<PAGE> 1
Founders of
"America's First
Money Fund"
810 Seventh Avenue, New York, NY 10019-5868
GENERAL INFORMATION AND 24-HOUR YIELD AND BALANCE INFORMATION
800-637-1700
This literature is not authorized for distribution to prospective investors
unless
preceded or accompanied by an appropriate current prospectus.
Distributor -- Resrv Partners, Inc.
Founders of
"America's First
Money Fund"
-------------------------------------------------------------------------
----------
SEMI-ANNUAL REPORT
-------------------------------------------------------------------------
----------
PRIMARY FUND
U.S. GOVERNMENT FUND
U.S. TREASURY FUND
FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1997
(UNAUDITED)
<PAGE> 2
THE RESERVE FUND--PRIMARY FUND
STATEMENT OF NET ASSETS--NOVEMBER 30, 1997--(UNAUDITED)
<TABLE>
<CAPTION>
% DAYS TO VALUE
RATE MATURITY (NOTE 1)
------------ ---------- --------------
<S> <C> <C> <C>
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--15.28%
Bayerische Hypotheken-und Wechsel Bank AG(a)................................. 5.77 85 $ 110,123,414
Sanwa Bank, Ltd.(b).......................................................... 5.76-6.50 52-60 102,196,616
Societe Generale(b).......................................................... 5.56 4 100,525,111
Union Bank of California, N.A................................................ 5.80 87 50,040,278
--------------
Total Negotiable Bank Certificates of Deposit................................ 362,885,419
--------------
REPURCHASE AGREEMENTS--79.68%
FGPC 6.00%-7.00% due from 10/1/09 to 11/1/27, FGRA due from 10/15/20 to
3/15/24, FGRM 6.00%-8.875% due from 1/15/07 to 8/15/25, FNRM due 6/25/07
and FNRA due from 4/25/08 to 5/18/27 (Repo with Bear, Stearns & Co. Inc.
dated November 20, 1997, resale amount $551,954,028)....................... 5.55-5.60 3 551,954,028
FNMS 6.00%-10.50% due from 4/1/01 to 12/1/27, FGPC 5.00%-10.00% due from
1/1/98 to 11/1/27, FNAR due from 8/1/01 to 11/1/27, and FMPC 9.00%-10.00%
due from 12/1/08 to 4/1/18 (Repo with DLJ Securities Corp. dated November
20, 1997, resale amount $500,858,611)...................................... 5.62 3 500,858,611
GNMA 6.00%-11.50% due 3/15/99 to 11/15/32 (Repo with CS First Boston Corp.
dated November 20-28, 1997, resale amount $576,648,375).................... 5.56-5.75 3 576,648,375
FNRM 6.00%-9.00% due from 6/30/99 to 3/25/24, FNRA 5.33%-6.26% due from
4/25/21 to 1/25/24, FGRM 5.75%-8.00% due from 7/15/02 to 2/15/25, FGRA
5.66%-6.275% due from 8/15/08 to 2/15/27 and FMRM 4.50%-7.00% due from
1/15/21 to 9/15/21 (Repo with Prudential Securities Inc. dated November 28,
1997, resale amount $263,126,021).......................................... 5.75 3 263,126,021
--------------
Total Repurchase Agreements.................................................. 1,892,587,035
--------------
TAXABLE MUNICIPAL BONDS--4.79%
Florida Housing Finance Agency Housing Revenue Bonds 1993 Series A(c)........ 5.61 7 40,375,674
Illinois Student Assistance(c)............................................... 5.39 7 25,209,101
Maricopa County Industrial Development Authority Revenue Bonds for Phoenix
Multi-Purpose Arena Project Series 1990(c)................................. 5.95 7 43,080,180
New Hampshire Business Finance Authority Revenue Bonds 1992 Series B(c)...... 5.75 7 5,019,965
--------------
Total Taxable Municipal Bonds................................................ 113,684,920
--------------
Total Primary Fund Investments--(99.75%) (Cost $2,363,179,089)................. 2,369,157,374
Other assets, less liabilities--(.25%)......................................... 6,048,880
--------------
NET ASSETS (100%) equivalent to $1.00 net asset value, offering and redemption
price per share based on 2,375,206,254 shares of beneficial interest $.001
par value outstanding........................................................ $2,375,206,254
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE> 3
THE RESERVE FUND--U.S. GOVERNMENT FUND
STATEMENT OF NET ASSETS--NOVEMBER 30, 1997--(UNAUDITED)
<TABLE>
<CAPTION>
% DAYS TO VALUE
RATE MATURITY (NOTE 1)
------------ ---------- ------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
GNMA 6.00%-8.00% due from 7/20/24 to 10/15/27 (Repos with Bear, Stearns & Co.
