<PAGE> 1
[THE RESERVE FUNDS LOGO]
"America's First
Money Fund"
810 Seventh Avenue, New York, NY 10019-5868
GENERAL INFORMATION AND 24 HOUR YIELD AND BALANCE INFORMATION
800-637-1700
This literature is not authorized for distribution to prospective investors
unless preceded or accompanied by an appropriate current prospectus.
Distributor--Resrv Partners, Inc.
[THE RESERVE FUNDS LOGO]
"America's First
Money Fund"
ANNUAL REPORT
PRIMARY FUND
U.S. GOVERNMENT FUND
U.S. TREASURY FUND
FOR THE YEAR ENDED
MAY 31, 1995
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and the Board of Trustees of The Reserve Fund:
We have audited the accompanying statements of net assets of The Reserve
Fund--Primary, U.S. Government and U.S. Treasury Funds as of May 31, 1995, and
the related statements of operations, the statements of changes in net assets
and the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1995 by correspondence with the custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Primary, U.S. Government and U.S. Treasury Funds of The Reserve Fund as of May
31, 1995, the results of their operations, the changes in their net assets and
their financial highlights for the periods referred to above, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
June 23, 1995
THE RESERVE FUND--PRIMARY FUND
STATEMENT OF NET ASSETS--MAY 31, 1995
<TABLE>
<CAPTION>
% DAYS TO VALUE
RATE MATURITY (NOTE 1)
----------- ------- --------------
<S> <C> <C> <C>
COLLATERALIZED PROMISSORY NOTES--7.77%
Los Angeles Metropolitan Transportation Authority Sales Tax Revenue Notes Series
A(c).......................................................................... 6.18 12 $ 27,176,287
Michigan Underground Storage Tank Financial Assurance Authority State of
Michigan Notes Series 1(c).................................................... 6.12 40 72,516,010
Toronto--Dominion Holdings (U.S.A.), Inc.(c).................................... 6.65 35 24,842,986
--------------
Total Collateralized Promissory Notes........................................... $ 124,535,283
--------------
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--13.91%
Abbey National PLC(a)........................................................... 6.87 16 $ 25,796,729
Deutsche Bank AG(a)............................................................. 6.84 15 15,478,856
Harris Trust and Savings Bank(a)................................................ 6.00 8 25,095,833
Rabobank Nederland N.V.(b)...................................................... 6.42 1 27,881,145
Sanwa Bank, Ltd(b).............................................................. 6.04 26 40,054,323
Skandinaviska Enskilda Banken(b)................................................ 6.16 5 45,438,949
Societe Generale(b)............................................................. 6.02-6.08 16-54 43,151,779
--------------
Total Negotiable Bank Certificates of Deposit................................... $ 222,897,614
--------------
REPURCHASE AGREEMENTS--74.73%
FGPC 6%-7.50% due from 3/1/03 to 12/1/23, FMPC 9% due 12/1/01 and FNMS 6%-6.50%
due from 11/1/00 to 11/1/23 (Repo with Bear, Stearns & Co. Inc. dated May 31,
1995, resale amount $100,017,056)............................................. 6.14 1 $ 100,017,056
FGRM 7.50% due 9/15/06, FMAR 5.839% due 4/1/31 and FNRM 5.50% due 2/25/03 (Repo
with Dean Witter Reynolds Inc. dated May 31, 1995, resale amount
$100,017,083)................................................................. 6.15 1 100,017,083
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE> 3
THE RESERVE FUND--PRIMARY FUND
STATEMENT OF NET ASSETS--MAY 31, 1995--(CONTINUED)
<TABLE>
<CAPTION>
% DAYS TO VALUE
RATE MATURITY (NOTE 1)
----------- ------- --------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS -- (CONTINUED)
FGPC 5.50%-11.50% due from 10/1/95 to 11/1/24, FMPC 7.50%-13% due from 7/1/99 to
11/1/19, FNMS 6%-10% due from 12/1/00 to 3/1/25 and GNMA 6.80%-11.50% due from
4/15/96 to 9/15/30 (Repos with Donaldson, Lufkin & Jenrette Securities Corp.
