net increase (decrease)
in net assets derived
from capital share
transactions and from
investment
operations........... 3,117,592 3,716,056 7,711,163 (1,284,119) 4,135,840 3,762,151 2,104,222
NET ASSETS:
Beginning of year...... 41,316,496 37,600,440 1,222,486 2,506,605 16,949,289 13,187,138 --
------------- ------------- ------------ ----------- ------------ ------------ ----------
End of year............ $ 44,434,088 $ 41,316,496 $ 8,933,649 $1,222,486 $21,085,129 $16,949,289 $2,104,222
============= ============= ============ =========== ============ ============ ==========
</TABLE>
-----------------
(c) For the period March 3, 2000 (Commencement of Operations) to May 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------------------------------
Reserve New York Tax-Exempt Trust and Reserve Tax-Exempt Trust
(collectively the "Trusts") are registered under the Investment Company Act
of 1940 as nondiversified, open-end management investment companies. The
policies summarized below are consistently followed in the preparation of
their financial statements in conformity with generally accepted accounting
principles.
A. The Trusts' authorized shares of beneficial interest are unlimited. As
of May 31, 2000, Reserve Tax-Exempt Trust shares are divided into 10
series: California II, Connecticut, Florida, Interstate, Massachusetts,
Michigan, New Jersey, Ohio, Pennsylvania and Virginia Tax-Exempt Funds
(collectively the "Funds"). These financial statements and notes apply to
Reserve New York Tax-Exempt Trust and to all above-mentioned Funds except
for Interstate Tax-Exempt Funds.
B. Securities are valued at amortized cost which approximates market value.
The amortized cost method values a security at cost plus accrued interest
at the time of purchase and thereafter assumes a constant amortization to
maturity of any discount or premium, irrespective of intervening changes in
interest rates or market values. Pursuant to Rule 2a-7, the maturity of
floating or variable rate instruments in which the Fund may invest, will be
deemed to be for floating rate instruments (1) the notice period required
before the Fund is entitled to receive payment of the principal amount of
the instrument; and for variable rate instruments the longer of (1) above
or (2) the period remaining until the instrument's next rate adjustment,
for purposes of Rule 2a-7 and for computing the portfolio's average
weighted life to maturity.
C. It is the Trusts' policy to comply with Subchapter M of the Internal
Revenue Code and to distribute all income to its shareholders. Accordingly,
no Federal income tax provision is required.
D. Security transactions are recorded on a trade date basis; interest
income is accrued daily and security premium or discount is amortized or
accreted daily.
E. Net investment income is distributed to shareholders daily and
automatically reinvested in additional Fund shares.
F. Each Fund was charged only for its direct or allocated (in proportion to
net assets or number of shareholder accounts) share of expenses.
(2) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
--------------------------------------------------------------------------------
Pursuant to an Investment Management Agreement (the "Agreement") between
Reserve Management Company, Inc. ("RMCI") and the Funds, RMCI serves as the
Funds' Investment Adviser subject to the direction of the Board of
Trustees. Under the Agreement, RMCI is responsible for the supervision of
the day-to-day operations of each Fund, manages the Funds' investments,
effects purchases and sales thereof, and absorbs certain promotional
expenses. For its services as Investment Adviser prior to June 26, 1999,
RMCI receives a management fee from each Fund, except Michigan, Ohio and
Virginia, calculated at an annual rate of .50% of the first $500 million,
.475% of the next $500 million, .45% of the next $500 million, .425% of the
next $500 million and .40% in excess of $2 billion of average daily net
assets.
Effective June 26, 1999, Reserve New York Tax-Exempt Trust and Reserve
Tax-Exempt Trust entered into a new Investment Management Agreement with
RMCI, which is substantially similar to the Investment Management Agreement
previously in effect with regard to each Fund, except for a new
comprehensive management fee. The Agreement provides that RMCI will furnish
continuous investment advisory and management services to the Funds. For
its services, RMCI receives a fee of 0.80% per year of the average daily
net assets of each Fund. RMCI pays all employee 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.