Inc. dated October 29, 1997, resale amount $160,811,067)..................... 5.53 3 $160,811,068
GNMA 5.50%-13.00% due from 2/15/98 to 4/20/27 (Repo with CS First Boston Corp.
dated November 20, 1997, resale amount $154,262,099)......................... 5.57 3 154,262,099
GNMA 5.00%-15.00% due from 4/15/98 to 11/20/27 (Repo with DLJ Securities Corp.
dated November 20, 1997, resale amount $130,222,444)......................... 5.60 3 130,222,444
GNMA 6.875%-9.50% due from 11/15/17 to 10/20/25 (Repo with Lehman Brothers Inc.
dated November 28, 1997, resale amount $68,032,300).......................... 5.70 3 68,032,300
GNMA 6.00%-8.50% due from 2/20/26 to 11/15/27 (Repos with Prudential Securities
Inc. dated November 28, 1997, resale amount $120,057,300).................... 5.73 3 120,057,300
------------
Total U.S. Government Fund Investments--(99.70%) (Cost $632,000,000)........... 633,385,211
Other assets, less liabilities--(.30%)......................................... 1,887,388
------------
NET ASSETS (100%) equivalent to $1.00 net asset value, offering and redemption
prices per share based on 635,272,589 shares of beneficial interest $.001 par
value outstanding.............................................................. $635,272,589
============
</TABLE>
THE RESERVE FUND--U.S. TREASURY FUND
STATEMENT OF NET ASSETS--NOVEMBER 30, 1997--(UNAUDITED)
<TABLE>
<S> <C> <C> <C>
U.S. TREASURY BILLS--89.83%
U.S. Treasury Bills (Cost $201,610,103)........................................ 4.85-5.28 25-178 $203,365,271
Other assets, less liabilities--(10.17%)....................................... 23,017,909
------------
NET ASSETS (100%) equivalent to $1.00 net asset value, offering and redemption
prices per share based on 225,383,180 shares of beneficial interest $.001 par
value outstanding.............................................................. $226,383,180
============
</TABLE>
- ---------------
(a) Eurodollar Certificates of Deposit -- London Branch, United Kingdom.
(b) Yankee Certificates of Deposit.
(c) The interest rate is subject to change periodically. The rates shown were in
effect at November 30, 1997. Securities payable on demand are collateralized
by bank letter of credit, other bank credit agreements or financial guaranty
assurance agencies.
<TABLE>
<S> <C> <C>
GLOSSARY:
FGPC -- FHLMC Gold Mortgage-Backed Pass-Through Participation Certificates
FGRA -- FHLMC Gold REMIC Mortgage-Backed Pass-Through Participation Certificates -- Adjustable Rate
FGRM -- FHLMC Gold REMIC Mortgage-Backed Pass-Through Participation Certificates
FMPC -- FHLMC Mortgage-Backed Pass-Through Participation Certificates
FMRM -- FHLMC REMIC Mortgage-Backed Pass-Through Participation Certificates
FNAR -- FNMA Adjustable Rate Mortgage-Backed Pass-Through Securities
FNMS -- FNMA Mortgage-Backed Pass-Through Securities
FNRA -- FNMA REMIC Adjustable Rate Mortgage-Backed Pass-Through Securities
FNRM -- FNMA REMIC Mortgage-Backed Pass-Through Securities
GNMA -- Government National Mortgage Association Mortgage-Backed Pass-Through Securities
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 4
THE RESERVE FUND -- U.S. TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES -- (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30, 1997
-----------------
<S> <C>
ASSETS:
Investments, at value (identified cost -- $201,610,103).............................. $ 225,737,078
Cash................................................................................. 660,424
-----------------
Total Assets....................................................................... 226,397,502
-----------------
LIABILITIES:
Accrued expenses..................................................................... 14,322
-----------------
Total Liabilities.................................................................. 14,322
-----------------
NET ASSETS............................................................................. $ 226,383,180
================
NET ASSETS CONSIST OF:
Shares of beneficial interest, $.001 par value, unlimited number of shares
authorized......................................................................... $ 226,383
Paid-in capital in excess of par..................................................... 226,156,797
-----------------
NET ASSETS -- Equivalent to $1.00 per share based on 226,383,180 shares of beneficial
interest outstanding................................................................. $ 226,383,180
================
</TABLE>
THE RESERVE FUND--STATEMENTS OF OPERATIONS--(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30, 1997
-------------------------------------------------
PRIMARY U.S. GOVERNMENT U.S. TREASURY
FUND FUND FUND
----------- --------------- ---------------
<S> <C> <C> <C>
INTEREST INCOME (Note 1)......................................... $66,539,763 $17,509,593 $ 5,445,259
----------- ----------- ----------
EXPENSES (Note 2)
Management fee................................................. 5,347,652 1,551,025 --
Comprehensive fee.............................................. -- -- 832,670
Shareholder servicing, administration and general office
expenses..................................................... 2,528,882 674,415 --
Distribution assistance (Note 3)............................... 2,094,142 575,499 182,306
Equipment expense.............................................. 309,763 84,939 --
Professional fees.............................................. 262,996 62,646 --
Occupancy costs................................................ 129,436 35,492 --
Stationery, printing and supplies.............................. 220,313 60,189