dated May 16 to May 31, 1995, resale amount $211,859,395)..................... 6.05-6.20 1-35 $ 211,288,006
USTN 6.125%-8.625% due from 2/28/97 to 10/31/99 (Repo with CS First Boston
Corporation dated May 31, 1995, resale amount $205,034,878)................... 6.125 1 205,034,878
FGPC 6%-8% due from 2/1/99 to 5/1/25, FMAR 5.555%-7.78% due from 8/1/20 to
1/1/25, FNAR 5.839%-11.11% due from 11/1/20 to 6/1/28 and FNMS 6%-8.50% due
from 1/1/01 to 6/1/25 (Repo with Merrill Lynch Government Securities Inc.
dated May 31, 1995, resale amount $293,050,217)............................... 6.17 1 293,050,217
FGPC 7%-10% due from 11/1/08 to 1/1/25, FGRM 5%-7.30% from 2/15/08 to 4/15/21,
FMAR 6.273% due 4/1/19, FMDN due 7/3/95, FNAR 6% due 8/1/18, FNMS 7%-8.50% due
from 6/1/08 to 5/1/25, FNNT 7.57% due 5/1/00, FNRA 5.425% due 11/25/07, FNRM
4.75%-6% due from 6/25/98 to 2/25/08, FRRA 6.525% due 8/25/23, FRRM 7% due
3/25/24, GNMA 6.50%-9.125% due from 5/15/17 to 5/20/25, MCDB 8.07% due
4/12/02, RFIN due 10/15/95, USTB due 9/21/95, USTN 4.75%-5.75% due from
2/15/97 to 8/15/03 and USTS due from 5/15/99 to 8/15/21 (Repo with Smith
Barney Inc. dated May 31, 1995, resale amount $288,049,600)................... 6.20 1 288,049,600
--------------
Total Repurchase Agreements..................................................... $1,197,456,840
--------------
TAXABLE MUNICIPAL BONDS--3.57%
Florida Housing Finance Agency Housing Revenue Bonds 1993 Series A(d)........... 6.08 7 $ 8,343,467
Maricopa County Industrial Development Authority Revenue Bonds for Phoenix
Multi-Purpose Arena Project Series 1990(d).................................... 6.25 7 43,819,514
New Hampshire Business Finance Authority Revenue Bonds 1992 Series B(d)......... 6.25 1 5,024,306
--------------
Total Taxable Municipal Bonds................................................... $ 57,187,287
--------------
Total Primary Fund Investments (99.98%) (Cost $1,597,374,674)..................... $1,602,077,024
Other assets, less liabilities (.02%)............................................. 386,548
--------------
NET ASSETS (100%)equivalent to $1.00 net asset value, offering and redemption
price per share based on 1,602,463,572 shares of beneficial interest $.001 par
value outstanding............................................................... $1,602,463,572
=============
</TABLE>
THE RESERVE FUND--U.S. GOVERNMENT FUND
STATEMENT OF NET ASSETS--MAY 31, 1995
<TABLE>
<CAPTION>
% DAYS TO VALUE
RATE MATURITY (NOTE 1)
----------- ------- ------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--97.85%
GNMA 4.5%-12.50% due from 11/15/96 to 4/15/30 (Repos with Bear, Stearns & Co. Inc.
dated May 23 to May 26, 1995 resale amount $100,464,333)........................ 5.97 21-22 $100,124,375
USTN 7.25%-7.875% due from 4/15/98 to 5/15/04 and USTS due from 8/15/00 to 8/15/22
(Repo with Donaldson, Lufkin & Jenrette Securities Corp. dated May 31, 1995
resale amount $142,024,258)..................................................... 6.15 1 142,024,258
GNMA 6%-11.50% due from 1/5/15 to 12/23/20 (Repos with Goldman Sachs & Co. dated
May 31, 1995 resale amount $96,016,396)......................................... 6.08-6.15 1 96,016,396
GNMA 6%-9% due from 11/15/17 to 4/20/25 (Repo with Merrill Lynch Government
Securities Inc. dated May 31, 1995 resale amount $109,018,621).................. 6.15 1 109,018,621
GNMA 5.50%-11% due from 6/15/09 to 5/20/25 (Repo with Prudential Securities Inc.