DISTRIBUTION ASSISTANCE:
---------------------------------------------------------------------------
Pursuant to a Distribution Plan, each Trust will make payments of up to
.20% per annum of the average net asset value of the Trust qualified
shareholder accounts as to which the payee or RMCI has rendered assistance
in distributing its shares.
(3) MANAGEMENT'S USE OF ESTIMATES:
--------------------------------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities on
the dates of the financial statements and the reported amounts of income
and expenses during the reporting periods. Actual results could differ from
those estimates.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) INVESTMENT CONCENTRATION:
--------------------------------------------------------------------------------
The Trusts invest substantially all of their assets in portfolios of
tax-exempt debt obligations primarily consisting of issuers in each of the
respective states. The issuers' ability to meet their obligations may be
affected by economic, regional or political developments. In order to
reduce the credit risk associated with such factors, the Trusts invest
substantially in obligations backed by letters of credit, bond insurance of
financial institutions, or financial guaranty assurance agencies. At
May 31, 2000, the percentage invested in such obligations amounted to:
<TABLE>
<S> <C>
New York.................................................... 92%
California II............................................... 97%
Connecticut................................................. 95%
Florida..................................................... 93%
Massachusetts............................................... 91%
Michigan.................................................... 100%
New Jersey.................................................. 89%
Ohio........................................................ 100%
Pennsylvania................................................ 100%
Virginia.................................................... 100%
</TABLE>
(5) COMPONENTS OF NET ASSETS
--------------------------------------------------------------------------------
At May 31, 2000, the components of each Fund's net assets was as follows:
<TABLE>
<CAPTION>
NEW YORK CALIFORNIA II CONNECTICUT FLORIDA MASSACHUSETTS
------------ ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Par Value................ $ 228,428 $ 91,370 $ 51,129 $ 28,863 $ 16,108
Paid-in-Capital.......... 288,199,146 91,278,379 51,077,593 28,833,708 16,091,694
------------ ----------- ----------- ----------- -----------
Net Assets............... $288,427,574 $91,369,749 $51,128,722 $28,862,571 $16,107,802
============ =========== =========== =========== ===========
<CAPTION>
MICHIGAN NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
------------ ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Par Value................ $ 2,162 $ 44,434 $ 8,934 $ 21,085 $ 2,104
Paid-in-Capital.......... 2,159,611 44,389,654 8,924,715 21,064,044 2,102,118
------------ ----------- ----------- ----------- -----------
Net Assets............... $ 2,161,773 $44,434,088 $ 8,933,649 $21,085,129 $ 2,104,222
============ =========== =========== =========== ===========
</TABLE>
(6) FINANCIAL HIGHLIGHTS:
--------------------------------------------------------------------------------
Contained below is per share operating performance data for a share of
beneficial interest outstanding for each of the periods as indicated.