Trustee Fees................................................... 19,932 5,555 --
Other expenses................................................. 205,074 68,551 --
----------- ----------- ----------
Total Expenses............................................... 11,118,190 3,118,311 1,014,976
Less: voluntary waiver......................................... -- -- (208,176)
----------- ----------- ----------
Net Expenses................................................... 11,118,190 3,118,311 806,800
----------- ----------- ----------
NET INVESTMENT INCOME............................................ $55,421,573 $14,391,282 $ 4,638,459
=========== =========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 5
THE RESERVE FUND--STATEMENTS OF CHANGES IN NET ASSETS--(UNAUDITED)
<TABLE>
<CAPTION>
PRIMARY FUND U.S. GOVERNMENT FUND U.S. TREASURY FUND
---------------------------------- ---------------------------------- --------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30, YEAR ENDED
1997 MAY 31, 1997 1997 MAY 31, 1997 1997 MAY 31, 1997
---------------- -------------- ---------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE
(DECREASE) IN
NET ASSETS FROM
INVESTMENT
OPERATIONS:
Net investment
income paid
to
shareholder
as dividends
(Note 1).... $ (55,421,573) $ (86,925,147) $ (14,391,282) $ (25,382,282) $ (4,638,459) $ (7,148,426)
-------------- -------------- -------------- -------------- ------------ ------------
FROM CAPITAL
SHARE
TRANSACTIONS
(at net asset
value of $1
per share):
Net proceeds
from the
sale of
shares...... 5,572,942,442 8,848,392,468 1,563,319,164 2,757,510,343 467,938,423 682,830,849
Net asset
value of
shares
issued on
reinvestment
of
dividends... 55,421,573 86,925,147 14,391,282 25,382,282 4,638,459 7,148,426
-------------- -------------- -------------- -------------- ------------ ------------
Subtotal.... 5,628,364,015 8,935,317,615 1,577,710,446 2,782,892,625 472,576,882 689,979,275
Cost of
shares
redeemed... (5,357,266,813) (8,495,322,653) (1,554,282,173) (2,739,545,482) (415,371,507) (663,567,636)
-------------- -------------- -------------- -------------- ------------ ------------
Net increase
from capital
share
transactions... 271,097,202 439,994,962 23,428,273 43,347,143 57,205,375 26,411,639
NET ASSETS:
Beginning of
period...... 2,104,109,052 1,664,114,090 611,844,316 568,497,173 169,177,805 142,766,166
-------------- -------------- -------------- -------------- ------------ ------------
End of
period...... $2,375,206,254 $2,104,109,052 $ 635,272,589 $ 611,844,316 $226,383,180 $169,177,805
============== ============== ============== ============== ============ ============
</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--(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
------------------------------
The Fund is registered under the Investment Company Act of 1940 as a
non-diversified, open end 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 four classes, Primary Fund, U.S. Government
Fund, U.S. Treasury Fund and the Strategist Money Market Fund. These
financial statements and notes apply only to the Primary, U.S. Government and
U.S. Treasury Funds.
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 days to maturity irrespective of intervening changes in interest rates or
market value 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 Fund 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 average weighted life
to maturity.
C. It is the Fund's policy to comply with Subchapter M of the Internal
Revenue Code and to distribute all of its taxable income to its 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 custodian holds the securities owned subject to repurchase
agreements. The Fund's investment adviser determines that the resale amount
of the repurchase agreement is fully collateralized.
F. Net investment income on investments is distributed to shareholders daily
and automatically reinvested in additional Fund shares.
G. The Primary and U.S. Government Fund's are charged only for their direct
or allocated (in proportion to net assets or number of shareholder accounts)
share of expenses.
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 November 30, 1997, the advisor waived a portion of its
comprehensive fee. Also, under the current Service Agreement, RMCI was
reimbursed $3,676,396 (Primary Fund) and $991,787 (U.S. Government Fund)
during the six months ended November 30, 1997, 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 business. At November 30, 1997, the Primary, U.S. Government
and U.S. Treasury Funds had accrued expenses of $178,099, $51,917, and
$14,322, 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.
6
<PAGE> 7
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED)
4. 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 at 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.
5. COMPONENTS OF NET ASSETS:
---------------------------
At 11/30/97, the following funds had these components of net assets:
<TABLE>
<CAPTION>
PRIMARY U.S. GOVERNMENT U.S. TREASURY
-------------- --------------- -------------
<S> <C> <C> <C>
Par Value................................................... $ 2,375,206 $ 635,273 $ 226,383
Paid-in-Capital............................................. 2,372,831,048 634,637,316 226,156,797
-------------- ------------ ------------
Net Assets.................................................. $2,375,206,254 $ 635,272,589 $ 226,383,180
============== ============ ============
</TABLE>
------------------------
FEDERAL TAX INFORMATION
The dividends distributed by the Primary, U.S. Government and U.S. Treasury
Funds in each of the periods are treated for Federal tax purposes as ordinary
income.