dated May 31, 1995, resale amount $134,022,892)................................. 6.15 1 134,022,892
GNMA 5.50%-8% due from 6/15/09 to 9/15/24, USTB due 2/8/96 and USTN 5% due 1/31/99
(Repo with Smith Barney Inc. dated May 31, 1995, resale amount $125,021,354).... 6.15 1 125,021,354
------------
Total Repurchase Agreements....................................................... $706,227,896
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 4
THE RESERVE FUND--U.S. GOVERNMENT FUND
STATEMENT OF NET ASSETS--MAY 31, 1995--(CONTINUED)
<TABLE>
<CAPTION>
% DAYS TO VALUE
RATE MATURITY (NOTE 1)
----------- ------- ------------
<S> <C> <C> <C>
U.S. TREASURY BILLS--2.07%
U.S. Treasury Bills(e)............................................................ 6.385 15 $ 14,962,754
------------
Total U.S. Government Fund Investments (99.92%) (Cost $720,515,804)............... 721,190,650
SECURITIES HELD AS COLLATERAL FOR SECURITIES LOANED--2.12%
GNMA 6% due 7/20/24(f)............................................................ $ 15,318,972
------------
Total Investments and Securities held as collateral for securities loaned
(102.04%)....................................................................... 736,509,622
Deposit for Securities Loaned (-2.12%).............................................. (15,318,972)
Other assets, less liabilities (.08%)............................................... 594,142
------------
NET ASSETS (100%) equivalent to $1.00 net asset value, offering and redemption
prices per share based on 721,784,792 shares of beneficial interest $.001 par
value outstanding................................................................. $721,784,792
===========
</TABLE>
THE RESERVE FUND--U.S. TREASURY FUND
STATEMENT OF NET ASSETS--MAY 31, 1995
<TABLE>
<CAPTION>
DAYS
% TO VALUE
RATE MATURITY (NOTE 1)
----------- ------ ------------
<S> <C> <C> <C>
U.S. TREASURY BILLS--109.06%
U.S. Treasury Bills (Cost $103,334,558)............................................ 5.50-5.79 1-57 $103,854,366
Other liabilities, less assets (-9.06%).............................................. (8,627,686)
------------
NET ASSETS (100%)equivalent to $1.00 net asset value, offering and redemption prices
per share based on 95,226,680 shares of beneficial interest $.001 par value
outstanding........................................................................ $ 95,226,680
===========
</TABLE>
---------------
(a) Eurodollar Certificates of Deposit--London Branch, United Kingdom.
(b) Yankee Certificates of Deposit.
(c) Collateralized by Bank Letter of Credit.
(d) The interest rate is subject to change periodically. The rates shown were
in effect at May 31, 1995. Securities payable on demand are collateralized
by bank letter of credit, other bank credit agreements and financial
guaranty assurance agencies.
(e) Securities loaned.
(f) Collateral for securities loaned with a value of $14,962,754.
GLOSSARY
<TABLE>
<S> <C>
FGPC FHLMC Gold Mortgage-Backed Pass-Through Participation Certificates
FGRM FHLMC Gold REMIC Mortgage-Backed Pass-Through Participation Certificates
FMAR FHLMC Adjustable Rate Mortgage-Backed Pass-Through Participation Certificates
FMDN FHLMC Discount Notes
FMPC Federal Home Loan Mortgage Corporation ("FHLMC") Mortgage-Backed Pass-Through Participation Certificates
FNAR FNMA Adjustable Rate Mortgage-Backed Pass-Through Securities
FNMS FNMA Mortgage-Backed Pass-Through Securities
FNNT FNMA Medium Term Note
FNRA FNMA REMIC Adjustable Rate Mortgage-Backed Pass-Through Securities
FNRM Federal National Mortgage Association ("FNMA") REMIC Mortgage-Backed Pass-Through Securities
FRRA FHLMC REMIC Adjustable Rate
FRRM FHLMC REMIC
GNMA Government National Mortgage Association Mortgage-Backed Pass-Through Securities
MCDB FHLMC Debenture Bond
RFIN Resolution Funding Corp, STRIPS
USTB U.S. Treasury Bills
USTN U.S. Treasury Notes
USTS U.S. Treasury STRIPS
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 5
THE RESERVE FUND
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED MAY 31, 1995
------------------------------------------
<S> <C> <C> <C>
U.S. U.S.