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED MAY 31,
-------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NEW YORK TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- -------
Net investment income............................. .0258 .0222 .0268 .0247 .0276
Dividends from net investment income.............. (.0258) (.0222) (.0268) (.0247) (.0276)
------- ------- ------- ------- -------
Net asset value, end of year...................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total Return...................................... 2.58% 2.22% 2.68% 2.47% 2.76%
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of year (millions)................. $ 228.4 $ 186.0 $ 171.2 $ 153.2 $ 125.5
Ratio of expenses to average net assets........... 1.00% 1.00% .94% 1.04% 1.04%
Ratio of net investment income to average net
assets.......................................... 2.55% 2.19% 2.63% 2.43% 2.72%
</TABLE>
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
MAY 31,
2000(A)
-----------
<S> <C>
CALIFORNIA II TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of period.............. $1.0000
-------
Net investment income............................. .0208
Dividends from net investment income.............. (.0208)
-------
Net asset value, end of period.................... $1.0000
=======
Total Return...................................... 2.27%(b)
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of period (millions)............... $ 91.4
Ratio of expenses to average net assets........... 1.00%(b)(c)
Ratio of net investment income to average net
assets.......................................... 2.27%(b)(c)
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
-------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CONNECTICUT TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- -------
Net investment income............................. 0248 .0221 .0267 .0243 .0266
Dividends from net investment income.............. (.0248) (.0221) (.0267) (0243) (.0266)
------- ------- ------- ------- -------
Net asset value, end of year...................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total Return...................................... 2.48% 2.21% 2.67% 2.43% 2.66%
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of year (millions)................. $ 51.1 $ 55.4 $ 36.8 $ 33.5 $ 34.8
Ratio of expenses to average net assets........... 1.00% 1.00% .89% .97% 1.01%
Ratio of net investment income to average net
assets.......................................... 2.42% 2.17% 2.64% 2.39% 2.61%
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
----------------------------------
2000 1999 1998 1997(D)
------- ------- ------- -------
<S> <C> <C> <C> <C>
FLORIDA TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- -------
Net investment income............................. .0272 .0237 .0269 .0228
Dividends from net investment income.............. (.0272) (.0237) (.0269) (.0228)
------- ------- ------- -------
Net asset value, end of year...................... $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= =======
Total Return...................................... 2.72% 2.37% 2.69% 2.42%(b)
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of year (millions)................. $ 28.9 $ 22.6 $ 10.8 $ 4.1
Ratio of expenses to average net assets........... 1.00% 1.00% .94% 1.04%(b)
Ratio of net investment income to average net
assets.......................................... 2.68% 2.30% 2.62% 2.39%(b)
</TABLE>
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
-------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
MASSACHUSETTS TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- -------
Net investment income............................. .0256 .0220 .0284 .0259 .0276
Dividends from net investment income.............. (.0256) (.0220) (.0284) (.0259) (.0276)
------- ------- ------- ------- -------
Net asset value, end of year...................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total Return...................................... 2.56% 2.20% 2.84% 2.59% 2.76%
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of year (millions)................. $ 16.1 $ 19.9 $ 25.4 $ 13.0 $ 9.0
Ratio of expenses to average net assets........... 1.00% 1.00% .75% .83%(c) .90%(c)
Ratio of net investment income to average net
assets.......................................... 2.55% 2.17% 2.78% 2.54%(c) 2.66%(c)
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
MAY 31,
------------------
2000 1999(E)
-------- --------
<S> <C> <C>
MICHIGAN TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of period.............. $1.0000 $1.0000
------- -------
Net investment income............................. .0263 .0118
Dividends from net investment income.............. (.0263) (.0118)
------- -------
Net asset value, end of period.................... $1.0000 $1.0000
======= =======
Total Return...................................... 2.63% 2.55%(b)
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of period (millions)............... $ 2.2 $ 1.2
Ratio of expenses to average net assets........... 1.00% 1.00%(b)(c)
Ratio of net investment income to average net
assets.......................................... 2.60% 2.02%(b)(c)
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
-------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NEW JERSEY TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Net investment income............................. .0249 .0223 .0254 .0236 .0263