7
<PAGE> 8
THE RESERVE FUND
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUND
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED)
SUPPLEMENTARY INFORMATION (UNAUDITED) (FOR ONE SHARE OUTSTANDING DURING EACH
PERIOD):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS FOR FISCAL YEARS ENDED MAY 31,
ENDED -------------------------------------------------------------
PRIMARY FUND NOVEMBER 30, 1997 1997 1996 1995
- -------------------------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $1.0000 $1.0000 $1.0000 $1.0000
---------- ------ ------ ------
Income from investment operations..... .0284 .0557 .0591 .0549
Expenses.............................. .0047 .0100 .0101 .0099
---------- ------ ------ ------
Net investment income (1)............. .0237 .0457 .0490 .0450
Dividends from net investment
income(1)........................... (.0237) (.0457) (.0490) (.0450)
---------- ------ ------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ====== ====== ======
Total Return.......................... 4.75%(2) 4.57% 4.90% 4.50%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <C> <C> <C> <C>
Net assets in thousands, end of
period.............................. 2,375,206 2,104,109 1,664,114 1,602,464
Ratio of expenses to average net
assets.............................. .94%(2) %.98 %.98 %.97
Ratio of net investment income to
average net assets.................. 4.69%(2) 4.47% 4.79% 4.42%
<CAPTION>
U.S. GOVERNMENT FUND
- --------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- ------ ------ ------
Income from investment operations..... .0281 .0550 .0586 .0542
Expenses.............................. .0050 .0101 .0102 .0101
---------- ------ ------ ------
Net investment income (1)............. .0231 .0449 .0484 .0441
Dividends from net investment
income(1)........................... (.0231) (.0449) (.0484) (.0441)
---------- ------ ------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ====== ====== ======
Total Return.......................... 4.64%(2) 4.49% 4.84% 4.41%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <C> <C> <C> <C>
Net assets in thousands, end of
period.............................. 635,273 611,844 586,497 721,785
Ratio of expenses to average net
assets.............................. .99%(2) %.99 1.00% %.99
Ratio of net investment income to
average net assets.................. 4.59%(2) 4.40% 4.75% 4.31%
<CAPTION>
U.S. TREASURY FUND
- --------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- ------ ------ ------
Income from investment operations..... .0264 .0521 .0547 .0523
Expenses.............................. .0039 .0078 .0081 .0067
---------- ------ ------ ------
Net investment income (1)............. .0225 .0443 .0466 .0456
Dividends from net investment
income(1)........................... (.0225) (.0443) (.0466) (.0456)
---------- ------ ------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ====== ====== ======
Total Return.......................... 4.50%(2) 4.43% 4.66% 4.56%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <C> <C> <C> <C>
Net assets in thousands, end of
period.............................. 226,383 169,178 142,766 95,227
Ratio of expenses to average net
assets(3)........................... .78%(2) %.77 %.79 %.68
Ratio of net investment income to
average net assets.................. 4.46%(2) 4.33% 4.53% 4.64%
<CAPTION>
PRIMARY FUND 1994 1993
- -------------------------------------- ----------------- -----------------
<S> <<C> <C>
Net asset value, beginning of
period.............................. $1.0000 $1.0000
------ ------
Income from investment operations..... .0345 .0361
Expenses.............................. .0099 .0100
------ ------
Net investment income (1)............. .0246 .0261
Dividends from net investment
income(1)........................... (.0246) (.0261)
------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000
====== ======
Total Return.......................... 2.46% 2.61%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <<C> <C>
Net assets in thousands, end of
period.............................. 1,415,378 1,389,136
Ratio of expenses to average net
assets.............................. %.97 %.99
Ratio of net investment income to
average net assets.................. 2.44% 2.58%
U.S. GOVERNMENT FUND
- --------------------------------------
<S> <<C> <C>
Net asset value, beginning of
period.............................. $ 1.0000 $ 1.0000
------ ------
Income from investment operations..... .0337 .0353
Expenses.............................. .0100 .0100
------ ------
Net investment income (1)............. .0237 .0253
Dividends from net investment
income(1)........................... (.0237) (.0253)
------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000
====== ======
Total Return.......................... 2.37% 2.53%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <<C> <C>
Net assets in thousands, end of
period.............................. 740,698 728,138
Ratio of expenses to average net
assets.............................. %.99 %.99
Ratio of net investment income to
average net assets.................. 2.35% 2.50%
U.S. TREASURY FUND
- --------------------------------------
<S> <<C> <C>
Net asset value, beginning of
period.............................. $ 1.0000 $ 1.0000
------ ------
Income from investment operations..... .0313 .0330
Expenses.............................. .0073 .0092
------ ------
Net investment income (1)............. .0240 .0238
Dividends from net investment
income(1)........................... (.0240) (.0238)
------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000
====== ======
Total Return.......................... 2.40% 2.38%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <<C> <C>
Net assets in thousands, end of
period.............................. 7,350 32,325
Ratio of expenses to average net
assets(3)........................... %.73 %.80
Ratio of net investment income to
average net assets.................. 2.38% 2.07%
</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
1.00%.
8
<PAGE> 9
American Express Money Market Account
is a cash management service offered by The
Reserve Funds through American Enterprise
Investment Services Inc., a subsidiary of
American Express Financial Corporation. Shares
offered are shares of The Reserve Funds.
AMERICAN ENTERPRISE INVESTMENT SERVICES INC.
A subsidiary of American Express Financial Corporation
IDS Tower 10
Minneapolis, Minnesota 55440
This literature is not authorized for distribution to prospective investors
unless preceded or accompanied by an appropriate current prospectus.
Distributor -- Resrv Partners, Inc.