PRIMARY GOVERNMENT TREASURY
FUND FUND FUND
----------- ----------- ----------
INTEREST INCOME (Note 1).......................................... $77,838,178 $38,871,090 $2,410,422
----------- ----------- ----------
EXPENSES (Note 2)
Management fee.................................................. 6,870,964 3,613,156 --
Comprehensive fee............................................... -- -- 298,645
Shareholder servicing, administration and general office
expenses...................................................... 3,303,352 1,565,059 --
Distribution assistance (Note 3)................................ 2,444,177 1,374,513 57,860
Occupancy costs................................................. 354,172 178,689 --
Professional fees............................................... 272,769 136,052 --
Equipment expense............................................... 375,663 187,474 --
Stationery, printing and supplies............................... 215,881 106,331 --
Trustee fee..................................................... 33,192 16,892 --
Other expenses.................................................. 118,913 70,488 --
----------- ----------- ----------
Total Expenses................................................ 13,989,083 7,248,654 356,505
Less: voluntary waiver.......................................... -- -- (47,096)
----------- ----------- ----------
Net Expenses.................................................. 13,989,083 7,248,654 309,409
----------- ----------- ----------
NET INVESTMENT INCOME............................................. $63,849,095 $31,622,436 $2,101,013
============ ============ ==========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PRIMARY FUND U.S. GOVERNMENT FUND U.S. TREASURY FUND
----------------------------------- ----------------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 1995 MAY 31, 1994 MAY 31, 1995 MAY 31, 1994 MAY 31, 1995 MAY 31, 1994
--------------- --------------- --------------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE
(DECREASE) IN
NET ASSETS
FROM
INVESTMENT
OPERATIONS:
Net
investment
income
(Note
1)........ $ 63,849,095 $ 34,379,027 $ 31,622,436 $ 17,196,464 $ 2,101,013 $ 156,671
Dividends to
share-
holders... (63,849,095) (34,379,027) (31,622,436) (17,196,464) (2,101,013) (156,671)
--------------- --------------- --------------- --------------- ------------- ------------
FROM CAPITAL
SHARE
TRANSACTIONS
(at net
asset value
of $1 per
share):
Net proceeds
from the
sale of
shares.... 5,517,915,950 5,177,251,711 3,357,034,315 3,677,513,168 275,724,588 23,079,634
Net asset
value of
shares
issued on
reinvestment
of
divi-
dends..... 63,849,095 34,379,027 31,622,436 17,196,464 2,101,013 156,671
--------------- --------------- --------------- --------------- ------------- ------------
Subtotal... 5,581,765,045 5,211,630,738 3,388,656,751 3,694,709,632 277,825,601 23,236,305
Cost of
shares
redeemed.. (5,394,679,426) (5,185,388,879) (3,407,569,981) (3,682,150,085) (189,949,285) (48,210,744)
--------------- --------------- --------------- --------------- ------------- ------------
Net increase
(decrease)
from share
transactions
and from
investment
operations.... 187,085,619 26,241,859 (18,913,230) 12,559,547 87,876,316 (24,974,439)
NET ASSETS:
Beginning of
year........ 1,415,377,953 1,389,136,094 740,698,022 728,138,475 7,350,364 32,324,803
--------------- --------------- --------------- --------------- ------------- ------------
End of year... $ 1,602,463,572 $ 1,415,377,953 $ 721,784,792 $ 740,698,022 $ 95,226,680 $ 7,350,364
================ ================ ================ ================ ============== =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 6
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
------------------------------
The Fund is registered under the Investment Company Act of 1940 as a
non-diversified, open-end management investment company. The policies
summarized below are consistently followed in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
A. The Fund's authorized shares of beneficial interest are unlimited. The
Fund's shares are divided into three series, Primary Fund, U.S. Government
Fund and the U.S. Treasury Fund.