Dividends from net investment income.............. (.0249) (.0223) (.0254) (.0236) (.0263)
------- ------- ------- ------- -------
Net asset value, end of year...................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total Return...................................... 2.49% 2.23% 2.54% 2.36% 2.63%
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of year (millions)................. $ 44.4 $ 41.3 $ 37.6 $ 39.5 $ 41.0
Ratio of expenses to average net assets........... 1.05% 1.00% .99% 1.06% 1.04%
Ratio of net investment income to average net
assets.......................................... 2.46% 2.17% 2.50% 2.33% 2.59%
</TABLE>
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
----------------------------
2000 1999 1998(F)
-------- -------- --------
<S> <C> <C> <C>
OHIO TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000
------- ------- -------
Net investment income............................. .0256 .0236 .0048
Dividends from net investment income.............. (.0256) (.0236) (.0048)
------- ------- -------
Net asset value, end of year...................... $1.0000 $1.0000 $1.0000
======= ======= =======
Total Return...................................... 2.56% 2.36% 2.87%(b)
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of year (millions)................. $ 8.9 $ 1.2 $ 2.5
Ratio of expenses to average net assets........... 1.00% 1.00%(c) 1.00%(b)
Ratio of net investment income to average net
assets.......................................... 2.95% 2.16%(c) 2.86%(b)
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
----------------------------
2000 1999 1998(G)
-------- -------- --------
<S> <C> <C> <C>
PENNSYLVANIA TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000
------- ------- -------
Net investment income............................. .0276 .0234 .0189
Dividends from net investment income.............. (.0276) (.0234) (.0189)
------- ------- -------
Net asset value, end of year...................... $1.0000 $1.0000 $1.0000
======= ======= =======
Total Return...................................... 2.76% 2.34% 2.64%(b)
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of year (millions)................. $ 21.1 $ 16.9 $ 13.2
Ratio of expenses to average net assets........... 1.00% 1.00% 1.00%(b)
Ratio of net investment income to average net
assets.......................................... 2.73% 2.28% 2.62%(b)
</TABLE>
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
MAY 31,
2000(H)
-----------
<S> <C>
VIRGINIA TAX-EXEMPT FUND
--------------------------------------------------
Net asset value, beginning of period.............. $1.0000
-------
Net investment income............................. .0075
Dividends from net investment income.............. (.0075)
-------
Net asset value, end of period.................... $1.0000
=======
Total Return...................................... 3.08%(b)
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------
Net assets end of period (millions)............... $ 2.1
Ratio of expenses to average net assets........... 1.01%(b)(c)
Ratio of net investment income to average net
assets.......................................... 3.19%(b)(c)
</TABLE>
---------------
(a) From July 2, 1999 (Commencement of Operations) to May 31, 2000.
(b) Annualized.
(c) Due to the voluntary waiver of certain expenses by RMCI for certain funds,
the actual expense ratios and net investment income amounted to:
<TABLE>
<CAPTION>
NET
FISCAL EXPENSE INVESTMENT
FUND YEAR RATIO INCOME
---- ------ ------- ----------
<S> <C> <C> <C>
California II...................... 2000 96% 2.31%
Massachusetts...................... 1997 .79 2.58
1996 .84 2.71
Michigan........................... 1999 .49 2.53
Ohio............................... 1999 .83 2.32
Virginia........................... 2000 .97 3.23
</TABLE>
(d) From June 24, 1996 (Commencement of Operations) to May 31, 1997.
(e) From December 14, 1998 (Commencement of Operations) to May 31, 1999.
(f) From April 1, 1998 (Commencement of Operations) to May 31, 1998.
(g) From September 12, 1997 (Commencement of Operations) to May 31, 1998.
(h) From March 3, 2000 (Commencement of Operations) to May 31, 2000.
FEDERAL TAX INFORMATION
The dividends distributed by the Trust are "exempt interest dividends" for
federal tax purposes.
29
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and the Board of Trustees of Reserve New York Tax-Exempt
Trust--New York Tax-Exempt Fund and Reserve Tax-Exempt Trust--California II,
Connecticut, Florida, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania
and Virginia Tax-Exempt Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of net assets, of
operations and of changes in net assets and financial highlights present fairly,
in all material respects, the financial position of Reserve New York Tax-Exempt
Trust--New York Tax-Exempt Fund and the California II, Connecticut, Florida,
Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania and Virginia Tax-Exempt
Funds (nine of the ten series constituting Reserve Tax-Exempt Trust) (the
"Trusts") at May 31, 2000, and the results of their operations for the period
then ended, the changes in their net assets for the periods presented, and the
financial highlights for the periods presented, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Trusts' management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at May 31,
2000 by correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
July 15, 2000
30