(C) 1998 American Express Financial Corporation
All rights reserved.
[LOGO]
AMERICAN EXPRESS
MONEY MARKET
ACCOUNTS
OFFERED BY
THE RESERVE FUNDS
SEMI-ANNUAL REPORT
PRIMARY FUND
U.S. GOVERNMENT FUND
U.S. TREASURY FUND
FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1997
(UNAUDITED)
[LOGO]
<PAGE> 10
THE RESERVE FUND--PRIMARY FUND
STATEMENT OF NET ASSETS--NOVEMBER 30, 1997--(UNAUDITED)
<TABLE>
<CAPTION>
% DAYS TO VALUE
RATE MATURITY (NOTE 1)
------------ ---------- --------------
<S> <C> <C> <C>
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--15.28%
Bayerische Hypotheken-und Wechsel Bank AG(a)................................. 5.77 85 $ 110,123,414
Sanwa Bank, Ltd.(b).......................................................... 5.76-6.50 52-60 102,196,616
Societe Generale(b).......................................................... 5.56 4 100,525,111
Union Bank of California, N.A................................................ 5.80 87 50,040,278
--------------
Total Negotiable Bank Certificates of Deposit................................ 362,885,419
--------------
REPURCHASE AGREEMENTS--79.68%
FGPC 6.00%-7.00% due from 10/1/09 to 11/1/27, FGRA due from 10/15/20 to
3/15/24, FGRM 6.00%-8.875% due from 1/15/07 to 8/15/25, FNRM due 6/25/07
and FNRA due from 4/25/08 to 5/18/27 (Repo with Bear, Stearns & Co. Inc.
dated November 20, 1997, resale amount $551,954,028)....................... 5.55-5.60 3 551,954,028
FNMS 6.00%-10.50% due from 4/1/01 to 12/1/27, FGPC 5.00%-10.00% due from
1/1/98 to 11/1/27, FNAR due from 8/1/01 to 11/1/27, and FMPC 9.00%-10.00%
due from 12/1/08 to 4/1/18 (Repo with DLJ Securities Corp. dated November
20, 1997, resale amount $500,858,611)...................................... 5.62 3 500,858,611
GNMA 6.00%-11.50% due 3/15/99 to 11/15/32 (Repo with CS First Boston Corp.
dated November 20-28, 1997, resale amount $576,648,375).................... 5.56-5.75 3 576,648,375
FNRM 6.00%-9.00% due from 6/30/99 to 3/25/24, FNRA 5.33%-6.26% due from
4/25/21 to 1/25/24, FGRM 5.75%-8.00% due from 7/15/02 to 2/15/25, FGRA
5.66%-6.275% due from 8/15/08 to 2/15/27 and FMRM 4.50%-7.00% due from
1/15/21 to 9/15/21 (Repo with Prudential Securities Inc. dated November 28,
1997, resale amount $263,126,021).......................................... 5.75 3 263,126,021
--------------
Total Repurchase Agreements.................................................. 1,892,587,035
--------------
TAXABLE MUNICIPAL BONDS--4.79%
Florida Housing Finance Agency Housing Revenue Bonds 1993 Series A(c)........ 5.61 7 40,375,674
Illinois Student Assistance(c)............................................... 5.39 7 25,209,101
Maricopa County Industrial Development Authority Revenue Bonds for Phoenix
Multi-Purpose Arena Project Series 1990(c)................................. 5.95 7 43,080,180
New Hampshire Business Finance Authority Revenue Bonds 1992 Series B(c)...... 5.75 7 5,019,965
--------------
Total Taxable Municipal Bonds................................................ 113,684,920
--------------
Total Primary Fund Investments--(99.75%) (Cost $2,363,179,089)................. 2,369,157,374
Other assets, less liabilities--(.25%)......................................... 6,048,880
--------------
NET ASSETS (100%) equivalent to $1.00 net asset value, offering and redemption
price per share based on 2,375,206,254 shares of beneficial interest $.001
par value outstanding........................................................ $2,375,206,254
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE> 11
THE RESERVE FUND--U.S. GOVERNMENT FUND
STATEMENT OF NET ASSETS--NOVEMBER 30, 1997--(UNAUDITED)
<TABLE>
<CAPTION>
% DAYS TO VALUE
RATE MATURITY (NOTE 1)
------------ ---------- ------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
GNMA 6.00%-8.00% due from 7/20/24 to 10/15/27 (Repos with Bear, Stearns & Co.