B. Securities are stated at value which represents amortized cost plus
interest accrued to date. Under Securities and Exchange Commission Rule 2a-7,
the Fund uses amortized cost to value the portfolios, by which investments
are valued at cost and the difference between the cost of each instrument and
its value at maturity is accrued into income on a straight line basis over
the number of days to maturity, irrespective of intervening changes in
interest rates or market values of investments. The maturity of floating or
variable rate instruments in which the Fund may invest will be deemed to be,
for floating rate instruments (1) following, and for variable rate
instruments the longer of (1) or (2) following: (1) the notice period
required before the Portfolio is entitled to receive payment of the principal
amount of the instrument; (2) the period remaining until the instrument's
next rate adjustment, for purposes of Rule 2a-7 and for computing the
portfolio's weighted average life.
C. It is each of the Fund's policy to comply with Subchapter M of the
Internal Revenue Code and to distribute all of their taxable income to their
shareholders. Accordingly, no Federal income tax provision is required.
D. Investments are recorded as of the date of their purchase and sale.
Interest income is determined on the basis of interest accrued, premium
amortized and discount accreted.
E. The Fund's custodians hold the securities owned subject to repurchase
agreements. In the event of counterparty default, the Fund has the right to
use the collateral to offset losses incurred. There is potential loss to the
Fund in the event that the Fund is delayed or prevented from exercising its
rights to dispose of the collateral securities including the risk of a
possible decline in the value of the underlying securities during the period
while the Fund seeks to assert its rights. The Fund's investment adviser
determines that the resale amount of the repurchase agreement is fully
collateralized and reviews the value of the collateral and the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements to evaluate potential risks.
F. Net investment income on investments is distributed to shareholders daily
and automatically reinvested in additional Fund shares.
G. Each Fund is charged only for its direct or allocated (in proportion to
net assets or number of shareholder accounts) share of expenses.
H. As of May 31, 1995, the U.S. Government Fund loaned U.S. Treasury Bills to
Lehman Government Securities, Inc., having an amortized cost value of
$14,962,754.
I. The U.S. Treasury Fund had payables of $9,913,044 for securities purchased
but not received at May 31, 1995.
2. MANAGEMENT FEE, SHAREHOLDER SERVICING COST AND TRANSACTIONS WITH AFFILIATES:
---------------------------------------------------------------------------
Under the Management Agreement, Reserve Management Company, Inc. ("RMCI"),
manages the Fund's investments, effects purchases and sales thereof, and
absorbs certain promotional expenses. RMCI receives management fees from the
Primary and U.S. Government Funds 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% of any excess over $2 billion of the
average daily net assets of Primary and U.S. Government Funds, subject to
reimbursement of Fund expenses (excluding brokerage fees and commissions,
interest charges, taxes and extraordinary legal fees and expenses) exceeding
1% of average daily closing net assets. For the U.S. Treasury Fund, RMCI
receives a comprehensive fee at an annual rate of .80% of the average daily
net assets. At May 31, 1995, the advisor waived a portion of its
comprehensive fee. Also, under the current Service Agreement, RMCI was
reimbursed $4,673,942 (Primary Fund) and $2,260,985 (U.S. Government Fund)
during the year ended May 31, 1995 for expenditures made on behalf of the
Fund's respective Portfolios for personnel, office space and equipment and
shareholder accounting and administrative services, to carry out the Fund's
6
<PAGE> 7
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
business. At May 31, 1995, the Primary, U.S. Government and U.S. Treasury
Funds had accrued expenses of $43,098, $20,016, and $2,087 respectively, due
to RMCI.
3. DISTRIBUTION ASSISTANCE:
-----------------------
Pursuant to a Plan of Distribution, subject to the Fund's expense
limitations, the Fund will make payments of up to .20% per annum of the
average net asset value of shareholder accounts as to which the payee has
rendered assistance in distributing shares of the portfolios. The Plan
requires RMCI to pay an equivalent amount from its own resources.