Inc. dated October 29, 1997, resale amount $160,811,067)..................... 5.53 3 $160,811,068
GNMA 5.50%-13.00% due from 2/15/98 to 4/20/27 (Repo with CS First Boston Corp.
dated November 20, 1997, resale amount $154,262,099)......................... 5.57 3 154,262,099
GNMA 5.00%-15.00% due from 4/15/98 to 11/20/27 (Repo with DLJ Securities Corp.
dated November 20, 1997, resale amount $130,222,444)......................... 5.60 3 130,222,444
GNMA 6.875%-9.50% due from 11/15/17 to 10/20/25 (Repo with Lehman Brothers Inc.
dated November 28, 1997, resale amount $68,032,300).......................... 5.70 3 68,032,300
GNMA 6.00%-8.50% due from 2/20/26 to 11/15/27 (Repos with Prudential Securities
Inc. dated November 28, 1997, resale amount $120,057,300).................... 5.73 3 120,057,300
------------
Total U.S. Government Fund Investments--(99.70%) (Cost $632,000,000)........... 633,385,211
Other assets, less liabilities--(.30%)......................................... 1,887,388
------------
NET ASSETS (100%) equivalent to $1.00 net asset value, offering and redemption
prices per share based on 635,272,589 shares of beneficial interest $.001 par
value outstanding.............................................................. $635,272,589
============
</TABLE>
THE RESERVE FUND--U.S. TREASURY FUND
STATEMENT OF NET ASSETS--NOVEMBER 30, 1997--(UNAUDITED)
<TABLE>
<S> <C> <C> <C>
U.S. TREASURY BILLS--89.83%
U.S. Treasury Bills (Cost $201,610,103)........................................ 4.85-5.28 25-178 $203,365,271
Other assets, less liabilities--(10.17%)....................................... 23,017,909
------------
NET ASSETS (100%) equivalent to $1.00 net asset value, offering and redemption
prices per share based on 225,383,180 shares of beneficial interest $.001 par
value outstanding.............................................................. $226,383,180
============
</TABLE>
- ---------------
(a) Eurodollar Certificates of Deposit -- London Branch, United Kingdom.
(b) Yankee Certificates of Deposit.
(c) The interest rate is subject to change periodically. The rates shown were in
effect at November 30, 1997. Securities payable on demand are collateralized
by bank letter of credit, other bank credit agreements or financial guaranty
assurance agencies.
<TABLE>
<S> <C> <C>
GLOSSARY:
FGPC -- FHLMC Gold Mortgage-Backed Pass-Through Participation Certificates
FGRA -- FHLMC Gold REMIC Mortgage-Backed Pass-Through Participation Certificates -- Adjustable Rate
FGRM -- FHLMC Gold REMIC Mortgage-Backed Pass-Through Participation Certificates
FMPC -- FHLMC Mortgage-Backed Pass-Through Participation Certificates
FMRM -- FHLMC REMIC Mortgage-Backed Pass-Through Participation Certificates
FNAR -- FNMA Adjustable Rate Mortgage-Backed Pass-Through Securities
FNMS -- FNMA Mortgage-Backed Pass-Through Securities
FNRA -- FNMA REMIC Adjustable Rate Mortgage-Backed Pass-Through Securities
FNRM -- FNMA REMIC Mortgage-Backed Pass-Through Securities
GNMA -- Government National Mortgage Association Mortgage-Backed Pass-Through Securities
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 12
THE RESERVE FUND -- U.S. TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES -- (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30, 1997
-----------------
<S> <C>
ASSETS:
Investments, at value (identified cost -- $201,610,103).............................. $ 225,737,078
Cash................................................................................. 660,424
-----------------
Total Assets....................................................................... 226,397,502
-----------------
LIABILITIES:
Accrued expenses..................................................................... 14,322
-----------------
Total Liabilities.................................................................. 14,322
-----------------
NET ASSETS............................................................................. $ 226,383,180
================
NET ASSETS CONSIST OF:
Shares of beneficial interest, $.001 par value, unlimited number of shares
authorized......................................................................... $ 226,383
Paid-in capital in excess of par..................................................... 226,156,797
-----------------
NET ASSETS -- Equivalent to $1.00 per share based on 226,383,180 shares of beneficial
interest outstanding................................................................. $ 226,383,180
================
</TABLE>
THE RESERVE FUND--STATEMENTS OF OPERATIONS--(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30, 1997
-------------------------------------------------
PRIMARY U.S. GOVERNMENT U.S. TREASURY
FUND FUND FUND
----------- --------------- ---------------
<S> <C> <C> <C>
INTEREST INCOME (Note 1)......................................... $66,539,763 $17,509,593 $ 5,445,259
----------- ----------- ----------
EXPENSES (Note 2)
Management fee................................................. 5,347,652 1,551,025 --
Comprehensive fee.............................................. -- -- 832,670
Shareholder servicing, administration and general office
expenses..................................................... 2,528,882 674,415 --
Distribution assistance (Note 3)............................... 2,094,142 575,499 182,306
Equipment expense.............................................. 309,763 84,939 --
Professional fees.............................................. 262,996 62,646 --
Occupancy costs................................................ 129,436 35,492 --
Stationery, printing and supplies.............................. 220,313 60,189
Trustee Fees................................................... 19,932 5,555 --
Other expenses................................................. 205,074 68,551 --
----------- ----------- ----------
Total Expenses............................................... 11,118,190 3,118,311 1,014,976
Less: voluntary waiver......................................... -- -- (208,176)
----------- ----------- ----------
Net Expenses................................................... 11,118,190 3,118,311 806,800
----------- ----------- ----------
NET INVESTMENT INCOME............................................ $55,421,573 $14,391,282 $ 4,638,459
=========== =========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 13
THE RESERVE FUND--STATEMENTS OF CHANGES IN NET ASSETS--(UNAUDITED)
<TABLE>
<CAPTION>
PRIMARY FUND U.S. GOVERNMENT FUND U.S. TREASURY FUND
---------------------------------- ---------------------------------- --------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30, YEAR ENDED
1997 MAY 31, 1997 1997 MAY 31, 1997 1997 MAY 31, 1997
---------------- -------------- ---------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE
(DECREASE) IN
NET ASSETS FROM
INVESTMENT
OPERATIONS:
Net investment
income paid
to
shareholder
as dividends
(Note 1).... $ (55,421,573) $ (86,925,147) $ (14,391,282) $ (25,382,282) $ (4,638,459) $ (7,148,426)
-------------- -------------- -------------- -------------- ------------ ------------
FROM CAPITAL
SHARE
TRANSACTIONS
(at net asset
value of $1
per share):
Net proceeds
from the
sale of
shares...... 5,572,942,442 8,848,392,468 1,563,319,164 2,757,510,343 467,938,423 682,830,849
Net asset
value of
shares
issued on
reinvestment
of
dividends... 55,421,573 86,925,147 14,391,282 25,382,282 4,638,459 7,148,426
-------------- -------------- -------------- -------------- ------------ ------------
Subtotal.... 5,628,364,015 8,935,317,615 1,577,710,446 2,782,892,625 472,576,882 689,979,275
Cost of
shares
redeemed... (5,357,266,813) (8,495,322,653) (1,554,282,173) (2,739,545,482) (415,371,507) (663,567,636)
-------------- -------------- -------------- -------------- ------------ ------------
Net increase
from capital
share
transactions... 271,097,202 439,994,962 23,428,273 43,347,143 57,205,375 26,411,639
NET ASSETS:
Beginning of
period...... 2,104,109,052 1,664,114,090 611,844,316 568,497,173 169,177,805 142,766,166
-------------- -------------- -------------- -------------- ------------ ------------
End of
period...... $2,375,206,254 $2,104,109,052 $ 635,272,589 $ 611,844,316 $226,383,180 $169,177,805
============== ============== ============== ============== ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 14
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
------------------------------
The Fund is registered under the Investment Company Act of 1940 as a
non-diversified, open end 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 four classes, Primary Fund, U.S. Government
Fund, U.S. Treasury Fund and the Strategist Money Market Fund. These
financial statements and notes apply only to the Primary, U.S. Government and
U.S. Treasury Funds.
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 days to maturity irrespective of intervening changes in interest rates or
market value 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 Fund 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 average weighted life
to maturity.
C. It is the Fund's policy to comply with Subchapter M of the Internal
Revenue Code and to distribute all of its taxable income to its 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 custodian holds the securities owned subject to repurchase
agreements. The Fund's investment adviser determines that the resale amount
of the repurchase agreement is fully collateralized.
F. Net investment income on investments is distributed to shareholders daily
and automatically reinvested in additional Fund shares.
G. The Primary and U.S. Government Fund's are charged only for their direct
or allocated (in proportion to net assets or number of shareholder accounts)
share of expenses.
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 November 30, 1997, the advisor waived a portion of its
comprehensive fee. Also, under the current Service Agreement, RMCI was
reimbursed $3,676,396 (Primary Fund) and $991,787 (U.S. Government Fund)
during the six months ended November 30, 1997, 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 business. At November 30, 1997, the Primary, U.S. Government
and U.S. Treasury Funds had accrued expenses of $178,099, $51,917, and
$14,322, 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.
6
<PAGE> 15
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED)
4. 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 at 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.
5. COMPONENTS OF NET ASSETS:
---------------------------
At 11/30/97, the following funds had these components of net assets:
<TABLE>
<CAPTION>
PRIMARY U.S. GOVERNMENT U.S. TREASURY
-------------- --------------- -------------
<S> <C> <C> <C>
Par Value................................................... $ 2,375,206 $ 635,273 $ 226,383
Paid-in-Capital............................................. 2,372,831,048 634,637,316 226,156,797
-------------- ------------ ------------
Net Assets.................................................. $2,375,206,254 $ 635,272,589 $ 226,383,180
============== ============ ============
</TABLE>
------------------------
FEDERAL TAX INFORMATION
The dividends distributed by the Primary, U.S. Government and U.S. Treasury
Funds in each of the periods are treated for Federal tax purposes as ordinary
income.