4. FINANCIAL HIGHLIGHTS (FOR ONE SHARE OUTSTANDING THROUGHOUT EACH YEAR):
--------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED MAY 31,
----------------------------------------------------------
PRIMARY FUND 1995 1994 1993 1992 1991
------------------------------------------------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..................$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- -------- -------- -------- --------
Income from investment operations................... .0549 .0345 .0361 .0541 .0794
Expenses............................................ .0099 .0099 .0100 .0100 .0100
--------- -------- -------- -------- --------
Net investment income(1)............................ .0450 .0246 .0261 .0441 .0694
Dividends from net investment income(1)............. (.0450) (.0246) (.0261) (.0441) (.0694)
--------- -------- -------- -------- --------
Net asset value, end of year........................$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return........................................ 4.50% 2.46% 2.61% 4.41% 6.94%
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------
Net assets in thousands, end of year................1,602,464 1,415,378 1,389,136 1,553,828 1,803,132
Ratio of expenses to average net assets............. .97% .97% .99% .99% .97%
Ratio of net investment income to average net
assets............................................ 4.42% 2.44% 2.58% 4.34% 6.72%
U.S. GOVERNMENT FUND
----------------------------------------------------
Net asset value, beginning of year..................$ 1.0000 $1.0000 $1.0000 $1.0000 $1.0000
--------- -------- -------- -------- --------
Income from investment operations................... .0542 .0337 .0353 .0533 .0772
Expenses............................................ .0101 .0100 .0100 .0101 .0102
--------- -------- -------- -------- --------
Net investment income(1)............................ .0441 .0237 .0253 .0432 .0670
Dividends from net investment income(1)............. (.0441) (.0237) (.0253) (.0432) (.0670)
--------- -------- -------- -------- --------
Net asset value, end of year........................$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return........................................ 4.41% 2.37% 2.53% 4.32% 6.70%
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------
Net assets in thousands, end of year................ 721,785 740,698 728,138 853,823 817,604
Ratio of expenses to average net assets............. .99% .99% .99% .99% .98%
Ratio of net investment income to average net
assets............................................ 4.31% 2.35% 2.50% 4.21% 6.38%
</TABLE>
7
<PAGE> 8
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FINANCIAL HIGHLIGHTS (FOR ONE SHARE OUTSTANDING THROUGHOUT EACH PERIOD):
--------------------------------------------------------------------
<TABLE>
<CAPTION>
FEBRUARY
3, 1992
(COMMENCEMENT
OF
OPERATIONS)
YEAR YEAR YEAR THROUGH
ENDED ENDED ENDED MAY 31,
U.S. TREASURY FUND 1995 1994 1993 1992
------------------------------------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............ $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- -------
Income from investment operations............... .0523 .0313 .0330 .0121
Expenses........................................ .0067 .0073 .0092 .0031
------- ------- ------- -------
Net investment income(1)........................ .0456 .0240 .0238 .0090
Dividends from net investment income(1)......... (.0456) (.0240) (.0238) (.0090)
------- ------- ------- -------
Net asset value, end of period.................. $1.0000 $1.0000 $1.0000 $1.0000
======== ======== ======== ========
Total Return.................................... 4.56% 2.40% 2.38% 2.75%(2)
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------
Net assets in thousands, end of period.......... 95,227 7,350 32,325 512
Ratio of expenses to average net assets......... .68%(3) .73%(3) .80% .97%(2)(3)
Ratio of net investment income to average net
assets........................................ 4.64% 2.38% 2.07% 2.74%(2)
</TABLE>
---------------
(1) Based on compounding of daily dividends. Not indicative of future results.
(2) Annualized.
(3) During this period the manager waived a portion of fees and expenses. If
there were no reduction in expenses, the actual expenses would have been
.80%, .80% and 1.00%, respectively.
------------------------
FEDERAL TAX INFORMATION
The dividends distributed by the Primary, U.S. Government and U.S. Treasury
Funds in each of the years presented are treated for Federal tax purposes as
ordinary income.
8