7
<PAGE> 16
THE RESERVE FUND
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUND
NOTES TO FINANCIAL STATEMENTS--(UNAUDITED)--(CONTINUED)
SUPPLEMENTARY INFORMATION (UNAUDITED) (FOR ONE SHARE OUTSTANDING DURING EACH
PERIOD):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS FOR FISCAL YEARS ENDED MAY 31,
ENDED -------------------------------------------------------------
PRIMARY FUND NOVEMBER 30, 1997 1997 1996 1995
- -------------------------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $1.0000 $1.0000 $1.0000 $1.0000
---------- ------ ------ ------
Income from investment operations..... .0284 .0557 .0591 .0549
Expenses.............................. .0047 .0100 .0101 .0099
---------- ------ ------ ------
Net investment income (1)............. .0237 .0457 .0490 .0450
Dividends from net investment
income(1)........................... (.0237) (.0457) (.0490) (.0450)
---------- ------ ------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ====== ====== ======
Total Return.......................... 4.75%(2) 4.57% 4.90% 4.50%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <C> <C> <C> <C>
Net assets in thousands, end of
period.............................. 2,375,206 2,104,109 1,664,114 1,602,464
Ratio of expenses to average net
assets.............................. .94%(2) %.98 %.98 %.97
Ratio of net investment income to
average net assets.................. 4.69%(2) 4.47% 4.79% 4.42%
<CAPTION>
U.S. GOVERNMENT FUND
- --------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- ------ ------ ------
Income from investment operations..... .0281 .0550 .0586 .0542
Expenses.............................. .0050 .0101 .0102 .0101
---------- ------ ------ ------
Net investment income (1)............. .0231 .0449 .0484 .0441
Dividends from net investment
income(1)........................... (.0231) (.0449) (.0484) (.0441)
---------- ------ ------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ====== ====== ======
Total Return.......................... 4.64%(2) 4.49% 4.84% 4.41%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <C> <C> <C> <C>
Net assets in thousands, end of
period.............................. 635,273 611,844 586,497 721,785
Ratio of expenses to average net
assets.............................. .99%(2) %.99 1.00% %.99
Ratio of net investment income to
average net assets.................. 4.59%(2) 4.40% 4.75% 4.31%
<CAPTION>
U.S. TREASURY FUND
- --------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- ------ ------ ------
Income from investment operations..... .0264 .0521 .0547 .0523
Expenses.............................. .0039 .0078 .0081 .0067
---------- ------ ------ ------
Net investment income (1)............. .0225 .0443 .0466 .0456
Dividends from net investment
income(1)........................... (.0225) (.0443) (.0466) (.0456)
---------- ------ ------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ====== ====== ======
Total Return.......................... 4.50%(2) 4.43% 4.66% 4.56%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <C> <C> <C> <C>
Net assets in thousands, end of
period.............................. 226,383 169,178 142,766 95,227
Ratio of expenses to average net
assets(3)........................... .78%(2) %.77 %.79 %.68
Ratio of net investment income to
average net assets.................. 4.46%(2) 4.33% 4.53% 4.64%
<CAPTION>
PRIMARY FUND 1994 1993
- -------------------------------------- ----------------- -----------------
<S> <<C> <C>
Net asset value, beginning of
period.............................. $1.0000 $1.0000
------ ------
Income from investment operations..... .0345 .0361
Expenses.............................. .0099 .0100
------ ------
Net investment income (1)............. .0246 .0261
Dividends from net investment
income(1)........................... (.0246) (.0261)
------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000
====== ======
Total Return.......................... 2.46% 2.61%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <<C> <C>
Net assets in thousands, end of
period.............................. 1,415,378 1,389,136
Ratio of expenses to average net
assets.............................. %.97 %.99
Ratio of net investment income to
average net assets.................. 2.44% 2.58%
U.S. GOVERNMENT FUND
- --------------------------------------
<S> <<C> <C>
Net asset value, beginning of
period.............................. $ 1.0000 $ 1.0000
------ ------
Income from investment operations..... .0337 .0353
Expenses.............................. .0100 .0100
------ ------
Net investment income (1)............. .0237 .0253
Dividends from net investment
income(1)........................... (.0237) (.0253)
------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000
====== ======
Total Return.......................... 2.37% 2.53%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <<C> <C>
Net assets in thousands, end of
period.............................. 740,698 728,138
Ratio of expenses to average net
assets.............................. %.99 %.99
Ratio of net investment income to
average net assets.................. 2.35% 2.50%
U.S. TREASURY FUND
- --------------------------------------
<S> <<C> <C>
Net asset value, beginning of
period.............................. $ 1.0000 $ 1.0000
------ ------
Income from investment operations..... .0313 .0330
Expenses.............................. .0073 .0092
------ ------
Net investment income (1)............. .0240 .0238
Dividends from net investment
income(1)........................... (.0240) (.0238)
------ ------
Net asset value, end of period........ $ 1.0000 $ 1.0000
====== ======
Total Return.......................... 2.40% 2.38%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------
<S> <<C> <C>
Net assets in thousands, end of
period.............................. 7,350 32,325
Ratio of expenses to average net
assets(3)........................... %.73 %.80
Ratio of net investment income to
average net assets.................. 2.38% 2.07%
</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
1.00%.
8
<PAGE> 17
[LETTERHEAD OF THE RESERVE FUNDS]
January 30, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Public Filing Room
Re: The Reserve Fund
Securities Act File No. 332-36429
Investment Company Act File No. 811-2033
Ladies and Gentlemen:
Pursuant to Rule N-30D/A of the Securities Act of 1933 we are filing an amended
Semi-Annual Report for the above referenced Trust. The purpose of this
amendment is to correct the N-30D filing made on January 28, 1998 which did not
contain all of the appropriate covers and pages to the Semi-Annual Report.
Please contact the undersigned at (212) 977-9982, extension 355, with any
questions or comments about the foregoing.
Respectfully,
/s/ Michelle L. Neufeld
Counsel & Secretary
